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

                                   FORM 10-KSB

[x]       ANNUAL  REPORT  PURSUANT  TO  SECTION  13 OR 15(d)  OF THE  SECURITIES
          EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2000


[ ]       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
          SECURITIES EXCHANGE ACT OF 1934
          For the transition period from                 to
                                         --------------      -------------

                         Commission File Number 0-29657
                                            ----------

                   AMERICAN ELECTRIC AUTOMOBILE COMPANY, INC.
                                -----------------
                 (Name of small business issuer in its chapter)


     Delaware                                              33-0727323
--------------------------------                ---------------------------
(State or other jurisdiction of                 (I.R.S. Employer  I.D. No.)
incorporation or organization)

7270 Woodbine Avenue, Suite 200, Markham, Ontario, Canada     L3R 4B9
---------------------------------------------------------   ------------
(Address of principal executive offices)                         (Zip Code)

Issuer's telephone number, including area code             (905) 947-9925
                                                          -----------------
Securities registered pursuant to section 12(b) or 12(g) of the Exchange
Act: Common Stock $0.0001 par value

          Securities registered under Section 15 (d) of the Securities Act:

                          None.

          Check whether the Issuer (1) filed all reports required to be filed by
section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the registrant was required to file such report(s),  and (2)
has been subject to such filing requirements for the past 90 days. (1) Yes [ X ]
No [ ]

          Check if there is no disclosure  of  delinquent  filers in response to
Item 405 of Regulation S-B is contained in this form, and no disclosure  will 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-KSB
or any amendment to this Form 10-KSB. [X ]

          The issuer's revenue for its most recent fiscal year was nil.

          The  aggregate  market value of the  issuer's  voting stock held as of
December 31, 2000, by non-affiliates of the issuer was approximately $341,481.14

          As  of  January  31,  2001,   issuer  had   5,843,151   common  shares
outstanding.

Transitional Small Business Disclosure Format. Yes [  ] No [X]
Documents incorporated by reference: none

<PAGE>


          This Form 10-KSB contains certain  forward-looking  statements  within
the meaning of the Private  Securities  Litigation  reform Act of 1995. For this
purpose any statements  contained in this Form 10-KSB that are not statements of
historical fact may be deemed to be forward-looking statements. Without limiting
the foregoing,  words such as "may," "will," "expect," "believe,"  "anticipate,"
"estimate"  or  "continue"  or  comparable  terminology  is intended to identify
forward-looking statements.  These statement by their nature involve substantial
risks and uncertainties, and actual results may differ materially depending on a
variety of factors,  many of which are not within the Company's  control.  These
factors include but are not limited to economic conditions  generally and in the
industries  in  which  the  Company  may  participate;  competition  within  the
Company's chosen industry,  including  competition from much larger competitors;
technological  advances  and  failure  by the  Company to  successfully  develop
business relationships.

                                     PART 1

Item 1.   Description of Business


A.  HISTORY

American Electric Automobile Company (the "Company") was chartered as a Delaware
corporation  on May 9, 1996.  On June 15, 1996 the Company  acquired  all of the
outstanding stock of California Electric  Automobile Co., Inc.,  incorporated in
California on November 14, 1995,  ("CEAC") from the  shareholders  of CEAC in an
exchange for stock in the Company. The exchange was on the basis of one share of
CEAC for ten  shares  of the  Company  for a total of  1,050,000  shares  of the
Company's  common stock.  Of the 1,050,000  shares,  900,000 were held in escrow
pending the exercise of CEAC's option to purchase the assets and business of San
Diego Electric automobile Company.

On October 17, 1996 the Company  exercised its option to purchase the assets and
business  of  San  Diego  Electric   Automobile   Company   ("SDEAC"),   a  sole
proprietorship.  The  purchase  price was for  900,000  shares of AEAC's  common
stock.  The  Company is  currently  comprised  of American  Electric  Automobile
Company and its subsidiary, CEAC.

The Company  experienced  a  significant  change in its stock  ownership and its
management  in  August  and  September  2000.  In a report  filed on Form 8-K on
September  19, 2000,  the Company  reported  that by Letter of  Agreement  dated
August 23, 2000,  the Company  agreed to issue  3,250,000  shares of  restricted
common shares to Bisell  Investments Inc.  ("Bisell") for a total purchase price
of $275,000.00  payable in four  installments over a ninety day period following
closing. Bisell made two payments of $75,000 each in September and October 2000,
with the final payment of $150,000 on January 12, 2001. Under the Agreement,  12
shares of the  Company's  common stock were to be released  upon receipt of each
payment  from  Bisell.  The shares were being held in escrow by Edward F. Myers,
former  Chairman of the Company.  Myers  refused to release the escrowed  shares
after receiving proof of the final payment from Bisell.  Therefore,  the Company
cancelled the remaining escrowed shares and issued replacement shares to Bisell.
Myers objected to the issuance of the replacement shares, his position being
that the last two payments were not made in accordance with the Agreement nor
were the funds allocated in accordance with the contract.  The Company and its
attorneys are of the opinion that the objections of Myers have no basis and are
without merit.

On September 13, 2000  pursuant to the August 23, 2000 Letter of Agreement,  the
Company  accepted the  resignations of Edward F. Myers,  Betty N. Myers and Gary
Degano as  directors  and officers and took the  following  actions:  It elected
Pierre  Quilliam  as  President  and  CEO  and  appointed  him to the  Board  of
Directors;  it elected Stephen M. Cohen as Secretary and Treasurer and appointed
him to the Board of Directors;  and it appointed Denise Quilliam to the Board of
Directors.  Edward F. Myers, Betty N. Myers and Gary Degano remained as officers
and  directors of CEAC until they  resigned on February  16, 2001.  On that date
Pierre Quilliam was appointed,  Chairman of CEAC, Stephen M. Cohen was appointed
Secretary and  Treasurer and Glenn Roach was appointed  President and elected to
the Board of Directors of CEAC.

On January  31,  2001,  the  Company  sold its  interest  in  American  Electric
Automobile Company (Asia) Inc. ("Asia"). After careful consideration,  the Board
of  Directors  of the Company  decided  that it would be in the  Company's  best
interest to discontinue its investment into Asia. The inherent risks involved in
doing business in China, the difficulty in monitoring the situation,  as well as
the continued  monetary  investment  into Asia that would have been required led
the Board to the decision to discontinue its investment in Asia.


                                       2

<PAGE>

The Company sold its interest in Asia,  being 45% of the issued and  outstanding
shares,  for the nominal amount of $100.00 to Edward F. Myers. Mr. Myers was the
former  Chairman of the Company and was also the former  Chairman and a director
of CEAC.


B. BUSINESS OF ISSUER.

1.  PRINCIPAL  PRODUCTS  OR  SERVICES  AND  THEIR  MARKETS.  The  Company  is  a
development  stage  company  engaged in the  business  of  converting  gasoline-
powered vehicles to electric and hybrid power uses. The Company accomplishes the
conversion  into  an  electrical   vehicle  ("EV")  by  replacing  the  internal
combustion engine of a standard gasoline-powered vehicle with readily obtainable
commercial  electric  motors that are  controlled by the Company's  computerized
electric drive  controllers.  To accomplish the conversion of a gasoline-powered
vehicle  into a  hybrid  electric-gasoline  vehicle  ("HEV")  , the  Company  is
replacing the standard  internal  combustion  engine with a specially  modified,
small gasoline or methanol  powered  internal  combustion  engine and generator,
along with the battery and electric motor of an electric vehicle.

Evs directly produce no emissions of regulated  emissions,  and are thus know as
zero  emission  vehicles  ("ZEVs").  The  South  Coast  Air  Quality  Management
District,  which  covers all or most of the  counties  of Los  Angeles,  Orange,
Riverside and San Bernardino,  California, has noted numerous advantages to Evs,
including rapid  acceleration  that "can beat even that of sport gas- guzzlers,"
and  Evs'   ability   to  avoid   the   usual   bi-annual   smog   checks   that
internal-combustion  engine  vehicles must  undergo,  as Evs don't burn fuel and
thus their emissions-control systems neither degrade or fail over time.

The Company intends to serve the anticipated  growing need for Evs in California
and elsewhere.  The California Air Resources Board ("CARB") has mandated that 2%
of all new cars  produced for sale in California  beginning  with the 2003 model
year  must be ZEVs.  In  addition,  8% of new  cars  produced  must be  "cleaner
vehicles"  which are made up of hybrid,  fuel cell and  super-ultra-low-emission
gasoline  vehicles.  The Company has already  successfully  converted  eight (8)
vehicles from gasoline power to an EV and thereafter sold five (5) of them, each
of  which  was  subsequently  licensed  by the  California  Department  of Motor
Vehicles for use on all California roads.

The Company also intends to continue to serve the  anticipated  growing need for
low emission  vehicles ("LEVs") through its work to develop its hybrid electric-
gasoline  vehicle ("HEV").  However,  in order to complete its development of an
HEV,  the Company will need to raise  substantial  additional  funds.  (See Risk
Factors, below.)

2.  DISTRIBUTION AND MARKETING

The Company conducts its business domestically through its wholly owned
subsidiary,  California  Electric  Automobile Company ("CEAC").  Until recently,
CEAC focused on the conversion of customer-owned vehicles from gasoline power to
Evs through its sales office located in San Diego County,  California.  CEAC has
recently  relocated to 42346 - F Rio Nedo in Temecula,  California.  The Company
has had modest success in attracting local newspaper coverage of its activities.
The  Company is also well known in the San Diego  Electric  Car  Association,  a
large organization that holds frequent  well-publicized  meetings to promote the
benefits of EV ownership. San Diego is the seventh largest city in this Country.

The Company has sufficient  experience and expertise to believe it could, in the
majority of  instances,  replace the gasoline  engine in almost any vehicle with
readily  obtainable  commercial  electric  motors  that  are  controlled  by the
Company's proprietary  computerized electric drive controllers.  In the calendar
year 1998,  CEAC  converted  one 1972 VW Beetle to an EV. In calendar year 1999,
CEAC converted one 1992 Dodge Caravan to an EV for a customer, and converted one
1998 VW Beetle for Company use as a demonstration EV. Currently, the Company has
two converted Hyundai Accent 2000 vehicles, and has no backlog.


                                       3

<PAGE>

3. STATUS OF NEWLY ANNOUNCED PRODUCT.

As  previously   noted,  the  Company  has  heretofore   focused  on  converting
gasoline-powered vehicles that were owned by third parties into Evs. On July 20,
2000, the Company  announced the successful  road test of a Hyundai Accent which
the Company had  purchased  for its own  account and  converted  into an EV. The
tests, which were completed on July 18, 2000,  involved a combination of highway
and city driving designed to simulate  anticipated everyday use for the vehicle.
The tests were  conducted by two-time  Indianapolis  500 winner Rodger Ward, who
serves as an unpaid consultant for the Company.  As of the date hereof, CEAC has
received  an offer to purchase  the Red  Hyundai 4- Door  model,  which has been
accepted.  However,  there can be no assurances  that there will be any sales in
the future.

As disclosed in the Company's 8K filed on March 1, 2001, in addition to electric
automobiles, the Company has also commenced production of electric boats through
CEAC's Electric Boat Division.  The Company  intends to begin  production with a
prototype. The vessels will be engineered and designed for both personal and the
boat rental industry. They will consist of pontoon boats, tri-hulls which are 8'
x 12' long. The floatation  pontoons are made of polyethylene  plastic that will
not crack, break or deteriorate,  and are not affected by fuel, oil,  chemicals,
pollutants or wildlife. A marine vinyl floor will cover a self-bailing deck. The
electric  propulsion system consisting of twin 72 volt battery packs will ensure
a safe return to dock side.  In addition,  the battery  packs will drive a water
turbine,  thus avoiding potential  propeller mishaps.  Due to the public concern
about  the  negative  environmental  impact  caused to lakes  and  waterways  by
gasoline and diesel powered boats, the Company believes that electric boats will
have a major impact on the market for watercraft over the long term.


