<PAGE>

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

                                   FORM 10-QSB


                  QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2002

                                   ----------


                       Commission file number: 33-49261-D


                        TRANSITION AUTO FINANCE II, INC.
        (EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)


<Table>
<S>                                                       <C>
                     TEXAS                                               75-2753067
            (State of incorporation)                      (I.R.S. employer identification number)


       8144 Walnut Hill Lane, SUITE 680,
                 DALLAS, TEXAS                                              75231
    (Address of principal executive offices)                              (Zip code)
</Table>



          Issuer's telephone number, including area code: (214)360-9966

Check whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the 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.   [X]  Yes   [ ] No

State the number of shares outstanding of each of the issuer's classes of Common
equity, as of the latest practicable date: As March 31, 2002, the issuer' had
1,000 shares of common stock



    TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMS (CHECK ONE): YES [ ]   NO [X]

================================================================================


<PAGE>



                        TRANSITION AUTO FINANCE II, INC.

                                   FORM 10-QSB

                      FOR THE QUARTER ENDED MARCH 31, 2002


<Table>
<Caption>
                                                                                                             Page No.
<S>                                                                                                          <C>
PART I.  FINANCIAL INFORMATION

         ITEM 1.  Financial Statements

                  Balance Sheets..................................................................................3
                    March 31, 2002 (Unaudited) and December 31, 2001

                  Statements of Income (Unaudited)................................................................5
                    Quarter ended March 31, 2002 and March 31, 2001

                  Statements of Cash Flows (Unaudited)............................................................6
                    Three Months ended March 31, 2002 and March 31, 2001

                  Notes to  Financial Statements (Unaudited)......................................................7

         ITEM 2.  Management's Discussion and Analysis of Financial Condition
                  and Results of Operations......................................................................12

PART II. OTHER INFORMATION

         ITEM 1.  Legal Proceedings..............................................................................13

         ITEM 2.  Changes in Securities and Use of Proceeds......................................................13

         ITEM 3.  Defaults Upon Senior Securities................................................................13

         ITEM 4.  Submission of Matters to a Vote of Security Holders............................................14

         ITEM 5.  Other Information..............................................................................14

         ITEM 6.  Exhibits and Reports on Form 8-K...............................................................14



         Signatures  ............................................................................................15
</Table>


         In the opinion of management, all adjustments necessary to fair
statement of the results for interim periods presented have been reflected in
these financial statements.



                                       2
<PAGE>



                          PART I. FINANCIAL INFORMATION

                          ITEM 1. FINANCIAL STATEMENTS

                        TRANSITION AUTO FINANCE II, INC.

                                 BALANCE SHEETS

                                     ASSETS

<Table>
<Caption>
                                                                       3 months ended        FYE
                                                                          3/31/2002        12/31/2001
                                                                         (unaudited)      (See Note 1)
                                                                        -------------    -------------
<S>                                                                     <C>              <C>
CURRENT ASSETS
  Cash and cash equivalents                                             $     275,565    $     263,633
  Accounts receivable                                                         505,014          512,086
  Vehicles held for sale                                                      312,097          170,306
  Other Assets                                                                  3,598            2,082
                                                                        -------------    -------------
      Total Current Assets                                                  1,096,274          948,107
                                                                        -------------    -------------

PROPERTY, at cost
  Vehicles leased                                                           3,322,406        4,006,800
  Less accumulated depreciation                                            (1,544,376)      (1,570,410)
                                                                        -------------    -------------
      Net Property                                                          1,778,030        2,436,390
                                                                        -------------    -------------

OTHER ASSETS
  Debt issuance costs, net of amortization of $1,040,542 and $962,153          78,390          156,779
  Due from an affiliate                                                        78,401           52,255
                                                                        -------------    -------------
       Total other assets                                                     156,791          209,034
                                                                        -------------    -------------


TOTAL ASSETS                                                            $   3,031,095    $   3,593,531
                                                                        =============    =============
</Table>



                                       3
<PAGE>



                        TRANSITION AUTO FINANCE II, INC.

