<PAGE>
                    U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                        -------------------------------

                                   FORM 10-KSB

(Mark One)

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

For the Fiscal Year Ended December 31, 2001

                                       OR

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

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

Commission File No. 000-28243

                                parts.com, Inc.
                                ---------------
               (Name of Small Business Issuer in its Charter)


                   NEVADA                                88-0344869
        (State or Other Jurisdiction                   (IRS Employer
      of Incorporation or Organization)              Identification No.)


            121 EAST FIRST STREET
              SANFORD, FLORIDA                                  32771
              -----------------                               --------
    (Address of Principal Executive Offices)                 (Zip Code)


Registrant's telephone number:(407) 302-1314
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)

Check whether the Registrant (1) has filed all reports to be filed by Section 13
or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for such a 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.

                                     X
                                   -----        -----
                                    YES           NO

Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. (X)

The aggregate market value of the Common Stock held by non-affiliates of the
registrant as of April 26, 2002 was approximately $381,811 based upon the
average closing price of the registrants common stock on April 26, 2002 of $0.16
per share. As of April 26, 2002, there were 2,386,322 held by non-affiliates.
For purposes of this computation, one outside shareholder whose combined
holdings represents more than 10% of the Common Stock and all executive officers
and directors of the registrant have been deemed to be affiliates. Such
determination should not be deemed to be an admission that such shareholder,
directors and officers are, in fact, affiliates of the registrant.

The number of shares of Common Stock of the registrant outstanding as of April
26, 2002 was 4,952,799.

Transitional Small Business Disclosure Format (check one): Yes [ ]  No [X]

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<TABLE>
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                               TABLE OF CONTENTS


                                     PART I

<S>      <C>                                                                                 <C>
Item 1.  Description of Business .........................................................     1
Item 2.  Description of Properties .......................................................    15
Item 3.  Legal Proceedings ...............................................................    15
Item 4.  Submission of Matters to a Vote of Security Holders .............................    15

                                     PART II

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters ...........    15
Item 6.  Selected Financial Data .........................................................    19
Item 7.  Management's Discussion and Analysis of Financial Condition and Results
             of Operations ...............................................................    19
Item 8.  Financial Statements and Supplementary Data .....................................    F-1
Item 9.  Changes in and Disagreements with Accountants on Accounting and
             Financial Disclosure ........................................................    24


                                    PART III

Item 10. Directors, Executive Officers of the Registrant, Promoters and Control
                 Persons; Compliance with Section 16(a) of the Exchange Act ..............    24
Item 11. Executive Compensation ..........................................................    26
Item 12. Security Ownership of Certain Beneficial Owners and Management ..................    30
Item 13. Certain Relationships and Related Transactions ..................................    31
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K .................    32
         Signatures ......................................................................    34
</TABLE>



<PAGE>

SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION

     Certain statements contained in this Annual Report on Form 10-KSB,
including information with respect to the Company's future business plans,
constitute "forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") and the
Private Litigation Securities Reform Act of 1995. For this purpose, any
statements contained herein that are not statements of historical fact may be
deemed to be forward-looking statements. Without limiting the foregoing, the
words "believes," "plans," "expects," "goals," "should," "anticipate," "intend,"
"plan," foresee and similar expressions are intended to identify forward-looking
statements. There are a number of important factors that could cause the results
of the Company to differ materially from those indicated by such forward-looking
statements. These factors include those set forth in the Business section below
and in Item 7 Management's Discussion and Analysis of Financial Condition and
Results of Operations and in other documents filed from time to time with the
Securities and Exchange Commission. Specific events addressed by these forward
looking statements include, but are not limited to:

         -        future acquisitions;

         -        industry trends;

         -        general economic trends, including employment rates and
                  consumer confidence levels;

         -        parts sales rates and subscriber sales growth;

         -        our financing plans;

         -        our business and growth strategies.

These forward-looking statements are based on our current estimates and
assumptions and involve various risks and uncertainties. As a result, you are
cautioned that these forward looking statements are not guarantees of future
performance, and that actual results could differ materially from those
projected in these forward looking statements. Factors which may cause actual
results to differ materially from our projections, as well as:

         -        our ability to generate sufficient cash flows or obtain
                  additional financing to support acquisitions, capital
                  expenditures and general operating activities;

         -        the reputation and financial condition of vehicle
                  manufacturers and dealers whose brands we represent;

         -        our relationships with dealers

         -        changes in laws and regulations governing the operation of
                  automobile franchises, accounting standards, taxation
                  requirements, and environmental laws;

         -        general economic conditions in the markets in which we
                  operate, including fluctuations in interest rates, employment
                  levels, and the level of consumer spending;

         -        high competition in the automotive B2B ecommerce parts
                  industry which creates pricing pressures on the products and
                  services we offer;

         -        our ability to successfully integrate past and potential
                  future acquisitions.


<PAGE>



                                     PART I

ITEM 1. BUSINESS.

THE FOLLOWING DESCRIPTION OF OUR BUSINESS CONTAINS FORWARD-LOOKING STATEMENTS
WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995, AS
DO THE MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS SECTIONS OF THIS FORM 10-K, ALL OF WHICH RELATE TO SUCH MATTERS AS
ANTICIPATED FINANCIAL PERFORMANCE, BUSINESS PROSPECTS, TECHNOLOGICAL
DEVELOPMENTS, AND SIMILAR MATTERS. SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN
AND UNKNOWN RISKS, UNCERTAINTIES, AND OTHER FACTORS WHICH MAY CAUSE THE ACTUAL
RESULTS, PERFORMANCE, OR ACHIEVEMENTS OF THE COMPANY TO BE MATERIALLY DIFFERENT
FROM THOSE EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. FACTORS
INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED ELSEWHERE IN THIS REPORT IN THE
SECTION ENTITLED "RISK FACTORS" AND THE RISKS DISCUSSED IN OUR OTHER SECURITIES
AND EXCHANGE COMMISSION FILINGS.

           All references to "we", "us", "our", "our company", the "Company" or
"Parts.com" in this report refer to Parts.com, Inc., a Nevada Corporation.
Parts.com (the "Company") is a business-to-business electronic commerce software
and parts procurement platform provider. The Company's e-procurement solutions
enable corporations to use electronic automation to streamline business
transactions and reduce costs. The Company's line of cost-effective, scalable,
Web-based business-to-business and business-to-consumer sales and procurement
software may fit the needs of any parts business serving any vertical industry.
In addition to automating existing relationships between buyers and sellers,
parts.com also provides a marketplace where buyers and sellers can conduct
transactions electronically.

           The principal offices of the Company are located at 121 East First
Street, Sanford, Florida 32771 and its telephone number is (407) 302-1314. Our
web sites are located at www.parts.com and www.trademotion.com. The information
contained on these Web Sites is not a part of this Annual Report on Form 10-KSB.

         The Company was incorporated in Nevada on September 13, 1995, under the
name I.E.L.S., Inc., which company had no material operations and whose common
stock was traded on the OTC Electronic Bulletin Board. In September 1998,
I.E.L.S. completed an exchange agreement with Direct Touch Research, Inc.
("DTR"), a closely held Florida corporation that also had no material
operations. Pursuant to the exchange agreement, all outstanding shares of DTR
common stock were exchanged for 5,542,000 shares of I.E.L.S. common stock. As a
result, DTR became a wholly owned subsidiary of I.E.L.S. and I.E.L.S. changed
its name to Miracom Corporation. On January 5, 2000, Miracom Corporation changed
its name to parts.com, Inc. DTR was subsequently dissolved as a corporation in
August 1999. As a result of this transaction, DTR stockholders became owners of
approximately 61% of the Company's then outstanding common stock and assumed
100% control of the Company's board of directors. The effect of the transaction
was a reverse acquisition of I.E.L.S. by DTR. The purpose of the transaction was
to provide the founders of DTR with a more viable structure in the form of a
publicly-traded company that would enable them to facilitate the growth of their
business plan through acquisitions and to attract and retain necessary technical
personnel. For additional information regarding the transaction, see "Item 13
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS."

         In September 1998, the Company acquired all of the assets, liabilities
and business of United Equity Partners, Inc., a Florida corporation ("UEP"). In
that transaction, the Company issued a total of 150,000 shares of common stock
to UEP. UEP subsequently distributed those shares to its shareholders and UEP
was dissolved in August 1999. For additional information regarding the
transaction, see "Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS."

         Also in September 1998, the Company acquired all of the assets,
liabilities and business of MTV/Pinnacle Advertising Group, Inc., a Florida
corporation ("Pinnacle"). In that transaction, the Company issued a total of
582,000 shares of common stock to Pinnacle. Pinnacle subsequently distributed
those shares to its shareholders and Pinnacle was dissolved in August 1999. For
additional information regarding the transaction, see "Item 13. CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS."


<PAGE>

         In May 1999, the Company acquired all of the assets and business
operations and assumed all the outstanding liabilities of LiveCode, Inc.
("LiveCode") a Florida corporation in exchange for 600,000 shares of the
Company's common stock and a six-month non-interest bearing $20,000 promissory
note in favor of the LiveCode stockholders. Effective September 30, 1999, the
note was repaid by the issuance of 40,000 shares of the Company Common Stock.
For additional information regarding the transaction, see "Item 13. CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS."

         In October 1999, the Company acquired all of the outstanding common
stock of FlexRadio, Inc. ("FlexRadio"), a Florida corporation, in exchange for
6,200,000 shares of the Company's common stock which shares were issued to the
shareholders of FlexRadio. For additional information regarding this
transaction, see "Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS."

BUSINESS STRATEGY

           Our parts.com marketplace went "live" on January 23, 2000. We
developed parts.com to capitalize on the unrealized opportunities in
business-to-business and business-to-consumer e-commerce by bringing new value
to mechanical repair facilities, collision repair facilities, franchised new car
dealers, consumers and new car Original Equipment Manufacturers. We intend to
use the parts.com Marketplace, TradeMotion Solutions, patent pending and patent
published business process to bring strong brand recognition, customer loyalty
and dealer/manufacturer relationships in the on-line auto parts industry.

         Our focus of operations is the franchised new car dealer industry with
our e-commerce web site located at www.parts.com. We believe the automotive
industry is particularly well suited for on-line services for the procurement
and distribution of automotive parts and accessories (hereinafter collectively
referred to as "automotive parts") for several reasons. First, it is an existing
business community linked on-line for the distribution of automotive parts.
Second, there is a large market for automotive parts. Third, the national,
regional and local dynamics are excellent for implementing our Internet-based
business model. Fourth, we perceived a need in the automotive parts industry for
a more efficient method to access inventory and distribute automotive parts
because there exists no standardized means of communication between businesses
in that industry. We believe our business model will afford us a competitive
advantage over the current methods of parts procurement and locating of
automotive parts. We have designed our Internet-based business model to provide
access to a "virtual" inventory of automotive parts. We anticipate that our
Internet-based business model will offer cost advantages to both the franchised
dealer, mechanical and collision repair facilities and consumers of automotive
parts as a result of: improving inventory management by having access to "real
time" information on inventory status and sales trends; minimizing the time and
labor involved in trying to locate a part; improving margins on automotive parts
for certain automotive businesses by providing them access, through parts.com,
to the inventory of manufacturers of automotive parts who are part of the
parts.com automotive parts community.

         Through parts.com, we intend to make the supply chain operate more
efficiently and more profitably for customers than the current distribution
system. Currently, automobile dealerships, service centers and garages order
automotive parts from certain "middle men" such as warehouse distributors (i.e.,
NAPA, Carquest, General parts, etc.), "jobbing stores" (i.e., Anderson
Wholesale, Barnes Motor & parts, etc.), and retailers (i.e., Pep Boys, Auto
Zone, Discount parts, etc.). Each warehouse distributor has its own platform and
related software managing its inventory and sales information. There are
currently many such different systems and a customer's operating system must be
compatible with that of the vendors from whom they buy parts. Auto parts are
warehoused by distributors in regional or district warehouses and are
transported to local stores and thereafter-local service centers or garages.
These storage and transportation costs are factored into the price of the parts.
When a dealer or garage needs a part that they do not have on hand, they may
have to call several warehouses, jobbers, retailers or other service centers or
garages before locating the part - all of which is time consuming and labor
intensive. If parts they do not have on hand are required for different

<PAGE>

vehicle lines (i.e., Ford, Chrysler, Chevrolet), then the same calls must be
made for each part to several different sources. Once the part is located, the
buyer and the seller then have to process the order, and the seller must collect
the funds - all of which is time consuming and labor intensive.

         Parts.com includes in its parts inventory base OEM parts information
(i.e., parts sold by Ford, Chrysler, General Motors and other automobile and
truck manufacturers), which is linked to new car-franchised dealers. The
manufacturer would be able to track in "real time" sales from the point-of-sale
of its parts inventory and plan its manufacturing and inventory needs
accordingly. Currently, manufacturers rely on information provided on a delayed
basis by franchised dealers whom sell parts to their warranty and non-warranty
customers as well as independent mechanical and collision repair facilities. As
a result, manufacturers and their dealers must maintain certain levels of
inventory at all times to meet demand.

         Our strategy is to provide a more efficient mechanism for:
communication between customers and franchised dealers; locating parts;
delivering those parts to the customer through our dealers; increasing sales for
the dealerships, to service centers and garages; processing orders for parts;
tracking inventory and sales trends to enable dealers to more accurately project
inventory needs in market areas. We intend to accomplish this by using the
Internet to create a "standardized" means of communication by linking
manufacturers, dealerships, mechanical and collision repair facilities, and
providing them access to a electronic parts catalog of automotive parts where
they can enter into our parts.com site or the Storefront of our subscribing
dealers locate the parts they need and order them from the nearest available
source, and process those orders - thus saving time and labor costs in the
search for and ordering of parts. We make available real-time information on
inventory location and availability to both buyers and sellers of parts via the
Internet. Our site offers information on the type of parts actually being sold
and the geographic locations of those sales. We anticipate that such
point-of-sale information will assist dealers in the planning of inventory
strategies-focusing on inventory that is in demand and decreasing inventory that
is slow-moving, and thus decreasing over-all inventory carrying costs and
potential write-offs of over-stocked parts. In addition, labor-intensive menial
tasks such as phone calls, sales history review, and inventory charting will be
replaced with the advent of real-time inventory data. Labor associated with the
processing of transactions will be minimized as our e-commerce site processes
transactions and sends parts orders directly into the dealers TradeMotion Octane
Administration Console which can subsequently be entered into the dealerships
management systems.


         The Service and Parts business of New car dealerships provides
important incremental revenue to dealerships, which we believe helps to mitigate
the effects of downturns in the automobile sales cycle. Unlike independent
service shops or used vehicle dealerships with service operations, franchised
dealerships are qualified to perform work covered by manufacturer warranties.
Since the manufacturer pays warranty service work, consumers are motivated to
service their vehicles at a dealership for the warranty period. To increase the
service and parts businesses, dealerships have implemented programs to track
maintenance records of customers and contact them regarding dealership
promotions and maintenance schedules. It is estimated that new car dealerships
sales of Service, Parts and Collision Repair Services represent up to 45% of
their retail gross margins. We believe that demand for these products and
services, which tend to produce higher margins than new vehicle sales, is less
affected by economic cycles. Therefore, we have focused our efforts on the
following:

         -        Retail Do-It-Yourself e-commerce - Establishing and increasing
                  both mechanical and collision online DIY retail parts sales
                  for new car dealerships

         -        Collision procurement - Establishing and increasing collision
                  business-to-business parts procurement on a local level
                  through our partnership with Eautoclaims for new car dealers.
                  Addressing cycle time, and reducing costs.

         -        National Part Locator - Reducing redundant part locating
                  expenses by developing a "Parts Locator" module within our
                  TradeMotion Octane Administration console.

<PAGE>

         -        Industrial Supply - Reducing Maintenance Repair and
                  Operational (MRO) supply costs, with free shipping to new car
                  dealers in the Continental United States through our license
                  with Grainger which allowed us to web enable and host
                  Grainger's catalog within our TradeMotion Octane
                  Administration Console

         Our subscribing franchised dealers compete with other franchised
dealers to perform warranty repairs and with other automotive dealers,
franchised and unfranchised service center chains, and independent garages for
non-warranty repair and routine maintenance business. Our subscribing franchised
dealers compete with other automotive dealers, service stores and auto parts
retailers in their parts operations. We believe that the principal competitive
factors in parts and service sales are locating the needed part, time to deliver
the part, price, technology, the use of factory-approved replacement parts, the
familiarity with a manufacturer's brands and quality customer service. A number
of regional and national chains offer selected parts at prices that may be lower
than our prices. According to various industry sources, the automotive retail
industry is served by approximately 22,000 franchised automotive dealerships,
approximately 56,000 independent used vehicles dealers. Additionally, certain
vehicle manufacturers are engaged in the retail sale and service of vehicles,
either independently or in conjunction with their franchised dealerships, and
may do so on an expanded basis in the future, subject to various state laws that
restrict or prohibit manufacturer ownership of dealerships.

         On average franchised dealers service and parts revenues have increased
in large part due to increasingly complex technology in vehicles, which makes it
difficult for independent repair facilities to maintain, diagnose problems in an
repair today's automobiles. Dealerships keep detailed records of customers'
maintenance and service history and we encourage dealers to advertise OEM parts
and accessories online when they forward the many service reminders that are
sent out to customers who are due for periodic maintenance or service.

         There are more than 22,000 franchised dealerships nationwide, with the
ten largest automotive retail groups accounting for only 5% of the total
industry revenue. Of the close to $1 trillion in sales in 2000, new vehicles
sales contributed approximately $380 billion, or 39% of total revenues, used
vehicle sales contributed approximately $367 billion, or 38% of total industry
revenues, followed by service and parts, which contributed approximately $227
billion, or 23% of total revenues. In 2000, franchised dealers contributed $73
billion, or 32% of the approximately $227 billion service and parts sector.

         Parts.com utilizes a unique business model concurrent with our
e-commerce web site dedicated to bringing value to dealer/suppliers utilizing
our technology. We have 39 OEM parts web enabled catalogs attached to franchised
dealers inventories. Examples of vehicle lines are Chrysler, Ford, Chevrolet,
Dodge, Nissan, Jeep, Mercedes Benz, Toyota, BMW, Hyundai, Lincoln, Mercury,
Buick, Pontiac, GMC, etc. The Company forwards visitors of the Parts.com site to
the dealer/supplier utilizing our web enabled catalog product called TradeMotion
StoreFront (StoreFront). Dealer/suppliers sets the price on the StoreFront which
dealers fulfill orders from their inventory in retail and wholesale
transactions, which price is a percentage over the dealers/supplier cost for the
automotive part/accessory. The only variables for the pricing model are shipping
costs. Since StoreFront customers ultimately determine the time frame in which
they need the product, our subscribing dealers must meet the customers demand in
order to fulfill the order within the specified time parameters.

         Thus, our business model creates a "virtual parts counter" to those
seeking automotive parts and accessories and likewise increases the probability
of locating a part. Dealerships, service centers and garages can save the
expense of carrying inventory that is not commonly needed. Our software enables
the dealer/supplier to process the transaction, thereby allowing dealers to
collect the payment directly and ship the part. Our dealers can track in
real-time the sales orders fulfilled, the potential orders missed by that
location, inventory source and the status of their respective inventories
through the TradeMotion reports engine.

         The parts.com website/marketplace are powered by multiple applications
the Company has named "TradeMotion Solutions." TradeMotion Solutions are
applications within platforms that fuel Web-based marketplaces. TradeMotion
facilitates sales,

<PAGE>

procurement and distribution processes, gives centralized management the ability
to monitor and track order progression, links end-users, approvers and financial
services, and ensures superior customer service. As a whole, parts.com's
TradeMotion Solutions enable users to monitor, evaluate and collaborate on part
location and procurement via the Web, allowing for optimal inventory management
as well as prompt evaluation of-and maximum capitalization on-market trends.

         Initially, revenue from parts.com was derived from capturing a small
transaction fee on each business-to-business and consumer sale and from charging
supplier/territory fees for signing up as Platinum, Gold or Silver
Dealer/Suppliers. In order to reduce fixed operating expenses, secure better
relationships with our franchised dealers and adjust to market pressures
parts.com discontinued this particular initiative on September 30, 2001. The
Company forwards the visitors directly to the subscribing dealer/suppliers and
does not charge a transaction fee. Subscribing dealers must license our
TradeMotion Storefront and Octane solutions to sell OEM parts.

         Due to financial constraints Parts.com is not currently working to
expand its software solutions, systems development capabilities, and marketplace
and business model to the European market outside of those companies already
solicited by the Company or Cap Gemini Ernst & Young (CGEY).

Our Solution

With StoreFront subscribers, businesses and customers can engage the e-commerce
software two ways: One, enter the parts.com domain through our Internet site and
locate the supplier of their choice. Two, go through the dealers website
directly to purchase auto parts and MRO, then buyers simply click on an item and
follow prompts that guide them in purchasing, shipping and payment information.
In addition to ordering parts, buyers can post request for proposals/request for
quotes, conduct targeted searches for hard to find auto parts, browse through
highlighted selections of the web site, shop for accessories, register for
personalized services, participate in promotions and check their order status.
Suppliers can post overstocked or obsolete parts, post catalogs and display
their company news instantly. One of our patent applications was published on
October 26, 2001 with respect to a "System and methods of online commerce for
the efficient supply of parts or the like". See "Intellectual Property."

         The Company's TradeMotion Solutions provide its users with the
following functions and uses: electronic automation of company processes,
multi-platform architecture, ease of use, information access and real-time
reporting. TradeMotion Solutions offer the following values to buyers: increased
productivity and reduced processing costs, reduced market fragmentation,
reduction in purchasing costs and increased availability of product and pricing
information. TradeMotion Solutions offer the following values to
dealer/suppliers: increased volume and revenue opportunities, reduction of costs
and brand preservation.

