U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

(X)  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE ACT OF
     1934 For the fiscal year ended December 31, 1998.


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

     For the transition period from _______ to ________.

Commission File No.:  0-29098


                                  NAVIDEC, INC.
                                  -------------
        (Exact name of small business issuer as specified in its charter)

   COLORADO                                                      33-0502730
   --------                                                      ----------
(State or other                                                 (IRS Employer
jurisdiction of                                              Identification No.)
incorporation)

              14 INVERNESS DRIVE, SUITE F-116, ENGLEWOOD, CO 80112
              ----------------------------------------------------
              (Address of principal executive offices) (Zip Code)

            Issuer's telephone number, incl. area code: 303-790-7565


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

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

     COMMON STOCK NO PAR VALUE
     -------------------------
     Title of Class

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

Check if there is no 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  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)

Revenues for the issuer's  most recent  fiscal year ended  December 31, 1998 are
$8,555,000.

As of April 5, 1999,  there were  7,475,111  shares of Common  Stock  issued and
outstanding and the aggregate market value of the issued and outstanding  Common
Stock held by non-affiliates was approximately $63,713,898.

<PAGE>


PART I

ITEM 1. DESCRIPTION OF BUSINESS

OVERVIEW

Navidec,  Inc.,  a  Colorado  corporation,  (the  "Company"  or  "Navidec")  was
incorporated  in 1993.  The Company  enables  Fortune 1000  customers to address
their e-commerce initiatives. Navidec's highly experienced team rapidly develops
component- based open systems solutions.  Out of this competency the Company has
launched its first  vertical  market that  provides  on-line  solutions  for the
automotive  industry.  The Company also serves as a distributor  of various high
technology and other products through traditional and electronic  channels.  The
Company  provides  its  services  and  distributes  its  products  to over 1,300
customers as of the date of this report.

The Company's core competencies in e-business technology and traditional product
marketing  and  distribution  form  its  business  model of  providing  complete
NetSolutions.   These  solutions  include  systems  and  network  infrastructure
architecture,  software development and services,  content and aggregation,  and
electronic  commerce.  The Company's  principal  sources of revenue are from the
architecture,  design,  development and  implementation of open system solutions
for Fortune 1000  companies,  license fees and  recurring  purchase  request and
advertising  revenue from the Company's on-line automotive  solution and product
sales of third party manufactures.

The Company was organized as ACI Systems, Inc. in July 1993 and changed its name
to NAVIDEC,  Inc. in July 1996. The Company merged with Interactive Planet, Inc.
("IPI"),  a designer  and  developer of Internet  World Wide Web sites,  in July
1996.  The Company  issued an aggregate of 678,877 shares of Common Stock to the
shareholders  of IPI and a  promissory  note in the  amount  of  $75,000  to one
shareholder  of IPI in exchange for all of the issued and  outstanding  stock of
IPI. The Company acquired TouchSource,  Inc. ("TS"), a designer and developer of
interactive  Kiosks,  in July 1997.  The Company  issued an aggregate of 207,000
shares of Common  Stock to the  shareholders  of TS and TS was  merged  into the
Company  in  exchange  for all of the issued  and  outstanding  stock of TS. The
merger  and  acquisition  were  consummated  in order to  expand  the  Company's
business model of combined  expertise in traditional  marketing and distribution
and  Internet/intranet  technology.  On December 28, 1998, the Company  acquired
CarWizard.com,  Inc. ("Carwizard") and LeaseSource Online, Inc. ("LeaseSource"),
owners and operators of CarWizard.com and LeaseSource.com,  two prominent online
automotive  sites.  The Company  issued an aggregate of 250,000 shares of Common
Stock to the  shareholders of both Companies,  and will pay an earn-out based on
the success of these sites in 1999 and 2000. The  acquisition was consummated in
order to expand the Company's on-line automotive presence.

Business Strategy

The  Company's  goal  is to  enhance  its  position  as a  leading  provider  of
comprehensive  e-business,  electronic commerce and E-mail messaging  solutions,
and to provide global  accepted  Online  Automotive  solutions.  To achieve this
objective,  the  Company  is  expanding  its  NetSolutions  division  and Online
Automotive division.

NETSOLUTIONS
------------

Navidec's NetSolutions Group focuses on providing e-business solutions utilizing
six primary technical environments :

SYSTEMS INFRASTRUCTURE
                *  Sun Hardware Integration
                *  Software Integration
                *  Network Integration


COMMUNICATION AND COLLABORATION
                *  Network Mail & Messaging
                *  E-Mail Migration Service
                *  Custom Messaging Applications
                *  Secure Messaging Solutions

<PAGE>


COMMERCIAL E-COMMERCE SITE DEVELOPMENT
                *  E-Commerce Site Development
                *  User Interface Design
                *  Database Integration
                *  Integration to Legacy Application
                *  Web/Application Hosting
                *  Marketing Research & Implementation Expertise

MISSION CRITICAL MANAGEMENT TOOLS
                *  Update Tools
                *  Application (RAS) Reliability Availability Scalability
                *  N-Tier Architecture

ENTERPRISE SOLUTIONS AND DEPLOYMENT
                *  Business Process Analysis & Documentation
                *  Intranet and Extranet Application Development
                *  Application Training

E-MAIL MESSAGING
                *  System Architecture
                *  System Conversions
                *  Implementation and Training

EXPERTISE

The Company  addresses the  e-business  initiatives  for Fortune 1000  companies
through its highly experienced team which rapidly develops  component-based open
systems solutions. The Company experts can provide a wide range of open systems,
web-based   solutions.   Its  team   has  the   following   qualifications   and
certifications:

                *  Netscape Solutions Experts
                *  LDAP & Open E-mail Expertise
                *  Sun Java Authorized Development Center
                *  N-Tier Architecture Expertise
                *  Macromedia Certified
                *  Microsoft Certified System Engineers
                *  Sun "Elite" Certified Representatives
                *  Database Expertise

CAPABILITIES

Navidec provides all aspects of the development  process in-house.  Our creative
staff is experienced  in design for the Internet space and the Company  believes
the  development  staff  represents  an  unparalleled  skill  sets.  Some of the
Company's capabilities include:

                *  Business Process Analysis
                *  Graphic Design
                *  User Interface Design
                *  Database Design and Integration
                *  Architecture Analysis and Design
                *  Custom Application Development
                *  System Configuration
                *  System Integration and Installation

<PAGE>


PARTNERSHIPS

To deliver the most  complete and  insightful  technology  solutions  available,
Navidec  partners with leading  technology  firms to provide the highest quality
network connections, software tools and hardware. Some of the Company's partners
include:

                *  Sun Microsystems
                *  Netscape
                *  BEA/WebXpress
                *  Oblix
                *  Access Graphics
                *  Diffusion
                *  Resonate
                *  Veritas
                *  Oracle
                *  Sybase

SIGNIFICANT CLIENTS

Verio, Inc. E-Mail Infrastructure Implementation
------------------------------------------------

Industry:      Internet Service Provider / Web Hoster

Description:   Verio,  Inc.  is the  world's  largest  domain  based web hosting
               company and one of the largest Internet Service  Providers in the
               United  States.  Since its  inception  in March  1996,  Verio has
               rapidly  established  critical mass and a global presence through
               the  acquisition,  integration  and growth of over 45 independent
               ISPs that  provide a  comprehensive  range of  business  Internet
               services.

               Dissatisfied with its existing E-mail architecture,  Verio wanted
               to convert to an infrastructure that would enhance its ability to
               store,  backup and manage  business  customers'  e-mail and large
               file attachments in a cost-effective and encrypted manner.

Technology:    Navidec partnered with Netscape to implement  Netscape's advanced
               messaging platform. Numerous members of Navidec's technical staff
               were  contracted to work on-site to assist in the  implementation
               and architecture of the solution.

Architecture Benefits:       
               By  converting  Verio's  e-mail   architecture  to  the  Netscape
               advanced   messaging  platform  Navidec  provided  the  following
               benefits:

               *    Enhanced  ability to store,  backup  and  manage  e-mail and
                    large file attachments
               *    Virtual office technology provides global e-mail access from
                    any web browser
               *    Provides Verio  customers with IMAP-based  e-mail,  web-mail
                    and unified messaging
               *    Allows Verio to centralize  operations,  reducing management
                    and ownership costs

<PAGE>



Richmond American Homes Web Site
--------------------------------

Industry:      Homebuilding and Mortgage Finance

Description:   Richmond  American Homes, a subsidiary of MDC Holdings,  Inc., is
               one of the nation's largest homebuilders. Over the past 25 years,
               Richmond American has built over 56,000 homes, generating revenue
               of $8.5 billion. MDC also provides mortgage financing through its
               wholly owned subsidiary HomeAmerican Mortgage Corporation.

               Richmond  American Homes wanted a web site that would not just be
               on par with its online  competition,  but surpass it. The company
               wanted to target  new  audiences  and  provide a new  information
               source for potential homebuyers and investors.

               The expected goals and benefits of the site were:

               *    Increased sales
               *    Gain a competitive advantage
               *    Expand marketing reach to targeted audiences

Technology:    Navidec  developed the site using Bluestone  Inc.'s  Sapphire/Web
               Application  Server.  In creating the Quick Home Search,  Navidec
               used  JavaScript  to provide  immediate  results  and ensure that
               users never received a zero result from their search criteria. By
               storing the  regional  home  inventories  in a Sybase  relational
               database,  Richmond  American  Homes will be able to automate its
               inventory updates through its internal system.

Development Features:
               Keeping with Richmond  American Homes' corporate  image,  Navidec
               placed heavy emphasis on crisp visuals with clean and simple site
               navigation. The homepage uses Java applets to create the illusion
               of a working fireplace and to run a slide show of different homes
               offered in all of the company's markets.

Other key features on the site include:
               *    Searchable  database of home inventories 
               *    Quarterly updated Java applet slide show of homes
               *    Mortgage Calculator figuring financing options
               *    Java pop-up mouse events

PENTAX Corporation Web Site
---------------------------

Industry:      Optical

Description:   To address  the growing  demand for  Internet  shopping,  Navidec
               worked  closely  with the PENTAX  team to develop a web site that
               allows  customers  to research  features for its line of cameras,
               binoculars, lenses and accessories. Camera and binocular shoppers
               also can visit  PENTAX  University  to get useful  tips on how to
               take better  photographs or how to buy the right binoculars.  The
               site was  named  one of Lycos TOP 5%, a  selective  directory  of
               top-shelf web sites.

Technology:    Navidec  created an  architecture  that adheres to open standards
               methodology,  making  the web site  portable  in the  event  that
               PENTAX wants to host it internally.  BEA's  WebLogic  Application
               Server was selected so that templated content pages could rapidly
               be changed on the site,  promoting  ease of use and  performance.
               The project also allowed  Navidec to leverage its extensive  Java
               development expertise.

               To  facilitate  the  need for  PENTAX  to be self  sufficient  in
               maintaining  the site,  Navidec  created a web-based  update tool
               that  allows  PENTAX to  instantaneously  update the  product and
               dealer  database.  The  PENTAX  site  is  hosted  on  a  Sun  450
               Production Server running a Netscape Enterprise Web Server.

<PAGE>


Development features:
               *    Access  specifications,  pricing  and reviews for all PENTAX
                    products
               *    Download product  information via PDF files to take with you
                    when shopping at a dealer
               *    Compare   up   to   three    products    side-by-side    and
                    feature-for-feature from aperture to weight
               *    Once you've  found the right  product,  you can search for a
                    PENTAX dealer near you
               *    Subscribe  to very  active  (3500  messages  are posted each
                    month)  E-mail   discussion   lists  with   discussions   on
                    photography,  photographic  techniques  and  tips  on  using
                    PENTAX products
               *    Visit  PENTAX  University  to get useful tips on how to take
                    better photographs and how to buy the right binoculars

Columbine JDS / Spotdata Web Site
---------------------------------

Industry:      Broadcast media invoice clearinghouse

Description:   Columbine  JDS  (CJDS) is the  national  leader  in  distributing
               invoices between broadcast outlets and advertising agencies.  The
               company  collects  invoices from  broadcast  outlets  nationwide,
               compiles  and  distributes  them to  advertising  agencies.  CJDS
               wanted  to  streamline  this  process  and  move  to a  paperless
               E-billing system.

               To meet CJDS'  requirements,  Navidec  developed  Spotdata.com  a
               full-service,  business-to-business,  E-commerce application. The
               site allows  registered  users to securely  download  invoices or
               view and print them from a web browser.

 Technology:   Beyond  hosting  the site on a secure  Netscape  server,  Navidec
               ensured  world-class  security on  Spotdata.com  with  VeriSign's
               digital certificates.  Spotdata is actually more secure than many
               online  banking  applications.  Users  register from the site and
               must log in with the digital  certificate  to access  their data.
               The  solution  uses the LDAP  directory  standard  to maintain an
               updateable  user list that is integrated  with the  certificates.
               Navidec  also  customized  the Oblix CSA  application  to provide
               users  and  administrators  with easy  access to their  directory
               information.

               With Java and BEA/WebXpress' WebLogic application server, Navidec
               dynamically creates a .pdf file that is easily printed.  The  PDF
               allows for  better  formatting  than HTML and better  performance
               than a dynamically generated image.

Development features:
               *    Subscriber  authentication  established through a public-key
                    certificate infrastructure
               *    Deploy VeriSign On-Site services to create the certificates
               *    Subscriber   authentication  and  authorization  is  managed
                    through  extensive  use of LDAP  directory  services and the
                    Oblix environment
               *    Users view invoices as PDF files  displayed by Adobe Acrobat
                    Reader
               *    All PDF files are securely  generated on the fly from a live
                    database


<PAGE>



Bryan Memorial Hospital Intranet
--------------------------------

Industry:      Healthcare

Description:   Bryan Memorial Hospital is the largest healthcare provider in the
               state of Nebraska.  In addition to providing  healthcare services
               for its customer  base,  the hospital  interfaces  with  numerous
               private  and  governmental  agencies.  Bryan  Memorial  processes
               information and performs  thousands of data transactions in paper
               formats everyday.

               Bryan Memorial's vision is to implement a state-of-the-art,  open
               systems  solution to provide an  effective,  highly secure way to
               perform all of its business transactions electronically. Its goal
               is to operate much more  efficiently  and  productively  and save
               operating costs in the process.

               Navidec  installed  a 700  seat  pilot  solution  using  Netscape
               servers.  This Netscape pilot replaced Bryan Memorial's  previous
               proprietary  Novell GroupWare  system.  The pilot program enables
               Bryan  Memorial  to  implement  new  e-mail,  calendar,  and  Web
               capabilities  for internal and external  communication.  Netscape
               Directory  Services with LDAP and the Certificate  Server provide
               ease  of  administration  and  the  security  needed  to  perform
               electronic  data  transfers.  Annual  overall  savings  for Bryan
               Memorial are expected to be in excess of $200,000.

Technology:    The 700 seat pilot  program  involved the  installation  of seven
               Netscape  servers on a DEC Alpha  server  running NT 4.0 SP3. The
               server was a two  processor  configuration  with 512MB of RAM and
               RAID 5 storage. Desktop clients were TCP/IP enabled.

Development Features Include:
               *    Open TCP/IP e-mail (No gateways to Internet)
               *    Open calendaring (Unified LDAP Directory)
               *    Open web publishing (Secure, controlled access)
               *    LDAP directory services (Single, unified resource directory)
               *    Proxy   services   (User   authentication   &  secure   data
                    transactions)
               *    Desktop  management   services   (consistent   desktop  user
                    interface with remote administration capabilities)

Major Financial Institution Infrastructure
------------------------------------------


Industry:      Financial Services Institution

Description:   A world-leading  financial services  institution enlisted Navidec
               to  migrate  their  Internet  site from a  problematic  Microsoft
               NT/IIS  architecture  to a  Sun/Netscape  architecture.  Expected
               benefits   of  the   migration   were  higher   performance   and
               scalability,   less  down-time  and  an   environment   based  on
               open-systems specifications (e.g. Java, UNIX Operating System).

               Additionally, Navidec provided on-site web administrators for the
               existing  IIS as well  as web  masters  for the new  Sun/Netscape
               infrastructure.  Navidec also engineered the web architecture and
               firewall architecture for the new environment.

Technology:    Navidec implemented the Resonate software package to help the new
               architecture  run faster.  Resonate  sits in front of two servers
               and analyzes  both servers to route  information  requests to the
               server  that  can  best  handle  the  request.  Additionally,  we
               provided the customer with complete integration,  operational and
               support  documentation.  By teaming with the  client's  technical
               staff for two weeks, Navidec's engineering team was able to fully
               familiarize the client's staff with the solution.

Primary technologies used on the project include:
               *    CheckPoint
               *    Netscape
               *    Sun
               *    Resonate
               *    Navidec's Java University Client Mentoring Program

<PAGE>


Major Public Utility
--------------------

Industry:      Public Utility Company

Description:   Navidec's Java University is a six-tier  education  program where
               our Java experts train the client's technical staff in using Java
               in the enterprise.  In this program,  we take clients through the
               architecture,  development,  launch and evaluation processes of a
               real  enterprise-level  project.  Every  facet  of  creating  the
               solution  is covered  from Java  theory and  programming  to Java
               application server techniques and enterprise development.

