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

                                    FORM 10-K

             ANNUAL REPORT PURSUANT TO SECTIONS 13 OR 15 (d) OF THE
                       SECURITIES AND EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 2006

                        Commission file number: 001-11497

                                 AUTOINFO, INC.
             (Exact Name of Registrant as Specified in Its Charter)

             Delaware                                     13-2867481
 (State or Other Jurisdiction of                      (I.R.S. Employer
  Incorporation or Organization)                     Identification No.)

                          6413 Congress Ave - Suite 260
                            Boca Raton, Florida 33487
                    (Address of Principal Executive Offices)

Registrant's telephone number, including area code:   561 - 988 - 9456

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

Securities registered pursuant to section 12(g) of the Act:

                          Common Stock, $.001 par value
                                (Title of class)

      Indicate by check mark if the registrant is a well-known  seasoned issuer,
as defined by Rule 405 of the Securities Act. Yes |_|  No |X|

      Indicate by check mark if the  registrant  is not required to file reports
pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes |_|  No |X|

      Indicate by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes |X|  No |_|

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

      Indicate  by check mark  whether  the  registrant  is a large  accelerated
filer,  an accelerated  filer,  or a  non-accelerated  filer.  See definition of
"accelerated  filer and large  accelerated  filer" in Rule 12b-2 of the Exchange
Act. (Check one):

Large Accelerated Filer |_|   Accelerated Filer |_|    Non-accelerated filer |X|

      Indicate  by check mark  whether  the  registrant  is a shell  company (as
defined in Rule 12b-2 of the Exchange Act). Yes |_|  No |X|

      The   aggregate   market  value  of  the  voting   common  stock  held  by
non-affiliates of the registrant as of June 30, 2006 was (based upon the closing
price  on the  Nasdaq  Over-the-Counter  Bulletin  Board  of  $1.19  per  share)
approximately $14,800,000.

      The number of shares  outstanding of the registrant's  common stock, $.001
par value, as of March 20, 2007 was 32,467,000 shares.

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None.

<PAGE>

                                 AUTOINFO, INC.

                           Annual Report on Form 10-K
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                           Page
                                                                                                           ----
<S>                                                                                                         <C>
PART I ...................................................................................................    2
   Item 1.  Business .....................................................................................    6
   Item 1A. Risk Factors .................................................................................   10
   Item 1B. Unresolved Staff Comments ....................................................................   10
   Item 2.  Properties ...................................................................................   10
   Item 3.  Legal Proceedings ............................................................................   10
   Item 4.  Submission of Matters to a Vote of Security Holders ..........................................   10
PART II ..................................................................................................   10
   Item 5.  Market for our Common Equity, Related Stockholder Matters
            and Purchases of Equity Securities ...........................................................   10
   Item 6.  Selected Consolidated Financial Data .........................................................   12
   Item 7.  Management's Discussion and Analysis of Financial Condition and Results of Operations ........   13
   Item 7A. Quantitive and Qualitative Disclosures About market Risk .....................................   20
   Item 8.  Financial Statements and Supplementary Data ..................................................   20
   Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosures ........   20
   Item 9A. Controls and Procedures ......................................................................   20
   Item 9B. Other Information ............................................................................   20
PART III .................................................................................................   21
   Item 10. Directors, Executive Officers and Corporate Governance .......................................   21
   Item 11. Executive Compensation .......................................................................   23
   Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters   30
   Item 13. Certain Relationships and Related Transactions, and Director Independence ....................   31
   Item 14. Principal Accounting Fees and Services .......................................................   32
   Item 15. Exhibits and Financial Statement Schedules ...................................................   32
</TABLE>


                      FORWARD LOOKING STATEMENT INFORMATION

      Certain   statements   made  in  this  Annual  Report  on  Form  10-K  are
"forward-looking  statements  "within  the  meaning  of the  Private  Securities
Litigation Reform Act of 1995,  regarding the plans and objectives of management
for  future  operations.  Such  statements  involve  known  and  unknown  risks,
uncertainties  and other factors that may cause our actual results,  performance
or achievements to be materially different from any future results,  performance
or achievements  expressed or implied by such  forward-looking  statements.  The
forward-looking  statements  included  herein are based on current  expectations
that involve  numerous  risks and  uncertainties.  Our plans and  objectives are
based, in part, on assumptions  involving judgments with respect to, among other
things,  future economic,  competitive and market conditions and future business
decisions,  all of which are difficult or impossible to predict  accurately  and
many of which are beyond our control.  Although we believe that our  assumptions
underlying the forward-looking statements are reasonable, any of the assumptions
could  prove  inaccurate  and,  therefore,  there can be no  assurance  that the
forward-looking statements included in this report will prove to be accurate. In
light  of  the  significant   uncertainties   inherent  in  the  forward-looking
statements  included  herein  particularly  in view of the current  state of our
operations,  the  inclusion  of such  information  should not be  regarded  as a
statement  by us or any other  person  that our  objectives  and  plans  will be
achieved.  Factors that could cause  actual  results to differ  materially  from
those expressed or implied by such  forward-looking  statements include, but are
not  limited to, the factors set forth  herein  under the  headings  "Business,"
"Risk Factors" and "Management's  Discussion and Analysis of Financial Condition
and Results of  Operations."  We  undertake  no  obligation  to revise or update
publicly any forward-looking statements for any reason.

<PAGE>

                                     PART I

Item 1. BUSINESS

Overview

      Through  our  wholly-owned   subsidiary,   Sunteck   Transport  Co.,  Inc.
(Sunteck), we are a non-asset based transportation  services company,  providing
transportation   capacity  and  related  transportation   services  to  shippers
throughout the United States,  and to a lesser  extent,  Canada.  As a non-asset
based provider of brokerage and contract carrier transportation  services, we do
not own any  equipment  and our  services  are  provided  through our  strategic
alliances with less than truckload,  truckload, air, rail, ocean common carriers
and independent  owner-operators  to service our customers' needs. Our non-asset
based services include ground  transportation  coast to coast, local pick up and
delivery. Our business services emphasize safety,  information  coordination and
customer service and are delivered through a network of independent commissioned
sales  agents  and  third  party  capacity  providers  coordinated  by  us.  The
independent commissioned sales agents typically enter into exclusive contractual
arrangements  with us and are responsible for locating  freight and coordinating
the  transportation  of the freight with customers and capacity  providers.  The
third party capacity  providers  consist of independent  contractors who provide
truck capacity to us, including  owner-operators  who operate under our contract
carrier  license,  air cargo  carriers  and  railroads.  Through this network of
agents and capacity  providers,  we operate a transportation  services  business
with revenue,  net revenue and net income of approximately $84.1 million,  $17.7
million  and $3.6  million,  respectively,  during our most  recently  completed
fiscal year.

      Our brokerage  services are provided though a network of independent sales
agents  throughout the United States and Canada.  Our services include arranging
for the  transport  of  customers'  freight  from the  shippers  location to the
designated  destination.  We do not  own  any  trucking  equipment  and  rely on
independent  carriers  for  the  movement  of  customers'  freight.  We  seek to
establish  long-term  relationships  with our customers and provide a variety of
logistics  services and solutions to eliminate  inefficiencies in our customers'
supply chain management.

      Our  contract  carrier  services  are also  provided  through a network of
independent sales agents and independent  owner-operators  throughout the United
States. We do not own any trucking  equipment;  our independent  owner-operators
lease onto our operating authority and transport freight under the Sunteck name.

Strategy

      Our  strategy  is  to  continue  to  expand  through   affiliations   with
independent sales agents and through internal expansion. We have been successful
at expanding  our  brokerage  sales agent  network and now have  representatives
throughout  the  United  States  and  Canada.  We have also been  successful  in
expanding  our  contract  carrier  services.  In addition,  we have  experienced
internal  expansion as many of our existing  agents have expanded their customer
base and increased the number of transactions generated. We intend to seek, on a
selective  basis,  acquisition of businesses that have services which complement
and expand our existing  services,  and provide us with  strategic  distribution
locations or  attractive  customer  bases.  Our ability to implement  our growth
strategy will be dependent on our ability to identify and  affiliate  with these
agents on desirable economic terms.


                                       2
<PAGE>

Company background

AutoInfo, Inc. was organized under the laws of the State of New York in 1976 and
reincorporated under the laws of Delaware in 1987. In December 2000, we acquired
Sunteck in a merger transaction.

The industry

      Prior to the mid  1980's,  the  trucking  industry  was  regulated  by the
Interstate Commerce Commission.  Deregulation brought new breath and life to the
industry.  This  also  brought  with  it the  problem  of how  to  navigate  the
transportation  highway.  Shippers  found it  difficult  to locate  carriers and
carriers  found that it was  expensive  to find  freight.  Enter the third party
transportation providers-intermediaries (freight brokers, freight forwarders and
logistics providers).  The third party intermediary connects the shipper and the
carrier and helps manage the flow of goods.

      The present market for freight moved by truck is in excess of $200 billion
per year. This is a highly  fragmented  industry  comprised of common  carriers,
contract carriers, freight forwarders and freight brokers.

      The actual movement of goods is  accomplished  by trucking  (consisting of
local, over the road, truckload, and less than truckload shipments), air freight
(time  sensitive  in nature),  rail  freight  (non time  sensitive in nature and
usually less expensive than truck) and ocean freight (generally in containerized
ships). Other services provided include warehousing and distribution.

      There are several  trends which are relevant to the  continued  dependency
upon and growth of the trucking industry:

    o Just in time service   With new  technology and a premium on cost savings,
                             businesses    are   able   to   maintain    smaller
                             inventories,  thereby  reducing  carrying costs and
                             warehouse  space  requirements.  The  impact on the
                             freight  industry  is  more  shipments  of  smaller
                             quantities   that  are  more  time  sensitive  and,
                             therefore, more costly.

    o Outsourcing            Companies  have found it to be more cost  effective
                             and  efficient  to  eliminate  company  owned truck
                             fleets  and  rely  upon  others  to  handle   their
                             trucking and shipping needs.

    o Logistics              Small to medium size businesses, with less frequent
                             shipping requirements,  utilize logistics providers
                             (freight  brokers,  etc.) to manage all  aspects of
                             the transportation, warehousing and delivery needs.

      The market for third party logistics providers is highly fragmented. It is
comprised  primarily  of full  service  logistics  providers,  freight  brokers,
independent sales agents and sales representatives.  Sales agents often work out
of home-based  offices or small regional sales offices and affiliate  themselves
with full  service  brokers  to  provide  back-office  services  including  load
dispatching, bonding and licensing, billing, collection and other administrative
services.  Sales  representatives  vary from  experienced  people  with years of
freight   industry   experience  and   established   client   relationships   to
telemarketing personnel cold calling shippers and dispatchers.

      Third party logistics companies provide numerous services to clients on an
outsourced  basis,  by  contract  and on demand.  The  continued  growth of this
industry has created secondary market opportunities to provide low-cost delivery
to the endpoint, in addition to supply chain services of warehousing,  inventory
management  and electronic  interface with customers and suppliers.  Third party
logistics  companies  provide  customized  domestic  and  international  freight
transportation  of customers' goods and packages via truck,  rail,  airplane and
ship, and provide warehousing and storage of those goods. Many companies utilize
information


                                       3
<PAGE>

systems and expertise to reduce  inventories,  cut  transportation  costs, speed
delivery  and improve  customer  service.  The  third-party  logistics  services
business has been bolstered in recent years by the competitiveness of the global
economy,  which causes shippers to focus on reducing  handling costs,  operating
with lower inventories and shortening  inventory transit times.  Using a network
of  transportation,  handling and storage  providers in multiple  transportation
modes, third-party logistics services companies seek to improve their customers'
operating  efficiency by reducing their  inventory  levels and related  handling
costs.  Many  third-party   logistics  service  providers  are  non-asset-based,
primarily utilizing physical assets owned by others in multiple transport modes.

      The  third-party  logistics  services  business  increasingly  relies upon
advanced information technology to link the shipper with its inventory and as an
analytical  tool to optimize  transportation  solutions.  This trend  favors the
larger, more professionally managed companies that have the resources to support
a  sophisticated  information  technology  infrastructure.  By  outsourcing  all
non-core  business  services to third  party  providers,  companies  can help to
control costs, eliminate staff and focus on internal business.

Operations and systems

      In our  brokerage  services,  we processed  approximately  50,000  freight
orders in 2006 as compared with 43,000 in 2005. Our sales agents  throughout the
United States and Canada receive  customers'  freight  requirements  daily.  All
agents make appropriate carrier arrangements for the pick-up and timely delivery
of customers' freight.

      In our  contract  carrier  services,  we  processed  approximately  10,000
freight  orders in both  2006 and 2005.  Our  sales  agents  receive  customers'
freight requirements daily and, utilizing their respective owner-operators, make
appropriate  carrier  arrangements  for  the  pick-up  and  timely  delivery  of
customers' freight. In addition,  utilizing various sources,  including numerous
internet based freight posting boards,  our agents locate additional  freight to
maximize utilization of available capacity and minimize deadhead miles, or miles
driven generating little or no revenue. A typical  owner-operator  will generate
$2,500 per week in  revenues.  In the fourth  quarter of 2006,  we upgraded  our
driver  safety and  compliance  standards  under the  direction  of a new safety
director as part of our effort to improve  safety ratings and the quality of our
owner operator network.  These changes resulted in a short-term reduction in the
number of owner operators and corresponding number of transactions in the fourth
quarter of 2006.  While we expect  that this will have a residual  impact in the
first and second  quarters of 2007, we do not anticipate  any long-term  adverse
effect.

      Our sales  agents  vary in level of  experience  from agents with years of
freight  industry  experience and  established  client  relationships  to a more
limited number of inexperienced  telemarketing and operations  personnel working
under the direct  supervision  and  training  of  experienced  sales  agents and
dispatchers.

      We rely exclusively on independent third parties for our hauling capacity.
These third party capacity providers consist of our independent owner-operators,
unrelated  trucking  companies,  air cargo  carriers and  railroads.  Our use of
capacity  provided  by our  independent  owner-operators,  and other third party
capacity  providers,  allows us to maintain a lower level of capital investment,
resulting in lower fixed costs.

      We utilize a  state-of-the-art  proprietary  internet  based  order  entry
system.  All agents access our web-based  platform and orders are entered into a
customized  traffic  management system which enables us to monitor the status of
all orders, generate customer billing and provide detailed transactional reports
in our Florida corporate headquarters.  We use these reports to monitor customer
logistics and transportation  usage, track customer and carrier historical data,
generate  detailed  financial and accounting data and provide our customers with
details of their supply chain  activity.  We maintain dual off-site  storage and
back-up facilities to insure data integrity and safety.


                                       4
<PAGE>

Suppliers

      We use the  services  of various  third  party  transportation  companies.
During  2006,  no third party  provider  handled  more than 10% of our  shipping
volume (measured by revenue).

Customers

      We strive to establish long-term customer  relationships and, by providing
a full range of  logistics  and supply chain  services,  we seek to increase our
level of business with each customer.  We service customers ranging from Fortune
100 companies to small  businesses in a variety of  industries.  During 2006, no
customer  accounted  for more than 10% of our  revenues.  We  typically  receive
credit  applications  from all customers,  review credit  references and perform
credit checks to ensure credit worthiness.

      Sunteck has achieved  revenue  growth  through the addition of independent
sales agents, the opening of new operations  offices,  an increase in the number
of  customers  serviced,  and the  expansion of the  logistics  and supply chain
services we provide.

      Each operations  office markets our full range of supply chain services to
existing customers and pursues new customers within its local markets.  We build
new customer relationships by exploiting our range of logistics and supply chain
services,  the traffic  lanes we commonly  service,  carrier  relationships  and
capabilities,  our industry  specific  expertise and our sales agents individual
knowledge and experience.

