UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 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 FISCAL YEAR ENDED MARCH 31, 2001 OR

[ ]      TRANSITION  REPORT  PURSUANT  TO SECTION 13 OR 15(D) OF THE SECURITIES
         EXCHANGE ACT OF 1934
         FOR THE TRANSITION  PERIOD FROM  _____________  TO _______________

                        Commission file number: 333-78659

                            AUTOTRADECENTER.COM INC.
             (Exact name of registrant as specified in its charter)

               ARIZONA                                      86-0879572
   (State or other jurisdiction of                       (I.R.S. Employer
    incorporation or organization)                      Identification No.)

           15170 NORTH HAYDEN ROAD, SUITE 5, SCOTTSDALE, ARIZONA 85260
              (Address of principal executive offices) (Zip code)

       Registrant's telephone number, including area code: (480) 556-6701

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

        Securities registered pursuant to section 12(g) of the Act: NONE

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 ___  No  X

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation S-K (ss.229.405 of this chapter) is not contained herein, and will
not be contained,  to the best of registrant's knowledge, in definitive proxy or
information  statements  incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [X]

Aggregate  market  value of the  voting and  non-voting  common  equity  held by
non-affiliates of the registrant as of July 23, 2001: $7,376,448

Number of shares of common stock outstanding as of March 31, 2001: 40,954,759

Documents incorporated by reference: None

<PAGE>

                                     PART I

ITEM 1.     BUSINESS.

         Unless the context otherwise requires, the terms "we," "our," and "us,"
refers to AutoTradeCenter.com Inc.

GENERAL

         We assist automobile manufacturers, finance companies, financial
institutions, lease and rental companies, and automobile dealers in marketing
their inventories of used automobiles over the Internet. This is referred to as
"remarketing" in the automotive industry. We have developed technology that
enables businesses with used vehicles to post their inventories on a website,
provide detailed information about each vehicle, and sell these vehicles to
other dealers. We believe that our services provide businesses with an efficient
and cost-effective used vehicle redistribution or remarketing system as an
alternative to traditional auto auctions.

         Presently, all of our revenues are derived from developing and
operating remarketing websites for businesses, such as American Honda Finance
and American Suzuki Motor, for which we are paid listing fees and fees when a
vehicle is bought or sold on the website. We are trying to market our services
to other similar types of companies.

CORPORATE BACKGROUND

         We were organized as an Arizona corporation on July 10, 1997 under the
name Auto Network USA, Inc., and commenced operations on September 22, 1997, at
our facility in Scottsdale, Arizona. In December 1998, we changed our name to
Auto Network Group, Inc. as a result of an agreement reached with an entity with
a similar name. We again changed our name to AutoTradeCenter.com in April 1999
to more accurately reflect our Internet presence and our future direction of
providing automotive remarketing services over the Internet.

         SUBSIDIARIES. Auto Network Group of New Mexico, Inc., a wholly owned
subsidiary, was incorporated on May 18, 1998, and commenced operations on June
1, 1998. Upon the opening of our Auto Network Group of New Mexico office and
warehouse facility, we were able to attract the necessary brokers and
administrative personnel by issuing common stock and stock options in our
company. We utilized this same process or methodology in opening other targeted
markets, which, at the time, was part of our business plan and corporate
strategy. Auto Network Group of New Mexico operated its business in a manner
similar to certain other subsidiaries of its parent, AutoTradeCenter.com.

         On August 20, 1998, we acquired Pinnacle Dealer Services, Inc., an
affiliated Arizona corporation by issuing 300,000 shares of common stock.
Pinnacle Dealer Services promoted and administered alternative financing
programs for dealers who purchased used cars from us.

         On January 7, 1999, we incorporated BusinessTradeCenter.com Inc. in
Arizona to facilitate the wholesale buying and selling of vehicles between
dealers on the Internet. Initially, we owned 55% of the common shares.
BusinessTradeCenter.com has developed the technology and systems necessary to
make our inventory, as well as the inventory of member dealers, available for
purchase and sale on our Internet site. In March 2000, we acquired the remaining
45% minority interest of BusinessTradeCenter by issuing 5,000,000 shares of our
common stock valued at $1.88 per share. As part of this transaction we repaid a
$200,000 note that contained conversion rights to acquire a 30% (after
conversion) interest in BusinessTradeCenter.com.

         On March 31, 1999, we acquired Walden Remarketing Services, Inc., a
Minnesota corporation, by issuing to the shareholders of Walden Remarketing
2,050,000 restricted shares of common stock, cash of $125,000, and a promissory
note in the principal amount of $450,000. We valued the issued shares at their
estimated fair market value of $0.71 per share, or $1,450,000. In a separate
agreement reached in December 1999, the then remaining balance of this note,
$314,475, was paid through the issuance of 314,475 shares of common stock,
valued at $1.00 per share. Walden Remarketing assists manufacturers in the
disposition of their fleet and consumer lease vehicles. Walden Remarketing
changed its name to AutoTradeCenter Remarketing Services in January 2000.


                                       2

<PAGE>

         On July 20, 1999, we acquired Auto Network Group Northwest, Inc., an
Oregon corporation formed to establish operations in the northwestern part of
the United States. It had no prior operating history. Auto Network Group
Northwest operated in a manner similar to Auto Network Group of New Mexico, Inc.

         On March 1, 2000 we acquired NDSCo.com Inc., a provider of systems and
applications technology for the automotive industry, by issuing to the former
shareholders of NDSCo 1,100,000 shares of our common stock valued at $2.55 per
share. NDSCo became a wholly-owned subsidiary of BusinessTradeCenter.com, Inc.

         Auto Group of San Antonio, Ltd. and Auto Network Group of Eastern Pa.,
Inc. became wholly-owned subsidiaries of our company on April 1, 2000. These
entities did not have prior operations. They operated in a manner similar to our
New Mexico and Oregon wholesale operations. In September 2000, we decided to
close the Pennsylvania operation.

         On August 2, 2000, we formed a new wholly-owned subsidiary, Auto
Network Group of Denver, Inc. This subsidiary was not funded primarily due to
our growing emphasis on Internet operations.

         Effective December 29, 2000, we sold our interest in Auto Network Group
of New Mexico, Inc., Auto Network Group Northwest, Inc., and Auto Group of San
Antonio, Ltd.

         EQUITY FINANCING. In December 1997, we sold 1,002,500 shares of common
stock, in a private placement, for gross proceeds of $25,062.50. In February
1998, we sold 6,750 shares of Series A preferred stock, in a private placement,
for $675,000. From November 1998 to December 1998, we sold 47,000 shares of
Series B preferred stock for gross proceeds of $470,000 in a private placement.
In February 2000, we sold in a private placement 20,800 shares of Series C
preferred stock and 31,200 shares of Series D preferred stock for gross proceeds
of $5,200,000. From March 2001 through April 20, 2001, we have sold 6,612,018
shares of common stock and 3,306,009 warrants in a private placement for gross
proceeds of $1,653,005.

INTERNET OPERATIONS

         On February 1, 1999, we introduced an Internet site:
AutoTradeCenter.com. Our wholly-owned subsidiary, BusinessTradeCenter.com,
controls the legal rights to the Internet domain name, technology, systems, and
programming required to operate this site. Upon introduction, access to this
site was limited to registered members including automobile dealers, leasing
companies, banks, and fleet or rental companies. It was our intent, at the time,
to provide to members information on used vehicles offered for sale by us and by
others. To encourage use of this site, initially we offered free membership. We
planned to charge a membership fee at an undetermined future date. From
inception, approximately 500 businesses have registered as members. Initially up
to ten members posted cars on the Internet site. Our entire inventory also was
listed on the Internet site. To date no revenue has been generated from the
AutoTradeCenter.com web site. Our current business plan does not include
generating revenue from this site. The start-up costs for the development of the
site were not material, since the prior minority owner of
BusinessTradeCenter.com contributed the technology for the site design for its
ownership interest. Software relating to Internet dealer-to-dealer used car
exchanges acquired from NDSCo.com, as part of the purchase price of that
company, was written off as impaired in our fiscal year ended March 31, 2001.

         The development of our website and our acquisition of Walden
Remarketing Services led to the execution of a Motor Vehicle Remarketing
Agreement with American Honda Finance Corporation in February 2000. The
agreement gave us the exclusive contract to remarket, over the Internet for two
years, all of the vehicles returned to Honda after termination of a lease.
Access to the website is restricted to users approved by Honda. As of June 15,
2000, the Honda Web site was operational with all Honda and Acura dealers
throughout the United States. We amended our agreement with American Honda
Finance on February 12, 2001. Among other things, the amendment extends our
contract to remarket Honda and Acura vehicles through January 31, 2004, and
increases the fees we can earn for each vehicles marketed on the website.


                                       3

<PAGE>

         We developed a pilot program for Suzuki, similar to the program
utilized for Honda, in September 2000. We signed a definitive agreement with
Suzuki in January 2001, and initiated sales of Suzuki vehicles over the Internet
in May 2001. BusinessTradeCenter is responsible for the technology used in our
contracts with American Honda Finance Corporation and American Suzuki Motor
Corporation, in addition to the on-going responsibility of maintaining the
system.

         On March 1, 2000, we acquired NDSCo.com Inc., a provider of technology
for the automotive industry. We believe that certain of the applications and
technology obtained by this acquisition complements the technology that we have
previously acquired or developed. The rights to this technology, processes and
applications became the property of BusinessTradeCenter.com. The functionality
of certain of the systems acquired through the NDSCo.com acquisition is similar
to the technology previously developed by BusinessTradeCenter. However, we
believe that the NDSCo.com systems offer more flexibility and capability of
being adapted for use by multiple clients. We believe that this technology
allows us to add more clients, such as American Suzuki, without having to effect
major changes to what we have already developed for existing clients.

         By combining the BusinessTradeCenter and NDSCo.com technologies, we
have created the next generation of AutoTradeCenter technology called
ATCADVANTAGE, to better service current clients such as American Honda Finance
Corporation and American Suzuki Motor Corporation, as well as prospective
clients. These prospective clients most likely will be automobile manufacturers,
finance companies, financial institutions, lease and rental companies, and
automobile dealers with an inventory of used vehicles to sell. We launched
ATCADVANTAGE in February 2001 with the Honda website. Both the Honda and Suzuki
websites utilize the ATCADVANTAGE platform, as will other clients when or if
obtained.

         The ATCADVANTAGE web site offers, among other things, the following
services and features:

    o    INVENTORY LISTING - A consignor can post inventory for sale. The
         listing can include a complete description of each vehicle, including
         make, model, trim, accessories, mileage, and the wholesale price.
         Uploaded digital images and condition reports are also associated with
         the vehicles for viewing.

    o    COMMUNITY - Consignors can set up a private, branded site for the
         purpose of providing an information center for their buying dealers.
         This area on the site facilitates dealer buying histories, remarketing
         activities calendar, transportation links, newsletter and other static
         links. Consignors can advertise here, through the use of banner ads,
         and other tools to market information to prospective buyers.

    o    CARGROUPS -Consignor vehicles are organized into groups that follow the
         same business rules, or behaviors. This technology allows differing
         vehicle bodies to be searched, and viewed side by side by with vehicles
         from other CarGroups. Consignors can make all their portfolios
         available for sale to any, or all-prospective buyers through the use of
         one or more CarGroups.

    o    CLIENT INVENTORY MANAGEMENT TOOLSET - Live performance reports, auction
         routing and individual vehicle tracking are available to the consignors
         providing a comprehensive view of their portfolios activity including
         sales and logistical data.

    o    CONDITION REPORT UPLOAD STANDARDS - Reduces integration costs as
         vendors are introduced into the environment. The Standard is intended
         to make it easier for buying dealers to interpret vehicle inspection
         results.

    o    CLICK SUPPORT FOR DEALERS - Utilizes push technology to take customer
         service levels to a new higher standard. The application of push
         technology, with advanced lead and follow characteristics, links
         directly with a CRM system, to unify dealer phone, fax, browsing and
         email activities.

         We intend to charge new clients for services provided on our
ATCADVANTAGE site a per vehicle listing fee and a transaction fee for each
vehicle sold on the website. We also intend to charge fees for extra services
such as providing a call center, generating reports and analyzing data collected
through the website, and to pass certain custom programming costs on to clients.


                                       4

<PAGE>

         Since we have been unable to generate revenue from posting and selling
vehicles on the AutoTradeCenter.com site as a result of, among other things,
obstacles relating to the dealer-to-dealer exchanges of used vehicles over the
Internet, we decided to change the functionality of our AutoTradeCenter.com web
site as follows:
    o    No automobiles are posted on the site.
    o    We are redirecting dealers to the ATCADVANTAGE site.

We are using the AutoTradeCenter.com site to provide information about our
company, such as financial statements, press releases, personnel information,
etc.

         BusinessTradeCenter is also responsible for the development and
maintenance of our Internet application utilizing our website
WWW.TRADEINCARSONLINE.COM. This website, introduced in December 1999, was
designed to facilitate the Internet car buying process by providing a firm bid
on trade-ins. Consumers can obtain a bid from us on their used car that they are
trading in when purchasing a new vehicle from one of the on-line new car sale or
referral programs. As of July 16, 2001, we have not purchased a vehicle through
this website and we are unable to predict when or if we will earn any revenues
from this or any other website.

LAND-BASED OPERATIONS

         We began operations as a licensed wholesale automobile dealer engaged
in the wholesale used car business. The wholesale used car business involves the
buying of a used vehicle from a licensed automobile dealer and selling that
vehicle to another licensed automobile dealer. Automobile dealers are licensed
through the laws of each state where they conduct business and include the
following types of entities:

    o    Franchised dealers
    o    Independent dealers
    o    Finance companies
    o    Lease companies
    o    Car rental companies

         The distribution process of used automobiles takes place on local and
national levels as car demand and supply fluctuates within and between local and
national markets. Currently, the auto auctions located primarily in major urban
areas across the country fill this re-distribution process. We, and other
wholesale companies similar to us, satisfy only a small portion of the used car
re-distribution process. The typical profile of other wholesale companies,
commonly referred to as independent wholesale brokers, are either individuals or
small groups of up to five individuals that buy and sell automobiles as
described above. Our land-based operations competed with both the auto auctions
and the independent wholesale brokers. Our land-based operations focused their
efforts on the buying and selling late model luxury automobiles. The average
vehicle sale was approximately $15,000.

         Our land-based operations contracted with salesmen, referred to as
brokers, to buy and sell used vehicles. Each broker entered into a non-exclusive
contract with the local operation that authorized the broker to act as the
operation's agent in the buying and selling of used vehicles under the company
name. Each operation used corporate funds to purchase the vehicle and in turn
all monies received upon the sale of the used vehicle were deposited into the
corporate bank account. Even though the broker had the authority to buy used
vehicles, each operation contractually limited the amount of inventory that each
broker could have on hand or unsold at any given point in time. Each broker had
the responsibility to sell the used cars he or she has purchased. The average
length of time a used vehicle was in inventory was 15 days.

         As of February 28, 2001, we discontinued all land-based operations.


                                       5

<PAGE>

AUTOTRADECENTER REMARKETING SERVICES (FORMERLY WALDEN REMARKETING SERVICES)

         AutoTradeCenter Remarketing assists the finance subsidiaries of
manufacturers, banks or other finance companies, and car rental companies in
remarketing used vehicles that are returned upon the expiration of a lease term
or other contractual arrangement. AutoTradeCenter Remarketing currently is
providing certain of these services for American Honda Finance Corporation and
American Suzuki Motor Corporation utilizing the Internet technology provided by
BusinessTradeCenter.com.

         In the mid 90's, creative lease programs appeared and thousands of
returned vehicles started to appear at auto auctions after termination of a
lease. Currently, we believe that lessees purchase only 25% of these vehicles at
termination of the lease. In addition, dealer purchases of these vehicles have
not met industry expectations. Therefore, lessors have not been able to maximize
the residual prices for these vehicles, resulting in certain cases in severe
losses on lease portfolios. Remarketing programs were developed to address this
resale need.

FINANCE PROGRAMS - PINNACLE DEALER SERVICES

         We acquired Pinnacle Dealer Services to promote and administer
alternative third party finance programs for dealers who purchase used cars from
us. Making financing available to dealers had the effect of increasing sales and
cash flow without exposing us to any financing risks. These dealers, who were
independent of our company, were obligated to the third party for any financing
extended to them. The third party had the risk of making the loans. This type of
arrangement is no longer needed in light of the disposition of our land-based
operations.

CUSTOMERS

         Our e-commerce Internet automotive solutions and initiatives provides
us with the opportunity to serve the large suppliers of used automobiles such as
finance companies, lease companies and car rental companies. These customers are
also considered to be automobile dealers; however, they only supply the industry
with used vehicles, they are not purchasers of used automobiles.

         For the fiscal year ended March 31, 2001, substantially all of our
revenues from continuing operations were generated from our contract with
American Honda Finance.

SEASONALITY OF BUSINESS

         The sale of used automobiles is a year-round process. However,
generally sales slow down during the fourth quarter of the calendar year due to
the introduction of new models and the holiday season. Business generally picks
up in January. Similarly there are fewer vehicles returned after the termination
of a lease in the fourth quarter of the calendar year. This is followed by a
return to higher volumes in the first and second calendar quarters, followed by
a further increase in vehicles being returned after lease terminations during
the summer months.

WORKING CAPITAL PRACTICES

         We financed our inventory needs for our land-based operations through
private sources of capital and proceeds from the sale of used cars. In addition,
we utilized a $3,000,000 line of credit with Wells Fargo Business Credit, Inc.
This line of credit has been paid in full as it was no longer needed due to the
disposition of our land-based operations. Currently we are meeting our working
capital needs through private placement sale of equity or debt securities and
loans from related parties.

COMPETITION

         We compete with other Internet-based entities that maintain commercial
Web sites for the wholesale remarketing of vehicles on the Internet including
Autodaq.com Inc., Manheim Interactive, Fleet Lease Disposal, Inc., The Cobalt
Group and GMAC's Smart auction. We also compete with various financial
institutions who


                                       6

<PAGE>

remarket their own off-lease vehicles. We believe that we compete for customers,
which are entities with inventories of off-lease or program vehicles to sell,
primarily on the basis of:

    o    The cost of using our services as opposed to the services of others;
    o    The experience and expertise of our personnel in Internet technology
         and the automobile remarketing/retail sales industries;
    o    Our call center which is staffed 24 hours a day, 7 days a week;
    o    Whether the needs of these entities are being addressed adequately; and
    o    The quality of service to be rendered to all users of the Web site -
         primarily the seller and the buyer.

         We currently assess our competition as follows:

    o    AUTODAQ.COM INC. - We believe that we compete directly against
         Autodaq.com Inc., an entity that currently provides an Internet Web
         site that competes with our Internet initiatives. These initiatives are
         directed to the acquisition and redistribution of vehicles returned to
         finance companies after termination of a lease. Because Autodaq.com is
         privately held there is little public knowledge about this company, its
         financial strength or its business model. We consider Autodaq.com to be
         a major competitor. Based upon the reaction from prospective customers
         to our most recent proposals, we believe that we compete favorably with
         Autodaq.com.
    o    MANHEIM INTERACTIVE - Manheim Interactive is an Internet-based
         subsidiary of Manheim Auctions, which is the largest automobile auction
         company in the United States. Until recently Manheim Interactive had
         limited its presence only to vehicles grounded at Manheim auctions.
         However, we believe that Manheim intends to expand its Internet
         presence to include other vehicles. Manheim is far better capitalized
         than we, as it is owned by Cox Enterprises, a subsidiary of Cox
         Communications.
    o    FLEET LEASE DISPOSAL, INC. - Fleet Lease Disposal is a privately-held
         Florida-based corporation that competes against us for large financial
         institution clients. It appears to have a management team with a
         significant amount of experience both in automobile sales and Internet
         technology. Its Veretack program offers vehicle remarketing services,
         lease disposal/termination solutions, title services, or personalized
         customer programs. It recently introduced new, web-based, Internet
         technology to expedite the process of remarketing off-lease and fleet
         vehicles for manufacturers, banks and other financial institutions.
    o    THE COBALT GROUP - Cobalt is a public company. It also is better
         capitalized than our company. Currently The Cobalt Group is a leading
         provider of e-business products and services to the automotive
         industry. Nearly half of the nation's auto dealers use Cobalt's
         technology, including 8,500 Web services clients. Its e-business
         products and services are endorsed by 15 automotive manufacturers and
         more than 50 of the 100 largest dealer groups in the United States.
         Cobalt is the only e-business provider endorsed by the National
         Automobile Dealers Association. In the event Cobalt decides to enter
         the remarketing business, it can become a formidable competitor.
    o    GMAC - Although the GMAC web site has been limited to General Motors'
         vehicles, an expansion of this site to other manufacturers and
         financial institution also could provide substantial competition.

GOVERNMENT REGULATION

         Compliance with government regulations does not impose a significant
impact on our Internet operations.

EMPLOYEES AND BROKERS

         As of July 16, 2001, we had 22 full-time employees and no part-time
employees. Employment levels remain relatively high as we anticipate future
growth. We depend upon a limited number of key management and technical
personnel. As we continue to mature, grow and diversify, our need for highly
skilled professionals increases. Our continued success will depend in large part
upon our ability to retain and attract managerial and technical personnel with
significant experience in finance, technology and computers, marketing, and
sales who


                                       7

<PAGE>

have significant automobile industry experience. None of our employees is
represented by labor organizations; we have never had a work stoppage or
slowdown as a result of labor issues; and we have excellent relations with our
employees. Management believes that the adoption of our stock plans, along with
other company benefits, will enhance employees' interest in remaining with us.
In the future, management is planning to add further incentives to attract and
retain high quality personnel.


ITEM 2.     PROPERTIES.

         We lease, from an unrelated third party, approximately 6,000 square
feet of office space in Scottsdale, Arizona, to house our Internet operations.
The lease expires February 28, 2002. The 13,500 square feet administrative and
warehouse facility, also in Scottsdale, Arizona, that formerly housed our
land-based and warehouse facilities, is leased from an unrelated third party
under an operating lease expiring September 30, 2002. This facility is subleased
to two unrelated parties. Monthly rentals received by us under the sublease are
approximately equal to our rental payments. In addition, we are obligated to pay
annual net rentals of $33,497 for a facility in Denver, Colorado. We are
attempting to sublease the Denver facility; however, in the event we are not
successful in subleasing this property, we have established adequate reserves in
our financial statements to offset all such lease costs.

         Facilities for our land-based operations were leased by the respective
subsidiaries. Accordingly, we have no ongoing obligations for those leases.


ITEM 3.     LEGAL PROCEEDINGS.

         We and certain of our subsidiaries have been named as defendants in
various claims, complaints and other legal actions arising in the normal course
of business. In the opinion of management, the outcome of these matters will not
have a material adverse effect upon our financial condition, results of
operations or cash flows. See "Forward-Looking Statements" below.


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

         None





                                       8

<PAGE>

                                     PART II

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

         Our common stock traded over-the-counter on the OTC Bulletin Board from
January 29, 1998 to August 2, 1999, and since November 8, 1999. From August 3,
1999 to November 5, 1999, our common stock traded on the "pink sheets". The
following table sets forth the range of high and low bid quotations for each
fiscal quarter since the stock began trading. These quotations reflect
inter-dealer prices without retail mark-up, mark-down, or commissions and may
not necessarily represent actual transactions.

<TABLE>
<CAPTION>
         Fiscal Quarter Ending           High Bid       Low Bid

<S>                                      <C>            <C>
         March 31, 1998................  $ 1.1250       $ 0.0250
         June 30, 1998.................  $ 1.1250       $ 0.7500
         September 30, 1998............  $ 1.0625       $ 0.1875
         December 31, 1998.............  $ 1.6875       $ 0.5000
         March 31, 1999................  $ 7.7500       $ 1.5625
         June 30, 1999.................  $ 3.7500       $ 1.8750
         September 30, 1999............  $ 2.1250       $ 0.6250
         December 31, 1999.............  $ 2.0000       $ 0.6250
         March 31, 2000................  $ 7.6250       $ 1.5000
         June 30, 2000.................  $ 3.2500       $ 1.1000
         September 30, 2000............  $ 2.6250       $ 0.9375
         December 31, 2000.............  $ 2.3750       $ 0.3125
         March 31, 2001................  $ 1.2344       $ 0.2969
</TABLE>

         On July 23, 2001, the closing price for the common stock was $0.19. The
number of record holders of common stock as of May 4, 2001 was 112 according to
our transfer agent.

         Our common stock is subject to SEC rules relating to "penny stocks,"
which apply to non-NASDAQ companies whose stock trades at less than $5.00 per
share or whose tangible net worth is less than $2,000,000. Prior to the sale of
a penny stock recommended by the broker-dealer to a new customer who is not an
accredited investor, the broker-dealer must approve the customer's account for
transactions in penny stocks in accordance with procedures set forth in the
SEC's rules. The broker-dealer must obtain information about the customer's
financial situation, investment experience, and investment objectives. Using
this information, the broker-dealer must be able to determine that transactions
in penny stocks are suitable for this customer and that the customer has
sufficient knowledge and experience in financial matters to be capable of
evaluating the risks of transactions in penny stocks. The broker-dealer must
furnish the customer with a written statement setting forth the basis for the
broker's determination of suitability. The customer must sign, date, and return
the statement to the broker-dealer. In addition, the broker-dealer must obtain a
written agreement from the customer to purchase the penny stock that sets forth
the identity of the stock and number of shares to be purchased. A separate
agreement must be obtained for each penny stock purchased by the customer until
he or she becomes an "established customer."

         Holders of shares of common stock are entitled to dividends when, and
if, declared by the board of directors out of funds legally available for the
payment of dividends. We have never paid any cash dividends on our common stock
and intend to retain future earnings, if any, to finance the development and
expansion of our business. Our future dividend policy is subject to the
discretion of the board of directors and will depend upon a number of factors,
including future earnings, capital requirements, and our financial condition.


                                       9

<PAGE>

ITEM 6.     SELECTED FINANCIAL DATA.

         The balance sheet and income statement data shown below were derived
from our audited financial statements. We have restated our financial statements
due to our disposition of our land-based operations, which represents the
disposal of a business segment. You should read this data in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," as well as our financial statements and notes thereto, included
elsewhere in this report.
<TABLE>
<CAPTION>

BALANCE SHEET DATA:
                                                   MARCH 31,           MARCH 31,         MARCH 31,        MARCH 31,
                                                     2001                2000              1999             1998
                                                                    (RECLASSIFIED)    (RECLASSIFIED)   (RECLASSIFIED)

<S>                                              <C>                <C>               <C>                 <C>
Current assets                                   $    628,595       $  5,489,176      $   401,628         $     --
Total assets                                     $ 10,267,582       $ 20,102,747      $ 4,790,817         $743,333
Current liabilities                              $    446,039       $  1,118,542      $ 1,343,936         $     --
Long-term liabilities                            $    538,807       $    528,807      $   535,817         $  3,465
Stockholders' equity                             $  9,282,736       $ 18,455,398      $ 2,911,064         $739,868
Working capital (deficiency)                     $    182,556       $  4,370,634      $  (942,308)        $     --
</TABLE>

<TABLE>
<CAPTION>

INCOME STATEMENT DATA:
                                                                                                       JULY 10, 1997
                                                                                                        (INCEPTION)
                                                   YEAR ENDED         YEAR ENDED        YEAR ENDED        THROUGH
                                                 MARCH 31, 2001     MARCH 31, 2000    MARCH 31, 1999   MARCH 31, 1998
                                                                    (RECLASSIFIED)    (RECLASSIFIED)   (RECLASSIFIED)
<S>                                              <C>                <C>               <C>                 <C>
Net sales                                        $    891,423       $    291,587      $       --          $     --
Net loss from continuing operations              $ (9,060,369)      $   (946,202)     $  (276,671)        $     --
Income (loss) from discontinued operations       $ (2,663,285)      $ (1,697,585)     $   448,491         $ 15,899
Net income (loss) before taxes                   $(11,723,654)      $ (2,643,787)     $   171,820         $ 15,899
Net income (loss)                                $(11,723,654)      $ (2,587,753)     $   115,241         $ 12,384
Basic earnings (loss) per share
    Continuing operations                        $      (0.28)      $      (0.04)     $     (0.02)        $     --
    Discontinued operations                      $      (0.08       $      (0.08)     $      0.03         $     --
Diluted earnings (loss) per share
    Continuing operations                        $      (0.28)      $      (0.04)     $     (0.01)        $     --
    Discontinued operations                      $      (0.08       $      (0.08)     $      0.02         $     --
</TABLE>


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

         The following discussion contains trend information and other
forward-looking statements that involve a number of risks and uncertainties. Our
actual future results could differ materially from our historical results of
operations and those discussed in the forward-looking statements. All period
references are from September 22, 1997, commencement of operations, through
March 31, 1998 and the years ended March 31, 1999, 2000, and 2001.

GENERAL

         The presentation includes a discussion of us with our wholly owned
subsidiaries, NDSCo.com, Inc., AutoTradeCenter Remarketing Services, Inc.
formerly Walden Remarketing Services, Inc., and BusinessTradeCenter.com Inc., as
well as subsidiaries in which we formerly carried out our land-based operations.
These subsidiaries are Auto Network Group of Arizona, Inc., Auto Network Group
of New Mexico, Inc., Auto Network Group Northwest, Inc., Auto Network Group of
Eastern Pa., Inc., Auto Group of San Antonio Ltd., Auto Network Group of Denver
Inc., and Pinnacle Dealer Services, Inc.


                                       10

<PAGE>

         As of December 29, 2000, we sold our interest in our land-based
operations in Albuquerque, New Mexico; San Antonio, Texas; and Bend, Oregon to
Automotive Disposition Management Services, Inc., an affiliated Arizona
corporation, in exchange for a 16% interest in Automotive Disposition.
Automotive Disposition is a private company owned by Jules Gollins, the manager
of the New Mexico land-based operation, and by Mark Moldenhauer, one of our
founders, a principal shareholder, and former officer and director. We disposed
of our land-based operations in Scottsdale, Arizona, as of February 28, 2001,
thereby discontinuing all land-based operations and allowing us to focus on
providing automotive remarketing services via the Internet.

         As a result of the disposition of our land-based operations, as further
described in the following paragraphs, the trend information should be carefully
read and evaluated. See "Anticipated Trends and Plan of Operations" beginning at
page 17.