                           BALANCE SHEETS (Continued)

                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

<Table>
<Caption>
                                                              3 Months Ended         FYE
                                                                 3/31/2002        12/31/2001
                                                                (Unaudited)      (See Note 1)
                                                               -------------    -------------
<S>                                                            <C>              <C>
CURRENT LIABILITIES
  Accrued liabilities                                          $      70,996    $      72,603
  Investor notes payable                                           6,599,000        6,736,000
  Current portion of deferred revenue                                135,335          196,932
                                                               -------------    -------------
        Total Current Liabilities                                  6,805,331        7,005,535
                                                               -------------    -------------

OTHER LIABILITIES
  Due to affiliate                                                     4,513          116,804
  Deferred revenue                                                    81,454           84,432
                                                               -------------    -------------
      Total Other Liabilities                                         85,967          201,236
                                                               -------------    -------------

TOTAL LIABILITIES                                                  6,891,298        7,206,771
                                                               -------------    -------------

SUBORDINATED DEBT TO AFFILIATE                                       371,330          371,330
                                                               -------------    -------------

STOCKHOLDERS' EQUITY (DEFICIT)
   Common stock, $.10 par value, 1,000 shares
    authorized, issued and outstanding                                   100              100

   Additional paid-in capital                                            900              900
   Retained earnings (deficit)                                    (4,232,533)      (3,985,570)
                                                               -------------    -------------
       Total Stockholders' Equity (Deficit)                       (4,231,533)      (3,984,570)
                                                               -------------    -------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
   (DEFICIT)                                                   $   3,031,095    $   3,593,531
                                                               =============    =============
</Table>


Note 1: The balance sheet at December 31, 2001, as presented, is derived from
the audited financial statements at that date.

See accompanying notes to financial statements.


                                       4
<PAGE>


                        TRANSITION AUTO FINANCE II, INC.

                              STATEMENTS OF INCOME

                                   (Unaudited)

<Table>
<Caption>
                                                     Quarter Ended     Quarter Ended
                                                     March 31, 2002    March 31, 2001
                                                     --------------    --------------
<S>                                                  <C>               <C>
REVENUES

  Vehicle monthly lease payments                     $     249,740    $     537,683
   Amortization of down payments                            81,847          233,371
                                                     -------------    -------------

        Total Revenues                                     331,587          771,054
                                                     -------------    -------------

OPERATING EXPENSES

  Operating costs                                           21,462            9,126
  General and administrative                                28,903           13,551
  Depreciation and amortization                            230,364          384,405
  Impairment loss                                              -0-              -0-
                                                     -------------    -------------

        Total Operating Expenses                           280,729          407,082
                                                     -------------    -------------

Operating Income (Loss)                                     50,858          363,972
                                                     -------------    -------------

OTHER INCOME (EXPENSE)

Investment income                                              153            1,467
Other income (expense)                                          39               52
Interest expense                                          (183,993)        (252,473)
Loss on sale of inventory                                 (114,020)        (120,565)
                                                     -------------    -------------

        Total Other Income (Expense)                      (297,821)        (371,519)
                                                     -------------    -------------

Provision for Federal Income Taxes                             -0-              -0-
                                                     -------------    -------------

Net Loss                                             $    (246,963)   $      (7,547)
                                                     =============    =============

Loss per share (basic and diluted)                   $      246.96    $        7.55
                                                     -------------    -------------
</Table>



See accompanying notes to financial statements.



                                       5
<PAGE>



                        TRANSITION AUTO FINANCE II, INC.