      Our growth model is focused on adding  sales agents in strategic  markets.
As this agent  network is further  established  and  expanded,  we believe  that
significant other  opportunities will emerge.  Larger sales agents offices often
have their own  equipment  (truck  space),  which  presents the  opportunity  to
maximize  available  freight and load capacity thereby  increasing gross margins
above historical  levels. In addition,  sales  representatives  will be added to
regional operating office sales agent locations to increase market  penetration.
Since  representatives  work on a commission basis,  this expansion  essentially
comes at no additional overhead outlay.

      Significant opportunities for expansion and growth also includes strategic
alliances with other service freight broker groups. This strategy will enable us
to  achieve  strong  regional  penetration  into new  geographical  markets  and
increase back office capabilities to service the agent network.

Competition

      The  transportation  industry is highly competitive and highly fragmented.
In our brokerage services,  our primary competitors are other non-asset based as
well as asset based third party logistics companies,  freight brokers,  carriers
offering  logistics  services and freight  forwarders.  In our contract  carrier
services,  our competitors are other contract  carriers and common carriers.  We
also compete with customers' and shippers'  internal traffic and  transportation
departments  as  well as  carriers  internal  sales  and  marketing  departments
directly seeking shippers'  freight.  We generally compete on the basis of price
and the range of logistics and supply chain services offered.

Government regulation

      Our  industry  has  long  been  subject  to  government   legislation  and
regulation.  Over the years,  many  changes in these laws and  regulations  have
affected the industry and caused changes in the operating practices and the cost
of providing  transportation  services.  We cannot predict what effect,  if any,
legislative and regulatory changes may have on the industry in the future.


                                       5
<PAGE>

      We are licensed by the United States Department of Transportation (DOT) as
a broker arranging the movement of materials by motor carrier. In this capacity,
we are required to meet certain qualifications to enable us to conduct business,
which includes the compliance with certain surety bond requirements. We are also
licensed by the DOT as a contract carrier arranging the movement of materials by
motor carrier. In this capacity, we are required to meet certain  qualifications
to enable us to conduct  business,  which includes the maintenance of $1,000,000
of general liability insurance and $100,000 of cargo insurance.

      If we fail to comply with, or lose,  any required  licenses,  governmental
regulators  could assess penalties or issue a cease and desist order against our
operations that are not in compliance.

Risk and liability

      In our brokerage  services,  we do not assume liability for loss or damage
to freight;  we act as the  shipper's  agent and arrange for a carrier to handle
the freight.  Therefore, we do not take possession of the shipper's freight and,
accordingly,  we are not  liable  for the  carrier's  negligence  or  failure to
perform.  We do assist our  customers in the  processing  and  collection of any
claim. The Federal Highway Administration  requires us to maintain a surety bond
of $10,000,  which is intended to show our financial  responsibility and provide
surety for the arrangements with shippers and carriers. In addition, we maintain
$100,000 of contingent cargo liability insurance.

      In our  contract  carrier  services  business,  we are  liable for loss or
damage to our customers' freight. We maintain cargo liability insurance coverage
with a policy  limit of  $100,000  per  occurrence.  We have  not  incurred  any
material losses to date. Any such losses in excess of insurance  limits would be
accounted for as incurred for financial reporting purposes.

Employees

      As of March 14, 2007, we had 45 full-time employees. None of our employees
are represented by a labor union and we believe that our  relationship  with our
employees is good.

Available Information

      Our website address is www.suntecktransport.com.  We are not including the
information  contained  on our  website  as  part  of,  or  incorporating  it by
reference  into,  this annual  report on Form 10-K.  We make  available  free of
charge through our website our annual report on Form 10-K,  quarterly reports on
Form 10-Q,  current reports on Form 8-K, Forms 3, 4 and 5, and all amendments to
those  reports  as  soon  as  reasonably  practicable  after  such  material  is
electronically filed with or furnished to the Securities and Exchange Commission
(SEC).

      The  public  may read and copy any  materials  we file with the SEC at the
SEC's Public Reference Room at 100 F Street, N.E.,  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 SEC  maintains  an  Internet  site that
contains  reports,  proxy and  information  statements,  and  other  information
regarding issuers such as us that file  electronically with the SEC. The website
address is www.sec.gov.

Item 1A. RISK FACTORS

      In addition to the other information  provided in this report,  you should
carefully consider the following factors in evaluating our business,  operations
and financial condition.  Additional risks and uncertainties not presently known
to us, that we currently  deem  immaterial or that are similar to those faced by
other  companies  in our  industry or business in general,  such as  competitive
conditions, may also impair our business operations.


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<PAGE>

The  occurrence  of any of the  following  risks  could have a material  adverse
effect on our business, financial condition and results of operations.

We are  dependent  upon  independent  commissioned  sales agents who have direct
relationships with our customers.

      A  substantial  portion of our  business is  originated  by our network of
independent  sales  agents.  Most  of  these  sales  agents  work  with us on an
exclusive basis. We do not have non-compete or non-solicitation  agreements with
these agents. These contracts are typically terminable upon 10 to 30 days notice
by either  party and do not  restrict  the ability of a former  agent to compete
with  Sunteck  following  termination.  As a  result,  if sales  representatives
terminate their affiliation with us, our revenue and results of operations could
be adversely affected.

We are dependent on third party capacity providers.

      We do not own trucks or other  transportation  equipment and rely on third
party capacity  providers,  including  independent  owner  operators,  unrelated
trucking  companies,  railroads and air cargo carriers to transport  freight for
our  customers.  We compete with motor  carriers and other third parties for the
services  of  independent   owner  operators  and  other  third  party  capacity
providers.  A significant  decrease in available capacity provided by either our
independent owner operators or other third party capacity providers could have a
material adverse effect on our results of operations and revenue.

Decreased  demand  for  transportation   services  could  adversely  affect  our
operating results.

      The  transportation   industry   historically  has  experienced   cyclical
financial  results as a result of slowdowns in economic  activity,  the business
cycles of  customers,  price  increases  by capacity  providers,  interest  rate
fluctuations,  and other  economic  factors  beyond our control.  Certain of our
third party capacity  providers can be expected to charge higher prices to cover
increased  operating  expenses,  and our operating  income may decline if we are
unable  to pass  through  to our  customers  the full  amount  of  these  higher
transportation  costs.  If a slowdown in economic  activity or a downturn in our
customers'  business  cycles causes a reduction in the volume of freight shipped
by  those  customers,  our  operating  results  could  be  materially  adversely
affected.

We have  limited  marketing  and  sales  capabilities  and  must  make  sales in
fragmented markets.

      Our  future  success  depends,  to a  great  extent,  on  our  ability  to
successfully  market our services through our network of independent agents. Our
sales and marketing  capabilities  are more limited than many of our competitors
who have captive internal sales forces and greater financial  resources than us.
We cannot  assure you that any  marketing  and sales  efforts  undertaken on our
behalf will be successful or will result in any significant sales.

Our industry is intensely competitive, which may adversely affect our operations
and financial results.

      All our markets are intensely  competitive  and numerous  companies  offer
services that compete with our services.  We anticipate that competition for our
services will continue to increase.  Many of our competitors have  substantially
greater capital  resources,  sales and marketing  resources and  experience.  We
cannot  assure  you  that  we  will be able  to  effectively  compete  with  our
competitors in effecting our business expansion plans.

We depend on the continued services of our president.

      Our future  success  depends,  in part, on the  continuing  efforts of our
president,   Harry  Wachtel,  who  conceived  our  strategic  plan  and  who  is
responsible  for executing that plan.  The loss of Mr.  Wachtel would


                                       7
<PAGE>

adversely  affect our  business.  At this time we do not have any term "key man"
insurance on Mr. Wachtel. If we lose the services of Mr. Wachtel,  our business,
operations, and financial condition would be materially adversely affected.

We must attract and retain qualified personnel.

      As we implement our business growth strategy,  significant demands will be
placed on our managerial,  financial and other resources. One of the keys to our
future  success  will be our  ability to attract  and  retain  highly  qualified
marketing,  sales  and  administrative  personnel.   Competition  for  qualified
personnel in these areas is intense and we will be competing for their  services
with companies that have  substantially  greater resources than we do. We cannot
assure you that we will be able to identify,  attract and retain  personnel with
skills and  experience  necessary  and relevant to the future  operations of our
business.  Our inability to retain or attract qualified personnel in these areas
could have a material adverse effect on our business and results of operations.

We may require additional financing in the future, which may not be available on
acceptable terms.

      Depending on our ability to generate  revenues,  we may require additional
funds to expand our  business  operations  and for  working  capital and general
corporate  purposes.   Any  additional  equity  financing  may  be  dilutive  to
stockholders,  and debt financings may involve restrictive  covenants that limit
our ability to make decisions that we believe will be in our best interests.  In
the event we cannot obtain  additional  financing on terms acceptable to us when
required, our ability to expand operations may be materially adversely affected.

Our principal stockholders have substantial control over our affairs.

      As of March 14, 2007, our president,  Harry Wachtel,  owned  approximately
15.4% of the issued and outstanding shares of our common stock.  Further,  James
T. Martin and  Kinderhook  Partners,  LP, two  significant  stockholders,  owned
approximately  19.3% and 18.6%,  respectively,  of the  issued  and  outstanding
shares of our common  stock.  As a result,  either Mr.  Wachtel,  Mr.  Martin or
Kinderhook  Partners,  LP could assert  control over our affairs,  including the
election of directors and any  proposals  regarding a sale of the company or its
assets or a merger. In addition,  this concentration of ownership could have the
effect of delaying,  deferring  or  preventing a change in control or impeding a
merger or consolidation,  takeover or other business combination which you, as a
stockholder, may otherwise view favorably.

Our stock price is volatile  and could be further  affected by events not within
our control.

      The market price of our common stock has historically  experienced and may
continue to  experience  significant  volatility.  For the 52-week  period ended
March 12,  2007 , our closing  stock  price has ranged  from $1.91 to $0.56.  On
March 13, 2007, our closing stock price was $1.01.

      The trading  price of our common stock has been volatile and will continue
to be subject to:

      o     volatility in the trading markets generally;

      o     significant fluctuations in our quarterly operating results; and

      o     announcements   regarding  our  business  or  the  business  of  our
            competitors.

      Statements or changes in opinions,  ratings or earnings  estimates made by
brokerage firms or industry analysts relating to the markets in which we operate
or expect to operate  could also have an adverse  effect on the market  price of
our common stock. In addition, the stock market as a whole has from time to time
experienced  extreme  price and  volume  fluctuations  which  have  particularly
affected the market price for the


                                       8
<PAGE>

securities of many  small-cap  companies and which often have been  unrelated to
the operating performance of these companies.

The price of our common stock may be adversely affected by the possible issuance
of  shares  of our  common  stock as a result  of the  exercise  of  outstanding
options.

      We have granted options covering  approximately 11.3 million shares of our
common stock.  As a result of the actual or potential  sale of these shares into
the market, our common stock price may decrease.

Future sales of our common stock may adversely affect our common stock price.

      If our stockholders sell a large number of shares of common stock or if we
issue a large  number  of shares  in  connection  with  future  acquisitions  or
financings, the market price of our common stock could decline significantly. In
addition, the perception in the public market that our stockholders might sell a
large number of shares of common stock could cause a decline in the market price
of our common stock.

Some  provisions  in our  charter  documents  and bylaws may have  anti-takeover
effects.

      Our certificate of  incorporation  and bylaws contain  provisions that may
make it more  difficult for a third party to acquire us, with the result that it
may deter potential suitors.  For example, our board of directors is authorized,
without action of the stockholders,  to issue authorized but unissued common and
preferred  stock.  The existence of authorized but unissued common and preferred
stock enables us to discourage or to make it more difficult to obtain control of
us by means of a merger, tender offer, proxy contest or otherwise.

We have agreed to limitations on the potential liability of our directors.

      Our certificate of incorporation provides that, in general, directors will
not be personally liable for monetary damages to the company or our stockholders
for a breach of fiduciary  duty.  Although this limitation of liability does not
affect the  availability  of equitable  remedies  such as  injunctive  relief or
rescission, the presence of these provisions in the certificate of incorporation
could prevent us from recovering monetary damages.

Liquidity on the Nasdaq OTC Bulletin  Board is limited,  and we may be unable to
obtain listing of our common stock on a more liquid market.

      Our  common  stock is quoted  on the  Nasdaq  OTC  Bulletin  Board,  which
provides  significantly  less liquidity than a securities  exchange (such as the
American or New York Stock Exchange) or an automated  quotation  system (such as
the Nasdaq  World or  Capital  Market).  We do not  currently  meet the  minimum
trading  price  requirement  for  listing  on the Nasdaq  Capital  Market or the
American Stock Exchange.  There is uncertainty that we will ever be accepted for
a listing on an automated quotation system or securities exchange.

Our common  stock has been  thinly  traded,  and the public  market may  provide
little or no liquidity for holders of our common stock.

      Purchasers  of shares of our common  stock may find it difficult to resell
their  shares at prices  quoted in the market or at all.  There is  currently  a
limited  volume of trading in our common stock,  and on many days there has been
no trading  activity at all. Due to the  historically  low trading  price of our
common stock,  many brokerage  firms may be unwilling to effect  transactions in
our common stock,  particularly because low-priced  securities are subject to an
SEC rule that imposes  additional sales practice  requirements on broker-dealers
who sell  low-priced  securities  (generally  those below  $5.00 per share).  We
cannot predict when or whether investor  interest in our common stock might lead
to an increase in its market price or the  development  of a more active trading
market or how liquid that market might become.


                                       9
<PAGE>

Item 1B. UNRESOLVED STAFF COMMENTS

        None.

Item 2. PROPERTIES

        We lease  approximately  5,300  square  feet of space for our  executive
offices and the  headquarters  of Sunteck at 6413 Congress  Avenue,  Boca Raton,
Florida.  This lease runs through  April 2010 and provides  for  aggregate  rent
payments of $61,000 for the thirteen  months ending March 2007,  $65,000 for the
thirteen  months  ending April 2008,  $68,000 for the twelve months ending April
2009 and $71,000 for the twelve  months ending April 2010. We lease 1,100 square
feet for our operating office at 315 Main Street, Pineville, North Carolina. The
lease runs through February 2008 and provides for an annual rental of $13,000.

Item 3. LEGAL PROCEEDINGS

        We are not a party to any material legal proceedings.

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

        None.

                                     PART II

Item 5. MARKET FOR OUR COMMON EQUITY,  RELATED STOCKHOLDER MATTERS AND PURCHASES
OF EQUITY SECURITIES

      Our common stock is not listed on any stock exchange.  Our common stock is
traded on the Nasdaq Over-the-Counter  Bulletin Board ("OTCBB") under the symbol
"Auto." The following  table sets forth the high and low bid information for our
common stock for each quarter  within the last two fiscal years,  as reported by
the OTCBB.  The bid information  reflects  inter-dealer  prices,  without retail
mark-up, mark-down or commission, and may not represent actual transactions.

    Year Ended December 31, 2006                   High              Low
    -----------------------------------        ------------     ------------

    First quarter                                 $0.90             $0.55
    Second quarter                                 1.33              0.76
    Third quarter                                  1.91              0.99
    Fourth quarter                                 1.17              0.98

    Year Ended December 31, 2005                   High              Low
    -----------------------------------        ------------     ------------

    First quarter                                 $0.74             $0.43
    Second quarter                                 0.60              0.40
    Third quarter                                  0.62              0.45
    Fourth quarter                                 0.60              0.42


                                       10
<PAGE>

      As of March 22 2007 the closing bid price per share for our common  stock,
as reported on the OTCBB was $ 1.01.  As of March 22, 2007 we had  approximately
1,000 beneficial stockholders.

Dividend policy

      We have never declared or paid a cash dividend on our common stock. It has
been the  policy of our board of  directors  to retain  all  available  funds to
finance  the  development  and  growth  of our  business.  The  payment  of cash
dividends  in the future  will be  dependent  upon our  earnings  and  financial
requirements and other factors deemed relevant by our board of directors.

