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, 2000
                                       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.)

             8135 EAST BUTHERUS, SUITE 3, SCOTTSDALE, ARIZONA 85260
               (Address of principal executive offices) (Zip code)

       Registrant's telephone number, including area code: (480) 951-8040

        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 X No ___

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.

Aggregate market value of the voting and non-voting common equity held by
non-affiliates of the registrant as of July 5, 2000: $4,330,280

Number of shares of common stock outstanding as of July 05, 2000: 30,662,609

Documents incorporated by reference: None


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                                     PART I

ITEM 1.           BUSINESS.

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

         We are 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. We compete with both the auto auctions and the independent
wholesale brokers and will differentiate our method of doing business as
compared to our competition under the "Competition" heading included later in
this section. We currently focus our efforts on the buying and selling late
model luxury automobiles. Our average vehicle sale is approximately $15,000.

         We contract with salesmen, referred to as brokers, to buy and sell used
vehicles. Each broker enters into a non-exclusive contract with us that
authorizes the broker to act as our agent in the buying and selling of used
vehicles under our company name. Although each broker may buy and sell vehicles
on his own behalf, most of the brokers choose only to buy and sell vehicles for
us. We use corporate funds to purchase the vehicle and in turn all monies
received upon the sale of the used vehicle are deposited into the corporate bank
account. Even though the broker has the authority to buy used vehicles, we
contractually limit the amount of inventory that each broker can have on hand or
un-sold at any given point in time. Each broker has the responsibility to sell
the used cars he or she has purchased. The average length of time a used vehicle
is in our inventory is 15 days. Generally we compensate our brokers under one of
two compensation methods. Under the first plan, the broker retains the profit or
loss in excess of a fixed fee, ranging from $175 to $225, retained by us. The
second compensation plan involves our company sharing any gain and loss with the
broker. There is no fee assessed under this plan. Currently, the first
compensation plan is the method predominately used; however, we anticipate that,
in the future, the second method will become the preferred alternative.

         In January 1999, we announced the development of our Internet site
WWW.AUTOTRADECENTER.COM. The general public can only access the "guest" section
when they originally connect to the web site. The full functionality features of
our Internet site are restricted to members. To become a member, a licensed
dealer must complete an application and provide to us a copy of their dealer
license as proof of their dealership status. The Internet site allows all
members, including our company, to buy and sell used automobiles over the
Internet.

         We believe that as the membership to our Internet site grows and the
listing of inventory of used vehicles for sale increases, our emphasis in the
way we conduct certain of our wholesale business will transition from the
current process, previously described, to that commonly referred to today as
e-commerce. Specifically, we intend to increase our use of the Internet site
WWW.AUTOTRADECENTER.COM for the conduct of our business of buying and selling
used vehicles to automobile dealers on a wholesale basis.

         At present, our marketing and advertising activities are restricted to
expanding personal relationships within the automotive industry. It is our
intent to increase the membership of our Internet site by selectively placing

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ads in industry publications during the current fiscal year. We will initiate a
more comprehensive marketing and advertising campaign if successful in our
anticipated fund raising activities.

         On February 28, 2000, we executed a Motor Vehicle Remarketing Agreement
with American Honda Finance Corporation that provides for our company to
remarket off-lease used vehicles to Honda and Acura dealers via an Internet
based Web site that is restricted to users approved by Honda. The Honda Web site
became operational in all Honda and Acura dealerships in the United States by
June 15, 2000 after the completion of our phase-in that began in April. We
signed a letter of intent in late March 2000 with American Suzuki Motor
Corporation to develop a pilot program, similar to the program utilized for
Honda, utilizing our Internet technology systems and procedures to remarket
their program cars to dealers. The pilot program is scheduled to begin August 1,
2000.

         We will continue to aggressively market our e-commerce
business-to-business technology applications and services to the used vehicle
automotive industry. The success we have achieved to-date in these efforts
continues to provide us with opportunities to assist our customers in addressing
the inefficiencies in the current redistribution process for used automobiles
and providing creative solutions through the use of our technology, remarketing
efforts and wholesale operations.

         For the remainder of the fiscal year ended March 31, 2001, we intend to
open office and warehouse facilities in five to seven additional markets subject
to raising necessary funds. Although we do not know specific locations at this
time, our strategy is to provide coverage of major markets across the country.
We believe, generally, $500,000 to $1,000,000 is needed for each new location,
approximately 75% of which will be provided by us and 25% provided by the
managing brokers. However, in certain circumstances our funds needed to open new
locations can vary between none and 100%. We also intend to continue the
development of our Internet sites. We intend to raise the capital necessary to
finance our anticipated growth through a combination of debt, equity or
convertible debt offerings of up to $21 million. Lastly, we must restructure the
$3,000,000 revolving line of credit with Wells Fargo Business Credit, Inc. by
the end of September 2000.

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 succinctly reflect our current Internet presence and our future
direction of providing business-to-business automotive redistribution services
over the Internet. From inception until February 1998, we had approximately 12
brokers and we operated on a break-even basis. During the months of February
1998 through March 1999, we added 14 brokers and secured additional funding. As
a result of these additional brokers and additional funding, our operating
margin increased, thereby resulting in profitable operations.

         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.

         Auto Network Group of New Mexico, Inc., a wholly owned subsidiary, was
incorporated on May 18, 1998, and commenced operations on June 1, 1998. In order
to achieve the sales volume necessary to economically operate an office and
warehouse facility in each targeted market area we need to staff that facility
with a minimum of four brokers plus two administrative personnel, one of which
must have a bookkeeping background. 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 will utilize this same process or methodology in
opening other targeted markets, which is part of our business plan and corporate
strategy. Auto Network Group of New Mexico operates its business in a manner
similar to certain other subsidiaries of its parent, AutoTradeCenter.com, as
will future facilities that operate pursuant to the Auto Network Group of New
Mexico model.

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         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 promotes and administers alternative financing programs
for dealers who purchase used cars from us.

         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.

         On January 7, 1999, we incorporated BusinessTradeCenter.com Inc. in
Arizona to facilitate the buying and selling of vehicles at wholesale between
dealers on the Internet. 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 45% minority interest of BusinessTradeCenter by issuing 5,000,000
shares of our common stock valued at $1.88 per share making BusinessTradeCenter
a wholly owned subsidiary. As part of this transaction we paid 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.

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

         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.

         On March 1, 2000 we acquired NDSCo.com Inc., a technology provider of
systems and applications 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 had no prior operations. They will operate in a manner similar to our
New Mexico and Oregon wholesale operations.

 CUSTOMERS

         We sell automobiles on a wholesale basis to franchise and independent
used car dealers throughout North America. There were over 80,000 registered and
licensed car dealers in the United States as of December 31, 1999. As of May 5,
2000, we had consummated at least one transaction with over 2,000 of these
licensed dealers. The past several years has brought about a much-publicized
attempt by various entities to consolidate the retail car market. These efforts
have primarily been directed at the franchised dealers. To date there has not
been sufficient experience to determine if such consolidation will have a
negative or positive impact on our long-term customer base and growth plans. At
present, management believes that our base of existing customers and potential
customers is sufficiently large that any impact due to the consolidation of the
franchised dealers will be minimal.

         Our e-commerce Internet business-to-business 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.


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INTERNET SITE - BUSINESSTRADECENTER.COM

         On February 1, 1999, we introduced an Internet site
AutoTradeCenter.com. Our subsidiary, BusinessTradeCenter.com, controls the legal
rights to the Internet domain name, technology, systems, and programming
involved in operating this site. Only automobile dealers, leasing companies,
banks, and fleet or rental companies can use this site to obtain information on
used vehicles. These businesses must first register to become members. To
encourage use of this site, we currently are offering free membership. We plan
to charge a membership fee at an undetermined future date. The pricing of the
membership fee cannot be established at this time; however, we plan to set the
fee to reflect the value of the service, taking into consideration any competing
pricing structure. As of June 30, 2000, approximately 500 businesses had
registered as members; a few members have been posting their inventory onto the
site on a consistent basis.

         Initially our entire inventory was listed on the Internet site.
However, recently due to additional site development and a change in our
internal accounting and inventory tracking systems we are not listing our cars
on the site. We expect that over time, certain of our business will be conducted
through the Internet site. We do not anticipate that our use of the Internet
site will eliminate the role of our brokers as our buying and selling agents;
however, we do anticipate that the broker of the future will be required to
develop skill sets associated with electronic commerce.

         The web site offers the following services and features to our company
and other members:

o    INVENTORY FOR SALE - A dealer may post its inventory for sale. The listing
     includes a complete description of the vehicle, a condition report,
     mileage, and the wholesale price. In addition, up to six pictures per
     vehicle may be uploaded to the site for viewing.

o    INTRA-NET CAPABILITY - We assign each member a unique user number and
     password. If a member dealer is associated or affiliated with other
     members, our system has the capability of restricting the viewing of any
     inventory listed to the affiliated group. This feature provides an
     affiliated group to share their inventory amongst their group for a period
     of time, specified for each vehicle listed, before that vehicle is made
     available for sale to any other member.

o    BATCH UPLOADING - Our system allows for a vehicle to be input into the
     system one at a time or by batches.

o    SEARCH CAPABILITIES - A search, utilizing any data field such as make,
     model, year, or location, can be made of all vehicles listed in the
     inventory database.

o    WISH LIST - If a dealer is seeking to purchase a vehicle that is not in the
     inventory database, he may enter the details of the desired vehicle on the
     wish list. Other members may have knowledge as to where that desired
     vehicle could be located.

o    ON-LINE AUCTION - When a dealer does not sell a listed vehicle at the
     wholesale price listed, he may choose to put the vehicle up for auction.
     Our on-line auction can be conducted for up to 72 hours for each vehicle.
     The listing dealer may accept or reject any bids.

o    TRANSACTING BUSINESS - Names, addresses and telephone numbers are listed
     for each dealer. If a member wishes to purchase a vehicle on the inventory
     listing, he may do so by contacting the listing dealer.

o    ESCROW SERVICES - Escrow services are available for any dealer who would
     like to have an independent third party hold the vehicle title and funds
     until all terms and conditions of the purchase/sale have been met. We are
     not a party to the escrow services, other than in our capacity as a member.

         No revenue had been generated from any fees on our Internet site as of
June 30, 2000. Management believes that as our Internet site grows, we may
receive other sources of revenues from advertising and other promotional fees.


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         On February 28, 2000, we executed a Motor Vehicle Remarketing Agreement
with American Honda Finance Corporation that provides for our company to
remarket off-lease used vehicles to Honda and Acura dealers via an Internet
based Web site that is restricted to users approved by Honda. As of June 15,
2000 the Honda Web site is operational with all Honda and Acura dealers through
out the United States. We signed a letter of intent with American Suzuki Motor
Corporation to develop a pilot program, similar to the program utilized for
Honda, utilizing our Internet technology systems and procedures to remarket
their program vehicles to dealers. The pilot program is scheduled to begin
August 1, 2000. BusinessTradeCenter is responsible for the technology used in
our contract with American Honda Finance Corporation and our proposed
contractual relationship with American Suzuki Motor Corporation in addition to
the on-going responsibility of maintaining the system. We are currently
generating revenue from American Honda Finance Corporation using this
technology.

         BusinessTradeCenter is also responsible for the development and
maintenance of our Internet application utilizing our Web site
WWW.TRADEINCARSONLINE.COM This Web site allows customers to 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. We have signed a letter of
intent with Autobytel.com Inc. that forms the basis of a strategic alliance for
expressed purpose of gaining access for their customers to our technology,
applications and processes for the customers who have a trade-in. Until we have
executed an agreement with Autobytel.com Inc., our letter of intent with them is
not binding on either party. In addition we are currently negotiating with two
other similar on-line new car-buying services to provide bids for their
prospective customer's trade-ins.

         On March 1, 2000, we acquired NDSCo.com Inc., a provider of technology
for the automotive industry. We believe that 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. Several of the systems acquired
through the NDSCo.com acquisition address the same inefficiencies in the
automotive used car industry as the technology developed by our company prior to
this acquisition; however, we are currently evaluating the specific applications
and processes and will make a decision within a few months regarding the most
efficient use of this technology.

FINANCE PROGRAMS - PINNACLE DEALER SERVICES

         Pinnacle Dealer Services promotes and administers alternative finance
programs for dealers who purchase used cars from us. On August 20, 1998, we,
along with Pinnacle Dealer Services, executed an agreement with Auction Finance
Group, Inc., a non-affiliated lending company that provides licensed automobile
dealers with credit lines, thereby allowing them to purchase vehicles from us.
These credit lines are marketed through Pinnacle Dealer Services. In the
agreement, we have granted the lending company an exclusive license to provide
third party loans and extensions of credit lines to dealers at our facilities.
The credit applications provided by the lending company bear the Pinnacle Dealer
Services logo. The lending company is to pay us a fee of $15.00 for each vehicle
it finances so long as the average purchase price is above $10,000 and the
average loan term is six weeks. If these two conditions are not met, the lending
company has the right to renegotiate the $15.00 fee. To date, we have met this
covenant. The agreement with the lending company is for a term of ten years and
automatically renews for successive ten-year periods unless terminated.

         Pinnacle Dealer Services is also currently exploring other alternative
finance programs that may be made available to our dealer network for retail
customers who purchase used cars from these dealers.

AUTOTRADECENTER REMARKETING SERVICES (FORMERLY WALDEN REMARKETING SERVICES)

         AutoTradeCenter Remarketing assists the finance subsidiaries of
manufacturers, banks or other finance companies in disposing of used vehicles
that are being returned upon the expiration of a lease term. AutoTradeCenter
Remarketing currently is providing these services for our contract with American
Honda Finance Corporation utilizing the technology provided by
BusinessTradeCenter.com.