Sales and Marketing

         We market through a direct inside and outside sales force. Since our
potential dealer subscribers fall within a defined market segment, we are able
to identify and target the purchasing decision-makers and potential users who
will influence the decision to adopt our e-commerce solution. Our sales and
marketing approach is designed to help buyers and sellers understand both the
business and technical benefits of our marketplace, our TradeMotion Solutions
and to promote adoption through one-on-one education and training. Our sales and
marketing programs are designed to educate our target market, create awareness
and attract subscribers to our marketplace and TradeMotion Solutions. To achieve
these goals, we intend to take advantage of the community offered by our
existing subscriber base and engage in marketing activities such as trade shows,
speaking engagements and Web site marketing. Our customer support department is
responsible for day-to-day contact with subscribers and responds to questions
from subscribers through e-mail and telephonically. This department is
responsible for retaining and increasing use by existing subscribers and is an
important aspect of subscriber satisfaction. Our customer support and service
personnel handle general subscriber inquiries and technical questions. We have
automated most of the tools used by our customer support and service staff, such
as tracking screens that let our support staff track

<PAGE>

a transaction through a variety of information sources. Our sales and
marketing group consisted of approximately 3 individuals as of December 31,
2001, all of whom are located at our Sanford, Florida headquarters.

Parts.com's utilizes many resellers (those companies who currently provide
products and services to franchised dealers) whom have been successful in
reselling our TradeMotion Solutions to their client base. Parts.com does not
license our software to the resellers, the resellers merely act as an
independent contractor and receive a commission for each sale.

Customers

         A majority of our customer base has been Original Equipment
Manufacturer ("OEM") franchised dealerships. Those franchised dealerships that
subscribe to our TradeMotion Solutions can locate and sell parts to their
business trading partners and consumers, through the utilization of our
TradeMotion ecommerce procurement solution. In December 2000, through the use of
TradeMotion Storefront (a private-label e-business application integrated
seamlessly into a dealers own websites), our dealership base has begun to sell
auto parts directly to their own customers. Although the Storefront software was
initially sold to dealerships, through a limited offer, the Company offered free
use of the software for a limited time. It has since cancelled all free offers
and charges a monthly or annual subscription fee.

Competition

         The Automotive Parts E-commerce Business market for
business-to-business e-commerce and Internet ordering and purchasing is new and
rapidly evolving, and competition is intense and expected to increase
significantly in the future. We believe that companies in our Internet
business-to-business marketplace compete on the basis of:

         -        Ease of use of technology;

         -        Breadth and depth of product and service offerings;

         -        Pricing of products and services;

         -        Quality and reliability of the Internet purchasing solution;
                  and

         -        Quality and scope of customer service and support.

         We currently compete almost solely in the market for automotive parts
and products and face competition from three main areas within this market:
other start-up businesses that have formed exchanges with e-commerce offerings,
existing automotive ecommerce companies, or groups of companies that have formed
exchanges, and traditional manufacturers, suppliers and distributors of
automotive parts that have developed e-commerce initiatives that are designed to
facilitate commerce between one seller and multiple buyers.

         Because of the rapidly evolving nature of e-commerce, it is difficult
to objectively estimate the number of companies that compete directly against
us. We believe that currently, our three primary competitors are PartsVoice, a
subsidiary of the Cobalt Group, OEConnection a company formed by GM, Ford,
Daimler/Chrysler and Bell & Howell and Choiceparts a company formed by Reynolds
& Reynolds, ADP Dealer Services and CCC Informations Group. Current and
potential competitors may be able to devote significantly greater resources to
marketing and promotional campaigns, and may adopt more aggressive pricing
policies or may try to attract users by offering services for free and devote
substantially more resources to product development than us. Increased
competition may result in reduced operating margins, loss of market share and
diminished value in our brand, any of which could materially and adversely
affect our business, financial condition and results of operations. New
technologies and the expansion of existing technologies may increase the
competitive pressures on us by enabling competitors to offer a similar but
lower-cost service. We cannot assure you that we will be able to compete
successfully against current and potential competitors. Further, as a strategic
response to changes in the competitive environment or otherwise, we may, from
time to time, make pricing, service or marketing decisions or acquisitions that
could materially and adversely affect our business, financial condition and
results of operations.

<PAGE>

           The manufacturers are the companies that actually make the majority
of the parts for the "Big 3". Covisint strives to create a standard means of
communication and purchasing process between the "Big 3" and manufacturers that
supply them.

           It is important to note that the "Big 3" cannot circumvent their
existing franchised dealerships with regard to new car sales and automotive
parts sales, due to the strength of the state franchise laws and current
dealership sales and service agreements between the "Big 3" and their dealer
network. Nearly every state has legislation with respect to dealer operating
policies and procedures, thus mandating that new vehicle sales and original
equipment manufacturer parts must be sold through a state licensed franchised
dealer.

           Although our belief is speculative, we believe that over-all our
business model will prove to have a competitive edge over that of our current
and potential competitors because our parts.com system is not designed
exclusively for the automotive parts industry but is adaptable to any parts
industry (i.e., consumer electronics, airplanes, appliances, computers, marine
products, housewares, etc). Thus, once our model is proven in the automotive
parts industry, we plan on expanding it to other parts industries. Further, we
believe our name and web site, "parts.com," is adaptable to any parts industry,
not only automotive parts (unlike names such as "carparts.com"), and the
building of our brand name will be leveraged by its adaptability to any kind of
part. For example, once we expand into other parts industries, anyone needing a
part can log onto the Internet with the word "parts.com" or "parts.net" and will
access our site.

Relationships With Suppliers

         We do not rely on any single dealer or dealer group to fulfill our auto
parts orders from parts.com. StoreFront subscribers now receive all part orders
directly. We do rely upon our relationship with Grainger to pick, pack and ship
all MRO products.

Intellectual Property

         In February 1999, we purchased for cash and stock the exclusive rights,
title and interest in and to the Internet Domain Names (a.k.a. "Uniform Resource
Locator" or "URL") and any trademarks or service marks in connection with
"www.parts.com" and "www.parts.net." We also own the URL's for many web-hosting
sites on behalf of our customers. The other primary URL that is the property of
the Company is; www.trademotion.com.

         In October 1998, Shawn Lucas and Scott Andersen, officers, directors
and shareholders of the Company, assigned to us all of their right, title and
interest in and to a pending patent application with respect to the technology
for the Miratouch product (subsequently renamed "ReallyKnow.com.") A utility
patent for the technology was filed with the U. S. Patent & Trademark Office in
October 1998. The Miratouch solution is an automated computer-assisted marketing
research product that is conducted on-site at a merchant's location and online
through use of the Internet. With the Miratouch (ReallyKnow.com) solution, the
merchant can receive collected marketing research results on-demand.

         In May 1999, Messrs. Shawn Lucas and Scott A. Anderson assigned to
FlexRadio, Inc. all of their right, title and interest in and to a provisional
patent application filed in May 1999 for a radio frequency detection and
reporting service. The Company acquired these pending patent rights when it
acquired all of the common stock of FlexRadio, Inc. The company presently is not
utilizing this technology.

         In December 1999, we filed a provisional patent application for our
parts.com system and have followed that up with a utility patent application.
The parts.com technology is an automated computer-assisted system for searching
for and selecting automotive parts from a virtual inventory of parts from
various sources in the distribution chain, processing orders and distributing
revenue among the vendors, and tracking inventory, orders and revenue.

<PAGE>

       The provisional patent applications provide the basis for filing a U.S.
utility application and any desired foreign applications, which must be filed
within 12 months of the filing of the provisional applications. Once the utility
application is filed, the review process by the U.S. Patent and Trademark Office
normally takes two to three years. Once patents are issued, the term of the
patent is normally 20 years from the date of the utility patent application. On
October 26, 2001 this patent was published by the USPTO.

Certain Factors Affecting Future Results

         You should carefully consider the following risks and the other
information in this Report and our other filings with the SEC before you decide
to invest in our Company or maintain or increase your investment. The risks and
uncertainties described below are not the only ones facing us. Additional risks
and uncertainties may also adversely impact and impair our business. If any of
the following risks actually occur, our business, results of operations or
financial condition would likely suffer. In such case, the trading price of our
common stock could decline, and you may lose all or part of your investment.

OUR AUDITORS HAVE MODIFIED THEIR REPORT ON OUR FINANCIAL STATEMENTS WITH RESPECT
TO OUR ABILITY TO CONTINUE AS A GOING CONCERN.

The accompanying consolidated financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and satisfaction of
liabilities in the normal course of business. Since its inception, the Company
has never been profitable, and anticipate continued losses and cannot guarantee
profitability in the future. We have never been profitable and expect to
continue to incur operating losses until at least the end of the fiscal 2002. We
may be unable to achieve profitability in the future. We have continued to
suffer recurring losses from operations that to date, total $28,635,233. The
Company used $1,250,017 and $3,766,499 of cash in operations for the years ended
December 31, 2001 and 2000, respectively and anticipates additional cash needs
in 2002. At December 31, 2001, the Company had a working capital deficit of
$3,753,613 and cash of $(4,055). The Company also had undeposited payroll taxes
to the Internal Revenue Service for the period July 2000 through December 2001,
resulting in an accrual for back payroll taxes in the amount of approximately
$362,305 as of December 31, 2001, including penalties and interest. The Company
is currently negotiating a payment plan with the IRS, but no formal agreement
has been reached. Due to cash deficiencies, the Company has also been unable to
pay certain members of senior management their regular salaries when due, which
has resulted in an accrual for back salaries of approximately $117,752 as of
December 31, 2001. These factors, among others, raise substantial doubt about
the Company's ability to continue as a going concern for a reasonable period of
time. The accompanying consolidated financial statements do not include any
adjustments relating to the outcome of this uncertainty.

The Company's continuation as a going concern is dependent upon its ability to
generate sufficient cash flow to meet its obligations on a timely basis. The
Company's primary source of liquidity has been from the cash generated by its
operations and through the private placement of equity and debt securities. The
Company has altered its business model and taken actions to reduce its cash
needs, such as significant reductions in its workforce to attempt to stabilize
its financial condition. The Company continues developing its technology known
as "TradeMotion Solutions" and continues implementation of a marketing campaign
in order to gain market acceptance of same and to eventually achieve profitable
operations. However, there can be no assurance that the Company will be
successful in achieving profitability or acquiring additional capital. Without
short or long-term financing, in order to meet its current and future capital
needs, the Company will depend on cash receipts from annual subscription fees,
fee revenue generated from its e-commerce web site, license fees from the sale
of its software and proceeds from the sale of additional shares of common stock
or the issuance of debt securities. The Company is actively pursuing other
sources of new cash financing, but has not completed such financing and cannot
provide any assurances as to whether such financing will be completed.
Furthermore, there can be no assurance that additional financing will be
available when needed or that if available, such financing will include terms
acceptable to our stockholders or management. The availability of such financing
is essential for the Company to continue to meet operating obligations and
continue as a going concern.

<PAGE>

WE NEED ADDITIONAL CAPITAL.

The Company must raise additional capital in the near term to continue execution
of its business plan. We are working with financial sources to raise additional
capital, but there are no guarantees that we will be able to raise sufficient
capital on a timely basis and on reasonable terms.

WE HAVE A LIMITED OPERATING HISTORY AND MAY EXPERIENCE RISKS ENCOUNTERED BY
EARLY-STAGE COMPANIES.

We have a very limited operating history for use in evaluating our business. Our
business and prospects must be considered in light of the risks, expenses and
difficulties that companies encounter in the early stages of development,
particularly companies in new and rapidly evolving markets like the Internet and
e-commerce.

THE REVENUE AND PROFIT POTENTIAL OF OUR BUSINESS MODEL IS UNPROVEN.

Our business model and marketplace are relatively new, and our ability to
generate revenue or profits from our Marketplace and TradeMotion Solutions is
unproven. We have initially focused on the automotive industry; our success is
dependent upon our ability to attract customers to, and expand our dealer base
for, our parts.com Web site, as well as our ability to attract customers for our
TradeMotion Solutions.

Even if we do achieve profitability, we cannot assure you that we can sustain or
increase profitability on a quarterly or annual basis in the future. If revenues
grow slower than we anticipate, or if operating expenses exceed expectations or
cannot be adjusted accordingly, our business, results of operations and
financial condition will be materially and adversely affected. We cannot predict
our success because our business model is unproven and we have operated our
business for only a short period of time. Our business model is new to the
automotive parts industry and our ability to generate revenues or profits is
unproven. We have a limited operating history, which will make it difficult to
evaluate our performance. Our prospects will be dependent upon our ability to
effectively implement our business model and adapt to changes in the
business-to-business e-commerce market. If our business model is not viable or
if we are unable to identify and address changes in our markets, we will not be
able to grow our business, compete effectively or achieve profitability. These
factors could cause our stock price to fall significantly.

We primarily rely on revenue from subscriptions and we may not be able to
successfully expand our subscriber base or establish additional revenue sources.
We currently generate revenues from franchised dealers who subscribe to our
service. Our success will be dependent on our ability to expand our membership
base within the automotive parts industry. We have experienced decreases in our
subscriber base. In addition, our success will depend on our ability to generate
additional revenues through the introduction of a new functionality and/or the
expansion into new markets and industries. We cannot assure you that we will be
successful in any efforts to generate additional revenues. We receive
substantially all of our revenue from participants in the automotive industry,
so a downturn in the automotive industry could damage our business. We receive
substantially all of our revenue from subscribers associated with the automotive
industry, and we expect these revenues will account for substantially all of our
revenues for the foreseeable future. Our dependence on subscribers associated
with the automotive industry makes us vulnerable to downturns in that industry.
A downturn could lead our subscribers to reduce their level of activity on our
marketplace and the marketing of the subscribers own Storefront which would
cause some to cancel their subscription. Intense competitive pressures in the
business-to-business e-commerce market may impede our ability to establish a
substantial market share that would allow us to be profitable. The
business-to-business e-commerce market is new, rapidly evolving, and intensely
competitive, and we expect competition to further intensify in the future.
Barriers to entry are minimal, and competitors may develop and offer services
similar to ours in the future. Recent entrants into the business-to-business
automotive parts market include an alliance of prominent automotive car
manufacturers and automotive industry participants that have superior capital


<PAGE>

resources and established reputations in the industry. In addition, we expect
that additional companies will offer competing e-commerce solutions in the
future, and our business could be severely harmed if we are not able to compete
successfully against current or future competitors. In addition, our dealers who
subscribe to our TradeMotion solutions may become competitors in the future.
Increased competition is likely to result in price reductions, reduced gross
margins and/or loss of market share, any of which could harm our business. Our
actual and potential competitors vary in size and in the scope and breadth of
the services they offer. Quarterly Operating Results are Subject to Significant
Fluctuations. Our revenues and operating results may vary significantly from
quarter to quarter due to a number of factors, not all of which are in our
control. These factors include:

         1)       Subscriber and advertiser demand for our solutions;

         2)       User traffic levels and activity on our marketplace and our
                  dealers Storefronts;

         3)       Seasonal fluctuations in Internet usage;

         4)       Changes in the growth rate of Internet usage;

         5)       The commitment of e-commerce customers in the automotive
                  industry who subscribe to our service;

         6)       The timing and amount of costs relating to the expansion of
                  our operations;

         7)       Changes in our pricing policies or those of our competitors;

         8)       The introduction of new solutions by us or our competitors;

         9)       Costs related to acquisitions of technology or businesses;

         10)      General economic and market conditions; and

         11)      Effects of terrorist activities upon the automotive industry.

Our revenues for the foreseeable future will remain dependent on commitment of
dealers to our e-commerce solutions in the automotive industry who subscribe to
our service. Such future revenues are difficult to forecast. In addition, we may
significantly increase our operating expenses to increase our sales and
marketing operations, to continue our expansion, to upgrade and enhance our
technology, and to market and support our solutions. We may be unable to adjust
spending quickly enough to offset any unexpected revenue shortfall. If we have a
shortfall in revenues in relation to our expenses, then our business, results of
operations and financial condition would be materially and adversely affected.
Such a result would likely affect the market price of our common stock in a
manner that may be unrelated to our long-term operating performance. Due to all
of the foregoing factors and the other risks discussed in this section, you
should not rely on quarter-to-quarter comparisons of our results of operations
as an indication of future performance. It is possible that, in some future
periods, our results of operations may be below the expectations of public
market analysts and investors. In this event, the price of our common stock may
fall. If we fail to effectively manage our operations and the use of our
services, we may lose subscribers or incur significant expenses. Our success
depends on effective planning and growth management. We will need to continue to
improve our financial and managerial controls, reporting systems, and
procedures, and we will need to continue to expand, train and manage our
workforce. We continue to increase the scope of our operations and our growth
has placed, and will continue to place, a significant strain on our management
and operational systems and resources. If we do not successfully implement and
integrate these new systems or if we fail to scale these systems to our growth,
the performance of our Web site may suffer which would cause us to lose
subscribers. In addition, any failure could make us unable to operate with
adequate, accurate and timely financial and operational information, which could
result in us incurring unnecessary and possibly damaging expenses. Because our
revenue is derived from providing marketplace access and StoreFront solutions to
subscribers for an annual subscription fee, the cancellation or non-renewal of
these subscriptions would hurt our business. We have generated substantially all
of our revenues to date through subscription fees for access to our marketplace
and TradeMotion Storefronts.

Generally, our subscription fees are paid on an annual basis, and these
subscriptions may be terminated on short-term notice. We have expended
significant financial and personnel resources and have expanded our operations
on the assumption that our subscribers will renew these annual subscriptions. We
do not have a sufficiently long history of operations to be able to predict
renewal rates of our subscribers. If our subscribers fail to continuously renew,
or if they terminate their subscriptions, our revenues would be significantly
reduced and our business

<PAGE>

could suffer dramatically. There are a finite number of potential subscribers
and we may be unable to develop other means of generating revenue, so our growth
may be limited. A major element of our growth strategy is the expansion of our
subscriber base. The number of participants in the automotive market limits our
potential subscriber base. Additionally, the barriers to entry, which exist in
the automotive market, may limit the entry of additional subscribers into our
e-marketplace. Accordingly, the number of potential subscribers to our
e-marketplace is likely finite, in which case our revenues may be similarly
limited if we cannot generate revenue through other means.

If our subscribers do not provide timely, professional and lawful delivery of
products to our buyers, their customer base may decrease and we may have reduced
ROI for the dealer/supplier which in turn may reduce renewals.


OUR FINANCIAL RESULTS MAY FLUCTUATE AND BE DIFFICULT TO FORECAST.

Our quarterly revenues, expenses and operating results will be unpredictable. We
expect that our operating results will fluctuate in the future as a result of a
number of factors, some of which are beyond our control. These factors include:

>>       Our ability to attract customers for our TradeMotion Solutions;

>>       Our ability to attract businesses and customers to our Web site;

>>       Our ability to attract and retain suppliers with large parts
         inventories;

>>       Our ability to control our gross margins;

>>       Our ability to timely process orders and maintain customer
         satisfaction;

>>       The availability and pricing of parts from suppliers;

>>       Product obsolescence and price erosion;

>>       Consumer confidence in encrypted transactions in the Internet
         environment;

>>       Our ability to obtain cost-effective advertising on other entities' Web
         sites;

>>       The effectiveness of off-line advertising in generating additional
         traffic to our Web site;

>>       The amount and timing of costs related to expansion of our operations;

>>       Technical difficulties encountered while using our Web site;

>>       Suppliers' delays in shipments to customers/businesses as a result of
         computer system failures, strikes or other problems with their delivery
         service;

>>       Delays in processing orders as a result of computer system failures,
         Internet brown-outs or problems with our credit card processing
         providers; and

>>       General economic conditions, and economic conditions specific to the
         Internet and e-commerce.

WE MAY NOT BE SUCCESSFUL IN DEVELOPING BRAND AWARENESS, AND THE FAILURE TO DO SO
COULD SIGNIFICANTLY HARM OUR BUSINESS AND FINANCIAL CONDITION.

We believe that the importance of brand recognition will increase as more
companies engage in commerce over the Internet. Development and awareness of the
parts.com and TradeMotion brands will largely depend on our marketing efforts.
If suppliers do not perceive us as an effective marketing and sales channel for
their parts, or if businesses and consumers do not perceive us as offering an
efficient and desirable way to purchase parts, we will be unsuccessful in
promoting and maintaining our parts.com and TradeMotion brands.

IF WE FAIL TO MAINTAIN SATISFACTORY RELATIONSHIPS WITH OUR DEALERS, OUR BUSINESS
WOULD BE MATERIALLY HARMED.

We will be highly dependent upon our dealers to provide inventory for sale
through our parts.com site. We do not have long-term supply contracts with any
of our dealers. We cannot be certain that our current dealers will continue to
provide inventory for sale. We must also attract additional dealers. We cannot
be certain that we will be able to establish new supplier relationships to
ensure that merchandise will be available through our Web site.

Our business will be significantly harmed if we are unable to develop and
maintain satisfactory relationships with dealers on acceptable commercial terms,
if we are unable to access sufficient parts inventories, if the quality of
service provided by these suppliers falls below a satisfactory standard, or if
our level of returns exceeds our expectations.

<PAGE>

RISK RELATED TO THE INTERNET AND E-COMMERCE INDUSTRIES.