                               COMPANY PERFORMANCE
     AND COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN AMONG AUTOINFO, INC.,
                           THE NASDAQ COMPOSITE INDEX,
                     AND THE DOW JONES TRANSPORTATION INDEX

                  The following graph shows a five year comparison of cumulative
total  returns  for  AutoInfo,  the  Nasdaq  Composite  Index,  and  the  Nasdaq
Transportation Index.

         [THE DATA BELOW REPRESENTS A LINE CHART IN THE PRINTED REPORT]

                                           DOW JONES
          NASDAQ COMPOSITE INDEX     TRANSPORTATION INDEX      AUTOINFO, INC.

2001                1.00                      1.00                  1.00
2002                0.68                      0.87                  1.58
2003                1.03                      1.14                  2.42
2004                1.12                      1.44                  5.08
2005                1.13                      1.59                  4.83
2006                1.24                      1.73                  8.50


                                       11
<PAGE>

Item 6. SELECTED CONSOLIDATED FINANCIAL DATA

      The following is a summary of our selected consolidated financial data for
the years ended  December 31, 2006,  2005,  2004,  2003, and 2002. The financial
data has been derived from our audited  consolidated  financial  statements  and
accompanying notes.

      The selected  financial data set forth below should be read together with,
and are qualified by reference to, the "Management's  Discussion and Analysis of
Financial  condition and Results of  Operations"  section of this report and our
audited  consolidated  financial  statements  and  accompanying  notes  included
elsewhere in this report.

<TABLE>
<CAPTION>
000's omitted, except for per share data                           Year ended December 31,
                                                --------------------------------------------------------------
                                                   2006         2005         2004         2003         2002
                                                ----------   ----------   ----------   ----------   ----------

Statement of Operations Data:
-----------------------------------------
<S>                                             <C>          <C>          <C>          <C>                  <C>
Gross revenues                                   $ 84,111     $ 68,040     $ 46,492     $ 27,171     $ 18,863

Net revenues (1)                                   17,743       13,554        8,734        5,076        3,368

Net  income                                      $  3,628     $  3,608     $  1,466     $  1,300     $    340

Net income per share (2)
     Basic                                       $    .11     $    .11     $    .05     $    .05     $    .01
     Diluted                                     $    .10     $    .11     $    .04     $    .05     $    .01
</TABLE>


(1)   Net revenues are determined by deducting cost of transportation from gross
      revenues. See Management's  Discussion and Analysis of Financial Condition
      and Results of Operations.

(2)   The common stock  equivalents for the year ended December 31, 2006,  2005,
      2004, 2003 and 2002 were 4,090,000,  2,400,000,  2,523,000,  1,434,000 and
      635,000, respectively.

<TABLE>
<CAPTION>
000's omitted                                                          As at December 31,
                                                 --------------------------------------------------------------
                                                    2006         2005         2004         2003         2002
                                                 ----------   ----------   ----------   ----------   ----------

Balance Sheet Data:
-----------------------------------------
<S>                                              <C>          <C>          <C>          <C>                <C>
Cash and cash equivalents                         $    146     $    419     $     38     $    133     $    684
Accounts receivable, net                            16,967       12,735        9,658        4,881        2,996
Total assets                                        23,822       16,646       11,795        6,286        3,944
Total liabilities                                   11,826        8,515        7,383        4,394        3,356
Deficit                                             (7,456)     (11,084)     (14,692)     (16,158)     (17,458)
Stockholders' equity                                11,996        8,131        4,412        1,892          588
</TABLE>


                                       12
<PAGE>

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

Cautionary statement  identifying  important factors that could cause our actual
results to differ from those projected in forward looking statements.

      Readers of this  report  are  advised  that this  document  contains  both
statements of historical facts and forward looking  statements.  Forward looking
statements  are subject to certain  risks and  uncertainties,  which could cause
actual results to differ  materially from those indicated by the forward looking
statements.  Examples of forward looking statements include, but are not limited
to (i)  projections  of revenues,  income or loss,  earnings per share,  capital
expenditures,  dividends,  capital  structure and other  financial  items,  (ii)
statements of our plans and objectives with respect to business transactions and
enhancement  of  shareholder   value,   (iii)   statements  of  future  economic
performance,  and (iv) statements of assumptions underlying other statements and
statements about our business prospects.

      This report also identifies  important  factors,  which could cause actual
results  to differ  materially  from  those  indicated  by the  forward  looking
statements.  These risks and  uncertainties  include the factors discussed under
the heading "Risk Factors" beginning at page 6 of this report.

      The following Management's  Discussion and Analysis of Financial Condition
and  Results of  Operations  should be read in  conjunction  with our  financial
statements and the notes thereto appearing elsewhere in this report.

Overview

      Through  our  wholly-owned   subsidiary,   Sunteck   Transport  Co.,  Inc.
(Sunteck), we are a non-asset based transportation  services company,  providing
transportation   capacity  and  related  transportation   services  to  shippers
throughout the United States,  and to a lesser  extent,  Canada.  As a non-asset
based provider of brokerage and contract carrier transportation  services, we do
not own any  equipment  and our  services  are  provided  through our  strategic
alliances with less than truckload,  truckload, air, rail, ocean common carriers
and independent  owner-operators  to service our customers' needs. Our non-asset
based services include ground  transportation  coast to coast, local pick up and
delivery, air freight and ocean freight. Our business services emphasize safety,
information  coordination  and  customer  service  and are  delivered  through a
network  of  independent  commissioned  sales  agents and third  party  capacity
providers coordinated by us. The independent commissioned sales agents typically
enter into exclusive  contractual  arrangements  with us and are responsible for
locating  freight  and  coordinating  the  transportation  of the  freight  with
customers and capacity providers.  The third party capacity providers consist of
independent   contractors   who  provide   truck   capacity  to  us,   including
owner-operators  who  operate  under our  contract  carrier  license,  air cargo
carriers and railroads.  Through this network of agents and capacity  providers,
we operate a transportation  services business with revenue, net revenue and net
income  of  approximately  $84.1  million,   $17.7  million  and  $3.6  million,
respectively, during our most recently completed fiscal year.

      Our brokerage  services are provided though a network of independent sales
agents  throughout the United States and Canada.  Our services include arranging
for the  transport  of  customers'  freight  from the  shippers  location to the
designated  destination.  We do not  own  any  trucking  equipment  and  rely on
independent  carriers  for  the  movement  of  customers'  freight.  We  seek to
establish  long-term  relationships  with our customers and provide a variety of
logistics  services and solutions to eliminate  inefficiencies in our customers'
supply chain management.


                                       13
<PAGE>

      Our  contract  carrier  services  are also  provided  through a network of
independent sales agents and independent  owner-operators  throughout the United
States.  We do no own any trucking  equipment;  our independent  owner-operators
lease onto our operating authority and transport freight under the Sunteck name.

      The most significant  factors in our growth during the past two years have
been internal growth experienced by our existing agents and the expansion of our
brokerage  services agent,  contract carrier  services agent and  owner-operator
networks.  This growth is readily measured by the number of transactions we have
processed,  which  increased from 43,300 in 2004 to 53,300 in 2005 and to 60,300
is 2006,  an  increase  of 23% from 2004 to 2005 and 13% from 2005 to 2006.  The
average  revenue dollar per load in our broker division also increased by 22% in
2005 as  compared  to 2004 and by 9% in 2006 as  compared  to 2005.  This is the
result of several  factors  including an increase in truckload  business  versus
less than  truckload at higher per load  revenues,  the addition of sales agents
hauling heavy  equipment at higher per load  revenues,  an increase in long-haul
versus short-haul volume and, to a lesser degree, a general increase in prices.

      During the next twelve months,  we plan to continue to offer our brokerage
and contract carrier  transportation  services and expand our agent network.  We
are presently  profitable and have adequate available lines of credit to satisfy
our working capital requirements during the next twelve months.

Results of operations

Comparison of 2006 vs 2005

      During the year ended  December  31, 2006,  we continued to implement  our
strategic  growth business plan consisting  primarily of the expansion of client
services, the opening of regional operations centers in key geographical markets
and the addition of independent  sales agents  providing  brokerage and contract
carrier services.  Our net revenues (gross revenues less cost of transportation)
are the  primary  indicator  of our  ability  to  source,  add value and  resell
services that are provided by third parties and are considered to be the primary
measurement  of growth.  Therefore,  the discussion of the results of operations
below focuses on the changes in our net revenues.  The increases in net revenues
and all  related  cost and  expense  categories  are the  direct  result  of our
business expansion.

The  following  table  represents  certain  statement  of  operation  data  as a
percentage of net revenues:

                                            2006            2005

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

      Net revenues                         100.0%          100.0%

       Commissions                          62.3%           61.6%
       Operating expenses                   21.6%           22.2%
       Interest expense                       .6%             .4%
       Income taxes (benefit)               (5.0)%         (10.8)%

      Net income                            20.5%           26.6%

Revenues

      Gross  revenues,  consisting  of freight fees and other  related  services
revenue,  totaled  $84,111,000 for the year ended December 31, 2006, as compared
with  $68,040,000  in the prior  year,  an increase of 24%.  Net  revenues  were
$17,743,000  for the year ended December 31, 2006, as compared with  $13,554,000
in the prior year, an increase of 31%.


                                       14
<PAGE>

      Gross  revenues from  brokerage  services  increased to  $73,036,000  from
$58,150,000 and net revenues  increased to $15,997,000  from  $11,887,000 in the
prior year. This increase is the direct result of the continued expansion of our
agent network and customer  base which  resulted in a 17% increase in the number
of  transactions  processed  and a 8% increase in the average  dollar amount per
load.

      Gross  revenues from contract  carrier  services  increased to $11,075,000
from $9,890,000 and net revenues  increased to $1,746,000 from $1,667,000 in the
prior year. Gross revenues  increased  approximately 12% for the year.  However,
there  were   fluctuations   during  the  year  in  the  number  of  agents  and
owner-operators due to the termination of agents and the addition of new agents.
As a result of these  fluctuations,  gross revenues  during the first quarter of
2006 increased by 94% over the  corresponding  2005 period and decreased 9%, 17%
and 6% for the second, third and fourth quarters,  respectively,  as compared to
the  corresponding  quarters of 2005. In the fourth quarter of 2006, we upgraded
our driver safety and compliance  standards  under the direction of a new safety
director as part of our effort to improve  safety ratings and the quality of our
owner operator network.  These changes resulted in a short-term reduction in the
number of owner operators and corresponding number of transactions in the fourth
quarter of 2006.  While we expect  that this will have a residual  impact in the
first and second  quarters of 2007, we do not anticipate  any long-term  adverse
effect.

Costs and expenses

      Commissions  totaled  $11,044,000 for the year ended December 31, 2006, as
compared with $8,348,000 in the prior year, an increase of 32%. This increase is
the direct result of the  continued  expansion of our agent network and customer
base. As a percentage of net revenues, commissions were 62.3% for the year ended
December 31, 2006 as compared with 61.6% in the prior year. This increase is the
direct result of the expansion of our agent network at higher  commission rates,
additional bonuses earned after certain monthly  benchmarks are achieved,  stock
based compensation expense, and cost associated with the new agent additions.

      Operating  expenses  totaled  $3,840,000  for the year ended  December 31,
2006,  as compared  with  $3,005,000  in the prior year.  As a percentage of net
revenues,  operating expenses were 21.6% for the year ended December 31, 2006 as
compared with 22.2% in the prior year. This decrease is the direct result of our
ability to leverage selling,  general and administrative  expenses in connection
with business  expansion.  We have increased  administrative  staff commensurate
with the  increase  in  transaction  volume.  In  February  2005,  we moved  our
headquarters  increasing  our space to 5,300  square  feet.  We  presently  have
adequate  facilities  and  management  to handle  the  present  and  anticipated
transaction volume in 2007 without a significant increase in overhead.

      Interest  expense was  $113,000  for the year ended  December  31, 2006 as
compared  with $56,000 in the prior year.  This increase is primarily the result
of increased average  borrowings and the increase in the prime lending rate from
5.25% at the beginning of 2005 to 8.25% by July 2006. As of September  2006, our
line of credit facility is at a interest rate of LIBOR plus 2%, or approximately
7.3% for the period from September through December 2006.

Income tax

      The income tax benefit of $882,000  for the year ended  December  31, 2006
consisted  of a benefit of  $1,965,000  resulting  from the  anticipated  future
utilization  of  an  available  federal  tax  loss  carryforward,   net  of  the
utilization  of the  deferred  tax benefit of $925,000 and state income taxes of
$158,000.  The income tax benefit of $1,463,000  for the year ended December 31,
2005 consisted of a benefit of $2,304,000  resulting from the anticipated future
utilization  of  an  available  federal  tax  loss  carryforward,   net  of  the
utilization  of the  deferred  tax benefit of $718,000 and state income taxes of
$123,000.  Based upon available  objective  evidence,  including our post-merger
history  of  profitability,  we  believe  that it is more  likely  than not that
forecasted


                                       15
<PAGE>

taxable  income  will be  sufficient  to utilize all of the net  operating  loss
carryforward before its expiration in 2014.  Accordingly,  in 2006 the valuation
allowance was reduced by $1,965,000.

Comparison of 2005 vs 2004

      During the year ended  December  31, 2005,  we continued to implement  our
strategic  growth business plan consisting  primarily of the expansion of client
services, the opening of regional operations centers in key geographical markets
and the addition of independent  sales agents  providing  brokerage and contract
carrier services.  Our net revenues (gross revenues less cost of transportation)
are the  primary  indicator  of our  ability  to  source,  add value and  resell
services that are provided by third parties and are considered to be the primary
measurement  of growth.  Therefore,  the discussion of the results of operations
below focuses on the changes in our net revenues.  The increases in net revenues
and all  related  cost and  expense  categories  are the  direct  result  of our
business expansion.

The  following  table  represents  certain  statement  of  operation  data  as a
percentage of net revenues:

                                           2005               2004

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

      Net revenues                        100.0%             100.0%

       Commissions                         61.6%              59.3%
       Operating expenses                  22.2%              28.8%
       Interest expense                      .4%                .6%
       Income taxes (benefit)             (10.8)%             (5.5)%

      Net income                           26.6%              16.8%

Revenues

      Gross  revenues,  consisting  of freight fees and other  related  services
revenue,  totaled  $68,040,000 for the year ended December 31, 2005, as compared
with  $46,492,000  in the prior  year,  an increase of 46%.  Net  revenues  were
$13,554,000 for the year ended December 31, 2005, as compared with $8,734,000 in
the prior year, an increase of 55%.

      Gross  revenues from  brokerage  services  increased to  $58,150,000  from
$36,931,000  and net revenues  increased to $11,887,000  from  $7,032,000 in the
prior year. This increase is the direct result of the continued expansion of our
agent network and customer  base which  resulted in a 29% increase in the number
of  transactions  processed and a 22% increase in the average  dollar amount per
load.

      Gross revenues from contract carrier services increased to $9,890,000 from
$9,561,000 and net revenues  decreased to $1,667,000 from 1,702,000 in the prior
year. Gross revenues  increased  approximately 3% for the year.  However,  there
were  fluctuations  during the year in the number of agents and  owner-operators
due to the termination of agents and the addition of new agents.  As a result of
these fluctuations, gross revenues during the first quarter of 2005 increased by
94% over the  corresponding  2004  period and  decreased  9%, 17% and 6% for the
second,   third  and  fourth   quarters,   respectively,   as  compared  to  the
corresponding  quarters of 2004.  The decrease in net revenues is primarily  the
result of higher  fuel  costs and an  increase  in fuel  service  and  detention
charges  which are  passed  directly  through  to our owner  operators,  thereby
reducing net revenues as a percentage of gross revenues.


                                       16
<PAGE>

Costs and expenses

      Commissions  totaled  $8,348,000  for the year ended December 31, 2005, as
compared with $5,179,000 in the prior year, an increase of 61%. This increase is
the direct result of the  continued  expansion of our agent network and customer
base. As a percentage of net revenues,  commissions  were 62% for the year ended
December 31, 2005 as compared  with 59% in the prior year.  This increase is the
direct result of the expansion of our agent network at higher  commission  rates
and additional bonuses earned after certain monthly benchmarks are achieved.