                            STATEMENTS OF CASH FLOWS

                                   (Unaudited)


<Table>
<Caption>
                                                                   3 Months Ended    3 Months Ended
                                                                   March 31, 2002    March 31, 2001
                                                                   --------------    --------------
<S>                                                                <C>               <C>
Cash flows from operating activities
Net loss                                                            $    (246,963)   $      (7,547)
Adjustments to reconcile net income to net cash provided by
  operating activities:
     Depreciation and amortization                                        230,364          384,405
     Amortization of down payments                                        (81,847)        (233,371)
     Impairment loss                                                          -0-              -0-
     Provision for allowance for doubtful accounts                            -0-              -0-
     (Gain) loss on sale of property                                      114,020          120,565
Net changes in operating assets and liabilities:
     Accounts receivable                                                    7,072          173,463
     Other Assets                                                          (1,516)
     Accrued liabilities                                                   (1,608)         (94,223)
     Deferred revenue                                                      17,272          (43,283)
                                                                    -------------    -------------
Net cash provided (USED) by operating activities                           36,794          300,009

Cash flows from investing activities
   Purchase of fixed assets                                                   -0-              -0-
   Cash proceeds from sale of property                                    250,575          678,737
                                                                    -------------    -------------
Net cash (used) by investing activities                                   250,575          678,737

Cash flows from financing activities
   Proceeds from issuance of common stock                                     -0-              -0-
   Net advances (payments) to affiliates                                 (138,437)           3,833
   Debt issuance costs                                                        -0-              -0-
   Proceeds from notes payable                                                -0-              -0-
   Payments of Notes Payable                                             (137,000)        (812,000)
                                                                    -------------    -------------
Net cash provided by financing activities                                (275,437)        (808,167)
                                                                    -------------    -------------

Net INcrease (DECREASE) In cash                                            11,932          170,579

CASH AND CASH EQUIVALENTS, beginning of period                            263,633          446,662
                                                                    -------------    -------------

CASH AND CASH EQUIVALENTS, end of period                            $     275,565    $     617,241
                                                                    =============    =============

Cash paid during the YEAR for
   Interest                                                         $     184,612    $     257,972
   Income taxes                                                     $         -0-    $         -0-
</Table>



NON-CASH INVESTING ACTIVITIES

Vehicle purchases during the three months ended March 31, 2002 with a net book
value of $162,469 were reclassified from vehicles leased to vehicles held for
sale.

See accompanying notes to financial statements.



                                       6
<PAGE>



                        TRANSITION AUTO FINANCE II, INC.

                          NOTES TO FINANCIAL STATEMENTS
                                   (Unaudited)

                                 MARCH 31, 2002

NOTE 1:  BUSINESS ACTIVITY

         The Company was established to purchase motor vehicles and automobile
         lease contracts, collect and service automobile lease contracts and
         remarket motor vehicles upon termination of their leases. A summary of
         the significant accounting policies consistently applied in the
         preparation of the accompanying financial statements follows.
         Transition Leasing Management, Inc. (TLMI) owns 100% of the Company's
         common stock.

NOTE 2:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         CASH AND CASH EQUIVALENTS

                  For purposes of the statement of cash flows, the Company
                  considers all highly liquid investments with a maturity of
                  three months or less when purchased to be cash equivalents.

                  The Company maintains cash balances at financial institutions
                  in Dallas, Texas. Accounts at the institutions are insured by
                  the Federal Deposit Insurance Corporation up to $100,000. The
                  Company has not experienced any losses in such accounts and
                  believes it is not exposed to any significant credit risk on
                  cash and cash equivalents.

         REVENUE

                  The vehicles are leased to individuals under leases with terms
                  ranging from thirty-six to forty-two months. The leases are
                  considered to be operating leases. At the end of the lease
                  period, the lessee may purchase the equipment at the
                  contractual residual value plus any other outstanding items
                  due. Monthly lease payments are recognized as revenue in the
                  month that the payments are due. The vehicle leases require a
                  down payment from the lessee at the inception of the lease.

                  The down payments are initially recorded as deferred revenue
                  and then recognized as income over the term of the leases on a
                  straight-line basis.