Our growth may be impaired if the Internet is unable to accommodate growth in
e-commerce. Our success depends on the widespread use of and growth in the use
of the Internet for retrieving, sharing and transferring information among
buyers and sellers in the aviation parts market. If the Internet cannot
accommodate growth in e-commerce or experiences periods of poor performance, the
growth of our business may suffer. Our ability to sustain and improve our
services is limited, in part, by the speed and reliability of the networks
operated by third parties. Consequently, the emergence and growth of the market
for our services is dependent on improvements being made to the Internet
infrastructure to alleviate overloading and congestion. Additionally, the
possible slow adoption of the Internet as a means of commerce by businesses may
harm our prospects. Even if the Internet is widely adopted as a means of
commerce, the adoption of our network for procurement, particularly by companies
that have relied on traditional means of procurement, will require broad
acceptance of e-commerce and online purchasing. In addition, companies that have
already invested substantial resources in traditional methods of procurement, or
in-house e-commerce solutions, may be reluctant to adopt our e-commerce
solution, thus impairing the growth of our member base and revenue potential.
The security risks related to e-commerce may cause members to reduce the use of
our service, and attempting to guard against these risks may cause us to incur
significant costs and expenses. A fundamental requirement to conduct
business-to-business e-commerce is the secure transmission of information over
public networks. If our subscribers are not confident in the security of
e-commerce, they may not effect transactions on our e-marketplace or renew their
subscriptions, which would severely harm our business. There can be no guarantee
that advances in computer capabilities, new discoveries in the field of
cryptography, or other developments will not result in the compromise or breach
of the algorithms that we use to protect content and transactions on our
e-marketplace or proprietary information in our databases. We may be required to
incur significant costs to protect against security breaches or to alleviate
problems caused by breaches. Further, a well-publicized compromise of security
could deter people from using the Internet to conduct transactions that involve
transmitting confidential information. Our failure to prevent security breaches,
or well-publicized security breaches affecting the Internet in general, could
adversely affect the willingness of our members to use our services. If our
sellers fail to provide timely and accurate information, our subscriber base and
potential revenue may decline. Our members use our service in large part because
of the comprehensive breadth and accuracy of our databases. It is our
responsibility to load seller product information into our database and
categorize the information for search purposes. However, we are dependent on our
subscribers providing us in a timely manner with accurate, complete, and current
information regarding their product inventory. If our timely loading of this
information is impaired, this could result in subscriber dissatisfaction and a
loss of subscribers. We may not be able to keep up with technological
advancements, which could result in a loss of subscribers and harm our ability
to compete. The market for Internet commerce is characterized by rapid change,
evolving industry standards and the frequent introduction of new technological
products and services. The introduction of new technology, products, services or
standards may prove to be too difficult, costly or simply impossible to
integrate into our existing systems. Moreover, innovations could render obsolete
our existing or any future products and services. Our ability to remain
competitive will also depend heavily upon our ability to maintain and upgrade
our technology products and services. We must continue to add hardware and
enhance software to accommodate any increased content and use of our Web site.
If we are unable to increase the data storage and processing capacity of our
systems at least in pace with the growth in demand, our Web site may fail to
operate at an optimal level for unknown periods of time. As a relatively small
company in the market for Internet commerce, we will be in a position of
responding to technological changes rather than establishing them. Any
difficulty keeping pace with technological advancements could hurt our ability
to retain members and effectively compete. Because we do not maintain a
redundant system, any system failure could delay or interrupt our service, which
could severely harm our business and result in a loss of members. Our ability to
successfully maintain an e-commerce marketplace and provide acceptable levels of
customer service depends largely on the efficient and uninterrupted operation of
our computer and communications hardware and network systems. Any interruptions
could

<PAGE>

severely harm our business and result in a loss of members. Our computer and
communications systems are located in Sanford, Florida. Although we periodically
back up our databases to tapes and store the backup tapes offsite, we have not
maintained a redundant site. As a result, our systems and operations are
particularly vulnerable to damage or interruption from human error, sabotage,
fire, flood, hurricane, power loss, telecommunications or equipment failure, and
similar events. We cannot assure you that we will not experience system failures
in the future. Moreover, we have experienced delays and interruptions in our
telephone and Internet access that have prevented subscribers from accessing our
technology and customer service department. Furthermore, we do not have a formal
disaster recovery plan and do not carry sufficient business interruption
insurance to compensate us for losses that may occur as a result of any system
failure, and therefore the occurrence of any system failure or similar event
could harm our business dramatically. Defects in the complex software on which
our services depend could cause service interruptions that could damage our
reputation and harm our business. Unlike many traditional suppliers and
distributors of automotive parts, we are wholly dependent on the error-free
functioning of our Web site and its associated software. Our e-marketplace
depends on complex software developed internally and by third parties. Software
often contains defects, particularly when first introduced or when new versions
are released. Our testing procedures may not discover software defects that
affect our new or current services or enhancements until after they are
deployed. These defects could cause service interruptions, which could damage
our reputation or increase our service costs, cause us to lose revenue, delay
market acceptance, or divert our development resources, any of which could
severely harm our business, financial condition, and results of operations. We
could face liability for information retrieved from or transmitted over the
Internet and liability for automotive products sold over the Internet. We could
be exposed to liability with respect to third-party information that may be
accessible through our Web site. If any third-party content information provided
on our Web site contains errors, consumers potentially could make claims against
us for losses incurred in reliance on that information. In addition, because
defective aviation products can result in substantial losses of property or
life, we have a relatively greater risk of being exposed to product liability
claims arising out of or relating to automotive parts and products sold through
our Web site, which could result in us incurring substantial defense costs and,
if successful, liability, either of which could severely harm our business. We
currently carry no policies, which would insure us against product liability
claims.

WE FACE INTENSE COMPETITION IN THE E-COMMERCE MARKET, AND WE CANNOT GUARANTEE
THAT WE WILL BE ABLE TO COMPETE SUCCESSFULLY.

The e-commerce market is new, rapidly evolving and extremely competitive. We
expect competition to continue to intensify. Barriers to entry are minimal, and
our business could be severely harmed if we are not able to compete successfully
against current or future competitors.

Virtually all of our potential competitors have significantly greater financial,
marketing, technical and other resources, as well as longer operating histories,
larger customer bases and greater brand recognition in the markets in which we
compete. Our competitors may be able to devote significantly greater resources
to marketing and promotional campaigns.

Some of our competitors may establish cooperative relationships among themselves
or directly with suppliers to obtain exclusive or semi-exclusive sources of
parts. In addition, we anticipate that there will be consolidation in our
industry. Accordingly, it is possible that new competitors or alliances among
competitors and suppliers may emerge and rapidly acquire market share. In
addition, manufacturers may elect to sell their parts directly. Increased
competition is likely to reduce our operating margins, cause us to lose market
share or diminish our brand. If any of these events occur, our business would be
significantly harmed.

OUR GROWTH AND FUTURE SUCCESS DEPEND UPON OUR ABILITY TO GENERATE TRAFFIC TO OUR
WEB SITE AND PROMOTE OUR PRODUCTS

Our ability to sell parts through our Internet site depends substantially on our
ability to attract user traffic to our Web site. If we are unable to generate
traffic to our Web site cost-effectively, or if our efforts to promote our
services and products using both online and off-line media are not successful,
our growth and business prospects will be substantially limited.

<PAGE>

OUR BUSINESS MAY SUFFER FROM CAPACITY CONSTRAINTS OR SYSTEM INTERRUPTIONS.

We may periodically experience systems interruptions, including Internet
disruptions. Any systems interruptions, including Internet disruptions that make
our Web site inaccessible or reduce our order fulfillment performance, would
reduce the volume of parts we are able to sell, which could harm our business.

In addition, an increase in the volume of traffic to our Web site could
adversely affect the capacity of the software or hardware deployed by us, which
could lead to slower response time or even system failures.

IF WE ENCOUNTER SYSTEM FAILURE, SERVICE TO OUR CUSTOMERS COULD BE DELAYED OR
INTERRUPTED. SERVICE DELAYS OR INTERRUPTIONS COULD RESULT IN A LOSS OF CUSTOMERS
AND SEVERELY HARM OUR BUSINESS.

Our ability to successfully maintain an e-commerce Web site and provide
acceptable levels of customer service largely depends on the efficient and
uninterrupted operation of our computer and communications hardware and network
systems. Any interruptions could severely harm our business and result in a loss
of customers. Our systems and operations are vulnerable to damage or
interruption from human error, sabotage, fire, flood, earthquake, power loss,
telecommunications failure and similar events. Moreover, we may experience
delays and interruptions in our telephone and Internet access, which will
prevent customers from accessing our Web site.

OUR BUSINESS WILL SUFFER IF WE DO NOT RETAIN OUR CURRENT KEY PERSONNEL.

Our future performance depends substantially on the continued service of our
senior management and other key personnel. The loss of the services of one or
more of our key personnel could seriously harm our business. Our future success
also depends on our continuing ability to attract, hire, train and retain a
substantial number of highly skilled managerial, technical, sales, marketing and
customer support personnel. Our failure to do so could adversely affect our
business and financial condition.

WE MAY NOT BE ABLE TO SUCCESSFULLY PROTECT OUR PROPRIETARY RIGHTS.

Our ability to compete effectively will depend upon our ability to maintain the
proprietary nature of our services and technologies, including our proprietary
software. Although we have two patent applications pending, we hold no patents
and rely on a combination of trade secrets and copyright laws, non-disclosure,
and other contractual agreements to protect our rights in our technological
know-how and proprietary services. We depend upon confidentiality agreements
with our officers, directors, employees and consultants to maintain the
proprietary nature of our technology. These measures may not afford us
sufficient or complete protection; and others may independently develop know-how
and services similar to ours, otherwise avoid our confidentiality agreements, or
produce patents or copyrights that would materially adversely affect our
business, prospects, financial condition and results of operations.

OUR SUCCESS DEPENDS ON THE INTERNET'S ABILITY TO ACCOMMODATE GROWTH IN
E-COMMERCE.

The use of the Internet for retrieving, sharing and transferring information
among businesses, buyers, suppliers and partners has only recently begun to
develop. If the Internet were not able to accommodate growth in e-commerce, our
business would suffer. The recent growth in the use of the Internet has caused
frequent periods of performance degradation. Our ability to sustain and improve
our services is limited, in part, by the speed and reliability of the networks
operated by third parties. Consequently, the emergence and growth of the market
for our services is dependent on improvements being made to the Internet
infrastructure to alleviate overloading and congestion.

<PAGE>

A LACK OF DEVELOPMENT OF THE E-COMMERCE MARKET WOULD NEGATIVELY AFFECT US.

If the e-commerce market does not grow or grows more slowly than expected, our
business will suffer. The possible slow adoption of the Internet as a means of
commerce by businesses may harm our prospects.

Even if the Internet is widely adopted as a means of commerce, the adoption of
our network for procurement -- particularly by companies that have relied on
traditional means of procurement -- will require broad acceptance of the new
approach.

EMPLOYEES

         As of April 26, 2002, the Company had a total staff of 7 employees,
comprised of 2 technical professionals, 2 sales/marketing and customer service
personnel, 1 accounting/administrative personnel and 2
executive/sales/operations. Six employees are full-time and one employee is
part-time. No employees are represented by a labor union or subject to a
collective bargaining agreement. Management believes that employee relations are
good.

ITEM 2.  DESCRIPTION OF PROPERTIES

         On October 17, 2001, the Company sold the office building which houses
our corporate headquarters at 121 East First Street, Sanford, Florida 32771,
which is approximately 20 miles northeast of Orlando, to New Era Partners Inc.,
a company owned by George Demakos an affiliate who owns more than 10% of
parts.com. In the same transaction, we also sold a 5,000 square foot parking lot
located one block from our office. The contract sales price was $550,000. The
Company applied $110,000 owed to George Demakos, New Era Partners Inc., and
Select Media Ltd., to the sale price, which resulted in a total balance due to
George Demakos, New Era Partners Inc., and Select Media of $5,671. As of
December 31, 2001, this liability was listed in the notes payable, related party
line item of the balance sheet. Subsequently, the company signed a lease with
New Era Partners Inc., to occupy approximately 3,000 square feet of office space
for $2,650.00 a month. The company can notify New Era Partners, Inc of its
intentions to vacate with sixty-days prior notice and pay a one-time penalty of
$5,000.00.


ITEM 3.  LEGAL PROCEEDINGS

The Company is a party to several legal proceedings, with which we believe none
will have an adverse affect on operations.

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

         No matters were submitted to a vote of stockholders during the fourth
quarter of the fiscal year covered by this report.

                                     PART II

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

Market Information. The shares of common stock of the Company are traded on the
Over-The-Counter Electronic Bulletin Board under the symbol "PART." The
following table sets forth for the periods indicated the high and low bid prices
of our common stock, as obtained from Nasdaq Trading & Marketing Services. The
quotations reflect prices between dealers in securities, without retail mark-up,
markdown or commission, and may not represent actual transactions. There was a
1:10 stock split on June 28, 2001.

<TABLE>
<CAPTION>
                                                  HIGH            LOW
                                                  ----            ---
                   <S>                           <C>             <C>

                    Fiscal Year Ended:
                    -----------------
                    December 31, 2001
                      Fourth Quarter             $  .60          $  .25
                      Third Quarter                1.20             .36
                      Second Quarter              12.00            1.10
                      First Quarter                5.60            2.70

                    Fiscal Year Ended:
                    -----------------
                    December 31, 2000
                      Fourth Quarter            $ 22.50          $ 3.80
                      Third Quarter               21.90           13.80
                      Second Quarter             125.00           20.00
                      First Quarter              505.00           82.50
</TABLE>

<PAGE>

The aforementioned stock prices include the 1 for 10 reverse stock split factor,
which was completed in June of 2001.

Holders. As of December 31, 2001 there were approximately 300 record holders of
the Company's common stock; however, there were approximately 4,000 beneficial
owners.

Dividends. The Company has never paid a dividend on its common stock. We intend
to retain future earnings, if any, to finance the expansion of our business and
do not anticipate that any cash dividends will be paid in the foreseeable
future. The future dividend policy will depend on our earnings, capital
requirements, expansion plans, financial condition and other relevant factors.

           Our board of directors, without further action by the stockholders,
is authorized to issue an aggregate of 10,000,000 shares of preferred stock. No
shares of preferred stock are outstanding. The board of directors may, without
stockholder approval, issue preferred stock with dividend rates, redemption
prices, preferences on liquidation or dissolution, conversion rights, voting
rights and any other preferences, which rights and preferences could adversely
affect the voting power of the holders of common stock. Issuance of preferred
stock, while providing desirable flexibility in connection with possible
acquisitions or other corporate purposes, could have the effect of making it
more difficult for a third party to acquire, or could discourage or delay a
third party from acquiring, a majority of our outstanding stock.

Recent Sales of Unregistered Securities. The Company issued the following
unregistered securities during the fiscal year ended December 31, 2001:

From January 22, 2001 through June 30, 2001, the Company sold 60,000 shares of
common stock in private placements to 4 investors (3 of which were accredited)
for net proceeds of $120,000 (all shares sold with a $2.00 per share price). The
securities were issued in reliance on Section 4(2) of the Securities Act. The
investors were provided information about the Company or had access to such
information, and the investors were provided opportunities to ask questions of
management concerning the information provided or made available. The investors
confirmed in writing their investment intent, and the certificates for the
securities bear a legend accordingly.

On February 6, 2001, the Company issued 11,938 shares to Jeffrey Taylor for
consulting services in satisfaction of a $23,874.97 payable owed to him. The
securities were issued in reliance on Section 4(2) of the Securities Act. The
investor was provided information about the Company or had access to such
information, and the investors were provided opportunities to ask questions of
management concerning the information provided or made available. The investor
confirmed in writing their investment intent, and the certificates for the
securities bear a legend accordingly.

On March 21, 2001, the Company issued to Jon Palazzo, an employee of the
Company, 19,621 shares of common stock, in lieu of back salary and wages earned
through March 21, 2001. The securities were issued in reliance on Section 4(2)
of the Securities Act. The investors were provided information about the Company
or had access to such information, and the investors were provided opportunities
to ask questions of management concerning the information provided or made
available. The investors confirmed in writing their investment intent, and the
certificates for the securities bear a legend accordingly.

<PAGE>

From March 27, 2001 to March 29, 2001, the Company issued to Shawn Lucas, Scott
Anderson, Michael Fouts and Jeffrey Odato, executive officers of the Company,
and as such accredited investors, 14,404, 17,793, 15,855 and 14,404 shares of
common stock respectively, in lieu of back salary and wages earned through March
29, 2001. The securities were issued in reliance on Section 4(2) of the
Securities Act. The investors were provided information about the Company or had
access to such information, and the investors were provided opportunities to ask
questions of management concerning the information provided or made available.
The investors confirmed in writing their investment intent, and the certificates
for the securities bear a legend accordingly.

On March 29, 2001, the Company issued to Shawn Lucas, Scott Anderson, and
Michael Fouts, executive officers of the Company, and as such accredited
investors, 12,500, 12,500, and 12,500 shares of common stock respectively, in
consideration of the canceling of the "evergreen clause" in the employee's
contract. The securities were issued in reliance on Section 4(2) of the
Securities Act. The investors were provided information about the Company or had
access to such information, and the investors were provided opportunities to ask
questions of management concerning the information provided or made available.
The investors confirmed in writing their investment intent, and the certificates
for the securities bear a legend accordingly.

From April 27, 2001 through May 14, 2001, the Company issued to two employees a
total of 6,000 shares of common stock in accordance with the Addendums to
Employment Agreements. The securities were issued in reliance on Section 4(2) of
the Securities Act. The investors were provided information about the Company or
had access to such information, and the investors were provided opportunities to
ask questions of management concerning the information provided or made
available. The investors confirmed in writing their investment intent, and the
certificates for the securities bear a legend accordingly.

On May 1, 2001, the Company issued 1,986 shares to R&G Technology for consulting
services. The securities were issued in reliance on Section 4(2) of the
Securities Act. The investor was provided information about the Company or had
access to such information, and the investors were provided opportunities to ask
questions of management concerning the information provided or made available.
The investor confirmed in writing their investment intent, and the certificates
for the securities bear a legend accordingly.

On May 1, 2001, the Company issued 2,836 shares to Gateway Productions for
consulting services. The securities were issued in reliance on Section 4(2) of
the Securities Act. The investor was provided information about the Company or
had access to such information, and the investors were provided opportunities to
ask questions of management concerning the information provided or made
available. The investor confirmed in writing their investment intent, and the
certificates for the securities bear a legend accordingly.

On May 3, 2001, the Company issued 2,802 shares to an accredited investor,
Mediawise Communications, for consulting services. The securities were issued in
reliance on Section 4(2) of the Securities Act. The investor was provided
information about the Company or had access to such information, and the
investors were provided opportunities to ask questions of management concerning
the information provided or made available. The investor confirmed in writing
their investment intent, and the certificates for the securities bear a legend
accordingly.

On May 16, 2001, the Company issued 10,000 shares to Kevin Hubbart for
consulting services. The securities were issued in reliance on Section 4(2) of
the Securities Act. The investor was provided information about the Company or
had access to such information, and the investors were provided opportunities to
ask questions of management concerning the information provided or made
available. The investor confirmed in writing their investment intent, and the
certificates for the securities bear a legend accordingly.

On May 25, 2001, the Company issued 8,479 shares to an accredited investor,
Anthem Communications, for consulting services. The securities were issued in
reliance on Section 4(2) of the Securities Act. The investor was provided
information about the Company or had access to such information, and the
investors were provided

<PAGE>

opportunities to ask questions of management concerning the information provided
or made available. The investor confirmed in writing their investment intent,
and the certificates for the securities bear a legend accordingly.

On May 25, 2001, the Company issued 5,265 shares to The Great American Flying
Circus for advertising services. The securities were issued in reliance on
Section 4(2) of the Securities Act. The investor was provided information about
the Company or had access to such information, and the investors were provided
opportunities to ask questions of management concerning the information provided
or made available. The investor confirmed in writing their investment intent,
and the certificates for the securities bear a legend accordingly.

On June 7, 2001, the Company issued 30,000 shares to Kevin Hubbart for
consulting services. The securities were issued in reliance on Section 4(2) of
the Securities Act. The investor was provided information about the Company or
had access to such information, and the investors were provided opportunities to
ask questions of management concerning the information provided or made
available. The investor confirmed in writing their investment intent, and the
certificates for the securities bear a legend accordingly.

On June 11, 2001, the Company issued 7,713 shares to Horwitz & Fussell for
consulting services. The securities were issued in reliance on Section 4(2) of
the Securities Act. The investor was provided information about the Company or
had access to such information, and the investors were provided opportunities to
ask questions of management concerning the information provided or made
available. The investor confirmed in writing their investment intent, and the
certificates for the securities bear a legend accordingly.

On October 1, 2001, the Company issued 50,000 shares to Kevin J. Hubbart for
consulting services for services rendered through September 30, 2001. The
securities were issued in reliance on Section 4(2) of the Securities Act. The
investor was provided information about the Company or had access to such
information, and the investors were provided opportunities to ask questions of
management concerning the information provided or made available. The investor
confirmed in writing their investment intent, and the certificates for the
securities bear a legend accordingly.

On October 1, 2001, the Company issued 120,000 shares to Kevin J. Hubbart for
consulting services to be rendered through September 30, 2002. The securities
were issued in reliance on Section 4(2) of the Securities Act. The investor was
provided information about the Company or had access to such information, and
the investors were provided opportunities to ask questions of management
concerning the information provided or made available. The investor confirmed in
writing their investment intent, and the certificates for the securities bear a
legend accordingly.


On September 28, 2001, the Company issued 500,000 shares to Shawn Lucas and
500,000 shares to Scott Anderson, both executive officers of the Company, and as
such accredited investors. The securities were issued in reliance on Section
4(2) of the Securities Act. The investor was provided information about the
Company or had access to such information, and the investors were provided
opportunities to ask questions of management concerning the information provided
or made available. The investor confirmed in writing their investment intent,
and the certificates for the securities bear a legend accordingly.

On October 17, 2001, the Company issued 40,000 shares to Martin Hall and 3G
Investment, parties related to or affiliated with the Eugene W. Gramzow
Revocable Trust in conjunction with the closing costs of the building sale of
121 East First Street, Sanford, FL. The securities were issued in reliance on
Section 4(2) of the Securities Act. The investor was provided information about
the Company or had access to such information, and the investors were provided
opportunities to ask questions of management concerning the information provided
or made available. The investor confirmed in writing their investment intent,
and the certificates for the securities bear a legend accordingly.

<PAGE>

On November 15, 2001, the Company issued 40,000 shares to JJCS for payment of
past consulting services. The securities were issued in reliance on Section 4(2)
of the Securities Act. The investor was provided information about the Company
or had access to such information, and the investors were provided opportunities
to ask questions of management concerning the information provided or made
available. The investor confirmed in writing their investment intent, and the
certificates for the securities bear a legend accordingly.

ITEM 6.  SELECTED FINANCIAL DATA

         The following selected financial data should be read in conjunction
with the more detailed financial statements, related notes and other financial
information included herein.