4. COMPETITION.

Beginning  with the 1997 model year,  the  electric  automobile  industry saw at
least  three  multi-national  automobile  manufacturers  introduce  their  first
production model. The California Energy Commission reported that by 1999, nearly
all of the major automobile companies - Ford, General Motors,  Toyota,  Chrysler
and Honda - offered  at least one model of an EV.  Pricing  for all of these new
vehicles from the major manufacturers has not been firmly  established,  but the
Company  believes that they will be priced at  approximately  $34,000,  which is
just below the luxury tax point.  Additionally,  if past  experience  continues,
many of these Evs will be available  only for lease,  and not sale.  The Company
will endeavor to counter the competitive activities of these large manufacturers
by offering
remanufactured  vehicles that will sell at much lower prices. However, there can
be no assurances that the Company's strategy will be effective,  or that it will
be able to compete against the large  advertising  and marketing  budgets of the
major  automobile  manufacturers.  Additionally,  the  Company's  experience  in
obtaining the materials necessary to convert gasoline-powered  vehicles into Evs
leads it to conclude that the major  manufacturers  offer their new Evs, whether
for sale or lease,  at prices  that do not fully  reflect  their  total costs of
production.  This was confirmed by the California Air Resources  Board which, in
its August 7, 2000 "ZEV Program Biennial Review" noted that  "Manufacturers  are
not yet  able  to  produce  a  competitively  priced  electric  vehicle  without
incurring  significant  losses on each unit  leased or sold." To the extent that
the major manufacturers are pricing their Evs for sale at below cost levels, the
Company's ability to market its Evs will be severely  impeded.  The Company does
not have  sufficient  cash or cash  reserves to fund any sales at a  significant
loss, or at any loss.

In addition to the major manufacturers,  the California Department of Energy has
reported  there are many Evs being  built  today by small car  companies,  or by
people who build them in their own  garages as a hobby.  Some Evs are built from
kits and made to look like  gasoline  roadsters or sports  cars.  There are also
other companies that, like American Electric Automobile Company, convert regular
cars into electric  vehicles by pulling out the motor and gas tank and replacing
them with electric  motors and batteries.  While the Company is not aware of all
companies  throughout  the  United  States  that  make Evs or  convert  existing
gasoline-powered  vehicles into Evs, it is aware of the following  companies who
engage in either or both of such behaviors:  Mike's Auto Care of San Mateo,  CA;
Solectria of Wilmington, MA; Electro Automotive of Santa Cruz, CA


                                       4

<PAGE>

As with electric vehicles, the Company also operates within a highly competitive
market  for  electric  boats in the United  States.  The  Company  intends to be
competitive by developing a prototype vessel which will be of excellent  quality
while still being cost-competitive.  However, with both electric automobiles and
electric boats, most of our competitors have longer operating histories,  larger
customer bases,  greater brand recognition and significantly  greater financial,
marketing and other resources than we have.  These  competitors may thus be able
to respond more quickly to new or emerging  technologies in these fields, and to
devote  greater  resources  to the  development,  promotion  and  sale of  their
products than we can.  Accordingly,  we may not be able to compete  successfully
against these competitors.

5. SOURCE AND  AVAILABILITY  OF RAW MATERIALS.  The Company uses electric motors
manufactured  by  other  companies,  and then  adapts  them  with the  Company's
proprietary  technological know-how. These engines, and the assemblies necessary
to incorporate  them into vehicles that the Company is converting  from gasoline
power,  have been  adequately  available  to the  Company,  and the  Company has
experienced  no difficulty  in obtaining  adequate  sources of supply.  Although
there can be no assurance  that the Company  will  continue to be able to obtain
adequate sources in the future,  the Company believes that it will be able to do
so.

Source and  availability  of raw materials for the electric  boats is similar to
that of the cars. All the materials  required are off the shelf and tested.  The
Company has  demonstrated  the  ability to develop  proprietary  technology  for
electric cars which will assist in doing the same for electric boats.

6. MAJOR  CUSTOMERS.  The Company is not dependent upon any one Customer.  While
due  to  the  small   current   volume  of  sales   because  the  Company  is  a
development-stage  company,  such that  each  individual  sale to an  individual
customer  represents  10% or more of the  Company's  sales for the year in which
such sale occurred,  the Company is not dependent  upon any one individual  sale
for its economic livelihood.

7. PATENTS,  LICENSES,  LABOR  CONTRACTS.  The Company is not dependent upon any
patent, trademark,  license, franchise,  concession,  royalty agreement or labor
contract. The Company has independently developed its technology,  and maintains
it as proprietary internal information.  The Company currently employs less than
five (5) full-time employees who perform conversion work, prototype  development
and testing. The Company has never experienced a work stoppage,  and none of its
employees are currently  represented  by a union or any other form of collective
bargaining  unit.  The Company  believes its  relations  with its  employees are
excellent.

8. NEED FOR  GOVERNMENTAL  APPROVAL.  The  Company  believes  that  there are no
special  governmental  approvals  that currently are necessary for it to conduct
its  business.  The Company's  activities  in converting  vehicles from gasoline
power  to Evs or  HEVs  do not  result  in  any  significant  modification  of a
vehicle's  running  gear,  and  thus  do  not  require  the  Company  to  obtain
governmental  waivers and approvals as would be necessary,  for example,  if one
were to import a car  manufactured  in  Australia,  and one had to  upgrade  the
vehicle to change  the  steering  wheel from the right side to the left,  change
bumper heights, and certify the engine to meet current emissions  standards.  To
date,  all vehicles  that the Company has converted  have passed all  California
requirements  for being licensed to drive on all California  roads.  The Company
does anticipate,  however,  that if it is able to secure additional financing to
expand the scope of its  operations,  it will likely have to comply with certain
licensing  provisions of  California  law.  Among other things,  if sales volume
increases,  or if the Company undertakes manufacture of its own form of vehicle,
the Company may have to comply with applicable  California license  requirements
promulgated by the California Department of Motor Vehicles,  such as obtaining a
license to become a vehicle dealer and/or a vehicle manufacturer.


                                       5

<PAGE>

The  electric  boats will come under the  grouping  of small  vessels  which are
required to conform to guide lines of the U.S. Coast Guard. Vessels are required
to be  registered  under  either a State  boating  agency  or with  the  federal
government.

9. EMPLOYEES. The Company currently has no full-time employees. The officers and
directors  work  on a part  time,  as  needed  basis.  CEAC,  its  wholly  owned
subsidiary, currently has one full-time employee and one part-time employee, who
devote  themselves to the  development and sale of Evs and Electric Boats at our
location at 42346 Rio Nedo in Temecula, California. The Company does not foresee
hiring any further employees until revenues and operations  warrant the addition
of employees.  In addition,  the Company  recognizes  that the  continuation  of
operations  and the  maintenance  of its existing  employees  is dependent  upon
obtaining  additional  funding for the  Company  which may or may not be readily
obtainable.


Reports to Security Holders

          The Company files annual and quarterly reports with the Securities and
Exchange Commission ("SEC"). The public may read and copy any materials filed by
the Company with the SEC at the SEC's Public Reference Room at 450 Fifth Street,
N.W., Washington, D.C. 20549. The public may obtain information on the operation
of the Public Reference Room by calling the SEC at  1-800-SEC-0330.  The Company
is an  electronic  filer and the SEC  maintains an Internet  site that  contains
reports,   proxy  and  information   statements   regarding  issuers  that  file
electronically with the SEC which may be viewed at http://www.sec.gov.




Item 2:        Description of Property

Property & Facilities

          The  Company  subleases  space at 7270  Woodbine  Avenue,  Suite  200,
Markham, Ontario, Canada, for its corporate offices. The Company pays CAD$474.60
per month plus applicable  Federal Taxes. The Company has a sub-lease  agreement
with Wepawaug Inc., the head tenant, which gives the Company the right to occupy
the space at the above rental rate until August 31, 2001.

The Company's  subsidiary,  CEAC, has entered into a lease with James E. Hundley
for 2,145  square feet of office and workshop  space  located at 42346 Rio Nedo,
#F,  Temecula,  California.  The  rental  rate is  $1,244.00  per  month  plus a
percentage  of common area  operating  expenses.  The lease term is for one year
ending February 28, 2002, subject to an option to renew for a further term of up
to five years. In the opinion of management of the Company,  both properties are
adequately covered by insurance.

Item 3.   Legal Proceedings.

                     None.

Item 4.   Submission of Matters to a Vote of Security Holders

               None.


                                       6

<PAGE>

                                     PART II

Item 5.   Market for Common Equity and Other Shareholder Matters.

>From  October  1998 the  Company's  common stock was traded on the OTC Bulletin
Board under the symbol  "AEAM."  During 1998 and the first quarter of 1999 there
were no quotes.

Quarter                     High Bid           Low Bid

2nd quarter 1999            $0.25              $0.25
3rd quarter 1999             0.3125             0.01

Starting  August 1, 1999 the Company's  common stock was traded under the symbol
"AEAM" by the National Quotation Bureau, LLC.

Quarter                    High Closing Bid    Low Closing Bid

3rd quarter 1999               $0.125                 $0.10
4th quarter 1999                0.10                   0.10


1st quarter 2000               $1.15                  $0.15

2nd quarter 2000
April 3 - April 4              $0.95                  $0.90

April 5 - June 30
(After the 1 for 3
reverse split)                 $3.00                  $1.20

3rd Quarter 2000               $1.30                  $0.45

4th Quarter 2000               $0.45                  $0.07


THE ABOVE QUOTATIONS  REPRESENT PRICES BETWEEN DEALERS AND DO NOT INCLUDE RETAIL
MARKUP, MARKDOWN OR COMMISSION,  AND MAY NOT REPRESENT ACTUAL TRANSACTIONS.  The
source for this information is Pink Sheets LLC.

On March 20, 2000, the Company's  shareholders  voted to consolidate  the common
shares on a one for three exchange.

The  Company's  "new"  common  stock was  assigned a new CUSIP  number and a new
trading symbol "AEAC". Trading of the "new" shares started on April 5, 2000.

The Company had approximately 71 shareholders of record as of December 31, 2000.

Dividends.  The Company has paid no  dividends  on its Common  Shares  since its
inception.  The Company does not  anticipate  paying any dividends on its Common
Stock until and unless such profit is realized and may not pay out any dividends
thereafter.


                                  "Penny Stock"

The Securities and Exchange  commission has adopted rule 15g-9 which established
the definition of a "penny stock", for the purposes relevant to the Company,  as
any equity security that has a market price of less than $5.00 per share or with
an exercise price of less than $5.00 per share,  subject to certain  exceptions.
For any transaction  involving a penny stock,  unless exempt, the rules require:
(1) that a broker or dealer approve a person's account for transactions in penny
stocks:  and (ii) the  broker  or dealer  receive  from the  investor  a written
agreement  to the  transaction,  setting  forth the identity and quantity of the
penny  stock to be  purchased.  In order  to  approve  a  person's  account  for
transactions  in penny  stocks,  the broker or dealer must (i) obtain  financial
information and investment  experience objectives of the person; and (ii) make a
reasonable  determination that the transactions in penny stocks are suitable for
that person and the person has sufficient  knowledge and experience in financial
matters to be capable of evaluating the risks of  transactions  in penny stocks.
The broker or dealer  must also  deliver,  prior to any  transaction  in a penny
stock, a disclosure  schedule  prepared by the Commission  relating to the penny
stock market,  which,  in highlight  form, (i) sets forth the basis on which the
broker or dealer made the suitability determination; and (ii) that the broker or
dealer  received a signed,  written  agreement  from the  investor  prior to the
transaction.  Disclosure  also has to be made  about the risks of  investing  in
penny stocks in both public  offerings  and in  secondary  trading and about the
commissions payable to both the broker-dealer and the registered representative,
current  quotations for the securities and the rights and remedies  available to
an  investor  in cases of fraud in penny stock  transactions.  Finally,  monthly
statements  have to be sent  disclosing  recent price  information for the penny
stock held in the account and information on the limited market in penny stocks.