OVERVIEW

         We began operations on September 22, 1997 and completed our first
fiscal year on March 31, 1998. On June 1, 1998, we opened the office and
warehouse facility in Albuquerque, New Mexico. We acquired Pinnacle Dealer
Services, Inc. in August 1998 to provide financing for the purchase of vehicles.
On July 20, 1999, we opened our office and warehouse facility in Bend, Oregon.
On April 1, 2000, we began operations in the Philadelphia, Pennsylvania area,
with the incorporation of Auto Network Group of Eastern Pa., Inc. At the same
time, we began operations in San Antonio, Texas, with the establishment of Auto
Group of San Antonio Ltd., a Texas limited partnership. In each of these
transactions, we entered into a management consulting agreement with the
individual or entity responsible for managing each respective operation. Under
these agreements, certain of our common shares were issued to such managers,
subject to forfeiture based on both future earnings levels and continuity of
management. In addition, we made stock options available to these managers,
which could be earned based on future performance. On August 2, 2000, we formed
a new wholly owned subsidiary, Auto Network Group of Denver, Inc., and leased a
facility in Denver, Colorado.

         In January 1999, we announced the development of our Internet site
WWW.AUTOTRADECENTER.COM. No revenues have been generated from the operations of
this site, which is now used for informational purposes only. However, effective
February 1, 2000, a new web site developed for American Honda Finance
Corporation, powered by our technology, began generating revenue. We generated
$291,587 of revenue in the year ended March 31, 2000 from remarketing activities
that were not related either to our Internet remarketing business or our
land-based operations. See the discussion about Walden Remarketing on page 13.
Our existing remarketing agreement with Honda Finance Corporation gives us an
exclusive contract to remarket, over the Internet through January 31, 2004, all
of the vehicles returned to Honda and Acura after termination of a lease. These
are referred to in the industry as "off-lease" vehicles. The Honda web site,
www.hfcarsales.com, became operational in all Honda and Acura dealerships by
June 15, 2000 upon completion of a phase in period beginning April 2000. We
developed a pilot program for Suzuki, similar to the program developed for
Honda, utilizing our Internet technology systems and procedures to remarket
their program vehicles to dealers. The Suzuki pilot program began in September
2000 (www.suzukiproline.com) and we signed an agreement with Suzuki in January
2001 to remarket their program cars over the Internet for a one-year period. In
April of 2001, we entered into an agreement to remarket off-lease Volvo vehicles
with Volvo Finance North America for 15 months, commencing April 30, 2001. We
anticipate the Volvo Finance web site, www.volvoride.com, will be completed by
August 15, 2001.

         Due to the discontinuance of our land-based operations, we now focus
all of our efforts on remarketing vehicles over the Internet.

RESULTS OF OPERATIONS

         Our financial statements since our inception in 1997 reflect Internet
operations as continuing operations and land-based operations as discontinued
operations, even though we did not generate any revenue from our Internet
remarketing operations until April 2000. On November 30, 2000, our management
and Board of Directors decided to discontinue all of our land-based operations.
We believe that our best opportunity to maximize profitability and shareholder
value is to concentrate all of our efforts on remarketing used vehicles
utilizing the Internet as the backbone of our operations. We sold our land-based
subsidiaries in New Mexico, Oregon, and Texas on December 29, 2000, and closed
our operations in Pennsylvania and Colorado by the end of the year. We began to


                                       11

<PAGE>

down size our Scottsdale, Arizona operations in December 2000, and transferred
these operations to certain of the independent-contractor brokers who formerly
purchased and sold vehicles for us primarily in Scottsdale, Arizona, effective
February 28, 2001.

         The following schedule shows the computation of the loss resulting from
discontinuing our land-based operations:
<TABLE>
<CAPTION>
        Loss from sale of Albuquerque, Bend, and San Antonio operations:

<S>                                                                           <C>                   <C>
                    Carrying value                                            $1,596,933
                    Sales price                                                1,200,000
                                                                              ----------
                          Loss                                                   396,933
                    Unamortized goodwill                                         351,542
                                                                              ----------
                    Total loss                                                                      $  748,475

        Loss from transfer and closing of Scottsdale operation:

                    Sale of equipment                                             17,793
                    Inventory losses due to sale                                 425,693
                    Uncollectible brokers accounts                               593,635
                    Costs of closing operations                                  226,461
                    Accrued future costs of closing operations                    50,000
                                                                                                     1,313,582
        Loss from closing Pennsylvania                                                                 277,388
                                                                                                    ----------
        Total loss from discontinuing land-based segment                                            $2,339,445
                                                                                                    ==========
</TABLE>

         The following statement of operations for the land-based operations
reflects the details of these operations for the periods herein presented:

RESULTS OF OPERATIONS OF DISCONTINUED LAND-BASED OPERATIONS:
<TABLE>
<CAPTION>

                                                                            FOR THE YEAR ENDED
                                                           3/31/01*              3/31/00               3/31/99
<S>                                                     <C>                   <C>                    <C>
Net sales                                               $ 123,171,010         $ 131,569,705          $ 97,665,410
Cost of sales                                             117,257,094           125,770,135            93,388,836
                                                        --------------        --------------         -------------
   Gross profit                                             5,913,916             5,799,570             4,276,574
                                                        --------------        --------------         -------------

Operating expenses
   Selling                                                  4,376,272             3,843,922             2,772,192
   General and administrative                               1,199,064             1,783,874               679,383
   Bad debt expenses                                           75,000             1,045,970                90,055
   Depreciation and amortization                               36,165                38,428                 3,816
                                                        --------------        --------------         -------------
      Total operating expenses                              5,686,501             6,712,194             3,545,446
                                                        --------------        --------------         -------------

Income (loss) from operations                                 227,415              (912,624)              731,128
                                                        --------------        --------------         -------------

Other income (expense):
   Miscellaneous                                              139,599               102,133                70,686
   Interest expense                                          (690,853)             (887,094)             (353,323)
                                                        --------------        --------------         -------------
      Total other income (expense) - net                     (551,254)             (784,961)             (282,637)
                                                        --------------        --------------         -------------

Net income (loss) before income taxes                   $    (323,839 )       $  (1,697,585)         $    448,491
                                                        ==============        ==============         =============


* Through 12/31/00 - date of discontinuance
</TABLE>


                                       12

<PAGE>

         Net losses from continuing operations were $9,060,369 ($0.28 per
share), $946,202 ($0.04 per share), and $276,671 ($0.02 per share) for the
fiscal years ended March 31, 2001, 2000, and 1999, respectively.

         Total net losses (including discontinued operations) were $11,723,654
($0.36 per share) and $2,587,753 ($0.12 per share) for the fiscal years ended
March 31, 2001 and 2000. We had net income of $115,241 ($0.01 per share) for the
year ended March 31, 1999.

         Net sales from continuing operations were $891,423, $291,587, and nil
for our fiscal years ended March 31, 2001, 2000, and 1999, respectively.
Substantially all revenue for the year ended March 31, 2001 was earned from
remarketing 22,173 Honda and Acura vehicles under our contract with American
Honda Finance Corporation. For the fiscal year ended March 31, 2000, all revenue
was earned during the first part of the year by AutoTradeCenter Remarketing
Services Inc. from contracts entered into by Walden Remarketing Services prior
to our acquisition of that company. These contracts were with American Honda
Finance and others. The revenue derived from these contracts resulted from
services provided by us to encourage dealers to attend and purchase off-lease
and other vehicles at auctions. None of this revenue resulted from Internet
activities, and it ceased upon expiration of the contracts in July and August of
1999.

         Operating expenses from continuing operations were $9,849,903,
$1,174,333, and $213,215 for the fiscal years ended March 31, 2001, 2000, and
1999, respectively. The increase in general and administrative expenses in the
fiscal year ended March 31, 2001, as compared to our fiscal year ended March 31,
2000, primarily resulted from the expansion of our Internet operations to
remarket off-lease and program vehicles. Included in expenses related to our new
business plan are $342,089 for hosting and maintaining our Honda and Suzuki web
sites and expenses to maintain a call center to serve all Honda, Acura, and
Suzuki dealers 24 hours a day, 7 days per week. Sales and marketing expenses
including salary, travel, and other website sales promotion totaled $730,883.
Operating expenses for the year included all of our corporate overhead costs.
During the fiscal year ended March 31, 2001, we expensed legal, accounting, and
professional fees of $579,155, outside consulting fees including directors fees
and other costs related to public relations of $473,788, rent expenses of
$187,431, and general and administrative costs of $385,083. The increase in
these costs, in addition to our expanded Internet operations, also can be
attributed, in part, to expenses associated with our registration process, costs
associated with our capital raising efforts, enhancements of our accounting and
management information systems, and costs associated with the hiring and
training of personnel.

         For the fiscal year ended March 31, 2000, operating expenses included
all direct costs and salaries related to continuing operations plus an
allocation of executive salary and administrative costs from our land-based
operations.

         While there were no revenues generated in fiscal 1999, we had operating
expenses of $213,215. Operating expenses for 1999 included certain allocations
of corporate overhead and interest expense from our land-based operations.

         Depreciation primarily is capitalized software costs resulting from the
acquisitions of minority interest in BusinessTradeCenter.com and the acquisition
of NDSCo.com, as well as from computers and equipment required to run our
Internet sites and office furniture and equipment. Depreciation and amortization
related to continuing operations increased to $3,836,788 for the fiscal year
ended March 31, 2001, as compared to $319,800 and $24,042 for the fiscal years
ended March 31, 2000 and 1999, respectively. Included in depreciation and
amortization for the fiscal year ended March 31, 2001 are $3,265,247 for
depreciation of software acquired when we purchased the minority interest in
BusinessTradeCenter.com and amortization of $198,538 of goodwill resulting from
our acquisition (during our fiscal year ended March 31, 2000) of Walden
Remarketing. The balance of depreciation expense resulted from depreciation of
our furniture, fixtures, and computer hardware.

         We also recorded a charge for the loss on disposal of impaired software
of $2,261,486. This software was acquired from NDSCo.com as part of the purchase
price when we acquired NDSCo on March 31, 2000. This software that assists in
dealer-to-dealer Internet exchanges of used vehicles does not fit in our current
business plan of remarketing off-lease and program cars. Since we cannot
determine when or if we will use the software, we are unable to assess its value
and accordingly consider it impaired.


                                       13

<PAGE>

         During the fiscal year ended March 31, 2000, depreciation and
amortization charges of $319,800 included amortization of $198,538 for goodwill
relating to our acquisition of Walden Remarketing, in addition to depreciation
of furniture, fixtures, and computer hardware. For our fiscal year ended March
31, 1999, depreciation of furniture, fixtures, and computer hardware totaled
$24,042.

         Interest expense for the fiscal years ended March 31, 2001, 2000, and
1999 of $106,888, $63,456, and $63,456, respectively, was from interest charges
on related party debt allocated to continuing operations. The balance of
interest expense from related party debt was included in the results of our
discontinued operations.

FLUCTUATIONS IN OPERATING RESULTS

         We have had limited experience to determine if our operations will be
subjected to major fluctuations or trends. Historically, the used car market has
remained relatively stable as an industry. Industry projections over the next
few years indicate there will be an upward trend in used car sales. Vehicles
coming off-lease during the next three years are predicted to remain relatively
constant as are the availability of program cars. However, there can be no
assurance that our sales will parallel industry projections or that industry
projections will materialize.

FINANCIAL CONDITION

         ASSETS. As a result of our decision to discontinue our land-based
operations, our total assets decreased to $10,267,582 at March 31, 2001, from
$20,102,747 at March 31, 2000. This decrease primarily results from the
substantial completion of the sale of assets formerly used in our land-based
operations (as is reflected in the following schedule) and our use of cash in
funding operations. Total assets also declined due to non-cash depreciation and
amortization of our software, furniture and equipment, and goodwill, and the
write-off of impaired software.

         The following table reflects the detail of our net assets from
discontinued operations:

AUTOTRADECENTER.COM INC.
SCHEDULE OF NET ASSETS FROM DISCONTINUED OPERATIONS
<TABLE>
<CAPTION>

                                                                             March 31, 2001         March 31, 2000
Assets

<S>                                                                        <C>              <C>
Accounts receivable - trade, net                                           $60,659          $ 5,743,845
Accounts receivable - employees and brokers, net                                --              332,122
Inventory                                                                   28,000            4,648,492
Goodwill and property and equipment                                             --              316,311
                                                                           -------          -----------
      Total Assets                                                          88,659           11,040,770
                                                                           =======          ===========

Liabilities

Accounts payable - trade                                                    66,847            4,401,858
Notes payable - related party and other                                         --            5,376,821
Accrued liabilities                                                             --              238,925
                                                                           -------          -----------
                                                                            66,847           10,017,604
                                                                           -------          -----------

Net Assets from Discontinued Operations                                    $21,812          $ 1,023,166
                                                                           =======          ===========
</TABLE>

         Total assets were $20,102,747 at March 31, 2000, an increase of
$15,311,930 from total assets of $4,790,817 at March 31, 1999. A substantial
amount of this increase is reflected in net software that increased from $5,442
at March 31, 1999 to $12,013,608 at March 31, 2000. The increase is due to our
acquisitions of other entities for shares of our common stock and other
consideration described below. Other increases in assets included an increase in
cash of $4,057,986 from the proceeds of the sale in a private placement of our
Series C and Series D convertible preferred stock, an increase in the carrying
value of net assets for discontinued operations, and purchases of property and
equipment.


                                       14

<PAGE>

    o    NATIONAL DEALER SERVICES CO. ("NDSCO")

         On March 1, 2000, we acquired NDSCo by issuing to its shareholders a
total of 1,100,000 restricted shares of common stock, valued at $2.55 per share,
in exchange for the outstanding NDSCo shares. Of the purchase price, $2,039,123
was allocated to the cost of software. During the fiscal year ended March 31,
2001, this entire undepreciated cost was charged to expense as a loss on
impaired software as we no longer could determine its fair value, if any.

    o    AUTOTRADECENTER REMARKETING SERVICES & WALDEN REMARKETING SERVICES,
         INC. ("WALDEN REMARKETING")

         On March 31, 1999, we acquired Walden Remarketing by issuing to its
shareholders a total of 2,050,000 restricted shares of common stock, cash of
$125,000, and a promissory note in the principal amount of $425,000. We valued
the common stock at its estimated fair market value of $0.71 per share for a
total of $1,450,000. The promissory note accrued interest at the rate of 12% per
annum and required us to make 18 equal monthly payments of principal and
interest beginning May 1, 1999. At December 31, 1999, we converted the remaining
principal balance of the note ($314,475) into 314,475 shares of common stock.
The excess of the purchase price over the fair value of the net assets acquired
(goodwill) was $1,985,383 and is being amortized on a straight-line basis over
10 years.

    o    BUSINESS TRADECENTER.COM INC. ("BTC")

         On January 7, 1999, we incorporated BTC in Arizona to facilitate the
buying and selling of vehicles at wholesale between dealers on the Internet. BTC
has developed the technology and systems necessary to make our inventory, as
well as the inventory of member dealers, available for purchase and sale on our
Internet site. On March 23, 2000, we acquired the remaining 45% minority
interest of BTC by issuing 5,000,000 shares of common stock, valued at $1.88 per
share, which represented management's estimate of the fair market value of the
common stock on that date, and paying off a convertible $200,000 note. Of the
purchase price, $9,374,550 was considered the value of the BTC software, certain
of which was being completed pursuant to our contract to provide Internet
marketing of American Honda Finance Corporation's off-lease vehicles. The
carrying value of this software is being depreciated over 36 months.

         LIABILITIES. Current liabilities at March 31, 2001 decreased to
$446,039 from $1,118,542 at March 31, 2000, primarily due to the repayment of
our revolving note payable to Wells Fargo Business Credit in February 2001.
Long-term debt due to related parties was $538,307 at March 31, 2001, as
compared to $528,807 due to the same parties at March 31, 2000 and March 31,
1999. Our long-term debt is due April 1, 2002.

         STOCKHOLDERS' EQUITY. Stockholders' equity decreased from $18,455,398
at March 31, 2000, to $9,282,736 at March 31, 2001. The decrease primarily
resulted from our net loss for the fiscal year ended March 31, 2001 of
$11,723,654 offset by: $1,452,487 of proceeds from private placement of common
shares in March 2001, cash received from the exercise of stock options of
$498,550, common stock issued for services of $299,955, and the conversion of a
note payable of $300,000 into common shares. Stockholders' equity increased from
$2,911,064 at March 31, 1999 to $18,455,398 at March 31, 2000. The increase is
attributable to: $4,766,341 of net proceeds from the sale in a private placement
of our Series C and series D preferred shares; $9,375,000 from the issuance of
common shares to acquire the minority interest in a subsidiary (BTC); $2,801,590
from the issuance of common shares to acquire a wholly owned subsidiary
(NDSCo.); $250,000 of net proceeds from the sale of common stock as a result of
exercise of options and warrants; the issuance of common stock valued at
$193,401 in connection with the acquisition of our Northwest subsidiary; $80,000
in common shares issued for software development; $314,475 relating to a
conversion of debt to equity; and $351,280 for the fair value of stock options
granted. These increases were offset by our net loss for the year of $2,587,753.

         During February 2000 we issued 20,800 shares of Series C preferred
stock ("Series C") for $2,080,000. Each share of Series C preferred stock is
convertible, at the option of the holder, at any time, into 80 shares of Common
Stock of the Corporation, which is based on the initial conversion price of
$1.25. We assigned an intrinsic value of $1,697,280 to this conversion feature.
As a result, a constructive dividend in this amount was charged to retained
earnings with a corresponding increase in common stock. Each share of Series C
preferred stock is entitled to a $100 liquidation preference over common
stockholders. The Series C preferred stock is non-voting. We have


                                       15

<PAGE>

the right and option upon notice to the holders of the Series C preferred stock
to call, redeem, and acquire any or all of the shares of Series C preferred
stock at a price equal to $110.00 per share, at any time to the extent such
shares have not previously converted to common stock pursuant to the terms
described above; provided, however, that the holders of the Series C preferred
stock shall, in any event, have the right during the 30-day period immediately
following the date of the Notice of Redemption, which shall fix the date for
redemption, to convert their shares of Series C preferred stock.

         During February 2000 we issued 31,200 shares of Series D preferred
stock ("Series D") for $3,120,000. Each share of Series D preferred stock is
convertible, at the option of the holder, at any time, into shares of Common
Stock of the Corporation equal to $100.00 divided by the conversion price which
shall be equal to 65% of the average closing bid price for the common stock for
the 10 trading days immediately preceding the date of conversion. The maximum
conversion price shall be $4.00 per share. We assigned an intrinsic value of
$1,680,000 to this conversion feature. As a result, a constructive dividend in
this amount was charged to retained earnings with a corresponding increase in
common stock. Each share of Series D preferred stock is entitled to a $100
liquidation preference over common stockholders. The Series D preferred stock is
non-voting. We have the right and option upon notice to the holders of the
Series D preferred stock to call, redeem, and acquire any or all of the shares
of Series D preferred stock at a price equal to $110.00 per share, at any time
to the extent such shares have not previously converted to common stock pursuant
to the terms described above; provided, however, that the holders of the Series
D preferred stock shall, in any event, have the right during the 30-day period
immediately following the date of the Notice of Redemption, which shall fix the
date for redemption, to convert their shares of Series D preferred stock in
accordance with the terms described above.

         In accordance with the terms of the Series C and D preferred stock, the
Company was deemed to issue an additional 2% (416 shares of Series C and 624
shares of Series D) to the shareholders. As the additional shares were
considered to be a cost of issuance, their cost was capitalized to the related
equity account. The conversion price for the Series C preferred stock was
subsequently reduced to $0.75.

         During our fiscal year ended March 31, 2001, holders of $981,708 and
$1,632,508 of our Series C and D preferred stock (9,682 and 16,664 shares,
respectively) elected to convert such shares to 3,352,663 common shares based on
the formulae contained in the terms of the preferred shares. On May 17, 2000, we
filed a registration statement to register the resale of the common shares
issued or to be issued upon conversion of the Series C and Series D preferred
stock. That registration is still in process.

LIQUIDITY AND CAPITAL RESOURCES

         Working capital (current assets minus current liabilities) was $182,556
at March 31, 2001, as compared to working capital at March 31, 2000 of
$4,370,634. The decrease of $4,188,078 substantially is due to the decrease in
cash of $4,146,670 and the decrease in assets from discontinued operations
offset by the increases in receivables and the repayment of our revolving line
of credit with Wells Fargo.

         We used cash of $4,371,599 in our operating activities for the fiscal
year ended March 31, 2001, the major components of which were our net losses for
the period from continuing operations of $9,060,369, discontinued operations of
$323,839, and discontinuance of land-based operations of $2,339,445. Cash
primarily was provided by the non-cash charges for depreciation and amortization
of $3,836,788, plus the non-cash loss on disposal of impaired assets of
$2,261,486. An additional non-cash expense related to the issuance of stock and
options for services valued at $299,955. Other accounts affecting our cash
balances included cash received from liquidation of assets of discontinued
operations of $1,001,354, an additional short-term loan from a related party,
and increases in accounts payable and accrued liabilities offset by an increase
in accounts receivable.

         For the fiscal year ended March 31, 2000, net cash used in operating
activities was $742,328. The major component contributing to the cash used in
operations for the fiscal year ended March 31, 2000 were our net losses for the
period of $946,202 and $1,641,551 from continuing operations and discontinued
operations, respectively. Cash primarily was provided by the non-cash charges
for depreciation and amortization of $319,800 and the additional non-cash
expense related to the issuance of stock and options for services valued at
$351,280. Other accounts affecting our cash balances included cash received from
discontinued operations of $1,257,062 and small changes, both positive and
negative, to other current assets and liabilities.



                                       16

<PAGE>

         For the fiscal year ended March 31, 1999, net cash used in operating
activities was $1,682,760. The major components contributing to the cash used in
operations for the fiscal year ended March 31, 1999 were our net income (loss)
for the period of $(226,369) and $341,610 from continuing operations and
discontinued operations, respectively. Cash was provided by the non-cash charges
for depreciation and amortization of $24,042 and the additional non-cash expense
related to the issuance of stock and options for services valued at $23,083. We
used $1,823,695 to acquire assets for our discontinued land-based operations.
Cash balances also were affected by small changes, both positive and negative,
to other current assets and liabilities.

         Our investing activities for the fiscal years ended March 31, 2001,
2000, and 1999 used cash of $1,123,690, $374,420, and $188,832, respectively.
For the fiscal year ended March 31, 2001, cash was used primarily for the
purchase of computer hardware and software required for business expansion and
our e-commerce and Internet operations, and offset by the sale of certain
company-owned vehicles. For the fiscal year ended March 31, 2000, we acquired
computer software and hardware, company cars, and office furniture and fixtures.
Our investing activities for the fiscal year ended March 31, 1999 also were for
similar items. In addition, we used $70,906 in an acquisition.

         Financing activities provided net cash of $1,148,619 for our fiscal
year ended March 31, 2001, as compared to $5,174,734 and $2,169,344 during the
previous two years, respectively. Increases in cash included $1,452,487 from the
proceeds of the sale of 5,865,212 common shares in March 2001, $498,550 in
proceeds received from the exercise of previously issued stock options, and
additional borrowings of $310,000 from related parties. Our related party debt
of $738,807 is due April 1, 2002. We used $1,112,418 to repay the Wells Fargo
Business Credit, Inc. line of credit that had provided sufficient short-term
liquidity and capital to implement our business plan, including the expansion
into other markets. The note that evidenced this obligation to Wells Fargo
Business Credit bore interest at 1.5% over prime and was extended from its
original due date of March 31, 2000 to January 31, 2001. At March 31, 2000 our
bank line of credit was $1,112,418. On February 16, 2001 we repaid Wells Fargo
Business Credit in full.

         For our fiscal year ended March 31, 2000, we supported our cash needs
by net borrowings of $158,393 and proceeds from the issuance of convertible
preferred stock and common stock of $4,766,341 and $250,000, respectively.

         For the fiscal year ended March 31, 1999, cash needs were supplied by
net borrowings of $1,268,500 and the issuance of long-term debt and convertible
preferred stock for $528,807 and $372,037, respectively.

ANTICIPATED TRENDS AND PLAN OF OPERATION

         We intend to continue the development of our Internet sites. We believe
that focusing on providing automotive remarketing services via the Internet will
improve our long-term prospects for profitability. While the land-based
operations generated a substantial amount of revenue, the gross profit margins
were low and insufficient to cover operating expenses relating to the land-based
operations. These operating expenses consisted primarily of selling commissions,
interest expenses (for financing inventory and accounts receivable), bad debt
expense, and office overhead. In addition, the land-based operations were
capital-intensive. In contrast, the Internet operations generate a lower amount
of revenue, but result in higher profit margins.

         Our agreement with American Honda Finance Corporation will generate
revenues for the next three years. We anticipate a greater number of car sales
on our Honda website resulting in increased revenues in the months to come as a
larger number of vehicles are being returned upon termination of leases and will
be available to all Honda and Acura dealers in the United States. In addition
our amended contract with American Honda Finance Corporation will provide
additional revenue for each car sold on our website. With the definitive
agreement signed with American Suzuki Motor Corporation in January 2001, we
expect to generate added revenue from the Suzuki site. We entered into an
agreement to remarket off-lease Volvo vehicles with Volvo Finance North America
for 15 months, commencing April 30, 2001. We anticipate the Volvo Finance web
site, www.volvoride.com, will be completed by August 15, 2001. We anticipate
entering into similar contracts with other manufacturers and financial
institutions to assist them in remarketing their inventories of used vehicles;
however, no such other contracts exist at this time.

         The Company has sustained operating losses and negative cash flow since
its  inception,  resulting  in little  tangible  net  worth at March  31,  2001.
Currently  we are  operating at a cash flow  deficit as revenues  from  Internet


                                       17

<PAGE>

operations  do not cover  operating  expenses.  We  project  that cash flow from
operations  will reach a break-even  level during our quarter ended December 31,
2001.  Accordingly,  we require no less than $1,300,000 of cash through external
sources to fund our operations and service our long and short-term debt until we
achieve positive cash flow from operations. We plan to finance this deficit from
additional  capital  in the form of  equity  or debt or both to be  raised  in a
private  placement.  In the event  this  capital  is not  raised,  our  Internet
operations  will be severely  limited and meeting our existing  overhead will be
difficult. This limitation adversely may affect shareholder value.

         We have  addressed  these  concerns  by:  (1)  obtaining  a new line of
credit,  effective  July 26, 2001,  for up to  $1,300,000  to fund our operating
needs until the projected  future revenue sources are developed;  (2) Continuing
our efforts to raise up to an additional  $500,000  under terms similar to those
of the private  placement of equity  securities in March and April of 2001;  (3)
Implementing  plans to  generate  positive  cash flow and  operating  profits by
increasing  revenues  through  the  expansion  of our  Internet  remarketing  of
off-lease  and  program  vehicles  with our  current  customers  and  others and
development  of new  products and  services  for our current  customer  base and
others;  and (4) further reducing our cash requirements for software and website
development and continuing to reduce our costs of operations.

         There  is no  assurance,  however,  that  the  Company  will be able to
implement its business plan as outlined  above. In the event that the Company is
unable to obtain  positive cash flow prior to exhausting its new line of credit,
it must obtain  additional  financing  in the form of equity or debt to continue
operations.

SUBSEQUENT EVENT

         On July 26, 2001, we entered into a financing arrangement with Eagle
Capital Group, LLC ("Eagle"), a private company, which provides for a line of
credit up to $1,300,000. The loan provides for an initial advance of $250,000,
followed by a thirty-day review period during which Eagle will complete its
legal due diligence with respect to, among other items, the Company's
intellectual property. The review period grants Eagle the right to discontinue
funding of the line of credit if the Company's intellectual property is
deficient in certain material respects. The loan is due June 30, 2002. It bears
interest at the rate of 12% per annum payable monthly. We paid a commitment fee
of $13,000 and are obligated to pay a one percent (1%) facility fee of up to
$13,000 each quarter. We also are required to pay monthly principal payments of
not less than 5% of the outstanding loan balance once we achieve positive cash
flow. The loan is secured by all assets including, but not limited to,
furniture, fixtures, leasehold, personal property, and intellectual property.

         The loan is convertible into our common stock at any time before the
due date thereof, including any extensions, at the lesser of the average bid
price following the date of the first advance and the earlier of the conversion
date or the termination date or $0.10 per share. We also issued Eagle a warrant
which allows Eagle, for a period of 90 days from the termination date of the
loan, to purchase common shares at $0.10 per share in an amount equal to the
difference between (a) 13,000,000 and (b) the number of shares of common stock
issued upon prior conversion of any amounts under the loan.

         In addition, we issued a warrant to Eagle that allows Eagle to
purchase, for a period of up to five years, up to 6,500,000 shares of common
stock at an exercise price of $0.125 per share. If we prepay the loan in full at
any time prior to December 31, 2001, we will issue to Eagle 1,500,000 shares of
common stock as consideration.

         In addition, we issued to Eagle 1,300 shares Series E preferred stock,
at a par value of $0.10 per share. The Series E preferred stock grants Eagle the
right to vote an equivalent of 13,000,000 common shares. Eagle will have two
representatives on our board of directors.

         We also entered into a Facilities Use and Administrative Services
Agreement with an affiliate of Eagle for the use of office facilities, software
development, marketing, accounting, and other management services that may vary
from time to time. The fee for these services will be negotiated between the
parties in good faith as business practices and circumstances change.

         On July 26, 2001, as part of the agreement with Eagle, we consolidated
the notes payable to Pinnacle Financial and Mark Moldenhauer of $336,807 and
$402,000, respectively. The consolidated note bears interest at 12% payable
monthly. In addition, we are obligated to make principal payments of $25,000 per
month in November




                                       18

<PAGE>


and December 2001, and $50,000 per month principal payments
from January 2002 through May 2002. The balance of the note is due June 30,
2002. Any principal payment may be converted into common stock at the sole
discretion of the lender at the rate of $0.10 per share, upon three days written
notice. We also issued a warrant to purchase one share of common stock for every
two shares of common stock received upon conversion. The warrant exercise price
is $0.125 per share and expires five years from issuance. The note is
subordinated to the first lien of Eagle.

         As a result of this transaction, we are required to reset the pricing
of the units sold in March through April, 2001 pursuant to a private placement.
The anti-dilution clause contained in the private placement required us to issue
9,948,027 shares of our common stock and 4,959,013 additional stock purchase
warrants exercisable at $0.125 per share.


ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

         Not applicable.


ITEM 8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

         See the financial statements beginning with page F-1.


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

         None.







                                       19

<PAGE>

                                    PART III

ITEM 10.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

         The officers and directors of the company are as follows:
<TABLE>
<CAPTION>

Name                              Age         Position

<S>                               <C>         <C>
Roger L. Butterwick               53          President, Treasurer and Director
John E. Rowlett                   51          Vice President, Secretary, Chief Operating Officer and Director
Michael H. Feinstein              66          Chief Financial Officer
Mark R. Jensen                    36          Chief Technology Officer and Vice President of Internet Operations
John Houck                        63          Director
James Kaiser                      57          Director
David Livingston                  67          Director
R. Gary McCauley                  58          Director
L. David Sikes                    59          Director
A. Marvin Strait                  67          Director
</TABLE>

         The term of office of each director of our company ends at the next
annual meeting of our stockholders or when such director's successor is elected
and qualifies. No date for the next annual meeting of stockholders is specified
in our Bylaws or has been fixed by the board of directors. The term of office of
each officer of our company ends at the next annual meeting of our board of
directors, expected to take place immediately after the next annual meeting of
stockholders, or when such officer's successor is elected and qualifies.

         ROGER L. BUTTERWICK has been the President and a director of our
company since December 8, 1999 and our Treasurer since April 2, 1999. Prior to
joining our company, Mr. Butterwick devoted the majority of his time as a
partner in Cambridge Management Associates, LLP, an organization in the business
of structuring and securing financing for developing organizations. Previously,
Mr. Butterwick was an owner of Lehman, Butterwick & Company, P.C., a large local
certified public accounting firm located in Denver, Colorado. In addition, he
has been involved with the finance and mortgage banking industries. Mr.
Butterwick received his Bachelor of Science in Business Administration from the
University of Denver. He is a member of the American Institute of CPA's. Mr.
Butterwick is a full-time employee of our company.

         JOHN E. ROWLETT has been the Secretary and a director of our company
since December 8, 1999. Mr. Rowlett is a 25-year veteran of the automobile
business. He has extensive expertise in all areas of dealership management,
including facility design, development and maintenance, sales, sales management,
general management, finance, CSI, wholesaling, reconditioning, parts, service
and body shop management, forecasting, budgeting, policy administration,
inventory acquisition and control, market trends, and financial management. Mr.
Rowlett has been charged with the responsibility of managing large retail
mega-dealerships involving multiple locations and new car store franchises.
Accomplishments include:
    o    Graduate of Chrysler Corporation's Dealer Academy
    o    Experienced in turnarounds and rapid growth transitions, outstanding
         history of rehabilitation of marginal or unprofitable dealerships.
    o    Accomplished in marketing, product development, operations and direct
         sales of diverse product lines.
    o    Effective in all phases of labor relations, including recruiting,
         hiring, training, motivating and supervising.

         MICHAEL H. FEINSTEIN has been the Chief Financial Officer of our
company since May 2000. Mr. Feinstein also serves as a director and the chairman
of the audit committee of Styling Technology Incorporated of Scottsdale,
Arizona, a publicly-held manufacturer and distributor of beauty salon products.
He has held this position since June 1997. From May 1998 to April 2000, Mr.
Feinstein has provided business consulting services in Phoenix, Arizona, in
addition to serving for a period of time as the President of a private company
engaged in manufacturing located in Tempe, Arizona. From July 1995 to May 1998,
he served as the chief financial officer for Monaco Finance, Inc., of


                                       20

<PAGE>

Denver, Colorado, a sub-prime automobile finance company formerly listed on
NASDAQ. He was the executive vice president and later president of American
Southwest Holdings, Inc., of Phoenix, Arizona, engaged in the mortgage
securitization industry. From 1983 to 1993, Mr. Feinstein was the chief
financial officer for MDC Holdings, Inc. and Asset Investors Corporation, both
based in Denver, Colorado and traded on the New York Stock Exchange. MDC
Holdings is one of the largest homebuilders in the United States and Asset
Investors is a real estate investment trust. Prior to 1983, he was a partner
with the national public accounting firm of Deloitte and Touche. Mr. Feinstein
is a graduate of the Wharton School of the University of Pennsylvania. He
obtained his CPA certificate from Colorado and has been a member of the American
Institute of CPA's.

         MARK R. JENSEN has been our Chief Technology Officer since March 2000.
He is responsible for all operations that relate to our Internet initiatives.
Mr. Jensen joined us from NDSCo.com, a privately-held Internet automotive
remarketing company that we acquired in March 2000. As acting chief operations
officer, he managed NDSCo.com's business operations from April 1999 to March
2000. Mr. Jensen founded The Deanox Group, Inc. in 1989 and operated that
company until 1998. As a privately-held company in Logan, Utah, The Deanox Group
provided computer software, hardware, and consulting services to customers
desiring to apply computer technologies to their business operations. Mr. Jensen
has been a frequent speaker and trainer for groups and academic forums including
the State of Utah, Utah State University, Bernina of America, Weber State
College, Mountain West Center for Regional Studies, Utah State Continuing
Education Department, and the Office of the Governor for the State of Utah.

         JOHN HOUCK has been a director since November 2000. Mr. Houck retired
in December 1998 from Toyota Motor Credit, where he had served as manager of its
Phoenix, Arizona, branch office since June 1987. From December 1966 to May 1987,
he worked with Ford Motor Credit, serving in the capacity of branch manager in
Honolulu, Hawaii.

         JAMES KAISER has been a director since November 2000. Mr. Kaiser has
been the chairman, chief executive officer, and a director of Avenir Partners
Inc., a privately-owned franchised automobile dealership located in Memphis,
Tennessee, since December 1998. He has also been the president of Kaiser
Services, LLC, a business development company, located in Manhattan Beach,
California, since 1998. From 1994 to 1996, Mr. Kaiser was the president, chief
executive officer, and a director of Quanterra Inc., a subsidiary jointly owned
by Corning Inc. and International Technology Inc., engaged in the business of
environmental testing laboratories and located in Denver, Colorado. Mr. Kaiser
serves as a director of the following public companies: Sunoco, Inc. since 1993;
and The Mead Corporation since 1995.

         DAVID LIVINGSTON has been a director since November 2000. Since
December 1995, Mr. Livingston has been the managing partner of The Corporate
Development Group, a private firm located in Mission Viejo, California offering
corporate development and investment banking services. He was the executive vice
president of the Bank of New Mexico (a Western Bancorporation/First Interstate
Bancorporation bank) from 1962 to 1970 and chairman, chief executive officer,
and a director of First National Bank of Albuquerque from January 1970 to March
1975. During his career, Mr. Livingston has served on numerous boards for
corporate, civic, and charitable organizations. He is also the current chairman
of David Livingston & Associates, Inc., dba Pacific-Southwest Capital Group
since 1975.

         R. GARY MCCAULEY has been a director since November 2000. Since 1964,
he has owned and/or operated a number of private businesses. Mr. McCauley has
been the owner, developer, and manager of retail shopping centers in Florida and
Colorado since 1986. In addition, since 1972, he has held oil and gas interests
through D&G Enterprises, a private company co-owned by him. He has owned and
been the president and/or general manager of various automobile dealerships from
time to time: Scott Toyota, Inc, Scottsdale, Arizona (1998-2000); McCauley
Mazda, Phoenix, Arizona (1989-1990); McCauley Oldsmobile/Honda, Colorado
Springs, Colorado (1977-1990); McCauley Volkswagen, Albuquerque, New Mexico
(1966-1977); and McCauley Volkswagen, Yuma, Arizona (1964-1966). From 1979 to
1990, Mr. McCauley was the co-founder and an officer of Sunwest Life Insurance
Co., which provided life, accident, health, and extended warranty insurance
products to over 50 automobile dealerships in the western United States.



                                       21

<PAGE>

         L. DAVID SIKES has been a director since November 2000. Since March
1995, Mr. Sikes has been the chairman and chief executive officer of Ramtron
International Corporation, a publicly-owned specialty semiconductor company
located in Colorado Springs, Colorado. Mr. Sikes was president and chief
executive officer of the U.S. operations of ASM International N.V., a public
semiconductor company domiciled in the Netherlands, from January 1990 to July
1992. His background also includes management positions with the following: vice
president for the semiconductor product sector of Motorola, Inc., Phoenix,
Arizona, from June 1984 to June 1987; an executive for National Semiconductor
Corporation, Santa Clara, California, from July 1972 to January 1974; and an
engineering management position for Eastman Kodak Company, Rochester, New York,
from July 1963 to January 1967.

         A. MARVIN STRAIT has been a director since November 2000. Mr. Strait
has been in the practice of public accountancy under the name of A. Marvin
Strait, CPA, since June 1994. He specializes in litigation support, offering
consulting services with a focus on business valuation. Mr. Strait was
previously the managing partner and later chairman with Strait oKushinsky and
Company, P.C. in Colorado Springs, Colorado, from October 1977 to May 1993. Mr.
Strait was a past chairman (1987-1988) and served on the board of directors
(1983-1989) of the American Institute of Certified Public Accountants. He
received the AICPA Gold Medal for Distinguished Service in 1992. Mr. Strait
currently serves as a director of the following: Whitman Education Group, Inc.,
a publicly-held company based in Miami, Florida, since late 1998; Colorado
Technical University, a private university with campuses in Colorado and South
Dakota, since 1990; and Western National Bank, a privately-held bank located in
Colorado Springs, Colorado, since 1996.


ITEM 11.    EXECUTIVE COMPENSATION.

         The following table sets forth the remuneration for Mr. Butterwick by
fiscal year, who functions as our chief executive officer. We are not required
to set forth information for any officer whose total annual salary and bonus
does not exceed $100,000.
<TABLE>
<CAPTION>
                                              SUMMARY COMPENSATION TABLE
                                                                             Long Term Compensation
                                                                            Awards             Payouts
                                                         Other     RESTRICTED   SECURITIES
    Name and                    Annual Compensation     Annual        STOCK     UNDERLYING      LTIP       All Other
    Principal                                          Compensa-     AWARD(S)     OPTIONS/      PAYOUTS     Compensa-
    Position        Year    Salary ($)    Bonus ($)     tion($)         ($)       SARS (#)        ($)        tion($)
------------------ -------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
<S>                 <C>     <C>              <C>          <C>          <C>        <C>            <C>          <C>
Roger Butterwick,   1999    $63,000(1)<F1>   -0-          -0-          -0-        375,000        -0-          -0-
    President       2000      $54,000        -0-          -0-          -0-        500,000        -0-          -0-
                    2001     $158,400        -0-          -0-          -0-          -0-          -0-          -0-

  John Rowlett,     2001     $144,000        -0-          -0-          -0-        325,000        -0-          -0-
 Chief Operating
     Officer

     Michael        2001     $121,000        -0-          -0-          -0-        90,000         -0-          -0-
Feinstein, Chief
Financial Officer

  Mark Jensen,      2001     $151,500        -0-          -0-          -0-        150,000        -0-          -0-
Chief Technology
     Officer
------------------
<FN>

(1)<F1>  Includes $36,000 paid to Mr. Butterwick as a consultant prior to becoming President.

</FN>
</TABLE>

         Currently, we pay the following monthly salaries plus car allowances:

         Roger Butterwick - $13,200                  John Rowlett - $12,500
         Michael Feinstein - $11,000                 Mark Jensen - $14,166

         We reimburse all officers and directors for actual out-of-pocket
expenses incurred on our behalf.


                                       22

<PAGE>

         We have no retirement, pension, profit sharing or medical reimbursement
plans exclusively covering our officers and directors, although we do
contemplate implementing a company sponsored 401(k) plan and providing major
medical and dental health insurance coverage for all employees in the near
future.
<TABLE>
<CAPTION>
                                           OPTION/SAR GRANTS IN LAST FISCAL YEAR

                                                                            Potential realizable value     Alternative
                                                                            at assumed annual rates of   to (f) and (g):
                                                                             stock price appreciation      grant date
                            Individual Grants                                    for option term              value
-------------------------------------------------------------------------- ----------------------------- -------------
                                 Percent of
                   Number of       total
                  securities    options/SARs
                  underlying     granted to     Exercise or                                                Grant date
                 Options/SARs   employees in    base price     Expiration                                 present value
     Name         granted (#)   fiscal year       ($/Sh)          date         5% ($)         10% ($)           $
---------------- -------------- ------------- -------------- ------------- -------------- -------------- -------------

<S>                 <C>             <C>           <C>          <C>           <C>           <C>                <C>
     Roger          125,000         4.3%          $0.91        11/29/05      $5,687.50     $11,375.00
  Butterwick        250,000 (1)<F1> 8.6%          $0.91        11/29/05      $2,275.00      $4,550.00

     John           150,000 (2)<F2> 5.1%          $0.9375      12/08/02      $2,343.75      $4,687.50
    Rowlett         125,000         4.3%          $0.91        11/29/05      $5,687.50     $11,375.00
                    200,000 (3)<F3> 6.8%          $0.91        11/29/05      $1,820.00      $3,640.00

    Michael          90,000 (4)<F4> 3.1%          $1.9375      05/01/03      $2,906.25      $5,812.50
   Feinstein

     Mark           150,000 (5)<F5> 5.1%          $3.16        04/01/03      $7,900.00     $15,800.00
    Jensen
----------------
<FN>

(1)<F1>  We granted Mr. Butterwick an option for 250,000 shares, 50,000 of which
         was vested at the time of granting. The remainder of the options vests
         as to 50,000 on each anniversary of the grant date. The option is
         exercisable for five years from date of vesting.
(2)<F2>  We granted Mr. Rowlett an option for 150,000 shares, 50,000 of which
         vested as of December 8, 2000. The remainder of the options vests as to
         50,000 on each anniversary thereafter. The option is exercisable for
         two years from date of vesting.
(3)<F3>  We granted Mr. Rowlett an option for 200,000 shares, 40,000 of which
         was vested at the time of granting. The remainder of the options vests
         as to 40,000 on each anniversary of the grant date. The option is
         exercisable for five years from date of vesting.
(4)<F4>  We granted Mr. Feinstein an option for 90,000 shares, 30,000 of which
         vested as of May 1, 2001. The remainder of the options vests as to
         30,000 on each anniversary thereafter. The option is exercisable for
         two years from date of vesting.
(5)<F5>  We granted Mr. Jensen an option for 150,000 shares, 50,000 of which
         vested as of April 1, 2001. The remainder of the options vests as to
         50,000 on each anniversary thereafter. The option is exercisable for
         two years from date of vesting.

</FN>
</TABLE>

<TABLE>
<CAPTION>

                 AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES

                                                                        Number of securities
                                                                             underlying         Value of unexercised
                                                                            unexercised             in-the-money
                          Shares acquired on                              options/SARs at         options/SARs at
         Name                exercise (#)         Value Realized ($)    fiscal year end (#)     fiscal year end ($)
------------------------ ---------------------- ---------------------- ----------------------- -----------------------
                                                                            Exercisable/            Exercisable/
                                                                           unexercisable           unexercisable
------------------------ ---------------------- ---------------------- ----------------------- -----------------------
<S>                               <C>                    <C>              <C>                         <C>
   Roger Butterwick               -0-                    -0-              450,000/425,000             -0-/-0-

     John Rowlett                 -0-                    -0-              215,000/260,000             -0-/-0-

   Michael Feinstein              -0-                    -0-               30,000/60,000              -0-/-0-

      Mark Jensen                 -0-                    -0-               50,000/100,000             -0-/-0-

</TABLE>

         In addition to the stock options granted to Mr. Butterwick shown in the
above table, stock options have also been granted to Mr. Butterwick in
connection with loan guarantees. In addition, certain stock options were granted
to Cambridge Management Associates, LLP, an entity controlled by Mr. Butterwick,
that provided contracted financial services to our company prior to Mr.
Butterwick becoming an officer, as described in the section of this prospectus
entitled "Certain Relationships and Related Transactions."

DIRECTORS' COMPENSATION AND COMMITTEES

         We pay each non-employee director $3,000 for his attendance at both the
annual stockholders' meeting and annual directors' meeting, $2,000 for his
attendance at each physical meeting of the board of directors, $750 for his
attendance at each physical committee meeting, and $500 for his attendance at
each telephonic meeting of the board of directors. We also reimburse them for
their travel expenses incurred in connection with these meetings.

         We have the following committees of the board of directors:


                                       23

<PAGE>

    o    Audit Committee, consisting of A. Marvin Strait (committee chairman),
         John Houck, and Michael H.
         Feinstein (corporate liaison)
    o    Technical Committee, consisting of L. David Sikes (committee chairman),
         James G. Kaiser, and Mark R. Jensen (corporate liaison)
    o    Compensation Committee, consisting of R. Gary McCauley (committee
         chairman), David G. Livingston, and John E. Rowlett (corporate liaison)

STOCK OPTION PLAN

         On August 5, 1997, the shareholders adopted the 1997 Stock Option Plan,
which provides for the granting of both incentive stock options and
non-qualified options to eligible employees, officers, and directors. The option
pool is adjusted annually on the beginning of our fiscal year to a number equal
to 10% of the number of shares of common stock outstanding at the end of our
last completed fiscal year. At March 31, 2001, the number of shares eligible
pursuant to the plan was 3,732,551. The plan is administered by the compensation
committee of the board of directors or, if there is no committee, by the board
of directors. A registration statement on Form S-8 was filed on May 15, 2000
registering the underlying shares of the options granted. At March 31, 2001,
2,606,729 options had vested and were eligible for exercise at a total exercise
price of $3,839,320.

         The plan provides that disinterested directors, defined as non-employee
directors or persons who are not directors of one of our subsidiaries, will
receive automatic option grants to purchase 10,000 shares of common stock upon
their appointment or election to the board of directors. Options shall have an
option price equal to 100% of the fair market value of our common stock on the
grant date and shall have a minimum vesting period of one year from the date of
grant.

         Each option granted under the plan will be evidenced by a written
option agreement between our company and the optionee. Incentive stock options
may be granted only to employees as defined by the Internal Revenue Code. The
option price of any incentive stock option may not be less than 100% of the fair
market value per share on the date of grant of the option; provided, however,
that any incentive stock option granted under the plan to a person owning more
than 10% of the total combined voting power of our common stock will have an
option price of not less than 110% of the fair market value per share on the
date of grant of the incentive stock option. Each non-qualified stock option
granted under the plan will be at a price no less than 85% of the fair market
value per share on the date of grant thereof, except that the automatic stock
option grants to disinterested directors will be at a price equal to the fair
market value per share on the date of grant. The exercise period of options
granted under the plan may not exceed ten years from the date of grant thereof.
Incentive stock options granted to a person owning more than 10% of the total
combined voting power of the common stock cannot be exercisable for more than
five years. No portion of any option will be exercisable prior to the first
anniversary of the grant date.

         An option may not be exercised unless the optionee then is an employee,
officer, or director of our company or its subsidiaries, and unless the optionee
has remained continuously as an employee, officer, or director of our company
since the date of grant of the option. If the optionee ceases to be an employee,
officer, or director of our company or any subsidiary other than by reason of
death, disability, retirement, or for cause, all options granted to such
optionee, fully vested to such optionee but not yet exercised, will terminate 90
days after the date the optionee ceases to be an employee, officer, or director.
All options, which are not vested to an optionee, under the conditions stated in
this paragraph for which employment ceases, will immediately terminate on the
date the optionee ceases employment or association.

         Options have been granted under this plan as follows:
<TABLE>
<CAPTION>

<S>                                                                        <C>
         Balance, March 31, 1998.......................................      350,000
         Granted.......................................................    1,298,175
         Exercised.....................................................            0
         Cancelled/expired.............................................     (125,000)
                                                                           ----------
         Balance, March 31, 1999.......................................    1,523,175
         Granted.......................................................    1,419,080
         Exercised.....................................................            0


                                       24

<PAGE>

         Cancelled/expired.............................................      (25,000)
                                                                           ----------
         Balance, March 31, 2000.......................................    2,917,255
         Granted.......................................................      554,474
         Exercised.....................................................     (362,925)
         Cancelled/expired.............................................     (394,885)
                                                                           ----------
         Balance, March 31, 2001.......................................    2,713,919
                                                                           ==========
</TABLE>

2000 EQUITY INCENTIVE COMPENSATION PLAN

         On November 29, 2000, the board of directors adopted the 2000 Equity
Incentive Compensation Plan, which provides for granting stock options, stock
appreciation rights, restricted and deferred stock, bonus stock, and other
stock-based awards to officers, directors, employees, and independent
contractors. The shareholders must still adopt this plan. The total number of
shares of common stock that may be subject to the granting of awards under this
plan at any time during the term of the plan is equal to 3,500,000 shares, plus
the number of shares with respect to which awards previously granted under the
plan that terminate without being exercised, and the number of shares that are
surrendered in payment of any awards or any tax withholding requirements. During
any fiscal year the number of options, stock appreciation rights, restricted
shares of common stock, deferred shares of common stock, shares as a bonus or in
lieu of other company obligations, and other stock-based awards granted to any
one participant may not exceed 450,000 for each type of such award, subject to
adjustment in certain circumstances. The maximum amount that may be paid out as
an annual incentive award or other cash award in any fiscal year to any one
participant is $2,000,000, and the maximum amount that may be earned as a
performance award or other cash award in respect of a performance period by any
one participant is $5,000,000.

         The compensation committee of the board of directors administers this
plan, and
    o    selects eligible persons to receive awards,
    o    determines the type and number of awards to be granted and the number
         of shares of common stock to which awards will relate,
    o    specifies times at which awards will be exercisable or settleable
         (including performance conditions that may be required as a condition
         thereof),
    o    sets other terms and conditions of awards,
    o    prescribes forms of award agreements,
    o    interprets and specify rules and regulations relating to this plan, and
    o    makes all other determinations that may be necessary or advisable for
         the administration of this plan.

         The board of directors may amend, alter, suspend, discontinue or
terminate this plan or the compensation committee's authority to grant awards
without further stockholder approval. However, stockholders must approve any
amendment or alteration if that approval is required by law or regulation or
under the rules of any stock exchange or quotation system on which our shares
are then listed or quoted.

         Unless earlier terminated by the board of directors, this plan will
terminate at such time as no shares of common stock remain available for
issuance under this plan and we have no further rights or obligations with
respect to outstanding awards under this plan.

         Subject to approval of this plan by the stockholders, options have been
granted under this plan as follows:
<TABLE>
<CAPTION>

<S>                                                               <C>
         Granted..................................................2,365,496
         Exercised................................................        0
         Cancelled/expired........................................        0
                                                                  ---------
         Balance, March 31, 2001..................................2,365,496
                                                                  =========
</TABLE>

OTHER OPTIONS

In addition to the stock options granted under the 1997 stock option plan and
2000 equity incentive compensation plan, we have granted options as follows:


                                       25

<PAGE>
<TABLE>
<CAPTION>

<S>                                                                        <C>
         Balance, March 31, 1998.......................................      850,000
         Granted.......................................................    1,589,810
         Exercised.....................................................            0
         Cancelled/expired.............................................     (350,000)
                                                                           ----------
         Balance, March 31, 1999.......................................    2,089,810
         Granted.......................................................      465,000
         Exercised.....................................................            0
         Cancelled/expired.............................................     (300,000)
                                                                           ----------
         Balance, March 31, 2000.......................................    2,254,810
         Granted.......................................................            0
         Exercised.....................................................     (210,000)
         Cancelled/expired.............................................      (75,000)
                                                                           ----------
         Balance, March 31, 2001.......................................    1,969,810
                                                                           ==========
</TABLE>


ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

         The following table provides stock ownership information as to the
officers and directors individually and as a group, and the holders of more than
5% of our common stock as of March 31, 2001:
<TABLE>
<CAPTION>
                                                                                    Percentage Ownership
        Name and address of owner                    Number of Shares Owned         Before Conversion (1) <F1>

<S>                                                     <C>                                 <C>
        Mark Moldenhauer                                4,569,000 (2)<F2>(3)<F3>            11.06%
        14500 N. Northsight Blvd. #213
        Scottsdale, AZ 85260

        Almond Investors, LLC                           5,808,085 (4)<F4>                   12.59%
        110 Colabaugh Pond Road
        Croton-on-Hudson, NY 10520

        Lloydminister Enterprises                       2,500,000                            6.10%
        Battersea Bridge Road
        London, England SW11 3BG

        Kindersley Holdings Inc.                        2,500,000                            6.10%
        23 Bentinck Street
        London, England W1M 5R1

        Roger L. Butterwick                             1,299,400 (5)<F5>                    3.08%

        R. Gary McCauley                                  325,000 (6)<F6>(7)<F7>             0.79%

        John E. Rowlett                                   215,000 (6)<F6>(8)<F8>             0.52%

        John Houck                                        125,000 (6)<F6>                    0.30%

        James Kaiser                                      125,000 (6)<F6>                    0.30%

        David Livingston                                  125,000 (6)<F6>                    0.30%

        L. David Sikes                                    125,000 (6)<F6>                    0.30%

        A. Marvin Strait                                  125,000 (6)<F6>                    0.30%

        Mark R. Jensen                                     50,000 (9)<F9>                    0.12%

        Michael Feinstein                                  30,000 (10)<F10>                  0.07%

        All officers and directors as a group             2,544,400(11)<F11>                 5.86%
        (10 persons)


                                       26

<PAGE>
<FN>

(1)<F1>  Where persons listed on this table have the right to obtain additional
         shares of common stock through the exercise of outstanding options or
         warrants or the conversion of convertible securities within 60 days
         from March 31, 2001, these additional shares are deemed to be
         outstanding for the purpose of computing the percentage of common stock
         owned by such persons, but are not deemed to be outstanding for the
         purpose of computing the percentage owned by any other person.
         Percentages are based on 40,954,759 shares outstanding.

(2)<F2>  Includes 100,000 shares issuable upon the exercise of options.

(3)<F3>  Includes 250,000 shares issuable upon the exercise of options.

(4)<F4>  Includes 5,154,400 shares issuable upon conversion of 8,976 shares of
         Series C preferred stock and 9,894 shares of Series D preferred stock,
         assuming a conversion price of $0.25 for the Series D preferred stock.
         Almond did not, in connection with its acquisition of the Series C and
         D preferred stock, obtain any voting rights, directorships, rights to
         directorships, positions with us, right to positions with us, or any
         non-public information regarding us. Further, Almond acquired the
         Series C and D preferred stock in the ordinary course of business, for
         its own account, and not with a view to distribution and did not, at
         the time of such acquisition nor any time thereafter, have any
         agreement or understanding, directly or indirectly, with any person to
         distribute any portion of the Series C and D preferred stock or the
         common stock issuable upon conversion.

(5)<F5>  Includes 99,400 shares held of record by Cambridge Consulting Group, an
         entity controlled by Mr. Butterwick. Includes 1,200,000 shares issuable
         upon the exercise of options.

(6)<F6>  Includes 125,000 shares issuable upon exercise of options.

(7)<F7>  Includes 200,000 shares issuable upon exercise of options.

(8)<F8>  Includes 90,000 shares issuable upon exercise of options.

(9)<F9>  Includes 50,000 shares issuable upon exercise of options.

(10)<F10>Includes 30,000 shares issuable upon exercise of options.

(11)<F11>Includes 2,445,000 shares issuable upon exercise of options.
</FN>
</TABLE>

         On July 27, 2001, we issued 1,300 shares of Series E preferred stock to
Eagle Capital Group, LLC that grants Eagle the right to vote an equivalent of
13,000,000 common shares. As a result of the transaction with Eagle, we will be
issuing 9,948,027 shares of our common stock to purchasers of units sold in
March through April, 2001 due to the anti-dilution clause contained in the
private placement.


ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         All of the terms of agreements and other transactions included in this
section were as fair as those we could have obtained from unrelated third
parties at arms-length transactions.

         Jeff Erskine, Mike Stuart, and Mark Moldenhauer and their respective
spouses personally guaranteed the operating lease dated July 24, 1997, pursuant
to which we lease our office and warehouse facilities in Scottsdale, Arizona. At
July 24, 1997, Messrs. Erskine, Stuart, and Moldenhauer were officers,
directors, and principal shareholders of our company. The lease expires
September 30, 2002.

         From inception, September 22, 1997, through March 31, 2001, we had
entered into various lending arrangements involving officers, directors and
other affiliated entities owned or controlled by officers, directors and other
key personnel. At March 31, 2001, 2000, and 1999, the outstanding balances on
these notes were $738,807, $538,807, and $538,807, respectively. The total
interest paid to these entities on all financing activities for the years ended
March 31, 2001, 2000, and 1999 was $106,888, $63,456, and $63,456, respectively.
The outstanding balances on related party notes respecting discontinued
operations were $0, $5,166,821, and $3,342,639 at March 31, 2001, 2000, and
1999, respectively. Total interest paid to these entities on all financing
activities for discontinued operations was $699,288, $704,665, and $233,368 for
the fiscal years ended March 31, 2001, 2000, and 1999, respectively.


                                       27

<PAGE>

<TABLE>
<CAPTION>
DATE OF
TRANSACTION             RELATED PARTY                TRANSACTION
<S>                     <C>                          <C>
09/22/97                Evelyn Felice               $400,000 loan, 12% interest per annum, payable monthly, due
                        (principal stockholder at    September 22, 1999, collateralized by used car inventory,
                        the time)                    personally guaranteed by Jeff Erskine, Mike Stuart, and John
                                                     Carrante.  This note was paid September 22, 1999.

10/17/97                Mark Moldenhauer             $150,000 loan, 12% interest per annum, payable monthly, due
                        (officer, director and       November 17, 1999, collateralized by used car inventory,
                        principal stockholder at     personally guaranteed by Jeff Erskine, Mike Stuart, and John
                        the time)                    Carrante. This note was paid by the Amended and Restated
                                                     Secured Promissory Note dated March 31, 2000.

12/15/97                Pinnacle Financial           $200,000 loan, 12% interest per annum, payable monthly, due
                        Corporation (owned by        December 15, 1998, collateralized by used car inventory.
                        officer, director, and       This note was paid by the Amended and Restated Secured
                        principal stockholder at     Promissory Note dated March 31, 2000.
                        the time)

01/15/98                Mark Moldenhauer             $300,000 loan, 12% interest per annum, payable monthly, due
                        (officer, director and       January 15, 1999, collateralized by used car inventory,
                        principal stockholder at     convertible into shares of common stock at $.10 per share.
                        the time)                    Note was converted into 3,000,000 shares of common stock on
                                                     May 1, 2000.