Statement of Operations Data:

<TABLE>
<CAPTION>
                                                  Year Ended             Year Ended
                                             December 31, 2001      December 31, 2000
                                             ----------------       ------------------
<S>                                         <C>                     <C>
Net Sales                                   $    1,038,728            $      903,162
Cost of Sales                               $      562,985            $      850,803
Operating and other Expenses                $    8,559,012            $   13,814,308
                                            --------------            --------------
Net Loss                                    $   (8,083,269)           $  (13,761,949)
</TABLE>


<TABLE>
<CAPTION>
Balance Sheet Data:
------------------
                                           December 31, 2001      December 31, 2000
                                           -----------------      -----------------
<S>                                        <C>                    <C>
Current Assets                              $      47,570            $     86,757
Total Assets                                $     266,475            $  5,217,864
Current Liabilities                         $   3,873,183            $  3,723,123
Total Liabilities                           $   3,899,065            $  3,739,644
Working Capital (Deficit)                   $  (3,825,613)           $ (3,636,366)
Stockholders' Equity                        $  (3,632,590)           $  1,478,220
</TABLE>

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

Investors should read the following discussion and analysis in conjunction with
the consolidated financial statements and notes thereto included elsewhere in
this report as well as "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the financial statements and notes
included in the Company's annual report on Form 10-K. In addition to historical
information, the following discussion contains certain forward-looking
statements within the meaning of Section 21E of the Securities Exchange Act of
1934, as amended, that involve known and unknown risks and uncertainties, such
as statements of our plans, objectives, expectations and intentions. The
cautionary statements made in this report should be read as being applicable to
all related forward-looking statements wherever they appear in this report. Our
actual results could differ materially from those discussed in the
forward-looking statements. Factors that could cause or contribute to such
differences include, but are not limited to, those discussed below and in the
section entitled "Factors That May Affect Our Future Results" in our annual
report on Form 10-K. You should not rely on these forward-looking statements,
which reflect only our opinion as of the date of this report. We do not assume
any obligation to update forward-looking statements.

Overview

The accompanying consolidated financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and satisfaction of
liabilities in the normal course of business. Since its inception, the Company
has continued to suffer recurring losses from operations that to date, total
$28,707,234. The Company used $1,345,516 and $3,784,520 of cash in operations
for

<PAGE>

the years ended December 31, 2001 and 2000, respectively and anticipates
additional cash needs in 2002. At December 31, 2001, the Company had a working
capital deficit of $3,825,613 and cash of $223. The Company also had undeposited
payroll taxes to the Internal Revenue Service for the period July 2000 through
December 2001, resulting in an accrual for back payroll taxes in the amount of
approximately $347,492 as of December 31, 2001, including penalties and
interest. The Company is currently negotiating a payment plan with the IRS, but
no formal agreement has been reached. Due to cash deficiencies, the Company has
also been unable to pay certain members of senior management their regular
salaries when due, which has resulted in an accrual for back salaries of
approximately $117,752 as of December 31, 2001. These factors, among others,
raise substantial doubt about the Company's ability to continue as a going
concern for a reasonable period of time. The accompanying consolidated financial
statements do not include any adjustments relating to the outcome of this
uncertainty.

The Company's continuation as a going concern is dependent upon its ability to
generate sufficient cash flow to meet its obligations on a timely basis. The
Company's primary source of liquidity has been from the cash generated by its
operations and through the private placement of equity and debt securities. The
Company has altered its business model and taken actions to reduce its cash
needs, such as significant reductions in its workforce to attempt to stabilize
its financial condition. The Company continues developing its technology known
as "TradeMotion Solutions" and continues implementation of marketing its
solutions in order to gain market acceptance of same and to eventually achieve
profitable operations. However, there can be no assurance that the Company will
be successful in achieving profitability or acquiring additional capital.
Without short or long-term financing, in order to meet its current and future
capital needs, the Company will depend on cash receipts from annual territory
fees, fee revenue generated from its e-commerce web site, license fees from the
sale of its software and proceeds from the sale of additional shares of common
and/or preferred stock or the issuance of debt securities. The Company is
actively pursuing other sources of new cash financing, but has not completed
such financing and cannot provide any assurances as to whether such financing
will be completed. Furthermore, there can be no assurance that additional
financing will be available when needed or that if available, such financing
will include terms acceptable to our stockholders or management. The
availability of such financing is essential for the Company to continue to meet
operating obligations and continue as a going concern.

There are many events and factors in connection with the development,
manufacture and sale of the Company's products over which the Company has little
or no control, including without limitation, marketing difficulties, lack of
market acceptance of our products, superior competitive products based on future
technological innovation and continued growth of e-commerce businesses. There
can be no assurance that future operations will be profitable or will satisfy
future cash flow requirements.

Results of Operations

Year ended December 31, 2001 compared to December 31, 2000

         For the year ended December 31, 2001, the Company's total revenue
amounted to $1,038,728 versus last year's revenue of $903,162. In connection
with the implementation of its current business plan for parts.com, which
concentrates the Company's software activities in the e-commerce sector, the
Company is no longer involved in the development of FlexRadio. For the years
ended December 31, 2001 and 2000, the Company generated gross revenues of
approximately $0 and $3,000, respectively, from the development of radio
frequency's related to Reallyknow. In August 2001, the Company changed its
parts.com e-commerce business-to-business model from transaction-fee based to
dealership subscription licensing-agreement based. The company recognized
$52,937 in Storefront licensing agreements for the year ended December 31, 2001
as opposed to $19,968 for the previous year. Additionally, at the end of 2001,
$55,501 remains deferred from Storefront Licensing Agreement sales. The company
continued with the sale of its TradeMotion Software Solutions and sold the
rights to Reallknow.com, its online real-time data gathering business, to
Eautoclaims in May of 2001. The company recognized $432,000 in Software
Development income for the 2001 year as opposed to $58,000 for the previous
year. All of the $1.3 million territory fees collected from dealerships
participating in its e-commerce initiative have been recognized as of December
31, 2001, with $513,108

<PAGE>

recognized during 2001. Due to the lower-than-expected transactions for the web
site, the Company extended the terms of its Platinum and Gold dealer territory
contracts through September 30, 2001. The Company's web site (launched in
late-January 2000) was discontinued as a transaction-based model in August 2001,
with an effective date of September 30, 2001, resulting in a minimal amount of
transactions processed and minimal transaction revenue of $10,731 for the year
ended 2001 as opposed to $7,896 for the previous year.

         The Company generated a gross profit of $52,359 for the year ended
December 31, 2000 compared to a gross profit of $475,743 for the year ended
December 31, 2001. The first reason for the higher gross profit from 2000 to
2001 is due to the Company completing significant software development sales,
which resulted in $374,000 more revenue in the year ended 2001 than 2000.
However, this was offset by a $250,301 decrease in territory fee recognition for
the 2001 year ended compared with the 2000 year because 60% of fees were already
recognized in 2000. Additionally, the Company recognized $14,460 in TradeMotion
Locator revenue for the 2001 year ended (none recognized in year ended 2000). An
additional $4,494 was recorded for the Marketplace Referral Program, the Catalog
Manager Option and other related commissions. Although the Company had a steady
increase in its web site transactions, the transaction-fee based model was
discontinued in August 2001. Again, the increase in revenue was offset by lower
Web Maintenance Fee revenue recognized in the year ended 2001 of $11,000 as
opposed to $18,067 in the year ended 2001.

         The second reason for the higher gross profit from 2000 to 2001 is the
significant reduction in cost of good sold expenditures. Total cost of goods
sold expenditures was reduced by $287,817 from 2001 as compared to 2000. All
cost of goods sold expenditure line items saw a reduction in 2001 from 2000
except for the parts.com Catalog expenditure. The Company reduced technical
support salary expenditures including contract labor to develop the web site by
$101,881 during 2001. Internet T-1 expenditures were reduced by $103,298 for
2001 as compared to 2000. Printing expenditures were reduced by $48,873 for 2001
compared to 2000. Finally, travel COGS was reduced by $32,958 in 2001 as
compared to 2000. These lower COGS expenditures were partially offset by an
increase in the parts.com Catalog expenditure, which was $33,923 more in 2001
than 2000.

         Operating and other expenses were significantly decreased by $5,255,296
or 38% for the year ended December 31, 2001 compared to the same period last
year as a result of several factors. During year 2001, the Company spent
$440,605 less in marketing and advertising costs in connection with the launch
of the web site parts.com, its e-commerce business-to-business exchange. Also,
the Company spent $310,446 less to attend the annual NADA and Automotive
Aftermarket Products Expo. Additionally, the Company did not incur any marketing
expenses through NASCAR and its associate sponsorship with M&M's/Mars
Incorporated in 2001 as opposed to $202,695 in the prior year. During year 2001,
the Company continued decreasing its workforce from 42 employees at the end of
the third quarter 2000, 27 employees by December 31, 2000, and 9 employees by
December 31, 2001. The reduced workforce resulting in a savings of $200,550 in
contract labor and $1,351,586 in administrative, customer service and sales
support. Related payroll tax expense was reduced by $126,975 and recruitment
expense was reduced by $103,176 for 2001 as compared with 2000. Commission
expense related to the Territory Fee income also reduced $39,053 for the year
ended 2001. Business Development costs were decreased by $94,179 during 2001 as
compared with 2000. Amortization for Consulting Fees was reduced by $94,966 for
2001 as compared with 2000. The Company recorded a goodwill impairment charge of
$1,485,935 in 2000, which was not incurred in the current year. Non-cash
interest expense was $950,000 in year 2000 as compared with $597,397 for 2001.
Stock based compensation totaled $3,644,388 for the year ended December 31, 2000
as compared to $1,971,631 for period ended December 31, 2001 (a reduction of
$1,672,757). The Company discontinued employer-sponsored health care, which
resulted in $34,447 less cost in 2001 over 2000. Likewise, Director's &
Officer's insurance was cancelled, resulting in $34,792 less cost for 2001 over
2000. Penalties & Fines expensed was $25,226 less in 2001 as compared to 2000.
Travel expense was also significantly reduced in 2001, resulting in $64,564 less
expense in 2001 over 2000. Computer expense was also reduced by $26,225 in 2001.
Shareholder relation expenses decreased $148,003 for 2001 as compared with 2000.
Legal fees were reduced to $64,661 for 2001, a reduction of $158,118 as compared
with 2000. Investment banking expense was $46,765 less in 2001 as compared with
2000. Finally, research and development costs were reduced by $25,067 in 2001 as
compared with 2000.

<PAGE>

The previously mentioned operating expense reductions are partially offset by
several factors. First, the Company fully impaired the Flex Patent at a cost of
$2,456,272 during 2001, which is a $1,436,454 increase over the previous year.
Interest expense related to Note Payable borrowings was increased to $178,000,
which is a $150,324 increase over 2000. Commissions for software development
were $146,400, which were not incurred, in the previous year. Consulting fees
were $132,441 in 2001 as compared to only $26,416 in 2000. Telephone costs
increased by $32,008 in 2001 over 2000. Finally, the Company sold its building
and nearby parking lot in October 2001, which resulted in a Loss on Sale of
Assets of $265,841.

In addition to the above, the Company rented part of its office space and
received $9,277 in rental income. The Company also provided consulting services
and received $13,974 in consulting income.

Liquidity and Sources of Capital

           Year 2001

         During the year ended December 31, 2001, the Company's operations used
approximately $1.35 million of cash. In order to fund its operating losses, the
Company sold 60,000 shares of its common stock through private placements
raising $120,000. Additionally, the Company executed convertible promissory
notes and lines of credit, which resulted in $875,800 and $210,939, respectively
of proceeds during 2001. Further, the Company paid approximately $1,692,008 of
accounts payable, fees owed for consulting services and employment contracts and
salary bonuses by issuing 1,432,056 shares of common stock.

           The Company's internally generated cash flow has not been sufficient
to finance its operations. The cumulative losses of the Company continue to be
financed through the private placement of common stock, the issuance of
convertible promissory notes and through the increase in other current
liabilities.

         The Company has not been able to make timely payments to
dealer/suppliers and other vendors. However, in late 2001, all vendors were
offered a debt settlement of $0.10 on the dollar of debt as satisfaction of
outstanding debt and as of December 31, 2001 $0 was settled in the form of
written acceptance and cash consideration. In addition, the Company did not
remit all the payroll taxes to the Internal Revenue Service for the period July
2000 through December 2001, resulting in an accrual for back payroll taxes in
the amount of $347,492 as of December 31, 2001, including penalties and
interest. The Company is currently negotiating a payment plan with the IRS, but
no formal agreement has been reached. On January 4, 2001 and March 20, 2001, the
Internal Revenue Service filed a federal tax lien against the assets of the
Company totaling $349,990.

         The ability of the Company to continue to satisfy its obligations
depends in part on its ability to reach a profitable level of operations and
secure both short and long-term financing for the development and expansion of
its business. The Company is currently in negotiations with financial
institutions and other private investors and lenders to provide additional
funding through equity or debt financing to fund its business plan. Without
short or long-term financing, in order to meet its current and future capital
needs, the Company will continue to depend on cash receipts from sales of its
software, fee revenue generated from its e-commerce website, proceeds from the
sale of additional shares of common stock and proceeds from the issuance of
convertible promissory notes. There can be no assurance, however, that the
Company will be successful in obtaining any such additional financing through
equity or debt financing.

           Year 2000

         During the year ended December 31, 2000, the Company's operations used
approximately $3.78 million of cash. In order to fund its operating losses, the
Company sold approximately 1.7 million shares of its common stock through
private placements raising approximately $1.7 million. Additionally, the Company
executed two convertible promissory notes for $500,000 and $550,000 with private
parties in

<PAGE>

July, September and December 2000. One of the promissory notes was increased by
$100,000 on similar terms subsequent to year-end. Further, the Company paid
approximately $2,304,858 of accounts payable, fees owed for consulting services
and employment contracts and salary bonuses by issuing 2,275,808 shares of
common stock.

           The Company's internally generated cash flow has not been sufficient
to finance its operations. The cumulative losses of the Company continue to be
financed through the private placement of common stock, the issuance of
convertible promissory notes and through the increase in other current
liabilities.

         The Company has not been able to make timely payments to trade
suppliers and other vendors; however, deferred payment terms are being
negotiated with these vendors. In addition, the Company did not remit payroll
taxes to the Internal Revenue Service for the period May 2000 through November
2000, resulting in an accrual for back payroll taxes in the amount of $378,000
as of December 31, 2000, including penalties and interest. The Company is
currently negotiating a payment plan with the IRS, but no formal agreement has
been reached. On January 4, 2001 and March 20, 2001, the Internal Revenue
Service filed a federal tax lien against the assets of the Company totaling
$349,990.

         The ability of the Company to continue to satisfy its obligations
depends in part on its ability to reach a profitable level of operations and
secure both short and long-term financing for the development and expansion of
its business. The Company is currently in negotiations with financial
institutions and other private investors and lenders to provide additional
funding through equity or debt financing to fund its business plan. Without
short or long-term financing, in order to meet its current and future capital
needs, the Company will continue to depend on cash receipts from sales of its
software, fee revenue generated from its e-commerce website, proceeds from the
sale of additional shares of common stock and proceeds from the issuance of
convertible promissory notes. There can be no assurance, however, that the
Company will be successful in obtaining any such additional financing through
equity or debt financing.

           ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The financial statements required by this report appear beginning at
page F-1 as follows:


<TABLE>
<CAPTION>
                                                                        Page
                                                                        ----
<S>                                                                     <C>

PARTS.COM, INC. AND SUBSIDIARY

Independent Auditors' Reports                                           F-2

Consolidated Balance Sheets as of December 31, 2001                     F-4
         and 2000

Consolidated Statements of Operations for the Years Ended               F-6
         December 31, 2001 and 2000

Consolidated Statements of Stockholders' Equity for the Years           F-7
         Ended December 31, 2001 and 2000

Consolidated Statements of Cash Flows for the Years Ended               F-8
         December 31, 2001 and 2000

Notes to Consolidated Financial Statements                              F-11
</TABLE>


                                      F-1
<PAGE>






                          INDEPENDENT AUDITOR'S REPORT

Board of Directors
parts.com, Inc. & subsidiary
Sanford, Florida

We have audited the accompanying consolidated balance sheet of parts.com, Inc.
and subsidiary (the Company) as of December 31, 2001, and the related
consolidated statements of operations, changes in stockholders' deficit, and
cash flows for the year then ended. 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 audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of parts.com, Inc.
and subsidiary as of December 31, 2001, and the results of its consolidated
operations and its cash flows for the year then ended in conformity with
accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 1, the Company has
incurred substantial losses since its inception, has a working capital
deficiency at December 31, 2001, is experiencing difficulty in generating
sufficient cash flow to meet its obligations and sustain its operations, and is
subject to federal tax liens (see Note 11), which raises substantial doubt about
its ability to continue as a going concern. Management's plans related to these
matters are also described in Note 1. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.


/s/ Moore Stephens Lovelace, P.A.

Certified Public Accountants

Orlando, Florida
April 30, 2002


                                       F-2


<PAGE>



                         PARTS.COM, INC. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS


                                     ASSETS



<TABLE>
<CAPTION>
                                                          December 31
                                                     2001            2000
                                                   --------        ----------
<S>                                                <C>             <C>
CURRENT ASSETS:
    Cash                                           $    223             8,683
    Accounts receivable trade, net of
         allowance for doubtful accounts of
         $72,000 and $77,863, respectively           27,780            10,751
    Prepaid expenses                                 19,567            67,323
                                                   --------        ----------

         Total Current Assets                        47,570            86,757
                                                   --------        ----------


PROPERTY AND EQUIPMENT, net                         185,310           929,084

DEFERRED LOAN COSTS, net of
    accumulated amortization of
    $25,343 as of December 31, 2000                      --           233,157

OTHER ASSETS, net                                    33,595           104,634

PATENT, net of accumulated amortization
    and allowance of $5,397,182 and
    $1,532,950, respectively                             --         3,864,232

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

    Total Assets                                   $266,475        $5,217,864
                                                   ========        ==========
</TABLE>


                 See Accompanying Notes to Financial Statements


                                       F-3



<PAGE>


                         PARTS.COM, INC. AND SUBSIDIARY
                     CONSOLIDATED BALANCE SHEETS, CONTINUED


                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)


<TABLE>
<CAPTION>
                                                                  December 31
                                                           2001                 2000
                                                       ------------         ------------
<S>                                                    <C>                  <C>
CURRENT LIABILITIES:

    Accounts payable and accrued expenses              $    790,746         $    915,455
    Other current liabilities                               831,593              801,070
    Current portion of mortgage notes payable                    --              381,562
    Current portion of note payable                          13,685                   --
    Convertible promissory notes                          1,954,934            1,050,000
    Notes payable - related party                            15,785               61,928
    Line of Credit                                          210,939                   --
    Deferred revenue                                         55,501              513,108
                                                       ------------         ------------

         Total Current Liabilities                        3,873,183            3,723,123

LONG-TERM LIABILITIES:
     Mortgage Notes Payable                                      --               16,521
     Note Payable                                            25,882                   --
                                                       ------------         ------------

         Total Liabilities                                3,899,065            3,739,644
                                                       ------------         ------------
COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY (DEFICIT):

    Preferred Stock, $.001 par value,
    10,000,000 shares authorized,
    no shares issued and outstanding                             --                   --

    Common Stock, $.001 par value,
    5,000,000 shares authorized,
    4,270,623 and 2,778,569 shares
    issued and outstanding, respectively                      4,271                2,778

    Additional paid-in capital                           25,160,277           22,592,466

    Accumulated deficit                                 (28,707,234)         (20,623,965)

    Deferred stock-based employee compensation              (89,904)            (493,059)
                                                       ------------         ------------

         Total Stockholders' Equity (Deficit)            (3,632,590)           1,478,220
                                                       ------------         ------------
         Total Liabilities and
               Stockholders' Equity (Deficit)          $    266,475         $  5,217,864
                                                       ============         ============
</TABLE>


                 See Accompanying Notes to Financial Statements


                                       F-4


<PAGE>


                         PARTS.COM, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>
                                                       Year Ended          Year Ended
                                                      December 31,        December 31,
                                                          2001                2000
                                                      -----------         ------------
<S>                                                   <C>                 <C>
NET SALES                                             $ 1,038,728         $    903,162

COST OF SALES                                             562,985              850,803
                                                      -----------         ------------

         GROSS PROFIT                                     475,743               52,359
                                                      -----------         ------------

SELLING, GENERAL AND ADMINISTRATIVE
    EXPENSES:

  Stock-Based Employee Compensation                     1,840,096            3,005,605

  Stock-Based Consulting Fees                             131,535              638,783
  Other                                                 1,541,225            4,733,093

  Amortization                                          1,428,939            1,774,735

  Depreciation                                            144,446              130,933

Interest, net (inclusive of noncash
 interest of $597,397 for 2001
 and $950,000 for 2000)                                   813,929            1,025,406

Goodwill Impairment Charge                                     --            1,485,935
Patent Impairment Charge                                2,456,272            1,019,818

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

         TOTAL SELLING, GENERAL AND
                  ADMINISTRATIVE EXPENSES               8,356,442           13,814,308
                                                      -----------         ------------
OTHER INCOME (EXPENSES)
  Loss on Sale of assets                                 (265,841)                  --
  Other income                                             63,271                   --
                                                      -----------         ------------

                  TOTAL OTHER INCOME (EXPENSE)           (202,570)
                                                      -----------         ------------
NET LOSS                                              $(8,083,269)        $(13,761,949)
                                                      ===========         ============
BASIC AND DILUTED NET LOSS
    PER COMMON SHARE                                  $     (2.49)        $      (5.70)
                                                      ===========         ============
WEIGHTED AVERAGE NUMBER OF
 COMMON SHARES OUTSTANDING                              3,244,608            2,412,835
                                                      ===========         ============
</TABLE>


                 See Accompanying Notes to Financial Statements

                                       F-5

<PAGE>

                         PARTS.COM, INC. AND SUBSIDIARY
            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
                 FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000



<TABLE>
<CAPTION>
                                                                                                 DEFERRED
                                             COMMON STOCK        ADDITIONAL                    STOCK-BASED
                                         -------------------      PAID-IN       ACCUMULATED      EMPLOYEE
                                          SHARES      AMOUNT      CAPITAL         DEFICIT      COMPENSATION        TOTAL
                                         ---------    ------    -----------     -----------    ------------     ------------
<S>                                      <C>          <C>       <C>            <C>             <C>              <C>
BALANCE - DECEMBER 31, 1999              2,305,121    $2,305    $16,110,795    $ (6,862,016)    $        --        9,251,084

ISSUANCE OF STOCK OPTIONS TO
   DIRECTORS                                    --        --        206,326              --              --          206,326

ISSUANCE OF STOCK OPTIONS FOR
   CONSULTING SERVICES                          --        --         10,514              --              --           10,514

ISSUANCE OF COMMON STOCK FOR CASH
   IN PRIVATE PLACEMENTS, NET OF
   $66,840 IN OFFERING COSTS               170,959       171      1,694,083              --              --        1,694,254