                                       7


<PAGE>

ITEM 6:     MANAGEMENTS' DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

                       Certain Forward-Looking Information

This Form 10KSB contains  certain  "forward-looking  statements" as such term is
defined  in the  Private  Securities  Litigation  Reform  Act of  1995 or by the
Securities  and Exchange  Commission  in its rules,  regulations  and  releases.
Without limiting the generality of the foregoing,  words such as "may",  "will",
"expect", "believe",  "anticipate",  "intend", "could", "estimate" or "continue"
or the  negative  or other  variations  thereof or  comparable  terminology  are
intended to identify forward-looking statements.


RESULTS OF OPERATIONS

The following  discussion  refers to the twelve-month  period ended December 31,
2000 and the twelve-month period ended December 31, 1999.

Fiscal 1999 versus Fiscal 1998

During  1999,  the Company had Net Revenues of $3,500  compared to $25,047.  The
1998 figure includes $10,000 deposit for a conversion completed and delivered in
1999. If this amount had been applied to 1999,  the Net Revenues would have been
$13,500 in 1999 and $15,047 in 1998.  These amounts  reflect the work  completed
and delivered in the respective years. An additional factor which contributed to
lower sales in fiscal 1999 was the  departure  of the  individual  from whom the
Company had been purchased.  This individual served as a director of the Company
until May 5,  1999,  and had  assisted  the  Company  in  marketing  operations,
principally with his attendance at trade shows.

During 1999, the Company had Consulting  Expenses of $68,750  compared to $2,000
in 1998.  This  reflects  the value of the stock as  assigned  by the  Company's
auditors  for the stock  issued to Dr.  Myers for his  services in managing  the
Company during the year.

During 1999, the Company had $37,440 in Legal and Professional  Fees compared to
$3,814 in 1998.  This  increase  was due to expenses in three  principle  areas.
During 1999 the company  engaged a  consultant  to develop a new  business  plan
($12,500),  engaged a consultant  to travel to China and assist the Company with
the  development  of the SUV  test  vehicle($8,000),  and  accounting  fees  for
auditing which have  increased  with the additional  complexity of the Company's
accounting  structure  ($9,000).  The business  plan and China project were one-
time  events.  In as much as the  Company  must  now  have  its  10-QSB  filings
reviewed, this increased level of accounting expense is expected to continue.

During  1999,  the  Company had $43,250 in Officer  Compensation  compared  with
$6,570 in 1998.  This  increase  reflects an  evaluation  by the auditors on the
stock that the Company issued for services performed by the Officers.


                                       8


<PAGE>

Fiscal 2000 versus Fiscal 1999

During  2000,  the Company had nil Net Revenues  compared to $3,500 in 1999.  In
2000 the Company had Other Income of $4,270.00 from the sale of spare parts, and
$6,339.00  of Interest  Income,  compared to nil income in these two accounts in
1999.  During the later part of 2000,  there was a change in  management  of the
Company and the last quarter was spent by the new  management  in assessing  and
rectifying  the past  management's  errors and  excesses,  thus  resulting  in a
slowdown in the production and sale of EV's and HEV's.

During 2000, the Company had Consulting Expenses of $26,431 compared to $68,750
in 1999.  This reflects a decrease in the cost to the Company of consulting fees
paid to Dr.  Myers for his  services  in managing  the Company  during the first
three quarters of 2000.

During 2000, the Company had $145,684 in Legal and Professional Fees,  including
professional and management services, compared to $37,440 in 1999. This increase
was due to legal fees paid to the Company's  attorneys for filing a registration
statement and  responding to comments of the SEC. In addition,  accounting  fees
were  substantial  as a result of the  complexity  of the  Company's  accounting
structure.  Furthermore,  as a result of the disorganized state of the books and
records  of the  Company  and its  subsidiaries  which  were  maintained  by the
previous  management,  the  Company's  accountants  were  required  to carry out
significantly  more work  than  would be  required  under  normal  circumstances
resulting in significantly  higher  accounting fees to the Company.  Although an
increased  level of  accounting  expense is  expected to continue in view of the
fact that the Company must file quarterly 10QSB's,  the new management is taking
steps to ensure that the financial records are maintained appropriately in order
to facilitate more efficient auditing

During 2000, the Company had $7,478 in advertising  expenses  compared to $3,065
in 1999.

During  2000,   the  Company  had  $76,117   listed  as  Officer   Compensation,
encompassing all employees'  payroll  including the subsidiary,  CEAC,  compared
with $43,250 in 1999.

General and  administrative  expenses for 2000 were $132,626.00 as compared with
$22,532. This amount includes all other expenses not described in the categories
referred  to above  including  but not limited to rent  ($37,242),  depreciation
($14,892), website ($5,051), write-down of the 1985 VW Cabriolet ($7,499.00) and
all other  expenses of the Company and its  subsidiary.  Generally,  this amount
reflects a readjustment by the Company's  accountants for values misallocated in
the past to various holdings and transactions.


LIQUIDITY AND CAPITAL RESOURCES - THE COMPANY

The Company has  completed  financing  through  the offer of its  securities  as
follows:

On December 13, 1999 the Company  approved an offering of  3,000,000  (1,000,000
new  shares)  shares of the  Company's  common  stock at $0.125 per  share.  The
offering was to be in accordance with Regulation D rule 504. The offering was to
accredited investors only in the states of MN, PA and TX.

The offering was accomplished  during January  ($42,500),  February  ($125,000),
March  ($78,750)  and April  ($127,500)  of 2000.  The offering was sold out and
closed April 21, 2000. The company subscribed a total of $372,500.

Expenses of the offering totaled $17,468:

Legal                                   $  5,614
Accounting                                10,928
Transfer                                     300
Fed Express                                  126
State Filings                                500

Money subscribed                        $373,750
Expenses                                 (17,468)
                                        ---------
Net proceeds                            $356,282
-----------------------------

Money Received                          $186,875
Expenses                                 (17,468)
                                        ---------
Money available
prior to 4/30/00                        $169,407


                                       9

<PAGE>

As was reported in the Company's Form 10QSB for the third quarter of 2000,  from
January  through  April 21 2000,  the Company  carried  out a private  placement
offering to a small number of accredited investors in three states. Of the total
amount  subscribed  of  $373,750,  the  Company  received  $186,875  in cash and
$187,541 in notes as of June 30,  2000.  Installment  payments on the notes were
due from five investors, with all such installments due by July 31, 2000. All of
those  investors  defaulted on their notes. Of the total amount due, the Company
received only $34,587  including  interest as payments  against those notes, and
there was a total balance due of $152,954. In addition, one investor's cheque in
the amount of $6,250.00 was returned N.S.F.

The Company sent notice to the  defaulting  shareholders  by registered  letters
dated October 5, 2000 informing them that, should the outstanding  payments plus
interest not be received in full by October 22, 2000,  the Company will elect to
cancel the Subscription  Agreements in respect of the number of shares for which
payment and interest has not been  received.  The Company has also  reserved its
right to pursue other remedies  available under law as a result of the breach of
the  Subscription  Agreements.  As of October 22, 2000,  none of the  defaulting
shareholders remitted further payments under
their promissory notes and therefore, the Company cancelled the shares for which
payment plus interest had not been received.

The Company was holding  various  stock  certificates  as security for the Notes
representing 650,000 issued and outstanding shares of Company stock. Out of this
number,  441,433 shares were cancelled,  bringing the total number of issued and
outstanding  shares down to 5,689,151 as of December 31, 2000.  The Company does
not have the  financial  resources to pursue the defaulted  amounts  through the
courts  at this  time due to the high  cost of  instituting  legal  proceedings,
however,  it has reserved its rights to pursue such remedies in the future if it
so chooses.

By Letter of  Agreement  dated  August 23,  2000,  the  Company  agreed to issue
3,250,000  shares of restricted  common stock to Bisell  Investments  Inc. for a
total purchase price of $275,000.00,  payable in four installments over a ninety
day period  following  the  closing.  As of the date  hereof,  the  Company  has
received full payment from Bisell Investments Inc.

As a result of the default on the offering of shares in early 2000,  the Company
will need  additional  capital in order to continue its  operations  in both the
electric car and electric  boat arenas as well as to finance the  administrative
costs  including  but not limited to legal and  accounting  fees.  The Company's
management will be seeking  additional  capital  however,  there is no assurance
that this needed  capital can be raised,  or raised on terms  acceptable  to the
Company.

RISK FACTORS

1. Limited  History of Operations.  The Company was organized in May of 1996 and
has had limited operations to date.  Therefore its operations are subject to the
risks inherent in new business enterprises. The likelihood of the success of the
Company must be  considered in light of the  problems,  expenses,  difficulties,
complications and delays frequently  encountered in connection with the start up
of a new business and the competitive environment in which the Company operates.
The Company has had no significant revenues to date.

2.  Insufficient  Operating  Revenues.  Time lapse to the Company's  Operational
Stage will depend upon the continued availability of investment capital to fully
fund subsequent projects. If operating revenues are insufficient to continue the
Company's operations, additional funds would have to be raised through equity or
debt financing. The Company has no commitments for any additional debt or equity
financing  and  there  can be no  assurance  that any such  commitments  will be
obtained on favorable terms, if at all.


                                       10

<PAGE>

3.  Competition.  Competition in the Electric Automobile Industry may be
expected to intensify.  General Motors started leasing its first Electric Auto
in December 1996.  Several of the other major automobile manufacturers also
have  announced  that they have  entered  or  intend  to enter  the  market.  In
addition,  there are several  established  electric  boat  manufacturers  in the
United States which the Company will be competing against.

4.  Dependence on Management.  Because the Company is a new business and has
no significant operating history, it will be heavily dependent upon the
services and experiences of its officers.  The loss of the service of any
officer could adversely affect the conduct of the Company's business.

5. Industry and Economic  Factors.  The Automobile and boat  industries in which
the  Company  expects to operate  are  subject to  constant  changes  based upon
changes in public taste as well as the condition of the general economy. Factors
beyond  the  control  of the  Company  or those on whom it intends to rely could
cause the Company to fail.

6. Control of the Company.  The Officers,  Directors  and Principal  Shareholder
Group own more than 50% of the  Common  Shares of the  Company.  Therefore,  the
Control Group will either control or significantly influence a voting control of
the Company.  Pursuant to the laws of Delaware,  a majority of all  shareholders
entitled to vote at any regularly  called  shareholders  meeting,  may act, as a
majority,  without notice or meeting,  giving notice to other  shareholders only
after such  action may have been  taken.  While  there are some limits upon this
right of the majority,  Investors should  understand that Management  commands a
voting majority in control of the Company.


7.  Dividends.  The Company has paid no dividends on its Common Shares since
its inception.  The Company does not anticipate paying any dividends on its
Common Stock until and unless such profit is realized and may not pay out any
dividends thereafter.

8.  Government  Regulation.  The  automobile  industry  in  general  is  heavily
regulated both as to crash survival and motor emissions.  The Company expects to
have no  problems  with the  latter and  because of the use of bodies  that have
already been  approved for gasoline  engine use,  less severe  problems with the
former.  In  addition,  the Company  shall be  manufacturing  electric  boats in
compliance with all regulatory requirements.

9.  Potential  Conflicts of Interest.  The officers and directors are associated
with other firms and are  involved in a range of business  activities  which may
have  business  dealings  with the  Company at some point in time.  Due to these
affiliations  and the fact that some  officers  are  expected  to devote  only a
portion  of their  time to the  business  of the  Company,  there are  potential
inherent  conflicts of interest in their  acting as  directors  and as officers.
Each of the  officers  and  directors  is or may  become an  officer,  director,
controlling  shareholder,  partner or participant in other entities engaged in a
variety of businesses.  These  existing and potential  conflicts of interest are
irreconcilable  and could  involve the  participating  officers and directors in
litigation brought by the Company's shareholders or by the shareholders of other
entities  with which the officers and directors  are  currently,  or may become,
affiliated.  To help alleviate this position somewhat,  Management has adopted a
policy of full disclosure with respect to business  transactions with any entity
in which any or all of the officers or directors are affiliated, either directly
or  indirectly.  An officer or director may  continue  any business  activity in
which such officer or director engaged prior to joining the Company.