               A major  Colorado-based  public utility company benefited greatly
               from Java University.  The public utility company brought Navidec
               in to help  them use Java to  create  an  enterprise  application
               development  tool that  allows  multiple  departments  to request
               specific development resources.


Technology:    Navidec utilized Netscape  enterprise  servers and BEA/WebXpress'
               WebLogic  application  server. The Netscape server sends requests
               to be processed by the WebLogic  server.  Additionally,  servlets
               and JHTML  interface with RMI servers and  Enterprise  Java Beans
               (EJBs) to complete the application.

               Creating the  application  in this manner  provides the following
               benefits:
              
                    1.   One WebLogic server is able to serve many web sites.
                    2.   JHTML separates graphics and content in the development
                         phase.
                    3.   JHTML also  allows for  updating on the fly so that the
                         client  will  never  have to take the  server  down for
                         updates.

INTERNET/INTRANET INDUSTRY OVERVIEW

The Internet

The Internet has emerged as a global medium for communication,  content delivery
and e-commerce and Internet use continues to rapidly increase. According to 1998
Nielson Media  Research/Commerce Net, 34.9% of American adults are online and 20
million of 48 million online shoppers said they purchased online.  International
Data Corporation estimates that the number of users worldwide with access to the
Internet  will  increase to over 319 million by 2002.  As consumers  have become
increasingly  adept at utilizing the Internet for  evaluating  and  purchasing a
wide variety of goods,  the dollar volume of online  commerce  transactions  has
risen  dramatically.  Forrester Research 1998 estimates that the volume of goods
and services  purchased over the Internet will increase from $5 billion today to
$327 billion in 2002.  Navidec's own 1998 CyberShopper  Survey  represented that
95% of online  shoppers  were  satisfied  with the  purchases  made  online.  In
addition to providing  the basic  medium for  e-commerce,  the  Internet  offers
online  retailers the opportunity to market and respond to consumer  preferences
and behavior directly.  Jupiter  Communications,  Inc. estimates that the dollar
volume of online  advertising  will  increase  from $1.9 billion in 1998 to $7.7
billion in 2002.  Because the Internet offers  "point-to-point"  communications,
online  advertisers  are able to present  messages  to  specific,  predetermined
audiences and interact immediately with these targeted individuals. In this way,
online retailers can target, measure and manage abroad consumer base rapidly and
economically,  while establishing and maintaining direct consumer  relationships
more  easily.  Consumers  benefit  from  improved  overall  convenience,  better
information   regarding   available   products  and  services,   enhanced  sales
interactions and, often, more competitive pricing.

<PAGE>


Commercial Uses of the Internet

Commercial   uses   of   the   Internet   include    business-to-business    and
business-to-consumer     transactions,     product    marketing,    advertising,
entertainment,  electronic publishing, electronic services and Internet support.
The Company  views the  Internet as  presenting  significant  opportunities  for
electronic commerce. In the Company's view, the Internet's benefits include:

-    Low cost in comparison to other marketing channels
-    Direct marketing of products and services
-    Audio/visual display and demonstration of products
-    Ability to capture orders  electronically at significantly  lower personnel
     costs than traditional order-taking
-    Provision of client services such as order tracking and trouble-shooting
-    Immediate  fulfillment and satisfaction of certain orders, such as software
     and information deliverable electronically
-    Customer convenience (24-hour, 7 days a week access)
-    Potential for narrowly-targeted marketing

A number of  companies  have  developed  systems to  maintain  the  security  of
transactions  on the Internet and the Company has developed its own  proprietary
merchandise engine which provides security for order-taking functions. There can
however be no assurance that breaches in  transaction  security will not have an
adverse effect on the growth and viability of on-line commerce.

Intranets

Because of the ease of use and widespread acceptance of Internet protocols, HTML
and other scripting  languages and tools, a number of companies have implemented
internal  networks,  or  Intranets,  based on such  protocols.  The use of these
protocols allows employees using personal  computers and Web browser software to
access and  interact  with a broad range of  information  sources  within  their
company,  independent of physical location and underlying  computer and database
design, on the familiar platform of Web browser software.

ONLINE AUTOMOTIVE SOLUTIONS
---------------------------

The Company  believes that the following  business  strengths  provide it with a
competitive advantage in the on-line automotive industry.

*    Consumer-Centric   Versus   Dealer-Centric.   Today's  Internet  automotive
     services  are,  for the most part,  entirely  dealer-centric.  As a result,
     services add little value to customers once they pass them off to a dealer.
     The Company has  discovered  that this process  alienates  and  disappoints
     customers  and does  little to generate  repeat or  referral  visits to the
     Company's  site.   Perhaps  less  obvious  is  the  inevitable  erosion  of
     participating   dealers   caused   by  the   proliferation   of   competing
     dealer-centric  systems.  With consumers  submitting leads from up to three
     different  automotive  sites  at  times,  dealers  are more  likely  to pay
     multiple  services  for the same  customer  lead.  This  results in obvious
     dealer  dissatisfaction.  To compound  matters,  most  dealers  close a low
     percentage  of  their  Internet  leads.  This  contributes   materially  to
     dissatisfaction  among dealers who perceive  little value and great risk in
     shifting their resources from  traditionally  successful sales practices to
     Internet sales. High dealer turnover results in instability and substantial
     losses for Internet automotive services that dedicate significant resources
     attempting  to  "train"  their  affiliate  dealers  in the  art of  closing
     Internet  sales.  The  Company's  new  strategy  eliminates  each of  these
     problems. The Company is implemented a on-line automotive solution in which
     the Company can receive  automotive  purchase and lease  requests  from its
     affinity  partners'  websites and the Company will fulfill  those  requests
     without the consumer having to negotiate with the auto dealer. By regaining
     control over the  transaction,  the Company can ensure that  customers  are
     treated  courteously and  effectively  throughout the  transaction.  In the
     process the Company meets Internet consumers' expectations and enables them
     to avoid  head-to-head  negotiations with a dealer.  This results in higher
     consumer  satisfaction and repeat business.  In addition,  the Company does
     not  need to  devote  resources  to  training  dealers  or  managing  their
     expectations in connection with lead quality.  The Company  produces sales,
     not leads.

<PAGE>


*    TotalOn-line  Solution.  Using its  proprietary  technology and broad-based
     industry relationships, the Company has created a complete on-line solution
     that enables  consumers to conveniently  purchase  vehicles using a process
     that is  faster,  better  and  easier  than  either  traditional  means  or
     prevailing  Internet  methods.  The  Company's  sites  enable  consumers to
     thoroughly research and compare all different makes and models available in
     the United States. Once their research is complete,  consumers will be able
     to access the Company's  DealWizard module, which gives them instant online
     quotes on  vehicles  the  consumers  construct  themselves.  The process is
     satisfying  for  the  consumer,  who can  manipulate  vehicle  options  and
     financing terms to arrive at an ideal automobile  package.  This process is
     currently unavailable anywhere on the Internet. Once the automobile package
     is complete, the consumer can actually follow through with the purchase and
     buy or lease the  vehicle  created  on-screen  for the prices and  payments
     shown.

*    Superior Automotive Content. A critical component of the Company's solution
     is the accuracy of its content. To enable consumers to effectively research
     vehicles and generate valid  purchase  requests,  the Company's  automobile
     pricing,  optioning and technical data is updated weekly and of the highest
     professional  caliber. In addition,  the Company's sites feature Automotive
     Lease Guide ("ALG") automobile leasing residual values, Motor Trend driving
     reviews,  NHTSA safety  information,  Reuter's  automotive news, and advice
     from nationally recognized automobile finance experts. The Company has been
     successful  in  licensing  its  content on the auto  "channels"  of Excite,
     Netscape,  WebCrawler,  Prodigy,  and  Magellan  as  well  as  on  CBS.com,
     WomanMotorist.com, and TheCarConnection.com.  The Company's sites also have
     been highly  recommended  in  numerous  national  publications,  including,
     Kiplinger's  Personal Finance Magazine,  Automobile  Magazine,  Smart Money
     Magazine, Money Magazine,  Consumers Digest, The New York Times, USA Today,
     and The Detroit News.

*    Technology  Based  Solutions.  The  Company has in the  development  of its
     Online  Automotive  solutions   effectively  leveraged  its  experience  in
     providing on-line business solutions to Fortune 1000 companies. The group's
     world class  expertise  has led to the  development  of the Data  Harvester
     application  that can access  legacy  information  systems and extract data
     essential to financial institutions, dealers and inventory-based automotive
     solutions. The Data Harvester enables dealers to manage inventory, customer
     lists,  and service  requests.  The Data Harvester  can, in hours,  extract
     marketing data from dealer legacy systems that would  otherwise take months
     and cost thousands of dollars to accumulate.

*    Partners and Industry  Relationships.  The Company has established a number
     of  strategic  relationships  that have  enabled  it to  obtain  and keep a
     significant  presence  in the  Internet  marketplace.  The  Company has two
     content  partnership  agreements  with Excite,  Inc. Those  agreements have
     resulted in the Company's  content and vehicle  inventory being featured on
     the Excite, Netscape Netcenter,  Prodigy,  WebCrawler and Magellan portals,
     as well as Excite  Classifieds.  The  Company's  relationship  with CBS New
     Media has resulted in the CBS.CarWizard.com  automotive service on CBS.com.
     The Company's  long-term  agreement  with Bank One Credit  Company and more
     than 13 broadcast  and print media  companies  has fueled the launch of six
     regional Wheels sites with additional regions in process. The Company has a
     marketing  agreement  with ALG under  which ALG has agreed to  promote  the
     Company's CarWizard application to the top 25 financial institutions in the
     United States.


Company-Operated Sites

The Company  currently  owns and operates the  USWheels.com,  CarWizard.com  and
LeaseSource.com Internet Sites. In combination, these sites receive in excess of
120,000,000 page views annually,  entertaining in excess of 13,000,000 visitors.
On average,  the sites generate more than 10,000 customer  purchase requests per
month.  The Company earns revenue from site  advertisements  as well as from the
handling of customer purchase request.

Affinity Solutions

Overview:  The core of the Company's  retail  business is driven by the affinity
solution paradigm.  The Company licenses partial or complete  automotive content
modules to affinity  organizations that wish to provide timely and accurate auto

<PAGE>


buying/leasing  information  and advice to their members and  customers.  At the
affinity partner's  request,  the Company can also provide dealer inventory from
the affinity partner's dealer network. In addition to content,  the Company also
offers lead  fulfillment  services.  For  organizations  that maintain their own
dealer network,  the Company provides a software tool to  intelligently  harvest
and distribute leads among member dealers. For affinity groups  without a dealer
network,  the Company can provide a complete dealer  network.  With this modular
approach,  the  Company  can offer a wide range of retail  automotive  solutions
depending on the individual needs of the affinity organization.

Financial, Portal, Media and Other Affinity Solutions: The Company has segmented
its affinity  relationships  into three major categories;  media  organizations,
Internet portals and financial  institutions.  For newspaper and broadcast media
organizations,  the Company offers the regional  Wheels  solution.  For Internet
portals,  the Company offers a private-label  solution or a "CarWizard"  branded
solution  to enable  portals  to enhance  their  content  offering  and sell the
resulting customer leads. The Company's content currently appears on Excite.com,
Netscape.com,      WebCrawler.com,     Prodigy,     CBS.com,     MotorTrend.com,
WomanMotorist.com   and   TheCarConnection.com.   The  solution  for   financial
institutions is particularly  powerful  because  financial  institutions  have a
vested  interest in pairing site visitors with their  automobile  lease and loan
packages.

Custom Automotive Solutions

The  Company  also  earns  revenue   through  the  development  and  license  of
"back-office" technology.  The Company typically licenses wholesale solutions to
financial institutions,  dealer groups and organizations whose business depends,
in  whole or in part,  upon  the  timely  harvesting  of  marketing  or  product
information from legacy business systems.

Market opportunity

The Company believes the market opportunity for its Online Automotive  solutions
is extremely promising.  The massive automotive market has quickly been impacted
by Internet  technology  as consumers  have adopted the Internet as an important
tool for making automotive purchase decisions.  The Internet allows consumers to
collect the large  amount of  information  necessary  to choose an auto from the
comfort and  convenience  of home or work.  According to Toyota,  Internet  auto
shoppers  buy within two to three days of  visiting a  dealership.  Prior to the
Internet,  consumers  bought  only  after two to three  weeks of  shopping.  The
proliferation  of Internet use and statistics  about online retailing reveal the
potential impact of the Internet on the automotive industry.

The Market for Vehicles and Related Products and Services

The global  proliferation  of cars and light  trucks  ("vehicles")  and  related
products  and  services  has served to make the  automotive  industry one of the
largest in the world. The Polk Company, an automotive  research firm,  estimates
that there were over 192 million registered  vehicles in the United States as of
December 31, 1997. CNW  Marketing/Research,  a market  research firm,  estimates
that approximately 15 million new and 41 million pre-owned vehicles were sold in
the United States in 1997, translating into a market that exceeded $670 billion.
A large market also exists for automotive-related products and services, such as
insurance and  financing.  According to A.M.  Best, an insurance  research firm,
total  automobile  insurance  premiums  were  expected to exceed $136 billion in
1998. In addition,  the U.S. Federal Reserve Board estimates that the automotive
consumer credit market totaled  approximately  $440 billion as of November 1998.
Combining  these  market size  estimates,  the total  United  States  market for
vehicles and automotive-related products and services exceeds $1 trillion.

The new  and  pre-owned  vehicle  market  suffers  from  an  aging  distribution
infrastructure  that is  fragmented  and  inefficient  for  both  consumers  and
dealers.   Automotive  News  estimates  that  there  are  approximately   22,000
franchised dealerships (excluding independent dealerships) in the United States,
representing  about 49,000  franchises (a dealership  selling Ford,  Lincoln and
Mercury  vehicles  would have three  franchises).  The unit sales of the top ten
dealership  groups, as reported by Automotive News,  accounted for only about 4%
of  the   approximately   31  million  new  and  pre-owned   vehicles  that  CNW
Marketing/Research  reports as having  been sold by  franchised  dealerships  in
1997. The recent  consolidation of some major dealership  groups has done little
to reduce the considerable fragmentation in the industry, and no national dealer
brand has  emerged.  The  Company  believes  that a  combination  of the  highly

<PAGE>


competitive dealership landscape and a salesperson  compensation system based on
sales  dollar  volume  rather  than sales  unit  volume  has  contributed  to an
unpleasant  buying  experience for consumers and a decline in profit margins for
dealers.  As a result,  consumers  often  view  dealerships  as  pressure-filled
environments where they must make significant purchase decisions with incomplete
information.  Further,  when  purchasing  pre-owned  vehicles as compared to new
vehicles,  consumers are confronted with a vehicle that has a unique price,  set
of  accessories,  mileage,  history of use and  maintenance  record.  The higher
profit  contribution  to the dealer  from the sale of a  pre-owned  vehicle,  as
compared to that of a new vehicle, further increases the pressure for the dealer
to complete a sale and often makes the process more  difficult for the consumer.
In addition,  consumers historically have not had access to competitively priced
automotive-related products and services in a single centralized location.

Growth of Online-Automotive acceptance

The following are highlights from the Navidec's own CyberShopper 1998 survey.

-    75% of online  users  likely to  purchase a new or used car or truck in the
     next year are  likely to use the  Internet  to gather  vehicle  information
     prior to buying.
-    Users who  shopped  online  for a vehicle  visited an average of 7 sites to
     gather information, with the minimum being 1 and the maximum being 60.
-    Price is the key reason for shopping for or buying a vehicle  online,  with
     47% of online users who already  shopped or purchased  online saying prices
     were reasonable or lower than traditional methods of buying an automobile.
-    Of those who said they are likely to use the Internet to gather information
     for their  next  automotive  purchase,  56% would  search  for new  vehicle
     information, and 21% who would search for used vehicle information.
-    92% of those who had  shopped for or  purchased a vehicle  online said they
     were at least somewhat satisfied with the experience.
-    When asked to name the top three  reasons  why they  shopped  for a vehicle
     online:
*    87% of respondents  said being able to comparison shop about different cars
     or trucks;
*    85% said to get the absolute lowest price; and,
*    70% said  getting a guaranteed  price on a car or truck  before  visiting a
     dealer.
-    When asked to name the top three kinds of information online shoppers would
     like to see on automotive web sites:
*    86% said obtaining the dealer invoice and selling prices of the vehicles;
*    81% said being able to price out different combinations of options; and,
*    75% said being able to compare a car feature-by-feature.
-    Nearly two-thirds of online users (61%) who provided  personal  information
     to a dealer about a particular  vehicle would like the dealer to respond to
     them by e-mail.
-    Nearly  one-half of  respondents  (44%) said they would use the Internet to
     find vehicle information three months or more in advance of their purchase.