         In the mid 90's, creative lease programs appeared and thousands of
off-lease vehicles started to appear at auto auctions. Currently, 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

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residual prices for these vehicles, resulting in certain cases in severe losses
on lease portfolios. Remarketing programs were developed to address this resale
need.

         We believe that AutoTradeCenter Remarketing differentiates us, among
other factors, from other Internet based providers of technology services due to
our experienced automobile remarketing personnel, techniques and applications
and will ultimately be a major contributing factor in our success.

WORKING CAPITAL PRACTICES

         We finance our inventory needs through private sources of capital and
proceeds from the sale of used cars. In addition, we have a $3,000,000 line of
credit with Wells Fargo Business Credit, Inc.

COMPETITION

         We believe that we have two major sources of competition: independent
wholesale brokers and auto auctions.

         INDEPENDENT WHOLESALE BROKERS. Approximately 3% of the vehicles sold by
franchised dealers in the United States in 1997 were acquired from independent
wholesale brokers and other related type organizations, according to the 1999
USED CAR MARKET REPORT prepared by ADT Automotive Inc. Independent wholesale
brokers represent a direct form of competition as they are performing services
similar to the services provided by us. Information on wholesale brokers is
limited. It is our belief that the vast majority of the wholesale brokers are
small organizations of typically 1 to 5 individuals. We are not aware of any one
wholesale broker that sells more than 2,000 vehicles annually. Based upon our
discussions with numerous individuals and associated groups of independent
wholesale brokers, we believe that these groups are generally undercapitalized
and have limited external financial resources.

         We believe that we possess many competitive advantages over these
smaller wholesale brokers due to our relatively greater financial strength and
operational staff. We believe that the auto dealers from whom we purchase
vehicles enjoy a greater assurance of timely payment from us as compared to
other smaller wholesale brokers because we are publicly held, we have achieved a
high reputation for prompt payment for vehicles purchased, and we have
significantly more capital than most of the independent wholesale brokers.
Dealers with whom we transact business have stated to us that our public
presence and our timely payment policies provides them with a greater degree of
comfort as compared to the smaller independent wholesale brokers. On a national
basis the wholesale brokers represent a very fragmented part of the auto
distribution system and these persons are part of the targeted consolidation and
growth plan for our company.

         We compete with the independent wholesale brokers on the basis of
service. We are not aware of any other independent wholesale brokers that
conduct their operations on the Internet.

         AUTO AUCTIONS. Auto auctions as a whole are the most significant
competitor to us in the used car distribution system. According to the 1999-USED
CAR MARKET REPORT, in 1997 the total number of vehicles sold by auto auctions
was in excess of 10 million units, which represented 38% of total used car
sales. From 1982 to 1998, auto auctions' contribution of used cars sold to
dealers increased from 6% to 26%. Following is a table showing the source of
used cars, expressed as a percent, retailed by dealers for 1998:

               Trade-in on new vehicles                    40%
               Trade-in on used purchases                  25%
               Auto Auctions purchases                     26%
               Street purchases                             6%
               Other, including wholesalers                 3%

         As shown in the table above, 71% of the used cars retailed are
purchased directly from the consumer through trade-in or street purchases. The
remaining 29% are purchased from other sources. Auto auctions account for 26% of
this remaining 29%. Therefore, auto auctions are our most significant
competitor.

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         Auto auctions originally began as "dealer exchanges" and over time have
evolved into the current distribution system of most of the used cars between
dealers. There are several nationally recognized companies in the auto auction
market. According to the 1999-USED CAR MARKET REPORT, Manheim Auctions, the
largest in the United States, has 64 locations and sold over 5.2 million units
in 1997, representing over 50% of all auto auction sales during that period. ADT
Automotive, Inc. has 28 locations, and sold 2.1 million cars in 1997, which
represented 21% of the auto auction market. Recently Manheim announced that they
have agreed in principal to acquire ADT. This transaction will result in a
further consolidation of the auction industry and has been approved by the
Federal Trade Commission subject to Manheim's divestiture of certain auctions to
an independent third party. In addition to the two organizations mentioned
above, there are numerous independent auto auctions located throughout the
United States and Canada.

         Generally, an auto auction company holds an auction once a week or at
other intervals, allowing the company to accumulate a number of vehicles for
sale. During the auctions, persons in attendance make bids on a particular
vehicle. The highest bid is generally accepted. If none of the bids meets a
certain set minimum to the company, the vehicle may be held over to the
following week's auction. The auction then proceeds to the next vehicle.

         We believe that the manner in which auto auctions conduct business is
highly inefficient in today's environment. Specifically, dealers selling used
vehicles through the auto auctions may be delayed in converting their used
vehicles into cash for up to 45 days because; (1) auctions are held only
periodically, and (2) because bids at the auctions may not be acceptable.

         A dealer selling a vehicle to us may receive approximately the same
amount or slightly less as compared to the net amount he would receive from a
sale at the auto auction, after deducting the fees charged by the auction.
However, he will receive his money faster by utilizing our services.

         A dealer who buys a vehicle from us may pay approximately the same
amount or slightly more as compared to the net amount paid for a vehicle at the
auto auction, after adding the fees charged by the auction. However, a buying
dealer utilizing our services is not forced to compete on a price basis with
other buying dealers and he does not need to spend the day at the auction away
from his place of business.

         As explained above, our brokers have the responsibility to sell the
used cars he or she has purchased. As opposed to a car receiving a few minutes
of attention from dealers at an auto auction, our brokers can give a car hours
of focused attention with dealers. We believe that the difference between auto
auctions and our business is analogous to a house which is sold by posting a
sign in the front yard versus hiring a realtor to advertise and market the house
to targeted prospective buyers.

         Manheim Auctions announced in April 2000 that it has established a new
division that has been created to address the Internet applications to its
business practices. Manheim currently is providing a listing of vehicles on-line
prior to their sale at auction and will allow dealers to purchase these vehicles
from the Internet. Manheim's new Internet division will provide significant
competition to our company.

         We do not compete with the retail used car business.

         OTHER WHOLESALE INTERNET OPERATIONS. Autodaq.com Inc. is an entity that
currently provides an Internet Web site that competes with our Internet
business-to-business initiatives, which are directed to the acquisition and
redistribution of off-lease vehicles. Because Autodaq.com is privately held
there is little public knowledge about their company, their financial strength
or their business model. We consider Autodaq.com to be a major competitor.

         MyTradeIn.com Inc. is a private entity that is planning to introduce a
Web site WWW.MYTRADEIN.COM that will compete with our Internet initiative
WWW.TRADEINCARSONLINE.COM. Because this Web site is not currently functional, we
are unable to determine the business model it represents nor are we able to
access to what extent they will be competition. We believe mytradein.com will be
a major competitor.

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GOVERNMENT REGULATION

         Compliance with government regulations does not impose a significant
impact on the sale of used cars between dealers. Laws between state motor
vehicle divisions do vary and we perform what duties we consider are reasonable
and appropriate to remain current on any law changes.

EMPLOYEES AND BROKERS

         As of May 5, 2000, we had 39 full-time employees, no part-time
employees, and 44 brokers. 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 as well as managers and brokers who 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 the 1997 Stock Option Plan, 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 administrative and warehouse facilities, comprising a total of
13,500 square feet in Scottsdale, Arizona, from an unrelated third party under
an operating lease expiring September 30, 2002. In addition, we sublease 3,000
square feet of office space from an unrelated third party that expires February
28, 2002. We opened an office and warehouse facility in Albuquerque, New Mexico,
on June 1, 1998, and entered into an operating lease for 5,000 square feet with
a related party. The original lease that expired on May 31, 1999 has been
extended to May 31, 2001. We lease an office and warehouse facility of
approximately 7,000 square feet in Bend, Oregon, on a month-to-month basis from
a related party. We lease an office and warehouse facility of approximately
8,000 square feet in Philadelphia, Pennsylvania from an unrelated third party
that expires on April 1, 2003. We lease an office of approximately 2,000 square
feet and a holding lot facility of approximately one acre in San Antonio, Texas
from an unrelated third party that expires on April 1, 2001.

         We believe that the leases are renewable on substantially similar
terms. In the event that the leases are not renewed, we believe that leasing any
non-customized facility can fill current general office/warehouse needs.

         We believe that our existing facilities are suitable and adequate for
our operations and that productive capacity is being utilized.

ITEM 3.           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. See "Forward-Looking
Statements" below.

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

         None

                                       9
<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, markdown, 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
</TABLE>

         On July 5, 2000, the closing price for the common stock was $1.1875.

         The number of record holders of common stock as of March 31, 2000 was
76 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.

ITEM 6.           SELECTED FINANCIAL DATA.

         The balance sheet and income statement data shown below were derived
from our audited financial statements. 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.

                                       10
<PAGE>
<TABLE>
<CAPTION>

           BALANCE SHEET DATA:                        MARCH 31, 2000         MARCH 31, 1999        MARCH 31, 1998
           <S>                                        <C>                    <C>                   <C>

           Current assets                             $  15,190,469          $   10,701,308        $    3,893,221
           Total assets                               $  30,120,351          $   13,077,130        $    3,961,845
           Current liabilities                        $   9,845,453          $    8,190,443        $    2,687,512
           Long-term liabilities                      $   1,819,500          $    1,975,623        $      534,465
           Stockholders' equity                       $  18,455,398          $    2,911,064        $      739,868
           Working capital                            $   5,345,016          $    2,510,865        $    1,205,709
</TABLE>
<TABLE>
<CAPTION>

           INCOME STATEMENT DATA:                                                                  JULY 10, 1997
                                                                                                    (INCEPTION)
                                                        YEAR ENDED             YEAR ENDED             THROUGH
                                                      MARCH 31, 2000         MARCH 31, 1999        MARCH 31, 1998
           <S>                                        <C>                    <C>                   <C>
           Net sales                                  $   131,861,292        $   97,665,410        $   31,581,117
           Income (loss) from operations              $      (749,400)       $      607,968        $      117,750
           Net income (loss) before taxes             $    (2,643,787)       $      171,820        $       15,899
           Net income (loss)                          $    (2,587,753)       $      115,241        $       12,384
           Earnings (loss) per share                  $         (0.12)       $         0.01        $         0.00

</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 and 2000.

GENERAL

         The following presentation sets forth Management's Discussion and
Analysis of Financial Condition and Results of Operations from September 22,
1997, commencement of operations, through March 31, 1998, and the years ended
March 31, 1999 and 2000. The presentation includes a discussion of us with our
wholly owned subsidiaries, Auto Network Group of Arizona, Inc. ("ANET-AZ"), Auto
Network Group of New Mexico, Inc. ("ANET-NM"), Auto Network Group Northwest,
Inc. ("ANET-NW"), Pinnacle Dealer Services, Inc., National Dealer Services
("NDSCo"), AutoTradeCenter Remarketing Services Inc. formerly Walden Remarketing
Services, Inc. ("Walden Remarketing"), and BusinessTradeCenter.com Inc. ("BTC")

         As a result of the acquisition of our subsidiaries, as further
described in the following paragraphs, the trend information should be carefully
read and evaluated.

OVERVIEW

         We began operations on September 22, 1997 and completed our first
fiscal year on March 31, 1998. During this period of time the founders were
involved in the normal activities associated with any start up venture.
Management focused its activities on hiring and training personnel, developing
accounting and management systems and controls, and expanding our operations
into different markets. On June 1, 1998, we opened the office and warehouse
facility in Albuquerque, New Mexico. Pinnacle Dealer Services, Inc. was acquired
in August 1998. Pinnacle Dealer Services, Inc. provides to our dealer network,
through third party financing arrangements, financing for the purchase of
vehicles that are purchased by dealers from us. Making financing available to
dealers has the effect of increasing sales and cash flow without exposing us to
any financing risks. These dealers, who are independent of our company, are
obligated to the third party for any financing extended to them. The third party
has the risk of making the loans. 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


                                       11

<PAGE>


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 have
been issued to such managers, subject to forfeiture based on both future
earnings levels and continuity of management. In addition, options to acquire
additional common shares can be earned by management based on future
performance. As part of our agreements these managers have contributed debt
subordinate to our interest in each operation to help provide liquidity and
protect us from the first losses, if any, sustained by these operations. We also
have signed letters of intent to open additional wholesale operating facilities
in Hartford, Connecticut, and Houston, Texas. These facilities are expected to
become part of our operations during our second fiscal quarter.

         In January 1999, we announced the development of our Internet site
WWW.AUTOTRADECENTER.COM. Our now wholly owned subsidiary,
BusinessTradeCenter.com, owns and operates the site development and technology
for the 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. Through April 30,
2000, no revenues have been generated from the operations of this site. However,
effective February 1, 2000, a new web site powered by our technology began
generating revenue. Access to this web site is limited to American Honda Finance
Corporation and its dealer base. Our remarketing agreement with Honda Finance
Corporation gives us an exclusive contract to remarket, over the Internet, all
of Honda's off-lease vehicles for two years. The Honda web site became
operational in all Honda and Acura dealerships by June 15, 2000 upon completion
of a phase in period beginning in April 2000. The opportunity to enter into the
agreement with American Honda Finance Corporation and others resulted directly
from our acquisition of Walden Remarketing Services on March 31, 1999. Walden
Remarketing Services is now known as AutoTradeCenter Remarketing Services. We
have also signed a letter of intent with Suzuki to develop a pilot program,
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 is scheduled to begin August 1, 2000.

         In December 1999, we introduced our second Internet site,
WWW.TRADEINCARSONLINE.COM, which has been designed to facilitate the Internet
car buying process by providing a firm bid on trade-ins. We initiated a pilot
program in Arizona in May 2000 and if successful intend to provide this service
to customers nationally within 90 days thereafter. As part of this program, we
have entered into a strategic alliance with WWW.AUTOBYTEL.COM, an Internet
company that sells new cars on line. Our letter of intent with Autobytel.com
calls for us to make a firm bid on trade-ins from their prospective customers.
If we are successful in acquiring cars through this program we intend to
wholesale such cars either through our land-based operations (Auto Network
Group) or over the Internet to our dealer network. Until we have executed an
agreement with Autobytel.com Inc., our letter of intent with them is not binding
on either party. In addition we are currently negotiating with two other similar
on-line new car-buying services to provide bids for their prospective customer's
trade-ins.