03/31/98                Mark Moldenhauer             $102,000 loan, 12% interest per annum, payable monthly, due
                        (officer, director and       upon 30 days' notice, collateralized by used car inventory.
                        principal stockholder at     This note was paid by the Amended and Restated Secured
                        the time)                    Promissory Note dated March 31, 2000.

04/07/98                Mark Moldenhauer             $300,000 loan, 12% interest per annum, payable monthly, due
                        (officer, director and       upon 30 days' notice, collateralized by used car inventory.
                        principal stockholder at     This note was paid by the Amended and Restated Secured
                        the time)                    Promissory Note dated March 31, 2000.

06/01/98                Eastlane Trading Limited     $250,000 loan, 12% interest per annum, payable on request,
                        (principal stockholder)      due April 1, 2000, collateralized by used car inventory.
                                                     This note was assumed by Pinnacle Financial as of December 31,
                                                     1999 and has been paid by the Amended and Restated
                                                     Secured Promissory Note due to Pinnacle Financial dated
                                                     March 31, 2000.

09/01/98                Mike and Debbie Stuart       $50,000 loan, 12% interest per annum, payable monthly, due
                        (officer, director, and      October 1, 1999, collateralized by used car inventory. This
                        principal stockholder at     note was paid March 31, 2000.
                        the time)

09/11/98                Pinnacle Financial           $117,500 loan, 12% interest per annum, payable monthly, due
                        Corporation (owned by        October 11, 1999, collateralized by used car inventory. This
                        officer, director, and       note was paid by the Amended and Restated Secured Promissory
                        principal stockholder at     Note dated March 31, 2000.
                        the time)


                                       28

<PAGE>
<CAPTION>

DATE OF
TRANSACTION             RELATED PARTY                TRANSACTION
<S>                     <C>                          <C>

09/18/98                Pinnacle Financial           $400,000 loan, 12% interest per annum, payable monthly, due
                        Corporation (owned by        October 30, 1998 (extended and due upon demand),
                        officer, director, and       collateralized by used car inventory. This note was paid by
                        principal stockholder at     the Amended and Restated Secured Promissory Note dated March
                        the time)                    31, 2000.

10/20/98                Eastlane Trading Limited     $1,000,000 loan, 12% interest per annum, payable on request,
                        (principal stockholder)      due April 1, 2000, collateralized by used car inventory. This
                                                     note was assumed by Pinnacle Financial as of December 31, 1999
                                                     and has been paid by the Amended and Restated
                                                     Secured Promissory Note due to Pinnacle Financial dated
                                                     March 31, 2000.

11/18/98                Eastlane Trading Limited     $232,259 loan, 12% interest per annum, payable on request,
                        (principal stockholder)      due April 1, 2000, collateralized by used car inventory. This
                                                     note was assumed by Pinnacle Financial as of December 31,
                                                     1999 and has been paid by the Amended and Restated
                                                     Secured Promissory Note due to Pinnacle Financial dated
                                                     March 31, 2000.

02/05/99                Eastlane Trading Limited     $17,741 loan, 12% interest per annum, payable on request, due
                        (principal stockholder)      April 1, 2000, collateralized by used car inventory. This
                                                     note was assumed by Pinnacle Financial as of December 31,
                                                     1999 and has been paid by the Amended and Restated
                                                     Secured Promissory Note due to Pinnacle Financial dated
                                                     March 31, 2000.

5/13/99                 Pinnacle Financial           $300,000 loan to Auto Network Group of New Mexico, 12 %
                        Corporation (owned by        interest per annum, payable monthly, due May 13, 2000,
                        officer, director, and       personally guaranteed by Jules Gollins, Bruce Burton, Stuart
                        principal stockholder at     Bailey, all officers of Auto Network Group of New Mexico, and
                        the time)                    their respective spouses.

6/22/99                 Pinnacle Financial           $200,000 loan, 12 % interest per annum, payable monthly, due
                        Corporation (owned by        December 22, 1999. This note was paid by the Amended and
                        officer, director, and       Restated Secured Promissory Note dated March 31, 2000.
                        principal stockholder at
                        the time)

6/22/99                 Mark Moldenhauer (officer,   $100,000 loan, 12 % interest per annum, payable monthly,
                        director and principal       due December 22, 1999. This note was paid by the Amended and
                        stockholder at the time)     Restated Secured Promissory Note dated March 31, 2000.

7/20/99                 Cascade Funding Group. LLC   $1,572,000 loan to Auto Network Group Northwest, prime plus
                        (owned by three officers     6% interest per annum, payable monthly, collateralized by
                        of Auto Network Group        used car inventory, due July 14, 2000.
                        Northwest, Inc.)

8/3/99                  Pinnacle Financial           $50,000 loan, 12 % interest per annum, payable monthly, due
                        Corporation (owned by        February 3, 2000. This note was paid by the Amended and
                        officer, director, and       Restated Secured Promissory Note dated March 31, 2000.
                        principal stockholder at
                        the time)


                                       29

<PAGE>

<CAPTION>
DATE OF
TRANSACTION             RELATED PARTY                TRANSACTION
<S>                     <C>                         <C>

8/3/99                  Mark Moldenhauer             $200,000 loan, 12 % interest per annum, payable monthly,
                        (officer, director and       due February 3, 2000. This note was paid by the Amended and
                        principal stockholder at     Restated Secured Promissory Note dated March 31, 2000.
                        the time

8/13/99                 MDM Investments              $160,000 loan, 12 % interest per annum, payable monthly,
                        (owned by Mike Stuart        due August 13, 2000. This note was paid October 14, 1999.
                        and Mark Moldenhauer)

11/1/99                 MDM Investments              $300,000 loan, 12% interest per annum, payable monthly, due
                       (owned by Mike Stuart         May 13, 2000. This note has been paid.
                        and Mark Moldenhauer)

11/5/99 and 11/9/99     Susan Gollins (wife of       $17,000 loan, 15% interest per annum, payable monthly, due on
                        officer and director of      demand.  Assumed by Automotive Disposition Management
                        Auto Network Group of New    Services, Inc.
                        Mexico, Inc.)

11/14/99                Darlene Burton Gollins       $45,000 loan, 15% interest per annum, payable monthly, due on
                        (wife of officer and         demand.  Assumed by Automotive Disposition Management
                        director of Auto Network     Services, Inc.
                        Group of New Mexico, Inc.)

12/27/99                Pinnacle Financial           $175,000 loan, 12 % interest per annum, payable monthly, due
                        Corporation (owned by        February 3, 2000.  This note was paid January 12, 2000.
                        officer, director, and
                        principal stockholder at
                        the time)

03/31/00                Pinnacle Financial           Amended and Restated Secured Promissory Note for
                        Corporation                  $2,675,420, 12% interest per annum, interest payable
                                                     monthly, 3 quarterly principal payments of $569,307
                                                     beginning June 30, 2000, with final payment of $967,500 due
                                                     April 1, 2001, personally guaranteed by Roger L. Butterwick
                                                     and John E. Rowlett, collateralized by all assets of
                                                     AutoTradeCenter.com Inc.  Assumed in part by Automotive
                                                     Disposition Management Services, Inc. and paid in part
                                                     by a new note for $336,200 due April 1, 2002, 12% interest
                                                     per annum.

03/31/00                Mark Moldenhauer             Amended and Restated Secured Promissory Note for $852,000,
                                                     12% interest per annum, interest payable monthly, principal
                                                     and interest due April 1, 2001, personally guaranteed by
                                                     Roger L. Butterwick and John E. Rowlett,  collateralized by
                                                     all assets of AutoTradeCenter.com Inc.  Paid by a new
                                                     note due April 1, 2002, 12% interest per annum.

12/29/00                Mark Moldenhauer             Secured Promissory Note for $300,000, 12% interest per
                                                     annum, principal and interest due April 1, 2001, collateralized
                                                     by all assets of AutoTradeCenter.com Inc.  Paid by a
                                                     new note due April 1, 2002, 12% interest per annum.


                                       30

<PAGE>

<CAPTION>
DATE OF
TRANSACTION             RELATED PARTY                TRANSACTION
<S>                     <C>                         <C>

03/31/01                Mark Moldenhauer             Secured promissory note for $402,000, 12% interest per
                                                     annum, payable monthly, principal and interest due April 1,
                                                     2002, collateralized by all accounts receivable, inventory,
                                                     equipment, and certain intangibles of AutoTradeCenter.com
                                                     Inc., personally guaranteed by Roger L. Butterwick and John
                                                     E. Rowlett, convertible at the option of the holder into
                                                     common shares at the lesser of $0.375 per share or the
                                                     average trading price of the common stock for the 30 trading
                                                     days preceding conversion.  Paid by Amended and Restated
                                                     Secured Promissory Note dated July 26, 2001.

03/31/01                Pinnacle Financial           Secured promissory note for $336,807, 12% interest per annum
                        Corporation                  payable monthly, principal and interest due April 1, 2002,
                                                     collateralized by all accounts receivable, inventory,
                                                     equipment, and certain intangibles of AutoTradeCenter.com
                                                     Inc., personally guaranteed by Roger L. Butterwick and John
                                                     E. Rowlett, convertible at the option of the holder into
                                                     common shares at the lesser of $0.375 per share or the
                                                     average trading price of the common stock for the 30 trading
                                                     days preceding conversion, subordinated to senior debt. Paid
                                                     by Amended and Restated Secured Promissory Note dated
                                                     July 26, 2001.

05/16/01                R. Gary McCauley             Promissory note for $150,000 and subsequently increased to
                        (director)                   $200,000 on May 31, 2001, due upon receipt of and secured
                                                     by specific trade accounts receivable, interest at 12% per
                                                     annum. Principal balance reduced to approximately $50,000
                                                     on June 29, 2001.

07/16/01                R. Gary McCauley             Promissory note for $65,000, due upon receipt of and secured
                        (director)                   by specific trade accounts receivable, interest at 12% per
                                                     annum.

07/24/01                Mark Moldenhauer and         Consolidated promissory note for $738,200, interest at 12%
                        Pinnacle Financial           per annum payable monthly, principal payments of $25,000 per
                        Corporation                  month for the months of November and December 2001, principal
                                                     payments of $50,000 per month for January 2002
                                                     through May 2002, balance due June 30, 2002, subordinated to
                                                     the first lien of Eagle Capital Funding, LLC.
</TABLE>

         On May 5, 1998, we obtained a line of credit from First International
Bank of Arizona in the amount of $500,000. The note was secured by a first lien
on all inventory, accounts receivable, equipment, and general intangibles and
personally guaranteed by Messrs. Erskine, Stuart and Moldenhauer. In addition,
Mr. Moldenhauer agreed to subordinate his loans made to us to the bank's line of
credit. On May 7, 1998, the Company granted each of Messrs. Erskine, Stuart, and
Moldenhauer two-year options to purchase 100,000 restricted shares of common
stock at a price of $.75 per share. On March 26, 1999, the note was paid. The
expiration date of the options has been extended to May 7, 2002.

         On March 26, 1999, we obtained a $3,000,000 revolving line of credit
from Wells Fargo Business Credit, Inc. The note was originally due March 31,
2000 and was secured by a first lien on all inventory, accounts receivable,
equipment, and general intangibles. The interest rate paid was 1.5% over the
bank's prime rate. Messrs. Stuart and Moldenhauer, who are former officers,
directors, and/or principal stockholders, and Mr. Butterwick, currently an
officer, director and principal stockholder personally guaranteed the note. On
December 31, 1998, we granted each of Messrs. Stuart, Moldenhauer, and
Butterwick three-year options to purchase 250,000 restricted


                                       31

<PAGE>

shares of common stock at a price of $1.00 per share, the closing bid on the
common stock at December 31, 1998, in consideration for providing their personal
guarantees on the line of credit. Mr. Butterwick remained as the sole guarantor
of the note during the extension period. No additional consideration was granted
to Mr. Butterwick. The note was paid in full on February 16, 2001.

         AUTO NETWORK GROUP OF NEW MEXICO, INC. TRANSACTIONS. On June 1, 1998,
Auto Network Group of New Mexico entered into a lease for an office and
warehouse facility in Albuquerque, New Mexico, with G & B Investments LLC, an
entity owned and controlled by Bruce Burton and Jules Gollins. The original
lease that expired on May 31, 1999 was extended to May 31, 2001. Messrs. Burton
and Gollins are two of the principals who manage the Auto Network Group of New
Mexico operations. The amount of lease payments made under this agreement was
$26,732 for the year ended March 31, 1999 and $34,754 for the year ended March
31, 2000.

         Also on June 1, 1998, we entered into a Purchase of Goodwill Agreement
with JBS, LLC, an entity whose members comprised the management team of Auto
Network Group of New Mexico. In consideration for the goodwill which Auto
Network Group of New Mexico received from JBS, JBS was granted a total of
800,000 contingently issuable restricted shares of our common stock valued at
$.20 per share as follows: 266,667 shares issued upon execution of the
agreement, held in escrow, and subject to forfeiture if Auto Network Group of
New Mexico was not doing business as of June 1, 1999; 266,667 shares to be
earned for the period June 1, 1998 through March 31, 1999 if pre-tax earnings of
Auto Network Group of New Mexico were at least $60,000; and 266,666 shares to be
earned for the period April 1, 1999 through March 31, 2000 if pre-tax earnings
of Auto Network Group of New Mexico were at least $120,000. In addition, JBS was
able to earn options to purchase restricted shares of our common stock at the
rate of 5 options for every dollar of pre-tax earnings of Auto Network Group of
New Mexico in excess of $60,000 for the period ending March 31, 1999, and 5
options for every dollar of pre-tax earnings of Auto Network Group of New Mexico
in excess of $120,000 for the year ended March 31, 2000. The options were to be
exercisable for a period of 3 years from date of grant at the bid price as of
March 31, 1999 or 2000, respectively.

         Since Auto Network Group of New Mexico was doing business at June 1,
1999, 266,667 shares were earned. For the period from June 1, 1998 through March
31, 1999, Auto Network Group of New Mexico had pre-tax earnings of $107,962,
resulting in JBS, LLC earning 266,667 shares and 239,810 options, exercisable at
$3.00 per share. For the period ending March 31, 2000, Auto Network Group of New
Mexico had pre-tax earnings of $70,395, resulting in no shares or options being
earned. This agreement was subsequently amended and 266,666 shares were issued
in 2000.

         On June 1, 1998, we loaned $250,000 to Auto Network Group of New
Mexico. The related promissory note is due June 30, 2000 and earns interest at
12% per annum, payable monthly. This note has been extended to June 30, 2003.
This note was repaid upon the sale of the subsidiary.

         WALDEN REMARKETING TRANSACTIONS. As of March 31, 1999, we acquired
Walden Remarketing Services, Inc., a Minnesota corporation, by issuing the
shareholders of Walden Remarketing a total of 2,050,000 restricted shares of
common stock, cash of $125,000, and promissory notes in the aggregate principal
amount of $425,000. The promissory notes accrued interest at the rate of 12% per
annum and had a remaining principal balance of $314,475 at December 31, 1999, at
which time they were converted into 314,475 common shares of our company.

         In connection with the acquisition of Walden Remarketing, Dennis E.
Hecker, the principal shareholder of that company, provided a personal guaranty
with respect to the full disclosure of liabilities of that company.

         On April 20, 1999, we entered into a consulting agreement with Dennis
E. Hecker as part of our acquisition of Walden Remarketing. Mr. Hecker has
agreed to provide consulting services to us for a period of three years ending
April 20, 2002. We granted Mr. Hecker an option to purchase 3,000,000 shares of
our common stock at $3.00 per share. As of December 1, 1999 the consulting
agreement and the option to purchase 3,000,000 shares of our common stock were
canceled.


                                       32

<PAGE>

         AUTO NETWORK GROUP NORTHWEST, INC. On July 20, 1999, we acquired Auto
Network Group Northwest, Inc., an Oregon corporation, by issuing the
shareholders of Auto Network Group Northwest a total of 500,000 contingently
issuable shares of restricted common stock valued at $1.50 per share. All shares
are held in escrow and are subject to the following events:

1.            83,333 shares are subject to forfeiture if the pre-tax earnings of
              Auto Network Group Northwest as of March 31, 2000 are less than
              $30,000. If pre-tax earnings are between $30,000 and $50,000 a
              pro-rata amount of shares shall be issued and the balance shall be
              forfeited.

2.            166,667 shares are subject to forfeiture if the pre-tax earnings
              of Auto Network Group Northwest as of March 31, 2001 are less than
              $50,000. If pre-tax earnings are between $50,000 and $100,000 a
              pro-rata amount of shares shall be issued and the balance shall be
              forfeited.

3.            250,000 shares are subject to forfeiture if the pre-tax earnings
              of Auto Network Group Northwest as of March 31, 2002 are less than
              $75,000. If pre-tax earnings are between $75,000 and $150,000 a
              pro-rata amount of shares shall be issued and the balance shall be
              forfeited.

         In addition, the former shareholders of Auto Network Group Northwest
may earn options to purchase restricted shares of our common stock at the rate
of 5 options for every dollar of pre-tax earnings of Auto Network Group
Northwest in excess of $50,000 for the period ending March 31, 2000; $100,000
for the year ended March 31, 2001; and, $150,000 for the year ended March 31,
2002. The options are to be exercisable for a period of 3 years from date of
grant at the bid price of our common stock as of April 1, 2000, 2001 or 2002,
respectively.

         For the period from July 20, 1999 through March 31, 2000, Auto Network
Group Northwest had pre-tax earnings of $41,721, resulting in the former
shareholders earning 69,535 shares. In April 2001, Automotive Disposition
Management Services, the parent of Auto Network Group Northwest, entered into an
agreement with the management of Auto Network Group Northwest under which Auto
Network Group Northwest reacquired all of its outstanding common shares from
Automotive Disposition Management Services and agreed to return to Automotive
Disposition Management Services 430,465 shares of our common stock that were
being held in escrow pending the results of the original earn-out agreement. We
decided to exercise our option to exchange these shares for 8.55% of our
interest in Automotive Disposition Management Services based upon the agreement
wherein Automotive Disposition acquired certain of our operating subsidiaries.
Effective July 1, 2001, all options previously issued to Auto Network Group
Northwest management and employees, as well as rights to earn new options,
expired unexercised.

         AUTO GROUP OF SAN ANTONIO, LTD. Effective April 1, 2000, we opened our
office and warehouse wholesale operation in San Antonio, Texas. Auto Group of
San Antonio Ltd., a Texas limited partnership, conducted our land-based business
in San Antonio. Our company was the sole limited partner and the sole owner of a
newly formed limited liability company which serves as the general partner.

         We loaned the limited partnership $450,000, which is evidenced by an
unsecured promissory note with interest at the rate of 12% per annum payable
monthly, in arrears. This note, which could be prepaid at any time, had a final
maturity on March 31, 2005. The limited partnership has entered into a
management agreement with JRB AutoBrokers, L.P., a Texas limited partnership.
JRB AutoBrokers also loaned $100,000 to the limited partnership on similar terms
to our advance. This promissory note was subordinate to our loan. When
Automotive Disposition Management Services acquired the limited partnership, our
note was repaid in full.

         Under the terms of the management agreement, JRB was responsible for
all day-to-day management of the limited partnership with complete autonomy,
subject only to reasonable review by the general partner. In addition, we
granted 468,750 contingently issuable restricted shares of our common stock to
JRB to acquire this operation. At that time, the shares were assigned a value of
$2.00 per share, and held in escrow pending certain future events. 93,750 of
such shares were released to JRB on April 1, 2001, since they were subject only
to the continuation of the business at that date. Annually beginning March 31,
2001, 93,750 additional shares or a portion thereof were to be released subject
to the limited partnership achieving pre-determined pre-tax earnings. For
example, if the limited partnership earns $100,000 for the year ended March 31,
2001, 93,750 of such shares will be released to JRB. In the event earnings for
the year fall below $100,000, a portion of these shares may still be released.
After March 31,


                                       33

<PAGE>

2001, the pre-tax earnings floor increases through March 31, 2004. A currently
interminable number of additional shares can be earned for the year ended March
31, 2005 based on pre-tax earning. Effective with the sale of this subsidiary we
placed 375,000 common shares in escrow to meet our obligation under the earn-out
agreement. For the fiscal year ended March 31, 2001, JRB reported unaudited
earnings of $78,157 entitling the managers of JRB to receive 73,272 earn-out
shares of the year then ended.

         AUTO NETWORK GROUP OF EASTERN PA., INC. Effective April 1, 2000 we
opened our office and warehouse wholesale operation in the Philadelphia,
Pennsylvania area. Our business in Pennsylvania was conducted by Auto Network
Group of Eastern Pa., Inc., a Pennsylvania corporation. We were the sole
shareholder of this Pennsylvania operation.

         We loaned $300,000 to the Pennsylvania operation, which was evidenced
by an unsecured promissory note with interest at the rate of 12% per annum
payable monthly, in arrears. The note could be prepaid at any time and had a
final maturity on March 31, 2006. Mr. Edward G. McCusker had agreed to loan
$100,000 to the Pennsylvania operation on terms similar to our advance, on or
before June 30, 2000. This loan was to be subordinate to the debt owed to us.
Mr. McCusker did not advance such funds for the Pennsylvania operations and for
this reason, as well as others, we ceased our operations in Pennsylvania in the
third quarter of 2000. We have filed a lawsuit in Pennsylvania against Mr. and
Mrs. McCusker in an effort to recover all or a part of our $300,000 loan plus
interest and costs. Although we believe that we are entitled to full recovery,
we have charged the unpaid balance of our loan to expense in the year ended
March 31, 2001.

         AUTOMOTIVE DISPOSITION MANAGEMENT SERVICES, INC. As of December 29,
2000, we sold our interest in our land-based operations in Albuquerque, New
Mexico; San Antonio, Texas; and Bend, Oregon to Automotive Disposition
Management Services, Inc., an affiliated Arizona corporation, in exchange for a
16% interest in Automotive Disposition. Automotive Disposition is a private
company owned by Jules Gollins, the manager of the New Mexico land-based
operation, and by Mark Moldenhauer, one of our founders, principal shareholders,
and former officer and director. In addition, promissory notes for $1,200,000
owed to us by the land-based operations have been assigned to Pinnacle Financial
Corporation, a private company owned by Mr. Moldenhauer. Pinnacle Financial
Corporation has in turn reduced the outstanding principal balance of our
promissory note to Pinnacle by $1,200,000 and extended the principal
installment, originally due December 31, 2000, to January 30, 2001. As of
February 16, 2001, Automotive Disposition Management Services, Inc. assumed a
portion of the note owed to Pinnacle Financial Corporation. The remaining
portion is being paid with a new note to Pinnacle Financial Corporation in the
amount of $366,200 due April 1, 2002.

         As described above, we originally acquired the New Mexico, Texas, and
Oregon operations with earn-out agreements, which enabled the managers of these
operations to earn shares and options if certain performance goals were met. We
agreed to place a total of 805,465 shares of our common stock in escrow to
satisfy, in full, our obligations under these agreements. These common shares
will remain in escrow until such time as certain shares of our stock are either
earned or forfeited. If earned, the relevant shares of our stock will be
transferred to the managers and brokers, and if unearned, the relevant shares of
our stock will be transferred and delivered to Automotive Disposition. Any
shares transferred to Automotive Disposition can, at our election, be exchanged
for part or all of our interest in Automotive Disposition.

         FUTURE TRANSACTIONS. All future affiliated transactions will be made or
entered into on terms that are no less favorable to us than those that can be
obtained from any unaffiliated third party. A majority of the independent,
disinterested members of our board of directors will approve future affiliated
transactions and forgiveness of loans.

         We believe that all loans made to affiliates by us meet the foregoing
standard. All loans to affiliates made by us carry an interest rate of 12% per
annum. This is the same interest rate paid by us on all notes payable to both
affiliates and outside third parties, with the exception of our revolving line
of credit with a financial institution. That revolving line of credit bears
interest at the prime rate plus 1-1/2%.


                                       34

<PAGE>

                                     PART IV

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

FINANCIAL STATEMENTS

         The following financial statements and financial statement schedules
are filed with this report:

         Independent Auditors' Report
         Consolidated Balance Sheet
         Consolidated Income Statement
         Consolidated Statement of Changes in Stockholders' Equity
         Consolidated Statement of Cash Flows

EXHIBITS

         The following exhibits are filed with this report:
<TABLE>
<CAPTION>
 Regulation S-K
     Number                                                     DOCUMENT

<S>    <C>         <C>
       2.1         Agreement and Plan of  Reorganization  between Auto Network  Group,  Inc. and Walden
                   Remarketing Services, Inc. (1)<F1>
       2.2         Agreement  Concerning  the  Exchange of Common  Stock  Between  AutoTradeCenter.com  Inc. and
                   Auto Network Group of Northwest, Inc. (1)<F1>
       3.1         Articles of Incorporation, as amended (1)<F1>
       3.2         Bylaws (1)<F1>
       4.1         Statement Pursuant To Section 10-602 of The Arizona Business  Corporation Act of Auto Network
                   USA, Inc. Regarding Series A Preferred Stock (1)<F1>
       4.2         Statement Pursuant To Section 10-602 of The Arizona Business  Corporation Act of Auto Network
                   USA, Inc. Regarding Series B Preferred Stock (1)<F1>
       4.3         Warrant to Purchase Common Stock Issued to Anthony & Company, Inc. (1)<F1>
       4.4         Statement   Pursuant   to   Section   10-602  of  The   Arizona   Business   Corporation   Act  of
                   AutoTradeCenter.com Inc. Regarding Series C Preferred Stock (3)<F3>
       4.5         Statement   Pursuant   to   Section   10-602  of  The   Arizona   Business   Corporation   Act  of
                   AutoTradeCenter.com Inc. Regarding Series D Preferred Stock (3)<F3>
       4.6         Statement   Pursuant   to   Section   10-602  of  the   Arizona   Business   Corporation   Act  of
                   AutoTradeCenter.com Inc. Regarding Series E Preferred Stock
      10.1         Stock Option Plan (1)<F1>
      10.2         Evelyn Felice loan documents (1)<F1>
      10.3         Mark Moldenhauer loan documents (1)<F1>
      10.4         Pinnacle Financial Corporation loan documents (1)<F1>
      10.5         Eastlane Trading Limited loan documents (1)<F1>
      10.6         Norwest Bank loan documents (1)<F1>
      10.7         Mike and Debbie Stuart loan documents (1)<F1>
      10.8         Purchase of Goodwill Agreement with JBS, LLC (1)<F1>
      10.9         Promissory Notes used for acquisition of Walden Remarketing Services, Inc.  (1)<F1>
      10.10        Consulting Agreement with Dennis E. Hecker dated April 20, 1999 (1)<F1>
      10.11        Non-Qualified Stock Option Agreement with Dennis E. Hecker dated April 20, 1999 (1)<F1>
      10.12        Sample "Work for Hire Agreement" (1)<F1>
      10.13        Agreement with Auction Finance Group, Inc. (1)<F1>
      10.14        Purchase  Agreement with Lloydminister  Enterprises Inc. and Kindersley  Holdings Inc. dated
                   March 23, 2000 (2)<F2>
      10.15        Amended and Restated Secured Promissory Note dated March 31, 2000 to Mark Moldenhauer (3)<F3>
      10.16        Amended  and  Restated  Secured  Promissory  Note  dated  March  31,  2000 to  Pinnacle  Financial
                   Corporation (3)<F3>
      10.17        Loan Extension from Wells Fargo Business Credit, Inc. (3)<F3>
      10.18        Agreement with American Honda Finance (3)(4)<F3><F4>


                                       35

<PAGE>

<CAPTION>
 Regulation S-K
     Number                                                     DOCUMENT

<S>    <C>         <C>

      10.19        Extension and Exchange Agreement with Pinnacle Financial Corporation dated December 29, 2000
                   (6)<F6>
      10.20        Motor Vehicle Remarketing  Agreement with American Suzuki Motor Corporation dated January
                   10, 2001 (4)<F4>
      10.21        Letter agreement with Sutro & Co. Incorporated dated October 11, 2000 (3)<F3>
      10.22        First Amendment to Motor Vehicle Remarketing Agreement with American Honda Finance
                   Corporation (4)<F4>
      10.23        Secured Promissory Note to Mark Moldenhauer dated December 29, 2000 (3)<F3>
      10.24        Secured Promissory Note to Mark Moldenhauer dated March 31, 2001
      10.25        Secured Promissory Note to Pinnacle Financial Corporation dated March 31, 2001
      10.26        Promissory Note to R. Gary McCauley dated May 31, 2001
      10.27        Promissory Note to R. Gary McCauley dated July 16, 2001
      10.28        Amended and Restated Secured Promissory Note to Mark Moldenhauer dated July 24, 2001
      10.29        Eagle Capital Group, LLC loan documents
      10.30        Fund Escrow Agreement between Stradling Yocca Carlson & Rauth, AutoTradeCenter.com Inc. and
                   Netchemistry, Inc. dated July 26, 2001
       21          Subsidiaries of the registrant (3)<F3>

---------------
<FN>

(1)<F1>  Incorporated by reference to the exhibits filed to the registration
         statement on Form S-1 (File No. 333-78659).

(2)<F2>  Incorporated by reference to the exhibits filed to the current report
         on Form 8-K dated March 23, 2000 (File No. 333-78659).

(3)<F3>  Incorporated by reference to the exhibits filed to the registration
         statement on Form S-1 (File No. 333-37090).

(4)<F4>  Portions of this exhibit have been omitted pursuant to a request for
         confidential treatment.

(5)<F5>  Incorporated by reference to the exhibits filed to the quarterly report
         on Form 10-Q for the quarter ended September 30, 2000.

(6)<F6>  Incorporated by reference to the exhibits filed to the current report
         on Form 8-K dated December 29, 2000 (File No. 333-78659).
</FN>
</TABLE>

REPORTS ON FORM 8-K

         1.       During the last quarter of the period covered by this report,
                  no reports on Form 8-K were filed.