The Online Automotive Opportunity

The Company believes that vehicle manufacturers,  dealers and vendors of related
products  and  services  increasingly  desire  to use the  Internet  to  improve
consumer interaction,  information  management and sales.  According to JD Power
and Associates,  16% of new vehicle  purchasers used the Internet to assist with
their purchases in 1997 and this figure is expected to increase to approximately
50% by 2000.  The Doring Co.  reported that 63% of all  respondents  to a recent
study would use the Internet to obtain  information about the vehicles that they
are  considering  for  purchase.  However,  to avail  themselves of the Internet
opportunity, dealers, vehicle manufacturers and related vendors must address the
need for  sophisticated  Web site development and maintenance,  increased demand
for electronic  consumer  interaction and support,  and integration of their Web
sites  with  existing  internal  systems.  For  consumers,  while  the  Internet
substantially  increases the amount of information available for researching and
evaluating  automotive  purchase  decisions,   this  information  is  often  not


<PAGE>


aggregated at a central,  organized source. In addition, a large portion of this
information  is located on  automotive  manufacturers'  own  Websites,  which we
believe frequently do not provide complete or unbiased content.  The Company has
formulated  a strategy  that  address the  automotive  industry's  technological
obstacles  by  providing  inventory  and  vehicle  specification  solutions  and
providing the vehicle  information  on a real time basis in a functional  format
for  the  consumer  while   simultaneously   providing  the  consumer  reliable,
independent information. There are numerous online automotive sales Web sites on
the Internet today,  but none that employ the same total solution  strategy like
the  Company.   Other  online   automotive  sales  products  include   Carpoint,
Auto-by-Tel,  Autoweb,  AutoConnect,  and AutoVantage. A few Internet developers
are also  attempting to sell online sales products to media,  but none offer the
total sales  solution that Wheels  offers to ensure that dealers sell  vehicles,
including  important  add-ons  such as  touch-screen  kiosks  and  mobile  sales
laptops.  Another important distinction is that the Company understands the auto
sales  process  and even  trains  dealers  to help them sell more autos from the
leads  generated  by  Wheels.  The  Company  has  over  25,000  hours  into  the
development of the wheels solution.

Potential applications in other vertical markets


Wheels is an inventory  management  system and its framework could be adapted to
manage and sell a vast array of inventory  over the Web.  Though Navidec has not
begun selling its technology  into other vertical  markets,  it is examining its
potential applications.

DISTRIBUTION AND RELATED SERVICES

The Company  distributes high technology systems and components  manufactured by
third  parties.  Product  distribution  clients  range from small  businesses to
Fortune 100 companies. Significant product distribution clients include Lockheed
Martin,  Johnson Controls,  Hughes Aircraft and US West. The Company serves both
as  a  national  manufacturer's  representative  for  the  products  of  certain
international  manufacturers  and as a reseller of selected computer products in
the Rocky Mountain region. The Company focuses its distribution  efforts towards
selling specialized, higher margin products. The Company has begun to expand its
product distribution  activities into electronic channels,  including sales over
the Internet on the Company's Web site.

Distribution activities usually involve the receipt by the Company of orders for
equipment from  prospective  purchasers and the delivery and/or  installation of
the equipment by the Company.  The Company purchases the equipment directly from
the  manufacturer  or vendor and  resells it to the  purchaser  at a price which
includes the Company's cost and a profit margin. The Company specializes in high
tech components, graphics products and supplies.

EMPLOYEES

There are currently 75 full-time  employees of the Company.  These include 13 in
Professional Services, 8 in Creative Services, 23 in Software Development,  4 in
Marketing Services, 17 in sales, and 10 in management and administration.

The Company  expects to hire forty five  additional  full-time  employees in the
twelve months following this report.  The Company  currently  anticipates 17 new
hires dedicated to sales, 3 new hires dedicated to professional services, 20 new
technical employees and 5 new hires in administration.

COMPETITION

Existing competitors to the NetSolutions business include EarthWeb, Inc. (NASDAQ
EWBX),  Critical Path, Inc. (NASDAQ CPTH) and USWeb, Inc. (NASDAQ USWB), as well
as a large number of regional firms providing  similar  services to those of the
Company.  Potential  competitors  in  this  business  include  browser  software
vendors, PC and UNIX software vendors and on-line service providers.  Additional
competition comes from numerous  client/server  companies,  database  companies,
multimedia  companies,  advertising  agencies,  document  management  companies,
networking  software  companies,  network  management  companies and educational
software  companies.  In a broader sense,  the Company may compete with the more
traditional  advertising and distribution mediums, such as radio, television and
mail order outlets.

<PAGE>


Potential competition also comes from the Company's clients, who could choose to
address their  Internet/Intranet  needs through in-house personnel.  Some of the
Company's  current and many of the Company's  potential  competitors have longer
operating histories,  greater name recognition,  larger installed customer bases
and  significantly  greater  financial,  technical and marketing  resources than
those of the Company.  Competitive  factors in the  Internet/Intranet  Solutions
business  include core  technology,  breadth of services  offered,  creative and
artistic  ability,  marketing and distribution  resources,  customer service and
support and price.

Competitors in the automotive market

There are numerous online  automotive sales Web sites on the Internet today, but
none that employ the same total solution strategy as Navidec.  Other online auto
sales products  include  Carpoint,  Auto-by-Tel  (NASDAQ ABTL),  AutoWeb (NASDAQ
AWEB), AutoConnect,  and Cars.com. A few Internet developers are also attempting
to sell online sales products to media,  but none offer the total sales solution
that Wheels  offers to ensure that dealers sell  vehicles,  including  important
add-ons such as touch-screen kiosks and mobile sales laptops.

Navidec has hired a team of experts well versed in the automotive business,  and
has the president of Denver's largest independently owned dealership group (Burt
Automotive) on its board of directors.  These experts enable Navidec's access to
the latest  industry  information  and a deep  understanding  of the  automotive
business and its processes.

Both the  Internet/Intranet  Solutions  business and the high technology product
distribution  business are characterized by low financial  barriers to entry and
frequent   introductions  of  new  products.   The  Company   therefore  expects
competition in each of its businesses to increase in the future. There can be no
assurance  that  the  Company  will  be  able  to  successfully  compete  in its
businesses.  Although the Company believes that it has the requisite management,
technical and creative abilities to successfully  compete,  the intense level of
competition  in each of the  Company's  businesses  could  materially  adversely
affect the Company's future operating results and financial condition.

ITEM 2.   DESCRIPTION OF PROPERTY

The Company's  headquarters are located at 14 Inverness Drive, Building F, Suite
116,  Englewood,  Colorado,  in a 13,000 square foot  facility,  which  includes
approximately  1,500  square feet in warehouse  space.  The facility is occupied
under a lease with an unaffiliated party expiring in June 2001 and providing for
a current  monthly lease rate of $15,708.  The Company also leases space at 1300
Plaza North,  Suite 101,  Lafayette,  CO, in a 1,500 square foot  facility.  The
facility is occupied under a lease with an  unaffiliated  party expiring in June
1999 and  providing  for a monthly  lease rate of $2,180.  The Company may lease
additional  office  space if needed to  support  the growth in  traditional  and
on-line product distribution.

ITEM 3.  LEGAL PROCEEDINGS

The Company is currently not involved in any material legal proceedings.

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

No  matters  were  submitted  to a vote of  security  holders  during the fourth
quarter of the fiscal year ended December 31, 1998.

PART II.

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

(a) The Company's  Common Stock commenced  trading on the Nasdaq SmallCap Market
under the symbol  "NVDC" on February 11,  1997.  The Company also had a class of
common stock purchase warrants ("Warrants") listed on the Nasdaq SmallCap Market
under the symbol  "NVDCW." The Warrants also  commenced  trading on February 11,
1997, but were called by the Company under terms of the warrants on February 12,
1999, and ceased trading on March 16, 1999.

<PAGE>


                                         Common Stock
                                   ------------------------
Quarter Ended                       High               Low
-------------                       ----               ---
March 31, 1997                     $5.625            $5.125
June 30, 1997                      $6.000            $3.250
September 30, 1997                 $7.000            $5.250
December 31, 1997                  $7.000            $4.063
March 31, 1998                     $7.125            $3.000
June 30, 1998                      $6.813            $5.750
September 30, 1998                 $7.219            $2.438
December 31, 1998                  $6.000            $2.063

(b) Holders

As of April 9, 1999,  the Company  estimates the number of beneficial  owners of
common stock to be 900.

(c) Dividends

The Company has not  declared any cash  dividends  on its common  shares for the
last two fiscal  years.  The  Company  currently  intends  to retain  funds from
earnings,  if any, from future  growth and therefore  does not intend to pay any
cash dividends in the foreseeable future on its Common Stock. The Company is not
currently a party to any agreement restricting the payment of dividends.

(d) Recent Sales of Unregistered Securities

     On February  16, 1998 the Company  entered  into an  agreement  with Joseph
Charles & Associates to engage it on an exclusive  basis to complete the private
placement  that was started in November  1997 and the Company  issued a total of
250,000   options  to  Joseph   Charles  &  Associates   and  its  designees  in
consideration for the services  performed by them. Those options are exercisable
at $3.50 per share and expire on  February  15,  2003.  That  offering  was made
pursuant to Rule 506 of Regulation D promulgated  pursuant to the Securities Act
of 1933 as an offering not  involving any public  offering  solely to accredited
and sophisticated investors.

On August 31, 1998, in consideration for a $800,000 loan from VSI Holdings Inc.,
the Company granted to VSI Holdings Inc.  options to purchase  177,175 shares of
the Company's  common stock at $4.50 per share that expire on September 25, 1999
and options to purchase  354,350  shares of the Company's  common stock at $6.50
per share that expire on December 31, 1999. The Company issued its securities in
that transaction under Section 4(2) of the Securities Act of 1933 as an offering
not involving any public offering.  VSI Holdings Inc. agreed with the Company in
March 1999 to cancel  100,000 of the options  exercisable at $6.50 as part of an
agreement for the Company to repay the loan from VSI Holdings Inc.

On November 24, 1998, the Company completed an offering of 700,000 shares of its
Common  Stock to twenty  investors.  The  Company  raised  $1,330,000  from that
offering net of offering  costs of $70,000.  That  offering was made pursuant to
Rule 506 of Regulation D promulgated  pursuant to the  Securities Act of 1933 as
an  offering  not  involving  any  public  offering  solely  to  accredited  and
sophisticated  investors.  In addition,  in 1999, the Company issued warrants to
purchase  70,000 shares of its Common Stock to four persons who agreed to render
services to the Company.  Those warrants were issued pursuant to Section 4(2) of
the Securities Act of 1933 as an offering not involving any public  offering and
are  exercisable  at $2.00 per share during the five-year  period  commencing on
November 24, 1998.

<PAGE>


On December 28, 1998, the Company issued a total of 250,000 shares of its common
stock to the  shareholders of CarWizard,  Inc. and LeaseSource  Online,  Inc. in
exchange for all of their ownership  interests of those  companies.  The Company
also issued  options to purchase  83,334  shares of its Common  Stock to Michael
Kranitz as part of that transaction.  Those options are exercisable at $5.08 per
share for a five year period commencing on December 31, 1998. The Company issued
its securities in that  transaction  under Section 4(2) of the Securities Act of
1933 as an offering not involving any public offering.

ITEM 6. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

Cautionary Statement Regarding Forward Looking Statements

The matters discussed in this report, when not historical  matters,  are forward
looking  statements that involve a number of risks and uncertainties  that could
cause actual results to differ materially from projected  results.  Such factors
include,  among other things, the rapidly developing and unpredictable nature of
the Internet, intense competition in all of the Company's markets,  obsolescence
of products and technological changes, the need for management of growth and the
dependence on relationships of the Company with its customers and suppliers,  as
well as other risk factors  described from time to time in the Company's filings
with the Securities and Exchange Commission.

Overview

The Company was organized as ACI Systems, Inc. in July 1993 and changed its name
to NAVIDEC,  Inc. in July 1996. The Company's  principal  sources of revenue are
from the  architecture,  design,  development and  implementation of open system
solutions  for Fortune  1000  companies,  license  fees and  recurring  purchase
request and advertising  revenue from the Company's on-line automotive  solution
and  product  sales  of  third  party  manufactures.  The  Company  merged  with
Interactive  Planet,  Inc.  ("IPI"),  a designer and developer of Internet World
Wide Web sites,  in July 1996. The Company issued an aggregate of 678,877 shares
of Common Stock to the  shareholders  of IPI and a promissory note in the amount
of  $75,000  to one  shareholder  of IPI in  exchange  for all of the issued and
outstanding  stock of IPI. The Company  acquired  TouchSource,  Inc.  ("TS"),  a
designer and developer of interactive  Kiosks,  in July 1997. The Company issued
an aggregate of 207,000 shares of Common Stock to the  shareholders of TS and TS
was merged into the Company in  exchange  for all of the issued and  outstanding
stock of TS. The merger and acquisition  were consummated in order to expand the
Company's  business  model of combined  expertise in  traditional  marketing and
distribution and Internet/ Intranet technology. On December 28, 1998 the Company
acquired  CarWizard and LeaseSource,  owners and operators of CarWizard.com  and
LeaseSource.com,  two prominent online  automotive  sites. The Company issued an
aggregate  of  250,000  shares  of  Common  Stock  to the  shareholders  of both
Companies,  and will pay an earn-out based on the success of these sites in 1999
and 2000.  The  acquisition  was  consummated  in order to expand the  Company's
Online Automotive presence.

The  Company's  strategy  is to  increase  revenue  generated  by its  two  core
competencies:  (1)  NetSolutions,  which are focused in five major market areas,
including computer and network infrastructure equipment,  software and services,
content aggregation,  electronic commerce and order fulfillment,  and (2) Online
Automotive  Solutions,  which derives revenue from,  sale of purchase  requests,
advertising  and the direct  leasing of  automobiles.  The Company has built and
intends to continue to build an  infrastructure  that assumes this strategy will
succeed.  The  failure  of the  Company to achieve  this  strategy  could have a
material  adverse  effect on the  Company's  business,  financial  condition and
results of operations.

The Company recognizes revenue upon delivery of goods and services. NetSolutions
generally begin with consulting  arrangements that are billed on an hourly basis
and  progress  to a bid for a  proposed  project.  Deposits  are then taken upon
acceptance  of the bid.  Most of the  Company's  customers  elect to update  and
expand their solutions frequently,  and clients are billed monthly on a time and
materials  basis for these  services.  Additional  sources  of  ongoing  revenue
include  revenue  from  advertising  sold by the  Company on clients  Web sites,
revenue  from sales of  merchandise  and  services  over  clients  Web sites and
revenue  from  maintenance  and hosting of client Web sites.  Online  Automotive
Solutions  currently  generates a substantial portion of its revenue through the
sale of new car leads to dealers. The Company also generates revenue through the
sale of banner and editorial advertising space.

<PAGE>


From  August  through  October,   1996,  the  Company  raised  net  proceeds  of
approximately $1,233,000 from the sale of 10% Unsecured Subordinated Convertible
Promissory Notes in a private placement (the "Bridge Private Placement").  These
notes were  converted  by their terms into an  aggregate  of 349,126  Units upon
consummation of the Company's  public offering  described  below. The Units were
identical to the Units offered in the public offering.

On February 14, 1997,  the Company  consummated  a public  offering of 1,000,000
Units  consisting  of one share of Common  Stock and one Common  Stock  purchase
warrant  ("Warrant").  Each Warrant entitled the holder to purchase one share of
Common Stock at a price of $7.20 per share until February 10, 2002. The Warrants
were redeemed by the Company on February 12, 1999, and stopped  trading on March
16,  1999.  Of the  1,000,000  shares of Common  Stock  and  1,000,000  Warrants
included in the offering,  755,000  shares of Common Stock and 755,000  Warrants
were sold by the Company,  for net proceeds of approximately  $3,436,000  (after
subtracting the underwriting  discount and other expenses of the offering).  The
remaining  245,000  units  were  sold by the  investors  in the  Bridge  Private
Placement.

From  November  1997  to  April  1998,   the  Company  raised  net  proceeds  of
approximately $2,193,000 from the issuance of 594,500 shares of Common Stock and
Warrants in a private  placement.  Each Warrant  entitles the holder to purchase
one share of Common Stock at a price of $7.20 per share until February 10, 2002.
The  Warrants  were  redeemed by the  Company on  February  12, 1999 and stopped
trading on March 16, 1999.

In November of 1998, the Company completed a private placement  resulting in the
issuance  of  700,000  shares  at  $2.00  per  share.  This  offering  generated
$1,330,000 in proceeds net of offering costs of $70,000.


Results of Operations

The Company  operates its business  activities in three segments:  NetSolutions,
Online   Automotive   Solutions   ("Automotive"),   and   Product   Distribution
("Products").   NetSolutions  enables  customers  to  address  their  e-commerce
initiatives.  Automotive provides total online automotive  solutions through its
Web sites,  in addition to  providing  custom  solutions to companies in or with
relationships  in the  automotive  industry.  Products  provides  the resale and
configuration  of  third  party  software  and  hardware  components,  graphical
printers and  supplies.  Management  has chosen to organize  the Company  around
these segments based on differences in products and services.