RESULTS OF OPERATIONS

          Income (loss) from operations was $117,750 from inception through
March 31, 1998, $607,968 for the year ended March 31, 1999, and ($749,400) for
the year ended March 31, 2000; net income (loss) for these periods was $12,384,
$115,241 and ($2,587,753) respectively.

           For the fiscal year ended March 31, 2000, we reported consolidated
sales of $131,861,292, as compared to sales of $97,665,410 for the year ended
March 31, 1999 and sales of $31,581,117 for the period ended March 31, 1998. The
increase in sales in the fiscal year ended March 31, 2000 is due to: (1) the
inclusion of twelve months operations of our land based operations in New Mexico
that began operations in June of 1998; (2) the acquisition of our land based
operations in Oregon in July of 1999; and (3) an increase in the number of
wholesale brokers in Arizona. New Mexico and Oregon operations contributed
$35,552,221 and $12,437,087 to consolidated revenues, respectively in the fiscal
year ended March 31, 2000, as compared to $ 18,088,097 and none respectively in
our fiscal year ended March 31, 1999. Sales in Arizona increased 6 % to
$84,570,897 for the fiscal year ended March 31, 2000 as compared to $79,871,040
in the same period in 1999. Sales for the period ended March 31, 1998 all were
from Arizona.

           The number of vehicles sold for the year ended March 31, 2000 was
8,922 compared to 6,507 units for the fiscal year ending March 31, 1999 and
1,862 for the period ended March 31, 1988. The average price per vehicle


                                       12
<PAGE>

sold ($16,460 in Arizona: $11,827 in New Mexico and $15,986 in Oregon) has
remained relatively constant. We generally have approximately 300 to 350
vehicles on hand at any given time.

         We realized a gross profit margin of 4.1% for the period ended March
31, 1998, 4.4% for the fiscal year ended March 31, 1999, and 4.6% for the fiscal
year ended March 31, 2000. The positive change in the gross profit percentage
for the most recent periods compared to the prior periods presented is
attributable to the increase of $25.00 we made effective January 1, 1999 to the
fee retained on the sale of each vehicle for certain brokers as well as a new
revenue sharing program for other brokers where-in profits and losses are split
between us and the broker. Management does not anticipate that our gross margin
will change significantly in the near term.

         Total operating expenses were $1,183,120 for the period ending March
31, 1998, $3,668,606 for the year ended March 31, 1999, and $6,840,557 for the
year ended March 31, 2000, resulting in income (loss) from operations of
$117,750, $607,968, and ($749,400), respectively. One major factor contributing
to the increase in the operating expenses for all periods presented is the
increase in selling expense, which are primarily commissions paid to brokers.
Selling expenses were $905,303 for the period ending March 31, 1998 and
$2,772,192 for the year ended March 31, 1999, and $4,084,987 for the year ended
March 31, 2000. As a percent of sales, selling expense in Arizona was
approximately 1.6% of sales as compared to approximately 5% in New Mexico and
Oregon. The variance primarily is due to differences in computing compensation
for brokers in Arizona as compared to New Mexico and Oregon. In Arizona certain
broker's earnings are divided between the broker and the Company based on a
predetermined ratio. In New Mexico and Oregon, brokers pay us a fixed fee per
car sold irrespective of the gross profit earned on the sale. General and
administrative expenses were $274,388 for the period ended March 31, 1998,
$868,556 for the year ended March 31, 1999, and $2,397,342 for the year ended
March 31, 2000. General and administrative expenses of $2,397,342 were
approximately 1.8% of revenues as compared to prior years during which general
and administrative expenses were approximately 1% of revenues. The increase in
general and administrative expenses, in addition to the increase resulting for
our expanded operations, primarily is attributable to expenses incurred in the
development of our web site, unusual one-time costs 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. Subsequent to the year-end
additional personnel were added to our payroll as well as additional office
facilities, equipment, computer hardware and software.

          The Company also increased its allowances for doubtful accounts
by$1,045,970 as more fully described in note B of our financial statements for
the year ended March 31, 2000. The provision was required to reduce accounts
receivable from certain prior and current brokers to net realizable value. New
policies and controls instituted by management subsequent to the end of our
fiscal year should minimize bad debt expense, however, it is possible than
not-withstanding these new policies and controls we may suffer significant bad
debt losses in the future.

         Interest expense was $114,404 for the period ending March 31, 1998,
$416,779 for the year ended March 31, 1999, and $950,550 for the year ended
March 31, 2000 The dollar increase is attributable to the significant increase
in the amount of borrowings that increased from $1,213,000 at March 31, 1998 to
$5,440,946 at March 31, 1999, and to $7,018,046 at March 31, 2000 The additional
borrowings primarily were used to finance our accounts receivable and inventory.
The effective annualized rate of interest was approximately 11% for all periods
presented.

         Depreciation and amortization increased from $3,429 for the period
ended March 31, 1998 to $27,858 for the fiscal year ended March 31, 1999 to
$358,228 for the fiscal year ended March 31, 2000. The significant increase in
depreciation to $101,487 for the fiscal year ended March 31, 2000 is due to
purchases of property and equipment required to expand our land based
operations, improve our internal reporting and communications and to initiate
our e-commerce business with Honda and others. Amortization increased to
$256,741 for the fiscal year ended March 31, 2000 from $3,212 for the fiscal
year ended March 31, 1999 and $152 for the period ended March 31, 1998, as a
result of our increase in intangible assets from $14,676 at March 31, 1998 to
$2,207,378 at March 31, 1999 to $13,506,484 at March 31, 2000. The increase in
intangible assets, primarily relating to purchased goodwill during the fiscal
year ended March 31, 1999, resulted from our acquisitions of ANET-NM, Pinnacle
Dealer Services, Inc., and Walden Remarketing. During the fiscal year ended
March 31, 2000, increases in goodwill resulted from our acquisitions of NDSCo,
the minority interest in BTC, and ANET-NW. Depreciation and amortization for the
fiscal year ended March 31, 2001 based on carrying values of tangible property
and equipment and intangible assets will be $470,684 and $1,374,695
respectively.


                                       13
<PAGE>


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; however,
there can be no assurance that our sales will parallel industry projections or
that industry projections will materialize.

FINANCIAL CONDITION

         MARCH 31, 2000.  Total assets were $30,120,351 at March 31, 2000, an
increase of $17,043,221 from total assets of $13,077,130 at March 31, 1999. A
substantial amount of this increase is reflected in net intangible assets that
increased from $2,207,378 at March 31, 1999 to $13,506,484 at March 31, 2000.
The increase is due to our acquisitions (as more fully described elsewhere) of
other entities for shares of our common stock and other consideration The
increase in total assets also reflects the growth we have experienced through
the deployment of the capital and debt raised from outside investors.

         Total liabilities increased from $10,166,066 at March 31, 1999 to a
consolidated total of $11,664,953 at March 31, 2000. This increase primarily is
attributable to our increases in business and revenues.

         Stockholders' equity increased from $2,911,064 at March 31, 1999 to a
consolidated balance of $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 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.


                                       14
<PAGE>

         MARCH 31, 1999 AND 1998. Total assets increased from $3,961,845 at
March 31, 1998, to a consolidated total of $13,077,130 at March 31, 1999. Total
assets for our company at March 31, 1999, without our subsidiaries, increased
from $3,961,845 at March 31, 1998 to $11,331,249 at March 31, 1999. This
increase reflects the growth we have experienced through the deployment of the
capital and debt raised from outside investors.

         Total liabilities increased from $3,221,977 at March 31, 1998 to a
consolidated total of $10,166,066 at March 31, 1999. The increase attributable
to all subsidiaries was $1,672,628 at March 31, 1999, with the remaining balance
of the increase due to short-term debt financing.

         Stockholders' equity increased from $739,868 at March 31, 1998 to a
consolidated balance of $2,911,064 at March 31, 1999. We attribute the increase
at March 31, 1999 to earnings of $115,241 generated during the year ended March
31, 1999, $372,037 of net proceeds from the sale of preferred stock, the
issuance of common stock valued at $1,604,480 of goodwill in connection with the
acquisition of our subsidiaries, and $79,438 which was the fair value of stock
options granted for the year.

LIQUIDITY AND CAPITAL RESOURCES

         MARCH 31, 2000 AND 1999 We used $2,371,839 of cash to support our
operating activities for the fiscal year ended March 31, 2000, as compared to
$3,695,046 for the fiscal year ended March 31, 1999 The major components
contributing to the use of cash funds for operations for the fiscal year ended
March 31, 2000, other than our net loss for the year of $2,587,753, reduced by
$709,508 for depreciation and amortization and stock options issued for
services, were the increase in accounts receivable of $779,921 (net of the bad
debt expense) and decrease in accounts payable, accrued liabilities, and
deferred income taxes totaling $118,454. The increase in accounts receivable was
the result of increased sales from expanded operations in New Mexico, opening a
facility in Oregon and increasing revenue in Arizona. These increases were
offset by decreases in inventory of $379,866 and in prepaid expenses of $
24,915. Total inventory declined due to better controls over operations
instituted by management. For the period ending March 31, 1999, accounts
receivable increased $3,492,114 (net of the bad debt expense), inventories
increased $2,845,459, and prepaid expenses and other current assets decreased
$70,906. These increases were offset by an increase in accounts payable of
$2,448,261 and accrued liabilities of $95,445. Increases in these assets and
liabilities resulted from our business expansion in Arizona our and our
initiation of operations in New Mexico.

         Our investing activities for the fiscal years ended March 31, 2000 and
1999 required a use of cash of $473,837 and $182,185, respectively. For the
fiscal year ended March 31, 2000, our investing activities comprised primarily
of the purchase of property and equipment for $536,512, less proceeds from sales
of property and equipment of $62,675. Property and equipment acquired in the
fiscal year ended March 31, 2000 primarily were computer hardware and software
required for business expansion and our e-commerce and Internet operations.

          For the fiscal year ended March 31, 1999 $158,287 was expended for
property and equipment and $56,277 was sold. In addition $80,175 was used for
investment and acquisitions.

         We supported the cash needs identified above by net borrowings of
$1,887,321 and proceeds from the issuance of convertible preferred stock and
common stock of $4,766,341 and $250,000, respectfully, for the fiscal year ended
March 31, 2000. For the fiscal year ended March 31, 1999 cash needs were
supplied by net borrowings of $2,586,033 and the issuance of long-term debt and
convertible preferred stock for $1,216,913 and $372,037 respectfully.

         MARCH 31, 1999 AND 1998. We used $3,695,046 of cash to support our
operating activities for the year ended March 31, 1999, as compared to
$1,881,132 for the period ended March 31, 1998. The major components
contributing to the use of cash funds for operations for the year ended March
31, 1999 was the increase in accounts receivable of $3,492,114 (net of bad debt
expense) and inventory of $2,845,459. These increases were offset by a
corresponding increase in account payable of $2,448,261. For the period ending
March 31, 1998 accounts receivable increased $1,705,323 and inventories
$2,182,898. Once again, these increases were offset by an increase in accounts
payable of $1,916,020.

         Our investing activities for the year ended March 31, 1999 and the
period ended March 31, 1998 required a use of cash of $182,185 and $59,353,
respectively. For the year ended March 31, 1999, our investing activities were
limited to the purchase of property and equipment of $158,287, sale of property
and equipment of $56,277,

                                       15
<PAGE>

investments in other assets of $605, and cash paid for acquisitions of $79,570.
For the period ended March 31, 1998 $57,225 was expended for property and
equipment and $2,128 for investments made in other assets.

         We supported the cash needs identified above by receiving cash from net
borrowings of $2,586,033, proceeds from issuance of long-term debt of $1,216,913
and proceeds from the issuance of preferred stock of $372,037 for the year ended
March 31, 1999. For the period ending March 31, 1998, our cash needs were
supplied by the net borrowings of $832,000, proceeds from long-term debt of
$381,000, and issuance of preferred and common stock totaling $727,485.

         The model for expansion into other markets and the opening of other
facilities requires the independent wholesale broker in the new location to
subordinate debt to the funds contributed by us into the operation. This
provides the new location with additional working capital to expand sales
volume. We estimate that each new operation will require between $500,000 and
$1,000,000 in capital to support inventory and receivable levels. We anticipate
that the independent wholesale broker will contribute approximately 25% of such
funds in the form of subordinated debt.

         Effective September 1, 1998, Pinnacle Dealer Services initiated a
financing program for dealers who purchase vehicles from us. We intend to
improve our cash flows through utilization of this financing program.

         In addition, on March 26, 1999, we obtained a $3,000,000 revolving line
of credit with Wells Fargo Business Credit, Inc. that provided sufficient
short-term liquidity and capital to implement our business plan, including
providing for the expansion into other markets. The note that evidences this
obligation to Wells Fargo Business Credit bears interest at 1.5% over prime and
has been extended from its original due date of March 31, 2000 to June 30, 2000,
and subsequently to September 30, 2000. The amount outstanding on our revolving
line of credit at March 31, 2000 was $1,112,418. We intend to renegotiate or
replace this credit facility by September 30, 2000.

         Total debt at March 31, 2000 was $7,018,046. $1,819,500 due to former
officers or entities controlled by former officers is due on April 1, 2001. The
balance of our debt other than $1,112,418 due to Wells Fargo Business Credit,
Inc. is due prior to March 31, 2001. All such debt is due to former officers and
directors, shareholders and related parties. On May 5, 2000, $300,000 of this
debt has been converted into equity.