      Operating  expenses  totaled  $3,005,000  for the year ended  December 31,
2005,  as compared  with  $2,519,000  in the prior year.  As a percentage of net
revenues,  operating  expenses were 22% for the year ended  December 31, 2005 as
compared  with 29% in the prior year.  This decrease is the direct result of our
ability to leverage selling,  general and administrative  expenses in connection
with business expansion.

      Interest  expense  was  $56,000  for the year ended  December  31, 2005 as
compared  with $50,000 in the prior year.  This increase is primarily the result
of increased average  borrowings and the increase in the prime lending rate from
4% at the beginning of 2004 to 7.25% by the end of 2005.

Income tax

      The income tax benefit of $1,463,000  for the year ended December 31, 2005
consisted  of a benefit of  $2,304,000  resulting  from the  anticipated  future
utilization  of  an  available  federal  tax  loss  carryforward,   net  of  the
utilization  of the  deferred  tax benefit of $718,000 and state income taxes of
$123,000.  The income tax benefit of $480,000  for the year ended  December  31,
2004 consisted of a benefit of $873,000  resulting from the  anticipated  future
utilization  of  an  available  federal  tax  loss  carryforward,   net  of  the
utilization  of the  deferred  tax benefit of $336,000 and state income taxes of
$57,000.  Based upon available  objective  evidence,  including our  post-merger
history  of  profitability,  we  believe  that it is more  likely  than not that
forecasted  taxable  income will be  sufficient  to utilize a portion of the net
operating loss carryforward before its expiration in 2014. Accordingly,  in 2005
the valuation allowance was reduced by $2,304,000.

Trends and uncertainties

      The  transportation  industry is highly competitive and highly fragmented.
In our brokerage services,  our primary competitors are other non-asset based as
well as asset based third party logistics companies,  freight brokers,  carriers
offering  logistics  services and freight  forwarders.  In our contract  carrier
services,  our competitors are other contract  carriers and common carriers.  We
also compete with customers' and shippers'  internal traffic and  transportation
departments  as  well as  carriers  internal  sales  and  marketing  departments
directly  seeking  shippers'  freight.  We anticipate  that  competition for our
services will continue to increase.  Many of our competitors have  substantially
greater capital  resources,  sales and marketing  resources and  experience.  We
cannot  assure  you  that  we  will be able  to  effectively  compete  with  our
competitors  in effecting our business  expansion  plans.  The most  significant
trend  contributing  to our  growth  during  the  past  two  years  has been the
expansion of our brokerage services agent network and contract carrier agent and
owner operator network.  Sales agents are independent  contractors and, as such,
there are no assurances  that we can either  maintain our existing agent network
or continue to expand this network.

      For the year ended  December 31, 2006,  we increased  gross  revenues from
$68.0 million to $84.1 million and had net income of $3,628,000 as compared with
$3,608,000  in the prior year.  As of December 31, 2006,  we had an  accumulated
deficit of $7.5 million compared to $11.1 million at December 31, 2005.  Factors
that could adversely affect our operating results include:


                                       17
<PAGE>

      o     the success of Sunteck in expanding its business operations; and

      o     changes in general economic conditions.

      Depending on our ability to generate  revenues,  we may require additional
funds to expand our  business  operations  and for  working  capital and general
corporate  purposes.   Any  additional  equity  financing  may  be  dilutive  to
stockholders, and debt financings may involve restrictive covenants that further
limit  our  ability  to make  decisions  that  we  believe  will be in our  best
interests.  In  the  event  we  cannot  obtain  additional  financing  on  terms
acceptable  to us when  required,  our ability to expand our  operations  may be
materially adversely affected.

Liquidity and capital resources

      During  the past two  years,  our  sources  for cash  have  been cash flow
generated from operations and available borrowings under lines of credit.

      At December 31, 2006, we had a balance outstanding of $3,451,000 under our
$4,000,000  line of credit.  The line of credit is subject to the maintenance of
certain  financial  covenants,  is  secured  by  accounts  receivable  and other
operating  assets,  and matures in June 2008. We believe that we have sufficient
working capital to meet our short-term  operating needs and that we will be able
to increase, extend or replace the line of credit on terms acceptable to us.

      At December  31, 2006,  we had liquid  assets of  approximately  $146,000.
Available cash is used to reduce borrowings on our line of credit.

      The total  amount of debt  outstanding  at December  31, 2006 and 2005 was
$3,451,000 and $1,280,000,  respectively.  The following table presents our debt
instruments and their weighted  average  interest rates at December 31, 2006 and
2005, respectively:

                                            Weighted                 Weighted
                                             Average                  Average
                                Balance       Rate       Balance       Rate
                             -------------------------------------------------
                                         2006                     2005
                             -------------------------------------------------

            Line of Credit     $3,451,000      7.3%     $1,280,000     6.4%

      Inflation  and changing  prices had no material  impact on our revenues or
the results of operations for the year ended December 31, 2006.

Critical Accounting Policies

      Preparation  of our  financial  statements  requires  management  to  make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities  and disclosure of contingent  assets and liabilities at the date of
the  financial  statements  and the  reported  amounts of revenues  and expenses
during  the  reporting  period.  Note 1 of the  Notes  to  Financial  Statements
includes a summary of the  significant  accounting  policies and methods used in
the  preparation  of  our  financial  statements.  The  most  significant  areas
involving our estimates and  assumptions  are described  below.  Actual  results
could differ  materially  from our  estimates  under  different  assumptions  or
conditions.


                                       18
<PAGE>

Revenue Recognition

      As a  third  party  transportation  logistics  provider,  we  act  as  the
shippers' agent and arrange for a carrier to handle the freight.  Gross revenues
consist of the total dollar value of services purchased by shippers.  Revenue is
recognized   upon  the   delivery  of   freight,   at  which  time  the  related
transportation cost, including commission, is also recognized. At that time, our
obligations are completed and collection of receivables is reasonably assured.

      Emerging  Issues  Task Force No.  99-19,  "Reporting  Revenues  Gross as a
Principal  Versus  Net as an  Agent"  (EITF  99-19),  establishes  criteria  for
recognizing  revenues on a gross or net basis. We are the primary obligor in our
transactions, have all credit risk, maintain substantially all risk and rewards,
have  discretion in selecting the supplier,  and latitude in pricing  decisions.
Accordingly, we record all transactions at the gross amount, consistent with the
provisions of EITF 99-19.

Income Taxes

      The deferred tax asset  represents  expected future tax savings  resulting
from our net operating loss carryforward.  As of December 31, 2006, we had a net
operating loss  carryforward of  approximately  $11.6 million for federal income
tax purposes which expire through 2014. Utilization of this benefit is primarily
subject to the extent of our future earnings, and may be limited by, among other
things,  stockholder  changes,  including  the possible  issuance of  additional
shares in one or more  financing or  acquisition  transactions.  As of December,
2006, we have  eliminated any valuation  allowance for the future tax savings as
management believes it is more likely than not that they will be realized by the
end of the carryforward period.

Provision For Doubtful Accounts

      We  continuously  monitor the  creditworthiness  of our customers and have
established an allowance for amounts that may become uncollectible in the future
based on current economic trends,  our historical payment and bad debt write-off
experience, and any specific customer related collection issues.

Recently Issued Accounting Standards

      In June 2006,  the  Financial  Accounting  Standards  Board (FASB)  issued
Interpretation   No.  48,  "Accounting  for  Uncertainty  in  Income  Taxes,  an
Interpretation  of FASB  Statement  No.  109"  (FIN  48),  which  clarifies  the
accounting for uncertainty in tax positions.  FIN 48 requires the recognition of
a tax  position  when it is more likely than not that the tax  position  will be
sustained  upon  examination  by taxing  authorities,  based upon the  technical
merits of the position. The provisions of FIN 48 are effective for us on January
1, 2007.  We do not expect the  adoption of FIN 48 to have a material  impact on
our financial statements.

      In September  2006,  the FASB issued  Statement  of  Financial  Accounting
Standards (SFAS) No. 157, "Fair Value  Measurements"  (SFAS 157), which provides
guidance  for using  fair  value to measure  assets  and  liabilities.  SFAS 157
defines  fair value and  establishes  a  framework  for  measuring  fair  value;
however,   SFAS  157  does  not  expand  the  use  of  fair  value  in  any  new
circumstances.  The  provisions  of SFAS 157 are  effective for us on January 1,
2008. We do not expect the adoption of SFAS 157 to have a material impact on our
financial statements.

Off-balance Sheet Arrangements

      We do not have any off-balance sheet arrangements.


                                       19
<PAGE>

Contractual Obligations

      The following table summarizes our contractual  obligations as of December
31, 2006:

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
                                                 Payments due by period
-----------------------------------------------------------------------------------------
Contractual Obligations          Total      Less than 1   1-3 years    3-5    More than 5
                                               year                   years      years
-----------------------------------------------------------------------------------------
<S>                           <C>           <C>           <C>            <C>          <C>
Operating Lease Obligations   $   235,000   $    59,000   $ 176,000      --           --
-----------------------------------------------------------------------------------------
Line of Credit                  3,451,000   $ 3,451,000          --      --           --
-----------------------------------------------------------------------------------------
Total                         $ 3,686,000   $ 3,510,000   $ 176,000      --           --
-----------------------------------------------------------------------------------------
</TABLE>

Item 7A. QUANTITIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

      None.

Item 8. FINANCIAL STATEMENTS

      The  response  to this item is  submitted  as a  separate  section of this
report beginning on page F-1.

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
        AND FINANCIAL DISCLOSURES

      None.

Item 9A. CONTROLS AND PROCEDURES

      Our management,  with the participation of our chief executive officer and
chief  financial  officer,  has evaluated the  effectiveness  of our  disclosure
controls  and  procedures  (as  such  term is  defined  in Rules  13a-15(e)  and
15d-15(e)  under the Securities  Exchange Act of 1934, as amended (the "Exchange
Act"))  as of the end of the  period  covered  by  this  report.  Based  on that
evaluation,  our chief  executive  officer  and  chief  financial  officer  have
concluded  that,  as of the end of such  period,  our  disclosure  controls  and
procedures are effective to ensure that information  required to be disclosed by
us in the  reports  that  we file or  submit  under  the  Exchange  Act is:  (i)
recorded, processed,  summarized and reported, within the time periods specified
in the  SEC's  rules  and  forms;  and  (ii)  accumulated  and  communicated  to
management,  including our chief executive officer and chief financial  officer,
as appropriate to allow timely decisions regarding required disclosure.

      There have not been any changes in our  internal  control  over  financial
reporting (as such term is defined in Rules  13a-15(f)  and 15d-15(f)  under the
Exchange Act) that occurred  during the period  covered by this report that have
materially affected, or are reasonably likely to materially affect, our internal
controls over financial reporting.

Item 9B. OTHER INFORMATION

      None.


                                       20
<PAGE>

                                    PART III

         Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

      The  following  table  sets  forth the names,  ages and  positions  of our
directors and executive officers:

<TABLE>
<CAPTION>
Name                                  Age          Position
----                                  ---          --------
<S>                                    <C>         <C>
Peter C. Einselen                      67          Director
Thomas C. Robertson                    61          Director
Harry Wachtel                          48          President, chief executive officer and director
Mark Weiss                             47          National account executive and director
William Wunderlich                     59          Chief financial officer
Michael P. Williams                    40          Chief operating officer and general counsel
</TABLE>

      PETER C. EINSELEN has been a director since January 1999. Mr. Einselen has
been an account  executive  since 1990 and served as senior vice  president from
1990 to 2001 of Anderson & Strudwick,  a brokerage  firm. From 1983 to 1990, Mr.
Einselen was employed by Scott and Stringfellow, Incorporated, a brokerage firm.

      THOMAS C. ROBERTSON has been a director since January 1999. Mr.  Robertson
has been senior vice president  since 2004 and was president and chief financial
officer  from  1988 to 2004  and a  director  from  1988 to 2005 of  Anderson  &
Strudwick,  a brokerage  firm.  Mr.  Robertson  has been  president of Gardner &
Robertson, a money management firm, since 1997.

      HARRY WACHTEL joined us in conjunction with the acquisition of Sunteck and
has been a  director,  and our  president  and  chief  executive  officer  since
December 7, 2000.  Since 1997,  he has been  president of Sunteck.  From 1992 to
1997, he served as vice  president of sales and marketing for Pioneer  Services,
Inc., a third party, non-asset based transportation logistics provider.

      MARK WEISS joined us in  conjunction  with the  acquisition of Sunteck and
has been a director since December 7, 2000.  Since 1997, he has been employed by
Sunteck  as a  national  account  executive.  From  1994 to 1997 he  served as a
national account executive for Pioneer Services,  Inc., a third party, non-asset
based transportation  logistics provider. Mr. Weiss is the brother-in-law of Mr.
Wunderlich, our executive vice president and chief financial officer.

      WILLIAM  WUNDERLICH  joined us in  October  1992 as our vice  president  -
finance,  became chief financial  officer in January 1993,  president in January
1999 and, in conjunction with the acquisition of Sunteck,  became executive vice
president in December  2000.  From 1990 to 1992, he served as vice  president of
Goldstein  Affiliates,  Inc., a public adjusting company.  From 1981 to 1990, he
served as executive vice president,  chief  financial  officer and a director of
Novo  Corporation,  a manufacturer  of consumer  products.  Mr.  Wunderlich is a
Certified Public  Accountant with a B.A. degree in Accounting and Economics from
the City  University  of New  York at  Queens  College.  Mr.  Wunderlich  is the
brother-in-law of Mr. Weiss, one of our directors.

      MICHAEL  P.  WILLIAMS  joined us in  January  2007 as our chief  operating
officer and general  counsel.  From 2002 to 2006, Mr. Williams served as general
counsel and vice  president  of legal and business  affairs for Vexure,  Inc., a
logistics company. Prior to that, from 1999 to 2002, Mr. Williams also served as
general  counsel and vice  president of legal and  business  affairs for Stonier
Transportation Group, Inc., a trucking and brokerage company.  During his tenure
with Stonier and Vexure,  Mr. Williams gained  experience  handling customer and
vendor contract negotiations,  risk management  strategies,  human resources and
assets


                                       21
<PAGE>

management,  and transportation and employment  litigation matters. Mr. Williams
received  his juris  doctor cum laude from Thomas  Cooley Law  School,  Lansing,
Michigan  and his masters  degree  (LL.M.) in taxation  from the  University  of
Florida, Gainesville. He has been a member of the Florida Bar since 1995.

Committees of the Board of Directors

      Our  board  of  directors  has  an  audit  committee  and  a  compensation
committee.  The audit  committee  reviews the scope and results of the audit and
other  services  provided  by  our  independent  accountants  and  our  internal
controls.  The  compensation  committee  is  responsible  for  the  approval  of
compensation  arrangements  for our officers and the review of our  compensation
plans and  policies.  Each  committee  is  comprised  of  Messrs.  Einselen  and
Robertson, our non-employee independent outside directors.

Audit Committee Matters

      Under its charter, the audit committee must pre-approve all engagements of
our independent  auditor unless an exception to such  pre-approval  exists under
the Exchange Act or the rules of the Securities and Exchange  Commission  (SEC).
Each  year,  the  independent   auditor's   retention  to  audit  our  financial
statements,  including the associated  fee, is approved by the committee  before
the filing of the preceding  year's annual report on Form 10-K. At the beginning
of the fiscal year,  the audit  committee  will evaluate  other known  potential
engagements of the independent auditor, including the scope of the work proposed
to be  performed  and the  proposed  fees,  and approve or reject each  service,
taking into account  whether the services are permissible  under  applicable law
and the possible impact of each non-audit  service on the independent  auditor's
independence  from  management.   At  each  subsequent  committee  meeting,  the
committee  will  receive  updates  on  the  services  actually  provided  by the
independent   auditor,  and  management  may  present  additional  services  for
approval.  Typically,  these  would be  services  such as due  diligence  for an
acquisition that would not have been known at the beginning of the year

      Since the May 6, 2003  effective  date of the SEC  rules  stating  that an
auditor is not independent of an audit client if the services it provides to the
client are not appropriately approved, each new engagement of Dworken,  Hillman,
LaMorte & Sterczala,  P.C. was approved in advance by the audit  committee,  and
none of those  engagements made use of the de minimus  exception to pre-approval
contained in the SEC's rules.