10.  Going Concern.  As of December 31, 2000 the company had a stockholders'
deficiency of $24,768.  The auditors have raised a "going concern" question on
the audit for the year ended December 31, 2000.

ITEM 7.  FINANCIAL STATEMENTS


                                       11

<PAGE>

                   AMERICAN ELECTRIC AUTOMOBILE COMPANY, INC.
                                 AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                        CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF DECEMBER 31, 2000


<PAGE>


                   AMERICAN ELECTRIC AUTOMOBILE COMPANY, INC.
                                 AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)


<TABLE>
<CAPTION>


                                    CONTENTS


<S>                 <C>
PAGE                F-1      INDEPENDENT AUDITORS' REPORT

PAGE                F-2      CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2000

PAGE                F-3      CONSOLIDATED  STATEMENTS OF OPERATIONS  FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999 AND
                             FOR THE PERIOD FROM JUNE 15, 1996 (INCEPTION) TO DECEMBER 31, 2000

PAGE                F-4      CONSOLIDATED  STATEMENTS OF CHANGES IN  STOCKHOLDERS'  EQUITY  (DEFICIENCY) FOR THE PERIOD
                             FROM JUNE 15, 1996 (INCEPTION) TO DECEMBER 31, 2000

PAGE                F-5 -    CONSOLIDATED  STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED  DECEMBER 31, 2000 AND 1999 AND
                    F-6      FOR THE PERIOD FROM JUNE 15, 1996 (INCEPTION) TO DECEMBER 31, 2000

PAGES               F-7 -    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    F-16


</TABLE>


<PAGE>




                          INDEPENDENT AUDITORS' REPORT


To the Board of Directors of:
  American Electric Automobile Company, Inc. and Subsidiary

We have audited the accompanying consolidated balance sheet of American Electric
Automobile  Company,  Inc. and  subsidiary (a  development  stage company) as of
December 31, 2000 and the related consolidated statements of operations, changes
in stockholders' equity (deficiency) and cash flows for the years ended December
31, 2000 and 1999 and for the period from June 15, 1996  (inception) to December
31, 2000. These consolidated  financial statements are the responsibility of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
consolidated financial statements based on our audit.

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

In our opinion, the consolidated  financial statements referred to above present
fairly in all material  respects,  the financial  position of American  Electric
Automobile  Company,  Inc. and  subsidiary (a  development  stage company) as of
December 31, 2000, and the results of their  operations and their cash flows for
the years ended  December  31,  2000 and 1999,  and for the period from June 15,
1996  (inception) to December 31, 2000 in conformity with accounting  principles
generally accepted in the United States of America.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will  continue as a going  concern.  As discussed in Note 11 to
the  consolidated  financial  statements,  the  Company is a  development  stage
company  with  accumulated  operating  losses of  $813,478,  a  working  capital
deficiency of $54,007, and a stockholders  deficiency of $24,768 at December 31,
2000. These conditions raise  substantial  doubt about the Company's  ability to
continue as a going concern.  Management's plans concerning this matter are also
described in Note 11. The accompanying  consolidated financial statements do not
include any adjustments that might result from the outcome of this uncertainty.

WEINBERG & COMPANY, P.A.

Boca Raton, Florida
April 6, 2001


                                      F-1


<PAGE>


            AMERICAN ELECTRIC AUTOMOBILE COMPANY, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                           CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 2000


                                                         ASSETS
<TABLE>
<CAPTION>
<S>                                                                                                <C>
CURRENT ASSETS
  Cash and cash equivalents                                                                        $                107
  Inventories, net                                                                                               36,511
                                                                                                      -------------------
TOTAL CURRENT ASSETS                                                                                             36,618
                                                                                                      -------------------

PROPERTY & EQUIPMENT - NET                                                                                       20,819
                                                                                                      -------------------

OTHER ASSETS
  Receivable from related parties                                                                                 2,252
  Prepaid expenses and deposits                                                                                   6,168
                                                                                                      -------------------
TOTAL OTHER ASSETS                                                                                                8,420
                                                                                                      -------------------

TOTAL ASSETS                                                                                       $             65,857
                                                                                                      ===================

                                        LIABILITIES AND STOCKHOLDERS' DEFICIENCY


CURRENT LIABILITIES
  Cash overdraft                                                                                   $             13,899
  Accounts payable and accrued expenses                                                                          29,020
  Accounts payable - related parties                                                                             17,206
  Income tax payable                                                                                                800
  Notes payable - related party                                                                                  29,700
                                                                                                      -------------------
TOTAL CURRENT LIABILITIES                                                                                        90,625
                                                                                                      -------------------

STOCKHOLDERS' DEFICIENCY
  Preferred stock, $.0001 par value,  20,000,000 shares authorized,  none issued
  and  outstanding  -  Common  stock,   $.0001  par  value,   50,000,000  shares
  authorized, 5,689,151 shares issued and
     outstanding                                                                                                    569
  Additional paid-in capital                                                                                    912,889
  Accumulated deficit                                                                                          (813,478)
                                                                                                      -------------------
                                                                                                                 99,980
  Less subscriptions receivable                                                                                (124,748)
                                                                                                      -------------------
TOTAL STOCKHOLDERS' EQUITY                                                                                      (24,768)
                                                                                                      -------------------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY                                                     $             65,857
                                                                                                      ===================

</TABLE>


          See accompanying notes to consolidated financial statements.

                                        F-2

<PAGE>


            AMERICAN ELECTRIC AUTOMOBILE COMPANY, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>

                                                    For the Year Ended            For the Year Ended      For the Period From June
                                                                                                           15, 1996 (Inception) to
                                                     December 31, 2000            December 31, 1999           December 31, 2000
                                                 --------------------------    ------------------------- -----------------------

<S>                                               <C>                           <C>                       <C>
NET REVENUES                                      $                  -          $                3,500    $               64,888

COST OF REVENUES                                                     -                           7,352                    55,313
                                                 --------------------------    ------------------------- -------------------------

GROSS PROFIT (LOSS)                                                  -                          (3,852)                    9,575
                                                 --------------------------    ------------------------- -------------------------

OPERATING EXPENSES
  Consulting                                                       26,431                       68,750                   148,959
  Legal and professional fees                                     145,684                       37,440                   199,232
  Advertising                                                       7,478                        3,065                    42,005
  Officers' compensation                                           76,117                       43,250                   153,082
  General and administrative                                      132,626                       22,532                   219,004
                                                 --------------------------    ------------------------- -------------------------
TOTAL OPERATING EXPENSES                                          388,336                      175,037                   762,282
                                                 --------------------------    ------------------------- -------------------------

LOSS FROM OPERATIONS                                             (388,336)                    (178,889)                 (752,707)
                                                 --------------------------    ------------------------- -------------------------

OTHER INCOME (EXPENSE)
  Other income                                                      4,270                         -                        4,270
  Interest income                                                   6,339                         -                        6,339
  Interest expense                                                   (673)                      (1,069)                   (2,810)
  Loss on investments                                             (39,016)                        -                      (61,240)
                                                 --------------------------    ------------------------- -------------------------
TOTAL OTHER INCOME (EXPENSE)                                      (29,080)                      (1,069)                  (53,441)
                                                 --------------------------    ------------------------- -------------------------

LOSS BEFORE INCOME TAXES                                         (417,416)                    (179,958)                 (806,148)

PROVISION FOR INCOME TAXES                                          1,880                        1,940                     7,330
                                                 --------------------------    ------------------------- -------------------------

NET LOSS                                          $              (419,296)      $             (181,898)   $             (813,478)
                                                 ==========================    ========================= =========================

NET LOSS PER COMMON SHARE - BASIC AND DILUTED     $                  (.13)      $                 (.06)   $                 (.56)
                                                 ==========================    ========================= =========================

WEIGHTED AVERAGE SHARES ISSUED AND OUTSTANDING -
  BASIC AND DILUTED                                             3,327,957                    3,171,559                 1,460,436
                                                 ==========================    ========================= =========================

</TABLE>

          See accompanying notes to consolidated financial statements.

                                        F-3


<PAGE>


            AMERICAN ELECTRIC AUTOMOBILE COMPANY, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
     CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
       FOR THE PERIOD FROM JUNE 15, 1996 (INCEPTION) TO DECEMBER 31, 2000
<TABLE>
<CAPTION>

                                                          Common Stock                     Common Stock               Additional
                                                                                           To Be Issued                Paid-In
                                                      Shares          Amount          Shares          Amount           Capital
                                                   -------------    -----------     ------------    ------------     -------------

<S>                                                <C>          <C>              <C>           <C>              <C>
 Issuance of stock to founders for services             55,000   $          6             -      $        -       $          159
 Issuance of stock to founder for cash                 333,334             33             -               -                  967
 Issuance of stock for investment in CEHK               50,000              5             -               -               37,495
 Issuance of stock to purchase subsidiary              350,000             35             -               -                   70
 Issuance of stock for cash                             13,333              1             -               -                9,999
 Net loss, 1996                                           -              -                -               -                 -
                                                                    -----------     ------------    ------------     -------------
                                                   -------------
BALANCE DECEMBER 31, 1996                              801,667             80             -               -               48,690

Issuance of stock for vehicle                           33,333              3             -               -               24,997
Issuance of stock for cash                              37,333              4             -               -               28,896
Issuance of stock for services                          46,333              5             -               -               34,745
Net loss, 1997                                            -              -                -               -                 -
                                                                    -----------     ------------    ------------     -------------
                                                   -------------
Balance, DECEMBER 31, 1997                             918,666             92             -               -              137,328

Issuance of stock for vehicle                           10,667              1             -               -                7,999
Issuance of stock for cash                              58,667              6             -               -               49,995
Net loss, 1998                                            -              -                -               -                 -
                                                                    -----------     ------------    ------------     -------------
                                                   -------------
BALANCE, DECEMBER 31, 1998                             988,000             99             -               -              195,322

Issuance of stock for cash                             151,918             15             -               -               56,759
Issuance of stock for debt                              16,000              2             -               -                8,773
Issuance of stock for services                          36,000              3           298,667              30          126,467
Forgiveness of debt of related party                      -              -                -               -               23,000
Net loss, 1999                                            -              -                -               -                 -
                                                   -------------    -----------     ------------    ------------     -------------
Balance, DECEMBER 31, 1999                           1,191,918            119           298,667              30          410,321

Cancel stock returned to company                       (10,667)            (1)            -               -               (3,999)
Issuance of stock for cash                           4,296,666            430             -               -              667,070
Cancel shares for non-payment                         (442,433)           (44)            -               -             (165,868)
Issuance of stock for services                         653,667             65         (298,667)            (30)           28,365
Forgiveness of debt reclassification                      -              -                -               -              (23,000)
Net loss, 2000                                            -              -                -               -                 -
                                                                                    ------------    ------------     -------------
                                                   -------------    -----------
Balance, DECEMBER 31, 2000                           5,689,151   $        569             -      $        -       $      912,889
----------------------------------------------     =============    ===========     ============    ============     =============



                                                      Accumulated       Subscriptions

                                                        Deficit           Receivable           Total
                                                    ----------------    ---------------     -------------

<S>                                              <C>                 <C>                 <C>
 Issuance of stock to founders for services      $            -      $           -       $          165
 Issuance of stock to founder for cash                        -                  -                1,000
 Issuance of stock for investment in CEHK                     -                  -               37,500
 Issuance of stock to purchase subsidiary                   (1,060)              -                 (955)
 Issuance of stock for cash                                   -                  -               10,000
 Net loss, 1996                                            (14,198)              -              (14,198)
                                                    ----------------    ---------------     -------------

BALANCE DECEMBER 31, 1996                                  (15,258)              -               33,512

Issuance of stock for vehicle                                 -                  -               25,000
Issuance of stock for cash                                    -                  -               28,900
Issuance of stock for services                                -                  -               34,750
Net loss, 1997                                            (142,622)              -             (142,622)
                                                    ----------------    ---------------     -------------

Balance, DECEMBER 31, 1997                                (157,880)              -              (20,460)

Issuance of stock for vehicle                                 -                  -                8,000
Issuance of stock for cash                                    -                  -               50,001
Net loss, 1998                                             (54,404)              -              (54,404)
                                                    ----------------    ---------------     -------------

BALANCE, DECEMBER 31, 1998                                (212,284)              -              (16,863)

Issuance of stock for cash                                    -                (4,000)           52,774
Issuance of stock for debt                                    -                  -                8,775
Issuance of stock for services                                -                  -              126,500
Forgiveness of debt of related party                          -                  -               23,000
Net loss, 1999                                            (181,898)              -             (181,898)
                                                    ----------------    ---------------     -------------
Balance, DECEMBER 31, 1999                                (394,182)  $         (4,000)           12,288

Cancel stock returned to company                              -                 4,000              -
Issuance of stock for cash                                    -              (278,539)          388,961
Cancel shares for non-payment                                 -               153,791           (12,121)
Issuance of stock for services                                -                  -               28,400
Forgiveness of debt reclassification                          -                  -              (23,000)
Net loss, 2000                                            (419,296)              -             (419,296)
                                                    ----------------    ---------------     -------------

Balance, DECEMBER 31, 2000                       $        (813,478)  $       (124,748)   $      (24,768)
----------------------------------------------      ================    ===============     =============


</TABLE>

          See accompanying notes to consolidated financial statements.

