<PAGE>


                              WASHINGTON, DC 20549
                                    FORM 10-K

(Mark One)

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

         For the period October 1, 2000 to September 30, 2001

                                       OR

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


                        COMMISSION FILE NUMBER 000-21673
                              AGILITY CAPITAL, INC.
             (Exact name of registrant as specified in its charter)


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<S>                                                   <C>
                       TEXAS                            75-2487218


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


    1512 WEST 35TH STREET CUT-OFF, AUSTIN, TEXAS             78731

     (Address of principal executive offices)              (Zip Code)

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       Registrant's telephone number, including area code: (512) 472-3600
           Securities registered pursuant to Section 12(b) of the Act:

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<CAPTION>

Title of class                              Name of each exchange on which registered
----------------------------------------    -----------------------------------------
<S>                                        <C>
COMMON STOCK, NO PAR VALUE PER SHARE        OVER THE COUNTER

15% SERIES A CUMULATIVE PREFERRED STOCK,
NO PAR VALUE PER SHARE                      OVER THE COUNTER
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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 (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X   No
                                             ---     ---

     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. [ ]










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     The aggregate market value of the voting stock held by non-affiliates of
the registrant was $56,691 on September 30, 2001
                                                    ------------
FOOTNOTE: 1 Calculated by excluding all shares that may be deemed to be
beneficially owned by executive officers, directors and five percent,
shareholders of the registrant, without conceding that all such persons are
"affiliates" of the registrant for purposes of the Federal securities laws.

As of September 30, 2001 there were 5,962,561 shares of the registrant's Common
Stock, no par value, and 1,073,500 of the registrant's 15% Series A Cumulative
Preferred Stock, no par value, outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE








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                                TABLE OF CONTENTS

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<S>                                                                                                  <C>
PART I................................................................................................1

   ITEM  1.  BUSINESS.................................................................................1
   ITEM  2.  PROPERTIES...............................................................................6
   ITEM  3.  LEGAL  PROCEEDINGS.......................................................................7
   ITEM  4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS......................................7

PART II...............................................................................................7

   ITEM  5.  MARKET FOR REGISTRANTS' COMMON EQUITY AND RELATED STOCKHOLDER MATTERS....................7
   ITEM  6.  SELECTED  FINANCIAL  DATA................................................................8
   ITEM  7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS....8
   ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK..............................13
   ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.............................................13
   ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE....13

PART III.............................................................................................13

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

PART IV..............................................................................................14

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

SIGNATURES...........................................................................................15

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                                     PART I


ITEM  1.     BUSINESS

RECENT DEVELOPMENTS

         On October 17, 2001, the Company agreed to purchase for $25,000
Southcoast Investment Group, Inc., a brokerage firm incorporated in the State of
Texas. It will be used to support investment opportunities of the Company. The
Company has limited operations and is not expected to be a significant source of
short-term revenue.

         October 22, 2001, the Company's President, Tom Blinten, resigned. He
will remain as a member of the Board of Directors.

GROWTH AND BUSINESS STRATEGY

THE COMPANY

         The Company is in the process of raising, pursuant to a private
placement, a $100,000,000 venture capital investment fund with a projected
10-year term, to be called the Agility Capital Fund, LLC (the "Fund"). The Fund
will sell and issue membership interests to accredited and institutional
investors. The Company will invest in such interests and will also serve as the
managing member and the initial advisor to the Fund. The Fund will invest in
early stage, privately held companies operating in the e-commerce business
services/internet, information technology and services, new media, enterprise
and application software, and communications industries. On a select basis,
later stage companies in other industries may also be considered.


Initial Investments
         Prior to the initial closing of the Fund, the Company has and may
advance funds on behalf of the Fund to make investments, which meet the Fund's
investment criteria. At the election of the Company, as Fund Manager, such
investments will be transferred to the Fund in return for the repayment of such
advances, without interest, for Class A Membership Interests in an amount equal
to the amount of funds advanced, be retained by the Company, or a combination of
each.

         As of September 30, 2001, the Company, in anticipation of their
transfer to the Fund, has made investments (aggregating approximately $800,000)
in and purchased notes (aggregating $600,000) from the following:

                  -a company that provides software technology that enables
distribution and synchronization of image intensive data for the fashion
modeling industry. This company's flagship offering is a proprietary distributed
database product that links together industry participants, enabling business
transactions and the distribution and synchronization of image intensive data.
In this regard, the product acts in many ways like an Applications Service
Provider ("ASP"), but is not limited or tied to the Internet. This service can
be used real-time, on-line or downloaded to a user's network, where the
distributed database will be updated automatically for data changes made by any
user.

                  -an e-Messaging software company delivering technologies that
can significantly increase the probability of recipient's action when receiving
e-mail, instant messages or other forms of electronic communications. This
Company's intelligent solution provides ISPs and hosting companies the ability
to generate annuity revenues in areas previously impossible. Their
patent-pending solution has significant applications in the broadband and
wireless sectors and can scale as these bandwidths increase their market share.

                  -an investment fund that co-invests in private venture-stage
companies with whom the principals of the fund have business or professional
relationships. This fund's investments will be made in conjunction with top-tier
venture capital funds, strategic corporate investors, and senior management
teams. The fund is premised upon the belief that in the world of venture
capital, relationships and successful deal flow are even more critical than in
the public markets and that access to venture opportunities is based on the
quality and depth of business and professional relationships.

                  -a company that provides automated test equipment for a wide
variety of semiconductor memory technologies, including DRAM, SDRAM, DDR,
RDRAM(R) and Flash. The company provides production automation solutions for
product testing and handling.

         The Company's current investments through this fund include (a) a
global services marketplace that allows businesses to transact, develop and
deliver services including software




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programming, graphic design, translation and transcription, all developed
remotely and delivered on-line, and (b) an Internet infrastructure company that
provides an entirely new class of lightweight, collaborative applications
through a proprietary platform whose applications can be created and used by
knowledge workers and delivered to the inbox or browser, enabling people to
assemble, communicate, and collaborate independent of time, location, and
computing platform.

         Subsequent to September 30, 2001, the Company converted substantially
all of its investment and its note receivable plus accrued interest in the
software technology company into a secured promissory note in the principal
amount of approximately $1,042,000 bearing interest at 9% and purchased a senior
secured convertible promissory note from this company in the principal amount of
approximately $800,000 bearing interest at 8%. The Company made an additional
advance of $50,000 to the e-Messaging software company.

Management Fee and Carried Interest
         It is currently proposed that for managing the Fund, the Company as
Fund Manager will receive an annual management fee equal to 2.5% of committed
capital through year five. Such annual management fee will decline .10% each
year thereafter, but not less than 2%. In addition, it is currently proposed
that the Company as the Fund Manager will be entitled to receive a carried
interest fee equal to 20% of the net profit from the Fund's investments, with
the remaining 80% allocated to the members in accordance with their ownership
percentages.

Establishment of the Fund on Terms Different From Those Proposed
         In order to accomplish the establishment of the Fund on terms
acceptable to investors in the Fund, it may be necessary to amend certain of the
proposed terms of the Fund. In particular, the size of the Fund may be reduced,
the Company may be precluded from selling certain existing investments to the
Fund, the amount of the management fee or 20% carry payable to the Company may
be reduced or delayed, and/or the Company may be required to assume a greater
share of placement agency fees. Such modifications could have an adverse effect
on the potential and future profitability of the Company.

Sharing of Management Fees with Managers
         The success of the Fund will primarily depend upon the efforts of
individuals designated by the Company, in its capacity as Fund Manager, to
manage the Fund's investments. The Company expects that the attraction and
continued retention of qualified individuals will require compensating these
individuals through the utilization of substantially all of the management fees
received by the Company, as well as the reallocation to such individuals of a
portion of the Company's 20% share of the Fund's net profits. Therefore, even if
the Fund is successfully established, there can be no assurance as to the
ultimate revenues available for the Company's shareholders.

Expenses
         The Company, as the Fund's Managing Member, will pay all ordinary
administrative and overhead expenses related to managing, originating and
monitoring investments, including salaries, rent, equipment, administrative
expenses which are incurred by the Fund Manager and the Managing Member (to the
extent not reimbursed by a Portfolio Company) in connection with the operation
of the Fund or an investment by the Fund.

THE FUND

         The Fund's business model is to invest in companies that can benefit
from the collective operating and financial experience of the Fund's managers
and its advisors. The management and advisory team's business and industry
experience and professional relationships will be relevant to the industries
targeted and will be used to help the Fund achieve significant and timely
venture capital rates of returns.


         In addition to providing growth capital to a selected group of
companies, the Fund will provide these companies ("Portfolio Companies") with
access to a network of contacts to help them anticipate and address challenges
when they arise and help accelerate their path to profitability. The Fund can
also provide Portfolio Companies with access to technology strategy and software
development resources via its proposed relationship with a technological
consulting and development firm, as well as management recruiting services
through the Fund's proposed association with an executive recruitment firm.
Portfolio Companies will be provided with access to marketing, advertising, and
communication expertise to help them develop marketing strategies to build brand
awareness in the digital marketplace through the Fund's association with a
founder and former President of one of the largest advertising and
communications agencies in the US. Access to significant debt and equity funding
resources to help further portfolio company growth will be facilitated through
the Fund's management team's extensive contacts in the financial community.
Additionally, Portfolio Companies will have access to state of the art business,
technology and consumer market intelligence through the Fund's association with
a leading provider of business technology research, consumer and market
intelligence and decision making tools.



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The Fund's Vision and Mission
         In the past several years, the venture capital industry in the United
States has experienced dramatic growth, both in terms of the number of venture
capital funds operating and the amount of venture capital under management. As a
result of this growth many venture capital funds have elected to concentrate on
making investments in later-stage, well-developed companies that require large
amounts of investment capital. Consequently, many deserving, less mature,
early-stage companies are finding it difficult to find venture capital funds
that are willing to invest more modest amounts while providing the hands-on
attention they need to help them successfully grow and reach profitability.
Consequently, the Fund believes many early stage companies in its targeted
industries are under served by the venture capital industry.

         The Fund intends to take advantage of these conditions by identifying
and investing in companies where the Fund can leverage its resources and help
these companies create substantial value in accelerated timeframes, and produce
investment returns for the Fund and its investors in excess of those which could
be expected in alternative investment vehicles. These goals will be achieved by
combining the talent, resources, and experiences of the Fund Manager and its
network of personal and professional relationships with the talent, resources,
and experiences existing in the Portfolio Companies.

         The Fund intends to reach its goals by:


    -Focusing its activities on private companies in the e-commerce business
     services/internet, information technology and services, new media,
     enterprise and application software, and communications industries.
    -Identifying significant venture investment opportunities based upon the
     quality and depth of the Fund's management, advisors, portfolio company
     management and business and professional relationships.
    -Providing Portfolio Companies with advice based upon the experience,
     contacts, and leadership of the Fund's management team.
    -Providing Portfolio Companies with assistance in raising equity capital,
     obtaining bridge and mezzanine financings and developing various buy-out
     structures, re-capitalizations, and with securing international
     investments.
    -Assisting Portfolio Companies to anticipate and address various operational
     problems by providing them with access to the Fund's network of advisors
     and service providers.

         Because of a highly competitive environment, companies with unique
technologies and solutions need to be able to quickly achieve leadership
positions by accelerating the development and commercialization of their
offerings, and getting them to market faster.

         Venture capital is increasingly being targeted at later stage companies
that require larger size amounts of investment capital, creating a gap in
available financing sources between "angel" investors and large venture capital
funds. Many of the entrepreneurial companies that could benefit from the Fund's
value-added services are start-up or early stage companies that cannot qualify
for consideration by larger venture capital funds and are too technical or
require more handholding than "angel" investors want or are able to provide. The
Fund will focus its activities on identifying and investing in companies that
fall into this gap.

Portfolio Strategy
         The Fund's objective is to create partnerships with its Portfolio
Companies by not only providing capital, but also by actively providing useful
advice and resources in the areas contributing to the development, execution,
and operations of the company. In doing so, the Fund will constantly monitor its
investments and assist Portfolio Companies to achieve greater efficiencies,
accelerating their path to profitability and success. The Fund will encourage
and promote all forms of synergies between the management teams of the Fund and
the Portfolio Companies, including the sharing of management experience, legal
and financial resources, and marketing, business development and technology
advice. We believe our investment model has significant advantages over
traditional venture capital funds because of our investment selection criteria
and the collective knowledge, industry experience, and business contacts we will
make available to our Portfolio Companies.

         The selection of a prospective Portfolio Company investment will be
done carefully with an eye toward choosing companies that possess the
characteristics and people with the greatest potential to succeed and the
opportunity to become industry leaders. The Fund Manager will employ a
research-based investment strategy, driven by a bottom-up analysis designed to
identify emerging technology companies in high growth potential,
technology-driven markets. After the investment is made, the Fund Manager plans
to use its resources to add value to Portfolio Companies during the period when
they have the best opportunity to rapidly create increased market value. This
period often coincides with the period the prospective Portfolio Company is
developing its product or service offering and its validation in the
marketplace. Generally, this period of opportunity occurs when the prospective
Portfolio Company is still privately held, and continues until its value is
recognized by the market and it is acquired by another company at a premium or
it has its initial public offering. The Fund Manager's




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investment committee, consisting of all the executive management of the Fund
Manager (the "Investment Committee") will be responsible for all of the Fund's
investment decisions, with each investment decision requiring the unanimous
approval of the Investment Committee. The Fund's primary focus is to invest in
early stage companies, but we may choose to consider more developed, and even
public, companies if the investment thesis is compelling and the Fund's
involvement is deemed to add value to the opportunity.