      Our board has  determined  that the chairman of the audit  committee,  Mr.
Robertson,  is an "audit committee financial expert," as that term is defined in
Item 407(d)(5) of Regulation S-K, and  "independent" for purposes of current and
recently-adopted   Nasdaq  listing   standards  and  Section  10A(m)(3)  of  the
Securities Exchange Act of 1934.

Code of Ethics

      We have adopted a code of ethics that applies to our  principal  executive
officer,  principal  financial  officer  and other  persons  performing  similar
functions.    This   code   of   ethics   is   posted   on   our    website   at
www.suntecktransport.com.

Section 16(a) beneficial ownership reporting compliance

      Section 16(a) of the Securities Exchange Act of 1934 requires our officers
and directors,  and persons who own more than ten percent of a registered  class
of our equity securities,  to file reports of ownership and changes in ownership
with the SEC. Officers,  directors and greater than ten-percent stockholders are
required by SEC  regulation to furnish us with copies of all Section 16(a) forms
they file.  Based solely on review of the


                                       22
<PAGE>

copies of such forms furnished to us, or written representations that no Forms 5
were required, we believe that all Section 16(a) filing requirements  applicable
to our officers and directors were complied with during 2006.

Item 11. EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

      We provide what we believe is a competitive total compensation  package to
our executive management team through a combination of base salary,  annual cash
and equity  incentives and the right to participate in our broad-based  benefits
program.  We place  significant  emphasis  on  incentive  compensation  directly
related to our financial performance.

      This  Compensation  Discussion  and  Analysis  explains  our  compensation
philosophy,  policies and practices with respect to our named executive officers
which includes our chief executive  officer,  chief financial  officer,  and our
national account executive.

The Objectives of our Executive Compensation Program

      Our   compensation   committee  is  responsible   for   establishing   and
administering  our policies  governing the compensation for all of our executive
officers.  The  compensation  committee  is composed  entirely  of  non-employee
independent directors. See "Committees of the Board of Directors" above.

      The purpose of our executive  compensation  program is to attract,  retain
and  motivate  qualified  executives  to manage our  business  so as to maximize
profits and stockholder value.  Executive  compensation in the aggregate is made
up  principally  of the  executive's  annual  base  salary,  a bonus  based upon
operating  earnings,   a  discretionary  bonus  which  may  be  awarded  by  our
compensation  committee  and  awards of stock or stock  options  under our Stock
Option  Plans.  Our  compensation   committee   annually   considers  and  makes
recommendations to our board of directors as to executive compensation including
changes in base salary, bonuses and awards of our stock or stock options.

      Consistent  with the  above-noted  purpose of the  executive  compensation
program,  in  recommending  the aggregate  annual  compensation of our executive
officers,  our compensation  committee considers our overall performance and the
individual  contribution  and  performance  of the  executive  with our  overall
performance being the more significant factor.  While stockholders' total return
is important and is considered by the compensation  committee,  it is subject to
the vagaries of the public market  place.  Our  executive  compensation  program
focuses on our strategic plans,  corporate  performance  measures,  and specific
corporate  goals which  should lead to a favorable  stock price.  The  corporate
performance  measure which our compensation  committee  considers include sales,
earnings,  return on equity and  comparisons  of sales and  earnings  with prior
years and with budgets.

      Our compensation committee does not rely on any fixed formulae or specific
numerical  criteria in  determining an executive's  aggregate  compensation.  It
considers corporate and personal performance criteria,  competitive compensation
levels,  the economic  environment  and changes in the cost of living as well as
the  recommendations  of management.  Our compensation  committee then exercises
business  judgment  based  on all of  these  criteria  and the  purposes  of the
executive compensation program.


                                       23
<PAGE>

The Elements of Our Executive Compensation Program

      Overall, our executive compensation programs are designed to be consistent
with the objectives  and  principles set forth above.  The basic elements of our
executive compensation programs are summarized in the table below, followed by a
more detailed discussion of each element of compensation.

<TABLE>
<CAPTION>
Element                                           Characteristics                                     Purpose
<S>                             <C>                                                    <C>
-------------------------------------------------------------------------------------------------------------------------
Base salary                     Fixed annual cash compensation; all executives are     Keep our annual compensation
                                eligible for periodic increases in base salary         competitive with the market for
                                based on performance; targeted at the median market    skills and experience necessary to
                                pay level.                                             meet the requirements of the
                                                                                       executive's role with us.
-------------------------------------------------------------------------------------------------------------------------

Incentive bonus awards          Performance-based annual cash and equity incentive     Motivate and reward for the
                                earned based on company and individual performance     achievement and over-performance of
                                against target performance levels; targeted at the     our critical financial and strategic
                                median market pay level.                               goals. Amounts earned for
                                                                                       achievement of target performance
                                                                                       levels based on our annual budget is
                                                                                       designed to provide a
                                                                                       market-competitive pay package at
                                                                                       median performance; potential for
                                                                                       lesser or greater amounts are
                                                                                       intended to motivate participants to
                                                                                       achieve or exceed our financial
                                                                                       performance goals and to not reward
                                                                                       if performance goals are not met.
-------------------------------------------------------------------------------------------------------------------------
Health & welfare benefits       Fixed component. The same/comparable health &          Provides benefits to meet the health
                                welfare benefits (medical, dental, vision,             and welfare needs of employees and
                                disability insurance and life insurance) are           their families.
                                available for all full-time employees.
-------------------------------------------------------------------------------------------------------------------------
</TABLE>

Annual Compensation

      To attract  and retain  executives  with the  ability  and the  experience
necessary to lead us and deliver  strong  performance  to our  stockholders,  we
provide a competitive total compensation  package. Base salaries are established
considering individual performance and experience, to ensure that each executive
is appropriately compensated.

      Base Salary

      Our compensation  committee reviews salary ranges and individual  salaries
for our executive  officers and  establishes  the base salary for each executive
officer based on the following:

            o     consideration  of median pay  levels in our peer  group  among
                  individuals in comparable  positions with transferable  skills
                  within the transportation industry and comparable companies in
                  general industry;

            o     internal  factors,  such as, the individual's  performance and
                  experience, and the pay of others on the executive team;

            o     our overall  performance and the individual  contribution  and
                  performance  of the  executive  with our  overall  performance
                  being the more significant factor; and


                                       24
<PAGE>

            o     with a focus on our  strategic  plans,  corporate  performance
                  measures,  and specific corporate goals which should lead to a
                  favorable stock price including,  our sales, earnings,  return
                  on equity and  comparisons  of sales and  earnings  with prior
                  years and with budgets.

      When  establishing  the base salary of any executive  officer,  we believe
that a  competitive  base salary is necessary to attract and retain an executive
management team with the appropriate  abilities and experience  required to lead
us. The base salaries paid to our named  executive  officers are set forth below
in the Summary  Compensation  Table. We believe that the base salary paid to our
executive officers during 2006 achieves our executive  compensation  objectives,
compares  favorably  to our peer group and is within our target of  providing  a
base salary at the market median.

    Incentive Bonus Awards

      Cash Bonuses

      Cash  incentive   bonus  awards  are  solely  based  on  established   and
pre-approved  percentages  of pre-tax  profit  levels,  are paid  quarterly  and
adjusted  on  an  annual  basis.  Our  compensation   committee  also  exercises
discretion   adjusting  awards  based  on  its   consideration  of  our  overall
performance during the year and each executive officer's individual performance,
other than the chief executive officer and the chief financial officer, based on
a review of the  executive's  performance as  communicated  to the  compensation
committee by the chief executive officer.

      Health and Welfare Benefits

      All full-time  employees,  including  our named  executive  officers,  may
participate  in our health and  welfare  benefit  programs,  including  medical,
dental and vision care coverage, disability insurance and life insurance.

Overview of 2006 Compensation

      We  believe  that  the  total  compensation  paid to our  named  executive
officers  for the fiscal  year ended  December  31,  2006  achieves  the overall
objectives of our executive compensation program. In accordance with our overall
objectives,  executive compensation for 2006 was competitive with our peer group
and was weighted more heavily to pay for performance.

Employment Agreements, Severance Benefits and Change in Control Provisions

      We have employment  agreements with our chief executive officer,  Harry M.
Wachtel, and our chief financial officer, William I. Wunderlich. We entered into
these agreements,  effective January 1, 2007, to ensure the performance of their
roles for an  extended  period of time.  In  addition,  we also  considered  the
critical nature of the position and our need to retain them when we committed to
these  agreements.  The agreements  provide for annual base salaries of $250,000
and $175,000,  respectively,  and for  participation  in all  executive  benefit
plans. Each of Mr. Wachtel's and Mr.  Wunderlich's  agreements provide that they
will each be entitled to a bonus equal to 10% of our consolidated pre-tax profit
(as defined in their respective  employment  agreements) up to $1,250,000 and 5%
of our consolidated pre-tax profit in excess of $1,250,000.  Annual salaries and
bonuses  shall  not  exceed  $750,000  for  Mr.  Wachtel  and  $675,000  for Mr.
Wunderlich.  The employment  contracts with both Mr. Wachtel and Mr.  Wunderlich
are for terms  expiring in December  2011. If either is terminated  for cause or
terminates without good reason (as defined in the agreements),  we are obligated
to pay only  those  wages  and  bonuses  pursuant  to the  terms  of our  annual
incentive plan and other  compensation then vested. If either Mr. Wachtel or Mr.
Wunderlich is terminated  without cause or if either  terminates  his employment
agreement  for good  reason (as defined in the  agreements),  in addition to the
payment of amounts then vested, in exchange for a general release of all claims,
such executive is entitled to:


                                       25
<PAGE>

  o   The  immediate  vesting of any unvested  stock options and one-year from
      the date of such termination to exercise such options;

  o   Salary for the remaining term of the agreement, if any; and

  o   Bonus based on a  pre-determined  percentage  of pre-tax  profit for the
      remaining term of the agreement, if any.

      We have granted options that remain  outstanding  under our 2006 Incentive
Stock Option Plan (the "2006 Plan").  The 2006 Plan contains  certain  change in
control  provisions  to ensure  that our  executives  remain with us through the
closing of any sale of the business.

The 2006 Plan

      Under our 2006 Plan,  in the event of a "change in  control" as defined in
the 2006 Plan,  the following  occurs with respect to options  granted under the
2006 Plan:

  o   Each outstanding  option  automatically  accelerates so that each option
      becomes fully  exercisable for all of the shares of the related class of
      common stock at the time subject to such option  immediately  before the
      change in control;

      A change  of  control  for  purposes  of the 2006  Plan is  deemed to have
      occurred if:

      o Any  "person" (a) other than us or any of our  subsidiaries,  (b) any of
      our or our subsidiaries'  employee benefit plans, (c) any "affiliate," (d)
      a company owned,  directly or indirectly,  by our stockholders,  or (e) an
      underwriter  temporarily holding our securities pursuant to an offering of
      such securities,  becomes the "beneficial  owner," directly or indirectly,
      of more than 50% of our voting stock;

      o The  individuals  who  constitute our board on the effective date of the
      2006 Plan (or any  individual  who was appointed to the board of directors
      by a majority of the  individuals who constitute our board of directors as
      of the effective date of the 2006 Plan) cease for any reason to constitute
      at least a majority of our board of directors.

      o A merger or  consolidation  transferring  greater than 50% of the voting
      power of our outstanding  securities to a person or persons different from
      the  persons   holding  those   securities   immediately   prior  to  such
      transaction; or

      o The disposition of all or substantially  all of our assets in a complete
      liquidation or dissolution.

Tax Deductibility of Executive Compensation

      Section  162(m) of the  Internal  Revenue  Code of 1996,  as amended  (the
"Code"),   generally   disallows  a  tax  deduction  to  public   companies  for
compensation  over $1 million paid to the chief executive officer and four other
most  highly  compensated   executive  officers,   unless  the  compensation  is
considered performance based. The compensation disclosed in this report does not
exceed  the $1  million  limit,  and  executive  compensation  for  2006 is also
expected to qualify for  deductibility.  We currently  intend to  structure  the
performance-based  portion of our executive  officers'  compensation  to achieve
maximum  deductibility  under Section 162(m) of the code with minimal sacrifices
in flexibility and corporate objective.

      Although deductibility of compensation is preferred,  tax deductibility is
not a primary objective of our compensation  programs. We believe that achieving
our  compensation  objectives set forth above is more important than the benefit
of tax deductibility and we reserve the right to maintain  flexibility in how we
compensate our executive  officers that may result in limiting the deductibility
of amounts of compensation from time to time.


                                       26
<PAGE>

Summary Compensation Table

      The  following  table  sets  forth  certain  information  with  respect to
compensation for the year ended December 31, 2006 earned by or paid to our chief
executive officer, chief financial officer and our other most highly compensated
executive  officers  in 2006 whose total  compensation  exceeded  $100,000  (the
"named executive officers").

                           Summary Compensation Table
--------------------------------------------------------------------------------
Name and Principal Position            Year   Salary ($)   Bonus ($)   Total ($)
--------------------------------------------------------------------------------
Harry M. Wachtel,                      2006   $  250,000   $ 269,000   $ 519,000
President and chief
executive officer
--------------------------------------------------------------------------------
William I. Wunderlich,                 2006   $  175,000   $ 229,000   $ 404,000
Executive vice president
and chief financial officer
--------------------------------------------------------------------------------
Mark Weiss,                            2006   $  137,000          --   $ 137,000
National account executive
--------------------------------------------------------------------------------

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

Discussion of Summary Compensation

      Our executive  compensation policies and practices,  pursuant to which the
compensation set forth in the Summary Compensation Table was paid, are described
above  under  "Compensation  Discussion  and  Analysis."  A summary  of  certain
material terms of our compensation plans and arrangements is set forth below.

Indemnification Arrangements

      Our  Certificate  of  Incorporation  provides  that we indemnify  and hold
harmless each of our directors and officers to the fullest extent  authorized by
the Delaware General  Corporation  Law, against all expense,  liability and loss
(including  attorney's fees,  judgments,  fines, ERISA excise taxes or penalties
and amounts paid or to be paid in settlement) reasonably incurred or suffered by
such person in connection therewith.

      Our Certificate of Incorporation also provides that a director will not be
personally  liable to us or to our  stockholders for monetary damages for breach
of the fiduciary  duty of care as a director.  This provision does not eliminate
or limit the liability of a director:

      o     for  breach  of  his  or  her  duty  of  loyalty  to us  or  to  our
            stockholders;

      o     for acts or omissions not in good faith or which involve intentional
            misconduct or a knowing violation of law;

      o     under Section 174 of the Delaware General  Corporation Law (relating
            to unlawful  payments or dividends or unlawful stock  repurchases or
            redemptions); or

      o     for any improper benefit.


                                       27
<PAGE>

Outstanding Equity Awards

      The  following  table  sets  forth  certain  information  with  respect to
outstanding  equity  awards  at  December  31,  2006 with  respect  to the named
executive officers.

                  Outstanding Equity Awards at Fiscal Year-End


                                               Option Awards
                                  --------------------------------------
                                   Number of
                                   Securities
                                   Underlying
                                   Unexercised     Option      Option
                                     Options      Exercise   Expiration
                 Name             Exercisable(1)   Price        Date
                 ----             --------------   -----        ----

        William I. Wunderlich        270,000       $ 0.10    5/22/2007

        William I. Wunderlich        500,000       $ 0.10    11/30/2009
      -----------------------

  (1) Fully vested

Compensation of Directors

      We do not pay any directors' fees.  Directors are reimbursed for the costs
relating to  attending  board and  committee  meetings.  During  2006,  Peter C.
Einselen and Thomas C. Robertson, our non-employee directors,  each were granted
options to purchase  100,000  shares of our common stock at prices  ranging from
$0.65 to $1.48 per share, 115% of the fair market value on the date of grant.