          To address our long-term liquidity needs, we must obtain additional
equity financing and/or additional credit facilities that are greater than one
year in duration. If we are unable to renegotiate or replace our notes and
credit lines and/or we are not successful in our planned equity raising
activities, we will be required to reduce the amount of vehicle purchases. If we
take this action, it will cause a reduction in our sales that could result in
unanticipated losses.

ANTICIPATED TRENDS

         Management anticipates that the current level of sales will increase
significantly during our fiscal year ending March 2001. The expected sales
increase is attributable to the expansion of our wholesale operations into the
San Antonio, Texas, and Philadelphia, Pennsylvania, markets as of April 1, 2000
and the anticipated expansion resulting from letters of intent to open wholesale
operations in Hartford, Connecticut and Houston, Texas during our second fiscal
quarter of our fiscal year ended March 31, 2001. In addition to our wholesale
operation expansion efforts, our agreements and letters of intent with American
Honda Finance Corporation, American Suzuki Motor Corporation and Autobytel.com
Inc. will generate fee revenue that has not previously been available to our
company Our Honda re-marketing program was launched in April 2000. Revenue for
April was less than $25,000 as we began the program with dealers located only on
the west coast. In May 2000 we began our ramp-up and added additional dealers in
other parts of the United States. During May, 1780 Honda and Acura vehicles were
sold through our web site resulting in revenues to us of $47,000. Effective June
15, 2000, all Honda and Acura dealers in the United States were using the
re-marketing program. For the month of June 2000, 2,319 Honda and Acura vehicles
have been sold resulting in revenues to us of $69,400 for the month. We
anticipate a substantially greater number of car sales and revenues in the
months to come as a larger number of vehicles are coming off lease and will be
available to all Honda and Acura dealers in the United States. Our Suzuki
program will begin in August 2000, and also will add additional revenue. The
Autobyetel program is currently under development and accordingly, we cannot
estimate a start date for earning revenue from this or similar programs.


                                       16
<PAGE>

         We estimate that approximately $5 million will be required to fund our
e-Commerce operations both to augment our current operations and to expand into
new markets, $2 million will be needed for marketing programs, $2 million for
the Internet development which includes capital expenditures, and $5 million for
the cash needs required to support the increase in inventory and accounts
receivable that will be generated from the anticipated growth of our land based
operations. In addition repayment of current short term and long term debt could
require up to another $7 million. We are currently in the process of
reevaluating our total needs and the appropriate financing to address such needs
with input from investment banking firms and others.

         While management anticipates significant growth during its fiscal year
ending March 31, 2001, our ability to grow depends upon our ability to raise the
estimated $21 million in capital and debt financing required to fund such
growth. We raised $5 million privately through the sale of Series C and D
preferred stock in February 2000. In addition, we have extended the line of
credit with Wells Fargo Business Credit until September 30, 2000 and have
extended certain of our debt due to related parties under favorable terms up to
April 1, 2001 that allows time to negotiate long-term credit facilities. We
cannot assure you that we will be able to raise the additional capital or debt
financing to execute our business plan that includes expanding existing
operations, expanding into new markets, and developing our Internet site. In
addition, extensions of existing debt terms may again be necessary in order for
us to meet obligations as they come due. Failure to extend these terms will
force us to reduce our current level of sales that could have a negative impact
upon shareholder value of our common stock.

YEAR 2000 ISSUES

         We have segregated our discussions of Year 2000 issues into the
following categories:

o    OUR STATE OF READINESS. We have identified and addressed all year 2000
     issues that we believe will have an impact upon our business. All
     information technology systems that we use directly in our operations are
     represented by the manufacturers to be Year 2000 compatible. To date, we
     have not experienced any Year 2000 issues. With respect to non-technical
     Year 2000 issues, we do not rely upon machinery or equipment that may
     contain embedded technology, such as microcontrollers, other than in the
     used vehicles we purchase and sell, mechanical heating and air conditioning
     equipment relating to our office and warehouse facilities, and our
     telephone answering system. We have prepared our remediation plan
     addressing these potential issues that includes the following:

1.   All internal technology software systems have been tested, with no
     indication of Year 2000 transition issues.
2.   To date, all technology hardware has functioned properly. Replacements
     prior to December 31, 1999 were made where appropriate; the cost of these
     replacements is included in the costs described below.
3.   We have addressed any issues with respect to used vehicles we purchase or
     sell.
4.   To date, the mechanical and air conditioning systems has continued to
     function properly.
5.   Our telephone system will not be affected.

         We depend upon third parties' technology, such as banks, the Federal
Reserve System, and the Internet for the conduct of our business. We have relied
upon written assurances from these third parties that they are Year 2000
compliant. To date, we have not experienced any Year 2000 issues with third
party technology.

o    THE COST TO ADDRESS OUR YEAR 2000 ISSUES. We have modified some of our
     information technology and software at an estimated cost of less than
     $10,000. The total cost to remedy all of our Year 2000 issues was estimated
     at $22,000.

o    THE RISKS OF OUR YEAR 2000 ISSUES. Our most reasonable likely worst case
     Year 2000 scenario involves a breakdown in the communication systems in
     telephone equipment and in accessing the Internet. While we have not
     experienced any Year 2000 issues to date, if any should occur, our
     anticipated business plan and the use of the Internet during Year 2000
     would be impaired.

o    OUR CONTINGENCY PLANS. We have developed a contingency plan addressing
     numerous potential risks. As stated above in our comments related to our
     state of readiness, all technological risks have been addressed and
     resolved. All remaining potential risks have been classified as either
     inconveniences or catastrophic. All inconveniences will be dealt with as
     they occur. Barring a major catastrophic breakdown in operations and
     systems out of our control, such as a complete collapse of the banking and
     communications systems in the world, we are prepared to make the necessary
     adjustments without a significant loss. If there is a complete


                                       17
<PAGE>

     collapse of the banking and communications systems in the world, or if we
     are unable to adequately resolve any issues that we currently classify as
     inconveniences, or if any unidentified technological issues become
     unresolvable in the short run, we will be forced to shut down our
     operations until these systems become operational.


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














                                       18
<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                           Secretary, Director
Michael H. Feinstein                       64                           Chief Financial Officer
</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 Denver,
Colorado, a sub-prime automobile finance company formerly listed on NASDAQ. He
was the executive vice president and later president of American Southwest
Holding, 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.


                                       19
<PAGE>


ITEM 11. EXECUTIVE COMPENSATION.

         The following table sets forth the remuneration for Mr. Butterwick, 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
                                        Annual Compensation                Awards             Payouts
                                                         Other     RESTRICTED   SECURITIES
   Name and                                             Annual        STOCK     UNDERLYING      LTIP        ALL OTHER
  Principal                                            Compensa-    AWARD(S)     OPTIONS/      PAYOUTS    COMPENSATION
  Position        Year      Salary ($)    Bonus ($)     tion($)        ($)       SARS (#)        ($)          ($)
<S>               <C>       <C>           <C>          <C>         <C>          <C>            <C>        <C>

    Roger         1999      $63,000(1)<F1>   -0-          -0-          -0-          -0-          -0-          -0-
 Butterwick       2000        $54,000        -0-          -0-          -0-          -0-          -0-          -0-
  President
-----------------------------------------------------------------------------------------------------------------
<FN>

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



         Currently, we pay Mr. Butterwick $13,200 and Mr. Rowlett $12,500 per
month plus we provide each a vehicle for their use. Mr. Feinstein receives
$11,000 per month plus a car allowance. We reimburse all officers and directors
for actual out-of-pocket expenses incurred on our behalf.

         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.

         We have granted stock options to Mr. Butterwick as compensation in his
capacity at President. Stock options have also been granted to Mr. Butterwick in
connection with loan guarantees and as additional consideration as Treasurer. 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 Item 13. Certain Relationships and Related Transactions.

CONSULTING AGREEMENT

         On December 1, 1999, we canceled the Consulting Agreement that we had
entered into with Dennis E. Hecker as part of our acquisition of Walden
Remarketing Services. Mr. Hecker had previously agreed to provide consulting
services to our company for a period of three years ending April 20, 2002. The
options that had been granted Mr. Hecker as consideration for his services were
also cancelled.

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, 2000, the number of shares eligible
pursuant to the plan is 2,808,307. 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, 2000,
2,139,755 options had vested and were eligible for exercise at a total exercise
price of $2,227,587.

         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

                                       20
<PAGE>

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.

         As of March 31, 2000, options have been granted under this plan as
follows:
<TABLE>
<CAPTION>

   Date of                                                     Number of     Exercise                EXPIRATION
    Grant                        Optionee                       Options        Price      VESTED        DATE
  <S>          <C>                                             <C>             <C>          <C>       <C>
  02/17/98     Employees and Brokers                            300,000        $.15         Yes       02/17/03

  06/01098     Employees and Brokers                            125,000        $.75         Yes       06/01/03

  09/11/98     Broker                                            10,000        $.51         Yes       09/11/03

  09/21/98     Employees and Broker                             175,000        $.425        Yes       09/21/03

  10/15/98     Broker                                            25,000        $1.03        Yes       10/15/03

  12/01/98     Broker                                            25,000        $1.25        Yes       12/01/03

  12/31/98     Brokers                                          583,175        $1.03        Yes       12/31/03

  02/01/98     Employees and Brokers                            130,000        $2.00        Yes       02/01/02

  02/15/99     Broker                                            25,000        $2.00        Yes       02/15/02

  03/31/00     Employee                                          25,000        $3.00        Yes       03/15/02

  06/30/99     Broker                                            42,000        $1.03        (2)<F2>   08/01/00

  10/21/99     Employee                                          25,000        $1.00        (1)<F1>   10/21/02

  10/27/99     Employee                                          25,000        $1.00        (1)<F1>   10/27/02

  11/22/99     Employees                                        125,000        $1.00        (1)<F1>   11/22/02

  01/03/00     Brokers                                          207,080        $2.03        (2)<F2>   01/03/03

  01/05/00     Employee                                          50,000        $1.63        Yes       01/05/03

  02/08/00     Employee                                          25,000        $1.03        (1)<F1>   02/08/03


                                                21
<PAGE>

   Date of                                                     Number of     Exercise                EXPIRATION
    Grant                        Optionee                       Options        Price      VESTED        DATE

  03/01/00     Employee                                         75,000        $ 4.88        (1)<F1>  03/01/04,05
                                                                                                        , 06

  03/15/00     Employee                                         45,000        $ 4.88        (1)<F1> 03/15/04,05,06
---------------
<FN>

(1)<F1>  To vest one year from date of grant for employees.
(2)<F2>  To vest one year from date of grant for brokers so long as the volume
         of transactions initiated by the optionee for our company one year from
         date of grant is no less than the volume of transactions at the time of
         grant.
</FN>
</TABLE>

OTHER OPTIONS

In addition to the stock options granted under the 1997 stock option plan, we
have granted options as follows:
<TABLE>
<CAPTION>

  DATE OF GRANT                                       NUMBER OF         EXERCISE                      EXPIRATION
                             OPTIONEE                 OPTIONS             PRICE         VESTED           DATE
    <S>                <C>                            <C>                <C>              <C>          <C>
    02/24/98           Cambridge Management           300,000             $.32            Yes          03/26/2002
                         Associates, LLP

    07/06/98              Arnold Greenberg             50,000            $.875            Yes          07/06/2000

    07/08/98               John Abadie                 25,000            $.875            Yes          07/08/2000
</TABLE>

         Other stock options have been granted to officers and directors in
connection with guarantees and other financial transactions.

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, 2000:
<TABLE>
<CAPTION>

                                                                                    Percent of Class (1)
                                                 Number of Shares Owned         Before                 After
Name and address of owner                                                     Conversion          Conversion (2)
<S>                                                    <C>                       <C>                   <C>

Lloydminister Enterprises Limited                      2,500,000                 8.90%                 8.16%
Battersea Bridge Road
London, England SW11 3BG

Kindersley Holdings Inc.                               2,500,000                 8.90%                 8.16%
23 Bentinck Street
London, England W1M 5R1

Mark Moldenhauer                                       1,770,000 (3)<F3>         6.23%                 5.71%
8135 E. Butherus #3                                              (4)<F4>(5)<F5>
Scottsdale, AZ 85260


Dennis E. Hecker                                       2,121,475                 7.55%                 6.92%
500 Ford Road
Minneapolis, MN 55426

                                       22

<PAGE>

<CAPTION>
                                                                                    Percent of Class (1)
                                                 Number of Shares Owned         Before                 After
Name and address of owner                                                     Conversion          Conversion (2)
<S>                                                    <C>                       <C>                   <C>
Mike Stuart                                            1,547,075 (4)<F3>         5.44%                 4.99%
8135 E. Butherus #3                                              (5)<F5>(6)<F6>
Scottsdale, AZ 85260

Jeff Erskine                                           1,530,008 (4)<F4>(7)<F7>  5.42%                 4.96%
8135 E. Butherus #3
Scottsdale, AZ 85260

John Michael Carrante                                  1,480,479 (8)<F8>         5.25%                 4.82%
8135 E. Butherus #3
Scottsdale, AZ 85260

Joseph M. Seaverns & Candace L. Seaverns               1,452,196 (9)<F9>         5.17%                 4.72%
Family Living Trust U/A Dated 6/21/93
10158 E. Topaz Drive
Scottsdale, AZ 85258

Roger L. Butterwick                                    1,100,000(5)<F5>(10)<F10> 3.78%                 3.48%
258 S. Sandstone Street
Gilbert, AZ 85296

Michael Feinstein                                           0                      0                     --
8135 E. Butherus #3
Scottsdale, AZ 85260

John E. Rowlett                                             0                      0                     --
8135 E. Butherus Street #3
Scottsdale, AZ 85260

All officers and directors as a group               1,100,000(5)(10)             3.78%                 3.48%
(3 persons)
<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, 2000, 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 28,083,074 shares outstanding before the
         offering and 30,650,954 shares outstanding after the offering, which
         assumes the conversion of the preferred shares using the maximum
         conversion price of $4.00 per share.