         The Investment Committee's primary investment selection criteria will
emphasize companies that have:

    -Unique technologies or solutions, which offer a competitive advantage.
    -Technology teams with the proven ability to successfully commercialize
     their concepts.
    -Large and growing market opportunities. Preference will be given to
     companies that have the potential to dominate their target markets.
    -A compelling, well articulated and proven business model that is
     sustainable.
    -A management team that displays entrepreneurial leadership, proven skills,
     a successful track record and relevant business experience, or a
     willingness to bring in professional management.

         The Fund expects that most of its investment opportunities will come
principally from three areas: the Fund's network of professional and business
relationships and its relationships with industry leaders, entrepreneurs, and
legal, accounting, consulting, and executive recruiting firms, the network of
professional, business and investor contacts of its Portfolio Companies, and
from venture capital funds concentrating on later stage investments that see the
Fund as a source for future investments.

         In addition to the management team comprised of the Company's current
executive management, the Fund will have an active Advisory Board comprised of
individuals from a wide variety of backgrounds who can be accessed for expert
advice on matters that are relevant to the success of the Fund's Portfolio
Companies. In addition, the Fund's investment team and contacts will seek to
assist Portfolio Companies in locating significant debt and equity resources
through access to leading venture capitalists, as well as Wall Street and
regional investment and merchant banks.

Overview and Diversity of Investments
         The Company expects that the size of most of the Fund's investments
will be less than those of the typical venture capital fund, but greater than
those made by the typical "angel" investor. Accordingly, each of the Fund's
initial investments will generally range between $100,000 and $3,000,000 (with
not more than 15% of the Fund's of such committed capital invested in a single
Portfolio Company). Follow-on investments may be made in Portfolio Companies
that are reaching agreed upon milestones.

         The Fund anticipates investing in approximately 10 to 15 Portfolio
Companies, assuming the Fund raises $100,000,000 in its offering. The Fund's
investment criterion is designed to produce a diversified investment portfolio.

Exit Strategies for Investments
         The Fund will seek to realize returns from its investments through a
variety of exit strategies including, but not limited to: (i) a sale of a
Portfolio Company or the Fund's investment to a strategic or financial buyer and
(ii) an initial public offering ("IPO"). Generally, it is expected that the Fund
will not be able to achieve liquidity until the end of a "lock-up" period,
generally 180 days following an IPO.

Investment Monitoring; Board of Directors of Portfolio Companies
         The Fund expects to be involved on a strategic level with all of its
Portfolio Companies. Unless it will benefit the Fund, the Fund does not expect
to be active in the day-to-day operations of its Portfolio Companies. Depending
on the circumstances, the Fund may make controlling or non-controlling
investments in a Portfolio Company, and the Fund may or may not be represented
on its board of directors. In the event that the Fund does appoint a director to
the board of directors of a Portfolio Company, such directors may include the
advisors, officers or directors of the Company, members of the Fund's Board of
Advisors, investors, or upon the advice of the Fund, outside business executives
that are capable of adding significant value to the Portfolio Company.

Assignment of Fund Management Responsibilities to Management Company
         The Company may assign, or may be required by the Fund's Members to
assign, all or a portion of the Company's investment advisory, management and/or
administrative responsibilities to an affiliated "Management Company" and assign
to such management company the right to receive all or any portion of the
management fees otherwise payable to the Company.

Expenses
         The Fund will pay all other costs and expenses relating to its
activities (to the extent not reimbursed by a Portfolio Company or those paid by
the Fund Manager), including the




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management fees, legal, auditing, consulting and accounting expenses (including
expenses associated with the preparation of Fund financial statements, tax
returns and K-1s), expenses of the Advisory Board and meetings of the Members
(annual or special), insurance and other expenses associated with the
acquisition, holding and disposition of its investments, all third-party
expenses in connection with transactions not consummated, and extraordinary
expenses (such as litigation, if any).

Risks Associated with the Company's New Business Plan

Failure to Establish the Fund
         The Company's management is using its best efforts to raise the capital
necessary to establish the Fund as a viable venture. The Company has engaged a
securities broker/dealer to serve as placement agent, assembled an initial
advisory board and engaged the services of two consultants. However, market
conditions for private equity funds are challenging, competitive and volatile.
Accordingly, there can be no assurance that the Company will be successful in
establishing the Fund. If the Fund cannot be established within a reasonable
timeframe, the Company's capital resources would eventually be strained and the
Company could be unable to monetize the investments currently made in
anticipation of their conveyance to the Fund, nor would the Company be able to
support current investments.

Risks Associated with the Fund

Risks Associated with Portfolio Investments
         Identifying and participating in attractive investment opportunities
and assisting in the building of successful young enterprises is difficult.
There is no assurance that the Fund's investments will be profitable and there
is a risk that the Fund's losses and expenses will exceed its income and gains.
There generally will be little or no publicly available information regarding
the status and prospects of Portfolio Companies or other private equity
investments. Many investment decisions by the Fund Manager will be dependent
upon the ability of its officers and agents to obtain relevant information from
non-public sources. The marketability and value of each investment will depend
upon many factors beyond the Fund Manager's control. The Fund may be represented
by representatives of the Managing Member or the Fund Manager on a Portfolio
Company's board of directors, although this cannot be assured and each Portfolio
Company will be managed by its own officers (who may not be affiliated with the
Fund, the Managing Member or the Fund Manager. Portfolio Companies may have
substantial variations in operating results from period to period, face intense
competition, and experience failures or substantial declines in value at any
stage. The public market for high technology and other emerging growth companies
is extremely volatile. Such volatility may adversely affect the development of
Portfolio Companies, the ability of the Fund to dispose of investments, and the
value of investment securities on the date of sale or distribution by the Fund.

         In particular, the receptiveness of the public market to initial public
offerings by the Fund's Portfolio Companies may vary dramatically from period to
period. An otherwise successful Portfolio Company may yield poor investment
returns if it is unable to consummate an initial public offering at the proper
time. Even if a Portfolio Company effects a successful public offering, the Fund
may be subject to contractual "lock-up," securities laws or other restrictions
which may, for a material period of time, prevent the Fund or the Class A
Members from disposing of the Portfolio Company's securities. Generally, the
investments made by the Fund will be illiquid and difficult to value, and there
will be little or no collateral to protect an investment once made. At the time
of the Fund's investment, a Portfolio Company may lack one or more key
attributes necessary for success (e.g., proven technology, marketable product,
complete management team, or strategic alliances). In most cases, investments
will be long term in nature and may require many years from the date of initial
investment before disposition. The Fund Manager will seek some investments that
may yield short-term returns, but this cannot be assured.

         Although investments in Portfolio Companies by the Fund may
occasionally generate some current income, the return of capital and the
realization of gains, if any, from a Portfolio Company investment generally will
occur only upon the partial or complete disposition of such investment. Although
a Portfolio Company investment may be sold at any time, it is not generally
expected that this will occur for a number of years after the Portfolio Company
investment is made. Factors such as overall economic conditions, the competitive
environment, the public market for initial public offerings, and the
availability of potential acquirers, may shorten or lengthen the Fund's holding
period. In addition, it is unlikely that there will be a public market for the
securities held by the Fund at the time of their acquisition. The Fund will
generally not be able to sell its Portfolio investments or its own securities
unless their sale is registered under applicable securities laws, or unless an
exemption from such registration requirements is available.

Highly Competitive Market; Limited Investment Opportunities
         The activity of identifying, completing and realizing on attractive
private equity investments is highly competitive, and involves a high degree of
uncertainty.



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         The success of the Fund may be influenced by other venture capital
funds, which now exist or may be established in the same geographic location. In
seeking attractive investment opportunities, the Fund may compete with other
venture capital funds, some of which may have greater resources than the Fund,
or be otherwise associated with other prominent executive recruiting firms.
There can be no assurance that the Fund will be able to locate and complete
investments in Portfolio Companies, which satisfy the Fund's objectives or
realize upon their values.

No Operating History; Unproven Business Model
         The Fund does not have any operating history, and has not made any
investments. While the officers of the Fund Manager have experience with matters
relating to private investments, they have no operating experience with respect
to an independent private equity fund. In addition, this fund is a relatively
new concept and the business model has not yet been successfully proven.

Risk of Limited Number of Investments
         Although the Fund anticipates making between 15 and 30 investments,
because of the early stage nature of its investments complete loss of capital in
a Portfolio Company is possible. The aggregate return of the Fund may be
substantially adversely affected by the unfavorable performance of one or a
small number of the Fund's investments.

Additional Financing Needs of Portfolio Companies
         Portfolio companies may need substantial additional capital to support
growth or to achieve or maintain a competitive position. Such capital may not be
available on attractive terms. The Fund's capital is limited and may not be
adequate to protect the Fund from dilution in multiple rounds of Portfolio
Company financing. If such financing were to be unavailable or more expensive
than anticipated, the Fund's investments could be adversely affected or lost
entirely.

Reliance on Portfolio Company Management
         Although the Fund Manager will monitor the performance of each
Portfolio Company and provide input at a strategic level, the Fund will rely
upon management of each Portfolio Company to operate the Portfolio Companies on
a day-to-day basis. While it is the intent of the Fund to invest in companies
with proven operating management in place, there can be no assurance that such
management will continue to operate successfully. While the Fund will attempt to
assist a Portfolio company with finding effective management, there is no
guarantee that either the Fund or the Portfolio Company will be successful in
acquiring the necessary human resources.

Legal, Tax, Accounting, and Regulatory Risks

         Legal, tax, accounting, and regulatory changes could occur during the
term of the Fund that may adversely affect the Fund. For example, from time to
time the market for private equity transactions has been adversely affected by
adverse public markets, availability of equity and mezzanine financing, and a
decrease in the availability of senior and subordinated financing for
transactions. In addition, future changes in the accounting rules applicable to
corporate partnership transactions may restrict the ability of corporations to
achieve off-balance sheet treatment and thereby reduce their interest in
pursuing such transactions.

         The Fund anticipates that many of its Portfolio Companies will be
internet-based or facilitated. As of September 30, 2001, there were few laws or
regulations directed specifically at Internet companies. However, because of the
Internet's popularity and increasing use, new laws and regulations may be
adopted, including taxes. These laws and regulations may cover issues such as
the collection and use of data from Web Site visitors and related privacy
issues, pricing, content, copyrights, online gambling, distribution, and the
quality of goods and services. The enactment of any additional laws or
regulations may impede the growth of the Internet, which could decrease the
revenue of Portfolio Companies and place additional financial burdens on them.

MANAGEMENT INFORMATION SYSTEMS

         The Company relies on standard accounting software that operates on a
personal computer to assist in the maintenance of its records.

EMPLOYEES

         As of September 30, 2001, the Company employed 7 persons.

         There are plans to hire additional personnel as the Company expands and
the need arises. The Company believes that its relationship with its employees
is satisfactory.

ITEM 2. PROPERTIES


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         The Company has leased approximately 1000 square feet of office space
at a monthly rent of $1,179. The Company's headquarters contain the Company's
executive offices.

ITEM 3. LEGAL PROCEEDINGS

         In the course of its previous business as a specialty finance company,
the Company from time to time has been made a party to litigation involving
consumer-law claims. These claims typically allege improprieties on the part of
the originating dealer and name the Company and/or its assignees as subsequent
holders of the finance contracts. To date, none of these actions have been
certified as eligible for class-action status.

         In 1998, the Company initiated suit in state court in Houston, Texas
against Progressive Northern Insurance Co. arising out of insurance policies
issued by Progressive affiliates to the Company. The policies provided
deficiency balance coverage and physical damage coverage on automobile loans
acquired by the Company and sold into certain securitizations. Progressive
contended that there was a cumulative limit on claims under the Deficiency
Balance Policy of 88% of the total premiums paid on that Policy, which was
contrary to the Company's position. On this point, the Company's position was
confirmed by the court. Progressive also contended that it had the right to
cancel the Policies, without any refund of the fully-paid premiums, at any time
pursuant to 30 days' notice and in fact did so in March 1998. The Company and
the securitization trustees disputed this termination as contrary to the terms
and understandings reached with Progressive and relied upon by the parties in
interest, including the securitization market. This issue was submitted by the
court to the jury. After a three week trial in January 2000, the Company failed
to win a verdict against Progressive. The Company filed a motion to set aside
the verdict based on various legal issues and the court denied this motion and
entered a take nothing judgment against the Company. The Company is currently
appealing this verdict.


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

         No matter was submitted to a vote of the security holders of the
Company during the fourth quarter of fiscal 2001.

                                     PART II

ITEM 5. MARKET FOR REGISTRANTS' COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         On November 8, 1996, the Company's Common Stock was listed for
quotation and began trading on the NASDAQ National Market under the symbol
"ABND". Prior to such date, the Company's stock was closely held and not traded
on any regional or national exchange. On February 27, 1998, the Company's common
stock listing was transferred to the American Stock Exchange and began trading
under the symbol "ABD". As a result of the Company's deteriorating financial
condition, the Company's Common Stock was delisted by the American Stock
Exchange and October 5, 1999 was the last day the Company's common and preferred
stock was traded on the exchange. The Company's common stock continues to be
traded in the over the counter market under the symbol "AGTY". High and low
quotations since October 5, 1999 represent bid prices derived from Nasdaq's
website and do not reflect retail mark-ups or commissions and may not
necessarily represent actual transactions.