                                        F-4


<PAGE>


            AMERICAN ELECTRIC AUTOMOBILE COMPANY, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                    CONSOLIDATED STATEMENTS OF CASH FLOWS FOR
                          THE YEARS ENDED DECEMBER 31,
                            2000 AND 1999 AND FOR THE
                            PERIOD FROM JUNE 15, 1996
                           (INCEPTION) TO DECEMBER 31,
                                      2000


<TABLE>
<CAPTION>

                                                                For the Year Ended     For the Year Ended    For the Period from
                                                                                                                June 15, 1996
                                                                                                                (Inception) to
                                                                December 31, 2000      December 31, 1999      December 31, 2000
                                                               ---------------------  ---------------------  ---------------------
<S>                                                              <C>                    <C>                     <C>
CASH FLOWS FROM OPERATING ACTIVITIES
 Net loss                                                        $        (419,296)     $        (181,898)      $       (813,478)
 Adjustments to reconcile net loss to net cash used in
  operating activities:
  Depreciation                                                              14,892                  7,772                 36,849
  Impairment of investments                                                 39,016                   -                    61,240
  Impairment of fixed assets                                                21,746                   -                    21,746
  Forgiveness of debt reclassification                                     (23,000)                  -                   (23,000)
  Gain on debt forgiveness                                                   3,398                   -                     3,398
  Stock issued for services                                                 28,400                126,500                190,876
 (Increase) decrease in:
  Accounts and loans receivable                                              4,960                 (1,225)                (2,726)
  Inventories                                                              (20,515)                16,199                (28,510)
  Prepaid expense                                                           (6,168)                   450                 (6,168)
 Increase (decrease) in:
  Accounts payable and accrued expenses                                     16,970                  9,645                 37,847
  Accounts payable - related parties                                        (5,800)               (12,282)                54,959
  Income taxes payable                                                      (3,540)                 1,940                    800
  Cash overdraft                                                            13,899                   -                    13,899
                                                               ---------------------  ---------------------  ---------------------
      Net Cash Used In Operating Activities                               (335,038)               (32,899)              (452,268)
                                                               ---------------------  ---------------------  ---------------------

CASH FLOWS FROM INVESTING ACTIVITIES
  Investment in subsidiaries                                               (20,266)                  -                   (21,221)
  Purchase of property and equipment                                       (21,864)               (18,688)               (44,414)
                                                               ---------------------  ---------------------  ---------------------
      Net Cash Used In Investing Activities                                (42,130)               (18,688)               (65,635)
                                                               ---------------------  ---------------------  ---------------------

CASH FLOWS FROM FINANCING ACTIVITIES
  Payments on notes payable                                                 20,000                   -                    20,000
  Proceeds from issuance of notes payable                                  (21,507)                  -                  (21,507)
  Proceeds from issuance of common stock - net                             376,841                 52,775                519,517
                                                               ---------------------  ---------------------  ---------------------
      Net Cash Provided By Financing Activities                            375,334                 52,775                518,010
                                                               ---------------------  ---------------------  ---------------------

Net increase (decrease) in Cash                                             (1,834)                 1,188                    107

Cash and cash equivalents -
  beginning of PERIOD                                                        1,941                    753                   -
                                                               ---------------------  ---------------------  ---------------------

Cash and cash equivalents -
  end of PERIOD                                                  $             107      $           1,941       $            107
                                                               =====================  =====================  =====================
</TABLE>


          See accompanying notes to consolidated financial statements.

                                        F-5


<PAGE>

            AMERICAN ELECTRIC AUTOMOBILE COMPANY, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                    CONSOLIDATED STATEMENTS OF CASH FLOWS FOR
                          THE YEARS ENDED DECEMBER 31,
                            2000 AND 1999 AND FOR THE
                            PERIOD FROM JUNE 15, 1996
                           (INCEPTION) TO DECEMBER 31,
                                      2000

SUPPLEMENTAL  DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES FOR 2000
AND 1999:

During  1999 the  Company  issued  16,000  shares of its common  stock to settle
$8,775 of accrued expenses payable to an individual.  In addition, an individual
forgave $23,000 that the Company owed him pursuant to a settlement agreement.

During  2000  the  Company  issued  355,000  shares  of  its  common  stock  for
compensation which was valued at $28,400. In addition,  the Company reclassified
$23,000  of  stock  issued  in 1999  pursuant  to a  settlement  agreement  from
additional paid in capital to forgiveness of debt.



          See accompanying notes to consolidated financial statements.

                                        F-6


<PAGE>


            AMERICAN ELECTRIC AUTOMOBILE COMPANY, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF DECEMBER 31, 2000


NOTE 1   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         (A) Organization and Description of Business

         American  Electric  Automobile  Company,  Inc.  ("AEAC") (a development
         stage  company),  a Delaware  corporation,  was  incorporated on May 9,
         1996. On June 15, 1996, AEAC acquired all of the  outstanding  stock of
         California  Electric  Automobile  Co.,  Inc.  ("CEAC"),   a  California
         corporation incorporated on November 14, 1995 (together the "Company").
         AEAC exchanged  1,050,000 shares of its common stock, in a ratio of ten
         to one, for all of the outstanding  shares of CEAC. The acquisition was
         accounted  for using the  purchase  method of  accounting.  Under  this
         method,  the assets were recorded at their fair market  value.  The $95
         excess  value of the stock  issued  over the fair  market  value of the
         assets  acquired was written off as goodwill since it was considered de
         minimis.

         The Company's mission is to provide environmentally sensitive,  quality
         and cost effective electric automotive transportation domestically with
         cooperative structuring of opportunities with global partners.

         (B) Principles of Consolidation

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

         (C) Use of Estimates

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

         (D) Cash and Cash Equivalents

         For purposes of the cash flow  statements,  the Company  considers  all
         highly liquid  investments with original  maturities of three months or
         less at time of purchase to be cash equivalents.


                                       F-7
<PAGE>


         (E) Inventory

         Inventory consists of vehicles held for sale,  including finished goods
         as well as work in process. Inventory is valued at the lower of cost or
         market with cost determined under the first-in, first-out method.

         (F) Property and Equipment

         Property  and   equipment   are  stated  at  cost,   less   accumulated
         depreciation.  Expenditures  for maintenance and repairs are charged to
         expense  as  incurred.   Depreciation  is  provided  using  the  double
         declining  balance method over the estimated useful lives of the assets
         from five to ten years.

         (G) Stock Options

         In accordance with Statement of Financial  Accounting Standards No. 123
         ("SFAS  123"),  the Company  has  elected to account for stock  options
         issued to employees under  Accounting  Principles  Board Opinion No. 25
         ("APB  Opinion No. 25") and related  interpretations  and  accounts for
         options issued to  non-employees  for services under SFAS 123 (See Note
         8(C)).

         (H) Concentration of Credit Risk

         The Company  maintains  its cash in bank deposit  accounts,  which,  at
         times,  may  exceed  federally  insured  limits.  The  Company  has not
         experienced  any losses in such accounts and believes it is not exposed
         to any significant credit risk.

         (I) Revenue Recognition

         The Company recognizes  revenue on each automobile  conversion when the
         completed   conversion  is  billed  and  delivered  to  the  respective
         customer.

         (J) Income taxes

         The Company  accounts for income taxes under the  Financial  Accounting
         Standards  Board Statement of Financial  Accounting  Standards No. 109.
         "Accounting for Income Taxes" ("Statement No.109"). Under Statement No.
         109,  deferred tax assets and liabilities are recognized for the future
         tax  consequences  attributable  to  differences  between the financial
         statement carrying amounts of existing assets and liabilities and their
         respective tax basis.  Deferred tax assets and liabilities are measured
         using  enacted  tax rates  expected  to apply to taxable  income in the
         years in which those temporary differences are expected to be recovered
         or settled.  Under Statement 109, the effect on deferred tax assets and
         liabilities  of a change  in tax rates is  recognized  in income in the
         period that includes the enactment date.

                                       F-8
<PAGE>

         (K) Recent Accounting Pronouncements

         The Financial  Accounting  Standards  Board has recently issued several
         new  accounting  pronouncements.  Statement  No  133,  "Accounting  for
         Derivative Instruments and Hedging Activities", as amended by statement
         No 137 and 138,  establishes  accounting  and  reporting  standards for
         derivative  instruments and related  contracts and hedging  activities.
         This  statement is effective  for all fiscal  quarters and fiscal years
         beginning  after June 15, 2000. The Company  believes that its adoption
         of  these  pronouncements  will  not  have  a  material  effect  on the
         Company's financial position or results of operations.

         (L) Loss Per Share

         Loss per share is provided in  accordance  with  Statement of Financial
         Accounting  Standard No. 128 (FAS No. 128) "Earnings Per Share".  Basic
         loss per share is  computed by dividing  earnings  available  to common
         stockholders   by  the  weighted   average   number  of  common  shares
         outstanding during the period. Diluted loss per share would reflect per
         share  amounts that would have  resulted if dilutive  potential  common
         stock had been  converted to common  stock.  Due to the anti - dilutive
         effects of these  common stock  equivalents,  they were not included in
         the loss per share  calculation.  This results in the same  calculation
         for both basic and diluted loss per share. At December 31, 2000,  there
         were 133,333 common stock options  outstanding  that could  potentially
         dilute future earnings per share.

         (M) Reclassification

         Certain 1999  balances  have been  reclassified  to conform to the 2000
presentation.

NOTE 2   DUE FROM RELATED PARTY

         Accounts  receivable - related party consists of advances for operating
expenses totaling $2,252, at December 31, 2000.

NOTE 3   INVENTORY
<TABLE>
<CAPTION>
<S>                                                                                            <C>
         Inventory at December 31, 2000 consists of the following:

         Finished goods - vehicle                                                              $             68,941
         Less allowance for write down to lower of cost or market                                           (32,430)
                                                                                                  -------------------
         Total inventory  - net                                                                $             36,511
                                                                                                  ===================


                                       F-9
<PAGE>


NOTE 4   PROPERTY AND EQUIPMENT

         Property and equipment at December 31, 2000 consists of the following:

         Electronic demonstration vehicles                                                     $             61,200
         Furniture and fixtures                                                                               4,936
         Machinery and equipment                                                                             13,277
                                                                                                  -------------------
                                                                                                             79,413
         Less:
           Accumulated depreciation                                                                         (36,849)
           Impairment write down                                                                            (21,745)
                                                                                                  -------------------
           Total property and equipment - net                                                  $             20,819
                                                                                                  ===================

         Depreciation  expense  was  $14,892  and  $7,772  for the  years  ended
         December 31, 2000 and 1999 respectively.