(2)<F2>  Assumes the conversion of the preferred shares using the maximum
         conversion price of $4.00 per share and the issuance of the 75,000
         option shares.

(3)<F3>  Does not include 3,000,000 shares issued on May 1, 2000 upon the
         conversion of a promissory note in the amount of $300,000 at a
         conversion price of $.10 per share. If these 3,000,000 shares were
         included, Mr. Moldenhauer's percentage ownership would be 15.35% before
         conversion and 14.03% after conversion.

(4)<F4>  Includes 100,000 shares issuable upon the exercise of options.

(5)<F5>  Includes 250,000 shares issuable upon the exercise of options.

(6)<F6>  Includes 100,000 shares held of record by his wife and 25,000 shares
         issuable upon the exercise of options granted to his wife.

(7)<F7>  Includes 65,162 shares issuable upon the exercise of options.

(8)<F8>  Includes 90,163 shares issuable upon the exercise of options.

(9)<F9>  Includes 87,350 shares issuable upon the exercise of options.


                                       23

<PAGE>

(10)<F10>Includes 100,000 shares held of record by Cambridge Consulting Group,
         an entity controlled by Mr. Butterwick. Includes 750,000 shares
         issuable upon the exercise of options.
</FN>
</TABLE>




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.

         Upon inception of our company, 9,000,000 restricted shares of common
stock were issued to our founders for total consideration of $30,000 as follows:


                  Jeff Erskine            1,820,000 shares
                  Mike Stuart             1,500,000 shares
                  Mark Moldenhauer        1,500,000 shares
                  Joe Seaverns              320,000 shares
                  Candy Seaverns          1,500,000 shares
                  Victor Felice             540,000 shares
                  John Carrante           1,820,000 shares

         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, 2000, we had
entered into various lending arrangements involving officers, directors and
other affiliated entities owned or controlled by officers, directors and other
key personnel totaling $3,682,751. At March 31, 1998 the balance outstanding on
these notes was $832,000 and total interest paid to these entities on all
financing activities for the period ended March 31, 1998 was $58,416. At March
31, 1999, the outstanding note balance was $3,871,446 and the total interest
paid for the year ended March 31, 1999 was $286,824. At March 31, 2000, the
outstanding note balance was $4,086,128 and the total interest for the year
ended March 31, 2000 was $470,340.

<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 September 22, 1999.


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


                                    24
<PAGE>
<CAPTION>
Date of
Transaction             Related party                   Transaction
<S>                     <C>                             <C>

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

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

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

06/01/98                Eastlane Trading Limited        $250,000 loan, 12% interest per annum, payable on request, due April 1,
                        (principal stockholder)         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.

06/30/98                Dove Motors (owned by           $100,000 loan, 12% interest per annum, payable upon
                        principal stockholder)          demand.  This note was paid.

07/28/98                Pinnacle Financial              $50,500 loan, 12% interest per annum, payable upon demand.
                        Corporation (owned by           This note was paid August 5, 1998
                        officer, director, and
                        principal stockholder at
                        the time)

07/30/98                Pinnacle Financial              $30,000 loan, 12% interest per annum, payable upon demand. This note was
                        Corporation (owned by           paid August 5, 1998.
                        officer, director, and
                        principal stockholder at
                        the time)

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

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

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


                                    25
<PAGE>
<CAPTION>
Date of
Transaction             Related party                   Transaction
<S>                     <C>                             <C>
10/20/98                Eastlane Trading                $1,000,000 loan, 12% interest per annum, payable on request, due April 1,
                        Limited (principal              2000, collateralized by used car inventory. This note was assumed by
                        stockholder)                    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                $232,259 loan, 12% interest per annum, payable on request, due April 1,
                        Limited (principal              2000, collateralized by used car inventory. This note was assumed by
                        stockholder)                    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 April 1,
                        (principal stockholder)         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, 12 % interest per annum, payable monthly, due May 13, 2000,
                        Corporation (owned by           personally guaranteed by Jules Gollins, Bruce Burton, Stuart Bailey, all
                        officer, director, and          officers of Auto Network Group of New Mexico, and their respective spouses.
                        principal stockholder at
                        the time)

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

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

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

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

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


                                    26

<PAGE>
<CAPTION>
Date of
Transaction             Related party                   Transaction
<S>                     <C>                             <C>
8/13/99                 MDM Investments                 $160,000 loan, 12 % interest per annum, payable monthly, due August 13,
                        (owned by Mike Stuart           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 May 13, 2000.
                        (owned by Mike Stuart
                        and Mark Moldenhauer)

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

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

12/27/99                Pinnacle Financial              $175,000 loan, 12 % interest per annum, payable monthly, due February 3,
                        Corporation (owned by           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 $2,675,420, 12% interest
                        Corporation                     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.

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.

</TABLE>

         During the period ended March 31, 1998, we consummated $1,255,000 of
vehicle sale and purchase transactions with Specialty Cars of Scottsdale, which
is owned by Mike Stuart and Mark Moldenhauer. At March 31, 1998, we had recorded
in accounts receivable $37,522 due from Specialty Cars. Also during this period,
we consummated $800,000 of vehicle sale and purchase transactions with Dove
Motor Company, which is owned by Joseph Seaverns, a principal shareholder. At
March 31, 1998, we had recorded an account payable of $15,999 to Dove Motors.
The amount of each sale or purchase was for a value equivalent of what would
have been attained by an independent third party. At March 31, 1999, these
accounts had been paid in full.

         During the period ending March 31, 1998, we paid $4,000 for
professional services to MRM Consultants, an entity owned by Mark Moldenhauer.
At March 31, 1998 and March 31, 1999, he was owed $11,500 and $-0-,
respectively.

         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


                                    27

<PAGE>

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.

         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 has been extended to June 30, 2000, and is secured by a first lien on
all inventory, accounts receivable, equipment, and general intangibles. The
interest rate paid is 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 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, which ends September 30,
2000. No additional consideration was granted to Mr. Butterwick.

         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 has been 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, and an entity whose members comprise the management team of Auto
Network Group of New Mexico. In consideration for the goodwill which Auto
Network Group of New Mexico is receiving from JBS, JBS was granted a total of
800,000 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 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 Auto Network Group of New
Mexico 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 Auto Network Group
of New Mexico are at least $120,000. In addition, JBS 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 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 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.

         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.

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

         PINNACLE DEALER SERVICES, INC. TRANSACTIONS. On August 20, 1998, we
acquired Pinnacle Dealer Services, Inc., an Arizona corporation owned and
controlled by Debbie Stuart who is the wife of Mike Stuart, Mark Moldenhauer,
and Cambridge Consulting Group, LLP for 300,000 restricted shares of common
stock.

         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.

                                       28

<PAGE>

         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.

         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 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 $30,000 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.

         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, conducts our business in San
Antonio. Our company is 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 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., and a Texas limited
partnership. JRB AutoBrokers also loaned $100,000 to the limited partnership on
similar terms to our advance. This promissory note is subordinate to our loan.

         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, we have issued
468,750 of our common shares to JRB to acquire this operation. The shares, that
have been mutually valued at $2.00 per share, are to be held in escrow pending
certain future events. 93,750 of such shares will be released to JRB on April 1,
2001, subject only to the continuation of the business at that date. 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 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, 2001, the pre-tax earnings floor increases


                                       29

<PAGE>

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.

         Stock options to acquire our common shares also can be earned if
pre-tax earnings exceed the total predetermined levels over the first five years
of this operation.

         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 is conducted by Auto Network
Group of Eastern Pa., Inc., and a Pennsylvania corporation. We are the sole
shareholder of this Pennsylvania operation.

         We loaned $300,000 to the Pennsylvania operation, which is evidenced by
an unsecured 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 has agreed to loan $100,000
to the Pennsylvania operation on terms similar to our advance, on or before June
30, 2000. This loan will be subordinate to the debt owed to us. As of July 13,
2000, Mr. McCusker had not made the loan.

         The Pennsylvania operation entered into a management agreement with Mr.
McCusker, which provides that he is responsible for all day-to-day operations.
In addition, we have agreed to issue 232,500 of our common shares to Mr.
McCusker as additional compensation for his services. The shares, valued by us
at $2.00 per share, are to be held in escrow pending certain future events,
including among other things the making of the loan by Mr. McCusker. 50,000 of
such shares will be released to Mr. McCusker one year from his funding his
obligation, subject to the continuation of the business at that date and to his
satisfactory performance. Annually beginning March 31, 2001 and for each
twelve-month period thereafter, 15,000, 22,488, 30,003, 32,504, 37,502, and
45,003 additional shares or a portion thereof will be released subject to the
Pennsylvania operation achieving pre-determined pre-tax earnings. For example,
if the operation earns $60,000 (floor) for the year ended March 31, 2001, 15,000
of such shares will be released to Mr. McCusker. In the event earnings for the
year fall below $60,000, a portion of these shares may still be released. After
March 31, 2001, the pre-tax earnings floor increases through March 31, 2006.

         Stock options to acquire our common shares also can be earned if
pre-tax earnings exceed the total predetermined floor over the first six years
of this operation.

         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.

                                       30
<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' Reports
         Consolidated Balance Sheet
         Consolidated Statement of Operations

         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>

       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
       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,
                   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,
                   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 (1)<F1>
       4.5         Statement   Pursuant   to   Section   10-602  of  The   Arizona   Business   Corporation   Act  of
                   AutoTradeCenter.com Inc. Regarding Series D Preferred Stock (1)<F1>
      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
      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
      10.17        Loan Extension from Wells Fargo Business Credit, Inc. (3)<F3>
       21          Subsidiaries of the registrant (3)<F3>
       27          Financial Data Schedule


                                       31
<PAGE>

---------------
<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).
</FN>
</TABLE>


REPORTS ON FORM 8-K

                  During the last quarter of the period covered by this report,
the following reports on Form 8-K were filed:

1.       Form 8-K dated March 23, 2000 reporting under Item 5. Other Events the
         acquisition of the minority interest in BusinessTradeCenter.com. No
         financial statements were required to be filed.

2.       Form 8-K dated February 29, 2000 reporting under Item 5. Other Events
         information contained in a press release. No financial statements were
         required to be filed.

3.       Form 8-K dated February 17, 2000 reporting under Item 5. Other Events
         information contained in a press release. No financial statements were
         required to be filed.





                                       32

<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:  July 14, 2000                          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
---------------------------------------                                          July 14, 2000
Roger L. Butterwick



/S/ JOHN E. ROWLETT
---------------------------------------  Vice President, Secretary and a
John E. Rowlett                          Director                                July 14, 2000



/S/ MICHAEL H. FEINSTEIN                 Chief Financial Officer
---------------------------------------  (Principal Financial Officer)           July 14, 2000
Michael H. Feinstein

</TABLE>




                                       33

<PAGE>




                            AUTOTRADECENTER.COM INC.
                                       AND
                                  SUBSIDIARIES

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

                              FINANCIAL STATEMENTS

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

                   FOR THE YEARS ENDED MARCH 31, 2000 AND 1999
                                       AND
              FROM JULY 10, 1997 (INCEPTION) THROUGH MARCH 31, 1998

<PAGE>
                                    CONTENTS





                                                                        PAGE

Independent Auditors' Reports                                           F-1

Consolidated Balance Sheet                                              F-3

Consolidated Statement of Operations                                    F-4

Consolidated Statement of Changes in Stockholders' Equity               F-5

Consolidated Statement of Cash Flows                                    F-7

Notes to Consolidated Financial Statements                              F-8

<PAGE>
NEFF & RICCI LLP
----------------------------
CERTIFIED PUBLIC ACCOUNTANTS
7001 PROSPECT PLACE NE
ALBUQUERQUE, NM  87110



                          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, 2000 and 1999, and the related consolidated
statements of income, changes in stockholders' equity, and cash flows for the
years then ended.  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 audit.

The financial statements of AutoTradeCenter.com, Inc. and Subsidiaries as of
March 31, 1998, were audited by other other auditors whose report dated August
6, 1998, expressed an unqualified opinion on those statements.

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

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



/s/Neff & Ricci LLP
Albuquerque, New Mexico
May 11, 2000


                                      F-1
<PAGE>
                   [Letterhead of Price Kong & Company, P.A.]

                          INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Stockholders
of Auto Network USA, Inc.


We have audited the accompanying balance sheet of Auto Network USA, Inc. an
Arizona corporation as of March 31, 1998, and the related statements of income,
stockholders' equity, and cash flows for the period from inception (July 10,
1997) to March 31, 1998. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Auto Network USA, Inc. as of
March 31, 1998, and the results of its operations and its cash flows for the
initial period then ended in conformity with generally accepted accounting
principles.


/s/ Price Kong & Co.