ISSUANCE OF COMMON STOCK TO
   DIRECTORS                                 6,000         6        719,100              --              --          719,106

ISSUANCE OF CONVERTIBLE DEBT WITH A
   BENEFICIAL CONVERSION FEATURE                --        --        950,000              --              --          950,000

ISSUANCE OF COMMON STOCK FOR ACCOUNTS
   PAYABLE AND SERVICES                    227,581       227      2,304,385              --              --        2,304,613

STOCK GRANTED FOR EMPLOYEE
   COMPENSATION                             68,900        69        597,263              --        (597,263)              69

AMORTIZATION OF EMPLOYEE STOCK-
   BASED COMPENSATION                           --        --             --              --         104,204          104,204

NET LOSS FOR THE PERIOD                         --        --             --     (13,761,949)             --      (13,761,949)
                                         ---------    ------    -----------    ------------     -----------     ------------

BALANCE - DECEMBER 31, 2000              2,778,569    $2,778    $22,592,466    $(20,623,965)    $  (493,059)    $  1,478,220


ISSUANCE OF STOCK OPTIONS TO
   OFFICERS                                     --        --      1,156,250              --      (1,156,250)              --

EXERCISE OF STOCK OPTIONS TO
   OFFICERS                              1,000,000     1,000          9,000              --              --           10,000

ISSUANCE OF COMMON STOCK FOR CASH
   IN PRIVATE PLACEMENTS                    60,000        60        119,940              --              --          120,000

ISSUANCE OF COMMON STOCK TO
   EMPLOYEES                               125,577       126        324,753              --          (9,720)         315,159

ISSUANCE OF CONVERTIBLE DEBT WITH A
   BENEFICIAL CONVERSION FEATURE                --        --        597,397              --              --          597,397

ISSUANCE OF COMMON STOCK FOR ACCOUNTS
   PAYABLE AND SERVICES                    306,479       307        241,031              --         (32,400)         208,938

CAPITAL CONTRIBUTIONS                           --        --        119,440              --              --          119,440

AMORTIZATION OF EMPLOYEE STOCK-
   BASED COMPENSATION                           --        --             --              --       1,601,525        1,601,525

NET LOSS FOR THE PERIOD                         --        --             --      (8,083,269)             --       (8,083,269)
                                         ---------    ------    -----------    ------------     -----------     ------------

BALANCE - DECEMBER 31, 2001              4,270,623    $4,271    $25,160,277    $(28,707,234)    $   (89,904)    $ (3,632,590)
                                         =========    ======    ===========    ============     ===========     ============
</TABLE>


                 See Accompanying Notes to Financial Statements


                                       F-6

<PAGE>

                         PARTS.COM, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS



<TABLE>
<CAPTION>
                                                         Year Ended         Year Ended
                                                        December 31,       December 31,
                                                            2001               2000
                                                         -----------       ------------
<S>                                                     <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                               $(8,083,269)      $(13,761,949)
  Adjustments to reconcile net loss to net
    cash used in operating activities:
       Loss on Sale of Property and Equipment                265,841                 --
       Goodwill impairment charge                                 --          1,485,935
       Patent impairment charge                            2,456,272          1,019,818
       Amortization                                        1,428,939          1,774,735
       Depreciation                                          144,446            130,933
       Non-cash interest expense                             597,397            950,000
       Stock-based compensation                            1,947,436          3,644,388
       Provision for doubtful accounts                        72,000             38,680

  Changes in operating assets and liabilities, net:
             Receivables                                     (89,029)             1,166
             Other Assets                                      8,311              1,806
             Prepaid expenses                                 47,756             10,501
             Deferred revenue                               (457,607)           (72,892)
             Accounts payable & Accrued Expenses             232,556            349,641
             Other current liabilities                        83,435            642,718
                                                         -----------       ------------
  Net cash used in operating activities                   (1,345,516)        (3,784,520)
                                                         -----------       ------------
CASH FLOWS FROM INVESTING ACTIVITIES:

  Payments for property and equipment                         (2,259)          (182,207)
                                                         -----------       ------------
</TABLE>


                 See Accompanying Notes to Financial Statements


                                       F-7

<PAGE>



                         PARTS.COM, INC. AND SUBSIDIARY
                CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED



<TABLE>
<CAPTION>
                                                   Year Ended         Year Ended
                                                   December 31,      December 31,
                                                       2001              2000
                                                   -----------       -----------
<S>                                                <C>               <C>
CASH FLOWS FROM FINANCING
    ACTIVITIES:

    Line of credit advances                            210,939                --
    Proceeds from issuance of
         convertible promissory notes                  875,800         1,050,000
    Repayments of mortgages payable                         --            (1,321)
    Proceeds from related party notes payable          327,997           228,528
    Repayment of related party notes payable          (192,627)         (166,600)
    Repayment of notes payable                          (2,794)               --
    Repayments of capitalized leases                        --           (10,113)
    Proceeds from issuance of
         common stock                                  120,000         1,760,923
    Payments for offering costs                             --           (66,840)
                                                   -----------       -----------
    Net cash provided by
         financing activities                        1,339,315         2,794,577
                                                   -----------       -----------

(DECREASE) INCREASE IN CASH                             (8,460)       (1,172,150)

CASH, AT BEGINNING OF PERIOD                             8,683         1,180,833
                                                   -----------       -----------

CASH, AT END OF PERIOD                             $       223       $     8,683
                                                   ===========       ===========
SUPPLEMENTAL DISCLOSURES OF
    CASH FLOW INFORMATION:

    Cash paid during the period for:
         Interest                                  $    52,912       $    45,613
                                                   ===========       ===========
</TABLE>


                                       F-8


<PAGE>


                         PARTS.COM, INC. AND SUBSIDIARY
                CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED


SUPPLEMENTAL SCHEDULE OF NON
    CASH INVESTING & FINANCING
    ACTIVITIES:

Year Ended December 31, 2001:

Accounts payable and accrued expenses in the amount of $207,649 settled through
issuance of common stock.

Accounts payable and accrued expenses settled through issuance of convertible
promissory note payable in the amount of $52,500.

Accounts payable and accrued expenses in the amount of $38,427 converted to
related party notes payable.

Property and equipment returned to vendor for credit, with corresponding
reduction of accounts payable and accrued expenses, in the amount of $25,000.

Building and parking lot sale, with corresponding reduction of notes and
mortgage payables and accrued interest, in the amount of $542,912.


Year Ended December 31, 2000:

Issuance of 2,660,000 shares of common stock in connection with employment
contracts and employee bonuses, in the aggregate amount of $2,562,311.

Issuance of 294,808 shares of common stock in payment of $274,560 of consulting
Fees.

Issuance of 10,000 shares for advertising costs valued at $65,250.

Reclassification of inventory to property and equipment in the amount of
$54,589.


                 See Accompanying Notes to Financial Statements


                                      F-9

<PAGE>
                         PARTS.COM, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    DECEMBER 31, 2001 AND DECEMBER 31, 2000


1.       ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES:

                  ORGANIZATION - Parts.com, Inc., (the "Company") is a
         business-to business and business-to-consumer electronic commerce
         software and parts procurement platform provider. The Company was
         incorporated in Nevada on September 13, 1995, under the name I.E.L.S.,
         Inc., which had no revenue and insignificant expenses, assets and
         liabilities and whose common stock was traded on the OTC Bulletin
         Board. Effective January 5, 2000, the Company changed its name from
         Miracom Corporation to parts.com, Inc.

                  GOING CONCERN - The accompanying consolidated financial
         statements have been prepared on a going concern basis, which
         contemplates the realization of assets and satisfaction of liabilities
         in the normal course of business. Since its inception, the Company has
         continued to suffer recurring losses from operations that to date,
         total $28,707,234. The Company used $1,345,516 and $3,784,520 of cash
         in operations for the years ended December 31, 2001 and 2000,
         respectively and anticipates additional cash needs in 2002. At
         December 31, 2001, the Company had a working capital deficit of
         $3,825,613 and cash of $223. The Company also had undeposited payroll
         taxes to the Internal Revenue Service for the period July 2000 through
         December 2001, resulting in an accrual for back payroll taxes in the
         amount of approximately $347,000 as of December 31, 2001, including
         penalties and interest. The Company is currently negotiating a payment
         plan with the IRS, but no formal agreement has been reached. Due to
         cash deficiencies, the Company has also been unable to pay certain
         members of senior management their regular salaries when due, which
         has resulted in an accrual for back salaries of approximately $117,752
         as of December 31, 2001. These factors, among others, raise
         substantial doubt about the Company's ability to continue as a going
         concern for a reasonable period of time. The accompanying consolidated
         financial statements do not include any adjustments relating to the
         outcome of this uncertainty.


                                      F-10


<PAGE>


                         PARTS.COM, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
                    DECEMBER 31, 2001 AND DECEMBER 31, 2000


1.       ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:

                  The Company's continuation as a going concern is dependent
         upon its ability to generate sufficient cash flow to meet its
         obligations on a timely basis. The Company's primary source of
         liquidity has been from the cash generated by its operations and
         through the private placement of equity and debt securities. The
         Company has altered its business model and taken actions to reduce its
         cash needs, such as significant reductions in its workforce to attempt
         to stabilize its financial condition. The Company continues developing
         its technology known as "TradeMotion Solutions" and continues
         implementation of a marketing campaign in order to gain market
         acceptance of it and to eventually achieve profitable operations.
         However, there can be no assurance that the Company will be successful
         in achieving profitability or acquiring additional capital. Without
         short or long-term financing, in order to meet its current and future
         capital needs, the Company will depend on cash receipts from annual
         subscription fees, fee revenue generated from its e-commerce web site,
         license fees from the sale of its software and proceeds from the sale
         of additional shares of common stock or the issuance of debt
         securities. The Company is actively pursuing other sources of new cash
         financing, but has not completed such financing and cannot provide any
         assurances as to whether such financing will be completed.
         Furthermore, there can be no assurance that additional financing will
         be available when needed or that if available, such financing will
         include terms acceptable to our stockholders or management. The
         availability of such financing is essential for the Company to
         continue to meet operating obligations and continue as a going
         concern.

                  PRINCIPLES OF CONSOLIDATION - The accompanying consolidated
         financial statements include the accounts of the Company and its
         wholly- owned subsidiary Flex. All significant intercompany
         transactions and balances have been eliminated for all periods
         presented.

                  USE OF ESTIMATES - The preparation of financial statements in
         conformity with accounting principles generally accepted in the United
         States of America 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 reported period. Actual results could differ from these
         estimates.

                  REVENUE AND EXPENSE RECOGNITION - Revenues are generally
         recognized when the service has been performed and related costs and
         expenses are recognized when incurred. Contracts for the development
         of software that extend over more than one reporting period are
         accounted for using the percentage-of-completion method of accounting.
         Revenue recognized at the financial statement date under these
         contracts is that portion of the total contract price that costs
         expended to date bears to the total anticipated final cost, based on
         current estimates of cost to complete. Revisions in total costs and
         earnings estimates during the course of the contract are reflected in
         the accounting period in which the circumstances necessitating the
         revisions become known. At the time a loss on a contract becomes known
         the entire amount of the estimated loss is recognized in the financial
         statements. Costs attributable to contract disputes are carried in the
         accompanying balance sheet only when realization is probable. Amounts
         received on contracts in progress in excess of the revenue earned,
         based upon the percent of completion method, are recorded as deferred
         revenue and the related costs and expenses incurred are recorded as
         deferred costs. Parts.com transaction fee revenues on
         business-to-business and consumer sales were recognized at the time
         the transaction was completed. Because individual sellers, rather than
         the Company make the actual product sale, the Company had no cost of
         goods sold, no procurement, carrying or shipping costs and no
         inventory. Provisions for estimated uncollectible accounts and
         authorized credits will be recorded as


<PAGE>


         percentages of revenues and will be provided for at the time of
         revenue recognition.

         On September 10, 2001, the Company notified its entire dealership
         network that its parts.com marketplace would no longer be charging
         transaction fees for orders received and forwarded to the Company's
         distribution network. The Company cancelled its transaction fee based
         model and adopted an annual subscription fee based model. The Company
         did not receive any written correspondence objecting to this change
         and, therefore, on September 30, 2001, all parts.com marketplace
         orders were forwarded to dealers within the parts.com distribution
         network who have subscribed to the Company's TradeMotion Storefront
         software. Service was cancelled prior to September 30, 2001, for all
         dealerships who did not respond to such notice by renewing their
         agreement under the new subscription fee based model. Accordingly, the
         Company recognized all remaining deferred revenues at September 30,
         2001 pertaining to its old transaction fee based model.

         As of September 30, 2001 the Company no longer charges annual
         territory fees to customers based upon each level of distribution and
         vehicle line that the customer purchases. Initially, annual fees were
         to be amortized into income over a period not to exceed 12 months
         commencing with the date the customer begins fulfilling parts orders
         for the web site. Effective October 2000, the Company extended the
         customer contracts through December 31, 2001. On September 30, 2001,
         however, the Company cancelled all annual territory fees to customers
         and as result of the change; fees were amortized into income over a
         total of 18 months. Unamortized fees under the new subscription fee
         based model are recorded as deferred revenue. Sales commissions
         associated with annual territory fees are recorded as prepaid expenses
         and are charged against income as the revenue is recognized.

                  The e-commerce web site became operational on January 23,
         2000. During the years ended December 31, 2001 and December 31, 2000,
         the Company recognized approximately $10,731 and $7,895 from
         e-commerce transactions, respectively.

                  ReallyKnow.com revenues and all costs and expenses related to
         sales of Kiosks will be recognized at the time the products are
         delivered. In connection with the implementation of its current
         business plan for ReallyKnow.com which concentrates the Company's
         dealer car sales generation and tracking tool in the e-commerce
         sector, the Company is no longer involved in the production of
         quantitative and qualitative demographic researching and reporting in
         the Customer Relationship Management sector utilizing Kiosks. For the
         years ended December 31, 2001 and 2000, the Company generated gross
         revenues of approximately $0 and $20,000 and respectively, from the
         production of radio, television media and CRM.

                  FAIR VALUE OF FINANCIAL INSTRUMENTS - Cash, accounts
         receivable, accounts payable, accrued expenses and other current
         liabilities are reflected in the consolidated financial statements at
         fair value because of the short-term maturity of these instruments.
         The carrying value of capitalized lease obligations approximate their
         fair value. The fair value of mortgage notes payable and other debt
         are based upon the present value of future cash flows discounted at
         estimated current borrowing rates available to the Company for each
         type of debt instrument.

                  CONCENTRATIONS OF CREDIT RISK - Financial instruments which
         potentially subject the Company to concentrations of credit risk
         consist principally of cash and accounts receivable. Cash is held in
         banks and other financial institutions and at times may exceed
         federally insured limits. The Company has not incurred any losses on
         its cash deposits and it does not believe it is exposed to any
         significant credit risk therefrom.

                  PROPERTY AND EQUIPMENT - Property and equipment is stated at
         cost. Depreciation is provided on the straight-line method at rates
         based on the estimated useful lives of individual assets or classes of
         assets. Building and related improvements were/are depreciated over 25
         years and


<PAGE>


         furniture and fixtures and computers and related equipment are
         depreciated over three to five years.

                  Leased property meeting certain criteria is capitalized and
         the present value of the related lease payment is recorded as a
         liability. Amortization of capitalized leased assets is computed on
         the straight-line method over the estimated useful lives of assets
         acquired ranging from three to five years.

                  Expenditures for repairs and maintenance are expensed as
         incurred. Expenditures, which materially increase values, or extend
         useful lives, are capitalized.

                  DEFERRED LOAN COSTS - Deferred loan costs in connection with
         the acquisition of the mortgage financing to purchase the Company's
         office building were being amortized on a straight-line basis over the
         17-year term of the loan, commencing in May 1999. The unamortized loan
         costs were expensed with the sale of the land and building in 2001
         (see Note 10).

                  OTHER ASSETS - Deferred consulting fees included in other
         assets for the year ended December 31, 2000 were amortized over the
         terms of the related consulting agreements, which ranged from one to
         two years. All deferred consulting fees have been fully expensed at
         December 31, 2001. The cost of acquiring the Internet domain names is
         being amortized over a period of five years commencing with the
         activation of the website in January 2000.

                  PATENT - Patents were carried at cost less accumulated
         amortization, which was calculated on a straight-line basis over the
         estimated useful life of the asset of five years. (See "impairment of
         long-lived assets")

                  GOODWILL - Goodwill, was amortized on the straight-line
         method over three years. Amortization expense for years 2001 and 2000
         was $0 and $466,555, respectively. (See "impairment of long-lived
         assets")

                  IMPAIRMENT OF LONG-LIVED ASSETS - In the event that facts and
         circumstances indicate the carrying value of a long-lived asset,
         including associated intangible assets, may be impaired, an evaluation
         of recoverability is performed by comparing the estimated undiscounted
         future cash flows associated with the asset to the asset's carrying
         amount to determine if a write-down to market value or undiscounted
         cash flow is required. As a result of such analysis, its limited
         funding and, accordingly, its decision to focus on its core business,
         the Company recognized a loss on its Flex technology patent pending of
         $2,456,272 and $1,019,818, respectively, during for the years ended
         December 31, 2001 and 2000, respectively. Based on a similar analysis,
         the Company recognized a loss on impairment of goodwill (see Note 12)
         of $1,485,935 during the year ended December 31, 2000.

                  INCOME TAXES - The Company accounts for income taxes under
         the Liability method which requires recognition of deferred tax
         liabilities and assets for the expected future tax consequences of
         events that have been included in the financial statements or tax
         returns. Under this method, deferred tax liabilities and assets are
         determined based upon the difference between the financial statement
         and tax bases of assets and liabilities using enacted tax rates in
         effect for the year in which the differences are expected to reverse.
         The Company has incurred losses since its inception. Due to the
         uncertainty of the realization of the tax loss carryforward, the
         Company has established a 100% valuation allowance against the
         carryforward benefit.

                  SEGMENT INFORMATION - The Company has adopted Statement of
         Financial accounting Standards No. 131, "Disclosures About Segments of
         an Enterprise and Related Information" (SFAS 131). The Company
         operates in one segment, which provides a business-to-business
         electronic commerce software and parts procurement platform. Since the
         Company operates in one segment, all


<PAGE>


         financial segment information required by SFAS 131 can be found in the
         consolidated financial statements.

                  NET LOSS PER SHARE OF COMMON STOCK - The basic and diluted
         net loss per common share in the accompanying consolidated statements
         of operations are based upon the net loss divided by the weighted
         average number of shares outstanding during the periods presented.

                  On June 15, 2001, the Board of Directors approved a reverse
         stock split of common stock of 1 share for 10 shares effective June
         27, 2001. All common stock and per share information has been
         retroactively restated to reflect this reverse split for all periods
         presented.

                  For the years ended December 31, 2001 and 2000, the Company
         had securities that could potentially dilute earnings per share in the
         future but were excluded from the computation of diluted net loss per
         share in the periods presented since their effect would have been
         anti-dilutive. The potential number of common shares into which these
         outstanding securities are convertible are as follows:


<TABLE>
                                                                    Year Ended
                                                                    December 31
                                                        ----------------------------------
                                                           2001                     2000
                                                        ---------                ---------
         <S>                                            <C>                      <C>
         Outstanding options                              211,000                  406,000
         Convertible promissory notes                   6,962,955                3,055,556
                                                        ---------                ---------
         Total                                          7,173,955                3,461,556
</TABLE>

                  As of December 31, 2001, the Company did not have enough
         unissued authorized shares to cover the shares the would be required
         to be issued if all of the Companies option holders and convertible
         debt holders were to requests conversion. The Company intends to
         increase its authorized shares in 2002 to give it the ability to cover
         all conversion requests.

                  STOCK OPTION PLAN - The Company accounts for stock-based
         compensation using the intrinsic value method prescribed in Accounting
         Principles Board Opinion No. 25 "Accounting for Stock issued to
         Employees." Compensation cost for stock options, if any, is measured
         as the excess of the quoted market price of the Company's stock at the
         date of grant over the amount the employee must pay to acquire the
         stock. Restricted stock is recorded as compensation cost over the
         requisite vesting periods based upon the market value on the grant
         date.

                  Statement of Financial Accounting Standards No. 123,
         "Accounting for Stock-Based Compensation," (SFAS 123) established
         accounting and disclosure requirements using a fair-value based method
         of accounting for stock-based employee compensation plans. The Company
         has elected to remain on its current method of accounting as described
         above, and has adopted the disclosure requirements of SFAS No. 123.

                  RECENT PRONOUNCEMENTS - In June 2001, the Financial
         Accounting Standards Board (FASB) issued two new pronouncements:
         Statement of Financial Accounting Standards (Statement) No. 141,
         "Business Combinations" (Statement 141) and Statement No. 142,
         "Goodwill and Other Intangible Assets" (Statement 142). Statement 141
         prohibits the use of the pooling-of-interest method for business
         combinations initiated after June 30, 2001 and also applies to all
         business combinations accounted for by the purchase method that are
         completed after June 30, 2001. There are also transition provisions
         that apply to business combinations completed before July 1, 2001,
         that were accounted for by the purchase method. Statement 142 is
         effective for fiscal years beginning after December 15, 2001 to all
         goodwill and other intangible assets recognized in an entity's
         statement of financial position at that date, regardless of when those
         assets were initially recognized. The Company does not believe the
         impact of the provisions of Statement 141 and Statement 142 will be
         material to the Company's financial statements.


<PAGE>


                  RECLASSIFICATIONS - Certain amounts in the 2000 consolidated
         financial statements have been reclassified to conform to the 2001
         presentation.

2.       MERCHANT ACCOUNT:

                  The Company maintains a merchant account for the electronic
         processing of its transactions with a credit card processor. Pursuant
         to the terms of the account, the Company was required to maintain a
         deposit of $100,000 with the credit card processor. In June 2000, the
         credit card processing company returned the deposit to the Company in
         full.

3.       PREPAID EXPENSES:

                   The company paid one nominal consulting fee in December 2001
         for January 2002 resulting in a prepaid expense asset of $3,000 at
         December 31, 2001.