The  following  table shows the  breakdown of these three  segments for 1998 and
1997

<TABLE>
<CAPTION>


                                         Year Ended December 31,                             Year Ended December 31,
                         ---------------------------------------------------  ----------------------------------------------------

                                                 1998                                                 1997
                         ---------------------------------------------------  ----------------------------------------------------
                         NetSolutions   Auto    Products     Corp.     Total  NetSolutions   Auto      Products     Corp     Total
                         ------------   ----    --------     -----     -----  ------------   ----      --------     ----     -----
<S>                        <C>        <C>        <C>       <C>        <C>        <C>        <C>        <C>       <C>        <C>  
Sales                      $ 5,443    $   939    $ 2,173              $ 8,555    $ 2,359    $   223    $ 3,426              $ 6,008
Cost of Goods Sold           4,009        243      1,618                5,870      1,412         37      2,770                4,219
                           -------    -------    -------              -------    -------    -------    -------              -------
Gross Profit               $ 1,434    $   696    $   555              $ 2,685    $   947    $   186    $   656              $ 1,789

Operating Expense
Product Development        $   542    $ 1,292    $     0              $ 1,834    $   835    $   827    $     0              $ 1,662
Selling & Marketing            217        665         39                  921        123         79         35                  237
Impairment of Goodwill                                                      0      1,305                                      1,305
General & Admin              1,857        890        379       353(1)   3,479      1,177        548        486       257(1)   2,468
                           -------    -------    -------   -------    -------    -------    -------    -------   -------    -------
Total Operating Expenses   $ 2,616    $ 2,847    $   418   $   353    $ 6,234    $ 3,440    $ 1,454    $   521       257      5,672

Operating (Loss) Income    $(1,182)   $(2,151)   $   137   $  (353)   $(3,549)   $(2,493)   $(1,268)   $   135   ($  257)   ($3,883)

(1) Represents depreciation expense on property and equipment,  which can not be
directly identified to a particular segment.

</TABLE>

<PAGE>


Net sales for fiscal 1998 were  $8,555,000  which  represents an increase of 42%
over  net  sales of  $6,008,000  in  fiscal  1997.  The  increase  is  primarily
attributed to increased sales in NetSolutions and Automotive. NetSolutions sales
were  $5,443,000  which  represents  an  increase  of 131%  over  net  sales  of
$2,359,000 in fiscal 1997. Automotive sales were $939,000 on a stand alone basis
and  $1,546,000 on a pro-forma  combined  basis with  LeaseSource  and CarWizard
representing an increase of 321% or 693% respectively over net sales of $223,000
in fiscal  1997.  The  increase in these two areas is  primarily  attributed  to
increase  market  acceptance  and  marketing  activities.  NetSolutions  typical
project  length is 90 to 120 days.  This  quick  turn  around  is  resulting  in
increased demand from new customers and expansion from existing  customers.  The
Company is projecting  sales in this division to continue to increase in 1999 as
a result of this expansion.  The Company's  Automotive  division online presence
increased  from one site at the  beginning  of 1998 to 14 on December  31, 1998.
This increase has resulted in automotive  purchase  requests increasing from 350
for the month of  January to in excess of 11,000  for the month of  December  of
1998.  This  increase has resulted in increased  revenue and will be the primary
source of increased revenues in 1999.

Net  sales in  Products  were  $2,173,000  a  decrease  of 37% from net sales of
$3,426,000  in  fiscal  1997.  The  decrease  in  sales  is  attributed  to  the
discontinuation  of distribution  products that did not have strong gross profit
and/or  recurring  sales. The Company projects product sales to remain stable in
1999.

Gross Profit was $2,685,000  during fiscal 1998, an increase of 50% over a gross
profit  of  $1,789,000  in  fiscal  1997.  As a percent  of sales  gross  profit
increased to 31.4% from 29.8% an increase of 1.6%. The increase in the Company's
gross margin was  attributable to the increased sales in Automotive.  Automotive
had a gross  profit as a percent of sales of 74.1% in 1998,  while  NetSolutions
had gross  profit  of 26.3% and  Products  had  25.5% for the same  period.  The
Company  plans for its  Automotive  division to make up a larger  percentage  of
sales in 1999,  and thus gross profit as a  percentage  of sales is projected to
increase accordingly.

Operating  expenses for fiscal 1998 were  $6,234,000 or 72.9% of sales  compared
with  $5,672,000 or 94.4% of sales for fiscal 1997.  General and  administrative
expenses for fiscal 1998 were $3,479,000 an increase of $1,011,000 or 41.0% over
general and administrative expenses of $2,468,000 for fiscal 1997. This increase
is primarily  attributed to increased  personnel  expenses,  and increased legal
expenses related to the VSI merger  negotiations  that were  discontinued by the
Company in 1998. General and  administrative  expenses are projected to increase
in 1999 with the  expansion  of the  Automotive  and  NetSolutions.  Selling and
marketing expenses for fiscal 1998 were $921,000 an increase of $684,000 or 289%
over selling and marketing  expenses of $237,000 for fiscal 1997. The Company is
projecting  significant  increase in selling and marketing expenses in 1999 as a
result  of  producing   brand  awareness  for  Automotive   solutions.   Product
development  expenses for fiscal 1998 were $1,834,000 an increase of $172,000 or
10% over product  development  expenses of  $1,662,000  in fiscal 1997.  Product
development  expenses are  projected to increase in the  automotive  division in
1999,  due to the  acceptance of online  solutions in the  automotive  industry.
NetSolutions  is also  projecting  an  increase  in  product  development  as it
continues with the Company's  philosophy of turning solutions into products.  In
1997 the Company recorded  $1,305,000 in expense for the impairment of goodwill.
The goodwill  was the result of the merger with IPI in 1996 and the  acquisition
of TS in 1997.

Net interest  expense for fiscal 1998 was $414,000  compared  with  $236,000 for
fiscal  1997.  The increase  was a result of  increased  borrowings  to fund the
growth of the Company. The Company expects interest expense to decrease in 1999.

Liquidity and Capital Resources

Through December 31, 1998, the Company funded its operations  primarily  through
equity investments, through the Company's IPO and subsequent Private Placements,
and revenues  generated from operations,  loans from principal  shareholders and
employees,  lines of credit and factoring  arrangements made available by banks.
As of December 31, 1998,  the Company had cash and cash  equivalents of $711,000
and a net  working  capital  of  $286,000.  This  compares  with  cash  and cash
equivalents of $369,000 and a working capital  $678,000 as of December 31, 1997.
In March of 1999, the Company completed a warrant call that resulted net cash of
approximately  $13.8  million.  In 1999  the  Company  expects  to have  capital
expenditures of approximately $1.8 million for its Automotive  division and $1.1
million for NetSolutions.  The increase in capital expenditures is projected due
to further implementation of the Automotive business model and increased network
activities for the NetSolutions division.

<PAGE>


Cash  used in  operating  activities  for the  Company  totaled  $3,050,000  and
$3,659,000  for  fiscal  1998 and 1997,  respectively.  Cash  used in  investing
activities  for the Company  totaled  $470,000  and $500,000 for fiscal 1998 and
1997,  respectively.  Cash used in investing  activities  consisted primarily of
expenditures for property and equipment.

Cash provided by financing  activities in fiscal 1998 was $3,862,000  consisting
primarily  of  advances  from  factoring   arrangements  of  $3,515,000  net  of
repayments  of  $3,502,000,  proceeds  from  the  issuance  of  common  stock of
$2,806,000, exercise of warrants of $292,000, exercise of employee stock options
of $284,000,  borrowings of $885,000 net of payments of $478,000.  This compares
to cash provided by financing activities in fiscal 1997 of $4,297,000 consisting
primarily of advances from factoring  arrangements of $634,000 net of repayments
of  $444,000,  proceeds  from  the  issuance  of  common  stock  of  $4,153,000,
borrowings of $333,000 net of payments of $369,000.

The Company has not recorded a deferred tax asset as it cannot  conclude to date
that it is more likely than not that the deferred tax asset will be realized.



Inflation

The Company does not believe that inflation  will have a material  impact on the
Company's future operations.

Year 2000

Computer programs or other embedded  technology that have been written using two
digits  (rather  than  four)  to  define  the  applicable  year  and  that  have
time-sensitive  logic may  recognize  a date using "00" as the Year 1900  rather
than the Year 2000. That mistake could result in widespread  miscalculations  or
system failures.  Both information  technology ("IT") systems and non-IT systems
using embedded technology may be affected by the Year 2000.

The Company initiated an  enterprise-wide  program to prepare its IT systems and
applications  for  the  Year  2000.  The  Company  has  completed  its  internal
assessment  phase of its Year  2000  program.  The  Company  did not  incur  any
material costs associated with that assessment. The Company believes that all of
its IT systems are Year 2000  compliant.  However,  there is no  assurance  such
belief is correct.  The Company has not completed the process of verification of
whether vendors,  suppliers and significant customers with which the Company has
material  relationships  are Year 2000 compliant.  If the Company and such third
parties  are unable to address  Year 2000  issues in a timely  manner,  it could
result in material  financial risk to the Company.  That financial risk includes
the loss of  revenue  and  substantial  unanticipated  costs.  Accordingly,  the
Company plans to devote all resources necessary to resolve significant Year 2000
issues in a timely manner. In addition, the Company plans to develop a Year 2000
contingency  plan in the event that its IT systems and applications are not Year
2000 compliant.

The  Company  expects  that  it  will  incur  internal  staff  costs  as well as
consulting  and  other  expenses  related  to the  completion  of its Year  2000
program. However, the Company currently is not able to determine the total costs
for its Year 2000  program or whether the Year 2000 will have a material  effect
on its financial condition, results of operations or cash flows.


<PAGE>


ITEM 7.   FINANCIAL STATEMENTS






                      NAVIDEC, INC.

                      CONSOLIDATED FINANCIAL STATEMENTS
                      AS OF DECEMBER 31, 1998
                      TOGETHER WITH REPORT OF INDEPENDENT
                        PUBLIC ACCOUNTANTS


<PAGE>


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To Navidec, Inc.:

We have audited the accompanying consolidated balance sheet of NAVIDEC, INC., (a
Colorado  corporation) and subsidiaries as of December 31, 1998, and the related
consolidated  statements of operations,  stockholders' equity and cash flows for
the  year  then  ended.   These  consolidated   financial   statements  are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the financial  position of Navidec,  Inc. and
subsidiaries,  as of December 31, 1998, and the results of their  operations and
their cash flows for the year then ended in conformity  with generally  accepted
accounting principles.



                                                             ARTHUR ANDERSEN LLP

Denver, Colorado,
    March 23, 1999.

<PAGE>

                          INDEPENDENT AUDITOR'S REPORT



Board of Directors
NAVIDEC, Inc.
Englewood, Colorado

We have audited the balance sheet of NAVIDEC, Inc., as of December 31, 1997 (not
separately   included  herein)  and  the  accompanied   related   statements  of
operations,  changes in stockholders'  equity, and cash flows for the year ended
December 31, 1997.  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 generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of the Company as of December 31,
1997,  and the  results of its  operations  and its cash flows for the year then
ended in conformity with generally accepted accounting principles.





HEIN + ASSOCIATES LLP

Denver, Colorado
    March 5, 1998.


<PAGE>
<TABLE>
<CAPTION>

                                       NAVIDEC, INC.


                                CONSOLIDATED BALANCE SHEET

                                     DECEMBER 31, 1998
   

                                          ASSETS
                                          ------

CURRENT ASSETS:
<S>                                                                           <C>        
    Cash and cash equivalents                                                 $   711,000
    Accounts receivable, net of allowance for doubtful accounts of $125,000     2,167,000
    Costs and estimated earnings in excess of billings                            107,000
    Inventories                                                                   341,000
    Restricted cash                                                               280,000
    Prepaid expenses and other                                                     52,000
                                                                              -----------
            Total current assets                                                3,658,000
                                                                              -----------
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $717,000               981,000
                                                                              -----------
OTHER ASSETS:
    Goodwill and intangibles, net of accumulated amortization of $100,000         619,000
    Other                                                                           7,000
                                                                              -----------
            Total other assets                                                    626,000
                                                                              -----------
                                                                              $ 5,265,000
                                                                              ===========

                           LIABILITIES AND STOCKHOLDERS' EQUITY
                           ------------------------------------

CURRENT LIABILITIES:
    Accounts payable                                                          $ 1,851,000
    Accrued liabilities                                                           423,000
    Payable to factor                                                             203,000
    Notes payable                                                                 821,000
    Current capital lease obligations                                              74,000
                                                                              -----------
            Total current liabilities                                           3,372,000
                                                                              -----------
CAPITAL LEASE OBLIGATIONS                                                          94,000

COMMITMENTS AND CONTINGENCIES (Notes 1, 3 and 7)

STOCKHOLDERS' EQUITY:
    Common stock, no par value, 20,000,000 shares authorized,
      4,709,000 shares issued and outstanding                                   8,059,000
    Warrants for common stock                                                   2,891,000
    Accumulated deficit                                                        (9,151,000)
                                                                              -----------
            Total stockholders' equity                                          1,799,000
                                                                              -----------
                                                                              $ 5,265,000
                                                                              ===========

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

</TABLE>

<PAGE>

                                  NAVIDEC, INC.


                      CONSOLIDATED STATEMENTS OF OPERATIONS


                                                       For the Years Ended
                                                           December 31,
                                                   ----------------------------
                                                      1998              1997
                                                      ----              ----

REVENUE                                            $ 8,555,000      $ 6,008,000

COST OF REVENUES                                     5,870,000        4,219,000
                                                   -----------      -----------
GROSS MARGIN                                         2,685,000        1,789,000
                                                   -----------      -----------
OPERATING EXPENSES:
    Product development                              1,834,000        1,662,000
    General and administrative                       3,479,000        2,468,000
    Selling and marketing                              921,000          237,000
    Impairment of goodwill                                --          1,305,000
                                                   -----------      -----------
              Total operating expenses               6,234,000        5,672,000
                                                   -----------      -----------
LOSS FROM OPERATIONS                                (3,549,000)      (3,883,000)
                                                   -----------      -----------
OTHER (EXPENSE) INCOME:
    Interest expense                                  (414,000)        (236,000)
    Other, net                                          30,000           12,000
                                                   -----------      -----------
              Other expense, net                      (384,000)        (224,000)
                                                   -----------      -----------
NET LOSS                                           $(3,933,000)     $(4,107,000)
                                                   ===========      ===========

BASIC AND DILUTED NET LOSS PER SHARE               $     (1.10)     $     (1.47)
                                                   ===========      ===========

BASIC AND DILUTED WEIGHTED-AVERAGE
     COMMON SHARES OUTSTANDING                       3,578,000        2,800,000
                                                   ===========      ===========


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


<PAGE>
<TABLE>
<CAPTION>

                                                NAVIDEC, INC.


                              CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                               FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997

                                                                                                          
                                                                                          Warrants                
                                                          Common Stock              for                                        
                                                   -------------------------      Common        Accumulated                        
                                                      Shares        Amount         Stock          Deficit          Total       
                                                      ------        ------         -----          -------          -----
                                                                                        
<S>                                                <C>         <C>              <C>             <C>             <C>
BALANCES, December 31, 1996                         1,701,000    $   401,000    $      --       $(1,111,000)    $  (710,000)

    Conversion of unsecured promissory
       notes to common stock                          349,000      1,133,000        305,000            --         1,438,000

    Issuance of common stock and warrants
       in a public offering, net
       of $1,094,000 of expenses                      755,000      2,473,000        963,000            --         3,436,000

    Issuance of common stock for the
       acquisition of TouchSource                     207,000        776,000           --              --           776,000

    Issuance of common stock and warrants
       in a private placement, net
       of $132,000 of expenses                        189,000        574,000        143,000            --           717,000

    Net loss                                             --             --             --        (4,107,000)     (4,107,000)
                                                  -----------    -----------    -----------     -----------     -----------
BALANCES, December 31, 1997                         3,201,000      5,357,000      1,411,000      (5,218,000)      1,550,000

    Issuance of common stock and warrants
       in a private placement, net
       of $350,000 of expenses                        406,000        131,000      1,345,000            --         1,476,000

    Issuance of warrants in connection
       with debt borrowing                               --             --          300,000            --           300,000

    Issuance of common stock in a private
       placement, net of $70,000 of expenses          700,000      1,330,000           --              --         1,330,000

    Issuance of common stock for acquisition
       of CarWizard and LeaseSource                   250,000        500,000           --              --           500,000

    Exercise of employee stock options                 69,000        284,000           --              --           284,000

    Exercise of warrants                               83,000        457,000       (165,000)           --           292,000

    Net loss                                             --             --             --        (3,933,000)     (3,933,000)
                                                  -----------    -----------    -----------     -----------     -----------
BALANCES, December 31, 1998                         4,709,000    $ 8,059,000    $ 2,891,000     $(9,151,000)    $ 1,799,000
                                                  ===========    ===========    ===========     ===========     ===========

                                                                                                                  

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


</TABLE>

<PAGE>
<TABLE>
<CAPTION>

                                         NAVIDEC, INC.