                                       36

<PAGE>
                                                         SIGNATURES

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

                                       AUTOTRADECENTER.COM INC.
                                       (Registrant)


Date:  August 2, 2001                  By:/s/ ROGER L. BUTTERWICK
                                          -------------------------------------
                                          Roger L. Butterwick, President

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

<TABLE>
<CAPTION>

SIGNATURE                                TITLE                                  DATE

<S>                                     <C>                                     <C>
                                        President, Treasurer and a director
/s/ ROGER L. BUTTERWICK                 (Principal Executive Officer)           August 2, 2001
------------------------------------                                            ----------------
Roger L. Butterwick


                                        Vice President, Secretary and a
/s/ JOHN E. ROWLETT                     Director                                August 2, 2001
------------------------------------                                            ----------------
John E. Rowlett


                                        Chief Financial Officer (Principal
/s/ MICHAEL H. FEINSTEIN                Financial and Accounting Officer)       August 2, 2001
------------------------------------                                            ----------------
Michael H. Feinstein


/s/ JOHN HOUCK                          Director                                August 2, 2001
------------------------------------                                            ----------------
John Houck


                                        Director
------------------------------------                                            ----------------
James Kaiser


/s/ DAVID LIVINGSTON                    Director                                August 2, 2001
------------------------------------                                            ----------------
David Livingston


/s/ R. GARY MCCAULEY                    Director                                August 2, 2001
------------------------------------                                            ----------------
R. Gary McCauley


                                        Director
------------------------------------                                            ----------------
L. David Sikes



/s/ A. MARVIN STRAIT                    Director                                August 2, 2001
------------------------------------                                            ----------------
A. Marvin Strait
</TABLE>


                                       37

<PAGE>
                          INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Stockholders
AutoTradeCenter.com, Inc. and Subsidiaries

We have audited the consolidated balance sheets of AutoTradeCenter.com, Inc. and
Subsidiaries  as of  March  31,  2001 and  2000,  and the  related  consolidated
statements of income,  changes in stockholders'  equity,  and cash flows for the
years ended March 31, 2001, 2000, and 1999.  These financial  statements are the
responsibility of AutoTradeCenter.com,  Inc. and Subsidiaries'  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 financial  statements  referred to above present fairly, in
all material respects, the financial position of  AutoTradeCenter.com,  Inc. and
Subsidiaries as of March 31, 2001 and 2000, and the results of their  operations
and their cash  flows for the years  ended  March 31,  2001,  2000,  and 1999 in
conformity with accounting principles generally accepted in the United States of
America.


/s/ Neff & Ricci LLP


Albuquerque, New Mexico
May 18, 2001, except for Note R and S, as to which the date is July 26, 2001.


                                      F-1
<PAGE>



                    AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
                           Consolidated Balance Sheet
                             MARCH 31, 2001 AND 2000

                                     ASSETS
<TABLE>
<CAPTION>
                                                                                                   2001              2000
                                                                                                -------------    -------------
Current assets:                                                                                                  (RECLASSIFIED)
<S>                                                                                             <C>              <C>
  Cash                                                                                          $    209,068     $  4,355,738
  Accounts receivable - trade                                                                        224,298                -
  Accounts receivable - employees                                                                      8,535                -
  Prepaid expenses and other                                                                         164,882          110,272
  Assets from discontinued operations, net                                                            21,812        1,023,166
                                                                                                -------------    -------------
     Total current assets                                                                            628,595        5,489,176
                                                                                                -------------    -------------
Property and equipment, net                                                                          508,949          813,118
Software, net                                                                                      7,539,338       12,013,608
                                                                                                -------------    -------------
                                                                                                   8,048,287       12,826,726
                                                                                                -------------    -------------
Intangible assets, net                                                                             1,590,700        1,786,845
                                                                                                -------------    -------------
Total assets                                                                                    $ 10,267,582     $ 20,102,747
                                                                                                =============    =============



                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable - trade                                                                      $    110,063     $          -
  Notes payable - bank                                                                                     -        1,112,418
  Long term debt - notes payable to related parties current portion                                  200,000                -
  Accrued liabilities                                                                                135,976            6,124
                                                                                                -------------    -------------
    Total current liabilities                                                                        446,039        1,118,542
                                                                                                -------------    -------------
Long term debt - notes payable to related parties                                                    538,807          528,807
                                                                                                -------------    -------------

Stockholders' equity:
  Convertible preferred stock, Series C; $.10 par value;
      400,000 shares authorized; 21,216, and 20,800 issued, and 11,118 and 20,800
      outstanding in 2001 and 2000, respectively; liquidation preference $100.00 per share           924,828        1,906,536
  Convertible preferred stock, Series D; $.10 par value;
      600,000 shares authorized; 31,824 and 31,200 issued, and 14,536 and 31,200 shares
      outstanding in 2001 and 2000, respectively; liquidation preference $100.00 per share         1,227,296        2,859,805
  Common stock, no par value; 100,000,000 shares authorized;
      40,954,759 and 27,652,609 shares issued and outstanding
      in 2001 and 2000, respectively                                                              24,944,750       19,779,542
  Retained deficit                                                                               (17,814,138)      (6,090,485)
                                                                                                -------------    -------------
    Total stockholders' equity                                                                     9,282,736       18,455,398
                                                                                                -------------    -------------

      Total liabilities and stockholders' equity                                                $ 10,267,582     $ 20,102,747
                                                                                                =============    =============
</TABLE>



                 See notes to consolidated financial statements

                                      F-2


<PAGE>


                    AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
                          Consolidated Income Statement
                    Years ended March 31, 2001, 2000 and 1999
<TABLE>
<CAPTION>
                                                                        2001               2000                 1999
                                                                    -------------       ------------         ----------
                                                                                       (RECLASSIFIED)      (RECLASSIFIED)
<S>                                                                 <C>                 <C>                  <C>
Net sales                                                           $    891,423        $   291,587          $       -
                                                                    -------------       ------------         ----------
Operating expenses:
  Salary                                                               1,053,198             54,000             63,000
  Selling                                                                730,883            241,065                  -
  General and administrative                                           1,967,548            559,468            126,173
  Loss on disposal of impaired software                                2,261,486                  -                  -
  Depreciation and amortization                                        3,836,788            319,800             24,042
                                                                    -------------       ------------         ----------
    Total operating expenses                                           9,849,903          1,174,333            213,215
                                                                    -------------       ------------         ----------

  (Loss) from operations                                              (8,958,480)          (882,746)          (213,215)
                                                                    -------------       ------------         ----------
Other income (expense):
  Miscellaneous                                                            4,999                  -                  -
  Interest expense                                                      (106,888)           (63,456)           (63,456)
                                                                    -------------       ------------         ----------
    Total other income (expense) - net                                  (101,889)           (63,456)           (63,456)
                                                                    -------------       ------------         ----------

  (Loss) from continuing operations                                   (9,060,369)          (946,202)          (276,671)
                                                                    -------------       ------------         ----------

Discontinued operations:
  Income (loss) from operations of land-based segment                   (323,840)        (1,697,585)           448,491
  Loss from disposition of land-based segment                         (2,339,445)                 -                  -
                                                                    -------------       ------------         ----------
                                                                      (2,663,285)        (1,697,585)           448,491
                                                                    -------------       ------------         ----------

Net income (loss) before income taxes                                (11,723,654)        (2,643,787)           171,820
                                                                    -------------       ------------         ----------

Income tax (expense) benefit:
  Continuing operations                                                        -                  -             50,302
  Discontinued operations                                                      -             56,034           (106,881)
                                                                    -------------       ------------         ----------
                                                                               -             56,034            (56,579)
                                                                    -------------       ------------         ----------
Net income (loss)                                                   $(11,723,654)       $(2,587,753)         $ 115,241
                                                                    =============       ============         ==========


Basic earnings (loss) per share:
  Continuing operations                                             $      (0.28)       $     (0.04)         $   (0.02)
  Discontinued operations                                           $      (0.08)       $     (0.08)         $    0.03


Diluted earnings (loss) per share:
  Continuing operations                                             $      (0.28)       $     (0.04)         $   (0.01)
  Discontinued operations                                           $      (0.08)       $     (0.08)         $    0.02



Weighted average shares number of common shares outstanding
  Basic                                                               32,777,824         21,638,671         13,726,397
  Fully diluted                                                       32,777,824         21,638,671         22,826,745
</TABLE>


                 See notes to consolidated financial statements

                                      F-3

<PAGE>


                    AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
            Consolidated Statement of Changes in Stockholders' Equity
                For the Years Ended March 31, 2001, 2000 and 1999
<TABLE>
<CAPTION>
                                      SERIES A, CONVERTIBLE   SERIES B, CONVERTIBLE    SERIES C, CONVERTIBLE
                                         PREFERRED STOCK         PREFERRED STOCK         PREFERRED STOCK
                                      ---------------------   ---------------------   -----------------------
                                        SHARES     AMOUNT      SHARES      AMOUNT      SHARES       AMOUNT
                                       -------   ----------   --------   ----------   --------   ------------
<S>                                    <C>       <C>          <C>        <C>          <C>        <C>

Balance - March 31, 1998                3,848    $ 382,251          -    $       -          -    $         -

June 1998 - Issued common shares
 under goodwill agreement

August 1998 - Issued common
 shares for purchase of subsidiary

November 1998 - Issued convertible
 Series B preferred stock                                      35,000    $ 281,242

December 1998 - Issued convertible
 Series B preferred stock                                      12,000       90,795

March 1999 - Converted preferred
 shares into common shares             (3,848)    (382,251)

March 1999 - Effect of construc-
 tive dividend on convertible
 Series B preferred stock

March 1999 - Issued common shares
 under goodwill agreement

March 1999 - Issued common shares
 for purchase of subsidiary

March 1999 - Fair value of stock
 options granted for the year ended.

Net income for the year ended
 March 31, 1999
                                       -------   ----------   --------   ----------   --------   ------------
Balance - March 31, 1999                    -    $       -     47,000    $ 372,037          -    $         -
                                       =======   ==========   ========   ==========   ========   ============


<CAPTION>
                                        SERIES D, CONVERTIBLE
                                         PREFERRED STOCK                COMMON STOCK              RETAINED
                                       -----------------------   ----------------------------     EARNINGS
                                        SHARES       AMOUNT         SHARES         AMOUNT         (DEFICIT)         TOTAL
                                       --------   ------------   ------------   -------------   -------------   -------------
<S>                                    <C>        <C>            <C>            <C>             <C>             <C>

Balance - March 31, 1998                    -     $         -     13,226,622    $    345,233    $     12,384    $    739,868

June 1998 - Issued common shares
 under goodwill agreement                                            266,667          53,333                          53,333

August 1998 - Issued common
 shares for purchase of subsidiary                                   300,000          47,814                          47,814

November 1998 - Issued convertible
 Series B preferred stock                                                                                            281,242

December 1998 - Issued convertible
 Series B preferred stock                                                                                             90,795

March 1999 - Converted preferred
 shares into common shares                                         4,275,128         382,251                               -

March 1999 - Effect of construc-
 tive dividend on convertible
 Series B preferred stock                                                            253,077        (253,077)              -

March 1999 - Issued common shares
 under goodwill agreement                                            266,667          53,333                          53,333

March 1999 - Issued common shares
 for purchase of subsidiary                                        2,050,000       1,450,000                       1,450,000

March 1999 - Fair value of stock
 options granted for the year ended                                                   79,438                          79,438

Net income for the year ended
 March 31, 1999                                                                                      115,241         115,241
                                       --------   ------------   ------------   -------------   -------------   -------------
Balance - March 31, 1999                     -    $         -     20,385,084    $  2,664,479    $   (125,452)   $  2,911,064
                                       ========   ============   ============   =============   =============   =============


</TABLE>


                 See notes to consolidated financial statements

                                      F-4

<PAGE>
                    AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
            Consolidated Statement of Changes in Stockholders' Equity
                For the Years Ended March 31, 2001, 2000 and 1999
<TABLE>
<CAPTION>
                                      SERIES A, CONVERTIBLE   SERIES B, CONVERTIBLE    SERIES C, CONVERTIBLE
                                         PREFERRED STOCK         PREFERRED STOCK         PREFERRED STOCK
                                      ---------------------   ---------------------   -----------------------
                                        SHARES     AMOUNT      SHARES      AMOUNT      SHARES       AMOUNT
                                       -------   ----------   --------   ----------   --------   ------------
<S>                                    <C>       <C>          <C>        <C>          <C>        <C>
Balance forward from March 31,
 1999                                       -    $       -     47,000    $ 372,037          -    $         -

April 1999 - Exercise of stock
 options

December 1999 - Note payable
 converted into stock

January 2000 - Preferred stock
 conversion                                                   (47,000)   $(372,037)

February 2000 - Issued common
 shares for software development

February 2000 - Warrants conversion

February 2000 - Issued convertible
 Series C preferred stock                                                              20,800      1,906,536

February 2000 - Issued convertible
 Series D preferred stock

March 2000 - Issued common shares
 for purchase of minority interest
 in subsidiary

March 2000 - Issued common shares
 for purchase of subsidiary

March 2000 - Effect of constructive
 dividend on convertible Series C
 preferred stock

March 2000 - Effect of constructive
 dividend on convertible Series D
 preferred stock

March 2000 - Fair value of stock
 options granted for the year ended

March 2000 - Issued restricted
 common shares for purchase of
 subsidiary

Net loss for the year ended
 March 31, 2000
                                       -------   ----------   --------   ----------   --------   ------------
Balance - March 31, 2000                    -    $       -          -    $       -     20,800    $ 1,906,536
                                       =======   ==========   ========   ==========   ========   ============



<CAPTION>
                                        SERIES D, CONVERTIBLE
                                         PREFERRED STOCK                COMMON STOCK              RETAINED
                                       -----------------------   ----------------------------     EARNINGS
                                        SHARES       AMOUNT         SHARES         AMOUNT         (DEFICIT)         TOTAL
                                       --------   ------------   ------------   -------------   -------------   -------------
<S>                                    <C>        <C>            <C>            <C>             <C>             <C>
Balance forward from March 31,
 1999                                        -    $         -     20,385,084    $  2,664,479        (125,452)   $  2,911,064

April 1999 - Exercise of stock
 options                                                             100,000         200,000                         200,000

December 1999 - Note payable
 converted into stock                                                314,475         314,475                         314,475

January 2000 - Preferred stock
 conversion                                                          543,515         372,037                               -

February 2000 - Issued common
 shares for software development                                      40,000          80,000                          80,000

February 2000 - Warrants conversion                                  100,000          50,000                          50,000

February 2000 - Issued convertible
 Series C preferred stock                                                                                          1,906,536

February 2000 - Issued convertible
 Series D preferred stock               31,200      2,859,805                                                      2,859,805

March 2000 - Issued common shares
 for purchase of minority interest
 in subsidiary                                                     5,000,000       9,375,000                       9,375,000

March 2000 - Issued common shares
 for purchase of subsidiary                                        1,100,000       2,801,590                       2,801,590

March 2000 - Effect of constructive
 dividend on convertible Series C
 preferred stock                                                                   1,697,280      (1,697,280)              -

March 2000 - Effect of constructive
 dividend on convertible Series D
 preferred stock                                                                   1,680,000      (1,680,000)              -

March 2000 - Fair value of stock
 options granted for the year ended                                                  351,280                         351,280

March 2000 - Issued restricted
 common shares for purchase of
 subsidiary                                                           69,535         193,401                         193,401

Net loss for the year ended
 March 31, 2000                                                                                   (2,587,753)     (2,587,753)
                                       --------   ------------   ------------   -------------   -------------   -------------
Balance - March 31, 2000                31,200    $ 2,859,805     27,652,609    $ 19,779,542    $ (6,090,485)   $ 18,455,398
                                       ========   ============   ============   =============   =============   =============

</TABLE>


                 See notes to consolidated financial statements

                                      F-5


<PAGE>


                    AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
            Consolidated Statement of Changes in Stockholders' Equity
                For the Years Ended March 31, 2001, 2000 and 1999
<TABLE>
<CAPTION>
                                      SERIES A, CONVERTIBLE   SERIES B, CONVERTIBLE    SERIES C, CONVERTIBLE
                                         PREFERRED STOCK         PREFERRED STOCK         PREFERRED STOCK
                                      ---------------------   ---------------------   -----------------------
                                        SHARES     AMOUNT      SHARES      AMOUNT      SHARES       AMOUNT
                                       -------   ----------   --------   ----------   --------   ------------
<S>                                    <C>       <C>          <C>        <C>          <C>        <C>
Balance forward from March 31,
 2000                                       -    $       -          -    $       -     20,800    $ 1,906,536

April 2000 - Exercise of stock
 options

April 2000 - Issued common shares
 for purchase of subsidiary
 contingent on performance

April 2000 - Issued common shares
 for purchase of subsidiary
 contingent on performance

May 2000 - Note payable converted
 into stock

July 2000 - Exercise of stock
 options

August 2000 - Exercise of stock
 options

September 2000 - Exercise of stock
 options

September 2000 - Issuance of shares
 for goodwill

September 2000 - Preferred C stock
 conversion                                                                            (8,200)      (751,615)

September 2000 - Preferred D stock
 conversion

October 2000 - Exercise of stock
 options

October 2000 - Stock issued for
 services                                                                                            (91,598)

January 2001 - Conversion of
 preferred shares                                                                        (700)       (17,495)

January 2001 - Conversion of
 preferred shares

March 2001 - Conversion of
 preferred shares

March 2001 - Conversion of
 preferred shares                                                                      (1,000)      (100,000)

Shares issued for services                                                                           (21,000)

Shares issued upon exercise of
 options

Common shares sold pursuant to
 Private Placement through March 31

Shares, options and warrants
 issued for services

To adjust Preferred shares for 2%
 bonus shares issued - net                                                                218

Net loss from discontinued
 operations for a the year ended
 March 31, 2001

Net loss from continuing
 operations for the year ended
 March 31, 2001

Rounding
                                       -------   ----------   --------   ----------   --------   ------------
Balance - March 31, 2001                    -    $       -          -    $       -     11,118    $   924,828
                                       =======   ==========   ========   ==========   ========   ============

<CAPTION>
                                        SERIES D, CONVERTIBLE
                                         PREFERRED STOCK                COMMON STOCK              RETAINED
                                       -----------------------   ----------------------------     EARNINGS
                                        SHARES       AMOUNT         SHARES         AMOUNT         (DEFICIT)         TOTAL
                                       --------   ------------   ------------   -------------   -------------   -------------
<S>                                    <C>        <C>            <C>            <C>             <C>             <C>
Balance forward from March 31,
 2000                                   31,200    $ 2,859,805     27,652,609    $ 19,779,542    $ (6,090,485)   $ 18,455,398

April 2000 - Exercise of stock
 options                                                              10,000          10,000                          10,000

April 2000 - Issued common shares
 for purchase of subsidiary
 contingent on performance                                                -               -                               -

April 2000 - Issued common shares
 for purchase of subsidiary
 contingent on performance                                                -               -                               -

May 2000 - Note payable converted
 into stock                                                        3,000,000         300,000                         300,000

July 2000 - Exercise of stock
 options                                                             163,875         124,792                         124,792

August 2000 - Exercise of stock
 options                                                               5,000           4,375                           4,375

September 2000 - Exercise of stock
 options                                                              50,000          22,500                          22,500

September 2000 - Issuance of shares
 for goodwill                                                        266,667          53,333                          53,333

September 2000 - Preferred C stock
 conversion                                                          669,120         751,615                               -

September 2000 - Preferred D stock
 conversion                            (14,900)    (1,365,740)     1,838,741       1,365,740                               -

October 2000 - Exercise of stock
 options                                                             374,750         317,583                         317,583

October 2000 - Stock issued for
 services                                            (137,396)       134,683         282,430                          53,436

January 2001 - Conversion of
 preferred shares                                                     57,120          17,495                               -

January 2001 - Conversion of
 preferred shares                       (1,000)       (47,532)       357,143          47,532                               -

March 2001 - Conversion of
 preferred shares                       (1,049)       (50,340)       348,939          50,340                               -

March 2001 - Conversion of
 preferred shares                                                     81,600         100,000                               -

Shares issued for services                            (31,500)        60,000          52,500                               -

Shares issued upon exercise of
 options                                                              19,300          19,300                          19,300

Common shares sold pursuant to
 Private Placement through March 31                                5,865,212       1,452,487                       1,452,487

Shares, options and warrants
 issued for services                                                                 193,186                         193,186

To adjust Preferred shares for 2%
 bonus shares issued - net                 285                                                                             -

Net loss from discontinued
 operations for a the year ended
 March 31, 2001                                                                                   (2,663,285)     (2,663,285)

Net loss from continuing
 operations for the year ended
 March 31, 2001                                                                                   (9,060,369)     (9,060,369)

Rounding                                                   (1)                                             1               -
                                       --------   ------------   ------------   -------------   -------------   -------------
Balance - March 31, 2001                14,536    $ 1,227,296     40,954,759    $ 24,944,750    $(17,814,138)   $  9,282,736
                                       ========   ============   ============   =============   =============   =============
</TABLE>

                 See notes to consolidated financial statements

                                      F-6




<PAGE>

                    AutoTradeCenter.com Inc. and Subsidiaries
                      Consolidated Statements of Cash Flows
                    Years ended March 31, 2001, 2000 and 1999

<TABLE>
<CAPTION>
                                                                        2001               2000                1999
                                                                    -------------       -------------      ------------
<S>                                                                 <C>                 <C>                <C>
Cash flows from operating activities:
  Net (loss) income:
    Continuing operations-net of income taxes                       $ (9,060,369)       $   (946,202)      $  (226,369)
    Discontinued operations-net of income taxes                       (2,663,285)         (1,641,551)          341,610
                                                                    -------------       -------------      ------------
                                                                     (11,723,654)         (2,587,753)          115,241
                                                                    -------------       -------------      ------------

Adjustments to reconcile net income (loss) to net cash
  provided by operating activities:
    Depreciation and amortization                                      3,836,788             319,800            24,042
    Loss on disposal of impaired software                              2,261,486                   -                 -
    Stock or stock options issued for services                           299,955             351,280            23,083
(Increase) decrease in:
  Net assets of discontinued operations                                1,001,354           1,257,062        (1,823,695)
  Accounts receivable                                                   (232,834)             98,610           (98,610)
  Prepaid expenses and other current assets                              (54,610)           (105,006)           (5,266)
  Long term debt - current portion                                       200,000                   -                 -
  Accounts payable                                                       110,063             (24,712)           24,712
  Accrued liabilities                                                    129,852             (44,599)           50,723
  Deferred income taxes                                                        -              (7,010)            7,010
                                                                    -------------       -------------      ------------
    Net cash used in operating activities                             (4,171,599)           (742,328)       (1,682,760)
                                                                    -------------       -------------      ------------

Cash flows from investing activities:
  Purchase of property, equipment and software                        (1,552,232)           (420,365)         (175,446)
  Sale of property and equipment                                         428,542              45,945            57,520
  Net cash paid for acquisitions                                               -                   -           (70,906)
                                                                    -------------       -------------      ------------
    Net cash used in investing activities                             (1,123,690)           (374,420)         (188,832)
                                                                    -------------       -------------      ------------
Cash flows from financing activities:
  Net proceeds from borrowings                                          (802,418)            158,393         1,268,500
  Proceeds from long-term debt                                                 -                   -           528,807
  Proceeds from issuance of convertible preferred stock                        -           4,766,341           372,037
  Proceeds from exercise of stock options                                498,550                   -                 -
  Proceeds from issuance of common stock - net                         1,452,487             250,000                 -
                                                                    -------------       -------------      ------------
    Net cash  provided by financings activities                        1,148,619           5,174,734         2,169,344
                                                                    -------------       -------------      ------------

Net change in cash                                                    (4,146,670)          4,057,986           297,752

Beginning cash balance                                                 4,355,738             297,752                 -
                                                                    -------------       -------------      ------------

Ending cash balance                                                 $    209,068        $  4,355,738       $   297,752
                                                                    =============       =============      ============


Supplemental disclosures:
  Interest paid for discontinued operations                         $    690,853        $    887,094       $   355,006
                                                                    =============       =============      ============
  Interest paid for continuing operations                           $    106,888        $     63,456       $    63,456
                                                                    =============       =============      ============
  Income taxes paid                                                 $          -        $      3,000       $    73,527
                                                                    =============       =============      ============
  Issuance of Common Stock for:
    Software                                                        $          -        $ 11,493,673       $        -
                                                                    =============       =============      ============
    Goodwill                                                        $     53,333        $    246,724       $ 1,503,333
                                                                    =============       =============      ============
</TABLE>

                 See notes to consolidated financial statements

                                      F-7

<PAGE>

                    AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2001


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

INCORPORATION AND NATURE OF  BUSINESS

         AutoTradeCenter.com  Inc. ("the Company") was incorporated  pursuant to
the laws of the  State of  Arizona  on July 10,  1997 and  began  operations  on
September 22, 1997.  In December  1998,  the Company  changed its name from Auto
Network USA, Inc. to Auto Network  Group,  Inc. In March 1999, the Company again
changed its name to AutoTradeCenter.com Inc. to more properly reflect its future
direction as an Internet based  wholesaler  and remarketer of used  automobiles.
The wholesale  automobile  business  principally  involves activities related to
redistributing used vehicles, typically acquired from franchised and independent
auto dealers,  lessors,  banks and other finance companies and reselling them to
other franchised and independent dealers. Prior to December 31, 2000 the Company
engaged in these activities either as a fee-based service or as a principal.  As
a principal  (land-based  operations),  the  Company  performed  these  services
through  independent  wholesale  brokers.  Each broker bought,  titled, and sold
vehicles in the name of the Company.  In November 2000,  the Company  decided to
discontinue all of its land-based  operations in order to concentrate efforts on
remarketing  used  vehicles  utilizing the  Internet.  Accordingly,  it sold its
land-based subsidiaries located in New Mexico, Texas, and Oregon on December 29,
2000,  and  transferred  ownership of  substantially  all vehicles  owned by its
Scottsdale,  Arizona  operations  on February  28, 2001 to certain of its former
brokers.

         The Company's Internet operations facilitate the exchange (remarketing)
of used vehicles from lessors,  captive and other finance companies,  banks, and
franchised and  independent  auto dealers,  to other  franchised and independent
dealers. The Company, generally, earns fees from these exchanges,  utilizing its
proprietary software. The Company currently has three contracts to remarket late
model  off-lease  and program  vehicles to  specified  franchised  dealers.  The
Company currently does not act as principal in its Internet business.

         AutoTradeCenter.com  Inc.  stock is traded on the NASD  Bulletin  Board
under the symbol AUTC.OB.

PRINCIPLES OF CONSOLIDATION

         The  consolidated  financial  statements  include  the  accounts of the
Company and its wholly owned subsidiaries:  Auto Network Group of Arizona,  Inc.
("ANET-AZ")  Pinnacle Dealer Services,  Inc.  ("PDS"),  National Dealer Services
("NDSCo"), AutoTradeCenter Remarketing Services Inc. formerly Walden Remarketing
Services, Inc. ("Walden Remarketing"), and BusinessTradeCenter.com Inc. ("BTC").
All  material  intercompany  accounts  and  transactions  have been  eliminated.
Information regarding the discontinued  operations of former subsidiaries;  Auto
Network Group of New Mexico,  Inc.  ("ANET-NM"),  Auto Network Group  Northwest,
Inc. ("ANET-NW"),  and Auto Group of SanAntonio,  Ltd. ("ANET-SA"), is contained
herein.  Information regarding two other land-based  subsidiaries that currently
have  no  assets  or  liabilities,   Auto-Network  Group  of  Eastern  PA,  Inc.
("ANET-PA")  and  Auto  Network  Group  of  Denver,  Inc.  ("ANET-Den")  also is
contained herein.

RECLASSIFICATIONS

         Certain prior period amounts have been  reclassified  to conform to the
current year presentation.

USE OF ESTIMATES

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




                                      F-8
<PAGE>


                    AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2001


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

CASH AND CASH ITEMS

         Cash  and  cash  items  include  all  highly  liquid  debt  instruments
purchased with a maturity of three months or less at the date of acquisition. At
times, cash balances held at financial  institutions were in excess of federally
insured limits.

INVENTORY

         Inventory  (relating to discontinued  operations)  consists entirely of
used vehicles  that are stated at the lower of cost or market.  The cost of used
vehicles is  determined  on a specific  identification  basis.  The cost of each
vehicle  includes  the purchase  price plus  transportation  and  reconditioning
expenses.  The Company  reduces the carrying  value of each vehicle if the total
cost exceeds the net  realizable  value of the  vehicle.  At March 31, 2001 as a
result of the  discontinuance  of its  land-based  operations the Company has no
inventory.

DEPRECIATION METHOD

         Equipment   and  leasehold   improvements   are  stated  at  cost  less
accumulated  depreciation  and  amortization.  Depreciation and amortization are
computed using the  straight-line  method over the assets estimated useful lives
ranging from 3 to 10 years.

SOFTWARE CAPITALIZATION AND WEBSITE DEVELOPMENT COSTS

         The Company  follows  Statement of Position  98-1,  Accounting  for the
Costs  of  Computer  Software   Developed  or  Obtained  for  Internal  Use,  in
determining the amount of software costs  developed  in-house to be capitalized.
The Company  applies  Emerging  Issues Task Force 00-02  Accounting  for Website
Development  Costs in determining the amount of website  development costs to be
capitalized.

         These standards require  capitalization  of certain direct  development
costs associated with internal use software and website development costs. Costs
to be capitalized  include internal and external direct project costs including,
among  others;  payroll  and labor,  material,  and  services.  These  costs are
included in software and are being  amortized  over a period not to exceed three
years beginning when the software is substantially ready for use. Costs incurred
on new  projects,  projects in a  preliminary  phase and projects  that contract
negotiations  have not begun,  as well as  maintenance,  and training  costs are
charged to expense as incurred.

AMORTIZATION OF INTANGIBLES

         Goodwill and other  intangibles are amortized on a straight-line  basis
over  periods  ranging up to 10 years.  The Company  periodically  assesses  the
recoverability  of the cost of its  goodwill  based  upon a review of  projected
undiscounted  cash  flows of the  related  operating  entity.  These  cash  flow
estimates  are  prepared  and  reviewed by  management  in  connection  with the
Company's annual long-range  planning  process.  As of March 31, 2001, there had
been no write down of goodwill (See information  regarding  reclassification  of
goodwill- Note B).


                                      F-9


<PAGE>
                    AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2001


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


REVENUE RECOGNITION

         Revenue and the corresponding  cost of revenue are recognized  monthly.
Customers  are billed a per vehicle  sales fee for vehicles sold while listed on
the Company's  hosted web sites.  These sales are recorded in trade  receivables
until cash is received.  The Company has implemented  the  requirements of Staff
Accounting  Bulletin  101,  which  did not have a  material  impact  on  revenue
recognition in the financial statements.