Price Kong & Company, P.A.,
Phoenix, Arizona

August 6, 1998

                                      F-2
<PAGE>


                   AutoTradeCenter.com Inc. and Subsidiaries
                           Consolidated Balance Sheet

                                     ASSETS
<TABLE>
<CAPTION>
<S>                                                           <C>               <C>
                                                                         March 31,
                                                              -------------------------------
                                                                   2000             1999
                                                              -------------     -------------
Current assets:
  Cash                                                        $  4,355,738      $    297,752
  Accounts receivable - trade, net                               5,743,845         4,971,798
  Accounts receivable - employees and brokers, net                 332,122           324,248
  Inventory                                                      4,648,492         5,028,357
  Prepaid expenses and other                                       110,272            79,153
                                                              -------------     -------------
     Total current assets                                       15,190,469        10,701,308
                                                              -------------     -------------

Property and equipment, net                                      1,423,398           168,444
                                                              -------------     -------------

Intangible assets, net                                          13,506,484         2,207,378
                                                              -------------     -------------
    Total assets                                              $ 30,120,351      $ 13,077,130
                                                              =============     =============

                      Liabilities and Stockholders' Equity

Current liabilities:
  Accounts payable - trade                                    $  4,401,858      $  4,198,742
  Accounts payable - employees and related parties                    -              250,251
  Notes payable - related party                                  4,086,128         1,902,833
  Notes payable - bank                                           1,112,418         1,268,500
  Notes payable - other                                               -              301,000
  Accrued liabilities                                              245,049           269,117
                                                              -------------     -------------
    Total current liabilities                                    9,845,453         8,190,443
                                                              -------------     -------------
Non-current liabilities:
  Deferred income taxes                                               -                7,010
  Long-term debt - related party                                 1,819,500         1,968,613
                                                              -------------     -------------
    Total non-current liabilities                                1,819,500         1,975,623
                                                              -------------     -------------

Stockholders' equity:
  Convertible preferred stock, Series B; $10.00 par
    value; 250,000 shares authorized; 47,000 issued
    and outstanding in 1999; liquidation preference
    $10.00 per share                                                  -              372,037
  Convertible preferred stock, Series C; $.10 par
    value; 400,000 shares authorized; 20,800 issued
    and outstanding in 2000; liquidation preference
    $110.00 per share                                            1,906,536              -
  Convertible preferred stock, Series D; $.10 par
    value; 600,000 shares authorized; 31,200 issued
    and outstanding in 2000; liquidation preference
    $100.00 per share                                            2,859,805              -
  Common stock, no par value; 100,000,000 shares
    authorized; 27,652,609 and 20,385,084 shares issued
    and outstanding in 2000 and 1999, respectively              19,779,542         2,664,479
  Retained deficit                                              (6,090,485)         (125,452)
                                                              -------------     -------------
    Total stockholders' equity                                  18,455,398         2,911,064
                                                              -------------     -------------
Total liabilities and stockholders' equity                    $ 30,120,351      $ 13,077,130
                                                              =============     =============
</TABLE>

                See notes to consolidated financial statements.

                                      F-3
<PAGE>



                   AutoTradeCenter.com Inc. and Subsidiaries
                      Consolidated Statement of Operations

<TABLE>
<CAPTION>



                                                            For the Year Ended            From July 10, 1997
                                                    ---------------------------------    (inception) Through
                                                    March 31, 2000     March 31, 1999      March 31, 1998
                                                    --------------     --------------    -------------------

<S>                                                 <C>                <C>               <C>
Net sales                                           $ 131,861,292      $ 97,665,410         $ 31,581,117
Cost of sales                                         125,770,135        93,388,836           30,280,247
                                                    --------------     -------------        -------------
  Gross profit                                          6,091,157         4,276,574            1,300,870
                                                    --------------     -------------        -------------
Operating expenses:
  Selling                                               4,084,987         2,772,192              905,303
  General and administrative                            2,397,342           868,556              274,388
  Depreciation and amortization                           358,228            27,858                3,429
                                                    --------------     -------------        -------------
    Total operating expenses                            6,840,557         3,668,606            1,183,120
                                                    --------------     -------------        -------------
Income (loss) from operations                            (749,400)          607,968              117,750

Other income (expense):
  Miscellaneous                                           102,133            70,686               12,553
  Bad debt expense                                     (1,045,970)          (90,055)                -
  Interest expense-related party                         (768,121)         (286,824)             (58,436)
  Interest expense                                       (182,429)         (129,955)             (55,968)
                                                    --------------     -------------        -------------
    Total other income (expense) - net                 (1,894,387)         (436,148)            (101,851)
                                                    --------------     -------------        -------------
Income (loss) before income taxes                      (2,643,787)          171,820               15,899
                                                    --------------     -------------        -------------
Income tax benefit (expense)                               56,034           (56,579)              (3,515)
                                                    --------------     -------------        -------------
Net income (loss)                                   $  (2,587,753)     $    115,241         $     12,384
                                                    ==============     =============        =============



Basic earnings (loss) per share                     $       (0.12)     $       0.01         $       0.00
                                                    ==============     =============        =============

Diluted earnings (loss) per share                   $       (0.12)     $       0.01         $       0.00
                                                    ==============     =============        =============


</TABLE>

                See notes to consolidated financial statements.


                                      F-4

<PAGE>

<TABLE>
<CAPTION>



                    AutoTradeCenter.com Inc. and Subsidiaries
            Consolidated Statement of Changes in Stockholders' Equity
From July 10, 1997 (inception) Through March 31, 1998, and The Years Ended March 31, 1999 and 2000

                       Series A and           Series C,          Series D,
                   Series B Convertible      Convertible        Convertible
                     Preferred Stock      Preferred Stock     Preferred Stock         Common Stock         Retained
                    Shares     Amount    Shares    Amount    Shares    Amount      Shares       Amount     Earnings        Total
                   --------  ----------  ------  ----------  ------  ----------  ----------  -----------  -----------   ------------
<S>                <C>       <C>         <C>     <C>         <C>     <C>         <C>         <C>          <C>           <C>
Beginning
 balance, July
 10, 1997
 (inception)-
 Issued common
 stock to
 founders                                                                         9,000,000  $    30,000                $    30,000

December 1997 -
 Issued common
 stock pursuant
 to Rule 504 of
 Regulation D                                                                     1,002,500       25,062                     25,062

February 1998 -
 Issued conver-
 tible Series A
 preferred stock     6,750   $ 675,000                                                                                      675,000

March 1998 -
 converted
 Series A pre-
 ferred shares
 into common
 shares: 1,111
 to 1               (2,902)   (290,171)                                           3,224,122      290,171                        -

Series A Pre-
 ferred stock
 offering costs                 (2,578)                                                                                      (2,578)

Net income from
 July 10,1997
 (inception)
 through March
 31, 1998                                                                                                 $    12,384        12,384
                   --------  ----------  ------  ----------  ------  ----------  ----------  -----------  ------------  ------------
Balance -
 March 31, 1998      3,848     382,251      -           -       -           -    13,226,622      345,233       12,384       739,868

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

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

November 1998 -
 Issued conver-
 tible Series B
 preferred stock    35,000     281,242                          -           -                                               281,242

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

March 1999 -
 Converted
 Series A Pre-
 ferred Shares
 into Common
 Shares: 1,111
 to 1               (3,848)   (382,251)                         -           -     4,275,128      382,251                        -

March 1999 -
 Effect of Con-
 structive Divi-
 dend on Con-
 vertible Series
 B Preferred
 Stock                                                                                           253,077     (253,077)

March 1999 -
 Issued Common
 Shares Under
 Goodwill Agree-
 ment                                                                               266,667       53,333                     53,333

March 1999 -
 Issued Common
 Shares for Pur-
 chase of Subsi-
 diary                                                                            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     47,000     372,037      -           -       -           -    20,358,084    2,664,479     (125,452)    2,911,064
                   --------  ----------  ------  ----------  ------  ----------  ----------  -----------  ------------  ------------
</TABLE>

                       See Notes to Financial Statements


                                      F-5
<PAGE>
<TABLE>
<CAPTION>

                       Series A and           Series C,          Series D,
                   Series B Convertible      Convertible        Convertible
                     Preferred Stock      Preferred Stock     Preferred Stock         Common Stock         Retained
                    Shares     Amount    Shares    Amount    Shares    Amount      Shares       Amount     Earnings        Total
                   --------  ----------  ------  ----------  ------  ----------  ----------  -----------  -----------   ------------
<S>                <C>       <C>         <C>     <C>         <C>     <C>         <C>         <C>          <C>           <C>
Balance forward     47,000     372,037                                           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

Series B Pre-
 ferred stock
 conversion
 January 31,
 2000              (47,000)   (372,037)                                             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 conver-
 tible Series C
 preferred stock                         20,800  $1,906,536                                                               1,906,536

February 2000 -
 Issued Conver-
 tible 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 -
 Issued re-
 stricted common
 shares for
 purchase of
 subsidiary                                                                          69,535      193,401                    193,401

March 2000 -
 Effect of con-
 structive divi-
 dend 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
 services for
 the year ended.                                                                                 351,280                    351,280

Net loss for the
 year ended
 March 31, 2000                                                                                            (2,587,753)   (2,587,753)
                   --------  ----------  ------  ----------  ------  ----------  ----------  -----------  ------------  ------------
Balance -
 March 31, 2000        -     $     -     20,800  $1,906,536  31,200  $2,859,805  48,037,693  $22,444,021  $(6,215,937)  $21,366,462
                   ========  ==========  ======  ==========  ======  ==========  ==========  ===========  ============  ============

</TABLE>



                       See Notes to Financial Statements

                                      F-6

<PAGE>
                   AutoTradeCenter.com Inc. and Subsidiaries
                      Consolidated Statement of Cash Flows
<TABLE>
<CAPTION>
                                                                                                                       From July 10,
                                                                                                                    1997 (Inception)
                                                                                    For the Year Ended                   Through
                                                                          March 31, 2000        March 31, 1999        March 31, 1998
                                                                          --------------        --------------      ----------------
<S>                                                                         <C>                   <C>                   <C>
Cash flows from operating activities:

  Net income (loss)                                                         $(2,587,753)          $   115,241           $    12,384
  Adjustments to reconcile net income (loss) to net cash provided
    by operating activities:
      Depreciation and amortization                                             358,228                27,858                 3,429
      Bad debt expense                                                        1,045,970                90,055                   -
      Stock options issued for services                                         351,280                23,083                   -
  (Increase) decrease in:
    Accounts receivable                                                      (1,825,891)           (3,582,169)           (1,705,323)
    Inventory                                                                   379,866            (2,845,459)           (2,182,898)
    Prepaid expenses and other current assets                                    24,915               (70,906)              (17,700)
  Increase (decrease) in:
    Accounts payable                                                            (47,135)            2,448,261             1,916,020
    Accrued liabilities                                                         (67,774)               95,445                89,491
    Deferred income taxes                                                        (3,545)                3,545                 3,465
                                                                           -------------          ------------          ------------
        Net cash used in operating activities                                (2,371,839)           (3,695,046)           (1,881,132)
                                                                           -------------          ------------          ------------
Cash flows from investing activities:

  Purchase of property and equipment                                           (536,512)             (158,287)              (57,225)
  Sale of property and equipment                                                 62,675                56,277                   -
  Investment in other assets                                                        -                    (605)               (2,128)
  Net cash paid for acquisitions                                                    -                 (79,570)                  -
                                                                           -------------          ------------          ------------
    Net cash used in investing activities                                      (473,837)             (182,185)              (59,353)
                                                                           -------------          ------------          ------------
Cash flows from financing activities:

  Proceeds from borrowings                                                   85,699,933             4,868,500                   -
  Repayment of borrowings                                                   (85,856,015)           (3,625,000)                  -
  Proceeds from related party borrowings                                      3,175,703             1,903,033             1,601,000
  Repayment of related party borrowings                                      (1,132,300)             (560,500)             (769,000)
  Proceeds from long-term debt                                                      -               1,216,913               381,000
  Proceeds from issuance of convertible preferred stock                       4,766,341               372,037               672,422
  Proceeds from issuance of common stock                                        250,000                   -                  55,063
                                                                           -------------          ------------          ------------
    Net cash provided by financings activities                                6,903,662             4,174,983             1,940,485
                                                                           -------------          ------------          ------------

Net change in cash                                                            4,057,986               297,752                   -

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



Supplemental disclosures:
  Interest paid                                                            $    950,550           $   355,006           $   107,960
                                                                           =============          ============          ============

  Income taxes paid                                                        $      3,000           $    73,527           $       -
                                                                           =============          ============          ============

  Issuance of common stock for goodwill                                    $ 11,607,064           $ 2,141,158           $       -
                                                                           =============          ============          ============

</TABLE>










                See notes to consolidated financial statements.

                                      F-7
<PAGE>
                    AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2000

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 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.  The Company  engages in these  activities
either  as a  fee-based  service  or as a  principal  to the  transaction.  As a
principal, the Company takes title to the vehicle being redistributed.

         The  Company's  land  based  operations  (non-Internet),  where  in the
Company is a principal  to the  transaction,  performs  these  services  through
independent  wholesale brokers.  Each broker buys and sells vehicles in the name
of the Company.  Currently, the Company employs two methods of compensating each
broker.  Under the first  arrangement,  the broker retains all profit or loss in
excess of a fixed fee per vehicle  charged by the  Company  for the  services it
provides  for the  brokers.  Under the second  arrangement,  the Company and the
broker  share the  profit  and loss in  accordance  with  negotiated  percentage
splits.  As of April 1, 2000, the Company has 5 locations  throughout the United
States.

         The  Company's  Internet  operations  facilitate  the  exchange of used
vehicles from franchised and independent auto dealers,  lessors, banks and other
finance  companies to other  franchised and  independent  dealers.  The Company,
generally, earns fees from these exchanges,  utilizing its proprietary software.
The Company,  currently does not act as principal in its Internet  business.  In
the future,  the  Company  may  acquire  certain  trade-in  used  vehicles  from
individuals for sale to dealers as a result of strategic alliances with Internet
companies  engaged  in the  business  of  selling  new  cars on  line.  (Such as
Autobytel.com).  Vehicles  acquired through this medium will be sold directly to
the franchise dealer providing the new car to the on-line consumer,  the Company
through its land-based operations or to dealers over the internet.

         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"),  Auto Network Group of New Mexico, Inc.  ("ANET-NM"),  Auto Network
Group  Northwest,  Inc.  ("ANET-NW"),  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.

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

                                      F-8

<PAGE>
                   AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2000



NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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.

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  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.

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.

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, 2000, there had
been no write down of goodwill.