4.       PROPERTY AND EQUIPMENT:

                  A summary of property and equipment at December 31, 2001 and
         December 31, 2000 is as follows:


<TABLE>
<CAPTION>
                                                           December 31,            December 31,
                                                              2001                     2000
                                                           -----------             -----------
         <S>                                               <C>                     <C>
         Land, building and improvements                   $       814             $   600,966
         Furniture and fixtures                                 22,857                  22,855
         Assets acquired under capitalized
               leases                                               --                  60,483
         Software                                              123,309                 146,053
         Computers and related equipment                       335,805                 355,943
                                                           -----------             -----------
                                                               482,785               1,186,300
         Less: accumulated depreciation and
               amortization                                   (297,475)               (257,216)
                                                           -----------             -----------
                                                           $   185,310             $   929,084
                                                           ===========             ===========
         Depreciation and amortization
               expense                                     $   144,446             $   130,933
                                                           ===========             ===========

         Depreciation and amortization
               expense of assets acquired under
               capitalized leases                          $    12,097             $    12,097
                                                           ===========             ===========
</TABLE>

                  Assets acquired under capitalized leases consisted primarily
         of telephones, computers and related equipment and were disposed of in
         the fourth quarter of 2001.

5.       OTHER ASSETS:

               Other assets at December 31, 2001 and December 31, 2000 are as
         follows:

<TABLE>
<CAPTION>
                                                   December 31,            December 31,
                                                       2001                  2000
                                                   -----------             -----------

         <S>                                       <C>                     <C>
         Deferred consulting fees                  $        --             $   940,929
         Internet domain                                47,870                  47,870
         Deposits                                        4,875                  13,186
                                                   -----------             -----------
                                                        52,745               1,001,985
         Less: accumulated amortization                (19,150)               (897,351)
                                                   -----------             -----------
                                                   $    33,595             $   104,634
                                                   ===========             ===========
         Amortization expense                      $    62,728             $   661,825
                                                   ===========             ===========
</TABLE>


<PAGE>


6.       NOTES AND MORTGAGE NOTES PAYABLE:

                  CONVERTIBLE PROMISSORY NOTES -

                  JAMES HALL NOTES - On July 20, 2000, the Company executed a
         Convertible Promissory Note (the "Note") with an individual for up to
         a Principal amount of $500,000. The note was subsequently modified on
         March 30, 2001 to allow for additional advances totaling $165,000,
         which were received during the six months ended June 30, 2001
         ($125,000 was received in the form of cash and $38,767 was incurred
         through legal expenses and the conversion of accrued interest). The
         new Note bears interest at 10% per annum and was due and payable in a
         single balloon payment of principal and interest on July 20, 2001;
         however the note holder extended the maturity date to April 30, 2002.
         The Note, including accrued interest may be prepaid in full prior to
         maturity, without penalty. The Note is collateralized by the Company's
         Uniform Resource Locator ("URL"), "parts.com," its "trademotion"
         software as well as all of its tangible and intangible property and
         equipment.

                  Provided the Note has not been prepaid prior to maturity, the
         holder may convert the principal balance plus any accrued interest,
         before or at the scheduled maturity date of the Note into shares of
         the Company's common stock. Of the $665,000 outstanding as of December
         31, 2001, $538,767 plus related accrued interest thereon is
         convertible at the lower of $3.60 per share or 80% of the 5-day
         average closing bid price prior to the conversion date while $125,000
         is convertible at the lower of $2.00 per share or 80% of the lowest
         closing bid price within five trading days preceding conversion.

                  On September 28, 2001, the Company executed another
         convertible promissory Agreement with this same individual for up to a
         principal amount of $250,000, at the lenders option. At December 31,
         2001 $162,000 was due under this agreement. The note bears interest at
         10% per annum and all outstanding principal and interest was
         originally due and payable on December 4, 2001 and was extended to
         April 30, 2002. Provided the note has not been prepaid prior to
         maturity, the holder may convert interest, or any portion thereof in
         an amount not less than $50,000, to shares of common stock of the
         Company at the lower of $0.75 per share or 80% of the average closing
         ask price for the 5 trading days preceding the conversion. The
         remaining $60,000 of principal plus related accrued interest thereon
         may be converted by the holder at the lower of $1.00 per share or 80%
         of the lowest closing bid price within the five trading days preceding
         conversion. The note, including accrued interest, may be prepaid in
         full prior to maturity without penalty and is collateralized by the
         Company's tangible and intangible property consistent with the
         original note dated July 20, 2000 (as modified on March 30, 2001)
         described above.

                  DOUGLAS NAGEL NOTES - On September 1, 2000, the Company
         executed a $250,000 Unsecured Convertible Promissory Note with an
         individual. The note bears interest at 10% per annum and was due and
         payable in a single balloon payment of principal and interest on
         September 1, 2001. The note, including accrued interest could have
         been prepaid in full prior to maturity, without penalty. Provided the
         note was not been prepaid prior to maturity, the holder could have
         converted the principal balance of the note plus any accrued interest,
         before or at the scheduled maturity date of the note into shares of
         the Company's common stock at a conversion price of $.375 per share.

                  In December 2000, the Company revised the terms of the
         $250,000 note and the holder advanced an additional $300,000 under a
         new note. The outstanding principal under the replacement note
         ($550,000) plus interest at 10% was due and payable December 31, 2001.
         The note is collateralized by the Company's URL "parts.com" and the
         source code for the Company's TradeMotion Software only to the extent
         of the indebtedness under the note. The Company has the right to
         prepay the entire principal under the note and


<PAGE>


         in the event that the Company prepays $300,000 in principal, the
         holder loses all collateral rights and the remaining $250,000 in
         principal becomes unsecured. The holder may convert the $300,000 in
         additional principal plus interest into common stock at a conversion
         price of $.30 per share. The previously funded $250,000 remains
         convertible into common stock at $.375 per share.

                  In 2001, the holder advanced the Company an additional
         $411,667 and executed addendums to the note with the same terms as
         above, except that the loan additional funds to the Company. The
         holder received short term options to acquire the Company's common
         stock, all of which expired in 2001. Also, as inducements to the rate
         at which the outstanding principal and interest is convertible into
         the Company's common stock. The new note agreement calls for
         conversion at the option of the holder any time prior to the maturity
         date on all outstanding principal and interest at the lower of $0.75
         per share or 80% of the average closing price of the Company's common
         stock for the 5 business days immediately preceding the date of
         conversion.

                  On August 31, 2001, the Company also executed a credit line
         with this individual for a maximum principal draw of $500,000 at not
         more than a proposed amount of $50,000 per month at the lender's
         discretion. The monies were placed in an escrow account held by the
         Company's legal counsel. This credit line was effective beginning
         August 31, 2001 and ended on December 31, 2001. The credit line bears
         interest at 10% per annum. Through December 31, 2001, approximately
         $111,000 had been drawn against this line of credit agreement of which
         the lender has disputed a portion of these funds being released out of
         escrow.

                  OTHER NOTES - On January 23, 2001 the Company executed a
         convertible promissory note with an individual in the amount of
         $50,000. The note bears interest at 10% per annum and was originally
         due and was payable in a single balloon payment on January 23, 2002.
         The note, including accrued interest may be prepaid in full prior to
         maturity without penalty. Provided the note has not been prepaid prior
         to maturity, the holder may convert the principal balance of the note
         plus any accrued interest, before or at the scheduled maturity date of
         the note into shares of the Company's Common Stock at a conversion
         price of $2.00 per share. The holder of the note had an option to loan
         up to an additional $150,000 prior to April 27, 2001, which the holder
         failed to exercise.

                  In April 2001, the Company settled an outstanding payable
         balance in the amount of $107,562 by issuing a convertible promissory
         note payable in the amount of $52,500 with payments beginning August
         16, 2001, and ending in December 2001. If the Company fails to make
         the initial payment, the balance owed is converted to common stock at
         $2.75 per share. As a result of this transaction, the Company recorded
         non-cash interest expense in the amount of $7,159 for the six months
         ended June 30, 2001, for the beneficial conversion feature.

                  The Company's real property was sold on October 17, 2001 to a
         shareholder of the Company (see Note 10). The Company issued a new
         note payable for $25,000 to the mortgage holder to cover the
         deficiency in the proceeds from the sale. Monthly principal and
         interest payments of $1,000 are due on this note.

                  Due to the fair value of the beneficial conversion feature
         associated with the convertible notes issued in 2001 and 2000, the
         Company recorded a debt discount as non-cash interest expense in the
         amount of $597,397 and $950,000 for the years ended December 31, 2001
         and 2000 (see Note 9).

                  DEBT MATURITIES - Debt maturities subsequent to December 31,
         2001, related to the Company's notes payable, convertible promissory
         notes and its line of credit, are as follows:


<PAGE>


<TABLE>
<CAPTION>
                  Year Ending
                  December 31,                          Amount
                  ------------                       ----------
                  <S>                                <C>
                  2002                                2,179,558
                  2003                                   12,834
                  2004                                   13,048
                                                     ----------
                      Total                          $2,205,440
                                                     ==========
</TABLE>

                  The 2002 maturities of $2,179,558 are included in the
         December 31, 2001 balance sheet as follows: Current portion of note
         payable $13,685, convertible promissory notes $1,954,934 and line of
         credit $210,939.

7.       CAPITALIZED LEASES:

                  Prior to December 31, 2000, the Company leased certain
         equipment under capital lease arrangements. There are no future
         minimum lease payments under these agreements at December 31, 2000 as
         the Company liquidated the balances due under the capitalized leases
         in January 2000.

8.       INCOME TAXES:

                  The difference between the Company's effective income tax
         rate and the federal statutory rate at December 31, 2001, and December
         31, 2000, is reconciled below:


<TABLE>
<CAPTION>
                                                                             2001             2000
                                                                             ----             ----

         <S>                                                                 <C>              <C>
         Federal benefit expected                                            (34)%            (34)%
         State taxes                                                          (4)              (4)
         Permanent items                                                      19               11
         Increase in valuation allowance                                      19               27
                                                                             ---              ---
                                                                             0.0%             0.0%
                                                                             ===              ===
</TABLE>

                  Significant components of the Company's deferred tax assets
         and liabilities at December 31, 2001, and December 31, 2000, are
         approximately as follows:


<TABLE>
<CAPTION>
                                                     2001                  2000
                                                  ----------            -----------
         <S>                                      <C>                   <C>
         Deferred Tax Assets
         Net operating losses                     $4,750,000            $ 3,912,000
         Noncash interest expense                 $  611,000                375,000
         Allowance for bad debts                          --                 31,000
         Stock-based compensation                 $2,307,000              1,580,000
         Deferred income                                  --                203,000
         Other                                    $   47,000                 66,000
                                                  ----------            -----------
              Gross deferred tax asset             7,715,000              6,167,000
         Less valuation allowance                 (7,715,000             (6,167,000)
                                                  ----------            -----------
              Deferred tax asset                  $       --            $        --
                                                  ==========            ===========
</TABLE>

                  There were no deferred tax liabilities as of December 31,
         2001, and December 31, 2000.

                  As of December 31, 2001, the Company had estimated net
         operating loss carryforwards of approximately $12,025,000 available to
         offset future taxable income. The net operating loss carryforwards
         expire through the year 2021. Under U.S. tax law, certain changes in
         ownership of a company may cause a limitation on future utilization of
         these loss carryforwards.

9.       STOCKHOLDERS' EQUITY:

                  On November 12, 1999, the Company amended its articles of
         corporation to grant the Board of Directors of the Company the
         authority to issue up to


<PAGE>


         10,000,000 shares of preferred Stock, par value $.001 per share, and
         to determine the price, rights, preferences, privileges, and
         restrictions, including voting rights of these shares without further
         vote or action by stockholders.

                  The Company accounts for employee stock-based compensation
         using the intrinsic value method prescribed in Accounting Principles
         Board Opinion No. 25 "Accounting for Stock Issued to Employees" (APB
         25). Compensation cost for employee stock options, if any, is measured
         as the excess of the quoted market price of the Company's stock at the
         date of grant over the amount the employee must pay to acquire the
         stock. Restricted stock is recorded as compensation cost over the
         requisite vesting periods based upon the market value on the date of
         grant.

                  Statement of Financial Accounting Standards No. 123,
         "Accounting for Stock-Based Compensation," (SFAS 123) established
         accounting and disclosure requirements using a fair-value based method
         of accounting for stock-based employee compensation plans. The Company
         has elected to remain on its current method of accounting as described
         above, and has adopted the disclosure requirements of SFAS No. 123.

                  The Company awarded a total of 1,000,000 options to two
         officers of the Company during the year ended December 31, 2001 valued
         at $1,156,250, all of which was immediately recognized and recorded as
         stock-based employee compensation expense in the accompanying
         financial statements (see Note 10).

                  The Company awarded an additional 200,000 options to the same
         two officers of the Company during the year ended December 31, 2001
         for which no stock based compensation was recorded in the accompanying
         financial statements (see Note 10).

                  During the year ended December 31, 2001, the Company settled
         several outstanding payables in the amount of $207,649 by issuing
         common stock of the Company.

                  On October 1, 2001 the Company entered into a revised
         representation agreement and retainer letter with Kevin J. Hubbart who
         serves as general corporate counsel to the Company. In the agreement
         the Company issued 50,000 shares for services rendered through
         September 30, 2001 and 120,000 shares for the remainder of the term of
         said agreement, which is through September 30, 2002. The Company
         expensed $21,600 during the year ended December 31, 2001 as
         stock-based consulting fees. The remaining balance of $24,300 will be
         expensed in 2002.

                  The Company has adopted the disclosure-only provisions of
         SFAS 123. Accordingly, no compensation cost has been recognized for
         the issuance of stock options to employees pursuant to the provisions
         of SFAS 123. For the year ended December 31, 2000, employees, officers
         and directors of the Company were issued options to purchase a total
         of 104,700 shares of the Company's common stock at exercise prices
         ranging from $11.50 to $200.00 per share. In December 2000, employees,
         officers and directors of the Company voluntary cancelled and retired
         143,100 stock options in exchange for the same number of underlying
         shares. As a result, 29,600 stock options issued during year 2000 were
         still outstanding at December 31, 2000. Exercise prices equaled or
         exceeded the market value at the time of grant, expiring from March
         2003 to February 2009.

                  Had compensation cost for the Company's issuances of stock
         options during the years ended December 31, 2001 and 2000 been
         determined based on the fair value at the date of grant consistent
         with the provisions of SFAS 123, the Company's 2001 and 2000 net loss
         and loss per share would have been increased to the pro forma amounts
         indicated below:


<PAGE>


<TABLE>
<CAPTION>
                                                                  December 31,
                                                     ------------------------------------
                                                        2001                    2000
                                                     -----------             ------------

         <S>                                         <C>                     <C>
         Net loss as - reported                      $(8,083,269)            $(13,761,949)
         Proforma net loss                           $(8,155,033)            $(15,303,601)
         Basic and diluted Net loss
           per common share - as reported            $     (2.49)            $      (5.70)
         Basic and diluted Net loss
           Per common share - proforma               $     (2.51)            $      (6.30)
</TABLE>

                  The Company utilizes the Black-Scholes option pricing model
         to calculate the fair value of each individual issuance of options
         with the following assumptions used for grants during the years ended
         December 31, 2001 and 2000: dividends yield of 0%; expected average
         annual volatility of 181.05% and 133.86%; average annual risk-free
         interest rate of 6%; and expected terms averaging approximately ten
         and three years.

                  The Company's stock option plan provides for the granting of
         either incentive stock options or non-qualified stock options to key
         employees and non-employee members of the Company's Board of Directors
         for up to a maximum of 165,000 shares of common stock. Options
         outstanding at December 31, 2000 consist of 11,000 non-qualified
         options and 29,600 incentive options. Options outstanding at December
         31, 2001 consisted of 211,000 non-qualified options. Employee options
         are generally exercisable one year from date of grant in cumulative
         annual installments of 33% and no options are exercisable after ten
         years from date of grant.

                  The following table summarizes stock option activity for the
         years ended December 31, 2001 and 2000:


<TABLE>
<CAPTION>
                                                                                                      Weighted
                                                                                 Exercise              Average
                                                         Shares                 Price Range         Exercise Price
                                                       ----------            ----------------       --------------
          <S>                                          <C>                   <C>                    <C>
          Outstanding as of December 31, 1999              79,000            $15.00 - $ 30.00           25.80

             Granted                                      104,700             11.50 -  200.00           65.00
             Exercised                                         --                          --              --
             Forfeited/Retired                           (143,100)            11.50 -  200.00           45.60
                                                       ----------            ----------------          ------
         Outstanding as of December 31, 2000               40,600                15.00-152.50           57.10


             Granted                                    1,215,000            $  .01 - $ 20.00          $  .32
             Exercised                                 (1,000,000)           $            .01          $  .01
             Forfeited/Retired                            (44,600)           $15.00 - $152.50          $51.33
                                                       ----------            ----------------          ------
         Outstanding as of December 31, 2001              211,000            $  .40 - $ 30.00          $ 1.94
                                                       ==========            ================          ======
</TABLE>


<TABLE>
<CAPTION>

                                        OPTIONS OUTSTANDING                   OPTIONS EXERCISABLE
                                     ------------------------                ---------------------
                                                                WEIGHTED                   WEIGHTED
                                                                AVERAGE                    AVERAGE
                                                   REMAINING    EXERCISE                   EXERCISE
                    PRICE RANGE       NUMBER         LIFE         PRICE       NUMBER         PRICE
                    <S>              <C>          <C>           <C>           <C>           <C>
                      $   .40        200,000      9.8 years     $   .40       200,000       $  .40
                      $ 30.00         11,000      7.1 years     $ 30.00        11,000       $30.00
</TABLE>

                  The outstanding options expire at various dates through
           September 2011. At December 31, 2001, a total of 211,000 were
           exercisable, with a weighted average exercise price of $1.94. The
           weighted average remaining contractual life of options at December
           31, 2001 with exercise prices ranging from $.40 to $30.00 is 9.7
           years. The weighted average fair value of the options issued for the
           years ended December 31, 2001 and 2000 were $0.36 and $5.19.

                  During the period ended December 31, 2001, the Company issued
           60,000 shares of common stock, in private placements all at $.20
           share and received net cash proceeds of $120,000. During the period
           ended December 31, 2000, the Company issued 170,959 shares of common
           stock, in private placements at per share prices ranging from $2.50
           to $4.00 per share and received net cash proceeds of $1,694,254

           During the years ended December 31, 2001 and 2000, the Company
           issued 306,479 and 227,581 shares of common stock, respectively, in
           payment of accounts payable, conversion of notes payable and
           services related to consulting and employment contracts. Except for
           the December 2000 issuance


<PAGE>

         of shares to a consultant who is also a related party (see below), all
         shares issued to liquidate recorded liabilities were valued based upon
         the amount of the recorded liability satisfied and all other shares
         issued were valued at a 10% discount to market for shares issued for
         services rendered or goods received and were recorded as an asset or
         charged to expense based upon the nature of the transaction. Of the
         shares issued in the year ended December 31, 2000 included in the
         amount above, 38,400 relate to the voluntary cancellation and retiring
         of stock options by employees in exchange for the same number of
         underlying shares. Such options were added back to the option pool at
         December 31, 2000. Certain of the above shares were treated as deferred
         compensation and are subject to one and two-year vesting requirements.

                  During the years ended December 31, 2001 and 2000, the Company
         recorded $1,198,370 and $597,263, respectively, in deferred
         compensation representing 90% of the fair market value of common stock
         issued to employees with vesting periods of one to two years. Such
         amount has been presented as a reduction to stockholders' equity and is
         being amortized over the applicable vesting period. The Company
         amortized an aggregate of $1,601,525 and $104,203 of deferred
         compensation during the years ended December 31, 2001 and 2000,
         respectively.

                  During the year ended December 31, 2001, the Company entered
         into various convertible promissory notes with individuals. The notes
         contained a nondetachable beneficial conversion feature that allowed
         the individuals to convert the notes and accrued interest thereon into
         the Company's common stock at conversion prices of $3.60, $1.00 or
         $0.75 per share or 80% of the 5-day average closing bid price prior to
         the conversion date. The fair value of the beneficial conversion
         feature exceeded the value of the notes. Since the notes were
         convertible at any time, the Company recorded debt discount of $597,397
         as "non-cash" interest expense upon issuance of the notes and
         correspondingly charged additional paid-in capital.

                  During the year ended December, 2000, the Company entered into
         two convertible promissory notes with individuals. The notes contained
         a nondetachable beneficial conversion feature that allowed the
         individuals to convert the notes and accrued interest thereon into the
         Company's common stock at conversion prices of $3.00, $3.75 per share
         and the lower of $3.60 per share or 80% of the 5-day average closing
         bid price prior to the conversion date. The fair value of the
         beneficial conversion feature exceeded the value of the notes. Since
         the notes were convertible at any time, the Company recorded debt
         discount of $950,000 as "non-cash" interest expense upon issuance of
         the notes and correspondingly charged additional paid-in capital.

10.      RELATED PARTY TRANSACTIONS:

                  On October 17, 2001 New Era Partners Inc., a company owned by
         George Demakos, an affiliate, who owns more than 10% of parts.com
         purchased from the Company the building which houses the Company's
         corporate headquarters, as well as the adjacent parking lot. The
         contract sales price was $550,000. The sales price was satisfied
         through a reduction in amounts owed to George Demakos and his
         companies, New Era Partners Inc., and Select Media Ltd. In the amount
         of $110,000 as well as Demakos' assumption of two mortgages in the
         amount of $380,000 and a note payable in the amount of $17,000 and
         accrued interest due on the mortgages and note. Subsequently, the
         company signed a lease with New Era Partners, Inc. to occupy
         approximately 3,000 square feet of office space for $2,650 a month. The
         company can notify New Era Partners, Inc. of its intentions to vacate
         with sixty days prior notice and pay a one-time penalty of $5,000.00

                  Douglas Nagel and James Hall released their liens against the
         property titled in the aforementioned paragraph in order for the
         closing to take place. The funds paid to the Eugene W. Gramzow
         Revocable Trust, the lender, were insufficient to cover the total
         liability owed by the Company and personally guaranteed by Shawn D.
         Lucas a related party who owns more than 10% of the Company.
         Subsequently, George P. Demakos, Shawn D. Lucas


<PAGE>

         and Scott Anderson personally guaranteed $25,000 owed to the Eugene W.
         Gramzow Revocable Trust and payments of $1,000 a month for 24 months
         are to be made by the Company.