         VEHICLES HELD FOR SALE

                  Vehicles held for sale are leased vehicles in which the lease
                  term has expired or that have been repossessed. Vehicles held
                  for sale are valued at the lower of book value or market
                  value. Generally these vehicles will be sold at auction by the
                  Company.



                                       7
<PAGE>



                        TRANSITION AUTO FINANCE II, INC.

                          NOTES TO FINANCIAL STATEMENTS
                                   (Unaudited)

                                 MARCH 31, 2002


NOTE 2:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
         (CONTINUED)

         EQUIPMENT AND LEASED VEHICLES

                  Equipment and leased vehicles are stated at cost less
                  accumulated depreciation. Depreciation is provided in amounts
                  sufficient to relate the cost of depreciable assets to
                  operations over their estimated service lives using the
                  straight-line-method. Leased vehicle depreciation is
                  calculated over the term of the vehicle lease, using the cost
                  of the vehicle less the estimated residual value of the
                  vehicle at the end of the lease. Present leases have terms
                  ranging from thirty-six to forty-two months.

                  The Company adopted Financial Accounting Standards Board
                  issued Statement No. 121, Accounting for the Impairment of
                  Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,
                  which requires impairment losses to be recorded on long-lived
                  assets used in operations when indicators of impairment are
                  present. No impairment has been recorded in these financial
                  statements.

         OTHER ASSETS

                  Other assets include debt issuance costs incurred in
                  connection with the Company's offering of securities filed
                  with the Securities and Exchange Commission. These costs are
                  being amortized, on a straight-line basis, over the term of
                  the debt securities which mature on June 30, 2002.

         DEFERRED REVENUE

                  Deferred revenue consists of down payments made by lessees at
                  the inception of the lease. The down payments are amortized
                  over the lease term. Lease terms range from thirty-six to
                  forty-two months.

         FAIR VALUE OF FINANCIAL INSTRUMENTS

                  Fair values of financial instruments are estimated to
                  approximate the related book value, unless otherwise
                  indicated, based on market information available to the
                  Company.



                                       8
<PAGE>



                        TRANSITION AUTO FINANCE II, INC.

                          NOTES TO FINANCIAL STATEMENTS
                                   (Unaudited)

                                 MARCH 31, 2002


NOTE 2:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
         (CONTINUED)

         USE OF ESTIMATES

                  In preparing the Company's financial statements, management is
                  required to make estimates and assumptions that affect the
                  reported amounts of assets and liabilities, the 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
                  these estimates.

         CONCENTRATION OF CREDIT RISK

                  A majority of the lessees are residents of the Dallas/Fort
                  Worth Metroplex. Vehicles are used as collateral for leases.

         ACCOUNTING PRONOUNCEMENTS

                  During 2001, the Financial Accounting Standards Board (FASB)
                  issued SFAS No. 143, "Accounting for Asset Retirement
                  Obligations," which is effective for financial statements
                  issued for fiscal years beginning after June 15, 2002. The
                  pronouncement addresses the recognition and remeasurement of
                  obligations associated with the retirement of tangible
                  long-lived assets. In 2001, the FASB issued SFAS No. 144,
                  "Accounting for the Impairment of Disposal of Long-Lived
                  Assets," which is effective for financial statements issued
                  for fiscal years beginning after December 15, 2001. SFAS No.
                  144 supersedes SFAS No. 121, "Accounting for the Impairment of
                  Long-Lived Assets and for Long-Lived Assets to be Disposed
                  Of," and applies to all long-lived assets (including
                  discontinued operations). The Company does not expect these
                  standards to have a material impact on future financial
                  statements or results of operations.

NOTE 3:  INVESTOR NOTES PAYABLE

         The Company has issued fixed rate redeemable asset-backed notes
         (Investor Notes) as of December 1999 in the amount of $10,000,000.
         During the first quarter ended March 31, 2002, approximately $252,000
         was repaid to investors. The remaining balance as of March 31, 2002 was
         $6,599,000.