                             CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                                      For the Years Ended
                                                                          December 31,
                                                                   --------------------------
                                                                      1998           1997
                                                                      ----           ----
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                <C>            <C>         
    Net loss                                                       $(3,933,000)   $(4,107,000)
    Adjustments to reconcile net loss to net cash
       used in operating activities-
          Depreciation and amortization                                522,000        865,000
          Discount on note payable                                     300,000           --
          Provision for bad debt                                        75,000         41,000
          Impairment of goodwill                                          --        1,305,000
          Changes in operating assets and liabilities-
              Accounts receivable                                   (1,377,000)      (627,000)
              Costs and estimated earnings in excess of billings        (1,000)      (106,000)
              Inventories                                              208,000       (315,000)
              Restricted cash                                           20,000       (300,000)
              Other assets                                              27,000        (52,000)
              Accounts payable                                         857,000        (92,000)
              Accrued liabilities                                      252,000       (271,000)
                                                                   -----------    -----------
                 Net cash used in operating activities              (3,050,000)    (3,659,000)
                                                                   -----------    -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchases of property and equipment                               (538,000)      (475,000)
    Cash assumed in acquisitions                                        68,000          7,000
    Acquisition costs incurred                                            --          (32,000)
                                                                   -----------    -----------
                 Net cash used in investing activities                (470,000)      (500,000)
                                                                   -----------    -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from factoring of accounts receivable                   3,515,000        634,000
    Payments to factor                                              (3,502,000)      (444,000)
    Proceeds from issuance of common stock and warrants              3,226,000      5,379,000
    Payment for offering and deferred financing costs                 (420,000)    (1,236,000)
    Proceeds from exercise of employee stock options                   284,000           --
    Proceeds from exercise of warrants                                 292,000           --
    Proceeds from notes payable                                        885,000        333,000
    Proceeds from related party note receivable                         60,000           --
    Payments on notes payable and capital leases                      (478,000)      (369,000)
                                                                   -----------    -----------
                 Net cash provided by financing activities           3,862,000      4,297,000
                                                                   -----------    -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS                              342,000        138,000

CASH AND CASH EQUIVALENTS, beginning of period                         369,000        231,000
                                                                   -----------    -----------
CASH AND CASH EQUIVALENTS, end of period                           $   711,000    $   369,000
                                                                   ===========    ===========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
       Cash paid for interest                                      $   109,000    $    79,000
                                                                   ===========    ===========

SUPPLEMENTAL SCHEDULE OF NON-CASH
    INVESTING AND FINANCING ACTIVITIES:
       Equipment acquired with capital leases                      $    72,000    $      --
                                                                   ===========    ===========
       Issuance of common stock in connection with acquisitions    $   500,000    $   776,000
                                                                   ===========    ===========
       Conversion of unsecured promissory notes to common stock    $      --      $ 1,438,000
                                                                   ===========    ===========
       Net liabilities assumed in acquisitions                     $    39,000    $    83,000
                                                                   ===========    ===========

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

</TABLE>

<PAGE>

                                  NAVIDEC, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 1998 AND 1997




(1) ORGANIZATION AND NATURE OF BUSINESS
---------------------------------------

Navidec, Inc., a Colorado corporation, (the "Company") was incorporated in 1993.
The Company's experienced team develops open systems, component-based solutions,
to  enable  customers  to  address  their  e-business  initiatives.  Out of this
competency,  the Company has launched its first  vertical  market that  provides
on-line  solutions  for the  automotive  industry.  The Company also serves as a
distributor of various high  technology and other products  through  traditional
and electronic channels.

The Company owns 100% of each of the following subsidiaries: Interactive Planet,
Inc. ("IPI"), TouchSource Inc., CarWizard.com Inc. ("CarWizard") and LeaseSource
Online Inc. ("LeaseSource").  IPI is a designer and developer of Internet sites.
TouchSource  is a designer and developer of  interactive  kiosks.  CarWizard and
LeaseSource are automotive information web site businesses.

The Company is subject to various risks and uncertainties frequently encountered
by companies in the early stages of development,  particularly  companies in the
new and rapidly evolving market for Internet-based  products and services.  Such
risks and uncertainties  include,  but are not limited to, its limited operating
history,  an evolving and  unpredictable  business  model and the  management of
rapid  growth.  To address these risks,  the Company  must,  among other things,
maintain and increase its customer base,  implement and successfully execute its
business and marketing strategy, continue to develop and upgrade its technology,
provide  superior  customer service and attract,  retain and motivate  qualified
personnel.  There can be no  guarantee  that the Company will be  successful  in
addressing such risks.

To date,  substantially  all of the  Company's  revenue  has been  derived  from
services  related to  internet/intranet  solutions  and the  resale of  computer
equipment , high technology  peripherals and electronic components  manufactured
by independent  vendors. The Company's strategy is to increase revenue generated
by its two core competencies:  1) Internet/Intranet solutions, which are focused
in five major  market  areas,  including  computer  and  network  infrastructure
architecture  and  equipment,   software   development  and  services,   content
aggregation,   electronic  commerce  and  order  fulfillment,   and  2)  product
distribution.  There can be no guarantee  that the Company will be successful in
marketing its current products or other new or enhanced  products.  In addition,
the market for the Company's  services is characterized  by rapid  technological
developments,   frequent  new  product   introductions   and  evolving  industry
standards.   The  changes  require  the  Company  to  continually   improve  the
performance, features, and reliability of its products, particularly in response
to competition. There can be no assurance that the Company will be successful in
responding  to these  changes. 

The Company expects that its growth may require  significant  external financing
within the next year.  While the Company believes that it will be able to obtain
such external financing from third parties or from existing shareholders,  there
can be no guarantee that it can do so at terms acceptable to the Company. If the
Company is unable to raise the  necessary  financing,  the  Company's  business,
results of operations  and  financial  condition  could be materially  affected.
Subsequent to December 31, 1998, the Company raised $13.8 million (Note 12).


<PAGE>


(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
----------------------------------------------

     Use of Estimates in the Preparation of Financial Statements
     -----------------------------------------------------------

The presentation of financial  statements in conformity with generally  accepted
accounting  principles  requires  management to make estimates and  assumptions.
These estimates and  assumptions  may affect the reported  amounts of assets and
liabilities  and disclosure of contingent  assets and liabilities at the date of
the  financial  statements  and the  reported  amounts of revenues  and expenses
during the reporting period. Actual results could differ from those estimates.

     Concentration of Credit Risk
     ----------------------------

Financial  instruments  that  potentially  subject  the  Company to  significant
concentrations  of credit risk consist  primarily of cash and cash  equivalents,
restricted  cash  and  accounts  receivable.  The  Company  has  no  significant
off-balance  sheet  concentrations  of credit  risk,  such as  foreign  exchange
contracts,  option contracts or hedging arrangements.  The Company maintains its
cash balances in the form of bank demand deposits and money market accounts with
financial  institutions  that  management  believes are  creditworthy.  Accounts
receivable are typically  unsecured and are derived from  transactions  with and
from  customers  primarily  located in the United States.  The Company  performs
ongoing credit evaluations of its customers and maintains reserves for potential
credit losses.  The Company  maintains an allowance for doubtful  accounts based
upon the expected collectibility of accounts receivable.

     Fair Value of Financial Instruments
     -----------------------------------

The Company's  financial  instruments  consist of cash  equivalents,  short-term
trade  receivables and payables,  and notes payable.  The carrying values of the
cash equivalents and short-term trade receivables and payables approximate their
fair  values.  Based  on  borrowing  rates  currently  used by the  Company  for
financing,  the carrying  value of the note payable  approximates  its estimated
fair value.

       Cash Equivalents
       ----------------

For cash flow  purposes,  the Company  considers all highly  liquid  instruments
purchased with an original maturity of 90 days or less to be cash equivalents.

     Restricted Cash
     ---------------

Restricted  cash  represents  amounts  withheld from  employees for their 401(k)
profit  sharing plan of $231,000  and the minimum  cash reserve for  receivables
sold to a bank of $49,000.  Included in accrued  liabilities on the accompanying
balance sheet is the $231,000 obligation for the employees 401(k).

<PAGE>


     Costs and Estimated Earnings in Excess of Billings
     --------------------------------------------------

Costs and  estimated  earnings in excess of billings as of December  31, 1998 is
comprised of the following:

               Costs incurred on contracts in progress   $ 31,000
               Estimated earnings                          76,000
                                                         --------
                                                          107,000
               Less progress billings                        --
                                                         --------
                                                         $107,000
                                                         ========

     Inventories
     -----------

Inventories are stated at the lower of cost (first-in, first-out) or market, and
consist primarily of products held for resale.

     Property and Equipment
     ----------------------

Property and equipment is stated at cost and  depreciation is provided using the
straight-line  method  over  estimated  useful  lives of  three to seven  years.
Computer  equipment and purchased  software is depreciated  over three years and
furniture and office equipment is depreciated  over five years.  Maintenance and
repairs  are  expensed  as  incurred  and  major  additions,   replacements  and
improvements are capitalized.

Leasehold  improvements  are amortized using the  straight-line  method over the
shorter of the useful life or the life of the lease.

The components of property and equipment as of December 31, 1998 are as follows:

            Computer equipment and purchased software   $ 1,451,000
            Furniture and office equipment                  204,000
            Leasehold improvements                           43,000
                                                        -----------
                                                          1,698,000
            Less- accumulated depreciation                 (717,000)
                                                        -----------
                                                        $   981,000
                                                        ===========

Depreciation expense was $353,000 in fiscal 1998  and $257,000 in fiscal 1997.



     Goodwill and Intangibles
     ------------------------

Goodwill  and  intangibles  are  recorded  at the date of  acquisition  at their
allocated cost. Amortization is provided over the estimated useful lives of five
years for both the goodwill  and the  intangible  assets.  At December 31, 1998,
goodwill  and  intangibles  of  $619,000  is  entirely  from the  CarWizard  and
LeaseSource acquisition, which closed on December 28, 1998. Amortization will be
provided for these  assets over their  useful lives of five years.  During 1997,
the Company  recorded an impairment  expense of $1,305,000 on goodwill (see Note
3).

<PAGE>


     Impairment of Long-Lived Assets
     -------------------------------

The Company reviews its long-lived  assets,  including goodwill and intangibles,
for impairment  whenever  events or changes in  circumstances  indicate that the
carrying  amount of an asset may not be recoverable.  The Company  evaluates the
recoverability of its long-lived assets based on estimated  undiscounted  future
cash flows and  provides  for  impairment  if such  undiscounted  cash flows are
insufficient to recover the carrying amount of the long-lived asset.

     Receivables Factored with Recourse
     ----------------------------------

In 1997, the Company entered into an agreement with a bank to factor,  with full
recourse,  existing and future accounts receivable to a maximum of $750,000. The
Company must  maintain a cash reserve  account with the bank of up to 20% of the
face amount of receivables sold to the bank. The Company's  recourse  obligation
is  secured  by all of the  Company's  assets  and is  guaranteed  by two of the
Company's shareholders.  As of December 31, 1998, the face amount of receivables
factored was $246,000  with a recourse  obligation  of $203,000.  For  financial
presentation purposes, the related receivable and outstanding recourse liability
have been included as an asset and liability,  respectively, on the accompanying
balance sheet.

     Revenue Recognition
     -------------------

The   Company   generally   recognizes   revenues   upon   delivery   from   its
Internet/Intranet   and  kiosk   solutions  and  product   distribution   goods.
Internet/Intranet   and  kiosk   solutions   generally   begin  with  short-term
arrangements,  which are billed on a time and  materials  basis or percentage of
completion method on fixed bid projects.  Frequently,  customers elect to update
and expand their Web sites, and are billed monthly on a time and materials basis
for these services.

Additional  sources of ongoing revenue include revenue from  advertising sold by
the  Company on  clients'  Web sites,  revenue  from  sales of  merchandise  and
services  over  clients'  Web sites and revenue from  maintenance  of client Web
sites.  The Company  receives and records a percentage of the gross revenue from
advertising and merchandise sales upon completion of these sales.

Revenues on short-term  contracts are recorded  upon  substantial  completion of
each  contract.  Revenues  from  time  and  material  contracts  are  recognized
currently as the work is performed.

Revenues from long-term contracts are recognized on the percentage of completion
method for individual contracts,  commencing when progress reaches a point where
experience  is sufficient to estimate  final results with  reasonable  accuracy.
Revenues are recognized in the ratio that costs incurred bear to total estimated
contract costs.  Changes in job performance,  estimated  profitability and final
contract  settlements  may result in revisions to costs and income in the period
in which the revisions are  determined.  Provisions for any estimated  losses on
uncompleted  contracts  are  made  in  the  period  in  which  such  losses  are
determinable.

<PAGE>


Contract  costs  include  all labor  costs and those  direct  costs  related  to
contract performance.

     Product Development
     -------------------

Costs incurred in the  development of new products and  enhancements to existing
products and services are charged to expense as incurred.

     Advertising Costs
     -----------------

Advertising  costs are  expensed  as  incurred  and are  included in selling and
marketing  expenses in the  accompanying  statements of operations.  The Company
does not  incur  any  direct-response  advertising  costs.  Advertising  expense
totaled $256,000 and $156,000 in 1998 and 1997, respectively.

     Income Taxes
     ------------

Deferred tax assets and  liabilities  are recorded for the estimated  future tax
effects of temporary differences between the tax basis of assets and liabilities
and amounts reported in the accompanying  balance sheets, and for operating loss
and tax credit carryforwards.  The change in deferred tax assets and liabilities
for the period  measures the  deferred tax  provision or benefit for the period.
Effects of changes in enacted  tax laws on deferred  tax assets and  liabilities
are  reflected as  adjustments  to the tax provision or benefit in the period of
enactment.  The  Company's  deferred tax assets have been reduced by a valuation
allowance  to the  extent it is more  likely  than not,  that some or all of the
deferred tax assets will not be realized.

     Stock-Based Compensation
     ------------------------

The Company  accounts for its employee stock option plans and other  stock-based
compensation  arrangements  using the  intrinsic  value  method  under  which no
compensation expense is recognized unless the fair value of the underlying stock
is less than the stock option  exercise price on the date of grant.  The Company
accounts for equity  instruments  issued to  non-employees  at fair value on the
date of grant.

     Net Loss Per Share
     ------------------

Basic net loss per share is computed by dividing  net loss  available  to common
shareholders  for the period by the  weighted  average  number of common  shares
outstanding  for the period.  Diluted net loss per share is computed by dividing
the net loss for the  period  by the  weighted  average  number  of  common  and
potential  common  shares  outstanding  during  the  period if the effect of the
potential  common  shares is  dilutive.  The Company has  excluded  the weighted
average  effect (using the treasury  stock method) of common stock issuable upon
conversion  of all warrants and stock  options from the  computation  of diluted
earnings per share as the effect of all such securities is anti-dilutive for all
periods presented.  The shares excluded are approximately 294,000 and 26,000 for
fiscal 1998 and 1997, respectively.

<PAGE>


     Comprehensive Income
     --------------------

Effective  January 1, 1998, the Company  adopted the provisions of SFAS No. 130,
"Reporting  Comprehensive  Income"  ("SFAS No. 130").  SFAS No. 130  establishes
standards for  reporting  comprehensive  income and its  components in financial
statements.  Comprehensive  income,  as defined,  includes all changes in equity
(net assets) during a period from non-owner sources.  From its inception through
December  31, 1998,  the  comprehensive  income  (loss) has been the same as net
income (loss).

     Other Recent Accounting Pronouncements
     --------------------------------------

In March 1998, the American  Institute of Certified  Public  Accountants  issued
Statement of Position  ("SOP") No. 98-1,  "Accounting  for the Costs of Computer
Software  Developed or Obtained for Internal  Use," which  provides  guidance on
accounting  for the  cost of  such  software.  SOP  No.  98-1 is  effective  for
financial  statements  for fiscal years  beginning  after December 15, 1998. The
Company has not yet determined  the impact,  if any, of adopting SOP No. 98-1 in
fiscal 1999.

In April 1998,  the AICPA issued SOP 98-5,  "Reporting  on the Costs of Start-Up
Activities  ("SOP  98-5").  In  general,  SOP 98-5  requires  costs of  start-up
activities and organization  costs to be expensed as incurred and specifies that
initial application of SOP 98-5 should be reported as the cumulative effect of a
change in  accounting  principle.  The  provisions of SOP 98-5 are effective for
fiscal  years  beginning  after  December  15,  1998 and will be  adopted by the
Company  during the year ended  December  31,  1999.  The Company  believes  the
adoption  of  SOP  98-5  will  not  have a  material  impact  on  the  financial
statements.

In June  1998,  the  FASB  issued  SFAS  No.  133,  "Accounting  for  Derivative
Instruments and Hedging Activities" ("SFAS No. 133"). The Company is required to
adopt SFAS No. 133 in the year ended December 31, 2000. SFAS No. 133 establishes
methods  of  accounting  for  derivative   financial   instruments  and  hedging
activities related to those instruments as well as other hedging activities. The
Company  does not believe  adoption of SFAS No. 133 will have a material  impact
upon its financial statements.

     Reclassifications
     -----------------

Certain  prior  years'  balances  were  reclassified  to conform to current year
presentation.

(3) ACQUISITIONS
----------------

Effective  December 28,  1998,  the Company  acquired  100% of the stock of both
CarWizard and  LeaseSource  for a total of 250,000  shares of common stock.  The
combined  purchased price was valued by issuing $500,000 of the Company's common
stock and the assumption of $39,000 of net liabilities, resulting in goodwill of
$539,000 being recorded.  Included in the net liabilities assumed was $80,000 of
intangibles for acquired technology. The acquisition was accounted for under the
purchase  method  of  accounting,  and  accordingly  the  operating  results  of
CarWizard and LeaseSource  have been included in the  accompanying  consolidated
financial  statements from the effective date of the acquisitions.  The purchase
agreement includes an earn-out  provision for up to an additional  $1,000,000 of
purchase price, which is based on the success of Web site leads provided in 1999
and 2000.