    HIGH AND LOW BID SALE PRICES BY PERIOD

<TABLE>
<CAPTION>
                   QUARTER ENDED                         HIGH          LOW
                   <S>                                   <C>           <C>
                   March 31, 1999                        5             13/16
                   June 30, 1999                         1 3/4         7/8
                   September 30, 1999                    1 3/16        3/32
                   December 31, 1999                     1/4           1/32

                   March 31, 2000                        1             5/32
                   June 30, 2000                         3/4           1/8
                   September 30, 2000                    3/16          1/8

                   December 31, 2000                     3/16          3/32
                   March 31, 2001                        1/8           3/32
                   June 30, 2001                         3/32          3/64
                   September 30, 2001                    3/32          3/64
</TABLE>

         The transfer agent and registrar for the Common Stock is American Stock
Transfer & Trust Company. As of September 30, 2001 the Company had approximately
19 stockholders of record, exclusive of holders who own their shares in "street"
or nominee names.

         The Company has not paid and does not presently intend to pay cash
dividends on its common stock. The Company anticipates that its earnings for the
foreseeable future will be retained for use in operation and expansion of
business. Payment of cash dividends, if any, in


                                       7










<Page>






the future will be at the sole discretion of the Company's Board of Directors
and will depend upon the Company's financial condition, earnings, current and
anticipated capital requirements, terms of indebtedness and other factors deemed
relevant by the Company's Board of Directors. In addition, dividends on the
Company's common stock may not be paid until all cumulative dividends in arrears
on the Company's preferred stock are paid in full. See "Liquidity and Capital
Resources".

ITEM 6. SELECTED FINANCIAL DATA

         The following table sets forth selected consolidated financial data for
the Company and its subsidiaries for the periods and at the dates indicated. The
selected financial data were derived from the financial statements and
accounting records of the Company. The data presented below should be read in
conjunction with the consolidated financial statements, related notes and other
financial information included herein. (Dollars in thousands, except for per
share amounts.)

<TABLE>
<CAPTION>
                                                                           Nine
                                                                          months
                                                                           Ended     Year Ended
                                                 Year Ended              September   September
                                                December 31,                30,         30,
                                     ----------------------------------- ----------- -----------
                                        1997        1998        1999        2000        2001
<S>                                    <C>          <C>         <C>         <C>         <C>
Statement of operations data:
Interest income                           4,119       1,499         746         237         298
Gain on sale of finance contracts        18,667      17,985       1,533          (8)          -
Servicing fee income                      1,131       3,222       3,122                       -
Gain on litigation settlement                                       750      22,583           -
Other income (loss)                        (173)        348         349          35         208
                                     ----------- ----------- ----------- ----------- -----------
Total revenues                           23,743      23,054       6,500      22,847         506
                                     ----------- ----------- ----------- ----------- -----------
Provision for credit losses                 613         100         277           -           -
Interest expense                          3,880       3,117       2,042         898           -
Salaries and benefits                     7,357      10,472       8,272       1,757       1,054
General and                               6,075       6,782       8,052       6,191       1,651
administrative
Impairment of retained interest in
   securitizations                        1,312       9,932       8,908           -           -
Other operating expenses                  2,005       3,422       2,843         243          68
                                     ----------- ----------- ----------- ----------- -----------
Total expenses                           21,242      33,825      30,394       9,089       2,773
                                     ----------- ----------- ----------- ----------- -----------
Income (loss) before taxes and
   extraordinary loss                     2,501     (10,771)    (23,894)     13,758      (2,267)
Provision (benefit) for income
   taxes                                    888      (3,626)       (102)          -           -
Extraordinary benefit, net of tax
   benefit                                    -           -           -       1,804           -
                                     ----------- ----------- ----------- ----------- -----------
Net income (loss)                         1,613      (7,145)    (23,792)     15,562      (2,267)
                                     ----------- ----------- ----------- ----------- -----------
Net income (loss) available to
   common shareholders                    1,613      (8,584)    (25,479)     14,354      (3,877)
Earnings per share before
   extraordinary item                       .25       (1.31)      (3.90)       1.99       (0.65)
Weighted average shares
   outstanding-diluted                6,965,877   6,531,311   6,531,311   6,292,938   5,962,561
Cash flow data:
Cash (used in) provided by
   operating activities                 (14,455)      4,721      (4,404)     16,425      (2,425)
Cash (used in) provided by
   investing activities                     513          80          89           8      (1,317)
Cash (used in) provided by
   financing activities                   9,980         211         (21)    (10,218)          -
Balance sheet data:
Cash and cash equivalents                   159       5,171         835       7,050       3,308
Restricted funds                          6,904           -           -           -           -
Finance contracts held for sale,
   net                                    1,366         867         208           -           -
Retained interests in
securitization                           32,017      13,873       1,402           -           -
Investments                                   -           -           -         100         817
Notes receivable                                                                            600
Total assets                             43,210      30,331       3,623       7,275       4,847
Revolving credit
agreement                                 7,639           -           -           -           -
Notes payable & non-recourse debt         9,841      13,352      10,315           -           -
Total debt                               17,480      13,352      11,863         668         507
Shareholders' equity (deficit)           15,348      15,552      (8,240)      6,607       4,340
</TABLE>



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

         The following analysis of the financial condition and results of
operations of the Company should be read in conjunction with the preceding
"Selected Financial Data" and the Company's Consolidated Financial Statements
and Notes thereto and the other financial data included herein. Certain of the
financial information set forth below has been rounded in order to simplify its
presentation. However, the ratios and percentages set forth below are



                                       8










<Page>






calculated using the detailed financial information contained in the Financial
Statements and the Notes thereto, and the financial data included elsewhere in
this Form 10-K.


REVENUES

         The Company's sources of revenue for the year ended September 30, 2001
consist of interest income on net cash received and invested on the settlement
from Dynex. Revenue for the year ended September 30, 2000 consist of the Dynex
settlement, and interest income related to it.

    RESULTS OF OPERATIONS

         Year Ended September 30, 2001 Compared To Nine Months Ended September
30, 2000

Net Income

         In the year ended September 30, 2001, net income decreased $17,828,529
to a net loss of $2,266,562 from net income of $15,561,967 for the nine months
ended September 30, 2000. The decrease in net income was due to the Company
establishing its new business plan. During the first nine months of 2000, the
Company had pared its business operations to five employees, received a
substantial cash settlement and forgiveness of $3 million in debt for its claims
against Dynex (resulting in deemed income of $22,583,122) and saved significant
interest expense through the payoff of debt owed to Bank Boston. The settlement
with Bank Boston for an amount less than par also resulted in non-cash income of
$1,804,345. During the year ended September 30, 2001, the Company devoted its
resources to establish itself as a venture capital firm.

Total Revenues

         Total revenues decreased $22,340,573 to $506,532 for the year ended
September 30, 2001 from $22,847,105 for the nine months ended September 30, 2000
due to the Dynex settlement in June 2000. In 2001, income was generated from the
Company's short-term investments.

         Interest Income. Interest income increased $60,788 to $298,178 from
$237,390 Interest was generated from assets ultimately conveyed to Dynex as part
of the settlement and from interest earned on the proceeds from the Dynex
Settlement.

         Gain on Litigation Settlement. The Company recorded a gain of
$22,583,122 from its lawsuit with Dynex in June 2000.

         Other Income. For the year ended September 30,2001 and nine months
ended September 30, 2000 other income was $208,354 and $34,692, respectively,
and consisted of insurance recoveries on auto finance contracts and dividends,
and the reduction of $82,706 in previously accrued payables which the Company
believes it will not be obliged to pay.

Total Expenses

         Total expenses of the Company decreased $6,316,389 to $2,773,094 for
the year ended September 30, 2001 from $9,089,483 for the nine months ended
September 30, 2000. There was $4.8 million in professional services expenses
incurred in the 2000 period, which the Company incurred mainly in its litigation
with Dynex.

         Interest Expense. Interest expense decreased $897,744 for the year
ended September 30, 2001. The decrease was the result of the extinguishment of
$10.5 million in notes held by Dynex and Bank Boston, and the amortization of
debt issuance costs. The Company had no interest bearing debt for the year ended
September 30, 2001.

         Salaries and Benefits. Salaries and benefits decreased $703,369 to
$1,053,911 for the year ended September 30, 2001 from $1,757,280. The Company
paid bonuses to several key employees in the period ending September 30, 2000
for their hard work and dedication during the Company's litigation with Dynex.
There were 7 employees as of September 30, 2001.

         General and Administrative Expenses. General and administrative
expenses decreased $4,540,760 to $1,651,023 for the year ended September 30,
2001 from $6,191,783 for the nine months ended September 30, 2000. During the
period ended September 30, 2000, there were high legal costs incurred by the
Company in its litigation of Dynex and Progressive Insurance, including a final
contingency fee and expense payment of $3.3 million out of settlement proceeds
to counsel in the Dynex lawsuit.

         Other Operating Expenses. Other operating expenses (communications and
insurance) decreased $174,516 to $68,160 for the year ended September 30, 2001
from $242,676 for the nine months ended September 30, 2000 because the Company
does not service any loans and has eliminated a substantial portion of the
communication system and need for insurance.

         Nine Months Ended September 30, 2000 Compared To Year Ended December
31, 1999



                                       9










<Page>






Net Income

         In the nine months ended September 30, 2000, net income increased
$39,353,878 to a net income of $15,561,967 from a net loss of $23,791,911 for
the year ended December 31, 1999. The increase in net income was due to the
proceeds from the settlement with Dynex, as well as significant decreases in
most operating expense categories. During 1999 the Company was struggling to
maintain its business while receiving no funding from Dynex. During the first
nine months of 2000, the Company had pared its business operations to five
employees, received a substantial cash settlement and forgiveness of $3 million
in debt for its claims against Dynex (resulting in deemed income of $22,583,122)
and saved significant interest expense through the payoff of debt owed to Bank
Boston. The settlement with Bank Boston for an amount less than par also
resulted in non-cash income of $1,804,345.

Total Revenues

         Total revenues increased $16,346,473 to $22,847,105 for the nine months
ended September 30, 2000 from $6,500,632 for the year ended December 31, 1999.
The increase was due to the Company winding down its operations and to the
settlement of its litigation.

         Interest Income. Interest income decreased $508,662 to $237,390 from
$746,052 primarily due to the sale in 1999 of the Company's interest-bearing
assets. Interest in 2000 was generated from assets ultimately conveyed to Dynex
as part of the settlement and from interest earned on the proceeds from the
Dynex Settlement.

         Gain on Sale of Finance Contracts. The Company realized a loss on sale
totaling $8,099 on finance contracts during the nine months ended September 30,
2000, reflecting whole loans sales at a loss. The Company realized gain on sale
of finance contracts totaling $1,532,888 during the year ended December 31, 1999
reflecting securitization gains through the Dynex facility earlier in the year,
offset by losses on whole loan sales later in the year.

         Servicing Fee Income. The Company earned no servicing fees for the nine
months ended September 30, 2000. The Company transferred all servicing
responsibilities to third parties during 1999. Servicing fee income for the year
ended December 31, 1999 was $3,121,827.

         Gain on Litigation Settlement. The Company recorded a gain of
$22,583,122 from its lawsuit with Dynex in June 2000 and the Company recorded a
gain of $750,000 from its lawsuit with an automobile dealer in 1999.

         Other Income. For the nine months ended September 30,2000 and year
ended December 31,1999 other income was $34,692 and $349,865, respectively, and
consisted of insurance recoveries on auto finance contracts and dividends.

Total Expenses

         Total expenses of the Company decreased $21,304,860 to $9,089,483 for
the nine months ended September 30, 2000 from $30,394,343 for the year ended
December 31, 1999, due to the Company winding down its operations, terminating
employees and focusing on mitigating its losses caused by the cessation of
funding by Dynex. There was $4.8 million in professional services expenses
accrued in the 2000 period, which the Company incurred mainly in its litigation
with Dynex.

         Provision for Credit Losses. There was no provision for credit losses
for the nine months ended September 30, 2000. The Company owned no finance
contracts or other receivable that was doubtful of collection. The provision for
credit losses decreased $276,844 from the year ended December 31, 1999.

         Interest Expense. Interest expense decreased $1,144,706 to $897,744 for
the nine months ended September 30, 2000 from $2,042,450 for the year ended
December 31, 1999. The decrease was the result of the extinguishment of $10.5
million in notes held by Dynex and Bank Boston, and the amortization of debt
issuance costs.

         Salaries and Benefits. Salaries and benefits decreased $6,514,916 to
$1,757,280 for the nine months ended September 30, 2000 from $8,272,196 for the
year ended December 31, 1999 because of layoffs due to the cessation of
operations during 1999. The year 1999 began with over 225 employees. There were
5 employees as of September 30, 2000.