      The following table provides  compensation  information for the year ended
December 31, 2006 for each of the independent members of our board of directors.

Director Compensation

              Name                   Option Awards (1)   Total
              ----                   -----------------   -----
              Thomas C. Robertson    $21,700 (2)         $21,700
              Peter C. Einselen      $21,700 (2)         $21,700
             ---------------------

        (1)  Amounts  are  calculated  using  the  provisions  of  Statement  of
        Financial Accounting Standards (SFAS) No. 123R, Share-based Payments.

        (2) During 2006, each of Mr. Robertson and Mr. Einselen was granted four
        option awards  exercisable for 100,000 shares of our common stock in the
        aggregate,  respectively.  Each award was for  options  exercisable  for
        25,000 shares of our common stock. The award grant dates were 1/26/2006,
        4/2/2006,  7/14/2006  and  10/12/2006  and the fair values  (computed in
        accordance with SFAS 123R) on such dates were $3,400, $4,500, $7,900 and
        $5,900, respectively.


                                       28
<PAGE>

                      Equity Compensation Plan Information
                          Year Ended December 31, 2006

<TABLE>
<CAPTION>
                                                                                                        Number of securities
                                                                                                      remaining available for
                                             Number of securities to        Weighted-average           future issuance under
                                             be issued upon exercise        exercise price of        equity compensation plans
                                             of outstanding options,      outstanding options,         (excluding securities
             Plan Category                     warrants and rights         warrants and rights        reflected in column (a))
----------------------------------------    --------------------------    ----------------------    -----------------------------
                                                       (a)                         (b)                           (c)
<S>                                                <C>                            <C>                        <C>
Equity compensation plans
  approved by security holders
  (1985, 1986, 1989, 1992,
  1997, 1999, and 2003) ...............              5,262,000                     $0.55                         74,000

Equity compensation plans not
  approved by security holders
  (1)                                                6,030,000                     $0.82                      6,465,000
                                            ==========================    ======================    =============================

Total..................................             11,292,000                     $0.70                      6,539,000
                                            ==========================    ======================    =============================
</TABLE>


(1) Includes the following equity compensation plans:

      o     In 2006,  our board of  directors  adopted  the 2006 Plan to provide
            incentives to employees, directors and consultants whose performance
            will contribute to our long-term  success and growth,  to strengthen
            our  ability  to  attract  and  retain   employees,   directors  and
            consultants  of  high  competence,   to  increase  the  identity  of
            interests of such people with those of our  stockholders and to help
            build  loyalty to us through  recognition  and the  opportunity  for
            stock ownership. Generally, the option price of both incentive stock
            options and  non-qualified  stock  options must be at least equal to
            100% of the fair  market  value of our  common  stock on the date of
            grant.  The  maximum  term  of  each  option  is 10  years.  For any
            participant  who owns shares  possessing more than 10% of the voting
            rights of our  outstanding  common stock,  the exercise price of any
            incentive  stock  option  must be at least equal to 110% of the fair
            market  value of our common  stock on the date of grant and the term
            of the option may not be longer than five years.  The 2006 Plan will
            be presented to stockholders for approval at our next annual meeting
            of stockholders during 2007.

      o     In addition to the 2006 Plan, we  established  the 2006  Independent
            Sales Agent Stock  Option Plan (the "Sales Agent Plan") to align the
            interests of our independent  sales agents and affiliates with those
            of our stockholders,  to afford an incentive to such sales agents to
            continue  as such,  to increase  their  efforts on our behalf and to
            promote the success of our business. Generally, the Sales Agent Plan
            is  administered  by our board of directors and provides (i) for the
            granting of non-qualified stock options,  (ii) that the maximum term
            for  options  granted  under the plan is 10 years and (iii) that the
            exercise price for the options may not be less than 115% of the fair
            market value of our common stock on the date of grant.

      o     In 2005,  we  established  the 2005  Independent  Sales  Agent Stock
            Option Plan (the "2005 Sales Agent Plan") to align the  interests of
            our  independent  sales  agents  and  affiliates  with  those of our
            stockholders,  to  afford  an  incentive  to such  sales  agents  to
            continue  as such,  to increase  their  efforts on our behalf and to
            promote the success of our business. Generally, the 2005 Sales Agent
            Plan is  administered by our board of directors and provides (i) for
            the granting of non-qualified  stock options,  (ii) that the maximum
            term for options  granted  under the plan is 10 years and (iii) that
            the exercise


                                       29
<PAGE>

            price for the  options  may not be less than 100% of the fair market
            value of our common stock on the date of grant.

Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
          RELATED STOCKHOLDER MATTERS

      The following table, together with the accompanying footnotes,  sets forth
information,  as of March 20,  2007,  regarding  stock  ownership of all persons
known by us to own beneficially 5% or more of our outstanding  common stock, all
directors,  named executive officers and all directors and executive officers as
a group.

      We determined beneficial ownership in accordance with rules promulgated by
the  SEC,  and the  information  is not  necessarily  indicative  of  beneficial
ownership for any other purpose.  Except as otherwise indicated, we believe that
the  persons or  entities  named in the  following  table  have sole  voting and
investment  power with  respect to all  shares of common  stock as  beneficially
owned  by them,  subject  to  community  property  laws  where  applicable.  All
information with respect to beneficial ownership has been furnished to us by the
respective stockholder.

<TABLE>
<CAPTION>
               Name of                             Shares of Common Stock          Percentage
        Beneficial Owner (1)                         Beneficially Owned           Of Ownership
        --------------------                         ------------------           ------------
<S>                                                     <C>                           <C>
(i) Directors and Executive Officers
Harry Wachtel                                           6,785,000 (2)                 20.6%
Thomas C. Robertson                                       555,000 (3)                  1.7%
Peter C. Einselen                                         685,000 (4)                  2.1%
Mark Weiss                                              1,075,000 (6)                  3.3%
William I. Wunderlich                                   1,622,000 (5)(7)               4.8%
All executive officers and directors as
a group (6 persons)                                     9,440,000 (8)                 26.9%

(ii) 5% Stockholders
James T. Martin                                         6,270,000                     19.3%
Kinderhook Partners, LP                                 6,038,000                     18.6%
Wasatch Advisors, Inc                                   3,224,000                      9.9%
</TABLE>

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

(1)   Unless otherwise  indicated below,  each director,  executive  officer and
      each 5% stockholder  has sole voting and investment  power with respect to
      all shares beneficially owned. The address for Mr. Wachtel,  Mr. Weiss and
      Mr.  Wunderlich is c/o AutoInfo,  Inc., 6413 Congress  Avenue,  Suite 260,
      Boca Raton,  FL 33487.  The address  for Mr.  Martin is c/o Bermuda  Trust
      Company, Compass Point Road, 9 Bermudian Road, Hamilton HM11, Bermuda. The
      address for Kinderhook  Partners,  LP is One Executive  Drive,  Suite 160,
      Fort Lee, NJ 07024.

(2)   Includes  1,282,000  shares  with  respect to which Mr.  Wachtel  has been
      granted voting rights pursuant to voting proxy agreements.

(3)   Includes 455,000 shares issuable upon the exercise of stock options.

(4)   Includes 385,000 shares issuable upon the exercise of stock options

(5)   Includes 770,000 shares issuable upon the exercise of stock options.

(6)   Includes 875,000 with respect to which Mr. Weiss has granted voting rights
      to Mr.  Wachtel  pursuant to a voting proxy  agreement.  Mr. Weiss retains
      full control over the disposition of these shares.

(7)   Includes  407,000 with respect to which Mr.  Wunderlich has granted voting
      rights to Mr. Wachtel pursuant to a voting proxy agreement. Mr. Wunderlich
      retains full control over the disposition of these shares.

(8)   Assumes  that all  currently  exercisable  options  or  warrants  owned by
      members of this group have been exercised.


                                       30
<PAGE>

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
         INDEPENDENCE

Since the beginning of our fiscal year ended  December 31, 2006, we did not have
any related party  transactions  pursuant to Item 404 of  Regulation  S-K of the
Exchange Act.

Director Independence

      The Board has determined that Thomas Robertson and Peter Einselen (the
"Independent Directors") are independent as that term is defined in the listing
standards of the Nasdaq. As disclosed above, Messrs. Robertson and Einselen are
the sole members of our audit committee and our compensation committee and are
independent for such purposes.

      In determining director independence, the Board considered the option
awards to the Independent Directors for the year ended December 31, 2006,
disclosed in "Item 11 - Executive Compensation - Director Compensation" above,
and determined that such awards were compensation for services rendered to the
Board and therefore did not impact their ability to continue to serve as
Independent Directors.


                                       31
<PAGE>

Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

      The  aggregate  fees billed by our  principal  accounting  firm,  Dworken,
Hillman, LaMorte & Sterczala, P.C., for the fiscal years ended December 31, 2006
and 2005 are as follows:

                                              2006               2005
                                         --------------     --------------
Audit fees                                  $61,000            $55,000
Audit related fees                               --                 --
Tax fees                                         --                 --
All other fees                                   --                 --
      Total fees                            $61,000            $55,000
                                         --------------     --------------

Audit Committee Pre-Approval Policies and Procedures

      Our  audit  committee  charter  provides  that the  audit  committee  will
pre-approve  audit  services  and  non-audit  services  to be  provided  by  our
independent auditor before the auditor is engaged to render these services.  The
audit committee may consult with management in the decision-making  process, but
may not delegate this authority to management.  The audit committee may delegate
its authority to pre-approve services to one or more committee members, provided
that the designees  present the  pre-approvals to the full committee at the next
committee meeting.

                                     PART IV

Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) The following documents are filed as part of this report:

      (1)  Financial  Statements - See the Index to the  consolidated  financial
statements on page F-1

(b) Exhibits
------------

No. 3A      Certificate of Incorporation of the Company, as amended. (9)

No. 3B      Amended and Restated By-Laws of the Company. (5)

No. 4A      Specimen Stock Certificate. (2)

No. 10A**   1986 Stock Option Plan. (1)

No. 10B**   1989 Stock Option Plan. (3)

No. 10C**   1992 Stock Option Plan. (4)

No. 10D**   1997 Stock Option Plan. (6)

No. 10E**   1997 Non-Employee Stock Option Plan. (6)

No. 10F**   1999 Stock Option Plan. (8)

No. 10G     Form of Agreement and Plan of Reorganization among AutoInfo, Inc. on
            the one hand, and Sunteck  Transport Co., Inc., et al., on the other
            hand, dated June 22, 2000. (7)

No. 10H     Form of Debenture dated December 6, 2000. (7)


                                       32
<PAGE>

No. 10I     **Employment  Agreement between AutoInfo,  Inc. and Harry M. Wachtel
            dated as of January 1, 2007.*

No. 10J     **Employment  Agreement  between  AutoInfo,   Inc.  and  William  I.
            Wunderlich dated January 1, 2007.*

No. 10M     Stock  Purchase  Agreement  between  AutoInfo,  Inc  and  Kinderhook
            Partners, LP dated January 21, 2005.(10)

No. 10N     Registration Rights Agreement between AutoInfo,  Inc. and Kinderhook
            Partners, LP, et al, dated October 4, 2005.(10)

No. 10O     Registration Rights Agreement between AutoInfo,  Inc. and Kinderhook
            Partners, LP, et al, dated January 5, 2005.(11)

No. 10P     First Amendment to Revolving Credit and Security  Agreement  between
            Wachovia Bank and AutoInfo, Inc., et al (10)

No. 10Q     Second Amendment to Revolving Credit and Security  Agreement between
            Wachovia Bank and AutoInfo, Inc., et al (11)

No. 10R     Third Amendment to Revolving Credit and Security  Agreement  between
            Wachovia Bank and AutoInfo, Inc., et al *

No. 10S**   2003 Stock Option Plan (12)

No. 10T**   2005 Independent Sales Agent Stock Option Plan*

No. 10U**   2006 Stock Option Plan*

No. 10V**   2006 Independent Sales Agent Stock Option Plan*

No. 14A     Code of Ethics.(10)

No. 21A     Subsidiaries of the Registrant. (10)

No. 23A     Consent of Dworken, Hillman, LaMorte & Sterczala,  P.C., independent
            registered public accounting firm.*

No. 31A     Certification of Chief Executive  Officer Pursuant to Section 302 of
            the Sarbanes-Oxley Act of 2002.*

No. 31B     Certification of Chief Financial  Officer Pursuant to Section 302 of
            the Sarbanes-Oxley Act of 2002.*

No. 32A     Certification  of Chief  Executive  Officer  Pursuant  to 18  U.S.C.
            Section   1350,   as  adopted   Pursuant   to  Section  906  of  the
            Sarbanes-Oxley Act of 2002.*

No. 32B     Certification  of Chief  Financial  Officer  Pursuant  to 18  U.S.C.
            Section   1350,   as  adopted   Pursuant   to  Section  906  of  the
            Sarbanes-Oxley Act of 2002.*

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


                                       33
<PAGE>

*     Filed as an exhibit hereto.

**    Management contract or compensatory plan or arrangement.

(1)   This  Exhibit was filed as an Exhibit to our  definitive  proxy  statement
      dated October 20, 1986 and is incorporated herein by reference.

(2)   This  Exhibit was filed as Exhibit to our  Registration  Statement on Form
      S-1 (File No. 33-15465) and is incorporated herein by reference.

(3)   This  Exhibit was filed as an Exhibit to our  definitive  proxy  statement
      dated September 25, 1989 and is incorporated herein by reference.

(4)   This Exhibit was filed as an Exhibit our definitive  proxy statement dated
      October 2, 1992 and is incorporated herein by reference.

(5)   This  Exhibit  was filed as an Exhibit to our  Current  Report on Form 8-K
      dated March 30, 1995 and is incorporated herein by reference.

(6)   This Exhibit was filed as an Exhibit to our Annual Report on Form 10-K for
      the year ended December 31, 1997 and is incorporated herein by reference.

(7)   This  Exhibit  was filed as an Exhibit to our  Current  Report on Form 8-K
      dated December 6, 2000 and is incorporated herein by reference.

(8)   This Exhibit was filed as an Exhibit to our Annual Report on Form 10-K for
      the year ended December 31, 1999 and is incorporated herein by reference.

(9)   This  Exhibit was filed as an Exhibit to our Annual  Report on Form 10-KSB
      for the year  ended  December  31,  2000  and is  incorporated  herein  by
      reference.

(10)  This  Exhibit was filed as an Exhibit to our Annual  Report on Form 10-KSB
      for the year  ended  December  31,  2004  and is  incorporated  herein  by
      reference.

(11)  This Exhibit was filed as an Exhibit to our Annual Report on Form 10-K for
      the year ended December 31, 2005 and is incorporated herein by reference.

(12)  This  Exhibit  was filed  with our  Definitive  Information  Statement  on
      Schedule  14C,  filed  on July  7,  2003  and is  incorporated  herein  by
      reference.


(c) Information  required by schedules called for under Regulation S-X is either
not applicable or is included in the consolidated  financial statements or notes
thereto.


                                       34
<PAGE>

                                   SIGNATURES

      Pursuant  to the  requirements  of  Section  13 or 15(d),  the  Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
March 28, 2007 on its behalf by the undersigned, thereunto duly authorized.

                                      AutoInfo, Inc.