NOTE 5   INVESTMENTS

         Investments at December 31, 2000 are as follows:

         China Electric Automobile Company of Hong Kong, Ltd.                                  $               -
         American Electric Automobile Company (ASIA), Inc.                                                     -
                                                                                                  -------------------
                                                                                               $               -
                                                                                                  ===================
</TABLE>

         On May 18,  1996,  the Company  entered  into an  agreement  with China
         Electric  Automobile  Company of Hong Kong, Ltd. ("CEHK") in which each
         exchanged  approximately 5% of their  outstanding  common stock for the
         other company's stock. The object of the relationship is the pursuit of
         business  opportunities  and product  development  using the  company's
         combined resources. This agreement was undertaken with the intention of
         entering into further  business  relationships  as product  development
         became more advanced.  The value of this  investment was assigned based
         on the Company's cash offering price,  $0.25 per share,  for its common
         stock near the date of the  agreement.  In  accordance  with APB 18 and
         related  interpretations,  the investment  was  originally  recorded at
         $37,500,  using the cost method, and was subsequently  adjusted in 1998
         to its net realizable value of $18,750.  CEHK had no material  revenues
         or expenses through  December 31, 2000, and the Company  determined the
         investment  in CEHK to be worthless  and wrote down the  investment  to
         zero.

         On February 12, 1997,  the Company  entered into an agreement with CEHK
         to form a joint venture to engage in various  electric  vehicle related
         businesses,  including  design,  production  and  trading  in  electric
         vehicles  and  related  parts.  The joint  venture,  American  Electric
         Automobile Company (Asia), Inc. ("AEAA"), a California corporation, has
         its  common  stock  ownership  divided  fifty-five  percent to CEHK and
         forty-five percent to the Company. The Company's original  contribution
         to the joint  venture was $3,000.  The joint venture  agreement  states
         that  CEHK  is  responsible  for  securing  AEAA  a  profit  generating
         agreement  with a third party,  upon which they would be entitled to an
         additional  five-percent  of  the  voting  stock  of  the  Company.  In
         accordance with APB 18 and related  interpretations,  the investment is
         accounted  for  under  the  equity  method.  During  1998  the  Company
         decreased  the value of their  investment in AEAA to zero and reduced a
         portion of the receivable from AEAA after  accounting for their portion
         of the investee's loss under the equity method. AEAA had no revenues or
         expenses   during  1999;   therefore,   no  additional   equity  method
         adjustments  were made to the  investment or the  receivable  from AEAA
         during 1999.  During 2000 the Company  contributed to the joint venture
         an  additional  $19,500.  Also during 2000,  the Company  decreased the
         value  of their  investment  in AEAA to zero  and  reduced  to zero the
         receivable  from  AEAA  after  accounting  for  their  portion  of  the
         investee's  loss under the equity method.  In January 2001, the Company
         sold its investment in AEAA to the former  president of the Company for
         $100 (See Note 12).

                                       F-10
<PAGE>

NOTE 6   ACCOUNTS PAYABLE AND ACCRUED EXPENSES
<TABLE>
<CAPTION>
<S>                                                                                          <C>
         Accounts  payable and accrued expenses at December 31, 2000 consists of
         the following:

          Accounts payable trade                                                             $               1,205
          Legal expenses                                                                                    27,792
          Interest payable on related party note                                                                23
                                                                                                --------------------
                                                                                             $              29,020
                                                                                                ====================

NOTE 7   NOTES PAYABLE - RELATED PARTY

         Note payable - related  parties at December 31, 2000 are  summarized as
         follows:

          EFM Venture Group, Inc.                                                            $               9,700
          Former president of the Company                                                                   20,000
                                                                                                --------------------
                                                                                             $              29,700
                                                                                                ====================
</TABLE>

         EFM Ventures Group, Inc. ("EFM") is one-third owned and operated by the
         former president of the Company's  wholly owned  subsidiary  California
         Electric Automobile Company. The notes payable to EFM consists of funds
         loaned  to the  Company  for  purchases  and  operating  expenses.  The
         payables to EFM are secured by a lien against three completed  vehicles
         owned by the Company,  two of which are  included in inventory  and the
         other in property and equipment (see notes 3 & 4).

         At December 31, 2000 the Company  owed $20,000 to the former  president
         of the Company's subsidiary.

                                       F-11
<PAGE>

         In 1999,  the Company  entered into a  "Settlement  and Mutual  Release
         Agreement"  with a former officer and director.  The Agreement was made
         in order to settle a dispute  that  arose with  respect  an  employment
         agreement. All of the Company's liabilities to the officer and director
         were considered  settled  pursuant to an agreement  between the parties
         for which the Company recorded $23,000 as a forgiveness of debt.

NOTE 8   STOCKHOLDERS' EQUITY

         (A) Preferred Stock

         The Company is authorized to issue 20,000,000 shares of preferred stock
         with  a  par  value  of  $.0001  per  share,  with  such  designations,
         preferences,  limitations  and relative  rights as may be determined by
         the  Board of  Directors.  No  preferred  stock  has been  issued as of
         December 31, 2000.

         (B) Common Stock

         On March 20, 2000, the company instituted a 3 for 1 reverse stock split
         that had been  authorized  by the  Board of  Directors.  The  financial
         statements  have been adjusted to  retroactively  reflect the split for
         all shares and per share amounts.

         The Company is  authorized to issue  50,000,000  shares of common stock
         with a par value of $.0001 per share. At December 31, 2000,  there were
         5,689,151 shares of common stock issued and outstanding.

         On January 1, 1999, the Company issued an offering circular pursuant to
         an exemption with the United States Securities and Exchange  Commission
         contained in  Regulation  D, Rule 504. The offering  called for 166,667
         common  shares at an  offering  price of $1.00 per share with a minimum
         subscription of $1,000. No shares were issued pursuant to this offering
         circular  through  the  date  of  this  report  and  the  offering  was
         cancelled.

         In January 18,  1999,  the Board  agreed to offer up to 166,667  common
         shares,  pursuant to Section  4(2) of the  Securities  Act of 1933,  as
         amended, at a $0.125 per share offering price. No offering document was
         prepared and no shares were issued under this offering.

         During May to December  1999,  the  Company  issued  151,866  shares of
         common stock pursuant to Section 4(2) of the Securities Act of 1933, as
         amended, at $0.125 per share for total proceeds of $56,775.

         On December 13, 1999, the Board agreed to offer up to 1,000,000  shares
         of common stock pursuant to section 4(2) of the Securities Act of 1933,
         as  amended,  at $0.125 per share.  No shares  were  issued  under this
         offering in 1999.  During 2000 the Company  issued  614,234  shares for
         cash consideration of $226,591.

                                       F-12
<PAGE>

         On  December  13,  1999 the Board  authorized  the  issuance of 115,333
         shares of common stock to its officers for past  services  rendered and
         183,333  shares to a related party for past  consulting  services.  The
         shares  were  issued at $0.125  per share  based  upon the price of the
         concurrent  offering  discussed  above  (See  Note  12  for  additional
         issuances).

         On August 23,  2000,  the Company  entered  into an  agreement  to sell
         3,250,000  shares for $275,000 to an investor group ("The Group") which
         effectively  transferred control of the Company.  Under this agreement,
         The Group made a down  payment of $75,000 and agreed to pay the balance
         in three  payments  within 90 days of the closing date.  The shares for
         this  purchase  were held in escrow  and were to be  released  based on
         payments  from The Group.  Per the agreement 12 shares of the Company's
         common stock were to be released  from escrow for every $1 payment made
         for the first  $225,000  of  payments  with a release of the  remaining
         shares on the last  payment.  The purchase  price was to be used mainly
         for operating expenses of CAEC as well as for  administrative  expenses
         of AEAC.  An  additional  $75,000 was  received on October 16, 2000 and
         shares were  released  from  escrow  prior to December  31,  2000.  The
         purchaser  did not make the  additional  payments in a timely  fashion,
         however,  in January 2001 all the amounts due under this  contract were
         paid.  When the escrow agent did not release the escrowed shares to The
         Group,  the Company  cancelled  those shares and issued new shares (See
         Note 12).

         (C) Stock Options

         The Company applies APB Opinion No. 25 and related  interpretations  in
         accounting  for stock  options  issued to  employees.  Accordingly,  no
         compensation  cost has been  recognized for options issued to employees
         as of  December  31,  2000  and  1999.  Had  compensation  cost for the
         Company's  stock-based  compensation  been determined on the fair value
         method at the grant  dates for awards,  consistent  with  Statement  of
         Accounting  Standards No 123, "Accounting for Stock Based Compensation"
         (Statement No. 123) the Company's net loss for the years ended December
         31, 2000 and 1999 would have been  increased to the  pro-forma  amounts
         indicated below.
<TABLE>
<CAPTION>

                                                                                       2000                1999
                                                                                   --------------     ---------------

<S>                                                                             <C>                <C>
         Net loss                                  As reported                  $      (419,296)   $       (181,898)
                                                   Pro forma                    $      (421,963)   $       (186,328)

         Net loss per share                        As reported                  $          (.13)   $          (0.06)
                                                   Pro forma                    $          (.13)   $          (0.06)
</TABLE>


                                       F-13
<PAGE>



         The options  have been  adjusted  to reflect a 3:1 reverse  stock split
         effective  March 20, 2000. The effect of applying  Statement No. 123 is
         not likely to be  representative  of the effects on reported net income
         (loss) for future  years due to,  among  other  things,  the effects of
         vesting.

         The stock options term is five years from the grant date. Stock options
issued vest over a three-year period.

         For financial statement disclosure  purposes,  the fair market value of
         each stock  option  grant is  estimated  on the date of grant using the
         minimum value  method,  which did not differ from the fair market value
         computed using the  Black-Scholes  method, in accordance with Statement
         No.  123 using the  following  weighted-average  assumptions:  expected
         dividend yield 0%, risk-free interest rate of 6.0%,  volatility of zero
         and expected term of three years.  There were no stock options  granted
         in 2000.

         A summary  of the  Company's  outstanding  common  stock  options as of
         December 31, 2000 and changes during the year is presented below:
<TABLE>
<CAPTION>

                                                                                Number of          Weighted Average
                                                                                  Shares            Exercise Price
                                                                              ---------------     -------------------
<S>                                                                          <C>              <C>
         Stock Options
           Balance at beginning of period                                           133,333    $               0.75
           Granted                                                                     -                       -
           Exercised                                                                   -                       -
           Forfeited                                                                   -                       -
                                                                              ---------------     -------------------
           Balance at end of period                                                 133,333    $               0.75
                                                                              ===============     ===================

         Options exercisable at end of   period                                     133,333    $               0.75
                                                                              ===============     ===================

          Weighted average fair value of options granted during the
             period                                                                    -       $               -
                                                                              ===============     ===================
</TABLE>

         The following table summarizes information about options outstanding at
December 31, 2000.
<TABLE>
<CAPTION>

                                   Options Outstanding                                    Options exercisable
                                                     Weighted
                                                     Average           Weighted                           Weighted
               Range of           Number            Remaining          Average           Number            Average
               Exercise        Outstanding         Contractual         Exercise        Exercisable        Exercise
                 Price         At Year End             Life             Price          At Year End          Price

<S>      <C>                        <C>             <C>            <C>                  <C>           <C>
         $        0.75              133,333         Years 1.76      $      0.75          133,333       $     0.75
</TABLE>


                                       F-14
<PAGE>

NOTE 9   INCOME TAXES

         The  provision  for income taxes for the years ended  December 31, 2000
         and 1999  consists  of  California  franchise  tax  expense for CEAC of
         $1,880  in 2000 and  $1,940  in 1999.  Provision  for  income  taxes is
         summarized as follows:
<TABLE>
<CAPTION>

                                                                                2000                    1999
                                                                          -----------------      -------------------
<S>                                                                    <C>                    <C>
         Current income taxes                                          $            1,880     $              1,940
         Deferred income taxes                                                        -                        -
                                                                          -----------------      -------------------
                                                                       $            1,880     $              1,940
                                                                          =================      ===================

         The  Company's  tax expense  differs  from the  "expected"  tax expense
         (benefit) for the years ended  December 31, 2000 and 1999  (computed by
         applying  the  applicable  Federal  corporate  tax  rate of 34% to loss
         before taxes) as follows:

                                                                                2000                    1999
                                                                          -----------------      --------------------

         Computed "expected" tax (benefit)                             $         (137,460)    $             (27,285)
         State income tax                                                           1,880                     1,940
         Effect of net operating loss                                             137,460                    27,285
                                                                          -----------------      -------------------
                                                                       $            1,880     $               1,940
                                                                          =================      ====================

         The tax effects of temporary  differences that give rise to significant
         portions of deferred  tax assets and  liabilities  at December 31, 2000
         and 1999 are as follows:

                                                                                2000                    1999
                                                                          -----------------      --------------------
         Deferred tax assets:

         Net operating loss carry-forward                              $          270,765     $              59,868
                                                                          -----------------      --------------------
         Total gross assets                                                       270,765                    59,868
         Less valuation allowance                                                (270,765)                  (59,868)
                                                                          -----------------      -------------------
         Net deferred tax asset                                        $             -        $                -
                                                                          =================      ====================
</TABLE>

         At January 1, 2000, the valuation allowance was $59,868. The net change
         in the valuation  allowance during the year ended December 31, 2000 was
         an increase of $210,897.