         General and Administrative Expenses. General and administrative
expenses decreased $1,859,914 to $6,191,783 for the nine months ended September
30, 2000 from $8,051,697 for the year ended December 31, 1999. The cost savings
program that was implemented in 1999 was more than offset by the high legal
costs incurred by the Company in its litigation of Dynex and Progressive
Insurance, including a final contingency fee and expense payment of $3.3 million
out of settlement proceeds to counsel in the Dynex lawsuit. The Company reduced
the amount of its office space with a corresponding reduction in rent,
telephone, and other office related expenses.




                                       10










<Page>







         Impairment of Retained Interest in Securitizations. The Company
periodically reviews the fair value of the retained interest in securitizations.
The Company recorded a charge against earnings for impairment of these assets of
$8,907,970 for the year ending December 31, 1999. This impairment reflects the
revaluation of expected future cash flows to the Company from securitizations.
The revaluation of the retained interests to zero as of the beginning of the
period ending September 30, 2000 reflects the transfer to Dynex of certain
securitization interests as part of the settlement, and the uncertainty
regarding the receipt of any future cash flows from those securitizations as to
which the Company still maintains a retained interest.

         Other Operating Expenses. Other operating expenses (consisting
principally of servicer fees, credit bureau reports, communications and
insurance) decreased $2,600,510 to $242,676 for the nine months ended September
30, 2000 from $2,843,186 for the year ended December 31, 1999 because the
Company does not service any loans and has eliminated a substantial portion of
the communication system and need for insurance.

FINANCIAL CONDITION

         Cash. Cash decreased $3,741,983 to $3,308,105 at September 30, 2001.
The primary use of cash was for funding the operations of the Company while the
Company seeks to execute its new business strategy.

         Investments. The Company made its first private equity investment of
$100,000 under its new business plan in September 2000. The Company made
$717,000 of additional investments throughout 2001.

         Note Receivable. The company advanced $500,000 to one of its portfolio
companies. The Company earns 8% interest on the note. In addition, the Company
advanced $100,000 to another of its portfolio companies. The Company earns 8.5%
interest on this note.

         Other Assets. The Company engaged an investment firm to raise the
venture capital fund and paid $125,000, of which $75,000 is reported as deferred
offering costs representing the fee that will be refunded if the securities do
not get placed. The Company accrued $46,105 of interest and prepaid one-month
rent.


LIQUIDITY AND CAPITAL RESOURCES

         As discussed in Note 10 to the financial statements, the Company
received a legal judgment of $23.3 million in 2000. The Company entered into a
settlement agreement with the defendant, pursuant to which (a) the defendant and
the Company released all claims against each other; (b) the defendant paid $20
million to the Company (of which $3.3 million was paid to the Company's Texas
trial counsel pursuant to a contingency fee and expense arrangement), (c) the
defendant surrendered to the Company 51,500 shares of the Company's preferred
stock, (d) the defendant cancelled the Company's indebtedness to the defendant
under a $3 million note, and (e) the Company assigned to the defendant (i) a
$1.1 million subordinated note from a securitization in which the defendant held
the senior debt, and (ii) the common stock in two securitization subsidiaries in
which defendant held the senior debt. This settlement represented the
culmination of the Company's securitization operations. In light of the
Company's cessation of it's specialty finance business, the company took the
following additional steps to achieve a more disciplined cost structure, to
lessen vulnerability to external factors and to position the Company to
ultimately attain profitability:

     o    The Company entered into an agreement in July 2000 with Bank Boston,
          N.A., whereby Bank Boston accepted $6.5 million in settlement of all
          claims against the Company for the Subordinated Notes including the
          outstanding principal of $7.5 million and accrued interest of
          approximately $1.1 million. This action combined with the above
          settlement eliminated the company's long term-debt.

     o    Reduced headcount to 6 employees as of September 30, 2001

     o    Relocated offices to a lower cost facility

     o    Hired a Managing Director to assist the company in raising a venture
          capital fund

         At September 30, 2000 the company completed the year with cash balances
of approximately $7 million. During the year ended September 30, 2001, the
company used cash of in its operations of $2.4 million, primarily for salaries
and benefits and general and administrative expenses. Additionally the company
made investments and loans under its new business strategy of $1.3 million. As
of September 30, 2001, the Company had $3.3 million in cash and no indebtedness.
Management believes the Company has sufficient liquidity to meet its obligations
(primarily employee/consultancy fees and expenses, rent and professional
expenses) and to make selected investments through 2002. Management hopes to
generate additional liquidity and revenues through the establishment of the
Agility Capital Fund (the "Fund") in the following ways: (i) the reimbursement
from the Fund (at cost) of certain investments made by the Company in
anticipation of the establishment of the Fund, (ii) a management fee of up to
2.5% per annum of committed funds, (iii) the pro rata share of realized
investment gains on the Company's investment in the Fund (expected to be 1% of
the size of the Fund, or a maximum of



                                       11










<Page>






$500,000), and (iv) additional fees of up to 20% of the realized gains on Fund
investments (net of amounts utilized for compensation arrangements for the
officers of the Fund Manager). Management has pursued establishment of the fund
through the engagement of an investment firm and through other means; however,
the current capital market conditions have made efforts to date to raise the
Fund unsuccessful. There can be no assurance that the Fund will be established
or managed in a manner in which those revenue goals are met.

         Subsequent to September 30, 2001, the Company converted substantially
all of its investment and its note receivable plus accrued interest in the
software technology company into a secured promissory note in the principal
amount of approximately $1,042,000 bearing interest at 9% and purchased a senior
secured convertible promissory note from this company in the principal amount of
approximately $800,000 bearing interest at 8%. The Company made an additional
advance of $50,000 to the e-Messaging software company. Also the company has
made a capital commitment of $500,000 to an investment fund that co-invests in
private venture-stage companies. As of September 30, 2001, $425,000 of the
commitment has not been funded by the Company awaiting capital calls from the
investment fund.

         The inability of the Company to raise the Fund has left the Company
with the need to pursue other sources of revenue outside of interest income
earned on existing cash balances. The Company has established a broker
dealership, which should generate additional revenue and cash flow from
commissions and capital gains. If these sources of revenue are not sufficient to
cover the Company's operations and investment activities doubt may be raised
about the Company's ability to continue as a going concern.

         Cash Flows. Significant cash flows related to the Company's operating
activities included cash flows from its money market fund. Cash was used by
investing activities to invest in equities of new technology companies.

         Series A Preferred Stock.

         In February 1998, the Company completed the underwritten public
offering of 1,125,000 shares of its 15% Series A Cumulative Preferred Stock (the
"Preferred Stock"), with a liquidation preference of $10 per share. The price to
public was $10 per share, with net proceeds to the Company of approximately
$10,386,000. Such net proceeds have been utilized for working capital purposes,
including the funding of finance contracts. Dividends on the Preferred Stock are
cumulative and payable quarterly on the last day of March, June, September and
December of each year, commencing on June 30, 1998, at the rate of 15% per
annum. After three years from the date of issuance, the Company may, at its
option, redeem one-sixth of the Preferred Stock each year, in cash at the
liquidation price per share (plus accrued and unpaid dividends), or, if in
Common Stock, that number of shares equal to $10 per share of Preferred Stock to
be redeemed, divided by 85% of the average closing sale price per share for the
Common Stock for the 5 trading days prior to the redemption date. The Preferred
Stock is not redeemable at the option of the holder and has no stated maturity.

         As dividends on the Preferred Stock are in arrears for at least two
quarterly dividend periods, holders of the Preferred Stock exercised their right
to call a special meeting of the Preferred Stock holders for the purpose of
electing two additional directors to serve on the Company's Board of Directors
until such dividend arrearage is eliminated. Such meeting was held on October 1,
1999; however, because a quorum of preferred shareholders did not attend or
provided proxies for the meeting, no additional directors were elected. The
Board appointed David Wulf to the Board. As part of the issuance of the
Preferred Stock in 1998, Robert Shuey was appointed to the Board. In addition,
certain changes that could materially affect the holders of Preferred Stock,
such as a merger of the Company, cannot be made without the affirmative vote of
the holders of two-thirds of the shares of Preferred Stock, voting as a separate
class. The Preferred Stock ranks senior to the Common Stock with respect to the
payment of dividends and amounts upon liquidation, dissolution or winding up.
During the years 1999 through 2001, no dividends have been paid on the Preferred
Stock and the Company at September 30, 2001 is $4,428,188 in arrears in dividend
payments.


FORWARD LOOKING STATEMENTS

         The statements contained in this document that are not historical facts
are forward looking statements. Actual results may differ from those projected
in the forward looking statements. These forward looking statements involve
risks and uncertainties, including but not limited to the following risks and
uncertainties: changes in the performance of the financial markets, in the
demand for and market acceptance of the Company's services, and in general
economic conditions, including interest rates, presence of competitors with
greater financial resources and the impact of competitive products and pricing;
the effect of the Company's policies; the ability of the Company to find
adequate funding sources, the ability of the Company to raise a venture capital
fund, and the ability of the Company to find suitable investments for the
venture capital fund that provide an ongoing revenue stream to the Company.
Investors also are directed to other risks discussed in documents filed by the
Company with the SEC.



                                       12










<Page>






IMPACT OF INFLATION AND CHANGING PRICES

         The Company does not believe that inflation directly has a material
adverse effect on its financial condition or results of operations. Inflation
can adversely affect the Company's operating expenses, such as occupancy and
employee expenses.

IMPACT OF NEW ACCOUNTING PRONOUNCEMENTS

         The Company adopted the provisions of SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities", as amended by SFAS Nos. 137 and
138, and as interpreted by the FASB and the Derivatives Implementation Group
through "Statement 133 Implementation Issues", as of October 1, 2000. The
Company has not engaged in any derivative instruments or any embedded derivative
instruments that require bifurcation. The Company has not engaged in hedging
activities.

         The Financial Accounting Standards Board ("FASB") recently issued
Statement of Financial Accounting Standards No. 141 ("SFAS 141"), "Business
Combinations", Statement of Financial Accounting Standards No. 142 ("SFAS 142"),
"Goodwill and Other Intangible Assets", Statement of Financial Accounting
Standards No. 143 ("SFAS 143"), "Accounting for Asset Retirement Obligations"
and Statement of Financial Accounting Standards No. 144 ("SFAS 144"),
"Accounting for the Impairment or Disposal of Long-Lived Assets". SFAS 141
requires the purchase method of accounting for business combinations initiated
after June 30, 2001 and eliminates the pooling-of-interests method. SFAS No. 142
requires companies to cease amortizing goodwill that existed at June 30, 2001
and establishes a new method of testing goodwill for impairment on an annual
basis or on an interim basis if an event occurs or circumstances change that
would reduce the fair value of a reporting unit below its carrying value. SFAS
143 addresses financial accounting and reporting for obligations associated with
the retirement of tangible long-lived assets and the associated asset retirement
costs and is effective for fiscal years beginning after June 15,2002. SFAS 144
clarifies the accounting for disposals of long-lived assets and is effective for
fiscal years beginning after December 31, 2001. The Company does not believe
that the adoption of SFAS 141, SFAS 142, SFAS 143 and SFAS 144 will have a
significant impact on its financial statements.


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Market risk generally represents the risk of loss that may result from
the potential change in the value of a financial instrument as a result of
fluctuations in interest and currency exchange rates and in equity and commodity
prices. Market risk is inherent to both derivative and non-derivative financial
instruments. The Company's market risk management procedures include all market
risk sensitive financial instruments. The Company has no derivative financial
instruments, exposure to currency exchange rates nor commodity risk exposure.

         The Company's fixed rate debt was paid off through settlement
agreements with Dynex on June 9, 2000 and with Bank Boston on July 27, 2000. The
Company's new business plan does not contemplate the incurrence by the Company
of additional material long term indebtedness.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


         Financial statements are set forth in this report beginning at page
F-1.


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

         NONE
                                    PART III

         The information required by Items 10 through 13 is incorporated by
reference from the Company's definitive Information Statement or Proxy Statement
pursuant to General Instruction G(3) to Form 10-K. The Company will file its
definitive Information Statement or Proxy Statement pursuant to Regulation 14C
or 14A respectively, by January 28, 2002.

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

ITEM 11.  EXECUTIVE COMPENSATION

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS




                                       13










<Page>







                                     PART IV


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


(a) The following documents are filed as part of this Form 10-K:

1.  Financial Statements

          Report of Independent Accountants

          Financial Statements
               Consolidated Balance Sheets

               Consolidated Statements of Operations and Comprehensive Income

               Consolidated Statements of Shareholders' Equity (Deficit)

               Consolidated Statements of Cash Flows

               Notes to the Consolidated Financial Statements

2.  Exhibits

<TABLE>
<CAPTION>
EXHIBIT NO..  DESCRIPTION OF EXHIBIT
------------  ------------------------------------------------------------------
<S>           <C>
3.1 (1). . .  Restated Articles of Incorporation of the Company
3.2 (1). . .  Amended and restated Bylaws of the Company
4.1 (1). . .  Specimen Common Stock Certificate
10.1 (1) . .  Employment Agreement effective as of May 1, 1996 between William O.
              Winsauer and the Company
10.2 (2) . .  2001 Stock Option Plan
21.1 . . . .  Subsidiaries of the Company
</TABLE>

------------
(1)   Incorporated by reference from the Company's Registration Statement on
      Form S-1 (Registration No.333-05359).