                                      By: /s/ Harry M. Wachtel
                                         -------------------------------
                                          Harry M. Wachtel, President and Chief
                                          Executive Officer

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

<TABLE>
<S>                                 <C>                                         <C>
/s/ Harry M. Wachtel
-----------------------------
Harry M. Wachtel                    President, Chief Executive Officer and      March 28, 2007
                                      Chairman of the Board
                                      (Principal Executive Officer)

/s/ William I. Wunderlich
-----------------------------
William I. Wunderlich               Chief Financial Officer                     March 28, 2007
                                      (Principal Accounting Officer)

/s/ Mark Weiss
-----------------------------
Mark Weiss                          Director                                    March 28, 2007

/s/ Peter C. Einselen
-----------------------------
Peter C. Einselen                   Director                                    March 28, 2007

/s/ Thomas C. Robertson
-----------------------------
Thomas C. Robertson                 Director                                    March 28, 2007
</TABLE>


                                       35
<PAGE>

                         AUTOINFO, INC. AND SUBSIDIARIES

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm                      F-2

Consolidated Balance Sheets as of December 31, 2006 and 2005                 F-3

Consolidated Statements of Income for the Years Ended
        December 31, 2006, 2005 and 2004                                     F-4

Consolidated Statements of Stockholders' Equity for the Years Ended
        December 31, 2006, 2005 and 2004                                     F-5

Consolidated Statements of Cash Flows
        for the Years Ended December 31, 2006, 2005 and 2004                 F-6

Notes to Consolidated Financial Statements                                   F-7

Information  required by schedules called for under Regulation S-X is either not
applicable  or is included in the  Consolidated  Financial  Statements  or Notes
thereto.


                                      F-1
<PAGE>

             Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of
AutoInfo, Inc.

We have audited the accompanying  consolidated balance sheets of AutoInfo,  Inc.
and subsidiaries as of December 31, 2006 and 2005, and the related  consolidated
statements of income, stockholders' equity, and cash flows for each of the three
years in the period ended December 31, 2006. These financial  statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of AutoInfo, Inc. and subsidiaries
as of December 31, 2006 and 2005 and the results of their  operations  and their
cash flows for each of the three years in the period ended  December 31, 2006 in
conformity with accounting principles generally accepted in the United States of
America.

As described in Note 2 to the  consolidated  financial  statements,  in 2006 the
Company  adopted   Statement  of  Financial   Accounting   Standards  No.  123R,
"Share-Based Payment."

February 26, 2007
Shelton, Connecticut

                                /s/  Dworken, Hillman, LaMorte & Sterczala, P.C.
                                ------------------------------------------------
                                Dworken, Hillman, LaMorte & Sterczala, P.C.


                                      F-2
<PAGE>

                         AUTOINFO, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                  December 31,
                                                                          ----------------------------
                                                                              2006            2005
                                                                          ------------    ------------
<S>                                                                       <C>             <C>
         ASSETS (Note 3)

 Current assets:
  Cash and cash equivalents                                               $    146,000    $    419,000
  Accounts receivable, net of allowance for doubtful accounts
   of $249,000 and $201,000 as of December 31, 2006 and
   2005, respectively                                                       16,967,000      12,735,000
  Deferred income taxes  (Note 5)                                            1,445,000         860,000
  Other current assets                                                         363,000         255,000
                                                                          ------------    ------------

 Total current assets                                                       18,921,000      14,269,000

 Fixed assets, net of depreciation                                             324,000         292,000

 Deferred income taxes (Note 5)                                              2,502,000       2,047,000

 Advances and other assets                                                   2,075,000          38,000
                                                                          ------------    ------------

                                                                          $ 23,822,000    $ 16,646,000
                                                                          ============    ============

         LIABILITIES AND STOCKHOLDERS' EQUITY

 Current liabilities:
  Loan payable (Note 3)                                                   $  3,451,000    $  1,280,000
  Accounts payable and accrued liabilities                                   8,375,000       7,235,000
                                                                          ------------    ------------

 Total current liabilities                                                  11,826,000       8,515,000
                                                                          ------------    ------------

 Commitments and contingencies (Note 6)

 Stockholders' equity : (Note 7)
  Common stock - authorized 100,000,000 shares, $.001 par
   value; issued and outstanding 32,102,000 and 31,624,000 as
   of December 31, 2006 and 2005, respectively                                  32,000          32,000
  Additional paid-in capital                                                19,420,000      19,183,000
  Deficit                                                                   (7,456,000)    (11,084,000)
                                                                          ------------    ------------

  Total stockholders' equity                                                11,996,000       8,131,000
                                                                          ------------    ------------

                                                                          $ 23,822,000    $ 16,646,000
                                                                          ============    ============
</TABLE>


        The accompanying notes are an integral part of these consolidated
                              financial statements.


                                      F-3
<PAGE>

                         AUTOINFO, INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                  For The Years Ended December 31,
                                            --------------------------------------------
                                                2006            2005            2004
                                            ------------    ------------    ------------
<S>                                         <C>             <C>             <C>
Gross revenues                              $ 84,111,000    $ 68,040,000    $ 46,492,000
Cost of transportation                        66,368,000      54,486,000      37,758,000
                                            ------------    ------------    ------------

Net revenues                                  17,743,000      13,554,000       8,734,000
                                            ------------    ------------    ------------

Commissions                                   11,044,000       8,348,000       5,179,000
Operating expenses                             3,840,000       3,005,000       2,519,000
                                            ------------    ------------    ------------
                                              14,884,000      11,353,000       7,698,000
                                            ------------    ------------    ------------

Income from operations                         2,859,000       2,201,000       1,036,000

Interest expense (Note 4)                        113,000          56,000          50,000
                                            ------------    ------------    ------------

Income before income taxes (benefit)           2,746,000       2,145,000         986,000
Income taxes (benefit)  (Note 5)                (882,000)     (1,463,000)       (480,000)
                                            ------------    ------------    ------------

Net income                                  $  3,628,000    $  3,608,000    $  1,466,000
                                            ============    ============    ============

Net income per share:
 Basic                                            $  .11          $  .11          $  .05
 Diluted                                          $  .10          $  .11          $  .04

Weighted average number of common shares:
 Basic                                        31,915,000      31,520,000      30,915,000
 Diluted                                      36,005,000      33,920,000      33,438,000
</TABLE>


        The accompanying notes are an integral part of these consolidated
                              financial statements.


                                      F-4
<PAGE>

                         AUTOINFO, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                    Shares of
                                     Common                 Additional
                                      Stock      Common      Paid - In
                                   Outstanding    Stock       Capital      Deficit
                                   -----------   -------   -----------   ------------
<S>                                 <C>          <C>       <C>           <C>
Balance, January 1, 2004            27,383,000   $27,000   $18,023,000   $(16,158,000)

Sale of common shares                1,333,000     2,000       415,000

Conversion of subordinated
 debentures  (Note 4)                2,300,000     2,000       573,000

Exercise of stock options              202,000        --        15,000

Stock-based compensation expense                                47,000

Net income                                                                  1,466,000
                                   -----------   -------   -----------   ------------

Balance, December 31, 2004          31,218,000   $31,000   $19,073,000   $(14,692,000)

Exercise of stock options              406,000     1,000        21,000

Stock-based compensation expense                                89,000

Net income                                                                  3,608,000
                                   -----------   -------   -----------   ------------

Balance, December 31, 2005          31,624,000   $32,000   $19,183,000   $(11,084,000)

Exercise of stock options              478,000                 103,000

Stock-based compensation expense                               134,000

Net income                                                                  3,628,000
                                   -----------   -------   -----------   ------------

Balance, December 31, 2005          32,102,000   $32,000   $19,420,000   $ (7,456,000)
                                   ===========   =======   ===========   ============
</TABLE>


        The accompanying notes are an integral part of these consolidated
                              financial statements.


                                      F-5
<PAGE>

                         AUTOINFO, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                              For The Years Ended December 31,
                                                             2006           2005           2004
                                                         -----------    -----------    -----------
<S>                                                      <C>            <C>            <C>
 Cash flows from operating activities:
  Net income                                             $ 3,628,000    $ 3,608,000    $ 1,466,000
  Adjustments to reconcile net income to net
   cash provided by  (used in)  operating activities:
    Change in allowance for doubtful accounts                 48,000         76,000         65,000
    Depreciation and amortization expenses                   104,000         85,000         40,000
    Stock-based compensation expense                         134,000         89,000         47,000
    Deferred income taxes                                 (1,040,000)    (1,586,000)      (537,000)

  Changes in assets and liabilities:
    Accounts receivable                                   (4,279,000)    (3,153,000)    (4,842,000)
    Other current assets                                    (108,000)       424,000       (398,000)
    Advances and other assets                             (2,037,000)        (8,000)       105,000
    Accounts payable and accrued liabilities               1,140,000      1,850,000      2,612,000
                                                         -----------    -----------    -----------

  Net cash provided by (used in) operating activities     (2,410,000)     1,385,000     (1,442,000)
                                                         -----------    -----------    -----------

  Cash flows from investing activities:
    Capital expenditures                                    (137,000)      (307,000)       (37,000)
                                                         -----------    -----------    -----------

  Net cash used in investing activities                     (137,000)      (307,000)       (37,000)
                                                         -----------    -----------    -----------

  Cash flows from financing activities:
    Sale of common shares                                         --             --        417,000
    Exercise of stock options                                103,000         21,000         15,000
    Increase (decrease) in  loan payable, net              2,171,000       (718,000)       952,000
                                                         -----------    -----------    -----------

  Net cash  provided by (used in) financing activities     2,274,000       (697,000)     1,384,000
                                                         -----------    -----------    -----------

  Net change in cash and cash equivalents                   (273,000)       381,000        (95,000)
  Cash and cash equivalents, beginning of year               419,000         38,000        133,000
                                                         -----------    -----------    -----------

  Cash and cash equivalents, end of year                 $   146,000    $   419,000    $    38,000
                                                         ===========    ===========    ===========
</TABLE>


        The accompanying notes are an integral part of these consolidated
                             financial statements.


                                      F-6
<PAGE>

                         AUTOINFO, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 and 2004

Note 1 - Business and Summary of Significant Accounting Policies

Business Overview

      Through its  wholly-owned  subsidiary,  Sunteck  Transport  Co.,  Inc, the
Company  is  a  non-asset  based  transportation  services  company,   providing
transportation   capacity  and  related  transportation   services  to  shippers
throughout the United States,  and to a lesser  extent,  Canada.  As a non-asset
based provider of brokerage and contract carrier  transportation  services,  the
Company  does  not own any  equipment  and its  services  are  provided  through
strategic alliances with less than truckload, truckload, air, rail, ocean common
carriers  and  independent  owner-operators  to service  customers'  needs.  The
Company's non-asset based services include ground transportation coast to coast,
local pick up and delivery.  The Company's  business services  emphasize safety,
information  coordination  and  customer  service  and are  delivered  through a
network  of  independent  commissioned  sales  agents and third  party  capacity
providers coordinated by it. The independent commissioned sales agents typically
enter  into  exclusive  contractual   arrangements  with  the  Company  and  are
responsible for locating  freight and  coordinating  the  transportation  of the
freight  with  customers  and  capacity  providers.  The  third  party  capacity
providers  consist of independent  contractors who provide truck capacity to the
Company,  including  owner-operators  who operate under the  Company's  contract
carrier license, air cargo carriers and railroads.

      The  Company's  brokerage  services  are  provided  though  a  network  of
independent sales agents throughout the United States and Canada.  The Company's
services  include  arranging for the  transport of  customers'  freight from the
shippers  location to the designated  destination.  The Company does not own any
trucking  equipment  and relies on  independent  carriers  for the  movement  of
customers' freight. The Company seeks to establish long-term  relationships with
its  customers  and  provides a variety of logistics  services and  solutions to
eliminate inefficiencies in its customers' supply chain management.

      The  Company's  contract  carrier  services  are also  provided  through a
network of independent sales agents and independent  owner-operators  throughout
the  United  States.  The  Company  does  not own any  trucking  equipment;  its
independent  owner-operators  lease onto the Company's  operating  authority and
transport  freight  under its name. In the fourth  quarter of 2006,  the Company
upgraded its driver safety and compliance standards under the direction of a new
safety  director as part of its effort to improve safety ratings and the quality
of its owner operator network.  These changes resulted in a short-term reduction
in the number of owner operators and corresponding number of transactions in the
fourth quarter of 2006. While the Company expects that this will have a residual
impact in the first and second  quarters  of 2007,  it does not  anticipate  any
adverse long-term effect.


                                      F-7
<PAGE>

Summary of Significant Accounting Policies

Basis of Presentation

      The  financial  statements  of the Company  have been  prepared  using the
accrual basis of accounting under accounting  principles  generally  accepted in
the United States of America (GAAP).

Principles of Consolidation

      The  consolidated   financial  statements  include  the  accounts  of  the
AutoInfo, Inc. (the Company), its wholly-owned subsidiary Sunteck Transport Co.,
Inc.  and its  wholly-owned  subsidiary  Sunteck  Transport &  Logistics,  Inc.,
(collectively,  Sunteck). All significant intercompany balances and transactions
have been eliminated in consolidation.

Use of Estimates

      The  preparation  of these  financial  statements in conformity  with GAAP
requires  management to make certain estimates and assumptions.  These estimates
and  assumptions  affect  the  reported  amounts  of  assets,   liabilities  and
contingent  liabilities at the date of the financial statements and the reported
amounts of revenue  and  expenses  during the  periods  presented.  The  Company
believes that all such  assumptions  are  reasonable  and that all estimates are
adequate, however, actual results could differ from those estimates.

Revenue Recognition

      As a third party  transportation  logistics provider,  the Company acts as
the  shippers'  agent and arranges  for a carrier to handle the  freight.  Gross
revenues  consist of the total dollar  value of services  purchased by shippers.
Revenue is  recognized  upon the delivery of freight,  at which time the related
transportation cost, including commission, is also recognized. At that time, the
Company's  obligations are completed and collection of receivables is reasonably
assured.

      Emerging  Issues  Task Force No.  99-19,  "Reporting  Revenues  Gross as a
Principal  Versus  Net as an  Agent"  (EITF  99-19),  establishes  criteria  for
recognizing revenues on a gross or net basis. The Company is the primary obligor
in its transactions,  has all credit risk, maintains  substantially all risk and
rewards,  has discretion in selecting the supplier,  and has latitude in pricing
decisions.  Accordingly,  the  Company  records  all  transactions  at the gross
amount, consistent with the provisions of EITF 99-19.

Cash and Cash Equivalents

      Cash and cash equivalents consist of cash in banks.

Provision For Doubtful Accounts

      The Company  continuously  monitors the  creditworthiness of its customers
and has  established an allowance for amounts that may become  uncollectible  in
the future based on current economic trends, its historical payment and bad debt
write-off experience, and any specific customer related collection issues.


                                      F-8
<PAGE>

Fixed Assets

      Fixed assets as of December 31, 2006 and 2005, consisting predominantly of
furniture, fixtures equipment and proprietary software, were carried at cost net
of accumulated  depreciation.  Depreciation  of fixed assets was provided on the
straight-line method over the estimated useful lives of the related assets which
range from three to five years.

Advances

During 2006, in connection  with the expansion of its sales agent  network,  the
Company made advances to independent commissioned sales agents. According to the
terms of the  agreements,  these  advances  will be offset  against  commissions
earned over the lives of the agreements.

Income Per Share

      Basic  income  per share is based on net income  divided  by the  weighted
average  number  of  common  shares   outstanding.   Common  stock   equivalents
outstanding  were  4,090,000,  2,400,000,  and  2,523,000  for the  years  ended
December 31, 2006, 2005 and 2004, respectively.

Income Taxes

      The Company  utilizes the asset and liability  method for  accounting  for
income  taxes.  Under the asset and  liability  method,  deferred tax assets and
liabilities  are  recognized  for the future tax  consequences  attributable  to
differences  between the financial statement carrying amounts of existing assets
and  liabilities  and  their  respective  tax bases and  future  benefits  to be
recognized  upon  the  utilization  of  certain  operating  loss  carryforwards.
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.  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.