REVENUE RECOGNITION

         Revenue  and the  corresponding  cost of the  sale is  recognized  when
vehicles  are  sold to  customers  evidenced  by a sale  and a  purchase  order,
respectively.  The Company  pays for the vehicle and  receives  payment from its
customers when the vehicle title is 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 PER SHARE

         Basic  earnings  per share  have been  computed  based on the  weighted
average number of common shares outstanding. Diluted earnings per share 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.

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

                                      F-9
<PAGE>
                   AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2000



NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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 operating segments
in and related  disclosures  about products and services,  geographic  areas and
major customers.  The Company  currently has only one operating segment at March
31, 2000. However, on February 28, 2000 the Company entered into a Motor Vehicle
Remarketing  Agreement with American Honda Finance  Corporation  and on March 1,
2000 purchased NDSCo. These events launched the Company's Internet  re-marketing
segment. The Company earned no revenue from its Internet re-marketing operations
during  the year ended  March 31,  2000,  and its  related  expenses  from these
acquisitions and from its subsidiaries,  BusinessTradeCenter.com Inc. and NDSCo,
were immaterial to its operations.  Beginning with the year ended March 31, 2001
the  Company  will  report  information  regarding  both its land  based and its
Internet re-marketing operations.


NOTE B - ACCOUNTS RECEIVABLE

Accounts receivable consist of the following:
<TABLE>
<CAPTION>

                                                               March 31,
                                                          2000          1999
                                                          ----          ----
<S>                                                   <C>            <C>

       Trade accounts receivable                      $5,828,411     $5,061,853
       Due from employees and independent
        wholesale brokers                              1,378,092        324,248
                                                      -----------    ----------
                                                       7,206,503      5,386,101
       Allowance for doubtful accounts                 1,130,536         90,055
                                                      -----------    ----------
          Total                                       $6,075,967     $5,296,046
                                                      ===========    ==========

       The allowance for doubtful accounts
        consist of the following:
          Beginning of the year                       $   90,055     $      -0-
          Provision for bad debts                      1,045,970         90,055
          Write offs                                      (5,489)           -0-
          Recoveries                                         -0-            -0-
                                                      -----------    ----------
          End of the year                             $1,130,536     $   90,055
                                                      ===========    ==========
</TABLE>

         On March 31, 2000 accounts  receivable from used car brokers  providing
services to the Company under the terms of work-for-hire  agreements ("Brokers")
totaled $1,378,092.  The Company has determined that an additional provision for
losses of $1,045,970 is required which reduced earnings for the year ended March
31, 2000. Recoveries, if any, will be recorded as revenue in the period in which
they are received.

                                      F-10
<PAGE>
                   AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2000


NOTE C - PROPERTY AND EQUIPMENT

Property and equipment consist of the following:
<TABLE>
<CAPTION>
                                                                                             March 31,
         CATEGORY                                          LIFE/METHOD                  2000            1999
         <S>                                               <C>                       <C>              <C>
         Computers and equipment                           3 years/SL               $  597,231        $ 40,490
         Software/systems design                           3 years/SL                  598,225           9,509
         Vehicles                                          3 years/SL                  229,910          80,442
         Furniture and fixtures                            7 years/SL                  100,243          46,021
         Leasehold improvements                            5 years/SL                   16,628          16,628
                                                                                    ----------        --------
                                                                                     1,542,237         193,090
         Less allowance for depreciation                                               118,839          24,646
                                                                                    ----------        --------
                                                                                    $1,423,398        $168,444
                                                                                    ==========        ========
</TABLE>

NOTE D - INTANGIBLE ASSETS

Intangible assets consist of the following:
<TABLE>
<CAPTION>
                                                               March 31,
                                                         2000            1999
                                                         ----            ----
         <S>     <C>    <C>    <C>    <C>    <C>    <C>
         Goodwill                                     $13,746,926     $2,139,862
         Other                                             21,278         71,788
                                                      -----------     ----------
                                                       13,768,204      2,211,650
         Less accumulated amortization                    261,720          4,272
                                                      -----------     ----------
                                                      $13,506,484     $2,207,378
                                                      ===========     ==========
</TABLE>
Also see Note J.


NOTE E - LONG-TERM DEBT AND NOTES PAYABLE

Long-term debt and notes payable consists of the following:
<TABLE>
<CAPTION>

                                                                                                  March 31,
RELATED PARTY AND AFFILIATES:                                                                2000          1999
                                                                                             ----          ----
<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, 20001, $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)                          $1,152,000     $  852,000

o    Note payable to former officer and director,  12% annual  interest  payable
     monthly,  collateralized by inventory, due October 1, 1999, subordinated to
     senior debt. (See 2. below)                                                                -0-         50,000

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 1, 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)                                                                       2,675,420        717,500


                                      F-11

<PAGE>
                   AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2000


                                                                                                  March 31,
RELATED PARTY AND AFFILIATES:                                                                2000          1999
                                                                                             ----          ----

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 bya ll
     accounts receivable,  inventory,  and furniture and equipment, due July 14,
     2000                                                                                 1,409,608            -0-

o    Note payable to a  shareholder  of an entity  acquired by the Company,  12%
     annual interest,  principal and interest  payable  monthly,  due October 1,
     2000                                                                                       -0-        425,000

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.
     (See Note 3. below)                                                                    174,116        198,116

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            -0-

o    Notes payable to a related party, 15% annual interest payable monthly,  due
     on demand                                                                               17,000            -0-

o    Note payable to a related party, 15% annual interest  payable monthly,  due
     on demand                                                                               35,000            -0-

o    Note payable to an entity controlled by two officers of ANET-NM, 12% annual
     interest payable monthly, due on demand                                                 50,000            -0-

o    Note payable to an officer of ANET-NM, 15% annual interest payable monthly,
     due upon 30 days notice, subordinated to senior debt (See 3. below)                     92,409        123,084

o    Note payable to an entity that is a major  shareholder of the Company,  12%
     annual interest payable monthly, due April 1, 2000 (See 4. below)                          -0-      1,500,246

o    Notes payable to officers and major  shareholders,  12% annual interest 12%
     annual interest  payable  quarterly,  due March 31, 2001,  convertible into
     stock of subsidiary (See 6. below)                                                         -0-          5,500

                                                                                         ----------     ----------
                                                                                          5,905,628      3,871,446

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, (See 5. below)               1,112,418      1,268,500

OTHER:

o    Note  payable to an  unrelated  third party,  12% annual  interest  payable
     monthly, due September 22, 9999                                                            -0-        301,000
                                                                                         ----------     ----------
Total long-term debt and notes payable                                                    7,018,046      5,440,946
                                                                                         ----------     ----------

Less current portion of long-term debt and notes payable:
     Related party and affiliates                                                         4,086,128      1,902,833
     Bank                                                                                 1,112,418      1,268,500
     Other                                                                                      -0-        301,000
                                                                                         ----------     ----------
     Total current portion of long-term debt and notes payable                            5,198,546      3,472,333
                                                                                         ----------     ----------
Total long-term debt                                                                     $1,819,500     $1,968,613
                                                                                         ==========     ==========

</TABLE>

                                      F-12
<PAGE>
                   AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2000


NOTE E - LONG-TERM DEBT AND NOTES PAYABLE (CONTINUED)

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 and not paid when they became due.
3.       The note is convertible at any time into shares of the Company's common
         stock at the bid price of the common stock at date of conversion.
4.       The note is convertible,  prior to acceptance of payment in full of the
         outstanding  balance,  into shares of the  Company's  common stock at a
         conversion  price of $1.03  per  share.  This  note was paid in full on
         December 31,1999 and was not converted into common stock.
5.       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.  6. These notes were paid
         in full on  February  16, 2000 and were not  converted  into the common
         stock of the subsidiary.

                  All  long-term  debt in the amount of  $1,968,613 at March 31,
         1999 matures  during the year ending March 31, 2001. All long-term debt
         in the amount of $1,819,500  at March 31, 2000 matures  during the year
         ending March 31, 2002.


NOTE F - 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  approximate  fair value because of the short-term
maturity of these instruments.

LONG-TERM DEBT (INCLUDING AMOUNTS DUE WITHIN ONE YEAR)

         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,
                                                           2000                                1999
                                               -----------------------------      -----------------------------
                                               FAIR VALUE     CARRYING VALUE      FAIR VALUE     CARRYING VALUE
<S>                                            <C>              <C>               <C>              <C>
Cash and cash equivalents                      $4,355,738       $4,355,738        $  297,752       $  297,752
Long-term  debt  which  includes  amounts
 due within one year                           $7,018,046       $7,018,046        $5,440,946       $5,440,946

</TABLE>

                                      F-13
<PAGE>
                   AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2000


NOTE G - INCOME TAXES

         The income tax provision  (benefit)  shown in the  consolidated  income
statement is detailed for each year ended March 31:
<TABLE>
<CAPTION>
                                                                          2000           1999           1998
                                                                          ----           ----           ----
         <S>                                                           <C>             <C>            <C>
         Currently payable (receivable):
                  Federal                                              $   (38,459)    $ 43,564       $   -0-
                  State                                                    (10,565)       9,470            50
                                                                       ------------    ---------      --------
                      Total currently payable                              (49,024)      53,034            50


         Deferred:
                  Federal                                                   (5,105)       3,154         1,951
                  State                                                     (1,905)         391         1,514
                                                                       ------------    ---------      --------
                      Total deferred                                        (7,010)       3,545         3,465
                                                                       ------------    ---------      --------
                           Total                                       $   (56,034)    $ 56,579       $ 3,515
                                                                       ============    =========      ========
</TABLE>

         The income tax provision  (benefit) for  continuing  operations  varied
from the federal statutory rate as follows for each year ended March 31:

<TABLE>
<CAPTION>
                                                                            2000          1999          1998
                                                                            ----          ----          ----
         <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                                                 39%            0%            0%
                                                                            -----          ---           ---
                                                                              3%           42%           42%
                                                                            ====           ===           ===
</TABLE>

         The  company  has a  federal  tax loss  carryforward  of  approximately
$1,464,000, which expires in 2015.

         The following  summarizes the tax effects of the significant  temporary
differences  which  comprise the  deferred tax asset or liability  for each year
ended March 31:
<TABLE>
<CAPTION>

                                                                        2000           1999            1998
                                                                        ----           ----            ----
         <S>                                                        <C>             <C>              <C>
         Bad debt reserve                                           $   439,307     $ 37,823         $   -0-
         Other                                                              -0-      (41,368)         (3,465)
         Net operating loss carryforward                                615,049          -0-             -0-
                                                                    ------------    ---------        -------
         Net deferred tax asset (liability)                           1,054,356       (3,545)         (3,465)
         Valuation allowance                                         (1,054,356)         -0-             -0-
                                                                    ------------    ---------        -------
         Net deferred income tax (liability)                        $       -0-     $ (3,545)        $(3,465)
                                                                    ============    =========        =======
</TABLE>


NOTE H - 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.



                                      F-14

<PAGE>
                   AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2000


NOTE H - EARNINGS PER SHARE (CONTINUED)

         The  computation of basic and dilutive  earnings per common share is as
follows:
<TABLE>
<CAPTION>
                                                                                                                     From July 10,
                                                                                                                   1997 (inception)
                                                                               Year ended           Year ended          Through
                                                                             March 31, 2000       March 31, 1999    March 31, 1998
                                                                             --------------       --------------   ----------------
     <S>                                                                     <C>                   <C>               <C>
     Income (loss) available to common stockholders:
          Basic                                                              $ (2,587,753)         $    115,241      $     12,384
          Effect of dilutive securities - convertible debt                            -0-                68,573             5,914
                                                                             -------------         -------------     -------------
          Diluted                                                            $ (2,587,753)         $    183,814      $     18,298
                                                                             =============         =============     =============
     ------------------------------------------------------------------------------------------------------------------------------
     Weighted average number of common shares
         outstanding - basic                                                   21,638,671            13,726,397         9,844,084
     Conversion of Series A preferred stock                                           -0-             4,181,427         1,978,270
     Conversion of Series B preferred stock                                           -0-               388,235               -0-
     Exercise of stock options                                                        -0-               167,260            22,105
     Exercise of warrants                                                             -0-               844,655           449,955
     Conversion of debt                                                               -0-             3,518,771         1,184,211
                                                                             -------------         -------------     -------------
     Weighted average number of common shares
         outstanding - diluted                                                 21,638,671            22,826,745        13,478,625
     ------------------------------------------------------------------------------------------------------------------------------
     Earnings (loss) per common share:
     Basic                                                                         $(0.12)                $0.01             $0.00
                                                                                   =======                =====             =====

     Diluted                                                                       $(0.12)                $0.01             $0.00
                                                                                   =======                =====             =====
</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  year  ended  March  31,  2000  because  they  are
anti-dilutive.

         As  described  in Notes E, J and K, the Company has  convertible  debt,
contingently issuable stock, options, warrants and convertible preferred stock.


NOTE I - OPERATING LEASES

         The  Company  leases  its  facility  in  Scottsdale,  Arizona  from  an
unrelated third party under an operating  lease expiring  September 30, 2002. As
more fully  explained  in Note J, the Company  sublets a  different  facility in
Scottsdale,  Arizona to handle the relocated remarketing and expanding corporate
operations.  Both of these  leases  require the Company to pay all  maintenance,
insurance,  and taxes on the leased  property.  The Company  also has  operating
leases for facilities in Albuquerque,  New Mexico,  Bend,  Oregon,  San Antonio,
Texas and Philadelphia,  Pennsylvania.  The following  schedule shows the future
minimum lease payments required by year under the various operating leases:

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

              Year ending March 31,            2001                      $428,946
                                               2002                       378,177
                                               2003                       113,952
                                               2004                        31,397
                                                                         --------
                                                                         $952,472
                                                                         ========
</TABLE>


                                      F-15
<PAGE>
                   AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2000


  NOTE I - OPERATING LEASES (CONTINUED)

         The  Company  sub-leases  a portion of its  Scottsdale  facility  to an
independent third party on a monthly basis for $2,000 per month.  Rental expense
was $222,296,  $195,312, and $75,860 for the years ended March 31, 2000 and 1999
and for the period ending March 31, 1998, respectively.