(2)   Incorporated by reference to the Company's quarterly report on Form 10-Q
      for the quarter ended March 31, 1998


(b)   Reports on Form 8-K

     The Company filed no reports on Form 8-K during the year ended September
30, 2001.





                                       14











<Page>






                                   SIGNATURES



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

                                  AUTOBOND ACCEPTANCE CORPORATION
                                  By:    /s/ William O. Winsauer
                                     ----------------------------
                   William O. Winsauer, Chairman of the Board
                                  and Chief Executive Officer



Date:  December 28, 2001

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







<TABLE>
<S>                       <C>                                  <C>
/s/ William O. Winsauer   Chairman of the Board and            December 28, 2001
-----------------------      Chief Executive Officer
William O. Winsauer

/s/ A. Dale Henry          Chief Financial Officer             December 28, 2001
----------------------- (Principal Accounting Officer)

A. Dale Henry

/s/ John S. Winsauer      Secretary and Director               December 28, 2001
-----------------------
John S. Winsauer

</TABLE>






                                       15







<Page>




                     AGILITY CAPITAL, INC. AND SUBSIDIARIES
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>

                                                                                                       Page
<S>                                                                                                     <C>
Report of Independent Auditors                                                                          F-2
Consolidated Balance Sheets as of September 30, 2000  and September 30, 2001                            F-3
Consolidated Statements of Operations and Comprehensive Income (Loss) for the Year Ended
   December 31, 1999, the nine months ended September 30, 2000 and the
   Year Ended September 30, 2001                                                                        F-4
Consolidated Statements of Shareholders' Equity (Deficit) for the Year Ended December 31,
   1999, the nine months ended September 30, 2000 and the Year Ended September
   30, 2001                                                                                             F-5
Consolidated Statements of Cash Flows for the Year Ended December 31,1999, the nine
   months ended September 30, 2000 and the Year Ended September 30, 2001                                F-6
Notes to Consolidated Financial Statements                                                              F-7

</TABLE>

     All schedules are omitted as the required information is not applicable or
the information is presented in the consolidated financial statements, related
notes, or other schedules.

                                      F-1









<Page>





                         REPORT OF INDEPENDENT AUDITORS

Board of Directors and Shareholders
Agility Capital, Inc.

         We have audited the accompanying consolidated balance sheets of Agility
Capital, Inc. and subsidiaries (the "Company") as of September 30, 2001 and 2000
and the related consolidated statements of operations and comprehensive income
(loss), shareholders' equity and of cash flows for the year ended September 30,
2001, the nine months ended September 30, 2000 and the year ended December 31,
1999. 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 auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the 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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Agility
Capital, Inc. and subsidiaries as of September 30, 2001 and 2000 and the results
of their operations and their cash flows for the year ended September 30, 2001,
the nine months ended September 30, 2000 and the year ended December 31, 1999 in
conformity with accounting principles generally accepted in the United States of
America.


/s/Deloitte  & Touche LLP

Austin, Texas
December 27, 2001

                                      F-2








<Page>




                     AGILITY CAPITAL, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                                                September 30,
                                                                                           2000             2001
<S>                                                                                   <C>                <C>
                                   ASSETS
Cash and cash equivalents                                                             $ 7,050,088        $ 3,308,105
Investments                                                                               100,000            817,000
Notes Receivable                                                                                             600,000
Other assets                                                                              125,000            122,284
                                                                                   --------------- ------------------
Total assets                                                                          $ 7,275,088        $ 4,847,389
                                                                                   =============== ==================


                    LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Payables and accrued liabilities                                                      $   667,660        $   506,523
                                                                                   --------------- ------------------
Total liabilities                                                                         667,660        $   506,523
Commitments and Contingencies (Notes 11 and 12)
Shareholders' equity:
Preferred stock, no par value; 5,000,000 shares authorized; 1,073,500 shares of
     15% Series A cumulative preferred stock, $10 liquidation preference, issued
     and outstanding, at September 30, 2000 and 2001 (Dividends in arrears of
     $4,428,188 at September 30, 2001)                                                 10,341,000         10,341,000
Common stock, no par value; 25,000,000 shares authorized; 5,962,561 shares
     issued and outstanding at September 30, 2000 and 2001                                  1,000              1,000
Capital in excess of stated capital                                                     7,563,566          7,563,566
Due from shareholders                                                                     (10,592)           (10,592)
Accumulated deficit                                                                   (11,287,546)       (13,554,108)
                                                                                   --------------- ------------------
Total shareholders' equity                                                              6,607,428          4,340,866
                                                                                   --------------- ------------------
Total liabilities and shareholders' equity                                            $ 7,275,088        $ 4,847,389
                                                                                   =============== ==================
</TABLE>

                   The accompanying notes are an integral part
                    of the consolidated financial statements

                                      F-3








<Page>





                     AGILITY CAPITAL, INC. AND SUBSIDIARIES
      CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)


<TABLE>
<CAPTION>
                                                                         December 31,              September 30,
                                                                        ---------------- ---------------------------------
                                                                                          (Nine months)
                                                                             1999              2000             2001
<S>                                                                        <C>               <C>             <C>

Revenues:
    Interest income                                                     $    746,052       $   237,390     $   298,178
    Gain (loss) on sale of finance contracts                               1,532,888            (8,099)
    Servicing income                                                       3,121,827
    Gain on litigation settlement                                            750,000        22,583,122
    Other income                                                             349,865            34,692         208,354
                                                                     ---------------- ----------------- ---------------
Total revenues                                                             6,500,632        22,847,105         506,532

Expenses:
    Provision for credit loss                                                276,844
    Interest expense                                                       2,042,450           897,744
    Salaries and benefits                                                  8,272,196         1,757,280       1,053,911
    General and administrative                                             8,051,697         6,191,783       1,651,023
    Impairment of retained interest in securitizations                     8,907,970
    Other operating expenses                                               2,843,186           242,676          68,160
                                                                     ---------------- ----------------- ---------------
Total expenses                                                            30,394,343         9,089,483       2,773,094
                                                                     ---------------- ----------------- ---------------
(Loss) income before income taxes                                        (23,893,711)       13,757,622      (2,266,562)
Benefit for income taxes                                                    (101,800)
                                                                     ---------------- ----------------- ---------------
(Loss) income before extraordinary gain                                  (23,791,911)       13,757,622      (2,266,562)
Extraordinary gain on forgiveness of debt                                                    1,804,345
                                                                     ---------------- ----------------- ---------------
Net (loss) income                                                        (23,791,911)       15,561,967      (2,266,562)

Income attributable to preferred shareholders                             (1,687,500)       (1,207,688)     (1,610,250)
                                                                     ---------------- ----------------- ---------------
Net (loss) income available to common shareholders                      $(25,479,411)      $14,354,279     $(3,876,812)
                                                                     ================ ================= ===============

Weighted average number of common shares:
    Basic                                                                  6,531,311         6,292,938       5,962,561
    Diluted                                                                6,531,311         6,292,938       5,962,561

Earnings per common share - basic
    (Loss) income before extraordinary gain                                   $(3.90)            $1.99          $(0.65)
    Extraordinary gain                                                                             .29
                                                                     ---------------- ----------------- ---------------
    Net (loss) income                                                         $(3.90)            $2.28          $(0.65)
                                                                     ================ ================= ===============

Earnings per common share - diluted
    (Loss) income before extraordinary gain                                   $(3.90)            $1.99          $(0.65)
    Extraordinary gain                                                                             .29
                                                                     ---------------- ----------------- ---------------
    Net (loss) income                                                         $(3.90)            $2.28          $(0.65)
                                                                     ================ ================= ===============

</TABLE>

                   The accompanying notes are an integral part
                    of the consolidated financial statements

                                      F-4








<Page>





                     AGILITY CAPITAL, INC. AND SUBSIDIARIES
            CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>


                                                     December 31,             September 30,
                                                        1999             2000             2001
                                                     ----------------------------------------------

<S>                                                   <C>              <C>            <C>
Preferred stock (Shares):
-------------------------
   Beginning balance                                    1,125,000        1,125,000        1,073,500
   Issuance of preferred stock in public offering
   Cancellation of preferred shares                                        (51,500)
                                                     ----------------------------------------------
   Ending balance                                       1,125,000        1,073,500        1,073,500
   --------------                                    ----------------------------------------------
Common stock (Shares):
----------------------
   Beginning balance                                    6,531,311        6,531,311        5,962,561
   Purchase of common stock                                               (568,750)
                                                     ----------------------------------------------
   Ending balance                                       6,531,311        5,962,561        5,962,561
   --------------                                    ----------------------------------------------
Preferred stock:
----------------
   Beginning balance                                 $ 10,856,000     $ 10,856,000     $ 10,341,000
   Purchase of preferred stock                                            (515,000)
                                                     ----------------------------------------------
   Ending balance                                      10,856,000       10,341,000       10,341,000
   --------------                                    ----------------------------------------------
Common stock (stated capital):
------------------------------
   Beginning balance                                        1,000            1,000            1,000
                                                     ----------------------------------------------
   Ending Balance                                           1,000            1,000            1,000
   --------------                                    ----------------------------------------------
Capital in excess of stated capital:
------------------------------------
   Beginning balance                                    8,291,481        8,291,481        7,563,566
   Purchase and cancellation of common stock                              (200,000)
   Termination of Common Stock Investment                                 (527,915)
                                                     ----------------------------------------------
   Ending balance                                       8,291,481        7,563,566        7,563,566
   --------------                                    ----------------------------------------------
Due from shareholders:
----------------------
   Beginning balance                                      (10,592)         (10,592)         (10,592)
                                                     ----------------------------------------------
   Ending balance                                         (10,592)         (10,592)         (10,592)
   --------------                                    ----------------------------------------------
Accumulated deficit:
--------------------
   Beginning balance                                   (3,057,602)     (26,849,513)     (11,287,546)
   Net (loss) income                                  (23,791,911)      15,561,967       (2,266,562)
                                                     ----------------------------------------------
   Ending balance                                     (26,849,513)     (11,287,546)     (13,554,108)
   --------------                                    ----------------------------------------------
Investment in common stock agreement:
-------------------------------------
   Beginning balance                                     (527,915)        (527,915)
   Termination of Common Stock Investment                                  527,915
                                                     ----------------------------------------------
   Ending balance                                        (527,915)
   --------------                                    ----------------------------------------------
Total shareholders'(deficit) equity                  $ (8,239,539)    $  6,607,428     $  4,340,866
                                                     ==============================================


       The accompanying notes are an integral part of the consolidated financial statements

</TABLE>





                                      F-5









<Page>




                     AGILITY CAPITAL, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                            December 31,             September 30,
                                                                1999            2000               2001

<S>                                                         <C>              <C>              <C>
OPERATING ACTIVITIES:
Net (Loss) Income                                           $(23,791,911)    $ 15,561,967     $ (2,266,562)
Adjustments to reconcile (loss) income  to net cash from
operating activities
    Amortization of debt issuance costs and discounts            692,208          185,051
    Provision for credit loss                                    276,844
    Provision for market impairment of finance contracts         754,551
    Depreciation and amortization                                520,868          126,577
    Impairment of retained interests in securitizations        8,907,970
    Gain on sale of finance contracts                         (1,532,888)          (8,099)
    Gain on forgiveness of debt                                                (1,804,345)
    Loss on disposal of property, plant & equipment                               634,554
    Deferred income taxes                                       (101,800)
Changes in operating assets and liabilities
    Finance contracts held for sale, net                       1,163,697          216,391
    Retained interest in securitizations                         359,888        1,401,858
    Receivable from Dynex                                      6,573,107
    Due from affiliates                                          184,153
    Other assets                                               1,366,724          (40,465)           2,716
    Payables and accrued liabilities                             222,568          151,391         (161,137)
                                                            ------------     ------------     ------------
CASH (USED) PROVIDED BY OPERATIONS                            (4,404,021)      16,424,880       (2,424,983)
                                                            ------------     ------------     ------------

INVESTING ACTIVITIES:
    Proceeds from disposal of collateral                         176,397          107,513
    Purchases of property, plant and equipment                   (87,308)
    Purchase of investments                                                      (100,000)        (717,000)
    Purchase of note receivable                                                                   (600,000)
                                                            ------------     ------------     ------------
CASH PROVIDED (USED) BY INVESTING                                 89,089            7,513       (1,317,000)
                                                            ------------     ------------     ------------

FINANCING ACTIVITIES:
    Payments on notes payable                                    (20,737)      (9,502,605)
    Repurchase of preferred stock                                                (515,000)
    Purchase of common stock                                                     (200,000)
                                                            ------------     ------------     ------------
CASH (USED IN) FINANCING                                         (20,737)     (10,217,605)
                                                            ------------     ------------     ------------
(DECREASE) INCREASE IN CASH                                   (4,335,669)       6,214,788       (3,741,983)
BEGINNING CASH BALANCE                                         5,170,969          835,300        7,050,088
                                                            ------------     ------------     ------------
ENDING CASH BALANCE                                         $    835,300     $  7,050,088     $  3,308,105
                                                            ============     ============     ============

                 The accompanying notes are an integral part of the consolidated financial statements

</TABLE>


                                      F-6








<Page>




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Summary of Significant Accounting Policies

Organization

Agility Capital, Inc. formerly known as AutoBond Acceptance Corporation (the
"Company") was incorporated in June 1993 and commenced operations August 1,
1994. The Company and its wholly-owned subsidiaries (collectively, the
"Company"), were engaged primarily in the business of acquiring, financing and
servicing automobile installment loan contracts ("finance contracts") originated
by franchised automobile dealers. The Company specialized in contracts to
consumers who generally have limited access to traditional financing, such as
that provided by commercial banks or captive finance companies of automobile
manufacturers. The Company purchased contracts directly from automobile dealers
or from other originators, and financed these purchases through whole loan sales
or securitizations.