                  The Company authorized the issuance of 40,000 shares to
         parties related to or affiliated with the Eugene W. Gramzow Revocable
         Trust in conjunction with the closing. All property taxes due and
         payable by the Company in the approximate amount of $7,000 and listed
         in accounts payable and accrued expenses in the accompanying balance
         sheet were satisfied at the closing date of October 17, 2001.

                  The Company recognized a loss on the sale of the building of
         $265,841 which is classified as loss on sale of assets in the
         accompanying financial statements.

                  From January through March, 2001, Select Media Ltd., owned by
         an individual who indirectly owns more than 10% of the common stock of
         the Company, loaned the Company a total of $28,500, payable on demand
         and bearing interest at 10%. The Company repaid the loans in full
         during the first quarter 2001. Also during the year ended December 31,
         2001, the Company repaid this individual $28,408 as partial payment on
         other loans made to the Company prior to 2001. Additionally, the
         Company converted $21,106 of expense reimbursements owed to this
         individual accrued through December 31, 2001 to a note payable bearing
         13% annual interest which is due and payable on demand. Finally, the
         $48,648 balance due this individual was applied towards the purchase of
         the Company's real property on October 17, 2001.

                  From January through March 2001, New Era, Inc., owned by an
         individual who indirectly owns more than 10% of the Common Stock of the
         Company, loaned the Company a total of $80,000 under two notes payable,
         both due and payable on demand and bearing interest at 13% for $50,000
         and 8% for $30,000. The Company repaid the $50,000 note in full
         (including interest) during the six months ended June 30, 2001 and
         $2,000 of the other note in June 2001. Finally, the $34,928 balance due
         this individual was applied towards the purchase of the Company's real
         property on October 17, 2001.

                  During the nine months ended September 30, 2001, George P.
         Demakos, an individual who owns more than 10% of the common stock of
         the Company, loaned the Company four separate notes totaling $60,900
         payable on demand and bearing interest at 14% per annum. The Company
         repaid $31,000 of the notes in full (including interest) during the
         year ended December 31, 2001. Finally, $26,425 of the balance due this
         individual was applied towards the purchase of the Company's real
         property on October 17, 2001.

                  In January 2001, Scott Anderson, a related party and employee
         of the Company loaned the Company a total of $20,000, payable on demand
         and bearing interest at 10%. From January through July 2001, $7,700 in
         principal was re-paid (with interest). Additionally, the balance of
         this individual's expense reimbursements accrued through December 31,
         2001 were converted to a note payable bearing 13% interest due and
         payable on demand. The entire amount of this note has been repaid
         during the year ended December 31, 2001.

                  During the year ended December 31, 2001, the Company incurred
         and paid a commission in the amount $66,000 to an officer of the
         Company for completion of a software sale and design contract. The
         Company also incurred a commission in the amount of $66,000 to another
         officer of the Company for completion of a software sale and design
         contract. This commission was forgiven by the officer and treated as a
         capital contribution.

                  On July 9, 2001, the Company entered into two similar
         employment agreements for a term of 5 years with Shawn Lucas, President
         and CFO, and Scott Anderson, Chief Technical Officer, both of whom are
         the only active members of the Company's Board of Directors. Generally,
         the employment agreements provide for annual salaries of $72,000 each,
         retroactive to January 1, 2001, subject to an increase to $144,000
         effective January 1, 2002. The agreements also provide for sales
         commissions of 20% of the gross sales price of all software, license,
         and other products sold by each employee during the first six months of
         the employment agreements.
<PAGE>

                  These employment agreements also provide for the grant of
         three types of options to purchase shares of the Company's common
         stock: Signing Options, Risk Options, and Performance Options. Each
         employee was granted 250,000 Signing Options and 250,000

                  Risk Options for a total of 1,000,000 options. Both of these
         types of options were subject to vesting over 4 years, have a $0.01
         strike price, and a 10 year contractual life. Both the Signing Options
         and Risk Options, valued at a total of $1,156,250 for both employees
         pursuant to the provisions of APB 25, were determined to be granted for
         past services provided to the Company and, therefore, were fully
         expensed during the three months ended September 30, 2001.
         Additionally, both the Signing Options and Risk Options are subject to
         immediate vesting in the event of either voluntary or involuntary
         termination, with or without cause, of employment with the Company.

                  The Performance Options have a $1.00 strike price and a
         10-year contractual life. Each employee is entitled to receive 100,000
         Performance Options, subject to immediate vesting, if the per share
         closing price of the Company's common stock is $1.25 or greater for 5
         consecutive closes. Furthermore, each employee was entitled to receive
         an additional 100,000 shares of the Company's common stock for each
         additional increment of $0.25 in stock price (e.g., $1.50, $1.75,
         $2.00, etc.) for which the closing price is at or above that level for
         5 consecutive closes. As these targets have not yet been achieved, no
         Performance Options have been awarded and, therefore, no compensation
         expense has been recorded. In the event of the employees' termination
         of employment with the Company, voluntary or involuntary and with or
         without cause, Performance Options will only be granted to the extent
         they have been earned pursuant to the criteria noted above. The
         Performance Options, once awarded, will be subject to variable
         accounting treatment prescribed by APB 25, which generally provides
         that estimated compensation cost will be measured and recorded based on
         the fair value of the Company's common stock as of each reporting date
         until the options are exercised, forfeited, or expire unexercised.

                  On August 29, 2001, the Company was unable to meet its payroll
         obligations to Shawn Lucas and Scott Anderson and, accordingly, was in
         violation of their employment agreements described above. In
         consideration of the breach of these agreements, the Company's Board of
         Directors modified the terms of these agreements so that the Signing
         Options and Risk Options would fully vest on September 28, 2001.

                  The initial performance stock price goal for the Performance
         Options of $1.25 was changed to $0.50 and all subsequent increments are
         to be measured from this new price. Furthermore, the Performance
         Options strike price of $1.00 was lowered to $0.40. Due to this
         modification, an additional 100,000 options were awarded to each
         individual during September 2001; however, no compensation expense was
         recognized as the fair value of the stock as of December 31, 2001 was
         less than the strike price.

                  During the year ended December 31, 2000, the Company issued a
         total of 98,000 shares of common stock to officers and directors and a
         key employee in payment of bonuses, at per share prices ranging from
         $3.93 to $99.00 for an aggregate of $1,146,375 in stock-based
         compensation expense. These shares are subject to "lock-up" documents
         executed by the officers, directors and key employee, whereby such
         shares cannot be sold for a minimum time period. In addition, the
         shares are also subject to "leakout" agreements signed by these same
         individuals that provide for restriction on the sale of these shares
         according to maximum specified monthly amounts over a two-year period.

                  During the year ended December 31, 2000, the Company issued a
         total of 88,000 shares of common stock to officers and directors and a
         key employee, valued at $346,500 and charged to stock-based employee
         compensation expense in exchange for the cancellation and retiring of
         stock options for the same number of underlying shares. These shares
         are subject to "lock-up" documents executed by the officers, directors
         and key employee, whereby such shares cannot be sold for a minimum time
         period. In addition, the shares are also subject to "leakout"
         agreements signed by these same individuals that provide for
         restriction on the sale of these

<PAGE>

         shares according to maximum specified monthly amounts over a two-year
         period.

                  In April 2000, the President loaned the Company $23,600,
         payable on demand and bearing interest at 8%. The Company repaid the
         loan with $41 in interest in April 2000.

                  In July 2000, Walter Anderson, father of the Co-CEO and
         indirect owner of more than 5% of the common stock of the Company,
         loaned the Company $20,000, payable on demand and bearing interest at
         8%. The Company repaid the loan with $233 in interest in July and
         September 2000.

                  In July 2000, Select Media Ltd., owned by an individual who
         indirectly owns more than 10% of the common stock of the Company,
         loaned the Company 35,000, payable on demand and bearing interest at
         8%. The Company repaid the loan with $167 in interest in July 2000.

                  In August 2000, Select Media Ltd. loaned the Company $2,500,
         payable on demand and bearing interest at 8%. The Company repaid the
         loan with $9 interest in September 2000.

                  In August 2000, New Era, Inc., owned by an individual who
         indirectly owns more than 10% of the common stock of the Company,
         loaned the Company $45,000, payable on demand and bearing interest at
         8%. The Company repaid the loan with $170 interest in September 2000.

                  From October to November 2000, New Era, Inc. loaned the
         Company $47,428, payable on demand and bearing interest at 8%. The
         Company repaid $40,500 worth of principal under the loans from October
         through December 2000. At December 31, 2000, the Company owed New Era,
         Inc. $6,928; this amount has been included in "Notes payable - related
         party." In January 2001, New Era, Inc. loaned the Company $50,000,
         payable on demand and bearing interest at 13%. The Company repaid
         $34,000 in principal against this loan in February 2001. In February
         and March 2001, New Era,Inc. loaned the Company $30,000, payable on
         demand and bearing interest at 8%.

                  In November 2000, Select Media Ltd. loaned the Company
         $55,000, payable on demand and bearing interest at 8%. At December 31,
         2000 this amount has been included in "Notes payable - related party."
         In January 2001, Select Media Ltd. loaned the Company $20,000, payable
         on demand and bearing interest at 8%. The Company repaid the $20,000 in
         principal only in January 2001.

                  In December 2000, the Company liquidated $38,769 of amounts
         due for consulting fees to George Demakos, a related party who
         indirectly owns more than 10% of the common stock of the Company, by
         issuance of 24,231 shares of common stock. At the time of the issuance,
         the Company's stock had a fair value of $3.90 per share, thus, the
         Company recognized stock-based consulting expense in the amount of
         $56,640 for the bargain purchase price element.

                  The shares of common stock issued in the above transactions
         were valued at per share prices approximating recent private placements
         of common stock less a 10% discount from market.

11.      COMMITMENTS AND CONTINGENCIES:

                  On March 29, 2001, the Company entered into new employment
         agreements with three of its executives and settlement agreements with
         two other executives. These agreements generally provided for the (1)
         settlement of breaches of their original employment agreements (2) the
         payment of back salary due to these individuals, and (3) the commitment
         of the Company to pay a lump sum amount ranging from $50,000 to
         $100,000 per employee, only in the event the Company does not adhere to
         the terms of the new employment agreements.


<PAGE>


                  Pursuant to the terms of the new employment agreements and the
         settlement agreements, the Company agreed to pay the employees cash in
         the total amount of $42,000, and issue a total of 119,575 shares of
         common stock valued at $309,219. Total value assigned to the stock was
         based on the market value on the date of the new employment agreements
         and settlement agreements, less a 10% discount

                  Of the total consideration paid or payable in the amount of
         $351,219 to these employees, $244,419 related to settlement of the
         contracts breached or for salaries earned in year 2000. Accordingly,
         this amount was accrued as an expense for the year ended December 31,
         2000 and is included in "Other current liabilities." The remaining
         consideration paid or payable and valued at $106,800, was related to
         salaries earned in the first quarter of 2001 and was, therefore,
         recognized as expense during the first quarter of 2001.

                  On January 4, 2001 and March 20, 2001, the Internal Revenue
         Service filed federal tax liens against the assets of the Company
         totaling $349,990 for undeposited payroll taxes for the period April
         2000 through November 2000. At December 31, 2001 the Company's unpaid
         payroll taxes amounted to approximately $347,492, including penalties
         and interest, and are included in "Other current liabilities" in the
         accompanying financial statements. The Company remitted $100,000 to the
         IRS pertaining to unpaid payroll taxes during the year ended December
         31, 2001.

12.      GOODWILL IMPAIRMENT CHARGE:

                  In November 2000, David Lampert, Senior Vice President of
         Software Development, a member of the board of directors and former
         principal of LiveCode, Inc. left the Company. Due to weaker than
         anticipated revenue growth from LiveCode, Inc. coupled with Mr.
         Lampert's departure, the Company determined that goodwill related to
         the LiveCode acquisition was fully impaired. And, in conformity with
         Staff Accounting Bulletin No. 100, "Restructuring and Impairment
         Charges," a $1,039,897 impairment charge related to LiveCode's goodwill
         was recorded in the fourth quarter 2000. In addition, due to 2000's
         operating loss and negative cash flow from operations, combined with a
         history of operating losses and negative cash flow from operations, the
         Company determined in the fourth quarter of 2000, that goodwill related
         to the September 30, 1998 MTV Pinnacle Advertising Group, Inc. ("MTV")
         and United Equity Partners, Inc. ("UEP") acquisitions was fully
         impaired. Accordingly, $446,038 impairment charge related to MTV and
         UEP's goodwill was recorded in the fourth quarter 2000.

13.      SUBSEQUENT EVENTS:

         The company settled approximately $755,000 in payables at an average of
         $.12 per dollar owed to vendors in January 2002. The amount of debt
         forgiven was approximately $662,000.

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

         There have been no disagreements between the Company and its certified
public accountants on any matter of accounting principles or practices or
financial statement disclosure.

                                    PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

         The Company's officers and directors and their respective ages as of
April 26, 2002 were as follows:

<TABLE>
<CAPTION>
     NAME                 AGE                          POSITION
<S>                       <C>    <C>
Shawn D. Lucas            34     Chairman, Chief Executive Officer, President and Interim
                                 CFO

Scott A. Anderson         34     Chief Technology Officer, Secretary and Director
</TABLE>


<PAGE>

         The following sets forth a description of the officers' and directors'
business experience during the past five years or more and other biographical
information:

         Shawn D. Lucas has served as the Chairman, Co-Chief Executive Officer
of the Company since September 1998. He co-founded parts.com and has been the
Company's President since June 1999. Prior to co-founding the Company, Mr.
Lucas was the Vice President of Media for several advertising agencies from
April 1992 through September 1998 who provided advertising services primarily
to automobile dealerships. Mr. Lucas has held several managerial positions at
automotive dealerships dating back to his tenure at his father's Chevrolet
dealership in Oregon.

         Scott A. Anderson has served as Co-Chief Executive Officer and Chief
Technology Officer of the Company from September 1998 to July 2001. He
co-founded parts.com and has been the Company's Chief Technology Officer since
inception. Prior to co-founding the Company, From January 1995 through
September 30, 1998, he was President of United Equity Partners, Inc., a Florida
corporation, an Internet technology and software solutions company who
developed an automotive Mechanical Breakdown Insurance product called E-policy
for Intercontinental Warranty Service Inc. Mr. Anderson is a graduate of
University of Central Florida where he received a Bachelor of Science degree.

Change in Management

         David Lampert was appointed director of the Company in April 1999.
Effective November 2000, Mr. Lampert resigned as director, and as Senior Vice
President of Software Development for the Company. The company feels Mr.
Lampert breached his employment agreement, which was completed upon the
acquisition of LiveCode Inc., and has to date not pursued legal action.

         David McComas was appointed director of the Company in September 1998.
In February 2000, Mr. McComas resigned as a director and subsequently left the
company in July 2000.

         Jeffrey Odato was appointed director of the Company in September 1998.
In March 2000, Mr. Odato resigned as a director and remained in the employ of
the Company as its Vice President, National Sales. In March 2001, Mr. Odato
entered into a settlement agreement and left the Company (see below).

           In October 1999, the Company entered into an employment agreement
with Jon Palazzo to serve as the Company's Vice President of Aftermarket
Operations. In March 2001, Mr. Palazzo terminated his employment agreement for
cause due to non-payment of salary. Subsequently, Mr. Palazzo entered into a
settlement agreement with the Company in which the company feels the settlement
agreement was breach (see below.) To date the company has not pursued legal
action.

         In February 2000, DuWayne Peterson was appointed a director of the
Company. In March 2000, Richard D'Onofrio was appointed a director of the
Company. In December 2000, Mr. D'Onofrio and Mr. Peterson resigned as directors
of the company.

         Ian Hart was appointed as our Chief Financial Officer in October 1999.
Mr. Hart terminated his employment agreement for cause due to non-payment of
salary for the period November 2000 through March 2001 and left the Company in
March 2001. Effective March 2001, President Shawn Lucas assumed the role of
Chief Financial Officer.

         Michael Third was appointed chief Software Architect in November 1999.
Mr. Third terminated his employment contract without proper notice in August of
2001. The company has to date not pursued legal action against Mr. Third.

         Steven O'Sullivan was appointed Executive Vice President of Operations
in April of 2000. Mr. O'Sullivan terminated his employment contract with the
company January of 2002.


<PAGE>


         All of the Company's officers and directors devote substantially all
of their time to the Company's business.

Director Compensation for Attendance at Meetings

         During 1999, the Company paid its employee-directors $7,500 for their
service as directors, but ceased paying those fees as of April, 1999. The
Company has no plan of reinstating director fees for directors who are also
employees of the Company. Although the Company intended to compensate its
outside board members for their time spent at board and committee meetings at
the rate of $4,000 per quarter, due to cash constraints, the outside board
members forgave such fees during their tenure in year 2000.

Significant Employees

The following individuals, although not executive officers of the Company, were
significant employees:

         Mark Reed joined the company in January of 2000 as Senior Software
Developer and currently oversees the company's entire software development.

Section 16(a) Beneficial Ownership Reporting Compliance

           Section 16(a) of the Exchange Act requires our directors and
executive officers, and persons who beneficially own more than 10% of a
registered class of our equity securities to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
ownership of common stock and other equity securities of the Company. Officers,
directors and greater than 10% beneficial owners are required by SEC
regulations to furnish the Company with copies of all reports they file under
Section 16(a). Based on its review of the copies of such forms received by it,
the Company believes that during its fiscal year ended December 31, 2001,
filing requirements applicable to its officers, directors and greater than 10%
beneficial owners were complied with.

ITEM 11.  EXECUTIVE COMPENSATION

Summary Compensation Table

         The following table sets forth compensation paid by the Company for
services by our Chief Executive Officer and Chief Technology Officer who
received in excess of $100,000 during the fiscal years ended December 31, 2001,
2000 and 1999.

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                                                Long-Term
                                                          Annual Compensation(1)               Compensation
                                                      ----------------------------    ----------------------------
                                                                                      Securities
                                            Fiscal                       Stock        Underlying       All Other
Name and Principal Position                  Year        Salary          Bonus          Options       Compensation
---------------------------------------     ------    ------------    ------------    -----------    -------------
<S>                                          <C>      <C>             <C>             <C>            <C>
 Shawn D. Lucas                              2001     $ 120,863       $ 645,922         100,000      $ 71,000
  President, Chairman, CEO, Interim CFO      2000     $  63,797       $ 131,250(4)          -0-      $ 63,905(6)(7)
                                             1999     $ 121,875(2)    $  96,875(3)       11,000(6)   $ 11,566(6)(7)

Scott A. Anderson                            2001     $  42,709       $ 654,463         100,000      $  5,000
  Chief Technology Officer, Secretary        2000     $  60,923       $ 120,313(4)          -0-      $ 63,905(6)(7)
  Director                                   1999     $ 113,908(2)    $  96,875(3)       11,000(6)   $ 14,732(6)(7)
</TABLE>


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

(1) The amounts reflected in the above table do not include any amounts for
perquisites and other personal benefits extended to those named above. The
aggregate amount of such compensation is less than 10% of the total annual
salary and bonus.

(2) Includes $5,508 of salary for the period August 30, 1999 to October 22, 1999
paid in 3,672 shares of restricted common stock. The closing price of a share of
common stock on November 30, 1999, the date of payment, was $5.00 per share.


<PAGE>


(3)      Bonus paid in an aggregate of 10,000 shares of restricted stock to
         these officers and directors. The closing price of a share of common
         stock on the dates of grant was $19.38 per share.

(4)

<TABLE>
<CAPTION>
                                                                                     Closing Price of a
Name                                  Bonus Shares              Date of Grant        Share on Grant Date
----                                  ------------              -------------        -------------------
<S>                                   <C>                       <C>                  <C>
Shawn D. Lucas                           5,000                     11/11/99                 $19.38
Scott A. Anderson                        5,000                     11/11/99                 $19.38
</TABLE>

(4) Bonus paid in an aggregate of 57,500 shares of restricted stock to these
officers and directors. The closing price of a share of common stock on the
dates of grant was $4.38 per share.

<TABLE>
<CAPTION>
                                                                                     Closing Price of a
Name                                  Bonus Shares              Date of Grant        Share on Grant Date
----                                  ------------              -------------      -------------------
<S>                                   <C>                       <C>                <C>
Shawn D. Lucas                          30,000                     12/29/00                 $4.38
Scott A. Anderson                       27,500                     12/29/00                 $4.38
</TABLE>

(5) On December 29, 2000 the Company issued a total of 22,000 shares of common
stock to these officers and directors, valued at $144,375 in exchange for the
cancellation and retiring of stock options for the same number of underlying
shares. The closing price of a share of common stock on the date of exchange
was $4.38.

<TABLE>
<CAPTION>
Name                                 Exchange Shares           Date of Exchange
----                                 ---------------           ----------------
<S>                                   <C>                      <C>
Shawn D. Lucas                           11,000                   12/29/00
Scott A. Anderson                        11,000                   12/29/00
</TABLE>

(6) Represents the number of shares of common stock subject to options on
February 12, 1999, the date of grant. The closing price of a share of common
stock on the date of grant was $35.00. On December 29, 2000, the Company issued
shares of restricted common stock in exchange for the cancellation and retiring
of stock options for the same number of underlying shares (see "5" above).

(7)  Represents sales commissions paid.

Stock Option Grants

         The following table sets forth information concerning individual grants
of options to purchase Common Stock made to executives during 2001, 2000 and
1999.


<TABLE>
<CAPTION>
                                                                                         Potential Realizable
                                                                                                Value at
                                                                                         Assumed Annual Rates
                                                                                                   of
                             Number of       Percent of                                       Stock Price
                             Securities        Total         Exercise                       Appreciation for
                             Underlying       Options           or                           Option Term(1)
                              Options        Granted to     Base Price     Expiration    ---------------------
Name                          Granted        Employees       ($/Share)         Date       5%($)         10%($)
------------------           ----------      ----------     ----------     ----------    --------     --------
<S>                          <C>             <C>            <C>            <C>           <C>          <C>
Shawn D. Lucas                 11,000(2)         16%         $30.00         2/12/09      $537,535     $855,935
                              100,000             8%         $ 0.40         1/01/08          -            -
                              500,000            42%         $ 0.01         7/09/06          -            -

Scott A. Anderson              11,000(2)         16%         $30.00         2/12/09      $537,535     $855,935
                              100,000             8%         $ 0.40         1/01/08          -            -
                              500,000            42%         $ 0.01         7/09/06          -            -
</TABLE>         06  8

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

(1) In accordance with the rules of the Commission, the potential realizable
values for such options shown in the table are based on assumed rates of stock
price appreciation of 5% and 10% compounded annually from the date the
respective options were granted to their expiration date. These assumed rates
of appreciation do not


<PAGE>

represent the Company's estimate or projection of the appreciation of shares of
Common Stock of the Company.