                                       9
<PAGE>



         These Investor Notes were issued pursuant to a public offering on Form
         SB-2 under the Securities Act of 1933. The Investor Notes bear interest
         at the rate of 11%. Interest is payable monthly on the 15th day of each
         month.

         The Investor Notes were issued at various times during 1999 and 1998,
         however the maturity date for all of the Investor Notes is June 30,
         2002. The Investor Notes are collateralized by the following:

              1. Automobile contracts for the leasing of new or late model
                 automobiles.

              2. The leased vehicles.



NOTE 4:  INCOME TAXES

         The Company is a corporation subject to federal and state income taxes.
         The Company and its parent intend to file a consolidated tax return.
         Each company in the consolidated group determines its taxable income or
         loss, on a separate company basis, and the consolidated tax liability
         is allocated to each company with taxable income in proportion to the
         total of the taxable income amounts.

         The Company has a deferred tax asset as of December 31, 2001 and 2000
         (primarily from net operating loss carryforward), which has been
         completely offset by recognition of a valuation allowance.

         The Company has a net operating loss (NOL) carryforward of
         approximately $5,400,000 and $1,450,000 for the year ended December 31,
         2001 and the year ended December 31, 2000, respectively. The Company's
         NOL carryforward expires between December 31, 2013 and December 31,
         2021.


NOTE 5:  RELATED PARTIES

         The Company has entered into a Servicing Agreement with TLMI. TLMI will
         be entitled to a servicing fee of $20 per month per contract and a
         payment of $150 per contract purchased. TLMI will receive, as a
         marketing fee, 57.5% of the down payment made by the customers with
         respect to contracts it originates. TLMI will receive from the Company
         a Releasing Fee of 57.5% of the down payment with respect to a new
         contract following repossession of a leased vehicle. For the period
         ending March 31, 2002, the Company paid TLMI $26,369 for these fees and
         owes TLMI another $4,513.



NOTE 6:  SUBORDINATED DEBT TO AFFILIATE

         The Company assumed a liability of $371,330 due to TLMI. This debt is
         subordinated to all other Company liabilities and cannot be repaid
         before any other creditors or investors.



                                       10
<PAGE>



NOTE 7:  GOING CONCERN

         The accompanying consolidated financial statements have been prepared
         in conformity with U.S. generally accepted accounting principles, which
         contemplates continuation of the Company as a going concern. The
         Company has sustained recurring losses from operations, negative
         working capital, a negative equity position and TAF II has substantial
         investor notes payable in 2002. Management of TAF II intends to attempt
         to continue leasing vehicles, raise additional capital and or secure
         additional financing in order to continue repayment of the investor
         notes payable. Management recognizes that full repayment may take
         several years to complete and that full repayment may not occur. This
         situation raises substantial doubt about TAF II's ability to continue
         as a going concern. TLMI and its other subsidiaries in the consolidated
         group are not responsible or obligated to repay any investor notes
         payable that TAF II cannot repay.



                                       11
<PAGE>



ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS


         The following discussions and analysis relates to factors that have
affected the operating results of the Company for the quarter ended March 31,
2002. The balance sheet at December 31, 2002, as presented, is derived from the
audited financial statements at that date.


General.

         As of December 31, 1999, the Company had sold $10,000,000 of its 11%
Redeemable Secured Notes. In February of 1999 the Company also purchased 116
lease contracts from Transition Auto Finance, Inc. for $2,883,000.


Results of Operations: Three months ended March 31, 2002, compared to three
months ended March 31 ,2001

         For the three months ended March 31, 2002, the Company had received
monthly contract lease payments of $249,740 and amortization of down payments of
$81,847. For the same period in 2001, the Company had contract lease income of
$537,683, and amortization of down payments of $233,371. The decrease in total
revenues of $439,467 for the three month period ended March 31, 2002, compared
to the same period in 2001, was the result of decreased lease activity in the
first quarter of 2002. Lease activity was down primarily because of a smaller
number of outstanding leases. Fewer outstanding leases were due to (1)
repossessions, (2) early-payoffs and (3) vehicles going to term.