         Formerly,  land-based  operating revenues and the corresponding cost of
the sales were  recognized  when vehicles were sold to customers  evidenced by a
sale and a purchase  order,  respectively.  The Company paid for the vehicle and
received payment from its customers when the vehicle title was presented.  It is
not  unusual  for a title to lag  several  days  behind the  recordation  of the
vehicle purchase and physical delivery;  correspondingly,  a vehicle may be sold
and  delivered to a customer  prior to the delivery of the title and the receipt
of cash.

 EARNINGS (LOSS) PER SHARE

         Basic  earnings  (loss)  per  share  have  been  computed  based on the
weighted average number of common shares outstanding.  The computations  exclude
430,465  shares held in escrow  pending  certain  earn-out  provisions.  Diluted
earnings per share for the year ended March 31,  1999,  reflects the increase in
average common shares outstanding that would result from the assumed exercise of
outstanding  stock  options and the  assumed  conversion  of debt and  preferred
stock.  Basic and  diluted  earrings  per share are the same for the years ended
March 31, 2000, and 2001, as the Company  reported  losses for these years and a
computation of fully diluted earnings would be anti-dilutive.

VALUATION OF STOCK OPTIONS

         The Company uses the  intrinsic  value method for valuing stock options
issued  to  employees.  The  Company  uses the fair  value of goods or  services
received or the fair value of the options or warrants issued,  whichever is more
readily  measurable,  to determine the expense to record for options or warrants
issued to non-employees.

INCOME TAXES

         The Company  recognizes  deferred  tax  liabilities  and assets for the
expected  future tax  consequences  of events that have been  recognized  in its
financial statements or tax returns. Under this method, deferred tax liabilities
and assets are determined based upon the difference between financial  statement
carrying amounts and tax basis of assets and liabilities using enacted tax rates
in effect in the years in which the differences are expected to reverse.

SEGMENT REPORTING

         The  Company is  required  to report  information  about its  operating
segments, as well as related disclosures about products and services, geographic
areas and  major  customers.  At March 31,  2001,  Internet  remarketing  is the
Company's  only operating  segment.  All of its revenue for the year ended March
31, 2001 was earned from its contract with American  Honda Finance  Corporation.
All former land-based operations are presented as discontinued operations.


                                      F-10


<PAGE>


                    AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2001


NOTE B - RECLASSIFICATION OF GOODWILL

         When the Company  acquired  NDSCo on March 31, 2000,  $2,039,123 of the
purchase  price was  allocated to  goodwill.  The goodwill was assigned a useful
life of 10 years.  Upon  further  consideration  the Company  reclassified  this
allocation from goodwill to cost of software to more  succinctly  categorize the
nature of the assets purchased. During the quarter ended December 31, 2000, as a
result of the changes in its business  plan  including  the  disposition  of its
dealer-to-dealer  land based business,  the Company  further  determined that it
could no longer estimate the useful life, if any, of this software. Accordingly,
the carrying cost of this asset was considered  impaired and written off in full
during the year.

         When the Company acquired the remaining 45% minority interest of BTC on
March 23, 2000,  $9,374,550 of the purchase price was allocated to goodwill with
an  estimated  life  of  10  years.  Upon  further  consideration,  the  Company
reclassified  this  allocation  from  goodwill  to  cost  of  software  to  more
succinctly categorize the nature of the assets purchased. Effective for the year
ended March 31,  2000,  the Company  changed its  estimate of the useful life of
this asset from 10 years to 3 years.

         The  reclassified  consolidated  balance sheet at March 31, 2000, among
other things, reflects both of these reclassifications.



NOTE C -  DISCONTINUED OPERATIONS

         On November 30, 2000,  the Company  formalized its decision to exit its
land-based  operations no later than March 31, 2001, the end of its fiscal year.
The  disposition  of the  land-based  operations  represents  the  disposal of a
business  segment  under APB  Opinion  No.  30.  Accordingly,  results  of these
operations  have been  classified  as  discontinued  and prior periods have been
restated,  including the reallocation of fixed overhead charges to both business
segments. As of December 29, 2000, the Company sold its land-based operations in
Albuquerque,  New Mexico;  San Antonio,  Texas;  and Bend,  Oregon to Automotive
Disposition   Management   Services,   Inc.,   ("ADM")  an  affiliated   Arizona
corporation,   in  exchange  for  a  16%  interest  in  ADM.  The  Company  sold
substantially all of its land-based operations in Scottsdale Arizona, to certain
of its  independent  contract  brokers  effective  February  28,  2001,  thereby
completing  the  discontinuance  of all land-based  operations.  The Company has
recorded an actual loss of $748,475 on the sale of its land-based  operations to
ADM,  recorded  total losses of $277,388  related to the earlier  closing of its
Pennsylvania  operation and accrued an estimated  loss of $1,313,582 on disposal
of its Scottsdale  operations,  including  $50,000 in estimated future expenses,
included  in  accrued  expenses.  Total  losses  on  disposition  of  land-based
operations  increased $687,392 over the amount reported in the Company's interim
financial  statements  contained in Form 10-Q for the period ended  December 31,
2000. The additional losses included among other things;  $250,000 in additional
allowance  for losses for unpaid  balances  due the Company at December 31, 2000
from  its  independent   contractor  brokers,   additional  losses  of  $225,693
attributable  to the sale and  disposition of inventory  during the three months
ended  March 31,  2001 that  could not be  charged  to and  collected  from such
brokers, an additional loss of $38,596,  from the sale of subsidiary  operations
other  than   Scottsdale,   with  the  balance   attributable   to  general  and
administrative expenses related to closing the Scottsdale operation.

         The following schedule of net assets from discontinued operations, long
term debt and notes payable of discontinued operations, and financial statements
show the effect of discontinued operations to the consolidated balance sheets at
March 31, 2001 and March 31, 2000 and to the condensed  consolidated  statements
of operations and cash flow for the fiscal years ended March 31, 2001,  2000 and
1999.


                                      F-11


<PAGE>


                    AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2001


NOTE C - DISCONTINUED OPERATIONS (CONTINUED)



SCHEDULE OF NET ASSETS FROM DISCONTINUED OPERATIONS:
<TABLE>
<CAPTION>

                                                                  MARCH 31, 2001           MARCH 31, 2000
                                                                  --------------           --------------
ASSETS:

<S>                                                                      <C>                  <C>
  Accounts receivable - trade, net                                       $60,659              $ 5,743,845
  Accounts receivable - employees and brokers, net                             -                  332,122
  Inventory                                                               28,000                4,648,492
  Goodwill and property and equipment                                          -                  316,311
                                                                         -------              -----------
                                                                          88,659               11,040,770
                                                                         -------              -----------
LIABILITIES:
  Accounts payable - trade                                                66,847                4,401,858
  Notes payable - related party and other                                      -                5,376,821
  Accrued liabilities                                                         --                  238,925
                                                                         -------              -----------
                                                                          66,847               10,017,604
                                                                         -------              -----------
NET ASSETS FROM DISCONTINUED OPERATIONS                                  $21,812              $ 1,023,166
                                                                         =======              ===========
</TABLE>


RESULTS OF OPERATIONS OF DISCONTINUED LAND-BASED SEGMENT:
     AUTOTRADECENTER.COM INC. AND SUBSIDIARIES

<TABLE>
<CAPTION>
                                                                      FOR THE YEAR ENDED
                                                          3/31/2001*        3/31/2000         3/31/1999
                                                        --------------    --------------     ------------
<S>                                                     <C>               <C>               <C>
Net Sales                                               $ 123,171,010     $ 131,568,705     $ 97,665,410
Cost of Sales                                             117,257,094       125,770,135       93,388,836
                                                        --------------    --------------    -------------
  Gross Profit                                              5,913,916         5,799,570        4,276,574
                                                        --------------     -------------     ------------


Operating Expenses:
  Selling                                                   4,376,272         3,843,922        2,772,192
  General and administrative                                1,199,064         1,783,874          679,383
  Bad debt expense                                             75,000         1,045,970           90,055
  Depreciation and amortization                                36,165            38,428            3,816
                                                        --------------     -------------     ------------
    Total Operating Expenses                                5,686,501         6,712,194        3,545,446
                                                        --------------     -------------     ------------

Income(loss) from operations                                  227,415          (912,624)         731,128

Other income (expense):
  Miscellaneous                                               139,599           102,133           70,686
  Interest expense                                           (690,853)         (887,094)        (353,323)
                                                        --------------     -------------     ------------
    Total other income(expense) - net                        (551,254)         (784,961)        (282,637)
                                                        --------------     -------------     ------------
Net income (loss) before income taxes               *   $    (323,839)    $  (1,697,585)    $    449,401
                                                        ==============    ==============    =============


* Through 12/31/00 date of discontinuance
</TABLE>




                                      F-12


<PAGE>

                    AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2001


NOTE C - DISCONTINUED OPERATIONS (CONTINUED)


Long term debt and notes payable related to discontinued operations at March 31,
2000 consisted of the following:

<TABLE>
<CAPTION>

RELATED PARTY AND AFFILIATES:

<S>  <C>                                                                                            <C>
o    Notes  payable  to  former officer and director,  12% annual  interest  payable  monthly,
     collateralized by all accounts receivable,  inventory, equipment and certain intangibles,
     $852,000  due April 1, 2001,  $300,000  due January 15,  1999,  30 day  renewable  terms,
     subordinated  to senior debt.  The $852,000  note can be  accelerated  if either Roger L.
     Butterwick  or John E.  Rowlett  ceases  to be an  officer  or  director.  (See 1. and 2.
     below)                                                                                         $  960,000
o    Note  payable  to  an entity  controlled by a former officer and director of the Company,
     12%  annual  interest  payable  monthly,   collateralized  by  all  accounts  receivable,
     inventory,  equipment,  and certain intangibles.  $569,307 is due June 30, 2000, $569,307
     is due  September  30,  2000,  $569,306  is due  December  31,  2000 with the  balance of
     $967,500  due  April  1,  2001.  This  note is  subordinated  to  senior  debt and can be
     accelerated  if either Roger L.  Butterwick or John E. Rowlett ceases to be an officer or
     director (See 2. below).                                                                        2,338,613

o    $1,572,000  line of credit to an entity  controlled by three  officers of ANET-NW,  annual
     interest at prime plus 6% (currently 15%), secured by all accounts receivable,  inventory,
     and furniture and equipment, due July 14, 2000.                                                 1,409,683

o    Note  payable to an entity  controlled  by two  officers of ANET-NM,  15% annual  interest
     payable monthly, due June 30, 2000, subordinated to senior debt.                                  174,116

o    Note payable to an entity  controlled by two former officers and directors of the Company,
     12% annual interest payable monthly,  collateralized by inventory, due May 13, 2000 and 30
     day renewable terms, subordinated to senior debt (See 2. below).                                  300,000

o    Notes payable to a related party, 15% annual interest payable monthly, due on demand.              17,000

o    Note payable to a related party, 15% annual interest payable monthly, due on demand.               35,000

o    Note  payable to an entity  controlled  by two  officers of ANET-NM,  12% annual  interest
     payable monthly, due on demand.                                                                    50,000

o    Note payable to an officer of ANET-NM,  15% annual interest payable  monthly,  due upon 30
     days notice, subordinated to senior debt.                                                          92,409
                                                                                                    ----------
Total long-term debt and notes payable discontinued operations                                       5,376,821

Less current portion of long-term debt and notes payable:
Related party and affiliates                                                                         3,557,321
                                                                                                    ----------
Total long-term debt                                                                                $1,819,500
                                                                                                    ==========
</TABLE>
1.   A note in the  amount of  $300,000  is  convertible,  at the option of note
     holder,  into shares of the Company's common stock at a conversion price of
     $0.10 per  share.  The  option  expires 30 days after the term of the note.
     This note was  converted  into  3,000,000  shares of common stock on May 1,
     2000.

2.   Various notes maturing during the year were extended by mutual agreement.






                                      F-13

<PAGE>

                    AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2001


NOTE C - DISCONTINUED OPERATIONS (CONTINUED)

Impact of discontinued operations to the consolidated balance sheet for the year
ended March 31, 2000:

<TABLE>
<CAPTION>
                                                                              RECLASSIFICATION
                                                                 2000               FOR
ASSETS                                                       AS ORIGINALLY      DISCONTINUED              2000
                                                               REPORTED          OPERATIONS         AS RECLASSIFIED
                                                             -------------      -------------        -------------
Current assets:
<S>                                                          <C>                <C>                  <C>
  Cash                                                       $  4,355,738       $          -         $  4,355,738
  Accounts receivable - trade                                   5,743,845         (5,743,845)                   -
  Accounts receivable - employees and related parties             332,122           (332,122)                   -
  Inventory                                                     4,648,492         (4,648,492)                   -
  Prepaid expenses and other                                      110,272                  -              110,272
  Net assets of discontinued operations, net                            -          1,023,166            1,023,166
                                                             -------------      -------------        -------------
     Total current assets                                      15,190,469         (9,701,293)           5,489,176
                                                             -------------      -------------        -------------

Property and equipment, net                                     1,423,398           (610,280)             813,118
Software, net                                                           -         12,013,608           12,013,608
                                                             -------------      -------------        -------------
                                                                1,423,398          11,403,328          12,826,726
                                                             -------------      -------------        -------------

Intangible assets, net                                         13,506,484        (11,719,639)           1,786,845
                                                             -------------      -------------        -------------

       Total assets                                          $ 30,120,351       $(10,017,604)        $ 20,102,747
                                                             =============      =============        =============


LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable - trade                                   $  4,401,858       $ (4,401,858)        $          -
  Accounts payable - employees and related parties                      -                  -                    -
  Notes payable - related party                                 4,086,128         (4,086,128)                   -
  Notes payable - bank                                          1,112,418                  -            1,112,418
  Notes payable - other                                                 -                  -                    -
  Accrued liabilities                                             245,049           (238,925)               6,124
                                                             -------------      -------------        -------------
     Total current liabilities                                  9,845,453         (8,726,911)           1,118,542
                                                             -------------      -------------        -------------

Non-current liabilities:
  Deferred income taxes                                                 -                  -                    -
  Long term debt - related party                                1,819,500         (1,290,693)             528,807
                                                             -------------      -------------        -------------
     Total non-current liabilities                              1,819,500         (1,290,693)             528,807
                                                             -------------      -------------        -------------

Commitments and contingencies

Stockholders' equity:
  Convertible preferred stock, Series C; $0.10 par value;
     400,000 shares authorized; 20,800 issued and
     outstanding in 2000; liquidation preference $100.00
     per share                                                  1,906,536                  -            1,906,536
  Convertible preferred stock, Series D; $0.10 par value;
     600,000 shares authorized; 31,200 issued and
     outstanding in 2000; liquidation preference $100.00
     per share                                                  2,859,805                  -            2,859,805
  Common stock, no par value; 100,000,000 shares
     authorized; 27,652,609 shares issued and outstanding
     in 2000                                                   19,779,542                  -           19,779,542
  Retained deficit                                             (6,090,485)                 -           (6,090,485)
                                                             -------------      -------------        -------------
     Total stockholders' equity                                18,455,398                  -           18,455,398
                                                             -------------      -------------        -------------

       Total liabilities and stockholders' equity            $ 30,120,351       $(10,017,604)        $ 20,102,747
                                                             =============      =============        =============
</TABLE>


                                      F-14


<PAGE>


                    AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2001


NOTE C - DISCONTINUED OPERATIONS (CONTINUED)


Impact of discontinued operations to the consolidated balance sheet for the year
ended March 31, 1999:


<TABLE>
<CAPTION>
                                                                              RECLASSIFICATION
                                                                 1999               FOR
ASSETS                                                       AS ORIGINALLY      DISCONTINUED              1999
                                                               REPORTED          OPERATIONS         AS RECLASSIFIED
                                                             -------------      -------------        -------------
Current assets:
<S>                                                          <C>                <C>                  <C>
  Cash                                                       $    297,752       $          -         $    297,752
  Accounts receivable - trade                                   4,971,798         (4,873,188)              98,610
  Accounts receivable - employees and related parties             324,248           (324,248)                   -
  Inventory                                                     5,028,357         (5,028,357)                   -
  Prepaid expenses and other                                       79,153            (73,887)               5,266
                                                             -------------      -------------        -------------
     Total current assets                                      10,701,308        (10,299,680)             401,628
                                                             -------------      -------------        -------------

Net assets of discontinued operations                                   -          2,280,228            2,280,228
Property and equipment, net                                       168,444            (50,308)             118,136
Software, net                                                           -              5,442                5,442
                                                             -------------      -------------        -------------
                                                                  168,444          2,235,362            2,403,806
                                                             -------------      -------------        -------------

Intangible assets, net                                          2,207,378           (221,995)           1,985,383
                                                             -------------      -------------        -------------

     Total assets                                            $ 13,077,130       $ (8,286,313)        $  4,790,817
                                                             =============      =============        =============


LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable - trade                                      4,198,742         (4,174,029)              24,713
  Accounts payable - employees and related parties                250,251           (250,251)                   -
  Notes payable - related party                                 1,902,833         (1,902,833)                   -
  Notes payable - bank                                          1,268,500                  -            1,268,500
  Notes payable - other                                           301,000           (301,000)                   -
  Accrued liabilities                                             269,117           (218,394)              50,723
                                                             -------------      -------------        -------------
     Total current liabilities                                  8,190,443         (6,846,507)           1,343,936
                                                             -------------      -------------        -------------

Non-current liabilities:
  Deferred income taxes                                             7,010                  -                7,010
  Long-term debt - related party                                1,968,613         (1,439,806)             528,807
                                                             -------------      -------------        -------------
     Total non-current liabilities                              1,975,623         (1,439,806)             535,817
                                                             -------------      -------------        -------------

Commitments and contingencies

Stockholders' equity:
  Convertible preferred stock, Series B; $10.00 par value;
     250,000 shares authorized; 47,000 issued and
     outstanding in 1999                                          372,037                  -              372,037
  Common stock, no par value; 100,000,000 shares
     authorized; 20,385,084 shares issued and
     outstanding in 1999                                        2,664,479                  -            2,664,479
  Retained deficit                                               (125,452)                 -             (125,452)
                                                             -------------      -------------        -------------
     Total stockholders' equity                                 2,911,064                  -            2,911,064
                                                             -------------      -------------        -------------

       Total liabilities and stockholders' equity            $ 13,077,130       $ (8,286,313)        $  4,790,817
                                                             =============      =============        =============
</TABLE>


                                      F-15


<PAGE>


                    AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2001


NOTE C - DISCONTINUED OPERATIONS (CONTINUED)

Impact of discontinued operations to the consolidated statement of operations
for the year ended March 31, 2000:

<TABLE>
<CAPTION>
                                                                               RECLASSIFICATION
                                                                  2000               FOR
                                                             AS ORIGINALLY       DISCONTINUED            2000
                                                                REPORTED          OPERATIONS        AS RECLASSIFIED
                                                             --------------     --------------       -------------
<S>                                                          <C>                <C>                  <C>
Net sales                                                    $ 131,861,292      $(131,569,705)       $    291,587
Cost of sales                                                  125,770,135       (125,770,135)                  -
                                                             --------------     --------------       -------------
Gross profit                                                     6,091,157        (5,799,570)             291,587
                                                             --------------     --------------       -------------

Operating expenses:
  Salary                                                                 -             54,000             54,000
  Selling                                                        4,084,987         (3,843,922)            241,065
  General and administrative                                     2,397,342         (1,837,874)            559,468
  Bad debt expense                                               1,045,970         (1,045,970)                  -
  Depreciation and amortization                                    358,228            (38,428)            319,800
                                                             --------------     --------------       -------------
     Total operating expenses                                    7,886,527         (6,712,194)          1,174,333
                                                             --------------     --------------       -------------

Loss from operations                                            (1,795,370)           912,624            (882,746)
                                                             --------------     --------------       -------------

Other income (expense):
  Miscellaneous                                                    102,133           (102,133)                  -
  Interest expense - related party                                (768,121)           704,665             (63,456)
  Interest expense                                                (182,429)           182,429                   -
                                                             --------------     --------------       -------------
     Total other income (expense) - net                           (848,417)           784,961             (63,456)
                                                             --------------     --------------       -------------

Net loss from continuing operations                             (2,643,787)         1,697,785           (946,202)
                                                             --------------     --------------       -------------

Loss from discontinued operations of land-based segment                  -         (1,697,585)         (1,697,585)
                                                             --------------     --------------       -------------

Net loss before income taxes                                    (2,643,787)                 -          (2,643,787)
                                                             --------------     --------------       -------------

Income tax (expense) benefit                                        56,034            (56,034)                  -
   Continuing operations                                                 -                  -                   -
   Discontinued operations                                               -             56,034              56,034
                                                             --------------     --------------       -------------
                                                                    56,034                  -              56,034
                                                             --------------     --------------       -------------

Net Loss                                                     $  (2,587,753)     $           -        $ (2,587,753)
                                                             ==============     ==============       =============

Basic loss per share                                         $       (0.12)
   Continuing operations                                                        $       (0.04)       $      (0.04)
   Discontinued operations                                                      $       (0.08)       $      (0.08)

Diluted loss per share                                       $       (0.12)
   Continuing operations                                                        $       (0.04)       $      (0.04)
   Discontinued operations                                                      $       (0.08)       $      (0.08)

Weighted average shares number of common shares outstanding
   Basic                                                        21,638,671                  -          21,638,671
   Fully diluted                                                21,638,671                  -          21,638,671

</TABLE>


                                      F-16


<PAGE>


                    AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2001


NOTE C - DISCONTINUED OPERATIONS (CONTINUED)


Impact of discontinued operations to the consolidated statement of operations
for the year ended March 31, 1999:

<TABLE>
<CAPTION>
                                                                              RECLASSIFICATION
                                                                 1999               FOR
                                                             AS ORIGINALLY      DISCONTINUED            1999
                                                               REPORTED          OPERATIONS       AS RECLASSIFIED
                                                             -------------      -------------      -------------

<S>                                                          <C>                <C>                <C>
Net sales                                                    $ 97,665,410       $(97,665,410)      $          -
Cost of sales                                                  93,388,836        (93,388,836)                 -
                                                             -------------      -------------      -------------
Gross profit                                                    4,276,574         (4,276,574)                 -
                                                             -------------      -------------      -------------

Operating expenses:
  Salary                                                                -             63,000             63,000
  Selling                                                       2,772,192         (2,772,192)                 -
  General and administrative                                      868,556           (742,383)           126,173
  Bad debt expense                                                 90,055            (90,055)                 -
  Depreciation and amortization                                    27,858             (3,816)            24,042
                                                             -------------      -------------      -------------
     Total operating expenses                                   3,758,661         (3,545,446)           213,215
                                                             -------------      -------------      -------------

Income (loss) from operations                                     517,913           (731,128)          (213,215)
                                                             -------------      -------------      -------------

Other income (expense):
  Miscellaneous                                                    70,686            (70,686)                 -
  Interest expense - related party                               (286,824)           223,368            (63,456)
  Interest expense                                               (129,955)           129,955                  -
                                                             -------------      -------------      -------------
     Total other income (expense) - net                          (346,093)           282,637            (63,456)

Net (loss) income  from continuing operations                     171,820           (448,491)          (276,671)
                                                             -------------      -------------      -------------

Income from discontinued operations of land-based segment               -            448,491            448,491
                                                             -------------      -------------      -------------

Net income before income taxes                                    171,820                  -            171,820
                                                             -------------      -------------      -------------

Income tax (expense) benefit                                      (56,579)            56,579                  -
  Continuing operations                                                 -             50,302             50,302
  Discontinued operations                                               -           (106,881)          (106,881)
                                                             -------------      -------------      -------------
                                                                  (56,579)                 -            (56,579)
                                                             -------------      -------------      -------------

Net Income                                                   $    115,241       $          -            115,241
                                                             =============      =============      =============

Basic earnings (loss) per share                              $       0.01
  Continuing operations                                                         $      (0.02)      $      (0.02)
  Discontinued operations                                                       $       0.03       $       0.03

Diluted earnings (loss) per share                            $       0.01
  Continuing operations                                                         $      (0.02)      $      (0.02)
  Discontinued operations                                                       $       0.03       $       0.03

Weighted average shares number of common shares outstanding
  Basic                                                        13,726,397                  -         13,726,397
  Fully diluted                                                22,826,745                  -         22,826,745
</TABLE>


                                      F-17


<PAGE>


                    AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2001


NOTE C - DISCONTINUED OPERATIONS (CONTINUED)


Impact of discontinued operations to the consolidated statement of cash flows
for the year ended March 31, 2000:
<TABLE>
<CAPTION>

                                                                              RECLASSIFICATION
                                                                  2000              FOR
    `                                                        AS ORIGINALLY      DISCONTINUED            2000
                                                               REPORTED          OPERATIONS       AS RECLASSIFIED
                                                             -------------      -------------      -------------
Cash flows from operating activities:
<S>                                                          <C>                <C>                <C>
    Net loss                                                 $ (2,587,753)      $  2,587,753       $          -
       Continuing operations-net of income taxes                        -           (946,202)          (946,202)
       Discontinued operations-net of income taxes                      -         (1,641,551)        (1,641,551)
                                                             -------------      -------------      -------------
                                                               (2,587,753)                 -         (2,587,753)
    Adjustments to reconcile net income to net cash provided
        by operating activities:
        Depreciation and amortization                             358,228            (38,428)           319,800
        Bad debt expense                                        1,045,970         (1,045,970)                 -
        Stock or stock options issued for services                351,280                  -            351,280
    (Increase) decrease in:
        Net assets of discontinued operations                           -          1,257,062          1,257,062
        Accounts receivable                                    (1,825,891)         1,924,501             98,610
        Inventory                                                 379,866           (379,866)                 -
        Prepaid expenses and other current assets                  24,915           (129,921)          (105,006)
    Increase (decrease) in:
        Accounts payable                                          (47,135)            22,423            (24,712)
        Accrued liabilities                                       (67,774)            23,175            (44,599)
        Deferred income taxes                                      (3,545)            (3,465)            (7,010)
                                                             -------------      -------------      -------------
         Net cash  provided by (used in) operating
           activities                                          (2,371,839)         1,629,511           (742,328)
                                                             -------------      -------------      -------------

Cash flows from investing activities:
    Purchase of property and equipment and software              (536,512)           116,147           (420,365)
    Sale of property and equipment                                 62,675            (16,730)            45,945
    Investment in other assets                                          -                  -                  -
    Net cash paid for acquisitions                                      -                  -                  -
                                                             -------------      -------------      -------------
         Net cash used in investing activities                   (473,837)            99,417           (374,420)
                                                             -------------      -------------      -------------

Cash flows from financing activities:
    Net Proceeds from borrowings                               85,699,933        (85,541,540)           158,393
    Repayment of borrowings                                   (85,856,015)        85,856,015                  -
    Proceeds from related party borrowings                      3,175,703         (3,175,703)                 -
    Repayment of related party borrowings                      (1,132,300)         1,132,300                  -
    Proceeds from long-term debt                                        -                  -                  -
    Proceeds from issuance of convertible preferred stock       4,766,341                  -          4,766,341
    Proceeds from issuance of common stock                        250,000                  -            250,000
                                                             -------------      -------------      -------------
        Net cash  provided by financing activities              6,903,662         (1,728,928)         5,174,734
                                                             -------------      -------------      -------------

Net change in cash                                              4,057,986                  -          4,057,986

Beginning cash balance                                            297,752                  -            297,752
                                                             -------------      -------------      -------------

Ending cash balance                                             4,355,738                  -          4,355,738
                                                             =============      =============      =============

Supplemental disclosures:
    Interest paid                                            $    950,550       $          -       $          -
                                                             =============      =============      =============
    Interest paid including discontinued operations          $          -       $    887,094       $    887,094
                                                             =============      =============      =============
    Interest paid for continuing operations                  $          -       $     64,456       $     63,456
                                                             =============      =============      =============
    Income taxes paid                                        $      3,000                  -              3,000
                                                             =============      =============      =============
</TABLE>


                                      F-18


<PAGE>

                    AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2001


NOTE C - DISCONTINUED OPERATIONS (CONTINUED)

Impact of discontinued operations to the consolidated statement of cash flows
for the year ended March 31, 1999:
<TABLE>
<CAPTION>

                                                                              RECLASSIFICATION
                                                                 1999               FOR
                                                             AS ORIGINALLY      DISCONTINUED            1999
                                                               REPORTED          OPERATIONS       AS RECLASSIFIED
                                                             ------------       ------------       ------------
<S>                                                          <C>                <C>                <C>
Cash flows from operating activities:
    Net (loss) income                                        $   115,241        $  (115,241)       $         -
       Continuing operations-net of income taxes                       -           (226,369)          (226,369)
       Discontinued operations-net of income taxes                     -            341,610            341,610
                                                             ------------       ------------       ------------
                                                                 115,241                  -            115,241
                                                             ------------       ------------       ------------
    Adjustments to reconcile net income to net cash
        provided by operating activities:
      Depreciation and amortization                               27,858             (3,816)            24,042
      Bad debt expense                                            90,055            (90,055)                 -
      Stock or stock options issued for services                  23,083                  -             23,083
    (Increase) decrease in:
      Net assets of discontinued operations                            -         (1,823,695)        (1,823,695)
      Accounts receivable                                     (3,582,169)         3,483,559            (98,610)
      Inventory                                               (2,845,459)         2,845,459                  -
      Prepaid expenses and other current assets                  (70,906)            65,640             (5,266)
    Increase (decrease) in:
      Accounts payable                                         2,448,261         (2,423,549)            24,712
      Accrued liabilities                                         95,445            (44,722)            50,723
      Deferred income taxes                                        3,545              3,465              7,010
                                                             ------------       ------------       ------------
        Net cash  provided by (used in) operating
          activities                                          (3,695,046)         2,012,286         (1,682,760)
                                                             ------------       ------------       ------------

Cash flows from investing activities:
    Purchase of property and equipment and software             (158,287)           (17,159)          (175,446)
    Sale of property and equipment                                56,277              1,243             57,520
    Investment in other assets                                      (605)               605                  -
    Net cash paid for acquisitions                               (79,570)             8,664            (70,906)
                                                             ------------       ------------       ------------
        Net cash used in investing activities                   (182,185)            (6,647)          (188,832)
                                                             ------------       ------------       ------------

Cash flows from financing activities:
    Net Proceeds from borrowings                               4,868,500         (3,600,000)         1,268,500
    Repayment of borrowings                                   (3,625,000)         3,625,000                  -
    Proceeds from related party borrowings                     1,903,033         (1,903,033)                 -
    Repayment of related party borrowings                       (560,500)           560,500                  -
    Proceeds from long-term debt                               1,216,913           (688,106)           528,807
    Proceeds from issuance of convertible preferred
      stock                                                      372,037                  -            372,037
                                                             ------------       ------------       ------------
        Net cash  provided by financing activities             4,174,983         (2,005,639)         2,169,344
                                                             ------------       ------------       ------------

Net change in cash                                               297,752                  -            297,752

Beginning cash balance                                                -                   -                   -
                                                             ------------       ------------       ------------
Ending cash balance                                          $   297,752        $                  $   297,752

Supplemental disclosures:
    Interest paid                                            $   710,012        $  (710,012)       $         -
                                                             ============       ============       ============
    Interest paid including discontinued operations          $         -        $   355,006        $   355,006
                                                             ============       ============       ============
    Interest paid for continuing operations                  $                  $    63,456        $    63,456
                                                             ============       ============       ============
    Income taxes paid                                        $    73,527               -           $    73,527
                                                             ============       ============       ============
</TABLE>



                                      F-19

<PAGE>

                    AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2001


NOTE C - DISCONTINUED OPERATIONS (CONTINUED)


The following schedule shows the computation of the loss resulting from
discontinuing the land-based segment:
<TABLE>
<CAPTION>
<S>                                                                               <C>                <C>
              Loss from sale of: ANET-NM, ANET-NW, and ANET-SA:

                 Carrying value                                                   $1,596,933
                 Sales price                                                       1,200,000
                                                                                  ----------
                      Loss                                                           396,933
                 Un-amortized goodwill                                               351,542
                                                                                  ----------

                 Total loss on sale of land-based subsidiaries                                       $  748,475

              Loss from transfer and closing of Scottsdale land-based facility:
                    Operations:
                      Sale of equipment                                               17,793
                      Inventory losses due to sale                                   425,693
                      Uncollectible brokers accounts                                 593,635
                      Costs of closing operations                                    226,461
                      Accured future costs of closing operations                      50,000
                                                                                  ----------
                                                                                                      1,313,582
              Loss from closing Pennsylvania                                                            277,388
                                                                                                     ----------
              Total loss from discontinuing land-based segment                                       $2,339,445
                                                                                                     ==========
</TABLE>



NOTE D - ACCOUNTS RECEIVABLE

Accounts receivable consist of the following: (No allowance for doubtful
accounts is considered necessary since all accounts are deemed fully
collectible.)
<TABLE>
<CAPTION>

                                                  March 31,
                                      ---------------- -----------------
                                              2001             2000
                                              ----             ----

<S>                                         <C>                <C>
       Trade accounts receivable            $224,298           $  -
       Due from employees                      8,535              -
                                            --------           ----
                                            $232,833           $  -
                                            ========           ====
</TABLE>


                                      F-20


<PAGE>


                    AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2001


  NOTE E - PROPERTY AND EQUIPMENT

  Property and equipment consist of the following:
<TABLE>
<CAPTION>

                                                                                           March 31,
                                                                Depreciation    ---------------------------------
                                                                LIFE/METHOD                 2001            2000
                                                                -----------                 ----            ----
<S>                                                              <C>                 <C>             <C>
  Computers and equipment                                        3 years/SL          $   739,638     $   665,890
  Vehicles                                                       3 years/SL                    -         229,910
  Furniture and fixtures                                         7 years/SL               62,072          41,616
  Leasehold improvements                                         5 years/SL                6,300               -

                                                                                         808,100         937,416
  Less accumulated depreciation                                                         (299,061)       (124,298)

                                                                                     $   508,949     $   813,118


  Software and Website programming consist of the following:
    Software/systems design                                      3 years/SL          $10,804,765     $12,448,037
    Less accumulated amortization                                                     (3,265,427)       (434,429)
                                                                                     ------------    ------------
                                                                                     $ 7,539,338     $12,013,608
                                                                                     ============    ============
</TABLE>

         The  Company,  in its fiscal  year  ended  March 31,  2001,  charged an
impairment  loss of  $2,261,486  on the disposal of software  acquired  when the
Company  purchased all of the outstanding  common stock in NDSCo.  This software
provides  dealer-to-dealer Internet trading for the exchange of used automobiles
and is not included in the Company's  current  business plan which is focused on
the remarketing of off-lease and program vehicles .