In July 2000, the Board of Directors of the Company approved changing the
Company's name to Agility Capital, Inc. ("Agility Capital") and the adoption of
a new business plan. As Agility Capital, the Company plans to generate income by
acting as an advisor to, and investor in, new economy ventures through the
establishment of one or more investment funds. The Company is in the process of
raising, pursuant to a private placement, a $100,000,000 venture capital
investment fund with a projected 10-year term, to be called the Agility Capital
Fund, LLC (the "Fund"). The Fund will sell and issue membership interests to
accredited and institutional investors. The Company will invest up to $500,000
in such interests and will also serve as the managing member and the initial
advisor to the Fund. The Fund will primarily invest in early stage, privately
held companies operating in the e-commerce business services/internet,
information technology and services, new media, enterprise and application
software, and communications industries. On a select basis, later stage
companies in other industries may also be considered. The Fund's business model
is to invest in companies that can benefit from the collective operating and
financial experience of the Fund's managers and its advisors. The management and
advisory team's business and industry experience and professional relationships
will be relevant to the industries targeted and will be used to help the Fund
achieve significant and timely venture capital rates of returns.

2. Liquidity and Management's Plans

As discussed in Note 10 to the financial statements, the Company received a
legal judgment of $23.3 million in 2000. The Company entered into a settlement
agreement with the defendant, pursuant to which (a) the defendant and the
Company released all claims against each other; (b) the defendant paid $20
million to the Company (of which $3.3 million was paid to the Company's Texas
trial counsel pursuant to a contingency fee and expense arrangement), (c) the
defendant surrendered to the Company 51,500 shares of the Company's preferred
stock, (d) the defendant cancelled the Company's indebtedness to the defendant
under a $3 million note, and (e) the Company assigned to the defendant (i) a
$1.4 million subordinated note from a securitization in which the defendant held
the senior debt, and (ii) the common stock in two securitization subsidiaries in
which defendant held the senior debt. This settlement represented the
culmination of the Company's securitization operations. In light of the
Company's cessation of it's specialty finance business, the company took the
following additional steps to achieve a more disciplined cost structure, to
lessen vulnerability to external factors and to position the Company to
ultimately attain profitability:

      o   The Company entered into an agreement in July 2000 with Bank Boston,
          N.A., whereby Bank Boston accepted $6.5 million in settlement of all
          claims against the Company for the Subordinated Notes including the
          outstanding principal of $7.5 million and accrued interest of
          approximately $1.1 million. This action combined with the above
          settlement eliminated the company's long term-debt.

      o   Reduced headcount to 6 employees as of September 30, 2001

      o   Relocated offices to a lower cost facility

      o   Hired a Managing Director to assist the company in raising a venture
          capital fund

At September 30, 2000 the company completed the year with cash balances of
approximately $7 million. During the year ended September 30, 2001 the company
used cash of in its operations of $2.4 million, primarily for salaries and
benefits and general and administrative expenses. Additionally the company made
investments and loans under is new business strategy of $1.3 million. As of
September 30, 2001, the Company had $3.3 million in cash and no indebtedness.
Management believes the Company has sufficient liquidity to meet its obligations
(primarily employee/consultancy fees and expenses, rent and professional
expenses) and to make selected investments through 2002. Management hopes to
generate additional liquidity and revenues through the establishment of the
Agility Capital Fund (the "Fund") in the following ways: (i) the reimbursement
from the Fund (at cost) of certain investments made by the Company in
anticipation of the establishment of the Fund, (ii) a management fee of up to
2.5% per annum of committed funds, (iii) the pro rata share of realized
investment gains on the Company's investment in the Fund (expected to be 1% of
the size of the Fund, or a maximum of $500,000), and (iv) additional fees of up
to 20% of the realized gains on Fund investments (net of amounts utilized for
compensation arrangements for the officers of the Fund Manager). Management has



                                      F-7










<Page>





pursued establishment of the fund through the engagement of an investment firm
and through other means; however, the current capital market conditions have
made efforts to date to raise the Fund unsuccessful. There can be no assurance
that the Fund will be established or managed in a manner in which those revenue
goals are met.

Subsequent to September 30, 2001, the Company converted substantially all of its
investment and its note receivable plus accrued interest in the software
technology company into a secured promissory note in the principal amount of
approximately $1,042,000 bearing interest at 9% and purchased a senior secured
convertible promissory note from this company in the principal amount of
approximately $800,000 bearing interest at 8%. The Company made an additional
advance of $50,000 to the e-Messaging software company. Also the company has
made a capital commitment of $500,000 to an investment fund that co-invests in
private venture-stage companies. As of September 30, 2001, $425,000 of the
commitment has not been funded by the Company awaiting capital calls from the
investment fund.

The inability of the Company to raise the Fund has left the Company with the
need to pursue other sources of revenue outside of interest income earned on
existing cash balances. The Company has established a broker dealership, which
should generate additional revenue. If these sources of revenue are not
sufficient to cover the Company's operations and investment activities doubt may
be raised about the Company's ability to continue as a going concern.

The financial statements do not include any adjustment relating to the
recoverability and classification of recorded asset amounts and classification
of liabilities that might be necessary should the Company be unable to continue
as a going concern. The Company's continuation as a going concern is dependent
upon its ability to generate sufficient revenues and cash flows to cover
operating expenses. Management is continuing its efforts to raise a venture
capital fund on terms that will provide sufficient cash flow to the Company.


3. Summary of Significant Accounting Policies

Principles of Consolidation

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

Pervasiveness of Estimates

The preparation of consolidated 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.

The Company recorded the present value of estimated future cash flows in
connection with its determination of the carrying value of its retained interest
in securitizations. Since such assumptions did not predict actual performance,
the carrying value of the retained interest in securitizations was adjusted
periodically in 1999, resulting in adverse effects on the Company's results of
operations. As the Company no longer retains any interest in securitizations
there was no effect on the financial statements for the year ended September 30,
2001 or the nine months ended September 30, 2000.

Cash and Cash Equivalents

The Company considers highly liquid investments with maturities of three months
or less when purchased to be cash equivalents.

Investments.

The Company records its investments at fair value. The fair value of investments
is determined based upon the Company's valuation policy.

Under the valuation policy of the Company, unrestricted securities are valued at
the average closing price for publicly held securities for the last three days
of the month. Investments in portfolio companies and restricted securities,
including securities of publicly owned companies which are subject to
restrictions on resale, are valued at cost at the date of acquisition until
there is a sustained basis for recognizing appreciation or depreciation in the
valuation. Estimated fair value is determined by the Board of Directors based on
a number of factors including, if available, significant subsequent equity
financings by unrelated new investors, secondary offerings, independent
valuations, comparable publicly traded securities as well as current and
projected operating performance and other analytical data relating to the
investment. The valuations do not necessarily represent amounts which will
ultimately be realized from the investments.

Advertising

                                      F-8









<Page>




Advertising costs are expensed as incurred. Advertising cost was $116,262 for
the year ended December 31, 1999. The Company incurred no advertising costs for
the nine months ended September 30, 2000 or the year ended September 30, 2001.

Income Taxes

The Company uses the liability method in accounting for income taxes. Under this
method, deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Valuation allowances are
established, when necessary, to reduce deferred tax assets to the amount
expected to be realized. The provision for income taxes represents the tax
payable for the period and the change during the year in deferred tax assets and
liabilities. The Company files a consolidated federal income tax return.

Earnings per Share

Basic earnings per share excludes dilution and is computed by dividing income
available to common shareholders by the weighted-average number of common shares
outstanding for the period. Diluted earnings per share reflects the potential
dilution that could occur if securities or other contracts to issue common stock
were exercised or converted into common stock or resulted in the issuance of
common stock that then shared in the earnings of the Company.

As the Company posted a net loss for the years ended December 31, 1999 and
September 30, 2001, the effects of stock options and contingently issuable
shares for those years were anti-dilutive and not included in the computation of
diluted loss per share. The Company's market price for shares of its stock
remained below all option and warrant prices and therefore all options and
warrants were anti-dilutive and not included in the computation of diluted
earnings per share for the nine months ended September 30, 2000.

Interest Income

The Company generally uses the simple interest method to determine interest.

Recent Accounting Pronouncements

The Company adopted the provisions of SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities", as amended by SFAS Nos. 137 and 138, and as
interpreted by the FASB and the Derivatives Implementation Group through
"Statement 133 Implementation Issues", as of October 1, 2000. The Company has
not engaged in any derivative instruments or any embedded derivative instruments
that require bifurcation. The Company has not engaged in hedging activities.

The Financial Accounting Standards Board ("FASB") recently issued Statement of
Financial Accounting Standards No. 141 ("SFAS 141"), "Business Combinations",
Statement of Financial Accounting Standards No. 142 ("SFAS 142"), "Goodwill and
Other Intangible Assets", Statement of Financial Accounting Standards No. 143
("SFAS 143"), "Accounting for Asset Retirement Obligations" and Statement of
Financial Accounting Standards No. 144 ("SFAS 144"), Accounting for the
Impairment or Disposal of Long-Lived Assets. SFAS 141 requires the purchase
method of accounting for business combinations initiated after June 30, 2001 and
eliminates the pooling-of-interests method. SFAS No. 142 requires companies to
cease amortizing goodwill that existed at June 30, 2001 and establishes a new
method of testing goodwill for impairment on an annual basis or on an interim
basis if an event occurs or circumstances change that would reduce the fair
value of a reporting unit below its carrying value. SFAS 143 addresses financial
accounting and reporting for obligations associated with the retirement of
tangible long-lived assets and the associated asset retirement costs and is
effective for fiscal years beginning after June 15,2002. SFAS 144 clarifies the
accounting for disposals of long-lived assets and is effective for fiscal years
beginning after December 31, 2001. The Company does not believe that the
adoption of SFAS 141, SFAS 142, SFAS 143 and SFAS 144 will have a significant
impact on its financial statements.

4. Investments and Notes Receivable

The following table provides a listing of investments at September 30, 2000 and
2001:


<TABLE>
<CAPTION>
                                                                           September 30,
                                                                      2000               2001
                                                                ------------------------------------
<S>                                                                      <C>               <C>
                  Yehti                                                  $100,000          $100,000
                  Access Ventures                                                            75,000
                  Tanisys Technology                                                        120,000
                  Modelwire                                                                 522,000
                                                                ------------------------------------
                      Total                                              $100,000          $817,000
</TABLE>




                                      F-9











<Page>





The following table provides a listing of notes receivable at September 30, 2000
and 2001:

<TABLE>
<CAPTION>
                                                                           September 30,
                                                                      2000               2001
                                                                ------------------------------------
<S>                                                               <C>                     <C>
                  Modelwire                                                               $ 500,000
                  Yehti                                                                     100,000
                                                                ------------------------------------
                      Total                                                               $ 600,000
</TABLE>

         In October 2000, the Company purchased at par a $500,000 convertible
note bearing interest at 8%(the "8% note") from Modelwire, Inc.("Modelwire").
The 8% note was convertible at the option of the Company into shares of
securities being offered at the time of a Qualifying Financing. A Qualifying
Financing is defined as a private financing resulting in proceeds before
expenses of $5,000,000 or more to Modelwire. The number of shares was to be
computed by dividing (i) the outstanding principal amount of the 8% note
together with accrued interest on such principal amount as of the date of
conversion by (ii) the lower of (x) $4.00 per common equivalent share or (y) the
price per share of the securities issued in such Qualifying Financing discounted
by 35% of such price.

         The 8% note was due and payable upon the earliest to occur of the
following:

             (a)  the second anniversary of the date issued; or

             (b)  upon sale of all or substantially all of its assets; or

             (c)  upon liquidation of Modelwire; or

             (d)  upon any merger involving Modelwire in which Modelwire is not
                  the resulting or surviving entity.

         In October 2001, substantially all of the Company's investment in
Modelwire and the 8% note (including all accrued interest) was converted at par
into a secured promissory note bearing interest at 9%(the "9% Note") from
Modelwire in the principal amount of approximately $1,042,000. Subject to the
Senior Note (as defined below), the 9% Note is secured by all of the tangible
and intangible assets of Modelwire.

         The 9% Note is due and payable upon the earliest to occur of the
following:

             (a)  August 31, 2002; or

             (b)  upon the sale, license or lease by Modelwire of all or
                  substantially all of its assets; or

             (c)  upon the liquidation, dissolution or winding up of Modelwire;
                  or

             (d)  upon any merger involving Modelwire in which Modelwire is not
                  the resulting or surviving entity; or

             (e)  upon the occurrence of certain events of default by Modelwire,
                  such as any material breaches by Modelwire of any covenants
                  contained in the 9% Note.