<PAGE>


Effective July 31, 1997,  the Company  acquired 100% of the stock of TouchSource
by issuing  207,000  shares of the Company's  common stock.  The total  purchase
price was valued by  issuing  $776,000  of the  Company's  common  stock and the
assumption  of $83,000 of net  liabilities,  resulting  in  goodwill of $859,000
being  recorded.  The acquisition was accounted for under the purchase method of
accounting,  and  accordingly  the operating  results of  TouchSource  have been
included  in  the  accompanying   consolidated  financial  statements  from  the
effective date of the acquisition.  Subsequent to the acquisition,  technologies
developed more rapidly than expected, which has reduced the expected future cash
flows  associated  with the  TouchSource  technology.  Furthermore,  the Company
intends to integrate  the  TouchSource  technology  with its other  products and
market it primarily to the automotive industry,  which was not a market focus of
TouchSource. As such, the Company reevaluated the related goodwill, and recorded
an impairment  expense of $707,000 in fiscal 1997,  resulting in a remaining net
balance of  $80,000  as of  December  31,  1997.  This  remaining  goodwill  was
amortized completely in 1998.

Effective July 1, 1996, the Company acquired 100% of the stock of IPI by issuing
679,000  shares of the Company's  common stock and a $75,000 note  payable.  The
total  purchase  price was valued by issuing  $750,000 of the  Company's  common
stock and the assumption of $100,000 of net  liabilities,  resulting in goodwill
of $850,000 being recorded. The acquisition was accounted for under the purchase
method of accounting,  and  accordingly  the operating  results of IPI have been
included  in  the  accompanying   consolidated  financial  statements  from  the
effective  date of the  acquisition.  Subsequent to the  acquisition,  projected
future cash flows  associated  with the technology  previously  developed by IPI
declined due to rapidly  changing  technologies  and increased  competition  for
products  developed  with the IPI  technology.  In  addition,  during the fourth
quarter  of 1997,  after  the  introduction  of new  Internet  solutions  by the
Company,  management decided to focus the Company on its automotive solution. As
such,  the Company  reevaluated  the goodwill  related to this  acquisition  and
recorded  an  impairment  expense of  $598,000 in fiscal  1997,  resulting  in a
remaining  net  balance of $20,000  as of  December  31,  1997.  This  remaining
goodwill was amortized completely in 1998.

<PAGE>


The  following  table sets forth the  unaudited  condensed  pro forma  operating
results of the Company for the CarWizard and  LeaseSource,  and the  TouchSource
business  combinations,  as if each  transaction  occurred  on  January 1 of the
preceding year for each  acquisition.  Adjustments  are reflected for additional
amortization of goodwill and intangibles:

                                                   For the Years Ended
                                                        December 31,
                                                 -------------------------
                                                     1998         1997
                                                     ----         ----

     Revenues                                    $ 9,162,000   $ 6,407,000
                                                 ===========   ===========

     Net loss                                    $(4,142,000)  $(4,501,000)
                                                 ===========   ===========

     Basic and diluted loss per share            $     (1.08)  $     (1.42)
                                                 ===========   ===========

     Basic and diluted weighted-average common
         shares outstanding                        3,828,000     3,170,000
                                                 ===========   ===========


The condensed pro forma results are not necessarily indicative of the results of
operations had the  acquisitions  been  consummated on the earlier date, and may
not  necessarily  be  indicative  of  future  performance.  The  purchase  price
allocation for the CarWizard and LeaseSource  acquisition is preliminary and may
change  in the near  future  based  upon  completed  valuations  of  assets  and
liabilities acquired by the Company.

(4) NOTES PAYABLE
-----------------

Notes payable consist of the following as of December 31, 1998:

    Notes payable to VSI Holdings; interest at 9%, due in part
        in September 1998 and December 1998, secured by assets
        of the Company                                           $ 721,000

    Note payable; interest at 9%, due on October 18,
        1999, secured by assets of LeaseSource                     100,000
                                                                 ---------
                                                                   821,000
    Less- current portion                                         (821,000)
                                                                 ---------
    Long-term portion                                            $    --
                                                                 =========


In  September  and  December  1998,  the  Company  granted a total of 531,525 of
detachable warrants to VSI Holdings in connection with the above borrowing.  The
warrants were valued at $300,000,  using the Black-Scholes option pricing model,
and  accounted  for as a  discount  on the note.  The  discount  has been  fully
amortized into interest expense as of December 31, 1998.

<PAGE>


The above notes payable to VSI Holdings were in default as of yearend.  However,
on  January  13,  1999,  these  notes  were  converted  into  160,267  shares of
unregistered  common stock at a price of $4.50 per share. On March 22, 1999, the
Company entered into a settlement and release  agreement with VSI Holdings where
the 160,267  shares will be cancelled  and the Company will retire the notes and
accrued interest for cash of approximately $745,000 by April 5, 1999.

(5) CAPITAL LEASE OBLIGATIONS
-----------------------------

The Company has entered into several  capital leases for  equipment.  The leases
are for terms  ranging from 24 to 60 months,  expiring at various  times through
2001.  Interest on the Company's  capital lease  obligations is at rates ranging
from  9% to  21% at  December  31,  1998.  The  capital  lease  obligations  are
collateralized by the related equipment.

Equipment purchased under capital leases is included in the cost of property and
equipment.  The following is a summary of property and equipment purchased under
capital leases as of December 31, 1998:

                  Computer equipment               $ 247,000
                  Less- accumulated depreciation     (78,000)
                                                   ---------
                  Net book value                   $ 169,000
                                                   =========


As of December 31, 1998,  future minimum lease payments under  capitalized lease
obligations are as follows:

         Year ended December 31-
             1999                                          $  92,000
             2000                                             82,000
             2001                                             31,000
                                                          ----------
                                                             205,000
             Less- amounts representing interest            ( 37,000)
                                                          ----------
             Total obligation                                168,000
             Less- current portion                           (74,000)
                                                          ----------
             Long-term capital lease obligation           $   94,000
                                                           =========


Interest  expense  under such leases was $24,000 and $27,000 for the years ended
December 31, 1998 and 1997, respectively.

(6) INCOME TAXES
----------------

At December 31, 1998,  for income tax  purposes,  the Company has  approximately
$7.5 million of net operating  loss  carryforwards.  Such net  operating  losses
expire  between  the years  2011 to 2018.  Management  believes  that it is more
likely than not that the deferred tax assets will not be realized.  Accordingly,
a valuation allowance was recorded against the entire net deferred tax asset.

<PAGE>


The Tax Reform Act of 1986 contains provisions which may limit the net operating
loss  carryforwards  available  to be used in any given year if  certain  events
occur, including significant changes in ownership interests.

The provision (benefit) for income taxes consists of the following:

                                          1998            1997
                                          ----            ----

              Current:                 $      --      $      --

              Deferred:
                 Federal                (1,224,000)      (866,000)
                 State                    (189,000)      (134,000)
                 Valuation allowance     1,413,000      1,000,000
                                       -----------    -----------
                                       $      --      $      --
                                       ===========    ===========

The provision (benefit) for income taxes differs from the federal statutory rate
of 34% for the following reasons:

                                                             1998     1997
                                                             ----     ----

      Expected rate                                         (34.0)%  (34.0)%
      State taxes, net of federal deduction                  (3.2)    (2.2)
      Nondeductible goodwill amortization and impairment      0.9     12.8
      Valuation allowance                                    35.9     24.3
      Other                                                   0.4     (0.9)
                                                            -----    -----
                                                              0%       0%
                                                            =====    =====

The components of the net deferred  income tax asset at December 31, 1998 are as
follows:


               Deferred tax assets:
                 Net operating loss carryforwards   $ 2,801,000
                 Bad debt reserve                        46,000
                 Vacation accrual                        17,000
               Deferred tax liabilities:
                  Accumulated depreciation              (77,000)
                  Prepaids                               (7,000)
                                                    -----------
                                                      2,780,000
               Less valuation allowance              (2,780,000)
                                                    -----------
                                                    $      --
                                                    ===========

<PAGE>


(7) COMMITMENTS AND CONTINGENCIES
---------------------------------

     Operating Lease Obligations
     ---------------------------

The Company leases certain  facilities and equipment under operating leases that
expire at various  times through 2001.  Future  minimum lease  payments for such
operating leases are as follows as of December 31, 1998:

         Year ended December 31-
             1999                                  $204,000
             2000                                   191,000
             2001                                    79,000
                                                   --------
                                                   $474,000
                                                   ========


Rental  expense  related to these  leases was $125,000 and $97,000 for the years
ended December 31, 1998 and 1997, respectively.

     Litigation
     ----------

In the normal  course of  business,  the Company is subject to, and may become a
party to,  litigation.  There  are no  matters  currently  in  litigation  which
management  believes  will have a  material  impact on the  Company's  financial
position or results of operations.

(8) RELATED PARTY TRANSACTIONS
------------------------------

In  December  1998,  the  Company  entered  into  employment  agreements  with a
shareholder.  The  agreements  provide for payments  totaling  $150,000 per year
through 2000 and include  covenants not to compete during the term of employment
and for one year thereafter.

The Company entered into a service  agreement with a shareholder  that commenced
on August 1, 1996,  and was  subsequently  extended  through  February 1999. The
agreement  provides for payments of approximately  $5,000 per month plus options
to purchase 212,500 shares of the Company's common stock at $4.12 per share. The
options are exercisable from April 1999 to October 2001. During fiscal 1998, the
shareholder  exercised  69,000 of these  options.  The agreement also contains a
covenant  not to compete  during the term of the service  agreement  and for one
year thereafter.  During 1997, the Company loaned $60,000 to this shareholder at
5.5% interest and secured by the options  discussed  above. The note was paid in
full during 1998.

In April 1997,  the Company  entered into an additional  service  agreement with
this shareholder.  This agreement provides for additional payments of $5,000 per
month plus 2 1/2% of any capital raised as a result of the shareholder's efforts
in the form of warrants for the Company's  stock.  These warrants will be priced
at the  closing  price of the  Company's  stock on the  date of  closing  of any
transaction,  exercisable commencing six months after each grant and expire five
years  from  the  date of each  grant.  As a result  of this  agreement,  14,862
warrants are outstanding at December 31, 1998.

<PAGE>


In February 1998, the Company entered into an additional  service agreement with
this shareholder to provide financial and banking services.  For this agreement,
the shareholder received a consulting fee of 250,000 warrants to purchase common
stock at $3.50 per warrant. During fiscal 1998, the shareholder exercised 83,000
of these warrants.

In  July  1996,  the  Company  entered  into  employment   agreements  with  two
shareholders.  The agreements  provide for payments  totaling  $165,000 per year
through June 30, 1998 and include  covenants  not to compete  during the term of
employment and for one year thereafter.

(9) STOCKHOLDERS' EQUITY
------------------------

     Initial Public Offering
     -----------------------

In February  1997,  the Company  completed an initial  public stock  offering of
1,000,000 units  (comprised of 1,000,000 shares of common stock and warrants for
the purchase of 1,000,000  shares of common  stock).  Included in the  1,000,000
units were  245,000  units  offered by the  holders  of  unsecured  subordinated
convertible  promissory  notes.  The  offering  of the  755,000  units  provided
proceeds to the Company of $3,436,000, net of offering costs of $1,094,000. Each
warrant  allows the holder to purchase  one share of common stock at an exercise
price of $7.20 through February 2002. The warrants are redeemable by the Company
at $.05 per warrant  upon 30 days notice if the market price of the common stock
for 20 consecutive  trading days within the 30-day period preceding the date the
notice is given equals or exceeds  $8.40 (see Note 12). The Company also sold to
the underwriter at the close of the public offering underwriter's warrants, at a
price of $0.001 per warrant,  to purchase  100,000  shares of common stock.  The
underwriter's warrants are exercisable for four years beginning in February 1998
at $7.38 per share.

     Private Placement 1997
     ----------------------

During 1997 and 1998, the Company raised $2,193,000 in a private placement,  net
of offering costs of $482,000,  by issuing 594,500 units (comprised of one share
of common  stock and one  warrant) at $4.50 per unit.  Each  warrant  allows the
holder to purchase one share of common stock at an exercise price of $7.20 for a
period  extending  through February 10, 2002. The warrants are redeemable by the
Company  at $.05 per  warrant  upon 30 days  notice if the  market  price of the
common stock for 20 consecutive  trading days within the 30-day period preceding
the date the  notice is given  equals or exceeds  $8.40 (see Note 12).  Offering
costs associated with the private placement include underwriter  commissions and
non-accountable  expense  allowances  totaling  13%  of  proceeds,  as  well  as
placement  agent  warrants to purchase 10% of the units sold for five years from
the date of closing at $4.50 per unit. In addition,  the Company agreed to issue
any  broker  or  registered  agent  who  places  four  or more  placement  units
(consisting of 6,000 units or $27,000 each) one broker warrant for each $20 sold
at a price of $4.50. Accordingly, 118,849 of warrants were issued during 1998 to
brokers and registered  agents.  During 1997, the Company completed  closings on
this private  placement of $717,000  net of offering  costs of $132,000.  During
1998, the Company completed closings on this private placement of $1,476,000 net
of offering  costs of $350,000.  Additionally,  during 1998,  the Company issued
61,520 of  warrants  to brokers  or  registered  representatives  as part of the
offering cost.

<PAGE>


     Private Placement 1998
     ----------------------

In November 1998,  the Company  completed a private  placement  resulting in the
issuance  of  700,000  shares  at  $2.00  per  share.  This  offering  generated
$1,330,000 in proceeds net of offering costs of $70,000. No warrants were issued
in connection with this offering.

     Warrants
     --------

In connection  with the above equity  transactions,  the Company  issued warrant
units to  purchase  one share of the  Company's  common  stock.  For  accounting
purposes,  all warrants were valued utilizing the  Black-Scholes  option pricing
model,  assuming a volatility factor of 97%, risk free interest rate of 5.6% and
expected lives outstanding of 1.5 to 2 years. The following table summarizes the
warrants outstanding as of December 31, 1998:

                                 Exercise                           Remaining
  Warrants       Units            Price            Value        Contractual Life
  --------       -----            -----            -----        ----------------

      A        2,043,626      $7.20 - $7.38      $1,723,000       Called 2/5/99
      B           14,862          $4.50              57,000         4.25 years
      C          166,500          $3.50             329,000         4.25 years
      D           61,520          $4.50             164,000         4.25 years
      E          118,849          $4.50             318,000         4.25 years
      F          531,525      $4.50 - $6.50         300,000     One year or less
               ---------                         ----------
               2,936,882                         $2,891,000
               =========                          =========

     Stock Option Plan
     -----------------

The Company  adopted the Stock Option Plan (the "Plan")  under which the Company
is authorized to grant incentive and  non-qualified  stock options to acquire up
to 1,000,000  shares of the Company's common stock to employees and directors of
the Company.  On February 15, 1999, the authorized  stock options were increased
to 2,000,000 as approved by the board of directors. Under the Plan, the exercise
price per share of a non-qualified stock option must be equal to at least 50% of
the fair market value of the common stock on the date of grant, and the exercise
price per share of an incentive stock option must equal the fair market value of
the common stock on the date of grant.  Options  granted vest over various terms
with a maximum  vesting  period of five years and  expire  after a maximum of 10
years.

<PAGE>


The  following  table  summarizes  the Plan at December  31, 1998 and 1997,  and
activity during the years then ended:


                                                 1998                1997
                                         -------------------    ----------------
                                                    Weighted            Weighted
                                                    Average             Average
                                                    Exercise            Exercise
                                          Shares      Price     Shares   Price
                                          ------      -----     ------   -----



Outstanding, beginning of year             297,000    $4.58       --     $--
Granted                                  1,390,000     4.17    297,000    4.58
Forfeited or canceled                     (150,000)    4.43       --        --
Exercised                                  (69,000)    4.12       --        --
                                        ----------    -----   --------   -----
Outstanding, end of year                 1,468,000    $4.23    297,000   $4.58
                                        ==========    =====   ========   =====

Exercisable, end of year                   263,000    $4.45       --     $--
                                        ==========    =====   ========   =====

Weighted average fair value of
    options granted during the year                   $2.20              $3.42
                                                      =====              =====


The status of stock options  outstanding  and  exercisable  under the Plan as of
December 31, 1998 is as follows:

                      Stock Options Outstanding        Stock Options Exercisable
                ----------------------------------------------------------------
                              Weighted 
                               Average                                  Weighted
   Range of                   Remaining      Weighted                   Average
   Exercise      Number of   Contractual      Average       Number of   Exercise
    Prices        Shares        Life       Exercise Price    Shares      Price
    ------        ------        ----       --------------    ------      -----


$2.34 - $3.00     452,000       4.9           $2.93            --        $  --
$3.56 - $5.06     496,000       4.8            4.08         183,000       3.88
$5.44 - $5.88     520,000       5.9            5.49          80,000       5.75
                ---------       ---           -----         ------       -----
                1,468,000       5.2           $4.23         263,000      $4.45
                =========       ===           =====         =======      =====


<PAGE>
 

     Pro Forma Fair Value Disclosures
     --------------------------------

The fair value of each option grant is calculated on the date of grant using the
Black-Scholes   option  pricing  model  with  the  following   weighted  average
assumptions:

                                                  Years Ended
                                                  December 31,
                                            ------------------------
                                              1998           1997
                                              ----           ----

         Risk-free interest rate                 5.0%           5.5%
         Expected dividend yield                   0%             0%
         Expected lives outstanding         4.0 years      4.4 years
         Expected volatility                      76%           104%


Cumulative  compensation  costs  recognized in pro forma net income or loss with
respect  to  options  that are  forfeited  prior to vesting  are  adjusted  as a
reduction of pro forma compensation expense in the period of forfeiture.