NOTE J - 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.

         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  239,810  options,
exercisable  at $3.00 per share.  For the period ending March 31, 2000,  ANET-NM
had pre-tax earnings of $70,395 resulting in no shares being earned by JBS, LLC.

         The   goodwill   purchased   of  $106,666  is  being   amortized  on  a
straight-line basis over 10 years.

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 (See Note L).

         The excess of the purchase  price over the fair value of the net assets
acquired  (goodwill) was $47,813 and is being amortized on a straight-line basis
over 10 years.

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


                                      F-16
<PAGE>
                   AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2000


NOTE J - BUSINESS ACQUISITIONS (CONTINUED)

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  is  being   amortized  on  a
straight-line basis over 10 years.


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
web sites 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.

         The excess of the purchase  price over the fair value of the net assets
acquired  (goodwill) was $2,039,123  and is being  amortized on a  straight-line
basis over 10 years.


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.



                                      F-17
<PAGE>
                   AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2000


 NOTE J - BUSINESS ACQUISITIONS (CONTINUED)

         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  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 has 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 we acquired
the remaining 45% minority interest of BTC by issuing 5,000,000 shares of common
stock and paying off a  convertible  $200,000  note,  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 is being  amortized on a  straight-line
basis over 10 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 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.
<TABLE>
<CAPTION>


                                                                Year ended March 31,
                                                            2000                   1999
                                                            ----                   ----
        <S>                                             <C>                    <C>
        Net revenues                                    $131,861,262           $97,665,410
        Net loss                                        $ (4,758,855)          $(2,192,753)
        Net loss per common share:
                 Basic                                        $(0.17)               $(0.11)
                 Diluted                                      $(0.17)               $(0.11)
</TABLE>

         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-18

<PAGE>
                   AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2000


NOTE J - 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>    <C>    <C>    <C>    <C>
            Accounts receivable, net                                         $       -0-         $   98,609
            Prepaid expenses                                                         -0-              3,520
            Investment in subsidiaries                                               460                -0-
            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                                                        -0-             84,712
             Accrued liabilities                                                  40,241             84,180
                                                                             -----------         ----------
                 Total liabilities assumed                                        40,241            168,892
                                                                             -----------         ----------
        Notes payable issued                                                         -0-            425,000

        Value of common stock issued                                          12,369,991          1,604,480
                                                                             -----------         ----------
        Net cash paid                                                        $       -0-         $   79,570
                                                                             ===========         ==========
</TABLE>

NOTE K - 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").

PREFERRED STOCK

SERIES A

         On  February  2,  1998,  the  Company  sold  6,750  shares  of Series A
preferred  stock  to  Eastlane  Trading  Limited  for  $675,000.  Each  share is
convertible  into 1,111  shares of common  stock.  The  intrinsic  value of this
conversion feature was not material.  For each share of common stock issued upon
conversion of the Series A preferred stock, one warrant to purchase common stock
is issued.  Five warrants are  exercisable to purchase one share of common stock
at $.25 per share. Total exercisable warrants were 1,499,850. On March 15, 1999,
644,824 of these  warrants  expired.  As of March 31, 1999,  all 6,750 shares of
Series A preferred  stock had been  converted  into  7,499,250  shares of common
stock, and warrants exercisable to purchase 855,026 shares were outstanding. The
remaining 855,026 warrants expired on March 23, 2000.

SERIES B

         During November and December,  1998 the Company issued 47,000 shares of
Series B  preferred  stock  ("Series  B") for  $470,000.  Each share of Series B
preferred  stock is convertible  into shares of common shares using a conversion
price equal to 65% of the average closing bid price for the common stock for the
10 trading


                                      F-19
<PAGE>
                   AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2000



NOTE K - STOCKHOLDERS' EQUITY (CONTINUED)

days  immediately  preceding  the date of  conversion.  The Company  assigned an
intrinsic  value  of  $253,077  to  this  conversion  feature.  As a  result,  a
constructive dividend in this amount was recorded in the accompanying  financial
statements.  Each  share  of  Series B  preferred  stock  is  entitled  to a $10
liquidation preference over common stockholders. The Series B preferred stock is
non voting.

         The Company  shall have the right and option upon notice to the holders
of the Series B preferred stock to call,  redeem,  and acquire any or all of the
shares of Series B preferred  stock at a price equal to $11.00 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 B 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 B preferred
stock in accordance with the terms described above.

         As of March 31, 2000, all 47,000 shares of series B preferred stock had
been converted into 543,515 shares of common 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.

         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
theSecurities  Act of 1933 to  register  the  common  shares to be  issued  upon
conversion of the Series C preferred stock.

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.  The maximum  conversion price shall be $4.00 per share. The Company
assigned an  intrinsic  value of  $1,680,00  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.

                                      F-20
<PAGE>
                   AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2000



NOTE K - STOCKHOLDERS' EQUITY (CONTINUED)

         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.

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 and April 1, 2000,  the Option Pool was 2,038,508  shares and 2,765,261,
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.

         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 price of the employees'
stock option equal the market value of the  underlying  stock at the grant date,
as in the case of options granted to the Company's employees.

         SFAS 123 pro-forma numbers are as follows:

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

                                                                                                     From July 10,
                                                                                                   1997 (inception)
                                                              Year Ended         Year Ended             Through
                                                            March 31, 2000     March 31, 1999       March 31, 1998
                                                            --------------     --------------       --------------
Net income (loss) as reported under APB 25                   $(2,587,753)          $115,241              $12,384
Net income (loss) pro forma under SFAS 123                   $(3,653,384)        $ (234,979)             $10,783
Basic net income (loss) per common share-
     as reported under APB 25                                     $(0.12)             $0.01                $0.00
Diluted net income (loss) per common share-
     as reported under APB 25                                     $(0.12)             $0.01                $0.00


                                      F-21
<PAGE>
                   AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2000


NOTE K - STOCKHOLDERS' EQUITY (CONTINUED)

<CAPTION>
<S>                                                         <C>                <C>                 <C>

                                                                                                     From July 10,
                                                                                                   1997 (inception)
                                                              Year Ended         Year Ended             Through
                                                            March 31, 2000     March 31, 1999       March 31, 1998
                                                            --------------     --------------       --------------

Basic net income (loss) per common share-
     pro forma under SFAS 123                                     $(0.17)            $(0.02)               $0.00
Diluted net income (loss) per common share-
     pro forma under SFAS 123                                     $(0.17)            $(0.02)               $0.00
</TABLE>

         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:

<TABLE>

<CAPTION>
<S>                                                         <C>                <C>                 <C>

                                                                                                     From July 10,
                                                                                                   1997 (inception)
                                                              Year Ended         Year Ended             Through
                                                            March 31, 2000     March 31, 1999       March 31, 1998
                                                            --------------     --------------       --------------
Expected dividend yield                                          0.00%               0.00%                 0.00%
Risk-free interest rate                                          6.02%               4.67%                 5.11%
Expected volatility                                               166%                149%                   53%
Expected life (in months)                                         32                  43                     59

</TABLE>
         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, 2000 and 1999 and the period  ending March 31, 1998 were $0.80,  $0.52
and $0.01 per share, respectively.

         During the years ending  March 31, 2000 and 1999 and the period  ending
March 31, 1998,  the Company  granted  stock options to certain of its employees
and  independent  wholesale  brokers to purchase up to 1,322,080,  1,361,499 and
175,000  shares,  respectively,  of the  Company's  common  stock  that would be
restricted  pursuant  to Rule 144 of the SEC.  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 option prices range from $0.15 to $4.88.  At March 31, 2000,  1999 and 1998,
2,389,755, 1,206,499 and 0 shares, respectively, were eligible for exercise. The
weighted  average  exercisable  price was  $1.55,  $1.09 and $0.15 for the years
ended March 31, 2000, 1999 and the period ending March 31, 1998, respectively.


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.  The price at which the options may be exercised varies from $0.32
to $2.56. At March 31, 2000, 1999 and 1998, the total  outstanding  options were
2,429,810, 2,089,810 and 850,000, respectively.

                                      F-22
<PAGE>

                   AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2000


NOTE K - STOCKHOLDERS' EQUITY (CONTINUED)

         The fair value of the  options  issued  during the year ended March 31,
1998 was not  material.  The fair value of the options  issued  during the years
ended  March 31, 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 year ended
March 31, 2000 options granted for services were valued at $351,280.


NOTE L - RELATED PARTY TRANSACTIONS

         During the years  ended  March 31,  2000 and 1999 and the period  ended
March 31, 1998, the Company  consummated a total of $0, $486,275 and $800,000 of
vehicle  sales  and $0,  $2,055,000  and  $1,255,000  in  purchase  transactions
respectively  with two  entities  owned by officers,  directors  and other major
stockholders  of the  Company.  At March 31,  1998,  the Company had recorded in
accounts  receivable  $37,522 due from one of these entities.  Likewise at March
31,  1998,  the  Company had  recorded an account  payable of $15,999 to another
related entity. At March 31, 1999, these accounts had been paid in full.

         During the period  ending March 31,  1998,  the Company paid $4,000 for
professional  services  to MRM  Consultants,  an entity  owned by an officer and
director.  At March 31, 1998 he was owed $11,500. At March 31, 1999, the account
had been paid in full.

         On May 5,  1998,  the  Company  obtained  a line  of  credit  from  its
commercial bank 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 the  Company to the
bank's  line of credit.  On May 7, 1998,  the  Company  granted  each of Messrs.
Erskine,  Stuart, and Moldenhauer  options to purchase 100,000 restricted shares
of Common  Stock at a price of $.75 per share.  These  options  expire on May 7,
2002. On March 26, 1999, the note was refinanced.

         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 is $3,600 per month.

         As  described  in Note K, 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 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.


                                  F-23
<PAGE>

                   AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2000



NOTE L - RELATED PARTY TRANSACTIONS (CONTINUED)

         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 E, at March 31,  2000,  March 31,  1999 and March  31,1998 the
outstanding  balance on these notes was  $5,905,628,  $3,871,446  and  $832,000,
respectively.  The  total  interest  paid to  these  entities  on all  financing
activities  for the years ended March 31, 2000,  1999 and the period ended March
31, 1998 was $768,121, $286,824 and $58,436, respectively.

         Related  party  payables at March 31, 1999  include  $185,000  due to a
major shareholder, normal commissions of $37,423 due to officers of ANET-NM, and
$27,828 due to affiliated  entities for business  expenses incurred on behalf of
the Company.


NOTE M - CONCENTRATIONS

         The  Company is engaged  primarily  in one line of business - wholesale
activities of used automobiles which represents 100% of consolidated sales.

         During  the year ended  March 31,  1999,  the  Company  purchased  used
vehicles  from  Canada  for  resale in the United  States.  The total  amount of
vehicles purchased in Canada was $3,350,955 including transportation and vehicle
inspections.  The  Company did no  Canadian  transactions  during the year ended
March 31, 2000.

         The  Company  utilizes  independent  brokers as its sales  force in the
purchase and sale of used vehicles.  For the years ended March 31, 2000 and 1999
a significant  portion of the Company's  sales were  generated by a few of these
brokers. Consequently,  loss of the services of one of more of these high volume
sales  producers  would have had an impact upon the  financial  results.  As the
Company continues its expansion plans, any future negative results from the loss
of any one broker's services will be minimized.


NOTE N  - SUBSEQUENT EVENTS

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 our 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.

                                      F-24

<PAGE>
                   AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2000



NOTE N  - SUBSEQUENT EVENTS (CONTINUED)

         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 to acquire this operation.  The shares,  that have
been  mutually  valued at $2.00  per  share,  are to be held in  escrow  pending
certain future events. 93,750 of such shares will be released to JRB on April 1,
2001,  subject only to the  continuation of the business at that date.  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 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, 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.

         Stock  options  to  acquire  our  common  shares  also can be earned if
pre-tax earnings exceed the total predetermined levels over the first five years
of this operation.

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 an unsecured  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 has agreed to loan
$100,000 to the  Pennsylvania  operation on terms similar to our advance,  on or
before June 30, 2000.  This loan will be  subordinate to the debt owed to us. As
of May 10, 2000, Mr. McCusker had not made the loan.

         The Pennsylvania operation entered into a management agreement with Mr.
McCusker,  which provides that he is responsible for all day-to-day  operations.
In  addition,  the  Company  granted a total of  232,500  contingently  issuable
restricted  shares of the Company's  common stock to Mr.  McCusker as additional
compensation for his services.  The shares, valued by us at $2.00 per share, are
to be held in escrow pending certain future events, including among other things
the making of the loan by Mr.  McCusker.  50,000 of such shares will be released
to Mr.  McCusker  one year  from his  funding  his  obligation,  subject  to the
continuation of the business at that date and to his  satisfactory  performance.
Annually  beginning March 31, 2001 and for each twelve-month  period thereafter,
15,000,  22,488,  30,003,  32,504,  37,502,  and 45,003  additional  shares or a
portion thereof will be released subject to the Pennsylvania operation achieving
pre-determined  pre-tax  earnings.  For example,  if the operation earns $60,000
(floor)  for the year  ended  March  31,  2001,  15,000 of such  shares  will be
released to Mr. McCusker. In the event earnings for the year fall below $60,000,
a portion of these  shares may still be  released.  After  March 31,  2001,  the
pre-tax earnings floor increases through March 31, 2006.

         Stock  options  to  acquire  our  common  shares  also can be earned if
pre-tax earnings exceed the total  predetermined  floor over the first six years
of this operation.



                                      F-25

<PAGE>

                   AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2000


NOTE O - 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-26