         As of  December  31,  2000,  the  Company  has  state and  federal  net
         operating  loss  carryforwards  before any  limitations,  which  expire
         throughout 2020.


                                       F-15
<PAGE>


NOTE 10  RELATED PARTIES

         See Notes 2, 5, 7, 8(B) and 12, for related party transactions.

NOTE 11  GOING CONCERN

         The Company's financial statements for the year ended December 31, 2000
         have been  prepared on a going  concern  basis which  contemplates  the
         realization of assets and the settlement of liabilities and commitments
         in the normal  course of business.  The Company  incurred a net loss of
         $419,296  for the year  ended  December  31,  2000 and has  accumulated
         losses since inception of $813,478. In addition,  the Company's working
         capital deficiency of $54,007 at December 31, 2000 may not enable it to
         meet such objectives as presently structured.

         The ability of the Company to continue as a going  concern is dependent
         upon  the  Company's   ability  to  attain  a  satisfactory   level  of
         profitability and obtain suitable, adequate financing.

         Management's plans include seeking additional equity  investments.  The
         financial  statements do not include any adjustments  that might result
         from the outcome of this uncertainty.

NOTE 12  SUBSEQUENT EVENTS

         In 2001,  the former  president of the  Company,  who is a party to the
         August 23, 2000  contract  (See Note 8(B))  objected to the  subsequent
         issuance  of the  shares  in  escrow  based on  non-performance  of the
         contract. His position is that the last two payments under the contract
         were not made in accordance with the scheduled payments since they were
         made in January 2001, nor were the funds  allocated in accordance  with
         the contract. Based on the above position, the former president refused
         to release to The Group certain  shares held in escrow.  On January 18,
         2001 the Company cancelled the escrowed shares and issued 1,450,000 new
         shares to The Group.  The Company is of the opinion that the objections
         of the former  president  of the Company  have no basis and are without
         merit.

         In January 2001, the Company sold its  investment in American  Electric
         Automobile  Company Asia, Inc. for $100 to the former  president of the
         Company.

         In January 2001, the Company issued  154,000  restricted  shares to two
         officers for services rendered.


                                       F-16


<PAGE>

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

The Company's previous auditors,  Harlen and Boettger, LLP, informed the company
in March 1999 that due to  increased  insurance  costs,  it no longer  performed
audits for public  companies.  On March 8, 2000, the company engaged the firm of
Weinberg  &  Company  P.A.  as  the  company's  auditors.   There  has  been  no
disagreement with the Company's accountants.


ITEM 9.  ITEM 5:  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

The names, ages, and respective positions of the directors and executive
officers of the Company immediately preceding the Change of Control on September
13, 2000 were:

Name                              Age              Position

Edward F. Myers                   67               Chairman/CFO.

Gary G. DeGano                    56               President & CEO/Director.

Betty N. Myers                    62               Secretary/Director.

Gary L. Jackson                   52               Vice President-Research.


Notes:  1) Edward F. Myers and Betty N. Myers are spouses.
        2) Directors terms run until the end of the fiscal year, or until
           their replacements are elected and qualified.

Dr. Edward F. Myers has been Chairman, and a Director of the Company since May
8, 1996 and President of California Electric Automobile Company, Inc. since
November 19, 1995.  Between June 1970 to September 1991, he was president of
Extend Ventures, Inc., a public company.  From March 1983 to December, 1995,
he was president of EFM Venture Group, Inc., a financial syndication firm.
Dr. Myers was a director of William Lyon College, San Diego from 1981-1985
and the Treasurer and a Trustee of Beacon College, Washington, D.C., between
1981-1983.  From 1980 to 1983 he was President of Exchange Accommodation
Corporation, a company active in real estate exchanges, and was also Chairman
of the Board of Impact International, Inc.  Prior to 1980 Dr. Myers was
Special Assistant to the Vice President, Cubic Corporation; Director of
Engineering, Swan Electronics, a subsidiary of Cubic Corp; President of EFM
Financial, Inc.; Director and Chairman of the Executive Committee of Microdyne
Corporation; Director of European Operations of Informatics, Inc.; Division
Manager, Computer Applications Inc.; manager of Applications research,
Stromberg-Carlson, Division of General Dynamics Corporation.


                                       12

<PAGE>

Mr. Gary G. DeGano was elected President, CEO and a Director of the Company on
August 1, 1997.  Since March of 1997 he has also been President of Incremental
Data, Inc.  Between 1995 and 1996 he was in charge of investor relations for
Exten Industries, Inc., a public company.  From 1986 until 1994 he was
President and CEO of Sun Harbor Financial Resources Inc., whose stock was
publicly traded in the over-the-counter market, and President and CEO of Sun
Harbor Mortgage, Inc., a full service mortgage banking firm of which he was
one of the founders.  Mr. DeGano has also been President of the following
corporations: American Mortgage Network, Sea Coast, Inc., Pacific Sun Escrow
Company and Sun Coast Mortgage Company.

Betty N. Myers has served as the Secretary and a Director since December 13,
1999.  She also is President and a Director of EFM Venture Group, Inc., a real
estate company, as the licensed broker.  She has also been President of
Exchange Accommodation Corp., an accommodating company for 1031 delayed
exchanges.

Dr. Gary L. Jackson has been Vice  President of Research since December 6, 1999.
Between  December 5, 1996 and December 6, 1999 he was a Director of the Company.
He  received  his Ph.D.  from the  University  of Arizona in 1977 in  Electrical
Engineering  with a  Physics  minor and since  that  time has been  employed  by
General  Atomics,  San Diego,  CA. He has also  contributed  several articles on
electric vehicles to the Society of Automotive Engineers (SAE), Electric Vehicle
Associations of Southern  California  (EVAOSC) and San Diego  (EVAOSD),  and has
written a column,  "Nuts  and  Volts"  for the  associations'  newsletters.  Dr.
Jackson has been active in the field of electric vehicles for 27 years beginning
with the  construction of his first electric  vehicle in 1969. He was a founding
member and former vice-president of the local electric vehicle chapter (EVAOSD).

The names,  ages,  and  respective  positions  of the  directors  and  executive
officers of the Company immediately subsequent to the Change of Control are:


Name                              Age              Position

Pierre Quilliam                   62               President/Director

Denise Quilliam                   62               Director

Stephen M. Cohen                  38               Secretary/Treasurer/Director


Pierre  Quilliam was elected  President and Director of the Company on September
13,  2000.  Since  1976 he has  been  self-employed,  working  in a  variety  of
positions in the financing and accounting arena,  including general oversight of
a management  consulting  company. He has also worked directly with the Canadian
Government   on  various   aspects  of  the   Government's   program  to  combat
desertification.  Mr. Quilliam  graduated from Chicago Western University with a
major in Accounting and Economics.

Denise Quilliam, who is the spouse of Pierre Quilliam, was elected a Director of
the Company on  September  13,  2000.  Since 1975,  she has been  self-employed,
working  at  various  financing  and  accounting  positions  including  that  of
comptroller. Mrs. Quilliam received her teacher's certificate from Ecole Normale
Marguerite Bourgeois in Montreal, Canada, in 1957.

STEPHEN M. COHEN has been  Secretary,  Treasurer  and a Director  of the company
since  September  13,  2000.  He  attended  Osgood  Hall Law School in  Toronto,
graduating  with a Bachelor of Laws degree in 1987.  He was called to the Bar of
Ontario in 1989 and has been a member of the Law Society of Upper  Canada  since
that time. He became a partner in the law firm of Cohen and  Associates in 1992,
where he  remained  until  1999.  From May 1999 until May 2000,  he worked as an
associate of the law firm of Goldman,  Sloan,  Nash and Haber in Toronto.  Since
May 2000, he has worked as in-house  counsel for 87807 Canada Inc. and a related
group of companies.  Since  December 2000, Mr. Cohen has also been a Director of
Nexus Group  International Inc., a public company trading on the Toronto Stock
Exchange.



                                       13

<PAGE>

INDEMNIFICATION OF DIRECTORS AND OFFICERS

The  Company's  Certificate  of  Incorporation  provides  that a director of the
Company will not be  personally  liable to the Company or its  shareholders  for
monetary  damages  for  breach  of the  fiduciary  duty of  care as a  director,
including  breaches which constitute gross negligence.  However,  this provision
does not  eliminate or limit the  liability of a director of the Company (i) for
breach of the  director's  duty of loyalty to the  Company or its  shareholders,
(ii) for acts or  omissions  not in good  faith  or  which  involve  intentional
misconduct  or a  knowing  violation  of law,  (iii)  under  Section  174 of the
Delaware  General  Corporation Law (relating to unlawful payment of dividends or
unlawful stock repurchases or redemptions),  (iv) for gaining a financial profit
of other  personal  advantage  to which he or she was not  entitled,  or (v) for
breaches of a director's responsibilities under the Federal securities laws.

The Company's  by-laws  provide that the Company  shall  indemnify its officers,
directors,  employees  and  agents,  to the  extent  permitted  by  the  General
Corporation Law of Delaware.

The Company's  Certificate  of  Incorporation  and Bylaws are, in large measure,
based upon Delaware General Corporation Law Section 145, which provides that the
Company may  indemnify  any  officer or director  who was made a party to a suit
because of his position,  including  derivative  suits, if he was acting in good
faith and in a manner he  reasonably  believed  was in the best  interest of the
Company,  except, in certain circumstances,  for negligence or misconduct in the
performance of his duty to the Company. If the director or officer is successful
in  his  suit,  he  is  entitled  to  indemnification  for  expenses,  including
attorneys'  fees.  Article Ten of the  Company's  Certificate  of  Incorporation
provides for  indemnification  of the  Company's  officers and  directors to the
fullest extent  permitted by law.  Indemnification  agreements have been entered
into with all officers and directors of the Company.


                                       14


<PAGE>

ITEM 10:     EXECUTIVE COMPENSATION

Summary Compensation Table


Former Management

Name &     Year Salary Bonus Other    Restricted  Options  LTIP     All other
Principal        ($)    ($)  annual   stock       SARs     Payouts  compen-
Position                     compen-  awards                ($)     sation ($)
                             sation($) ($)

E Myers    1996  -0-    -0-    -0-         -0-       -0-       -0-     -0-
Chairman/  1997  -0-    -0-    -0-         -0-       8333      -0-     -0-
Director   1998  -0-    -0-    -0-         -0-       8333      -0-     -0-
           1999  -0-    -0-    -0-         -0-       8333      -0-     -0-
           2000  -0-    -0-    -0-      283,334      -0-       -0-     -0-

G DeGano   1996  -0-    -0-    -0-         -0-       -0-       -0-     -0-
President/ 1997  -0-    -0-    -0-         -0-       8333      -0-     -0-
CEO/Dir    1998  -0-    -0-    -0-         -0-       8333      -0-     -0-
           1999  -0-    -0-    -0-        1200       8333      -0-     -0-
           2000  -0-    -0-    -0-      70,000       -0-       -0-     -0-

B Myers    1996  -0-    -0-    -0-         -0-       -0-       -0-     -0-
Secretary/ 1997  -0-    -0-    -0-         -0-       -0-       -0-     -0-
Director   1998  -0-    -0-    -0-         -0-       -0-       -0-     -0-
           1999  -0-    -0-    -0-       31,250      -0-       -0-     -0-
           2000  -0-    -0-    -0-       83,333      -0-       -0-     -0-

G Jackson  1996  -0-    -0-    -0-         -0-       -0-       -0-     -0-
Vice Pres. 1997  -0-    -0-    -0-         -0-       8333      -0-     -0-
           1998  -0-    -0-    -0-         -0-       8333      -0-     -0-
           1999  -0-    -0-    -0-         720       8333      -0-     -0-
           2000  -0-    -0-    -0-       72,000      -0-       -0-     -0-

Out of the 283,334 shares issued to Edward F. Myers as indicated above,  183,334
were issued in the name of his company, EFM Venture Group Inc.