Had compensation  cost for the Plan been determined based upon the fair value on
the date of grant,  the  Company's  net loss  would have been  increased  to the
following pro forma amounts for the years ended December 31, 1998 and 1997:

                                                  1998             1997
                                                  ----             ----
   Net loss:
                                As reported   $ (3,933,000)   $  (4,107,000)
                                              ============    =============
                                Pro forma     $ (5,569,000)   $  (4,227,000)
                                              ============    =============

   Basic and diluted net loss per share:
                                As reported   $      (1.10)   $       (1.47)
                                              ============    =============
                                Pro forma     $      (1.56)   $       (1.51)
                                              ============    =============


(10) SEGMENT REPORTING
----------------------

In June 1997,  the FASB issued SFAS No. 131,  "Disclosures  about Segments of an
Enterprise  and Related  Information"  ("SFAS No.  131").  SFAS No. 131 requires
disclosure  of  operating  segments,  which as  defined,  are  components  of an
enterprise  about which  separate  financial  information  is available  that is
evaluated  regularly by the chief  operating  decision  maker in deciding how to
allocate resources and in assessing performance.

The  Company  operates  in  three  different  segments:   NetSolutions,   Online
Automotive Solutions  ("Automotive"),  and Product Distribution.  Management has
chosen to organize the Company  around these  segments  based on  differences in
products and services.

<PAGE>



NetSolutions  provides custom  solutions,  including the  architecture,  design,
development and  integration of high tech  solutions,  utilizing Web technology.
Automotive provides total online automotive  solutions through its Web sites, in
addition to providing custom solutions to companies in or with  relationships in
the  automotive  industry.   Product   Distribution   provides  the  resale  and
configuration  of  third  party  software  and  hardware  components,  graphical
printers and supplies.

Segment operations are measured  consistent with the accounting policies used in
these consolidated financial statements.

The following provides information on the Company's segments:

<TABLE>
<CAPTION>

                                                    For the Year Ended December 31, 1998
                                      ----------------------------------------------------------------
                                                               (In thousands)

                                         Net-                       Product
                                      Solutions    Automotive    Distribution    Corporate       Total
                                      ---------    ----------    ------------    ---------       -----
<S>                                    <C>          <C>            <C>            <C>           <C>    
Revenues from external
   customers                           $ 5,443      $   939        $ 2,173        $  --         $ 8,555
                                       =======      =======        =======        =======       =======

(Loss) income from operations          $(1,182)     $(2,151)       $   137        $  (353)(1)   $(3,549)
                                       =======      =======        =======        =======       =======

Identifiable assets                    $ 1,607      $   987        $   640        $ 2,031(2)    $ 5,265
                                       =======      =======        =======        =======       =======

</TABLE>
<TABLE>
<CAPTION>

                                                     For the Year Ended December 31, 1997
                                      --------------------------------------------------------------------
                                                                 (In thousands)

                                        Net-                          Product
                                      Solutions      Automotive     Distribution    Corporate       Total
                                      ---------      ----------     ------------    ---------       -----
<S>                                    <C>            <C>             <C>            <C>           <C>    
Revenues from external
   customers                           $ 2,359        $   223         $ 3,426        $  --         $ 6,008
                                       =======        =======         =======        =======       =======

(Loss) income from operations          $(2,493)(3)    $(1,268)        $   135        $  (257)(1)   $(3,883)
                                       =======        =======         =======        =======       =======


(1)  Corporate loss from operations represents depreciation expense.

(2)  Corporate  assets  are  those  that  are  not  directly  identifiable  to a
     particular  segment  and  includes  cash,  restricted  cash,  property  and
     equipment and prepaids and other assets.

(3)  Included  in  NetSolutions  loss  from  operations  in  fiscal  1997 is the
     impairment of goodwill for $1,305,000.

</TABLE>

<PAGE>


(11) DEFINED CONTRIBUTION PLAN
------------------------------

The  Company  has a 401(k)  profit  sharing  plan (the  "401K  Plan").  Eligible
employees  may make  voluntary  contributions  to the 401K  Plan.  The amount of
employee  contributions is limited as specified in the Plan. The Company may, at
its discretion, make additional contributions to the 401K Plan. The Company made
no contributions in 1998 or 1997.

(12) SUBSEQUENT EVENT
---------------------

On February 12, 1999, the Company issued notice of a call regarding 2,043,626 of
redeemable  warrants to purchase  common  stock.  As discussed  above in Note 9,
these  warrants are  redeemable by the Company at $0.05 per warrant upon 30 days
notice if the market price of the common stock for 20  consecutive  trading days
within  the 30 day  period  preceding  the date the  notice  is given  equals or
exceeds $8.40.  Each warrant could be exercised during the notice period for one
common share at a price of $7.20 per share. The exercise period for the warrants
expired on March 16,  1999 and as of the close of  trading,  1,920,940  warrants
were  exercised for common stock  generating  approximately  $13,808,000  of net
proceeds to the Company.


<PAGE>


ITEM  8.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE

     On March 1, 1999, Navidec, Inc. (the "Company") engaged Arthur Andersen LLP
to replace Hein +  Associates,  LLP as the Company's  independent  accountant to
audit the Company's  financial  statements for the year ended December 31, 1998.
Hein + Associates,  LLP was dismissed as the Company's independent accountant on
the same date. The Audit Committee of the Company's Board of Directors  approved
the change in the Company's independent accountant.

     The independent  auditor's report of Hein + Associates,  LLP dated March 5,
1998,  for the Company's  financial  statements  for the year ended December 31,
1997, did not contain an adverse opinion or a disclaimer of opinion, and was not
modified as to uncertainty, audit scope, or accounting principles.

     During the  Company's  two most recent fiscal years and through the date of
the  dismissal  of  Hein +  Associates,  LLP,  the  Company  did  not  have  any
disagreements with Hein + Associates, LLP on any matter of accounting principles
or practices, financial statement disclosure, or auditing scope or procedure.

PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLAINCE
WITH SECTION 16(a) OF THE EXCHANGE ACT

                                   MANAGEMENT

Directors and Officers

     The  following  table sets forth the name,  age and position of each of the
Company's officers and directors as of the date of this report. 

                                                                    Period from 
Name                         Age      Position                      Which Served
----                         ---      --------                      ------------

Ralph Armijo                 45       President, Chief Executive          7/93
                                      Officer and Director

Patrick R. Mawhinney         35       Chief Financial Officer,            7/96
                                      Treasurer and Director

Harold Anderson II           34       Vice President of Automotive        7/96

Kenneth P. Bero              44       Vice President of Sales            12/97

Michael Kranitz              38       Vice President of Strategic        12/98
                                      Development and Director

Andrew Davis                 45       Director                            4/97

Lloyd G. Chavez, Jr.         48       Director                            4/97

Gerald A. Marroney           46       Director                            4/97

James Hosch                  45       Director                            6/98

<PAGE>



     The officers  are elected by the Board of  Directors  at the first  meeting
after each annual  meeting of the Company's  shareholders  and hold office until
their successors are duly elected and qualified in accordance with the Company's
Bylaws.

     RALPH ARMIJO has served as the Company's President, Chief Executive Officer
and as one of the Company's  directors since its inception in 1993. From 1981 to
1993, Mr. Armijo was employed by Tektronix, Inc., a large communications company
which  also   produced   testing   and   measuring   equipment.   Mr.   Armijo's
responsibilities at Tektronix  progressed from sales manager, to branch manager,
to district manager and, ultimately,  to Western Regional Manager, a position he
held for five years.  In that position,  he was  responsible  for a $100 million
budget in sales,  graphics,  technical  support and  administration,  and he was
responsible  for  developing  new  distribution  channels,   including  reseller
agreements. From 1976 to 1981, Mr. Armijo was employed by IBM Corporation, where
he  sold  computerized  accounting  and  financial  applications  to  small  and
medium-sized businesses.  Mr. Armijo received his B.A. from Colorado College and
his M.B.A. from the University of California, Los Angeles.

     PATRICK R. MAWHINNEY  served as the President of Interactive  Planet,  Inc.
from its  inception  until its merger with the Company in July 1996.  Since that
time he has served as the Company's  Chief Financial  Officer,  Treasurer and as
one of the Company's directors. From May 1995 until May 1996, Mr. Mawhinney also
served as a  financial/accounting  consultant  for  MIS\Sunguard,  a provider of
accounting and investment  software.  Mr. Mawhinney was employed as an Assistant
Vice  President of The Bank of Cherry Creek from November 1993 to May 1995; as a
Vice  President of Vectra Banking  Corporation  from June 1989 to November 1993;
and as Operations  Coordinator for Zions Bancorporation from August 1986 to June
1989. He received his B.S. from Colorado State University.

     MICHAEL  KRANITZ has been one of the Company's  directors and the Company's
Vice President of Strategic  Development  since December 1998. From October 1997
until December 1998, Mr. Kranitz was the CEO and President of LeaseSource,  Inc.
From January 1997 until October 1997, Mr. Kranitz worked with a computer company
primarily on the development of the  intellectual  property used by LeaseSource,
Inc.  and in  October  1997,  Mr.  Kranitz  acquired  from  that  company  those
intellectual  property rights.  From 1994 until December 1996, Mr. Kranitz was a
partner with the law firm of Benesch, Friedlander, Coplan & Aronoff, LLP located
in  Cleveland,  Ohio.  Mr.  Kranitz is also the author of Look Before You Lease:
Secrets to Smart Vehicle  Leasing.  Mr. Kranitz  received a BS in Economics with
high  honors  from the  University  of Florida in 1982 and a JD from  Vanderbilt
School of Law in 1985.

     HAROLD  ANDERSON II served as Vice  President of Business  Development  for
Interactive  Planet,  Inc.  from July 1995 until its merger  with the Company in
July 1996. He served as the  Company's  Vice  President of Business  Development
from July 1996 until June 1997.  Since June 1997 Mr.  Anderson has served as the
Company's Vice  President of  Automotive.  From September 1986 to July 1995, Mr.
Anderson was  employed by U.S.  West Advance  Technologies  and  Communications,
where he worked  in  Distributed  Technology  Platform  Security,  served as the
Technical Project Manager, and later acted as a Product Marketing Specialist for
the U.S. West Internet Services  Provider/On-line  Service Project. Mr. Anderson
received  his B.S.  degree in Business  Administration  from the  University  of
Arizona in 1986 and a Masters  degree in Computer  Information  Systems from the
University of Denver in 1991.

     KENNETH P. BERO has served as the Company's  Vice  President of Sales since
December 1997.  From July 1996 to December 1997, Mr. Bero was Director of Sales,
SGI Business  Group at Access  Graphics,  a wholesale  distributor of UNIX based
hardware and software products.  From September 1989 to June 1996, Mr. Bero held
various  sales and sales  management  positions  at  Tektronix,  Inc.  including
Business Development Manager,  Major Account Group Manager and National Reseller
Group Manager for the Display Products Division. Mr. Bero received his B.A. from
Bates College and his M.B.A. from Northeastern University.

     ANDREW DAVIS has been one of the Company's  directors  since December 1997.
Mr.  Davis has served as  Director of Global &  Strategic  Accounts  for InFocus
Systems.  Since  December 1997, Mr. Davis served as the Company's Vice President
of Sales and Marketing  from May 1996 until  December 1997. He became one of the
Company's  directors in April 1997. From January 1994 to May 1996, Mr. Davis was
manager of wholesale  distribution  at InFocus  Systems,  a manufacturer of high
resolution  projection  systems.  From September 1982 to January 1994, Mr. Davis
held various sales and marketing positions in Tektronix, Inc. including Director
of Marketing for the Interactive  Technologies  Division. Mr. Davis attended the
University of Denver from 1971 to 1974 where he studied Business  Management and
Marketing.

<PAGE>


     LLOYD G. CHAVEZ,  JR. became one of the Company's  directors in April 1997.
He has been a director of the Burt group of  automobile  dealerships  in Denver,
Colorado  since 1988 and Director of Automotive  Markets of the Burt group since
1994.  From  1983  to  1994,  Mr.  Chavez  was  Vice  President  of  Fort  Dodge
Laboratories,  a subsidiary of American Home Products,  where he was responsible
for  business  acquisitions,  new  products and  technologies,  joint  ventures,
intellectual property acquisitions, strategic planning, market research and sale
projections.  From  1982 to 1983,  Mr.  Chavez  was Vice  President  of  General
Genetics Corporation,  where he was responsible for management of biological and
pharmaceutical  research  and  development.  Mr.  Chavez  received  his B.A.  in
Molecular,  Cellular,  Development Biology from the University of Colorado,  his
M.A. in Old Testament  Studies from Denver  Seminary,  his Ph.D. in Microbiology
and Immunology from the University of Virginia,  and was a post-doctoral  Fellow
in Chemistry at Cornell University.

     GERALD A. MARRONEY became one of the Company's  directors in April 1997. He
has  served  as a State of  Colorado  District  Court  Judge in  Pueblo  County,
Colorado since 1990. Prior to such time he was a practicing  attorney in Pueblo,
Colorado.  Mr.  Marroney  received his B.S. in Political  Science from  Southern
Colorado  State College in 1973 and his J.D.  from  Oklahoma City  University in
1976.

     JAMES HOSCH has been one of the Company's  directors since June 1998. Since
November  1998, Mr. Hosch has been an  independent  representative  for Bathgate
McColley Capital Group LLC, a NASD registered broker dealer. From September 1995
until  November1998  Mr. Hosch was a Senior Vice  President of Joseph  Charles &
Associates,  Inc.,  a NASD  registered  broker  dealer.  From January 1993 until
September  1995, he was Executive Vice President of Cohig & Associates,  Inc., a
NASD registered broker dealer. From 1989 until January 1993, he was President of
Kober Corporation, a publicly traded real estate firm.

     None of the  Company's  directors or executive  officers are related to any
other director or executive officer. None of the Company's officers or directors
hold any directorships in any other public company.

Compliance with Section 16(a) of the Exchange Act

Under U.S.  securities laws,  directors,  certain executive officers and persons
holding more than 10 percent of Navidec's common stock must report their initial
ownership of the common stock and any changes in that  ownership to the SEC. The
SEC has  designated  specific  due dates  for those  reports  and  Navidec  must
identify in this report those  persons who did not file those  reports when due.
Based solely on Navidec's review of copies of the reports filed with the SEC and
written  representations  of  its  directors  and  executive  officers,  Navidec
believes  that all persons  subject to reporting  filed the required  reports on
time in 1998.

<PAGE>

ITEM 10.  EXECUTIVE COMPENSATION

                             EXECUTIVE COMPENSATION

Summary Compensation Table

     The  following  table  sets  forth  the  annual  compensation  paid  to the
Company's  Chief  Executive  Officer  and one  other  executive  officer  of the
Company,  for the last three  fiscal years and to one  executive  officer of the
Company during 1998. No other executive officer has received annual compensation
in excess of $100,000.

<TABLE>
<CAPTION>

                                                                                Long Term Compensation

                                        Annual Compensation                         Awards                  Payouts
------------------------------------------------------------------------------------------------------------------------------------

                                                              Other                         
Name and Principal Position                                   Annual       Restricted       Securities                    All Other
                                                             Compen-         Stock          Underlying        LTIP         Compen-
                     Year      Salary ($)      Bonus ($)     sation ($)     Award(s)      Options/SARs(#)   Payouts ($)   sation ($)
------------------------------------------------------------------------------------------------------------------------------------

<S>                  <C>        <C>               <C>           <C>           <C>            <C>     <C>       <C>         <C>      
Ralph Armijo, CEO    1998       $172,133          $0            $0            $0             146,000           $0          $9,600(2)
                                                                                               (1)
                     1997       $156,141        $12,869         $0            $0                0              $0          $9,600(2)

                     1996       $124,384          $0            $0            $0                0              $0          $9,000(2)

Hal Anderson,
VP Automotive        1998       $ 89,708        $20,000         $0            $0              50,000           $0             $0
                                                                                               (3)
                     1997       $ 80,000        $19,958         $0            $0              22,000           $0             $0
                                                                                               (3)
                     1996       $ 39,666          $0            $0            $0                0              $0             $0

Ken Bero,                                                                                      
VP Sales(5)          1998       $104,706        $25,000         $0            $0             125,000           $0             $0
                                                                                               (4)

</TABLE>


(1)  The number indicated  represents the number of stock options granted to Mr.
     Armijo during 1998.