NOTE  F - GOODWILL AND INTANGIBLES
<TABLE>
<CAPTION>
                                                                                           March 31,
                                                                Amortization    ---------------------------------
                                                                LIFE/METHOD                 2001            2000
                                                                -----------                 ----            ----
<S>                                                             <C>                  <C>              <C>
  Goodwill and intangibles                                                           $ 1,989,612      $1,988,611
  Less accumulated amortization                                 10 years/SL             (398,912)       (201,766)
                                                                                     ------------    ------------
                                                                                     $ 1,590,700      $1,786,845
                                                                                     ============    ============
</TABLE>


NOTE G - LONG-TERM DEBT AND NOTES PAYABLE:
<TABLE>
<CAPTION>
RELATED PARTY AND AFFILIATES:                                                           2001          2000
<S>                                                                                   <C>            <C>
o        Notes payable to former  officer  and  director,  12%  annual  interest
         payable monthly, collateralized by all accounts receivable,  inventory,
         equipment and certain  intangibles  due April 1, 2002.  The note can be
         accelerated if either Roger L.  Butterwick or John E. Rowlett ceases to
         be an officer or director.  The note is  guaranteed  by Mr.  Butterwick
         and Mr. Rowlett as  individuals.  The note is convertible at the option
         of the  holder  into  common  shares of the  Company  at the  lesser of
         $0.375 per share or the average  trading  price of such  common  shares
         for 30 previous trading days prior to conversion.                            $ 402,000      $   192,000

o        Note payable to an entity  controlled  by a former  officer and director
         of the Company, 12% annual interest payable monthly,  collateralized



                                      F-21


<PAGE>


                    AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2001

RELATED PARTY AND AFFILIATES:                                                           2001          2000

         by  all   accounts   receivable,   inventory,   equipment, and  certain
         intangibles  due April 1, 2002 This note is subordinated to senior debt
         and can be accelerated if either Roger L. Butterwick or John E. Rowlett
         cease to be an  officer  or  director.  The note is  guaranteed  by Mr.
         Butterwick and Mr.  Rowlett as  individuals  The note is convertible at
         the  option of the  holder  into  common  shares of the  Company at the
         lesser of $0.375 per share or the average  trading price of such common
         shares for 30 previous trading days prior to conversion.                       336,807          336,807

BANK:
o        $3,000,000  revolving line of credit,  1.5% over prime,  secured by all
         accounts  receivable,  inventory,  equipment  and certain  intangibles,
         partially guaranteed by one officer, due June 30, 2000. (Note 1)                     -        1,112,418
                                                                                      ----------     ------------

Total notes payable                                                                     738,807        1,641,225
Less long-term notes                                                                   (538,807)        (528,807)
                                                                                      ----------     ------------
Notes payable-current portion   ( see Note R-Subsequent events)                       $ 200,000      $ 1,112,418
                                                                                      ==========     ============
</TABLE>

1.       Subject to the bank's approval, the loan may be increased to the lessor
         of 85% of the eligible accounts receivable or $3 million. The amount of
         the average unused line as of year-end is $1,765,895.  The bank charges
         a fee on the amount of the unused  line by taking  the  average  unused
         portion  times .25%  divided  by 360 times the days in the month.  This
         calculated into a fee of $380 for the month of March 2000. In addition,
         the loan  requires  net  income  and  equity  limits be met and  limits
         capital  expenditures,  officers' pay and additional  indebtedness.  At
         March 31, 2000,  the Company was in violation of various  provisions of
         the loan agreement.  These  provisions  apply to the amount of net loss
         incurred and the amount of capital  expenditures  incurred.  The lender
         subsequently  waived  these  Events of Default.  The line of credit was
         repaid in full in February 2001.


NOTE H - FAIR VALUE OF FINANCIAL INSTRUMENTS

         The methods  and  assumptions  used to estimate  the fair value of each
class of financial instrument are as follows:

CASH AND CASH EQUIVALENTS, RECEIVABLES, AND ACCOUNTS PAYABLE

         The  carrying  amount  approximates  fair  value due to the  short-term
maturity of these instruments.

LONG-TERM DEBT

         The fair value of  long-term  debt was based upon market  prices  where
available or current  borrowing rates available for financing with similar terms
and maturities.
<TABLE>
<CAPTION>
                                                                         March 31,
                                           --------------------------------------------------------------------
                                                          2001                              2000
                                           ---------------------------------- ---------------------------------
                                                                  Carrying                        Carrying
                                                FAIR VALUE         VALUE         FAIR VALUE        VALUE
<S>                                              <C>              <C>            <C>             <C>
Cash and cash equivalents                        $209,068         $209,068       $4,355,738      $4,355,738
Notes payable                                                     $738,807       $1,641,225      $1,641,225
</TABLE>



                                      F-22

<PAGE>


                    AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2001


NOTE I - INCOME TAXES

         The income tax provision  (benefit)  shown in the  consolidated  income
statement is detailed for each year.
<TABLE>
<CAPTION>
                                                                                    March 31,
                                                                  -------------------------------------------
                                                                  2001                 2000             1999
                                                                  ----                 ----             ----
Currently payable (receivable):
<S>                                                               <C>               <C>               <C>
           Federal                                                $  -              $(38,459)         $43,564
           State                                                     -               (10,565)           9,470
                                                                  ----              ---------         -------
           Total currently payable                                   -               (49,024)          53,034

Deferred:
           Federal                                                   -                (5,105)           3,154
           State                                                     -                (1,905)             391
                                                                  ----              ---------         -------
           Total deferred                                            -                (7,010)           3,545
                                                                  ----              ---------         -------
Total                                                             $  -              $(56,034)         $56,579
                                                                  ====              =========         =======
</TABLE>


         The income tax provision  (benefit) for  continuing  operations  varied
from the federal statutory rate as follows for each year.
<TABLE>
<CAPTION>

                                                                                       March 31,
                                                                       --------------------------------------
                                                                       2001             2000             1999
                                                                       ----             ----             ----
<S>                                                                     <C>              <C>              <C>
U.S. Statutory rate                                                    -34%             -34%              34%
State income taxes, net of federal income tax benefit                   -8%              -8%               8%
Valuation allowance                                                     42%              39%               0%
                                                                        ---             ----             ----
                                                                         0%               3%              42%
                                                                       ====             ====             ====
</TABLE>

         The  Company  has a  federal  tax loss  carryforward  of  approximately
$14,300,000 of which  approximately  $1,450,000  expires in 2020 and $12,850,000
expires in 2021.

         The Company has  undergone a change in ownership of over 50% during the
preceding 36 months. Accordingly,  Section 382 of the Internal Revenue Code will
limit the Company's annual utilization of its net-operating loss carryforward to
an amount equal to the pre-change value of the Company multiplied by the federal
long-term tax exempt  interest  rate.  The  application  of Section 382 also may
result in a portion of the Company's net operating loss  carryforwards to expire
unused.

         The following  summarizes the tax effects of the significant  temporary
differences which comprise the deferred tax asset or liability for each year.
<TABLE>
<CAPTION>
                                                                                March 31,
                                                                ---------------------------------------------
                                                                     2001             2000            1999
                                                                     ----             ----            ----
<S>                                                             <C>                 <C>             <C>
Bad debt reserve                                                $         -         $ 439,307       $  37,823
Other                                                                                       -         (41,368)
Net operating loss carryforward                                   6,013,809          615,049                -
                                                                ------------     ------------       ----------
Net deferred tax asset (liability)                                6,013,809        1,054,356          (3,545)
Valuation allowance                                              (6,013,809)      (1,054,356)               -
                                                                ------------     ------------       ----------
Net deferred income tax (liability)                             $         -      $         -        $ (3,545)
                                                                ============     ============       ==========
</TABLE>



                                      F-23


<PAGE>

                    AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2001


NOTE J - EARNINGS PER SHARE

         Basic  earnings  per  common  share are based on the  weighted  average
number of common shares  outstanding in each year.  Diluted  earnings per common
share assume that any dilutive convertible preferred shares and convertible debt
outstanding  during each year were converted at the first  available  conversion
date, with related interest and outstanding common shares adjusted  accordingly.
It also assumes that outstanding common shares were increased by shares issuable
upon exercise of those stock options and warrants for which market price exceeds
exercise price, to the extent they are not anti-dilutive.
<TABLE>
<CAPTION>

The computation of basic and dilutive earnings
per common share follows:                                              YEAR ENDED MARCH 31,
                                                       -------------------------------------------------
                                                             2001              2000               1999
Income (loss) available to common stockholders:
<S>                                                    <C>               <C>               <C>
Continuing operations-basic and diluted                $ (9,060,369)     $   (946,202)     $   (226,369)

Discontinued operations                                  (2,663,285)       (1,641,551)          341,610
  Effect of dilutive securities - convertible debt                -                 -            68,573
                                                       -------------     -------------     -------------
                                                       $(11,723,654)     $ (2,587,753)     $    183,814
                                                       =============     =============     =============
Weighted average number of common shares
outstanding - basic                                      32,777,824        21,638,671        13,726,397

Conversion of Series A preferred stock                          -0-               -0-         4,181,427
Conversion of Series B preferred stock                          -0-               -0-           388,235
Exercise of stock options                                       -0-               -0-           167,260
Exercise of warrants                                            -0-               -0-           844,655
Conversion of debt                                              -0-               -0-         3,518,771
                                                       -------------     -------------     -------------
Weighted average number of common shares
outstanding - diluted                                    32,777,824        21,638,671        22,826,745
                                                       =============     =============     =============

Basic earnings (loss) per common share:
  Continuing operations                                $      (0.28)     $      (0.04)     $      (0.02)
  Discontinued operations                              $      (0.08)     $      (0.08)     $       0.03


Diluted earnings (loss) per common share
  Continuing operations                                $      (0.28)     $      (0.04)     $      (0.01)
  Discontinued operations                              $      (0.08)     $      (0.08)     $       0.02
</TABLE>


         The  effects of  convertible  debt and  preferred  stock along with the
stock options and warrants have not been included in the  calculation of diluted
earnings  per share  for the years  ended  March  31,  2001 and March 31,  2000,
because they are anti-dilutive.

         As  described  in Notes G, L and M, the Company has  convertible  debt,
contingently issuable stock, options, warrants and convertible preferred stock.


                                      F-24


<PAGE>


                    AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2001


NOTE K - COMMITMENTS

         The  Company  leases  its  facility  in  Scottsdale,  Arizona  from  an
unrelated third party under an operating lease expiring September 30, 2002 at an
annual  cost of  $87,737.  It also is  obligated  to pay annual  net  rentals of
approximately  $33,497 for a land-based facility in Denver,  Colorado.  Reserves
established at March 31, 2001,  should be adequate to cover such expenses in the
event the Company is unable to further  sub-lease this  property.  Both of these
leases require the Company to pay all maintenance,  insurance,  and taxes on the
leased property.


         The following schedule shows the future minimum lease payments required
by year under the various operating leases:


Year ending March 31,         2002          $286,387
                              2003            96,162
                              2004            38,548
                              2005            31,397
                              2006             5,233
                                            --------
                                            $457,727
                                            ========


         The Company  sub-leases a portion of its former  land-based  Scottsdale
facility to two  unrelated  third  parties.  One of the  sub-leases  is a $3,000
month-to-month  rental.  The other third party's  sub-lease is a  non-cancelable
agreement  that  expires on September  30, 2002 and calls for annual  rentals of
$62,064.  Neither of these  sub-leases  have been used to reduce  the  Company's
minimum annual operating lease obligation (see above table).  Rental expense was
$435,938,  $192,296,  and $195,312 for the years ended March 31, 2001, 2000, and
1999  respectively.  The Company also has  contracted  with a vendor to host its
remarketing websites for a base fee of $10,900 per month through April 30, 2002.



NOTE L - BUSINESS ACQUISITIONS

AUTO NETWORK GROUP OF NEW MEXICO, INC. ("ANET-NM")

         On June 1,  1998,  the  Company  entered  into a Purchase  of  Goodwill
Agreement with JBS, LLC, an entity whose members comprise the management team of
ANET-NM.  In consideration for the goodwill which ANET-NM is receiving from JBS,
JBS was granted a total of 800,000  contingently  issuable  restricted shares of
the Company's  common stock valued at $.20 per share as follows:  266,667 shares
issued  upon  execution  of the  Agreement,  held  in  escrow,  and  subject  to
forfeiture if ANET-NM is not doing  business as of June 1, 1999:  266,667 shares
to be earned  for the  period  June 1, 1998  through  March 31,  1999 if pre-tax
earnings of ANET-NM are at least  $60,000;  and 266,666  shares to be earned for
the period April 1, 1999 through  March 31, 2000 if pre-tax  earnings of ANET-NM
are at least $120,000. In addition,  JBS may earn options to purchase restricted
shares of the  Company's  common stock at the rate of 5 options for every dollar
of pre-tax  earnings of ANET-NM in excess of $60,000 for the period ending March
31,  1999,  and 5 options  for every  dollar of pre-tax  earnings  of ANET-NM in
excess of  $120,000  for the year ended  March 31,  2000.  The options are to be
exercisable  for a period  of 3 years  from date of grant at the bid price as of
March 31, 1999 or 2000, respectively.

         In  accordance  with the terms of the  Purchase of Goodwill  Agreement,
266,667 shares of  contingently  issuable shares of common stock were granted to
JBS, LLC as ANET-NM was doing business at June 1, 1999. For the period from June
1, 1998  through  March 31,  1999,  ANET-NM  had  pre-tax  earnings  of $107,962
resulting  in JBS LLC,  earning  266,667  shares and  earning  239,810  options,
exercisable at $3.00 per share. For



                                      F-25


<PAGE>


                    AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2001


NOTE L - BUSINESS ACQUISITIONS (CONTINUED)

the period  ending  March 31,  2000,  ANET-NM  had  pre-tax  earnings of $70,395
resulting in no shares being earned by JBS, LLC. However, in an amendment to the
purchase  agreement  entered  into  during the year ended  March 31,  2001,  the
Company issued the 266,666  remaining  contingently  issuable shares to JBS, LLC
and increased  purchased  goodwill by $53,333.  All purchased goodwill was being
amortized over 10 years.

         When the company exchanged all of its interest in ANET-NM,  on December
29,  2000,  for its  interest  in ADM,  the balance of  unamortized  goodwill of
$136,889 was charged to loss on discontinuance of land-based operations.


AUTO NETWORK GROUP NORTHWEST, INC. ("ANET-NW")

         On July 20, 1999, the Company  entered into an Exchange of Common Stock
Agreement  with  ANET-NW.  In  consideration  for the stock which the Company is
receiving  from  ANET-NW,  ANET-NW was  granted a total of 500,000  contingently
issuable  restricted  shares of the  Company's  common stock valued at $1.50 per
share as follows:  up to 83,333 shares shall no longer be forfeitable on July 1,
2000 under the following  conditions:  if audited pre-tax earnings are less than
$30,000 all 83,333 shares shall be forfeited.  If the audited  pre-tax  earnings
are between  $30,000 and $50,000 a pro-rata amount of shares shall be issued and
the balance shall be forfeited.  If the audited pre-tax  earnings are $50,000 or
over the  restricted  stock will be issued and any earnings in excess of $50,000
shall  cause  options  to be earned at a ratio of 5 options  for every  $1.00 of
excess  earnings.  These options shall be priced at the closing bid price of the
Company's common stock on April 1 following the March 31 year end. As of July 1,
2001, 166,667 shares can be earned at the following levels: less than $50,000 of
pre-tax  audited  earnings  then  shares are  forfeited,  $50,000 to  $100,000 a
pro-rata  amount of shares  will be issued,  over  $100,000  the shares  will be
issued and options  will be earned with the above  formula.  As of July 1, 2002,
250,000  shares  can be earned at the  following  levels:  less than  $75,000 of
pre-tax  audited  earnings  then  shares are  forfeited,  $75,000 to  $150,000 a
pro-rata  amount of shares  will be issued,  over  $150,000  the shares  will be
issued and options will be earned with the above formula.

         For the period from July 20, 1999 through  March 31, 2000,  ANET-NW had
pre-tax earnings of $41,721 resulting in ANET-NW earning 69,535 shares.

         The  goodwill   purchased   of  $193,391  was  being   amortized  on  a
straight-line  basis  over 10 years.  On  December  31,  2000,  the  balance  of
unamortized  goodwill  of  $176,886  was  charged  to  loss  on  disposition  of
land-based operations.

         Subsequent  Events.  In  April,  2001 ADM the then  parent  of  ANET-NW
entered into an agreement with ANET-NW management under which ANET-NW reacquired
all of its  outstanding  common shares from ADM and among other things agreed to
return to ADM  430,465  shares of the  Company's  stock  that were being held in
escrow  pending the results of the original  earn-out  agreement.  The Company's
Board of Directors  has directed  management  to exercise its option to exchange
these  shares for 8.55% of its  interest in  Automotive  Disposition  Management
Company  ("ADM") based upon an agreement  between the parties to the transaction
wherein ADM acquired  certain of the operating  subsidiaries of the Company (See
Note C).  Effective  July 1,  2001 all  options  previously  issued  to  ANET-NW
management  and  employees  as  well  as  rights  to earn  new  options  expired
unexercised.



                                      F-26


<PAGE>


                    AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2001


NOTE L - BUSINESS ACQUISITIONS (CONTINUED)


AUTO GROUP OF SAN ANTONIO, LTD.

         Effective  April 1, 2000,  the Company  opened an office and  warehouse
wholesale  operation in San Antonio,  Texas.  Auto Group of San Antonio  Ltd., a
Texas limited partnership,  conducts business in San Antonio. The Company is the
sole  limited  partner and the sole owner of a newly  formed  limited  liability
Company which serves as the general partner.

         The Company loaned the limited partnership $450,000, which is evidenced
by an  unsecured  promissory  note  with  interest  at the rate of 12% per annum
payable monthly, in arrears.  This note, which may be prepaid at any time, has a
final  maturity on March 31, 2005.  The limited  partnership  has entered into a
management  agreement  with  JRB  AutoBrokers,  L.P.  ("JRB"),  a Texas  limited
partnership.  JRB also loaned  $100,000 to the  limited  partnership  on similar
terms to the Company's advance. This promissory note is subordinate to our loan.
When ADM acquired the limited partnership they repaid the note to the Company in
full.

         Under the terms of the management agreement, JRB is responsible for all
day-to-day management of the limited partnership with complete autonomy, subject
only to  reasonable  review by the general  partner.  In  addition,  the Company
granted  a total of  468,750  contingently  issuable  restricted  shares  of the
Company's  common stock to JRB. At that time the shares were assigned a value of
$2.00 per share.  The  issuance  of 93,750 of the shares is subject  only to the
continuation  of the business at March 31, 2001.  Annually  beginning  March 31,
2001,  93,750 additional shares or a portion thereof will be released subject to
the limited partnership achieving  pre-determined pre-tax earnings. For example,
if the limited  partnership  earns  $100,000  for the year ended March 31, 2001,
93,750 of such shares will be issued to JRB. In the event  earnings for the year
fall below  $100,000,  a portion of these shares may still be issued After March
31, 2001, the pre-tax  earnings floor increases  through March 31, 2004. As part
of the stock-for-stock  agreement with ADM, 93,750 of the contingently  issuable
shares  were  issued to JRB in April of 2001.  The  balance of the  contingently
issuable  shares,  375,000,  were  placed  in  escrow  subject  to the  earn-out
agreement.  For the fiscal year ended March 31, 2001,  JRB reported  earnings of
$78,157  entitling the managers of JRB to receive 73,272 earn-out shares for the
year then ended. No additional  future losses from  discontinued  operations has
been  accrued  respecting  the balance of the  earn-out  shares as the number of
shares, if any, to be issued is not determinable.


AUTO NETWORK GROUP OF EASTERN PA., INC.

         Effective  April 1, 2000 the  Company  opened an office  and  warehouse
wholesale  operation in the  Philadelphia,  Pennsylvania  area.  The business in
Pennsylvania  is  conducted  by Auto  Network  Group of  Eastern  Pa.,  Inc.,  a
Pennsylvania   corporation.   The  Company  is  the  sole  shareholder  of  this
Pennsylvania operation.

         The Company loaned  $300,000 to the  Pennsylvania  operation,  which is
evidenced  by a secured  promissory  note with  interest  at the rate of 12% per
annum payable monthly, in arrears. The note may be prepaid at any time and has a
final  maturity on March 31,  2006.  Mr.  Edward G.  McCusker had agreed to loan
$100,000 to the  Pennsylvania  operation on terms similar to our advance,  on or
before June 30, 2000.  This loan was to be  subordinate  to the debt owed to us.
Mr. McCusker did not advance such funds for the Pennsylvania  operations and for
this reason as well as others, the Company ceased its operations in Pennsylvania
in the third quarter of 2000.  The Company has filed a law-suit in the Courts of
Pennsylvania  naming Mr. and Mrs. McCusker as defendants in an effort to recover
all or part of its $300,000 loan plus  interest and costs.  Although the Company
believes that it is entitled to full recovery, it has charged the unpaid balance
of its loan to the Pennsylavnia operations in the current year.


                                      F-27

<PAGE>


                    AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2001


NOTE L - BUSINESS ACQUISITIONS (CONTINUED)


PINNACLE  DEALER SERVICES, INC. ("PDS")

         On August 20, 1998, the Company  acquired PDS, an Arizona  corporation,
by issuing  to the  shareholders  of PDS a total  300,000  restricted  shares of
common stock,  valued at $0.20 per share, in exchange for the outstanding shares
of PDS. PDS provides  financing  programs for dealers who purchase vehicles from
the Company.

         The excess of the purchase  price over the fair value of the net assets
acquired (goodwill) was $47,813 and was being amortized on a straight-line basis
over 10 years.  At  December  31,  upon its  decision,  to close all  land-based
operations,  the Company charged the balance of the PDS unamortized  goodwill of
$36,657 to loss on discontinuance of land-based operations.

NATIONAL DEALER SERVICES CO. ("NDSCO")

         On March 1, 2000, the Company  acquired NDSCo, a Utah  corporation,  by
issuing to the  shareholders  of NDSCo a total  1,100,000  restricted  shares of
common stock,  valued at $2.55 per share, in exchange for the outstanding shares
of NDSCo.  100,000  shares of stock were held in escrow  pending the  successful
completion of the new NDSCo software.  The software was subsequently  completed.
NDSCo  was a  privately  held  corporation  involved  in the  development  of an
electonic vehicle  distribution  system.  They utilized a network of auto buying
websites  that  empowered  auto  dealerships  to research,  finance and purchase
vehicles  online.  They also  provided  manufacturers  with the  ability to list
vehicles for sale to dealers in all parts of the country  almost  instantly from
their own lots.

         Please  refer  to  Notes  B  and  E  for   information   regarding  the
reclassification  to software of the excess paid over  book-value for the NDSCo.
Common stock.  Subsequent to the  reclassification,  the Company determined that
this software is impaired, and accordingly has charged the remaining unamortized
balance to expense.


AUTOTRADECENTER  REMARKETING  SERVICES  INC. & WALDEN REMARKETING SERVICES, INC.
("WALDEN REMARKETING")


         On March 31, 1999, the Company acquired Walden Remarketing, a Minnesota
corporation  by  issuing  the  shareholders  of  Walden  Remarketing  a total of
2,050,000 restricted shares of common stock, cash of $125,000,  and a promissory
note in the principal amount of $425,000. The Company valued the common stock at
its estimated fair market value of $0.71 per share or $1,450,000. The promissory
note  accrues  interest at the rate of 12% per annum and requires the Company to
make 18 equal monthly payments of principal and interest beginning May 1, 1999.

         The excess of the purchase  price over the fair value of the net assets
acquired  (goodwill) was $1,985,383  and is being  amortized on a  straight-line
basis over 10 years.

         On April 20, 1999, the Company entered into a Consulting Agreement with
the former majority  shareholder of Walden  Remarketing as part of the Company's
acquisition of Walden  Remarketing.  The consulting  services agreement is for a
period of three years ending April 20, 2002. As consideration for the agreement,
the  Company  has granted to the  shareholder  an option to  purchase  3,000,000
shares of the  Company's  common stock at $3.00 per share.  The  options,  which
expire April 20, 2009, vest according to a schedule that is based on the trading
price of the common stock.

         On  December 1, 1999,  the  Company  entered  into an  agreement  which
provides for the  termination  and unwinding of all oustanding  obligations  and
agreements that arose when the Company acquired Walden Remarketing.  The balance
on the  promissory  note  issued  as part of the  acquistion  in the  amount  of
$314,475



                                      F-28

<PAGE>


                    AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2001


NOTE L - BUSINESS ACQUISITIONS (CONTINUED)


was  converted  into  common  stock at a price of $1.00 per share.  The  Company
changed the name from Walden Remarketing to AutoTradeCenter Remarketing Services
Inc. and moved the operation to a new office in Scottsdale, Arizona.

         The consulting services agreement entered into with the former majority
shareholder of Walden Remarketing as part of the Company's acquisition of Walden
Remarketing was also  terminated.  As a result the option to purchase  3,000,000
shares of the Company's common stock at $3.00 per share expired.


BUSINESSTRADECENTER.COM INC. ("BTC")

         On  January  7,  1999,  the  Company  incorporated  BTC in  Arizona  to
facilitate  the buying and selling of vehicles at wholesale  between  dealers on
the Internet. BTC has developed the technology and systems necessary to make the
Company's inventory,  as well as the inventory of member dealers,  available for
purchase and sale on the Company's  Internet site. On March 23, 2000 it acquired
the remaining 45% minority interest of BTC by issuing 5,000,000 shares of common
stock, valued at $1.88 per share, which represents  management's estimate of the
fair market value of the common stock on the date of the transaction, and paying
off a convertible $200,000 note, thereby making BTC a wholly-owned subsidiary.