         In December 2001, the Company purchased at par a senior secured
convertible promissory note bearing interest at 8% (the "Senior Note") from
Modelwire in the principal amount of approximately $800,000. The Company may
purchase an additional Senior Note in the principal amount of approximately
$98,000, which purchase, if consummated, is expected to occur by the end of
January 2002. The Senior Note is convertible at the option of the Company into
shares of Series C Convertible Preferred Stock, par value $0.01, of Modelwire
(the "Series C Stock"). The number of shares of Series C Stock to be issued to
the Company upon conversion is computed by dividing (i) the outstanding
principal amount of the Senior Note together with accrued interest on such
principal amount as of the date of conversion by (ii) $0.05. The Senior Note is
secured by a first priority lien on all of the tangible and intangible assets of
Modelwire.

         The Senior Note is due and payable upon the earliest to occur of the
following:

             (a)  September 15, 2002; or

             (b)  upon the occurrence of certain events of default by Modelwire,
                  such as the failure of Modelwire to make payment of any amount
                  due under the Senior Note or the default by Modelwire under
                  certain agreements.

         In connection with the purchase of the 9% Note and the Senior Note, the
Company received certain warrants to acquire equity securities of Modelwire.

         In March 2001, the Company purchased at par a $100,000 convertible note
bearing interest at 8.5% from Yehti Corporation. The note is to be converted
into Series B Preferred Stock at the time of a Qualifying Financing. A
Qualifying Financing is defined as a financing resulting in proceeds before
expenses of at least $1,500,000 to Yehti Corporation. Upon the consummation of
the Qualified Financing, the unpaid principal on this Note shall be converted
into shares of Series B Preferred Stock, and the Lender shall receive that
number of shares of Series B Preferred Stock that is equal to the outstanding
principal balance due to the Lender


                                      F-10











<Page>





divided by the lesser of (i) $0.50 per share or (ii) the lowest per share
purchase price of the Series B Preferred Stock issued in the Qualified
Financing, rounded to the nearest whole share with 0.5 rounded upward to avoid
fractional share interests.


5. Income Taxes

The provision for income taxes for the nine months ended September 30, 2000 and
for the year ended September 30, 2001 consisted of a provision for deferred
taxes and the Company had no current tax liability. The reconciliation between
the provision (benefit) for income taxes and the amounts that would result from
applying the Federal statutory rate is as follows:


<TABLE>
<CAPTION>
                                                                            September 30,
                                                                      2000               2001
                                                                 ----------------- -----------------
<S>                                                                   <C>               <C>
                 Federal tax (benefit) at statutory rate of 34%      $  5,291,069       $ (770,631)
                 Nondeductible expenses                                     2,457           24,910
                 Change in valuation allowance related to Net
                    Operating Loss                                     (5,293,526)         745,721
                                                                 ----------------- -----------------
                 Provision (benefit) for income taxes                $      -           $    -
                                                                 ================= =================
</TABLE>

Deferred income tax assets and liabilities reflect the tax effect of temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and income tax purposes. Significant components of the
Company's net deferred tax liability are as follows:

<TABLE>
<CAPTION>
                                                                           September 30,
                                                                      2000               2001
                                                                ------------------ -----------------
<S>                                                                   <C>               <C>
                 Deferred tax assets:
                     Net operating losses                             $ 1,041,792      $ 14,805,898
                     Gain on securitizations                            2,119,158         2,338,028
                                                                ------------------ -----------------
                          Gross deferred tax assets                     3,160,950        17,143,926
                                                                ------------------ -----------------
                 Deferred tax liabilities
                     Other                                                444,107           444,107
                                                                ------------------ -----------------
                          Gross deferred tax liabilities              $   444,107           444,107
                                                                ================== =================
                 Net deferred tax liabilities (assets)                $(2,716,843)     $ 16,699,819
                 Valuation allowance                                    2,716,843       (16,699,819)
                                                                ------------------ -----------------
                 Net deferred tax liabilities (assets)                $       -        $        -
                                                                ================== =================
</TABLE>

         At September 30, 2001 the Company had tax net operating loss
carryforwards of approximately $43 million expiring in fiscal years 2018 through
2020.

6. Shareholders' Equity

Stock Based Compensation Plan

The Company grants stock options under stock-based incentive compensation plans
(the "Option Plans"). The Company applies Accounting Principles Board Opinion
No. 25 and related interpretations in accounting for the Option Plans. In 1995,
SFAS No. 123 "Accounting for Stock-Based Compensation" ("SFAS 123") was issued,
which, if fully adopted by the Company, would change the methods the Company
applies in recognizing the cost of the Option Plans. Adoption of the cost
recognition provisions of SFAS 123 is optional and the Company has elected not
to adopt these provisions of SFAS 123. However, pro forma disclosures as if the
Company adopted the expense recognition provisions of SFAS 123 are required by
SFAS 123 and are presented below.

Under the Option Plans, the Company is authorized to issue shares of Common
Stock pursuant to "Awards" granted in various forms, including incentive stock
options (intended to qualify under Section 422 of the Internal Revenue Code of
1986, as amended), non-qualified stock options, and other similar stock-based
Awards. The Company granted stock options in 1996 through 2001 under the Option
Plans in the form of non-qualified stock options.


Stock Options

The Company has granted stock options to employees and directors. The stock
options granted have contractual terms of 5 to 10 years. All options granted to
the employees and directors have an exercise price not less than the fair market
value of the stock at the grant date. The options granted vest 33.33% per year
beginning on the first anniversary of the date of grant. In accordance with APB
25, the Company has not recognized any compensation cost for the stock options
granted.


                                      F-11










<Page>





A summary of the status of the Company's stock options for the period January 1,
1999 through September 30, 2001 is presented below:

<TABLE>
<CAPTION>
                                                               Shares of Underlying                  Weighted Average
                                                                       Options                        Exercise Price
                                                             ----------------------------------------------------------
<S>                                                                      <C>                              <C>
Outstanding at January 1, 1999                                           548,332                          7.18
    Granted                                                                    -                             -
    Exercised                                                                  -                             -
    Forfeited                                                           (165,006)                         6.78
                                                             ----------------------------------------------------------
Outstanding at December 31, 1999                                         383,326                          7.35
    Granted                                                                    -
    Exercised                                                                  -
    Forfeited                                                            (47,002)                         4.22
                                                             ----------------------------------------------------------
Outstanding at September 30, 2000                                        336,324                          7.79
   Granted                                                               682,500
   Exercised                                                                   -
   Forfeited                                                                   -
                                                             ----------------------------------------------------------
Outstanding at September 30, 2001                                      1,018,824                          3.24
Options exercisable at end of period                                     336,324                          7.79

</TABLE>


The fair value of each stock option granted is estimated on the date of grant
using the Black-Scholes option-pricing model with the following weighted-average
assumptions: dividend yield of 0%; risk-free interest rates ranging from 4.4% to
5.3%, the expected lives of options of 5 years; and volatility ranging from 45%
to 62% for all grants in 2001. There were no grants in 1999 or 2000.

<TABLE>
<CAPTION>
  Range of exercise             Shares of underlying         Weighted average      Weighted average
       price                          options                 remaining life        exercise price
<S>                             <C>                           <C>                   <C>
1.00 to 1.99                               682,500                  4.31                   1.00
2.00 to 2.99                                 5,333                  5.66                   2.42
3.00 to 3.99                                71,332                  6.27                   3.74
4.00 to 4.99                                18,331                  5.78                   4.37
5.00 to 5.99                                 6,666                  6.98                   5.50
6.00 to 6.99                                 3,333                  6.36                   6.13
7.00 to 7.99                                49,999                  6.51                   7.32
8.00 to 8.99                                 5,333                  6.21                   8.33
9.00 to 9.99                                79,331                  5.23                   9.82
10.00 to 10.99                              96,666                  5.14                  10.48

                            ------------------------------------------------------------------------
Total                                    1,018,824                  4.75                   3.24
</TABLE>

Pro Forma Net Income and Net Income Per Common Share

Had the compensation cost for the Company's Option Plan been determined
consistent with SFAS 123, the Company's net income and net income per common
share for 1999, 2000 and through September 30, 2001 would approximate the pro
forma amounts below:

<TABLE>
<CAPTION>
                                                            December 31,       September 30,
                                                                1999         Nine Months 2000         2001
                                                       -------------------   ----------------- ----------------
<S>                                                          <C>                 <C>             <C>
Net (loss) income attributable to common shareholders:
     As reported                                             (25,479,411)        14,354,279      (3,876,812)
     Pro Forma                                               (25,743,941)        14,319,632      (3,927,432)
Net (loss) income per common share (basic):
     As reported                                                   (3.90)              2.28           (0.65)
     Pro Forma                                                     (3.94)              2.28           (0.66)
Net (loss) income per common share (diluted):
     As reported                                                   (3.90)              2.28           (0.65)
     Pro Forma                                                     (3.94)              2.28           (0.66)
</TABLE>

The effects of applying SFAS 123 in this pro forma disclosure are not indicative
of future amounts.

Warrants

In connection with the issuance of preferred stock, the Company sold to Tejas
Securities Group, Inc. ("Tejas"), for $100, a warrant (the "Tejas Warrant") to
purchase up to 100,000 shares of the Company's common stock at an exercise price
equal to $7.75 per share. The Tejas Warrant is exercisable for a period of four
years commencing February 17, 1999. The Tejas Warrant includes a net exercise
provision permitting the holder, upon consent of the Company, to pay the
exercise price by cancellation of a number of shares with a fair market value
equal to the exercise price of such Tejas Warrant.




                                      F-12






<Page>




In connection with the issuance of the Company's 15% Subordinated Notes
$7,500,000 aggregate principal amount, in January 1998, the Company issued to
Bank Boston a warrant (the "Subordinated Note Warrant"). The Subordinated Note
Warrant entitled the holder, upon exercise of the Warrant, to purchase from the
Company that number of shares of the Company's common stock, up to 368,462,
which were available for conversion at the maturity of the Subordinated Notes on
February 1, 2001. The holder could either convert the debt or exercise the
warrant but not both. If certain major corporate events (such as a change in
control or major stock offering) did not occur prior to February 1, 2001, then
the holder will have the right to put the Warrant to the Company at the
difference between the current market price and the warrant exercise price. The
Subordinated Note Warrant was to expire on January 31, 2005. The warrant was
valued at $375,831 which was recorded as a discount on the debt. On July 27,
2000 the Company and Bank Boston reached a settlement. The debt was paid and the
warrants were canceled.

In connection with the placement of the Subordinated Notes and the Subordinated
Note Warrant, the Company, William O. Winsauer and John S. Winsauer, as
principals (the "Principals") entered into a Shareholders Agreement with Bank
Boston pursuant to which the Principals granted to Bank Boston certain
"tag-along rights" in connection with sales of common stock by the Principals.
Also, the Company paid a placement fee of 5% of the principal amount of the
Subordinated Notes to Dresner Investment Services, Inc. and issued to the
placement agent a warrant to purchase 65,313 shares of common stock of the
Company, at an exercise price of $6.30 per share. The warrant expires January
30, 2005.

In connection with a consulting agreement with Athens Group, the Company issued
110,000 warrants at an exercise price of $1.00. The warrants expire January 6,
2006. The value of the warrants was deemed to be insignificant and therefore not
reflected in the financial statements.

In connection with the appointment of Paul Ahern and Harsha Murthy to the
Advisory Board, the Company issued 10,000 warrants each at an exercise price of
$1.00. The warrants expire January 6, 2006. The value of the warrants was deemed
to be insignificant and therefore not reflected in the financial statements.

The Company's remaining outstanding warrant is held by Infinity Investors
Limited and is exercisable for 100,000 shares of common stock of the Company at
a price of $8.73 per share. The warrant expires March 31, 2002.

Preferred Stock

Pursuant to the Company's amended articles of incorporation; the Company is
authorized to issue from time to time up to 5,000,000 shares of preferred stock,
in one or more series. The Board of Directors is authorized to fix the dividend
rights, dividend rates, any conversion rights or right of exchange, any voting
right, any rights and terms of redemption (including sinking fund provisions),
the redemption rights or prices, the liquidation preferences and any other
rights, preferences, privileges and restrictions of any series of preferred
stock and the number of shares constituting such series and the designation
thereof.

In February 1998, the Company completed the underwritten public offering of
1,125,000 shares of its 15% Series A Cumulative Preferred Stock (the "Preferred
Stock"), with a liquidation preference of $10 per share. The price to the public
was $10 per share, with net proceeds to the Company of approximately $9,631,000.
Dividends on the Preferred Stock are cumulative and payable quarterly on the
last day of March, June, September and December of each year, commencing on June
30, 1998, at the rate of 15% per annum. After three years from the date of
issuance, the Company may, at its option, redeem one-sixth of the Preferred
Stock each year, in cash at the liquidation price per share (plus accrued and
unpaid dividends), or, if in common stock, that number of shares equal to $10
per share of Preferred Stock to be redeemed, divided by 85% of the average
closing sale price per share for the common stock for the 5 trading days prior
to the redemption date. The Preferred Stock is not redeemable at the option of
the holder and has no stated maturity. Cumulative unpaid dividends at September
30, 2001 were $4,428,188.