(2) Options were granted on February 12, 1999 and vest in thirds over three
years commencing October 1, 1999. In December 2000, the Company issued common
stock in exchange for the cancellation and retiring of these stock options for
the same number of underlying shares.

         In December 2000, the Company issued a total of 22,000 shares of
common stock to the executives above, valued at $144,375 and charged to
stock-based employee compensation expense in exchange for the cancellation and
retiring of the stock options. The shares are subject to "lock-up" documents
executed by each executive, whereby such shares cannot be sold for a minimum
time period. In addition, the shares are also subject to "leakout" agreements
signed by these same individuals that provide for restriction on the sale of
these shares according to maximum specified monthly amounts over a two-year
period.

(3) The Company awarded a total of 1,000,000 options to two officers of the
Company during the year ended December 31, 2001 valued at $1,156,250, all of
which was immediately recognized and recorded as stock-based employee
compensation expense in the accompanying financial statements (see Note 10).

         No options were exercised during years 2000 and 1999.

Stock Option Plan

         The Company's stock option plan currently authorizes the award of
165,000 shares of common stock in the form of stock options. As of December 31,
2000, stock options to purchase 40,600 shares of common stock were outstanding
under the plan. Accordingly, 124,400 shares of common stock are available for
future awards under the plan. The plan is designed as a means to retain and
motivate qualified and competent persons who provide services to the Company
and its subsidiary.

         All employees of the Company are eligible to be granted awards under
the plan, as are directors, consultants and independent contractors of the
Company or its subsidiaries. Awards under the plan are made by the board of
directors, or if instituted by the board of directors, by the compensation
committee, in its sole discretion, from among those eligible. In granting
options, the compensation committee considers current levels of compensation,
the need to provide incentives to particular employees, past performance,
comparison to employees at comparable companies and the Company's overall
performance.

         The plan is currently administered by the board of directors. The
board makes all decisions or determinations by either a majority vote of its
members at a meeting or by the unanimous written approval of its members. The
board may adopt, alter or repeal any administrative rules, guidelines and
practices for carrying out the purposes of the plan. The board has the right to
determine, among other things, the persons to whom awards are granted, the
terms and conditions of any awards granted, the number of shares of common
stock covered by the awards, the exercise price of options and the term
thereof.

           If there is a change in the common stock due to a stock dividend or
recapitalization, the plan provides for appropriate adjustment in the number of
shares available for grant under the plan and the number of shares and the
exercise price per share under any option then outstanding under the plan, so
that the same percentage of the Company's issued and outstanding shares shall
remain subject to being optioned under the plan or subject to purchase at the
same aggregate exercise price under any such outstanding option, as applicable.
Unless otherwise provided in any option, the committee may change the option
price and/or number of shares under any outstanding option when, in its
discretion, such adjustment becomes appropriate so as to preserve but not
increase benefits under the plan. The aggregate number of shares subject to
options granted to any one optionee under the Plan may not exceed 66,000,
subject to adjustment as described above. However, no



<PAGE>

incentive stock options (as defined in Section 422 of the Internal Revenue Code)
may be granted to a person who is not also an employee of the Company.

         The plan provides for the granting of both incentive stock options and
nonqualified stock options. Options may generally be granted under the plan on
such terms and at such prices as determined by the committee, except that the
per share exercise price of any incentive stock options cannot be less than the
fair market value of a share of the common stock on the date of grant. Each
option is exercisable after the period or periods specified in the option
agreement, but no option may become exercisable after the expiration of ten
years from the date of grant. The committee may accelerate the exercisabilty or
vesting of any option or shares previously acquired by the exercise of any
options, and, in the event of a change in control, unless otherwise provided in
the option; each outstanding option will become immediately fully exercisable.
Incentive stock options granted to an individual who owns (or is deemed to own)
at least 10% of the total combined voting power of all classes of stock of the
Company or any of its subsidiaries must have an exercise price of at least 110%
of the fair market value of the Common stock subject to such option on the date
of grant and a term of no more than five years. Incentive stock options granted
under the plan are not transferable other than by will or by the laws of
descent and distribution. Nonqualified stock options are also not transferable
unless the prior written consent of the committee is obtained and such transfer
does not violate Rule 16b-3 under the Exchange Act.

         The committee may permit the option price to be paid by cash,
certified or official bank check, personal check if accepted by the committee,
money order, shares of common stock that have been held for at least 6 months
(or such other shares as the Company determines will not cause the Company to
recognize for financial accounting purposes, a charge for compensation
expense), withholding of shares of common stock, any cashless exercise
procedure approved by the committee, other consideration deemed appropriate by
the committee, or a combination of the above. The plan also authorizes the
Company to make or guarantee loans to optionees to enable them to exercise
their options. Such loans must (i) provide for recourse to the optionee, (ii)
bear interest at the prime rate of the Company's principal lender, (iii) be
secured by the shares of Common Stock purchased, and (iv) contain such other
terms as the committee in its sole discretion shall reasonably require. The
committee has the authority to amend or terminate the plan or any options,
provided that no such action may substantially impair the rights or benefits of
the holder of any outstanding option without the consent of such holder, and
provided further that certain amendments to the plan are subject to shareholder
approval.

Employment Agreements

We entered into employment agreements (as amended) with the following
Executives:

<TABLE>
<CAPTION>
Officer                         Term              Salary          Position
-------                         ----              ------          --------
<S>                    <C>                       <C>        <C>
Shawn D. Lucas         July 2001 - July 2006     $144,000   CEO, President, CFO
Scott A. Anderson      July 2001 - July 2006     $144,000   Chief Technology Officer
</TABLE>

           In March, 2001, the Company entered into new employment agreements
with the three executives above. These agreements generally provide for the
following: (1) settlement of breaches of their original employment agreements
(2) the payment of back salary due to these individuals (see Note 1), and (3)
the commitment of the Company to pay a lump sum amount of $100,000, per
employee, only in the event the Company does not adhere to the terms of the new
employment agreements and settlement terms.

Pursuant to the terms of the settlement agreements, the Company agreed to pay
the employees above cash in the total amount of $10,000, and issue a total of
57,197 shares of common stock valued at $154,431. Total value assigned to the
stock was based on the market value on the date of the new employment
agreements and settlement agreements, less a 10% discount.


<PAGE>


All provisions contained in the employment agreements for the above-named
executives are identical. Under each agreement, the individual is entitled to
participate in all employee benefit programs available to Company employees
generally, including participation in health care and disability plans, stock
option plans and any retirement plan. The original term of the agreements is
three years; however, as a result of the settlement agreements with these
individuals, the agreements expire on July 1, 2001. The agreements provide for
payment of commissions related to any sales directly generated by the Company
as a result of the individual's efforts.

The Company may terminate the executives' and/or key employee's employment for
cause or without cause at any time with no notice.

The individuals may terminate their employment at any time upon 90 days'
written notice to the Company, except in the event of a change of control, when
10 days' notice is required. The agreements contain nonsolicitation and
noncompetition provisions that are intended to survive the termination of
employment for a period of two years.

           In March 2001, the Company entered into a settlement agreement
regarding Jeffrey Odato's breached employment agreement. Under the terms of the
agreement, Mr.Odato received a one-time cash payment of $2,000 and 14,403
shares of common stock in lieu of $28,807.15 worth of back salary. The
agreement contains a commitment of the Company to pay a lump sum amount of
$50,000, to Odato, only in the event the Company does not adhere to its terms.

         In March 2001, the Company entered into a settlement agreement
regarding Jon Palazzo's breached employment agreement. Under the terms of the
agreement, Mr. Palazzo is to receive $25,000 cash paid in monthly installments
beginning May 2001 through December 2001. Mr. Palazzo also agreed to accept
19,620 shares of common stock in lieu of $39,241.94 worth of back salary. Mr.
Palazzo received a total of $12,000 worth of payments during the year ended
2001.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The table below sets forth information regarding the beneficial
ownership of the Company's common stock as of April 26, 2002, held by persons
or groups believed by the Company to beneficially own more than 5% of the
Company's outstanding stock, by directors and officers of the Company, and by
all directors and officers and affiliates of the Company as a group. Unless
otherwise indicated, and subject to community property laws where applicable,
the persons named in the table have sole voting and investment power with
respect to all shares of common stock held by them. The address of each of the
individuals listed in the table is c/o the Company, 121 East First Street,
Sanford, Florida 32771.

         Percentage ownership in the following table is based on 4,952,799
shares of common stock outstanding as of April 26, 2002. Beneficial ownership
is determined in accordance with the rules of the Securities and Exchange
Commission and generally includes voting or investment power with respect to
securities. Shares of common stock subject to options, warrants or other
conversion rights that are presently exercisable or exercisable within 60 days
of April 26, 2002 are deemed to be outstanding and beneficially owned by the
person holding the options, warrants or conversion rights for the purpose of
computing the percentage of ownership of that person, but are not treated as
outstanding for the purpose of computing the percentage of any other person.

<TABLE>
<CAPTION>
                                                     NUMBER OF SHARES            SHARES BENEFICIALLY OWNED AS A
   NAME OF BENEFICIAL OWNER                         BENEFICIALLY OWNED          PERCENTAGE OF CLASS OUTSTANDING
<S>                                                 <C>                         <C>
   Shawn D. Lucas                                       928,394                            18.8%

   Scott A. Anderson (1)                                915,633 (1)                        18.5%

   Select Media Ltd. (2)                                472,450                             9.5%

   New Era Partners, Inc.(2)                            250,000                             5.1%

All directors and officers                                                                 51.9%
   and affiliates as a
   group (3 persons)
</TABLE>

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

(1) Includes 204,400 shares owned by Flex Technologies, Inc. for which Scott A.
Anderson holds a proxy.

(2) George Demakos is the President of Select Media Ltd, and New Era Partners
Inc.


<PAGE>

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         In September 1998, I.E.L.S., Inc., a Nevada corporation with no
material operations, completed an exchange agreement with Direct Touch Research,
Inc. a Florida corporation with no material operations, pursuant to which all
shares of DTR common stock were exchanged for 554,200 shares of I.E.L.S. common
stock. Three of the original shareholders and promoters of I.E.L.S. agreed to
have 161,000 shares of their stock redeemed by I.E.L.S. for an aggregate
consideration of $1,610.00. At the time of the completion of the share exchange,
the prior shareholders and promoters of DTR held 554,200 shares and the I.E.L.S.
shareholders held 420,000 shares (prior to redemption and cancellation of the
161,000 referenced above). As a result, DTR became a wholly owned subsidiary of
I.E.L.S. and I.E.L.S. changed its name to the Company. A total of 98,700
additional shares were issued to the following persons for related consulting
services: Consolidated Capital Group, Inc. (30,000 shares); Roger Tichenor
(30,000 shares); Pow Wow, Inc. (30,000 shares) and Douglas Hackett (8700
shares). The Company subsequently dissolved DTR in August 1999.

         In September 1998, the Company acquired all of the business, assets
and liabilities of United Equity Partners, Inc., a Florida corporation, for
15,000 shares of the Company common stock. UEP, a company owned by Scott A.
Anderson and Michael R. Fouts, provided website design and maintenance services
for businesses. The assets acquired consisted primarily of computer equipment,
accounts receivable and maintenance contracts. The Company also assumed trade
payables of approximately $90,000. UEP was subsequently dissolved in August
1999.

         In September 1998, the Company acquired all of the business, assets
and liabilities of MTV/Pinnacle Advertising Group, Inc., a Florida corporation
("Pinnacle"), for 58,200 shares of the Company common stock. Pinnacle, a
company owned by Jeffrey M. Odato and Michael R. Fouts, provided advertising
services primarily to automobile dealerships. The assets acquired consisted
primarily of accounts, receivables, computer and office equipment. The Company
also assumed trade payables of approximately $469,000.

         In September 1998, the Company retired a $40,000 obligation owed to
Michael Fouts, an officer, director and shareholder of the Company, by issuing
him 4,000 shares of the Company's Common Stock.

         In September 1998, the Company issued 40,000 shares of common stock to
Select Media, Inc., a beneficial owner of over 5% of the Company's issued and
outstanding common stock, pursuant to the terms of a consulting agreement
entered into with Select Media, Inc.

         In May 1999, the Company acquired all of the assets and business
operations and assumed all of the outstanding liabilities of LiveCode, Inc.
("LiveCode") a Florida corporation in exchange for 60,000 shares of the
Company's common stock and a six-month non-interest bearing $20,000 promissory
note in favor of the stockholders of LiveCode. The Company, whose President was
David Lampert, provides software solutions and other computer-related services
to various industries. Effective September 30, 1999, the $20,000 note was
repaid by the issuance of 4,000 shares of the Company common stock.

           In May 1999, the Company purchased the office building that is its
headquarters and a future parking facility for $562,000. The sellers of the
property were Karl and Helen Stairs and StoneStreet Investments, Inc., a
Florida corporation ("StoneStreet"), owned by Messrs. Lucas, Fouts, Odato,
Anderson and McComas. Messrs. Lucas, Amderson, Fouts and Odato are directors
and shareholders of the Company. Mr. McComas is a significant employee and a
major shareholder of the Company. The purchase was financed with secured loans
totaling $380,000 from an unrelated party, Eugene E. Gramzow, Trustee for the
Eugene W. Gramzow Revocable Trust (the "Gramzow Loan") and an unsecured loan in
the amount of $182,000 in favor


<PAGE>


of StoneStreet Investments, Inc. $432,000 of the loans were used to purchase the
property and the remaining loan proceeds were used to complete approximately
$160,000 worth of improvements to the property and the building. The Gramzow
Loan is secured by the following: (i) a first mortgage against the Company's
headquarters and second mortgage against the parking lot; (ii) a conditional
personal guaranty by Shawn D. Lucas; and (ii) a pledge of a total of 10,000
shares of the Company common stock by Scott A. Anderson, Michael R. Fouts,
Jeffrey M. Odato and David McComas (each of whom pledged 2500 shares). In
December 1999, the StoneStreet loan was retired by payment to StoneStreet of
12,787 shares of the Company's common stock. The carrying value of land,
building and improvements at December 31, 1999, has been reduced by $74,000,
which amount represents the excess of the purchase price of the property over
its appraised value at the date of purchase.

          Effective October 4, 1999, November 29, 1999, and November 30, 1999,
the Company repaid and aggregate of $157,139 of amounts due to its principal
shareholders, directors and/or officers with the issuance of 24,641 shares of
common stock. Messrs. Lucas, Anderson, McComas, Odato Fouts, Lambert and Hart
received 367; 5944; 6508; 2073; 9910; 3650 and 1000 shares respectively.

          On October 21, 1999, the Company acquired all of the outstanding
common stock of FlexRadio, Inc., ("FlexRadio") for 620,000 shares of the
Company common stock, a transaction valued at $6,417,000. The 620,000 shares of
stock were issued to FlexRadio's stockholders according to their respective
ownership percentages-Flex Technologies, Inc. (a Florida corporation owned by
Walter Anderson, father of the Company Co-CEO and Chief Technology Officer
Scott Anderson-229,400 shares), Shawn Lucas (our co-CEO and President-192,200
shares), Official Sports Management, Inc. (a Florida corporation owned by Ross
Reback-49,600 shares) and Select Media, Inc. (a Florida corporation owned by
George DeMakos-148,800 shares). Under the terms of the acquisition, the Company
obtained the rights to FlexRadio's provisional patent application for a radio
frequency detection and reporting device. FlexRadio technology will enable
radio stations to track program and advertising effectiveness in a real time
format. The Company will combine FlexRadio's technology with its
ReallyKnow.com's Miratouch division's web-enabled real time market research
business, thus expanding the reach of real time data gathering for businesses.

See "Summary Compensation Table" and "Stock Option Grants" in Item 11 of this
report for information concerning bonuses and stock options granted to the
Company's officers, directors and a key employee.

         On October 17, 2001 New Era Partners Inc., a company owned by George
Demakos an affiliate who owns more than 10% of parts.com purchased from the
Company the building which houses the Company's corporate headquarters, as well
as the adjacent parking lot. The contract sales price was $550,000. The Company
applied $110,000 owed to George Demakos, New Era Partners Inc., and Select Media
Ltd., to the sale price which resulted in a total balance due to George Demakos,
New Era Partners Inc., and Select Media of $5,671.

         Douglas Nagel and James Hall released their liens against the property
titled in the aforementioned paragraph in order for the closing to take place.
The funds paid to the unrelated party Eugene W. Gramzow Revocable Trust, the
lender, were insufficient to cover the total liability owed by the Company and
personally guaranteed by Shawn D. Lucas a related party who owns more than 10%
of the Company. Subsequently, George P. Demakos, Shawn D. Lucas and Scott
Anderson personally guaranteed $25,000 owed to the Eugene W. Gramzow Revocable
Trust and payments of $1,000 a month for 24 months are to be made by the
Company.

ITEM 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a)      Exhibits

None.

(b)      Reports on Form 8-K.

On June 26, 2001, The Company filed a Form 8-K Current Report to disclose that
on June 15, 2001, the directors approved a one-for-ten reverse stock split,
wherein


<PAGE>

every ten shares of parts.com common stock will convert into one share
of the effective date of the split. Shareholders will receive an additional
share for fractional shares.

In the same report, The Company disclosed that the reverse stock split was
scheduled to become effective at the close of business on June 27, 2001 and
would reduce the number of shares issued and outstanding from approximately
30,145,197 million shares to 3,014,519 million shares and the public float from
8,398,646 shares to approximately 839,864 shares with approximately 4,000
shareholders of record. It was further disclosed that the number of authorized
common shares would be reduced from 50,000,000 to 5,000,000.

In the same report, The Company disclosed that on June 15, 2001, the Company
announced new cusip #702140203 and new stock symbol PART, effective Thursday
morning, June 28, 2001.

On July 3, 2001, The Company filed a Form 8-K Current Report to disclose that
effective June 29, 2001, the directors approved an extension of the employment
contracts of Co-Ceo's Shawn Lucas and Scott Anderson. The employment contracts
were scheduled to expire on June 30, 2001, but were extended until July 13,
2001.

In the same report, the Company disclosed that the company was currently
negotiating with both Lucas and Anderson to enter into new employment
contracts.

On July 20, 2001, The Company filed a Form 8-K Current Report to disclose that
on July 9, 2001, based on the recommendations of a compensation committee of
outside advisors, the Board of Directors approved new employment agreements for
Shawn Lucas and Scott Anderson. Both agreements are for five-year terms and
generally provided for an initial annual salary of $72,000 and stock options
based on performance. In addition, the agreements addressed stock options,
unpaid wages and risks assumed by employees. No additional shares of stock were
issued to the employees.

In the same report, The Company disclosed that effective July 20, 2001, the
Board of Directors accepted until August 3, 2001 of the Convertible Promissory
Note of July 20, 2001. No compensation was required for the extension. The
report also stated that further terms and extensions of the Note were being
negotiated.

On August 3, 2001, The Company filed a Form 8-K Current Report to disclose that
the Board of Directors accepted the extension until September 4, 2001 of the
Convertible Promissory Note of July 20, 2001. It was further disclosed that no
compensation was required for the extension and that further terms and
extensions of the Note were being negotiated.

On September 4, 2001, The Company filed a Form 8-K Current Report to disclose
that on September 4, 2001, the Board of Directors accepted the extension until
October 5, 2001 of the convertible Promissory Note of July 20, 2001. No
compensation was required for the extension. The report also stated that
further terms and extensions of the Note were being negotiated.

On December 28, 2001, The Company filed a Form 8-K Current Report to disclose
that effective December 21, 2001, the Board of Directors of parts.com, Inc.
(the Company) approved and notified Deloitte & Touche LLP (Deloitte & Touche)
of their dismissal a the Company's independent certified public accountants.

In the same report, the Company disclosed that Deloitte & Touche's report on
the consolidated financial statements for the year ended December 31, 2000 did
not contain an adverse opinion or disclaimer of opinion and was not modified as
to audit scope or accounting principles; however, such report contained an
explanatory paragraph relating to substantial doubt regarding the uncertainty
of the Company's ability to continue as a going concern.

In the same report, the Company disclosed that in connection with its audit of
the Company's consolidated financial statements for the last fiscal year, and
the subsequent interim period had no disagreements with Deloitte & Touche on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements, if not
resolved to the satisfaction of Deloitte & Touche, would have caused them to
make a reference to the subject matter of the disagreements in connection with
their reports on the consolidated financial statements of the Company.



<PAGE>


In the same report, the Company disclosed that Deloitte & Touche has furnished
to the Company a letter addressed to the Securities and Exchange Commission
stating whether or not Deloitte & Touche agrees with the statements made by the
Company herein. A copy of such letter, dated December 21, 2001 was attached to
the report.

SIGNATURES

In accordance with Section 13 or 15(a) of the Exchange Act of 1934, as amended,
the Registrant has caused this Report on Form 10-KSB to be signed on its behalf
by the undersigned, thereunto duly authorized in Sanford, Florida on the 20th
day of May 2001.


                                      PARTS.COM, INC. AND SUBSIDIARY
                                      (FORMERLY MIRACOM CORPORATION)


                                     By:  /s/ Shawn D. Lucas
                                     ----------------------------------------
                                        Shawn D. Lucas

                                        President, Chairman and Chief Executive
                                        Officer and Interim CFO

In accordance with Section 13 or 15(a) of the Exchange Act of 1934, as amended,
this Report on Form 10-KSB has been signed by the following persons on behalf
of the Registrant in the capacities and on the dates indicated below.

<TABLE>
<CAPTION>
Signature                            Title                                                   Date
<S>                        <C>                                                            <C>
 /s/ Shawn Lucas           Director, President, Interim CFO
 ------------------          chief Executive Officer (Principal Executive
Shawn Lucas                  Officer)                                                     May 20, 2002

/s/ Scott Anderson
-------------------
Scott Anderson             Director, Chief Technology Officer,
                             Secretary                                                    May 20, 2002
</TABLE>