(2)  Consists of an automobile allowance.

(3)  The number indicated  represents the number of stock options granted to Mr.
     Anderson during 1998 and 1997.

(4)  The number indicated  represents the number of stock options granted to Mr.
     Bero during 1998.

(5)  Mr. Bero  commenced  working with the Company in December  1997 but did not
     receive any compensation from the Company until after January 1, 1998.

<PAGE>


Option/SAR Grants in Last Fiscal Year

     The following table sets forth information  concerning individual grants of
stock  options  made during the year ended  December  31, 1998 to the  Company's
Chief Executive Officer and two other named executive officers.


                                Individual Grants
--------------------------------------------------------------------------------

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

Ralph Armijo     146,000           12%                $3.00             2/13/03
Ken Bero          75,000            6%                $3.00             2/13/02
Ken Bero          50,000            4%                $3.00            10/31/05
Hal Anderson      50,000            6%                $2.44             9/11/03


Aggregate Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values

     The  following  table sets forth  information  concerning  each exercise of
stock options  during the year ended  December 31, 1998 by the  Company's  Chief
Executive  Officer  and two  other  named  executive  officers,  and the  fiscal
year-end value of unexercised options held by him.
                                                                    
                                              Number of              
                                              Securities       Value of    
                                              Underlying       Unexercised
                                              Unexercised      In-the-Money   
                                              Options/SARs     Options/SARs
                                              at FY-End (#)    at FY-End ($)

                Shares Acquired    Value      Exercisable/     Exercisable/
Name            on Exercise (#)    Realized   Unexercisable    Unexercisable 
--------------------------------------------------------------------------------

Ralph Armijo     0 (1)             0          146,000/0        $301,125/$0
Ken Bero         0 (1)             0          50,000/75,000    $103,125/$154,687
Hal Anderson     0 (1)             0          22,000/50,000    $0/$131,125



(1)  Messrs. Armijo, Bero and Anderson did not exercise any of the stock options
     they held during 1998.

The value  indicated was  calculated by determining  the difference  between the
fair market value of the Company's common stock underlying the stock options and
the exercise price of those options at December 31, 1998.

Director Compensation

None of the Company's directors received any compensation during the most recent
fiscal year for serving in their position as a director. Members of the Board of
Directors  may receive stock  options  issued under the  Company's  stock option
plan.

Employment  Agreements  and  Termination  of  Employment  and  Change-in-Control
Arrangements

<PAGE>


The Company  entered an Employment  Agreement  with Mr. Armijo that is effective
May 1,  1998.  The  term of that  agreement  is for one  year  and it may  renew
automatically  for two  additional  one-year  periods  provided that neither Mr.
Armijo nor the Company  provide the other with notice of its intent to not renew
the agreement at least thirty days before the anniversary date of the agreement.
Mr.  Armijo's  current  annual  salary  under the  agreement is $150,000 and his
salary is reviewed annually. The agreement also provides that Mr. Armijo will be
paid an annual bonus.  If Mr. Armijo remains  employed with the Company  through
the first  anniversary date of the agreement,  the Company must pay Mr. Armijo a
special  bonus  (the  "Special  Bonus")  in the event that there is a "Change in
Control" of the Company.  "Change in Control" is defined in the  agreement.  The
Special Bonus will be equal to Mr. Armijo's then effective  annual salary,  plus
the greater of

     *    the  annual  bonus  paid or payable  for the most  recently  completed
          fiscal year during the term of the agreement, and
     *    the average of the bonuses paid or payable to Mr. Armijo in respect of
          1998, 1997 and 1996.

The higher of the two numbers is referred to as the "Highest  Annual Bonus." The
agreement  provides  that if the Company  terminates  Mr.  Armijo other than for
"Cause" or "Disability" or Mr. Armijo terminates his employment either for "Good
Reason" or without any reason during a thirty day period  immediately  following
May 1, 1999, the Company must pay Mr. Armijo a lump sum cash payment equal to

     *    his annual salary through the date of termination,
     *    the Highest Annual Bonus through the date of termination,
     *    the Special Bonus, if any, and
     *    an amount equal to the product of two times his then effective  annual
          salary, the Highest Annual Bonus and the Special Bonus, if any.

The Company  may  terminate  Mr.  Armijo's  employment  for "Cause" and shall be
obligated  only  to pay  Mr.  Armijo  his  annual  salary  through  the  date of
termination.

401(k) Plan

The  Company has a 401(k)  profit  sharing  plan.  Eligible  employees  may make
voluntary  contributions  to the plan. The amount of employee  contributions  is
limited as  specified  in the plan.  The Company  may, at its  discretion,  make
additional contributions to the plan. The Company did not make any contributions
in 1998.

Stock Option Plan

The Company's  officers and directors may receive stock options issued under the
Company's stock option plan.

<PAGE>


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

SECURITY OWNERSHIP OF CERTAIN OWNERS AND MANAGEMENT

The following table sets forth  information as of April 9, 1999,  concerning the
beneficial   ownership  of  the  Company's  common  stock  by  each  person  who
beneficially  owns more than five  percent of the common  stock;  by each of the
Company's  executive  officers and directors;  and by all executive officers and
directors as a group.

                                              COMMON STOCK       PERCENT OF
     NAME AND ADDRESS OF                      BENEFICIALLY       BENEFICIAL
     BENEFICIAL OWNER(2)                          OWNED          OWNERSHIP
     -------------------                          -----          ---------

     Ralph Armijo...........................   978,659(3)          12.8%

     Patrick R. Mawhinney...................   206,357(3)           2.7%

     Harold Anderson II.....................    83,073(3)           1.1%

     Kenneth P. Bero........................    50,000(3)           (1)

     Michael Kranitz........................   333,334(3)(6)        4.4%

     Andrew Davis...........................    21,250(3)           (1)

     Lloyd G. Chavez, Jr....................    14,250(3)(4)        (1)

     Gerald A. Marroney.....................    10,000(3)           (1)

     James Hosch............................    51,096(5)           (1)

     All directors and executive officers as
        a Group (Nine Persons).............. 1,748,019             22.2%


<PAGE>


Rule 13d-3 under the Securities Exchange Act of 1934, provides the determination
of beneficial  owners of securities.  That rule includes as beneficial owners of
securities,  any person who directly or indirectly has, or shares,  voting power
and/or  investment  power  with  respect  to such  securities.  Rule  13d-3 also
includes  as a  beneficial  owner of a security  any person who has the right to
acquire  beneficial  ownership of such security within sixty days through means,
including,  the exercise of any option, warrant or conversion of a security. Any
securities  not  outstanding  which are  subject to such  options,  warrants  or
conversion  privileges are deemed to be outstanding for the purpose of computing
the  percentage  of  outstanding  securities  of the class owned by such person.
Those  securities are not deemed to be outstanding  for the purpose of computing
the percentage of the class by any other person.

(1)  Less than one percent.

(2)  Except as  indicated  herein,  the address for each person is 14  Inverness
     Drive, Building F, Suite 116, Englewood, Colorado 80112.

(3)  The number of shares  indicated  includes shares of common stock underlying
     options that are  currently  exercisable,  which are held by the  following
     persons in the amounts  indicated:  Mr.  Armijo  (146,000);  Mr.  Mawhinney
     (57,000); Mr. Anderson (22,000); Mr. Davis (10,000); Mr. Marroney (10,000);
     Mr. Chavez (10,000); and Mr. Kranitz (83,334).

(4)  LGC Management  owns 4,250 shares of common stock.  Mr. Chavez is President
     of LGC Management and may be deemed the beneficial owner of such shares.

(5)  The  number of shares  indicated  includes  50,500  shares of common  stock
     underlying  options  and  warrants  held by Mr.  Hosch  that are  currently
     exercisable.

(6)  The number of shares indicated includes 61,250 shares of common stock owned
     by  Mr.  Kranitz's  wife,  Abby  L.  Kranitz.  Mr.  Kranitz  is  deemed  to
     beneficially own the shares held by Ms. Kranitz.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In October 1997, Pat Mawhinney made a $30,000 loan to the Company,  evidenced by
a promissory note dated October 5, 1997,  which did not bear interest.  The loan
was repaid in November 1997.

In  October  1997,  Ralph  Armijo  guaranteed  a line of credit in the amount of
$750,000 extended to the Company by USA Funding,  Dallas, Texas. No compensation
was paid by the Company for such personal guarantee.

In March 1998, Pat Mawhinney made a $40,000 loan to the Company,  evidenced by a
promissory note dated March 13, 1998, which did not bear interest.  The loan was
repaid on March 31, 1998.

In October 1998, Pat Mawhinney made a $45,000 loan to the Company,  evidenced by
a promissory note dated October 2, 1998,  which did not bear interest.  The loan
was repaid on November 25, 1998.

James Hosch,  a former  Executive Vice President of Joseph Charles & Associates,
Inc., has been one of the Company's directors since June, 1998. Joseph Charles &
Associates  received  $143,750  in  commissions  and  $35,938 in expenses as the
placement agent for a private placement of an aggregate of $1,437,500  principal
amount of the Company's 10% Unsecured Subordinated Convertible Promissory Notes.
The notes were sold from August  1996 until  October  18,  1996.  The notes were
automatically converted into an aggregate of 349,126 units in our initial public
offering of securities.

Joseph  Charles & Associates  was the  managing  underwriter  for the  Company's
initial public offering of securities.  The Company  offered  1,000,000 units in
that  offering  consisting  of one share of the  Company's  Common Stock and one
common  stock  purchase  warrant.  Of the  1,000,000  shares of common stock and
1,000,000 warrants included in the offering,  755,000 shares of common stock and
755,000 warrants were sold by the Company and 245,000 units were sold by certain
of the Company's  shareholders.  The units were sold on a firm commitment  basis
and Joseph Charles & Associates  received a 10% discount on the public  offering
price of $6.00 per unit.  Joseph Charles & Associates  received  pursuant to the
underwriting  agreement for that offering a  non-accountable  expense  allowance
equal to 3% of the total proceeds of the offering, or $180,000. The Company also
agreed to retain  Joseph  Charles & Associates as a financial  consultant  for a
period of two years,  commencing  on  February  10, 1997 for a fee of $3,000 per
month.  The  Company  agreed  under the  underwriting  agreement  to sell Joseph
Charles &  Associates  for $100,  options to  purchase  up to 100,000  shares of
common stock. Those options are exercisable for four years beginning on February
10, 1998 and at an exercise price of $7.38 per share.

<PAGE>


The Company  also  entered  into an  engagement  letter  with  Joseph  Charles &
Associates to assist the Company to complete an offering of up to 600,000 units,
with each unit  consisting  of one share of common  stock and one  warrant.  The
offering  price of the  units  was $4.50  per  unit.  In  consideration  for its
services,  the  Company  agreed  to pay  Joseph  Charles  &  Associates  a sales
commission  of  10% of the  funds  raised  in the  offering.  Joseph  Charles  &
Associates  also was  entitled to purchase a number of units equal to 10% of the
units sold in the  offering  for a period of five years from the date of closing
of the  offering  at a  purchase  price of $4.50  per  unit.  Joseph  Charles  &
Associates also was entitled to receive a 3%  non-accountable  expense allowance
based on all funds raised in the offering. That offering was closed during April
1998 with an aggregate of 594,500 units being sold to investors and 59,450 units
being sold to Joseph Charles & Associates and its designees.

On February 16, 1998 the Company entered into an agreement with Joseph Charles &
Associates to engage it on an exclusive basis to complete the private  placement
that was  started in  November  1997 and the  Company  issued a total of 250,000
options to Joseph  Charles & Associates  and its  designees.  Those  options are
exercisable at $3.50 per share and expire on February 15, 2003.

The Company entered into an agreement with Bathgate  McColley  Capital Group LLC
on December 21, 1998, pursuant to which Bathgate McColley will provide financial
and investment  banking services to the Company on a non-exclusive  basis. James
Hosch, a director of the Company, is an independent  representative for Bathgate
McColley.

On December 28, 1998, the Company issued a total of 250,000 shares of its common
stock to the  shareholders of CarWizard,  Inc. and LeaseSource  Online,  Inc. in
exchange for all of their ownership  interests of those  companies.  The Company
also issued  options to purchase  83,334  shares of its common  stock to Michael
Kranitz as part of that transaction.  Those options are exercisable at $5.08 per
share for a five year period commencing on December 28, 1998. Mr. Kranitz was an
executive officer and principal owner of LeaseSource Online, Inc. and CarWizard,
Inc.

Although some of the foregoing transactions were determined without arm's length
negotiations  and involved  conflicts of interest  between the  interests of the
related  parties  and the  Company,  the  Company  believes  that  all of  these
transactions  were entered  into on terms no less  favorable to the Company than
could have been obtained from independent third parties.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits

Exhibit Number                      Description
--------------                      -----------

    3.1        Amended and Restated  Articles of  Incorporation  of ACI Systems,
               Inc.*
    3.2        Amended and Restated Bylaws of ACI Systems, Inc.*
    3.3        Articles of Merger and Agreement  and Plan of Merger  Between ACI
               Systems, Inc. and Interactive Planet, Inc.*
    4.1        Form of Certificate for Common Stock of NAVIDEC, Inc.*
   10.1        Form of Confidentiality and Non-Disclosure  Agreement between the
               Company and its significant technical employees.*

<PAGE>

Exhibit Number                      Description
--------------                      -----------

   10.2        Lease Agreement dated February 23, 1996 for the premises  located
               at 14 Inverness Dr., Building F, Suite 116,  Englewood,  Colorado
               80112.*
   10.3        Netscape   Commercial   Applications   Partner   Program  (NCAPP)
               Guidelines.*
   10.4        Form of Promissory  Note in the principal  amount of $70,000 from
               NAVIDEC,  Inc.  payable to Trust  Company of America  FBO Michael
               Hendricks  SEP IRA and  guaranteed  by Ralph  Armijo and  Patrick
               Mawhinney.*
   10.5        Wheels license agreement with the Denver Post.**
   10.6        Wheels license agreement with KOIN TV.**
   10.7        The Company's stock option plan.***
   10.8        Agreement to provide services with John McKowen.****
   10.9        Engagement  letter dated  October 27, 1997 with Joseph  Charles &
               Associates.****
   10.10       Engagement  Agreement dated February 16, 1998 with Joseph Charles
               & Associates.****
   10.11       Employment Agreement between NAVIDEC, Inc. and Ralph Armijo dated
               May 1, 1998.****
   10.12       Employment Agreement between NAVIDEC, Inc. and Hal Anderson dated
               May 1, 1998.****
   10.13       Employment Agreement between NAVIDEC,  Inc. and Patrick Mawhinney
               dated May 1, 1998.****
   10.14       Employment Agreement between NAVIDEC, Inc. and Kenneth Bero dated
               December 15, 1997.****
   10.15       Agreement between the Company and Bathgate McColley Capital Group
               LLC dated December 21, 1998. Filed herewith. 
   10.16       Agreement  between the Company and Verio Inc.  dated  January 23,
               1999. Filed herewith.
   10.17       Agreement by and between the Company,  LeaseSource  Online,  Inc.
               and CarWizard, Inc. Filed herewith.
   23.1        Consent of Arthur Andersen LLP.  Filed herewith.
   27.1        Financial Data Schedule.  Filed herewith.

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

*    Incorporated  by reference from the like numbered  exhibit to the Company's
     Registration  Statement on Form SB-2 declared  effective  February 10, 1997
     (SEC File Number 333-14497).
**   Incorporated  by reference from the Company's  Annual Report on Form 10-KSB
     for the year ended December 31, 1997.
***  Incorporated  by reference from the Company's  preliminary  proxy statement
     for the 1998 Annual Shareholders' Meeting.
**** Incorporated by reference from the Company's Registration Statement on Form
     SB-2 declared effective July 22, 1998 (SEC File Number 333-59019).

(b)  Reports on Form 8-K

     The Company did not file any reports on Form 8-K during the last quarter of
1998.

                                   SIGNATURES

     In accordance  with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                         NAVIDEC, INC.



Date: April 15, 1999                     By: /s/ Ralph Armijo
                                            ------------------------------------
                                            Ralph Armijo, President, 
                                            Chief Executive Officer and Director




<PAGE>


     In  accordance  with the Exchange Act, this report has been signed below by
the following  persons on behalf of the  registrant and in the capacities and on
the dates indicated.

Signature                         Title                           Date
---------                         -----                           ----

/s/ Ralph Armijo
-----------------------------     President, Chief                April 15, 1999
Ralph Armijo                      Executive Officer
                                  and Director

/s/ Patrick R. Mawhinney    
-----------------------------     Chief Financial Officer,        April 15, 1999
Patrick R. Mawhinney              Treasurer and Director

/s/ Michael Kranitz
-----------------------------     Vice President of Strategic     April 15, 1999
Michael Kranitz                   Development and Director

/s/ Andrew Davis
-----------------------------     Director                        April 15, 1999
Andrew Davis

/s/ Lloyd G. Chavez, Jr.
-----------------------------     Director                        April 15, 1999
Lloyd G. Chavez, Jr.

/s/ Gerald A. Marroney
-----------------------------     Director                        April 15, 1999
Gerald A. Marroney

/s/ James Hosch
-----------------------------     Director                        April 15, 1999
James Hosch