         Operating costs including general and administrative expenses were
$50,365 for the first quarter of 2002 compared to $22,677 for the same period in
2001. The increase in operating costs for the first quarter of 2002 was due to a
higher level of expenses, including audit and trustee fees.

         Depreciation and amortization was $230,364 for the three months ended
March 31, 2002, compared to $384,405 for the same period in 2001. The smaller
depreciation expense in the first quarter of 2002 was due to a smaller number of
vehicles on lease than for the same period in 2001.

         Interest expense for the three months ended March 31, 2002, was $
183,993 compared to $ 252,473 for the same period in 2001. The reduction in
interest expense for the second quarter of 2002 was due to a reduction in Notes
outstanding at March 31, 2002, compared to the same period in 2001.

         Loss on sale of inventory for the first quarter of 2002 was $114,020
compared to a loss of $120,565 for the same period in 2001. Loss on sale of
inventory occurs when the book value of the asset exceeds the market value of
the repossessed vehicle.

         The net loss for the first quarter ended March 31, 2002 was $246,963
compared to a loss of $ 7,547 for the same period in 2001. The higher loss for
the 2002 period reflects the reduction in revenue for the 2002 period compared
to the same period in 2001.


 Liquidity and Capital Resources

         During the three months ended March 31, 2002 the Company used cash of $
250,575 in its investing activities from the sale of property and used
$(275,437) in its financing activities. For the same period in 2001, the Company
utilized cash of $678,737 in its investing activities and used $(808,167) in its
financing activities.

         Investor notes payable of $6,599,000 are due on June 30, 2002. The
Company anticipates that a substantial portion of the Notes will not be paid at
that time. Management intends to continue leasing vehicles and attempt to raise
capital and/or secure bank financing in order to continue repayment of the
investor notes payable. There is no assurance that the Company will be
successful in raising additional funds or that all of the Notes will be repaid
from additional leasing activities.



                                       12
<PAGE>



         The Company's only source of liquidity in the future will be from its
monthly lease payments after interest and other allowed expenses.

         The Company's portfolio, which consisted of 436 leases, included 299
leases which resulted in early terminations. The information on the Company's
experience with respect to early terminations is set forth below:


<Table>
<Caption>
                                                                                                   Vehicle
                      # of        Gross Cost          Misc.          Total          Down             Sale          Sales Tax
                   Contracts      Of Vehicle        Expenses        Payments       Payment          Amount          Credit
                 -------------   -------------   -------------   -------------   -------------   -------------   -------------
<S>              <C>             <C>             <C>             <C>             <C>             <C>             <C>
Repossession               179   $   4,187,570   $     102,034   $   1,794,633   $     809,470   $   1,959,967   $      92,509
Early Payoff               120   $   2,495,672   $       3,944   $   1,148,002   $     532,088   $   1,714,878   $      84,887
                 -------------   -------------   -------------   -------------   -------------   -------------   -------------
Total                      299   $   6,683,242   $     105,978   $   2,942,635   $   1,341,558   $   3,674,845   $     177,396

<Caption>

                                                    Total
                    Warranty        Marketing       Amount           Profit
                    Rebate          Fee Paid       Received          (Loss)
                 -------------   -------------   -------------   -------------
<S>              <C>             <C>             <C>             <C>
Repossession     $      35,101   $     449,373   $   4,242,307   $     (47,297)
Early Payoff     $      15,516   $     289,318   $   3,206,053   $     706,437
                 -------------   -------------   -------------   -------------
Total            $      50,617   $     738,691   $   7,448,360   $     659,140
</Table>



Note: The above results on early termination does not include any allowance for
interest expense