         The excess of the purchase  price over the fair value of the net assets
acquired  (goodwill) was $9,374,550 and was being  amortized on a  straight-line
basis  over 10  years.  Please  refer to Note B for  information  regarding  the
reclassification of the purchase price paid by the Company for BTC from goodwill
to software and the subsequent change in the estimate of its useful life from 10
years to 3 years.

         The  acquisitions  described  above were  accounted for by the purchase
method of accounting for business  combinations.  Accordingly,  the accompanying
consolidated  statements  of  operations do not include any revenues or expenses
related to these  acquisitions  prior to the respective  closing dates. The cash
portions of the acquisitions were financed through available cash and borrowings
from the Company's line of credit.

         The  following  schedule  shows the  pro-forma  results for  continuing
operations  for the years ended March 31, 2000 and March 31, 1999  assuming  the
acquisitions  the Company acquired during the year ended March 31, 2000 occurred
on April 1, 1998.

                                              Year ended March 31,
                                         ------------------------------
                                             2000              1999
                                             ----              ----
        Net revenues                     $   291,587       $        -
        Net loss                         $(3,117,304)      $(2,534,363)

                                              Year ended March 31,
                                         ------------------------------
                                             2000              1999
                                             ----              ----
        Basic loss per common share      $    (0.11)       $     (0.13)
        Diluted loss per common share    $    (0.11)       $     (0.13)


         These  pro-forma  results have been prepared for  comparative  purposes
only and do not  purport to be  indicative  of the results of  operations  which
would have  actually  resulted had the  combinations  been in effect on April 1,
1998, or of future results of operations.


                                      F-29

<PAGE>
                    AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2001


NOTE L - BUSINESS ACQUISITIONS (CONTINUED)

         As a result of the acquisitions, the Company had the following non-cash
activity:
<TABLE>
<CAPTION>
                                                                               Year ended March 31,
                                                                        ------------------------------------
        Assets acquired:                                                            2000               1999
                                                                                    ----               ----
<S>                                                                           <C>                 <C>
            Accounts receivable, net                                          $       --          $  98,609
            Prepaid expenses                                                          --              3,520
            Investment in subsidiaries                                               460                 --
            Property and equipment                                               802,708             34,655
            Goodwill                                                          11,607,064          2,141,158
                                                                              ----------          ---------
                 Total assets acquired                                        12,410,232          2,277,942
                                                                              ----------          ---------

        Liabilities assumed:
             Accounts payable                                                         --             84,712
             Accrued liabilities                                                  40,241             84,180
                                                                              ----------          ---------
                 Total liabilities assumed                                        40,241            168,892
                                                                              ----------          ---------

        Notes payable issued                                                          --            425,000

        Value of common stock issued                                          12,369,991          1,604,480
                                                                              ----------          ---------

        Net cash paid                                                         $       --          $  79,570
                                                                              ==========          =========
</TABLE>


NOTE M - STOCKHOLDERS' EQUITY

COMMON STOCK

         On July 10, 1997  (inception)  the Company issued  9,000,000  shares of
no-par value common stock for $30,000 to its  founders.  In December  1997,  the
Company  sold  1,002,500  common  shares  for  $25,062  pursuant  to Rule 503 of
Regulation D under the Securities  Act of 1933  (commonly  referred to as a "504
offering").

         On March 31, 2001, the Company, in a private placement,  sold 5,865,210
units at $0.25 per unit.  Each unit consists of one share of no par common stock
and one warrant (expiring March 31, 2006) enabling the warrant holder to acquire
one share of common stock at $0.3125 per share, for each two warrants  tendered.
Subsequent  to March 31,  2001 an  additional  186,702  units were  sold,  under
similar  terms.  The  private  placement   subscription  agreement  contains  an
anti-dilution  provision.  Refer to Note R -  Subsequent  Events for  additional
disclosures  related to the  issuance of the number of shares of Common Stock to
be issued pursuant to this private placement.


PREFERRED STOCK

SERIES C

         During  February,  2000 the Company  issued  20,800  shares of Series C
preferred  stock ("Series C") for  $2,080,000.  Each share of Series C preferred
stock is convertible,  at the option of the holder,  at any time, into 80 shares
of Common  Stock of the  Corporation,  which is based on the initial  conversion
price of $1.25.  The Company  assigned an intrinsic  value of $1,697,280 to this
conversion  feature.  As a result,  a  constructive  dividend in this amount was
recorded  in the  accompanying  financial  statements.  Each  share of  Series C
preferred  stock  is  entitled  to a $100  liquidation  preference  over  common
stockholders. The Series C preferred stock is non voting.


                                      F-30


<PAGE>


                    AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2001


NOTE M - STOCKHOLDERS' EQUITY (CONTINUED)

         The Company  shall have the right and option upon notice to the holders
of the Series C preferred stock to call,  redeem,  and acquire any or all of the
shares of Series C preferred stock at a price equal to $110.00 per share, at any
time to the extent such shares have not  previously  converted  to common  stock
pursuant to the terms described above;  provided,  however,  that the holders of
the Series C preferred  stock  shall,  in any event,  have the right  during the
30-day period immediately following the date of the Notice of Redemption,  which
shall fix the date for redemption, to convert their shares of Series C preferred
stock in accordance with the terms described above.

         On May 17, 2000 the Company filed Form S-1 Registration Statement under
the  Securities  Act of 1933 to  register  the common  shares to be issued  upon
conversion  of the Series C preferred  stock.  On May 14, 2001 the Company filed
Form S-1 Registration  Statement  Amendment Number 5 under the Securities Act of
1933 to register the common shares to be issued upon  conversion of the Series C
preferred stock.

         In  accordance  with  terms  of the  Series  C  preferred  stock  and a
subsequent  agreement with shareholders the Company issued an additional 2% (416
Shares) Series C preferred shares to its shareholders.  As the additional shares
are  considered  to be a cost of  issuance,  their  cost is  capitalized  to the
related  equity  account.  Furthermore,  the  conversion  price for the Series C
preferred shares has been reduced to $0.75. No additional  constructive dividend
was  recorded  upon  the  reduction  of the  conversion  price  as  there  is no
additional intrinsic value resulting from the reduction.

SERIES D

         During  February,  2000 the Company  issued  31,200  shares of Series D
preferred  stock ("Series D") for  $3,120,000.  Each share of Series D preferred
stock is convertible,  at the option of the holder,  at any time, into shares of
Common Stock of the Corporation equal to $100.00 divided by the conversion price
which  shall be a price  equal to 65% of the  average  closing bid price for the
common  stock  for  the 10  trading  days  immediately  preceding  the  date  of
conversion.  Shareholders of Series D are limited to owning at any given time no
more than 5% of the total issued and outstanding Common Stock of the Corporation
after giving  effect to the issuance of the Common Stock to be received from any
Series D conversion.  The maximum conversion price shall be $4.00 per share. The
Company assigned an intrinsic value of $1,680,000 to this conversion feature. As
a  result,  a  constructive   dividend  in  this  amount  was  recorded  in  the
accompanying  financial  statements.  Each share of Series D preferred  stock is
entitled to a $100 liquidation preference over common stockholders. The Series D
preferred stock is non voting.

         The Company shall have the right and option upon notice to the holders
of the Series D preferred stock to call, redeem, and acquire any or all of the
shares of Series D preferred stock at a price equal to $110.00 per share, at any
time to the extent such shares have not previously converted to common stock
pursuant to the terms described above; provided, however, that the holders of
the Series D preferred stock shall, in any event, have the right during the
30-day period immediately following the date of the Notice of Redemption, which
shall fix the date for redemption, to convert their shares of Series D preferred
stock in accordance with the terms described above.

         On May 17, 2000 the Company filed Form S-1 Registration Statement under
the  Securities  Act of 1933 to  register  the common  shares to be issued  upon
conversion  of the Series D preferred  stock.  On May 14, 2001 the Company filed
Form S-1 Registration  Statement  Amendment Number 5 under the Securities Act of
1933 to register the common shares to be issued upon  conversion of the Series D
preferred stock.

         In  accordance  with terms of the Series D preferred  stock the Company
has deemed to issue an additional 2% (624 Shares)  Series D preferred  shares to
its  shareholders.  As the  additional  shares  are  considered  to be a cost of
issuance, their cost is capitalized to the related equity account.


                                      F-31


<PAGE>


                    AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2001


NOTE M - STOCKHOLDRS' EQUITY (CONTINUED)

STOCK OPTION PLANS

1997 STOCK OPTION PLAN:

         On August 5, 1997,  the  shareholders  of the Company  adopted the 1997
Stock Option Plan  ("Plan"),  which  provides for the granting of both incentive
stock  options  and  non-qualified  options  to  eligible  employees  (including
independent  wholesale  brokers),   officers,  and  directors  of  the  Company.
Initially,  a total of  1,000,000  shares  of common  stock  were  reserved  for
issuance  pursuant to the exercise of stock options under this Plan (the "Option
Pool").  The Option Pool is adjusted  annually on the beginning of the Company's
fiscal year to a number  equal to 10% of the number of shares of common stock of
the Company  outstanding at the end of the Company's last completed fiscal year,
or 1,000,000 shares, whichever is greater. For the fiscal years' beginning April
1,  1999,  April 1, 2000,  and April 30,  2001 the  Option  Pool was  2,038,508,
2,765,261 and 3,732,551  shares,  respectively.  The Plan is administered by the
Compensation  Committee of the Board of Directors  or, if there is no Committee,
by the Board of Directors.

         The Plan provides that disinterested directors, defined as non-employee
directors or persons who are not directors of one of the Company's subsidiaries,
will receive  automatic  option grants to purchase 10,000 shares of common stock
upon their  appointment  or election to the Board of  Directors  of the Company.
Options shall have an option price equal to 100% of the fair market value of the
common  stock on the grant date and shall have a minimum  vesting  period of one
year from the date of grant.

The following table reflects activities in the Company's 1997 Option Plan:

<TABLE>
<CAPTION>
                                                                          Weighted
                                                                           Average
                                                             Options        Price       Options
                                                           Outstanding    per Share   Exercisable
                                                        ------------------------------------------
<S>                                                         <C>           <C>        <C>
Balance, March 31, 1998                                       350,000     $ 0.15             0
                                                                                     ==========
              Granted                                       1,298,175       1.05
              Exercised
              Cancelled/Forfeited                           (125,000)       0.71
                                                            --------------------
Balance, March 31, 1999                                     1,523,175       0.87       375,000
                                                                                     ==========
              Granted                                       1,419,080       1.50
              Exercised
              Cancelled/Forfeited                            (25,000)       0.15
                                                            --------------------
Balance, March 31, 2000                                     2,917,255       1.50     2,139,755
                                                                                     ==========
              Granted                                         554,474       2.38
              Exercised                                     (362,925)       0.79
              Cancelled/Forfeited                           (394,885)       1.25
                                                            --------------------
Balance, March 31, 2001                                     2,713,919     $ 1.47     2,606,729
                                                            ==================================
</TABLE>


         These  shares vest  according  to length of service  provided  that the
recipient  is still  employed  by the  Company or under  contract  pursuant to a
work-for-hire  agreement as of the vesting date.  The vesting period for options
issued to brokers who were  performing  services  for the Company at the time of
its disposition of land-based  operations  remain  unchanged.  The option prices
range from $0.15 to $4.88.



                                      F-32


<PAGE>

                    AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2001


NOTE M - STOCKHOLDRS' EQUITY (CONTINUED)


2000 EQUITY INCENTIVE COMPENSATION PLAN:

         On November  29, 2000,  the board of directors  adopted the 2000 Equity
Incentive  Compensation  Plan, which provides for granting stock options,  stock
appreciation  rights,  restricted  and deferred  stock,  bonus stock,  and other
stock-based   awards  to  officers,   directors,   employees,   and  independent
contractors.  The  shareholders  must still adopt this plan. The total number of
shares of common  stock that may be subject to the granting of awards under this
plan at any time during the term of the plan is equal to 3,500,000 shares,  plus
the number of shares with respect to which awards  previously  granted under the
plan that terminate  without being exercised,  and the number of shares that are
surrendered in payment of any awards or any tax withholding requirements. During
any fiscal year the number of options,  stock  appreciation  rights,  restricted
shares of common stock, deferred shares of common stock, shares as a bonus or in
lieu of other company  obligations,  and other stock-based awards granted to any
one participant  may not exceed 450,000 for each type of such award,  subject to
adjustment in certain circumstances.  The maximum amount that may be paid out as
an annual  incentive  award or other cash  award in any  fiscal  year to any one
participant  is  $2,000,000,  and the  maximum  amount  that may be  earned as a
performance award or other cash award in respect of a performance  period by any
one participant is $5,000,000.

         Unless earlier terminated by the board of directors, this plan will
        terminate at such time as no shares of common stock remain available for
issuance under this plan and we have no further rights or obligations with
respect to outstanding awards under this plan.

         Subject to approval of this plan by the stockholders, options have been
granted under this plan as follows:

         Granted     ...............................     2,365,496
         Exercised..................................             0
         Cancelled/expired..........................             0
                                                          --------
         Balance, March 31, 2001....................     2,365,496
                                                         ==========


         SFAS No. 123,  "Accounting for Stock-Based  Compensation"  ("SFAS 123")
requires the Company to disclose pro forma  information  regarding option grants
made to its employees.  SFAS No. 123 specifies certain valuation techniques that
produce  estimated  compensation  charges  that are  included  in the pro  forma
results below. These amounts have not been reflected in the Company's  Statement
of  Operations,  because "APB 25",  "Accounting  for Stock Issued to Employees,"
specifies that no compensation charge arises when the stock price of the options
granted to the  Company's  employees is equal to or greater than the fair market
value of the stock price at the date of grant.

         Under SFAS No. 123, the fair value of each option grant is estimated on
the  date of  grant  using  the  Black-Scholes  option  pricing  model  with the
following average assumptions:



                                             Year Ended March 31,
                                          -------------------------
                                           2001      2000      1999
                                          -----     -----     -----
Expected divident yield                   0.00%     0.00%     0.00%
Risk-free interest rate                   5.74%     6.02%     4.67%
Expected volatility                        168%      166%      149%
Expected life (in months)                    16        32        43



                                      F-33

<PAGE>


                    AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2001


NOTE M - STOCKHOLDRS' EQUITY (CONTINUED)

         The  Black-Scholes  option  valuation  model was  developed  for use in
estimating  the fair value of traded  options that have no vesting  restrictions
and are fully  transferable.  In addition,  option  valuation models require the
input of highly  subjective  assumptions  including  the  expected  stock  price
volatility.  Because the Company's  employee stock options have  characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimates,  in
management's  opinion the existing models do not necessarily  provide a reliable
single measure of the fair value of the Company's options.  The weighted average
estimated fair value of employee  stock options  granted during the years ending
March 31,  2001 and 2000 and March 31,  1999 were  $1.07,  $0.80,  and $0.52 per
share, respectively.

SFAS 123 pro-forma numbers are as follows:
<TABLE>
<CAPTION>

                                                                      YEAR ENDED MARCH 31,
                                                    ----------------------------------------------------------
                                                          2001                 2000                 1999
                                                    ----------------     ----------------     ----------------
Net income (loss) as reported under APB 25

<S>                                                 <C>                  <C>                  <C>
  Continuing operations                             $ (9,060,369.00)     $   (946,202.00)     $   (226,369.00)
  Discontinued operations                           $ (2,663.285.00)     $ (1,641,551.00)     $    341,610.00
                                                    ----------------     ----------------     ----------------
                                                    $(11,723,654.00)     $ (2,587,753.00)     $    115,241.00

Net income (lo9ssP pro forma under SFAS 123
  Continuing operations                             $(10,712,316.00)     $ (1,578,305.00)     $   (267,263.00)
  Discontinued operations                           $ (2,663,285.00)     $ (2,075,079.00)     $     32,284.00
                                                    ----------------     ----------------     ----------------
                                                    $(13,375,601.00)     $ (3,653,384.00)     $   (234,979.00)

Basic net income (loss) per common share-
as reported under APB 25
  Continuing operations                             $         (0.28)     $         (0.04)     $         (0.02)
  Discontinued operations                           $         (0.08)     $         (0.08)     $          0.03
                                                    ----------------     ----------------     ----------------
                                                    $         (0.36)     $         (0.12)     $         (0.01)

Diluted net income (loss) per common share-
as reported under APB 25
  Continuing operations                             $         (0.28)     $         (0.04)     $         (0.01)
  Discontinued operations                           $         (0.08)     $         (0.08)     $          0.02
                                                    ----------------     ----------------     ----------------
                                                    $         (0.36)     $         (0.12)     $         (0.01)

Basic net income (loss) per common share-
pro forma under SFAS 123
  Continuing operations                             $         (0.33)     $         (0.07)     $         (0.02)
  Discontinued operations                           $         (0.08)     $         (0.10)     $          0.00
                                                    ----------------     ----------------     ----------------
                                                    $         (0.41)     $         (0.17)     $         (0.02)

Diluted net income (loss) per common share-
pro forma under SFAS 123
  Continuing operations                             $         (0.33)     $         (0.07)     $         (0.01)
  Discontinued operations                           $         (0.08)     $         (0.10)     $          0.00
                                                    ----------------     ----------------     ----------------
                                                    $         (0.41)     $         (0.17)     $         (0.01)


Outstanding Shares
  Basic                                               32,777,824           21,638,671           13,726,397
  fully diluted                                       32,777,824           21,638,671           22,826,746
</TABLE>





                                      F-34


<PAGE>


                    AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2001


NOTE M - STOCKHOLDRS' EQUITY (CONTINUED)

OTHER STOCK OPTIONS

         The Company has also granted  stock  options to other third  parties as
part of the issuance of stock, debt and in business  acquisitions.  Some options
vest  according to various  agreed upon  conditions;  while others vested on the
date granted.  Following is a table reflecting  activities regarding other stock
options:
<TABLE>
<CAPTION>
                                                      Weighted
                                                       Average
                                     Options             Price            Options
                                   Outstanding         per Share        Exercisable
<S>                                <C>                  <C>              <C>
Balance, March 31, 1998              850,000            $0.39
  Granted                          1,589,810             1.42
  Exercised                                -                -
  Cancelled/Forfeited               (350,000)            0.50
                                   ----------           -----            ---------
Balance, March 31, 1999            2,089,810             1.16            2,089,180
                                                                         =========
  Granted                            465,000             1.30
  Exercised                                -                -
  Cancelled/Forfeited               (300,000)            3.50
                                   ----------           -----            ---------
Balance March 31, 2000             2,254,810             0.88            2,254,810
                                                                         =========
  Granted                                  -                -
  Exercised                         (210,000)            1.00
  Cancelled/Forfeited                (75,000)            2.56
                                   ----------           -----            ---------
Balance March 31, 2001             1,969,810            $0.80            1,969,810
                                   ==========           =====            =========
</TABLE>


         The fair value of the options  issued  during the years ended March 31,
2001, 2000 and 1999 was determined using the Black-Scholes option pricing model.
Options granted for services were valued at $23,083 and options granted for loan
guarantees  were  valued at $56,355 in 1999.  For the years ended March 31, 2001
and 2000  options  granted for services  were valued at $193,186  and  $351,280,
respectively. No other options were granted for the year ended March 31, 2001.


NOTE N - RELATED PARTY TRANSACTIONS

         Certain of the  following  related  party  transactions  refer to prior
tranactions  with  the  disposal  of  land-based  subsidiaries  and  operations.
Effective  June  1,  1998  ANET-NM  entered  into a lease  agreement  with G & B
Investments,  LLC,  an  entity  owned  by  two of the  principals  managing  the
Albuquerque   operations.   The  lease   terminates  on  May  31,  1999  but  is
automatically  renewed unless a 30-day cancellation notice is received by either
party.  The lease is an operating  lease whereby  ANET-NM is responsible for all
operating costs.  The amount of the lease is $2,500 per month.  Effective May 1,
2000 the amount of the lease increased to $3,600 per month.

         As  described  in Note L, on  August  20,  1998  the  Company  acquired
Pinnacle Dealer Services ("PDS") for 300,000  restricted shares of common stock.
PDS was  owned by three  officers  of the  Company.  The value  assigned  to the
transaction was $47,813.

         On March 26, 1999,  the Company  obtained a  $3,000,000  line of credit
from a financial institution.  The note is due March 31, 2000, and is secured by
a first  lien on all  inventory  accounts  receivable,  equipment,  and  general
intangibles.  Messrs. Stuart, Moldenhauer,  and Butterwick personally guaranteed
the note. In



                                      F-35


<PAGE>


                    AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2001


NOTE N - RELATED PARTY TRANSACTIONS (CONTINUED)

consideration of the personal guarantees, the Company granted each of Messrs.
Stuart, Moldenhauer, and Butterwick three-year options to purchase 250,000
restricted shares of common stock at a price of $1.00 per share.

         On April 3, 2000, the Company  extended its  $3,000,000  line of credit
from a financial institution. The note is due June 30, 2000, and is secured by a
first  lien  on  all  inventory  accounts  receivable,  equipment,  and  general
intangibles.  Messr.  Butterwick personally guaranteed a portion of the note. No
options were granted in  consideration of his personal  guarantee.  The note was
further  extended  through  the first two  months of 2001 when it was  repaid in
full.

         Pursuant to a Financial  Services  Agreement with Cambridge  Management
Associates,  LLP,  an entity  whose  managing  partner  became an officer of the
Company on April 2, 1999,  300,000 stock options  vested on March 26, 1999.  The
options are exercisable at $0.32 per share.

         The  Company  has  entered  into  various  lending   arrangements  with
officers,  directors  and  other  affiliated  entities  owned or  controlled  by
officers,  directors  and other key  personnel  of the  Company.  As more  fully
detailed  in Note G, at March 31,  2001,  March 31,  2000 and March  31,1999 the
outstanding  balance  on these  notes  was  $738,807,  $528,807,  and  $528,807,
respectively.  The  total  interest  paid to  these  entities  on all  financing
activities  for the years ended March 31,  2001,  2000,  and 1999 was  $106,888,
$63,456, and $63,456, respectively.

         The outstanding balances on related party notes respecting discontinued
operations  were $0,  $5,166,821,  and  $3,342,639 at March 31, 2001,  2000, and
1999,  respectively.  Total  interest  paid to these  entities on all  financing
activities for discontinued operations was $699,288,  $704,665, and $233,368 for
the years ended March 31, 2001, 2000, and 1999, respectively.


NOTE O - CONCENTRATIONS

         Remarketing  off-lease  and  program  vehicles,   primarily  using  the
Internet, represents the Company's primary business segment. For the fiscal year
ended March 31, 2001, 100% of its revenue was earned under a three year contract
with  American  Honda  Finance  Corporation  to  remarket  used Honda and Accura
vehicles.


NOTE P - LEGAL PROCEEDINGS

         The  Company  and  certain  of its  subsidiaries  have  been  named  as
defendants in various claims,  complaints and other legal actions arising in the
normal course of business.  In the opinion of  management,  the outcome of these
matters will not have a material  adverse  effect upon the financial  condition,
results of operations or cash flows of the Company.


                                      F-36

<PAGE>

NOTE Q - AUTOTRADECENTER.COM  INC. - CONSOLIDATED  STATEMENT  OF  OPERATIONS FOR
         THE THREE MONTHS ENDED MARCH 31, 2001

<TABLE>
<CAPTION>

                                                                                  (unaudited)
                                                                                  ------------
<S>                                                                               <C>
               Net sales                                                          $   246,806
                                                                                  ============

               Operating expenses:
                    Salary                                                            210,962
                    Selling                                                           225,285
                    General and administrative                                        518,908
                    Loss on disposal of impaired software                                   -
                    Depreciation and amortization                                   1,238,626
                                                                                  ------------
                         Total operating expenses                                   2,193,781

                 (Loss) from operations                                            (1,946,975)
                                                                                  ------------

               Other income (expense):
                    Miscellaneous                                                       4,999
                    Interest expense                                                  (59,296)
                                                                                  ------------
                         Total other income (expense) - net                           (54,297)

                   (Loss) from continuing operations                               (2,001,272)
                                                                                  ------------

               Discontinued operations:
                   (Loss) from operations of land-based segment                             -
                   (Loss) from disposition of land-based segment                     (687,392)
                                                                                  ------------
                                                                                     (687,392)

               Net (loss) before income taxes                                      (2,688,664)
                                                                                  ------------

               Income tax expense (benefit)                                                 -
                                                                                  ------------

               Net (loss)                                                         $(2,688,664)
                                                                                  ============

               Basic earnings (loss) per share:
                    Continuing operations                                         $     (0.06)
                    Discontinued operations                                       $     (0.02)


               Diluted earnings (loss) per share:
                    Continuing operations                                         $     (0.06)
                    Discontinued operations                                       $     (0.02)

               Weighted average shares number of common shares outstanding
                    Basic                                                          34,323,871
                    Fully diluted                                                  34,323,871


</TABLE>


                                      F-37

<PAGE>

                    AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2001


NOTE R - SUBSEQUENT EVENTS

         On May 16, 2001 a director of the Company loaned the Company  $150,000.
On May 31, 2001,  the note was  rewritten  and  increased to $200,000 and is due
upon the Company's receipt of specific trade accounts receivable. The note bears
interest  at the rate of 12% per annum and is  secured by these  specific  trade
accounts.  On July 16,  2001,  this  director  loaned the Company an  additional
$65,000  under a new note with the same  terms and  conditions  as the  original
note.  Subsequent  principal  payments have reduced the balances due at July 26,
2001  on  both  notes  to  approximately  $115,000.  As  part  of the  financing
arrangement  with Eagle Capital Group,  LLC as described below, the due dates on
the notes have been extended until after August 31, 2001.

         On July 26, 2001, the Company entered into a financing arrangement with
Eagle Capital Group, LLC ("Eagle"), a private company, which provides for a line
of  credit  up to  $1,300,000.  The loan  provides  for an  initial  advance  of
$250,000,  followed  by a  thirty-day  review  period  during  which  Eagle will
complete  its legal due  diligence  with  respect  to,  among other  items,  the
Company's  intellectual  property.  The review  period grants Eagle the right to
discontinue funding of the line of credit if the Company's intellectual property
is deficient in certain material respects. The loan is due June 30, 2002 bearing
interest at the rate of 12% per annum that is payable monthly.  The Company paid
a commitment  fee of $13,000 and is obligated to pay a one percent (1%) facility
fee of up to $13,000 each  quarter.  The Company is also required to pay monthly
principal  payments of not less than 5% of the outstanding loan balance once the
Company achieves positive cash flow. The loan is secured by all assets including
but not  limited to  furniture,  fixtures,  leasehold,  personal  property,  and
intellectual property.

         The loan is  convertible  into common  stock of the Company at any time
before the due date  thereof,  including  any  extensions,  at the lesser of the
average bid price following the date of the first advance and the earlier of the
conversion  date or the  termination  date or $0.10 per share.  The Company also
issued  Eagle a warrant  which  allows  Eagle,  for a period of 90 days from the
termination date of the loan, to purchase common shares at $0.10 per share in an
amount  equal to the  difference  between (a)  13,000,000  and (b) the number of
shares of common stock  issued upon prior  conversion  of any amounts  under the
loan.

         In addition, the Company issued a warrant to Eagle that allows Eagle to
purchase,  for a period of up to five years,  up to  6,500,000  shares of common
stock at an exercise price of $0.125 per share.  If the Company prepays the loan
in full at any time prior to December 31, 2001,  the Company will issue to Eagle
1,500,000 shares of Common Stock as consideration.

         In  addition,  the  Company  issued  to  Eagle  1,300  shares  Series E
Preferred Stock, at a par value of $0.10 per share. The Series E Preferred Stock
grants Eagle the right to vote an equivalent of 13,000,000 common shares.  Eagle
will have two representatives on the Company's board of directors.

         The Company  also  entered  into a  Facilities  Use and  Administrative
Services  Agreement with an affiliate of Eagle for the use of office facilities,
software development,  marketing, accounting, and other management services that
may vary  from  time to time.  The fee for  these  services  will be  negotiated
between  the  parties  in good faith as  business  practices  and  circumstances
change.

         On July 26,  2001,  as part of the  agreement  with Eagle,  the Company
consolidated the notes payable to Pinnacle Financial and Mark Moldenhauer in the
amounts of $336,807 and  $402,000,  respectively.  The  consolidated  note bears
interest at 12% payable monthly.  In addition,  the Company is obligated to make
principal  payments of $25,000  per month in November  and  December  2001,  and
$50,000 per month  principal  payments  from January 2002 through May 2002.  The
balance of the note is due June 30, 2002. Any principal payment may be converted
into Common Stock at the sole  discretion of the lender at the rate of $0.10 per
share,  upon three days  written  notice.  The Company  also issued a warrant to
purchase one share of Common Stock for every two shares of Common Stock received
upon conversion. The warrant exercise price is $0.125 per share and expires five
years from issuance. The note is subordinated to the first lien of Eagle.

         As a result of this  transaction,  the Company is required to reset the
pricing of the units sold in March  through  April,  2001  pursuant to a private
placement.  The anti-dilution clause contained in the private placement requires
the  Company  to issue  9,948,027  shares of its  common  stock  and  4,959,013
additional stock purchase warrants exercisable at $0.125 per share.


                                      F-38

<PAGE>


NOTE S - LIQUIDITY ISSUES

         The Company has sustained operating losses and negative cash flow since
its inception, resulting in little tangible net worth at March 31, 2001. Without
the new financing, as discussed in Note R, the Company could not have funded its
day-to-day  operations  or  service  its long term  debt.  The  Company  and its
management have addressed these concerns by: (1) Obtaining a new line of credit,
effective July 26, 2001, for up to $1,300,000 (see Note R) to fund the Company's
operating needs until the projected  future revenue sources are fully developed;
(2)  Continuing  our efforts to raise up to an additional  $500,000  under terms
similar to those of the  private  placement  of equity  securities  in March and
April  of 2001;  (3)  Implementing  plans to  generate  positive  cash  flow and
operating  profits by increasing  revenues through the expansion of its Internet
remarketing  of off-lease and program  vehicles  with its current  customers and
others and develop new products and services for its current  customer  base and
others and; (4) the Company intends to further reduce its cash  requirements for
software and website development and continue to reduce its costs of operations.
There is no assurance,  however,  that the Company will be able to implement its
business  plan as  outlined  above.  In the event that the  Company is unable to
obtain  positive cash flow prior to exhausting  its new line of credit,  it must
obtain  additional  financing  in  the  form  of  equity  or  debt  to  continue
operations.





                                      F-39