Recently Issued Accounting Standards

      In June 2006,  the  Financial  Accounting  Standards  Board (FASB)  issued
Interpretation   No.  48,  "Accounting  for  Uncertainty  in  Income  Taxes,  an
Interpretation  of FASB  Statement  No.  109"  (FIN  48),  which  clarifies  the
accounting for uncertainty in tax positions.  FIN 48 requires the recognition of
a tax  position  when it is more likely than not that the tax  position  will be
sustained  upon  examination  by taxing  authorities,  based upon the  technical
merits of the position.  The  provisions of FIN 48 are effective for the Company
on January 1, 2007. The Company does not expect the adoption of FIN 48 to have a
material impact on its financial statements.

      In September  2006,  the FASB issued  Statement  of  Financial  Accounting
Standards (SFAS) No. 157, "Fair Value  Measurements"  (SFAS 157), which provides
guidance  for using  fair  value to measure  assets  and  liabilities.  SFAS 157
defines  fair value and  establishes  a  framework  for  measuring  fair  value;
however,   SFAS  157  does  not  expand  the  use  of  fair  value  in  any  new
circumstances.  The  provisions  of SFAS 157 are  effective  for the  Company on
January 1, 2008.  The Company does not expect the adoption of SFAS 157 to have a
material impact on its financial statements.


                                      F-9
<PAGE>

Segment Information

      The  Company  provides   transportation  capacity  and  related  logistics
services  through its integrated  network of independent  agents and third party
capacity  providers.   For  the  purpose  of  applying  Statement  of  Financial
Accounting  Standards No. 131,  "Disclosures About Segments of an Enterprise and
Related  Information",  management has  determined  that it operates in a single
business segment.

Reclassification

      Certain  prior year balances  have been  reclassified  to conform with the
current year presentation.  These  reclassifications had no effect on previously
reported results of operations or net assets.

Note 2 - Change in Accounting Principle

      In  December  2004,  the  Financial   Accounting  Standards  Board  issued
Statement of Financial  Accounting  Standards  No. 123R,  "Share-Based  Payment"
(SFAS 123R).  The  pronouncement  requires  companies  to measure and  recognize
compensation  expense for all share-based payments to employees in the financial
statements  based on the  fair  value at the  date of the  grant.  In the  first
quarter of 2006,  the Company  adopted SFAS 123R using the modified  prospective
method. Under the modified  prospective method,  compensation cost is recognized
for all share-based payments granted after the adoption of SFAS 123R and for all
awards  granted to employees  prior to the adoption  date of SFAS 123R that were
unvested on the adoption date.  Accordingly,  no restatements were made to prior
periods.

      Prior to the  adoption  of SFAS  123R,  the  Company  applied  SFAS 123 to
account for its stock  option  plans.  As permitted by SFAS 123, the Company had
chosen to apply  Accounting  Principles  Board Opinion No. 25,  "Accounting  for
Stock Issued to  Employees" in accounting  for its employee  stock  compensation
plans.  Accordingly,  no  compensation  expense was  recognized for its employee
stock option  issuances,  as stock options are issued with an exercise  price at
least equal to the closing price at the date of grant.

Note 3 - Debt

Loan Payable

      In May 2003, the Company entered into a $1.5 million Line of Credit with a
commercial  lending  institution,  secured  by  substantially  all assets of the
Company.  In 2004, this Line of Credit was increased to $2.5 million and in 2006
this line was  increased  to $4.0  million.  The Line of Credit  expires in June
2008.  The Line of Credit  provides  for  interest at the LIBOR plus 2% (7.3% at
December 31, 2006) and the maintenance of certain financial covenants.

Note 4 - Related Party Transactions

      In December 2000, the Company obtained  financing  totaling  $575,000 from
certain  related  parties in the form of ten year 12%  Subordinated  Convertible
Debentures  (Debentures).  In January 2004, these Debentures were converted into
2,300,000  shares of common stock.  Interest of $4,000 was charged to operations
in 2004.


                                      F-10
<PAGE>

Note 5- Income Taxes

      For the years ended  December 31, 2006,  2005 and 2004,  the provision for
income taxes consisted of the following:

<TABLE>
<CAPTION>
                                              2006                        2005                        2004
                                     Current       Deferred       Current      Deferred       Current     Deferred
                                   --------------------------------------------------------------------------------
<S>                                <C>            <C>            <C>          <C>            <C>          <C>
Income tax expense before
 application of operating
 loss carryforwards                $ 1,083,000    $        --    $ 841,000    $        --    $ 393,000    $      --
Income tax expense (benefit)
 of operating loss carryforwards      (925,000)       925,000     (718,000)       718,000     (336,000)     336,000
Change in valuation
 allowance                                         (1,965,000)                 (2,304,000)                 (873,000)
                                   -----------    -----------    ---------    -----------    ---------    ---------

Income tax expense (benefit)       $   158,000    $(1,040,000)   $ 123,000    $(1,586,000)   $  57,000    $(537,000)
                                   -----------    -----------    ---------    -----------    ---------    ---------
</TABLE>

      The following table reconciles the Company's  effective income tax rate on
income  from  operations  to the  Federal  Statutory  Rate for the  years  ended
December 31, 2006, 2005 and 2004:

<TABLE>
<CAPTION>
                                                   2006         2005         2004
                                                 --------     --------     --------
<S>                                                <C>          <C>          <C>
Federal Statutory Rate                              34.0%        34.0%        34.0%

State income taxes, net of federal benefit           5.8          3.4          5.7

Effect of:
 Utilization of operating loss carryforward        (34.0)       (34.0)       (34.0)
 Change in valuation allowance                     (37.9)       (44.0)       (54.4)
                                                --------     --------     --------
                                                   (32.1)%      (40.6)%      (48.7)%
                                                ========     ========     ========
</TABLE>

        Deferred  taxes are  comprised of the following at December 31, 2006 and
2005:

                                               December 31,   December 31,
                                                   2006           2005
                                               ------------   ------------
    Deferred tax asset:
      Net operating loss carryforward          $  3,947,000   $  4,872,000
                                               ------------   ------------

    Gross  deferred tax asset                     3,947,000      4,872,000
    Less: valuation allowance                            --     (1,965,000)
                                               ------------   ------------

    Deferred tax asset                         $  3,947,000   $  2,907,000
                                               ============   ============

      The deferred tax asset  represents  expected future tax savings  resulting
from the Company's net operating loss carryforward. As of December 31, 2006, the
Company has a net operating loss carryforward of approximately $11.6 million for
federal  income tax purposes  which expire  through  2014.  Utilization  of this
benefit is primarily subject to the extent of future earning of the Company, and
may be


                                      F-11
<PAGE>

limited by, among other  things,  shareholder  changes,  including  the possible
issuance  by the  Company  of  additional  shares  in one or more  financing  or
acquisition transactions.

      Based  upon  available   objective   evidence,   including  the  Company's
post-merger history of profitability, management believes it is more likely than
not that forecasted  taxable income will be sufficient to utilize all of the net
operating loss carryforward before its expiration in 2014. Accordingly, in 2006,
2005 and 2004 the valuation allowance was reduced by $1,965,000, $2,304,000, and
$873,000, respectively. However, there can be no assurance that the Company will
meet its expectations of future income.

Note 6 - Commitments and Contingencies

Leases

      The  Company  is  obligated  under  non-cancelable  operating  leases  for
premises  expiring at various  dates through  April 2010.  Future  minimum lease
payments are $73,000, $68,000, $70,000 and $24,000 for the years ending December
31, 2007,  2008, 2009 and 2010,  respectively.  Rent expense for the years ended
December  31,  2006,  2005  and  2004  was  $105,000,   $97,000,   and  $76,000,
respectively.

Other Agreements

      The Company has employment agreements with Messrs. Wachtel and Wunderlich,
its chief executive officer and chief financial officer,  respectively,  who are
also  stockholders.  The agreements  expire in December 31, 2011 and provide for
minimum annual  compensation of $250,000 and $175,000,  and bonuses equal to 10%
of the Company's  consolidated pre-tax profit (as defined) up to $1,250,000 and,
5% of our  consolidated  pre-tax profit in excess of  $1,250,000,  respectively.
Bonus  payments to each of Messrs.  Wachtel and  Wunderlich  were  $269,000  and
$229,000 for the year ended  December 31, 2006,  respectively,  and $125,000 for
the years ended December 31, 2005 and 2004.

Litigation

      The  Company is  involved in certain  litigation  arising in the  ordinary
course of its  business.  In the opinion of  management,  these matters will not
have a material adverse effect on the Company's financial position or liquidity.

Note 7 - Stockholders' Equity

Stock Option Plans

      The Company has ten stock option plans;  its 1985, 1986, 1989, 1992, 1997,
1999, 2003, 2005 and two 2006 Plans (collectively,  the Plans).  Pursuant to the
Plans,  a total of  20,342,500  shares of common stock were made  available  for
grant of stock  options.  Under the  Plans,  options  have been  granted  to key
personnel  to purchase  shares at not less than fair market value on the date of
grant. Stock options generally vest ratably over a period of three to five years
from the date of grant and must be  exercised  within ten years from the date of
grant.  The  Company's  policy  is  to  recognize   compensation  expense  on  a
straight-line  basis over the  requisite  service  period for the entire  award.
Compensation expense is recognized only for those options expected to vest, with
forfeitures  estimated  at the date of


                                      F-12
<PAGE>

grant based on the Company's historical  experience and future expectations.  No
further grants will be made under the 1985, 1986, 1989 or 1992 Plans.

      Options  have been  granted  under the Plans to  independent  sales agents
under the same general  terms and  conditions  as options  granted to employees.
Such  option  grants are  primarily  based  upon  profits  generated  and act as
long-term  incentives  to remain  with the  Company.  Out of the  total  options
outstanding  of 11,292,000 as of December 31, 2006,  8,873,000 have been granted
to independent sales agents.

      Option  activity for the years ended December 31, 2006,  2005 and 2004 was
as follows:

<TABLE>
<CAPTION>
                                    Shares         Weighted       Weighted       Aggregate
                                  Subject to       Average         Average       Intrinsic
                                    Options     Exercise Price    Remaining        Value
                                                  Per Share      Contractual   (in millions)
                                                                    Life
                                 -----------    --------------   -----------   -------------
<S>                                <C>                <C>               <C>           <C>
Outstanding, January 1, 2004       4,095,000          $  .15            7.5           $ 0.6
                                                                      -----           -----
Forfeited                           (736,000)            .16
Exercised                           (202,000)            .07
Granted                            2,437,000             .44
                                   ---------          ------

Outstanding, December 31, 2004     5,594,000          $  .28            5.9           $ 1.8
                                                                      -----           -----
Forfeited                           (611,000)            .33
Exercised                           (406,000)            .13
Granted                            2,504,000             .54
                                   ---------          ------

Outstanding, December 31, 2005     7,081,000          $  .37            5.1           $ 1.5
                                                                      -----           -----
Forfeited                           (192,000)            .56
Exercised                           (478,000)            .22
Granted                            4,881,000            1.11
                                   ---------          ------

Outstanding December 31, 2006     11,292,000          $  .70            4.6           $ 3.7
                                 -----------          ------          -----           -----
Exercisable, December 31, 2006     3,684,000          $  .32            3.9           $ 2.6
                                 -----------          ------          -----           -----
</TABLE>

        As of December 31,  2006,  there were  6,539,000  shares of common stock
available  for  issuance  pursuant to future  stock  option  grants.  Additional
information regarding options outstanding as of December 31, 2006 is as follows:

<TABLE>
<CAPTION>
                              Options outstanding                               Options exercisable
                  ------------------------------------------------              -------------------
                                   Weighted
                                   average
                                  remaining           Weighted                              Weighted
   Range of                    contractual life   average exercise                      average exercise
exercise prices     Shares         (years)             price              Shares             price
---------------   ----------   ----------------   ----------------   ----------------   ----------------
<S>                <C>               <C>                <C>              <C>                  <C>
  $.05 - .20       1,804,000         4.2                $   .13          1,804,000            $  .13
   .24 - .65       4,936,000         3.9                    .49          1,730,000               .44
   .72 - .88         484,000         5.3                    .87             50,000               .88
 1.07 - 1.48       4,068,000         5.5                   1.17            100,000              1.32
--------------------------------------------------------------------------------------------------------
  $.05 - 1.48      11,292,000         4.6                $   .70          3,684,000            $  .32
--------------------------------------------------------------------------------------------------------
</TABLE>


                                      F-13
<PAGE>

Weighted average grant-date fair value of options granted:

                         2006                                $ 1.11
                         2005                                $ 0.54
                         2004                                $ 0.44

      The fair  value of each  option  grant is  estimated  on the date of grant
using the Black-Scholes option pricing model with the following weighted average
assumptions by grant year.

                                      2006            2005            2004
                                 -----------------------------------------------

Risk-free interest rate               4.52%           3.00%           3.00%
Expected dividend yield                  0%              0%              0%
Expected volatility factor           18.16%          22.29%          25.24%
Expected option term, in years        6.00            6.00            5.48

      The Company recognized  stock-based  compensation expense related to stock
options of $134,000,  $89,000 and $47,000 for the years ended December 31, 2006,
2005 and 2004,  respectively.  As of  December  31,  2006,  the Company had $1.4
million of unrecognized  stock-based  compensation  expense related to nonvested
stock option plans that will be recognized over a period of five years.

Note 8 - Fair Value of Financial Instruments

      The  following  disclosures  of fair value were  determined  by management
using available  market  information and  appropriate  valuation  methodologies.
Considerable  judgment  is  necessary  to  interpret  market  data  and  develop
estimated  fair  value.  Accordingly,  the  estimates  presented  herein are not
necessarily  indicative of the amounts the Company could realize on  disposition
of the financial  instruments.  The use of different market  assumptions  and/or
estimation  methodologies may have a material effect on the estimated fair value
amounts.

      Cash and cash  equivalents,  accounts  receivable,  accounts  payable  and
accrued  liabilities  and loan payable are carried at amounts  which  reasonably
approximate fair value.


                                      F-14
<PAGE>

Note 9 - Quarterly Results of Operations (Unaudited)

<TABLE>
<CAPTION>
                                           Year Ended December 31, 2006
                                                   Quarter Ended
                               --------------------------------------------------------
                                  Mar 31       June 30       Sep 30          Dec 31
                               -----------   -----------   -----------   --------------
<S>                            <C>           <C>           <C>           <C>
Gross revenues                 $18,096,000   $20,858,000   $22,442,000   $   22,715,000
                               -----------   -----------   -----------   --------------

                               -----------   -----------   -----------   --------------
Net income                     $ 1,155,000   $ 1,044,000   $   986,000   $      443,000
                               ===========   ===========   ===========   ==============

Basic net income per share         $   .04       $   .03       $   .03       $      .01
                               -----------   -----------   -----------   --------------
Diluted net income per share       $   .03       $   .03       $   .03       $      .01
                               ===========   ===========   ===========   ==============
</TABLE>


<TABLE>
<CAPTION>
                                              Year Ended December 31, 2005
                                                      Quarter Ended
                               ---------------------------------------------------------
                                  Mar 31         June 30        Sep 30         Dec 31
                               ------------   ------------   ------------   ------------
<S>                            <C>            <C>            <C>            <C>
Gross revenues                 $ 14,915,000   $ 15,477,000   $ 17,336,000   $ 20,312,000
                               ------------   ------------   ------------   ------------

                               ------------   ------------   ------------   ------------
Net income                     $    393,000   $    441,000   $    580,000   $  2,194,000
                               ============   ============   ============   ============

Basic net income per share          $   .01        $   .01        $   .02        $   .07
                               ------------   ------------   ------------   ------------
Diluted net income per share        $   .01        $   .01        $   .02        $   .07
                               ============   ============   ============   ============
</TABLE>

Note  10 -  Supplemental  Disclosure  of  Cash  Flow  Information  and  Non-Cash
Financing Activities

      Cash paid for interest in 2006,  2005 and 2004 was  $113,000,  $56,000 and
$50,000 respectively.

      The Company paid income taxes $118,000,  $47,000 and $24,000 for the years
ended December 31, 2006, 2005 and 2004, respectively.

      In January 2004,  $575,000 of outstanding 12% convertible  debentures were
converted into 2,300,000 shares of common stock.


                                      F-15