                 Option/SAR Grants in Last Fiscal Year
                        (Individual Grants)


Name           Number of     % of Total     Exercise     Expiration
               Securities    Options/SAR    of Base      Date
               Underlying    Granted to     Price
               Options/SAR   Employees in   ($/Sh)
               Granted       Fiscal Year

E Myers          Nil           Nil          Nil
Chairman/
Director


G DeGano         Nil           Nil          Nil
President/
CEO/Dir

G Jackson        Nil           Nil          Nil
Vice Pres./
Director



                                       15

<PAGE>

       Aggregated Option/SAR Exercises in Last Fiscal Year
                And FY-End Option/SAR Values


Name           Shares        Value       Number of      Value of
               Acquired      Realized    Unexercised    Unexercised
               On Exercise               Securities     In-the-Money
               Underlying                Options/SAR    At FY-End
                                         Options/SAR
                                         At Year End

E Myers        0             0           33,333         N/A (See Note)
Chairman/
Director

G DeGano       0             0           33,333         N/A
President/
CEO/Dir

G Jackson      0             0           33,333         N/A
Vice Pres./
Director


Current Management

Name &     Year Salary Bonus Other    Restricted  Options  LTIP     All other
Principal        ($)    ($)  annual   stock       SARs     Payouts  compen-
Position                     compen-  awards                ($)     sation ($)
                             sation($) ($)

Pierre
Quilliam
Pres/CEO/
Director   2000  -0-    -0-    -0-      77,000      -0-       -0-     -0-

S. Cohen
Secretary\
Treasurer\
Director   2000  -0-    -0-    -0-      77,000      -0-       -0-    -0-

Denise
Quilliam
Director   2000  -0-    -0-    -0-       -0-        -0-       -0-     -0-
                 Option/SAR Grants in Last Fiscal Year
                        (Individual Grants)


Name           Number of     % of Total     Exercise     Expiration
               Securities    Options/SAR    of Base      Date
               Underlying    Granted to     Price
               Options/SAR   Employees in   ($/Sh)
               Granted       Fiscal Year

P. Quilliam     Nil             Nil            Nil
Pres/CEO/
Director


S.Cohen         Nil             Nil             Nil
Secretary/
/Dir

D. Quilliam     Nil             Nil             Nil
Director



                                       16

<PAGE>

       Aggregated Option/SAR Exercises in Last Fiscal Year
                And FY-End Option/SAR Values


Name           Shares        Value       Number of      Value of
               Acquired      Realized    Unexercised    Unexercised
               On Exercise               Securities     In-the-Money
               Underlying                Options/SAR    At FY-End
                                         Options/SAR
                                         At Year End

P. Quilliam        0             0           0           N/A (See Note)
Pres/CEO/
Director

S. Cohen           0             0           0           N/A
Secretary/
Treasurer/Dir

D. Quilliam        0             0           0           N/A
Director




ITEM 11.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

(a)        Security Ownership of Certain Beneficial Owners

NAME AND ADDRESS                SHARE              PERCENTAGE
OF BENEFICIAL                   OWNERSHIP          OWNERSHIP
OWNER

Edward F. Myers*                725,668            12.4%
4190 Bonita Rd.
Bonita, CA 91902


Bisell Investments Inc.**     3,327,000            56.9%
East Bay Shopping Centre
Suite A-159
Nassau, Bahamas



(b)        Security Ownership of Management

NAME AND ADDRESS                SHARE              PERCENTAGE
OF BENEFICIAL                   OWNERSHIP          OWNERSHIP
OWNER

Pierre Quilliam**                 3,327,000             56.9%
East Bay Shopping Centre
Suite A-159
Nassau, Bahamas


Stephen     Cohen                    77,000              0.01%
21 Corwin Crescent
Toronto, Ontario
M3H 1Z9


Percentages based on 5,843,151 shares outstanding on January 31, 2001.

* The holdings for Edward F. Myers include 531,667 shares held by him personally
and 194,001 shares held by a company controlled by him, EFM Venture Group Inc.

** The share  ownership  listed for each of Bisell  Investments  Inc. and Pierre
Quilliam  represents the shares beneficially owned by each of them collectively,
as required by Item 403 of Regulation  S-B. Thus, the shares  attributed to each
of them are the same shares that the other is attributing to itself,  and should
not be totaled together.

Change in Control

     To the knowledge of the  management,  there are no present  arrangements or
pledges of the  Company's  securities  that may result in a change in control of
the Company.


                                       17

<PAGE>

ITEM 12.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

On December 13, 1999 the Company issued  550,000 shares of the Company's  common
stock to EFM Venture Group, Inc. for consulting  services to the Company between
January 1, 1998 and December 13, 1999. EFM Venture Group,  Inc. is controlled by
the Company's former Chairman, Edward F. Myers. The Company's board valued these
shares at $0.02 per share for a total value of $11,000.  These services included
work on  helping  to  write  the  15c2-11  for  filing  with the  NASD,  work of
preparation  of the 10-SB for  filing,  assistance  with work with  Accountants,
auditors and Company attorneys. EFM also provided technical advice on the design
on electric car conversions.

On December 13, 1999 the Company  issued  250,000  shares of its common stock to
Betty N. Myers for services to the Company between its  organization in 1996 and
December 13, 1999.  Betty N. Myers is the wife of the Company's former chairman,
Edward F. Myers.  The board  valued  these shares at $0.02 per share for a total
value of $5,000. These services included secretarial and bookkeeping.

On December 13, 1999 the Company issued 36,000 shares of its common stock to
Gary  Jackson for services to the Company.  Dr.  Jackson is a past  Director and
Vice-President of the Company and presently serves as Vice President.  The board
valued these shares at $0.02 per share for a total value of $720. These services
included  technical  advice  on  conversion  of  automobiles  from  gasoline  to
electric.

On December  13, 1999 the Company  issued  60,000  shares of its common stock to
Gary G. DeGano, the Company's former president, in exchange for options that Mr.
DeGano held on 250,000 shares of the Company's  common stock at $0.25 per share.
The Company  valued  these shares at $0.02.  The Board of  Directors  decided to
reduce the number of  outstanding  options to increase the company's  ability to
attract additional capital.

On October 1, 2000 the Company  entered into a sublease  7270  Woodbine  Avenue,
Suite 200, Markham, Ontario, Canada, for its corporate offices. The Company pays
CAD$474.60 per month plus applicable  Federal Taxes. The Company has a sub-lease
agreement with Wepawaug Inc., the head tenant, which gives the Company the right
to occupy the space at the above  rental rate until  August 31,  2001.  Wepawaug
Inc. is controlled by Pierre Quilliam, the Company's President and CEO.

On October 31, 2000,  the Company  purchased a 50%  interest in a 1999  Cadillac
Seville for the price of  $16,427.97.  The Company  purchased this interest from
87807 Canada Ltd., which is controlled by Pierre Quilliam,  President and CEO of
the Company.  On November 7, 2000, the Company sold its interest in the Cadillac
to Bisell  Investments  Inc. for the price of $17,500.00,  realizing a profit of
$$1,072.03. Bisell Investments Inc. owns 57% of the shares of the Company and is
controlled by Pierre Quilliam.

As of December 31, 2000, the Company paid fees for administration and accounting
services to 87807 Canada Ltd. in the amount of  $3,106.01.  87807 Canada Ltd. is
controlled by Pierre Quilliam.

On January 31, 2001, the Company issued 77,000  restricted  shares of its common
stock to Pierre  Quilliam,  the Company's  President and CEO for services to the
Company from  September 13, 2000 until December 31, 2000. The Board valued these
shares at $0.10 per share for a total of $7,700. These services included overall
management of the Company,  assistance with the Company's auditors and attorneys
and assisting in the preparation of the 10QSB the 8Ks and all other SEC filings.

On January 31, 2001, the Company issued 77,000  restricted  shares of its common
stock to Stephen  Cohen,  the Company's  Secretary and Treasurer for services to
the Company from  September 13, 2000 until  December 31, 2000.  The Board valued
these shares at $0.10 per share for a total of $7,700.  These services  included
management  of the  Company's  administration,  assistance  with  the  Company's
auditors and attorneys and  preparation of the 10QSB,  the 8Ks and all other SEC
filings and compliance requirements.


                                       18


<PAGE>

Item 13.  Exhibits, Financial Statements, Schedules and Reports on
          Form 8-K.

     (a) The  financial  statements  filed  as part of this  report  are  listed
separately in the Index to Financial Statements.

      2.1     Plan of Acquisition of California Electric Automobile Company,
              Inc.*
      3.1(i)  Articles of Incorporation*
      3.1(ii) By-Laws*
      4.1     Instruments defining the rights of holders*
     10.1     JOINT VENTURE BETWEEN GUANGDONG EV CO. LTD. AND AMERICAN
              ELECTRIC AUTOMOBILE COMPANY (ASIA). INC.**
     10.2     TECHICNICAL AGREEMENT FOR THE ELECTRIC STATION WAGON EV6 460
              BETWEEN GUANGDONG EV CO.LTD. AND AMERICAN ELECTRIC AUTOMOBILE
              COMPANY (ASIA), INC.**
     10.3     CONTRACT OF ELECTRIC VEHICLE COOPERATION BETWEEN
              GUANGDONG EV CO.LTD. AND AMERICAN ELECTRIC AUTOMOBILE COMPANY.
              (ASIA), INC.**
     10.4     AGREEMENT BETWEEN NATIONAL ELECTRIC VEHICLE RUNNING EXPERIMENT
              DEMONSTRATION DISTRICT MANAGEMENT CENTER AND  AMERICAN ELECTRIC
              AUTOMOBILE COMPANY (ASIA), INC.**
     10.5     AGREEMENT BETWEEN AMERICAN ELECTRIC AUTOMOBILE COMPANY INC. AND
              BISELL INVESTMENTS INC.***
     11.1     Computation of per share earnings 12/31/1998*
     11.2     Computation of per share earnings 12/31/1999**
     11.3     Computation of per share earnings 12/31/2000
     13.1     Filed by reference: Form 10QSB filed May 17, 2000, August 22, 2000
              and November 21, 2000
     21.1     Subsidiaries of the registrant*


* Filed by  reference  to a Form 10SB filed on February  23,  2000.  ** Filed by
reference to a Form 10-12 G/A filed on November 3, 2000 ***Filed by reference to
a Form 8K filed on September 19, 2000


     (b) Reports on Form 8-K:

    One report on Form 8-K was filed by the  Registrant  during the last quarter
of the period  covered by this report on November 9, 2000  describing the action
by the  majority of the Board of  Directors of  California  Electric  Automobile
Company Inc.  ("CEAC") to lay of its employees due to cash flow  considerations.
CEAC is a wholly owned subsidiary of the Company.


                                       19

<PAGE>


                                   SIGNATURES


     In accordance  with Section 12 of the Securities  Exchange Act of 1934, the
registrant  caused  this  registration  statement  to be signed  on its  behalf,
thereunto duly authorized.


                                   AMERICAN ELECTRIC AUTOMOBILE COMPANY, INC.

                                   /s/ Pierre Quilliam
Date:     April 12, 2001        ----------------------------------
                                   PIERRE QUILLIAM
                                   President and CEO


                                   /S/ Stephen Cohen
Date:     April 12, 2001        ----------------------------------
                                   STEPHEN COHEN
                                   Secretary/Treasurer


                                       20