The Company has not paid the quarterly dividend on its Preferred Stock since
December 31, 1998. If dividends on the Preferred Stock are in arrears for two
quarterly dividend periods, holders of the Preferred Stock will have the right
to elect two additional directors to serve on the Company's Board until such
dividend arrearage is eliminated. Two of the Company's directors are designated
as representing the Preferred Stock holders. In addition, certain changes that
could materially affect the holders of Preferred Stock, such as a merger of the
Company, cannot be made without the affirmative vote of the holders of
two-thirds of the shares of Preferred Stock, voting as a separate class. There
have been no directors elected by the Preferred Shareholders. The Preferred
Stock ranks senior to the common stock with respect to the payment of dividends
and amounts upon liquidation, dissolution or winding up. In the event of
liquidation, dissolution or winding up of the Company, the amount required to
satisfy the preferred shareholders is $15.2 million at September 30, 2001.

During the nine months ended September 30, 2000 the Company received 51,500
shares of its Preferred Stock as part of its settlement from Dynex. These shares
have been cancelled. See Note 10.

                                      F-13








<Page>




Common Stock Investment Agreement

On May 20, 1998, the Company and Promethean Investment Group, L.L.C.
("Promethean") entered into a common stock investment agreement (the "Investment
Agreement") whereby Promethean agreed to purchase, subject to certain
conditions, from the Company up to $20 million (subject to increase up to $25
million at Promethean's option) of the Company's common stock. In consideration
of Promethean's obligations under the Investment Agreement, the Company paid
$527,915 in cash on August 19, 1998, which was treated as an investment in a
common stock agreement. The agreement expired August 20, 2000 and the investment
in common stock was charged to capital in excess of stated capital.

Earnings Per Share

Basic earnings per share were computed by dividing net income by the weighted
average number of shares of common stock outstanding during the period.

Earnings per share is calculated as follows:

<TABLE>
<CAPTION>
                                                          December 31,              September 30,
                                                                            Nine Months
                                                              1999             2000              2001
                                                        ----------------- ---------------- -----------------
<S>                                                        <C>                <C>             <C>
Net (loss) income available to common shares (basic)        $(25,479,411)     $14,354,279      $ (3,876,812)
                                                        ----------------- ---------------- -----------------
Net (loss) income available to common shares (diluted)      $(25,479,411)     $14,354,279      $ (3,876,812)
                                                        ================= ================ =================

Weighted average shares outstanding (basic)                    6,531,311        6,292,938         5,962,561
                                                        ----------------- ---------------- -----------------
Weighted average shares outstanding (dilutive)                 6,531,311        6,292,938         5,962,561
                                                        ================= ================ =================
</TABLE>


As the Company posted a net loss for the years ended December 31, 1999 and
September 30, 2001, the effects of stock options and contingently issuable
shares for those years were anti-dilutive and not included in the computation of
diluted loss per share. The Company's market price for shares of its stock
remained below all option and warrant prices and therefore all options and
warrants were anti-dilutive and not included in the computation of diluted
earnings per share for the nine months ended September 30, 2000.

7. Employment Agreements

The Company and its chief executive officer ("CEO") entered into an employment
agreement dated May 31, 1996 and effective from such date for five years. The
agreement provides for compensation at a base salary of $240,000 per annum,
which may be increased and may be decreased to an amount of not less than
$240,000, at the discretion of the Board of Directors. The agreement entitles
the CEO to receive the benefits of any cash incentive compensation as may be
granted by the Board to employees, and to participate in any executive bonus or
incentive plan established by the Board of Directors. The agreement also
provides the CEO with certain additional benefits. The agreement automatically
terminates upon (i) the death of the CEO, (ii) disability of the CEO for six
continuous months together with the likelihood that the CEO will be unable to
perform his duties for the following continuous nine months, as determined by
the Board of Directors, (iii) termination of the CEO "for cause" (which
termination requires the vote of a majority of the Board) or (iv) the occurrence
of the five-year expiration date provided, however, the agreement may be
extended for successive one-year intervals unless either party elects to
terminate the agreement in a prior written notice. Neither party had submitted
such notice upon expiration on May 31, 2001.

The Company entered into an employment agreement, dated as of January 1, 1998,
with a former outside director to serve as a consultant to the Company until
February 1, 1998, whereupon he agreed to become President of the Company for a
period of three years. The agreement provides for compensation at a base salary
of $200,000 per annum, with a one time signing bonus of $100,000 and additional
performance bonuses of up to $25,000 per quarter, as approved by the CEO and the
Compensation Committee. In addition, the President received options under the
Option Plan to purchase 100,000 shares of the Company's common stock, along with
an agreement to grant additional options to purchase 50,000 of the Company's
common stock on December 1, 1998. In June 2000, the Company released the
President and paid him $90,000 for the remainder of his contract.

8. Leases

The Company leased property under capital leases as follows:

<TABLE>
<CAPTION>

                                                                September 30,
                                                            2000              2001
                                                     --------------- ------------------
          <S>                                            <C>                <C>
          Furniture                                      $  49,606          $  49,606
          Equipment                                        515,891            515,891
          Accumulated depreciation                        (565,497)          (565,497)
                                                     --------------- ------------------
          Net                                            $      -           $     -
                                                     =============== ==================
</TABLE>







                                      F-14








<Page>


There were no future minimum lease payments under capital leases as of September
30, 2001. The Company currently has no operating leases, which extend beyond one
year. The Company is negotiating with the vendor regarding its obligations under
the capital lease whereby the company has stored the equipment offsite and has
offered to return the equipment to the vendor in satisfaction of its obligation.

9. Commitments and Contingencies

The Company is the plaintiff or the defendant in several legal proceedings
generally related to the repossession of vehicles that its management considers
to be the normal kinds of actions to which an enterprise of its size and nature
might be subject. The outcomes are not expected to be material to the Company's
overall business or financial condition, results of operations or cash flows.

In 1998, the Company initiated suit in state court in Houston, Texas against
Progressive Northern Insurance Co. arising out of insurance policies issued by
Progressive affiliates to the Company. The policies provided deficiency balance
coverage and physical damage coverage on automobile loans acquired by the
Company and sold into certain securitizations. Progressive contended that there
was a cumulative limit on claims under the Deficiency Balance Policy of 88% of
the total premiums paid on that Policy, which was contrary to the Company's
position. On this point, the Company's position was confirmed by the court.
Progressive also contended that it had the right to cancel the Policies, without
any refund of the fully-paid premiums, at any time pursuant to 30 days' notice
and in fact did so in March 1998. The Company and the securitization trustees
disputed this termination as contrary to the terms and understandings reached
with Progressive and relied upon by the parties in interest, including the
securitization market. This issue was submitted by the court to the jury. After
a three week trial in January 2000, the Company failed to win a verdict against
Progressive. The Company filed a motion to set aside the verdict based on
various legal issues and the court denied this motion and entered a take nothing
judgment against the Company. The Company is currently appealing this verdict.

In the Company's 1997-B and 1997-C securitization transactions, the Company sold
a pool of finance contracts to a special purpose subsidiary, which then assigned
the finance contracts to an indenture trustee. Under the trust indenture, the
special purpose subsidiary issued three classes of fixed income investor notes,
which were then sold to investors, generally at par, with fixed coupons. The
subordinated notes represent a senior interest in the excess spread cash flows
from the finance contracts. In connection with the 1997-B and 1997-C
securitizations, $5.8 million in Class B Notes are exchangeable (at a rate of
117.5% of the principal amount of Class B Notes exchanged) for the Company's 17%
Convertible Notes, solely upon the occurrence of a delinquency ratio trigger
relating to the securitized pools. As of September 30, 2001, such trigger event
has not been notified to the Company.

In August 2000, the trustee for the Company's securitizations in 1995 and 1996
made demand, on behalf of the certificate holders, on the Company that it
repurchase approximately $4.5 million in defaulted loans for which the trustee
claimed Interstate Insurance was refusing to pay claims. The trustee claimed
such refusal constituted a breach of representation by the Company regarding the
insurance coverage on the finance contracts. On June 27, 2001 the Company
entered into a settlement agreement whereby the Company and the trustee released
each other from all claims, demands, actions, and liabilities with respect to
each and all trusts.

The Company has made a capital commitment of $500,000 to an investment fund that
co-invests in private venture-stage companies with whom the principals of the
fund have business or professional relationships. $75,000 of the commitment was
paid in October 2000. There have been no further capital calls of the fund.

On October 17, 2001, the Company agreed to purchase for $25,000 Southcoast
Investment Group, Inc., a brokerage firm incorporated in the State of Texas. It
will be used to support investment opportunities of the Company.

10. Gain on litigation settlement

On June 9, 1998, the Company entered into a series of agreements with Dynex
Capital, Inc. ("Dynex") whereby Dynex agreed to provide financing to the
Company, with such financing to be secured by auto loans underwritten and
acquired by the Company. Further, the Company was to service all such loans for
a fee. Additionally, the three principal shareholders of the Company granted to
an affiliate of Dynex, Dynex Holding, Inc., an option to acquire their stock. In
February 1999, Dynex informed the Company that certain alleged "Funding
Termination Events" had occurred and that Dynex would no longer honor its
obligation to fund the Company as per the parties June 9, 1998, agreements. The
Company vigorously disputed Dynex's allegations and, on February 8, 1999, filed
suit against Dynex in the Texas case seeking to enforce Dynex's contractual
obligations and/or to recover damages resulting from the breach thereof. After a
four week jury trial, on March 9, 2000 the jury returned a verdict in favor of
the Company.

                                      F-15








<Page>




Specifically, the jury found that (a) the Company made no material, knowing or
reckless misrepresentations to induce Dynex to enter in the June 9, 1998
agreements between the parties, (b) the Company did not breach its June 9, 1998
agreements with Dynex prior to Dynex's cessation of funding, and (c) Dynex
maliciously or negligently made defamatory statements about the Company. Based
on these findings, the jury awarded the Company $18.7 million in direct lost
profits and approximately $50 million in consequential lost profits. After
numerous motions by both parties, the court entered judgment reducing the amount
of damages owed to the Company to $23.3 million. Thereafter, on June 9, 2000 the
Company entered into a settlement agreement with Dynex, pursuant to which (a)
Dynex and the Company released all claims against each other; (b) Dynex paid $20
million to the Company (of which $3.3 million was paid to the Company's Texas
trial counsel pursuant to a contingency fee and expense arrangement), (c) Dynex
surrendered to the Company 51,500 shares of the Company's preferred stock, (d)
Dynex cancelled the Company's indebtedness to Dynex under a $3 million note, and
(e) the Company assigned to Dynex (i) a $1.4 million subordinated note from a
securitization in which Dynex held the senior debt, and (ii) the common stock in
two securitization subsidiaries in which Dynex held the senior debt. The Company
recorded a gain on litigation settlement of $22,583,122 in the nine month period
ended September 30, 2000.

In February 1997 the Company discovered certain breaches of representations and
warranties by certain auto dealers with respect to finance contracts sold into a
securitization. The Company honored its obligations to the securitization trust
and repurchased finance contracts totaling $619,520 from that trust. The Company
brought suit against a dealership and reached a settlement agreement whereby the
Company received $750,000 from the dealership in February 1999 which was
recorded in the year ended December 31, 1999.

11. Fair Value of Financial Instruments

The estimated fair value amounts have been determined by the Company, using
available market information and appropriate valuation methodologies. However,
considerable judgment is necessarily required in interpreting market data to
develop the estimates of fair value. Accordingly, the estimates presented herein
are not necessarily indicative of the amounts that the Company would realize in
a current market exchange. The use of different market assumptions and/or
estimation methodologies may have a material effect on the estimated fair value
amounts. The following methods and assumptions were used to estimate the fair
value of each class of financial instruments for which it is practicable to
estimate that value.

Cash and Cash Equivalents

The carrying amount approximates fair value because of the short maturity of
these assets.

Investments

The fair value of investments is determined based upon market value of the
security. The carrying amount approximates fair value for all investments.

12. Supplemental Cash Flow Disclosures

The Company paid interest of $1,032,677 and $17 for the year ended December 31,
1999 and the nine months ended September 30, 2000 respectively. The Company paid
no interest for the year ended September 30, 2001. No income taxes were paid
during fiscal 1999, 2000 or 2001.

13. Quarterly Information (unaudited)

The following financial data summarizes quarterly results for the Company for
the nine months ended September 30, 2000 and the year ended September 30, 2001.

<TABLE>
<CAPTION>
Fiscal 2000                                      March 31        June 30         September 30
<S>                                            <C>              <C>                <C>
      Total revenues                           $    36,087      $22,675,598        $  135,420
      Net (loss) income                         (1,678,171)      15,714,635         1,525,503
      Net (loss) income available to
        common shareholders                     (2,100,046)      15,337,791         1,116,534
      (Loss) earnings per common share
        basic and diluted                            (0.32)            2.41               .19
</TABLE>

<TABLE>
<CAPTION>
Fiscal 2001                                    December 31         March 31          June 30         September 30
      <S>                                         <C>             <C>              <C>                <C>
      Total revenues                              $122,381        $ 185,796        $    64,360        $ 133,991
      Net loss                                    (643,181)        (432,251)          (626,645)        (564,485)
      Net loss available to common
        shareholders                            (1,045,744)        (834,814)        (1,029,208)        (967,046)
      Loss per common share basic and
        diluted                                      (0.18)           (0.14)             (0.17)           (0.16)

</TABLE>

                                      F-16