         This report contains various forward looking statements and information
that are based on management's belief as well as assumptions made by and
information currently available to management. Although the Company believes
that the expectations reflected in such forward-looking statements are
reasonable, it can give no assurance that such expectations will prove to have
been correct. Such statements are subject to certain risks, uncertainties and
assumptions. Should one or more of these risks or uncertainties materialize, or
should underlying assumptions prove incorrect, actual results may vary
materially from those expected. Among the key factors that may have a direct
bearing on the Company's operating results are fluctuations in the economy and
in the level of activity in the automobile and consumer finance industry, demand
for the Company's products, the impact of competition and interest rate
fluctuations.



PART II. OTHER INFORMATION



ITEM 1. LEGAL PROCEEDINGS

         The Company is not a party to any material legal proceedings, and no
material legal proceedings have been threatened by or, to the best of the
Company's knowledge, instituted against the Company.



ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS


         (a) Not Applicable

         (b) Not Applicable

         (c) Not Applicable

         (d) The company applied 90% of the gross proceeds from the sale of the
         Notes to the purchase or acquisition of the Leased Vehicles and the
         contracts. The Company paid to the Underwriter sales commissions of 6%
         of the principal amount of the Notes sold by the Underwriter.
         Additionally, the Company reimbursed the Underwriter for certain
         expenses incurred in connection with its due diligence activities with
         regard to the Offering of 2.5% of the aggregate principal amount of the
         Notes sold. The Company also used 1.5% of the gross proceeds from the
         sale of the Notes to pay offering and organizational expenses,
         including filing and registration fees, legal fees of the Company's
         counsel, accounting fees, trustee's fees, escrow agent's fees, "blue
         sky" expenses and printing expenses.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None



                                       13
<PAGE>



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


         No matters were submitted to a vote of the Company's sole stockholder
during the first quarter of 2002.


ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)      Financial Statements

         The following financial statements are filed as a part of this Form
         10-KSB:

             The Index to Financial Statements is set out in Item 7 herein.

         Exhibits

         The following exhibits are filed as exhibits to this report on Form
         10-KSB:

              The information required is set forth in the Index to Exhibits
         accompanying this Form 10-QSB.

(b)      Reports on Form 8-K

         No reports on Form 8-K were filed during the three months ended March
31, 2002



                                       14
<PAGE>



                                   SIGNATURES


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



                                           TRANSITION AUTO FINANCE II, INC.
                                       ----------------------------------------
                                                    (Registrant)


Date: 5/15/02                                   /s/ KENNETH C. LOWE
      --------------------             ----------------------------------------
                                                Kenneth C. Lowe, President/
                                                Chief Executive Officer


Date: 5/15/02                                   /s/ KENNETH C. LOWE
      --------------------             ----------------------------------------
                                                Kenneth C. Lowe, President/
                                                Chief Operating Officer


Date: 5/15/02                                   /s/ KENNETH C. LOWE
      --------------------             ----------------------------------------
                                                Kenneth C. Lowe, President/
                                                Chief Financial Officer



                                       15
<PAGE>



                                INDEX TO EXHIBITS


<Table>
<Caption>
EXHIBIT
NUMBER                                   DESCRIPTION
-------                                  -----------
<S>            <C>
3.1            Articles of Incorporation of Transition Auto Finance II, Inc.*

3.2            Bylaws of Transition Auto Finance II, Inc.*

4.1            Form of Indenture between Transition Auto Finance II, Inc. and
               Trust Management, Inc., as Trustee***

4.2            Form of Secured Note Due June 30, 2002 (included in Article Two
               of Indenture filed as Exhibit 4.1)

10.1           Form of Master Contract Purchase Agreement between Transition
               Auto Finance II, Inc. and Transition Leasing Management, Inc.**

10.2           Form of Servicing Agreement between Transition Leasing
               Management, Inc. and Transition Auto Finance II, Inc.**
</Table>


----------
*    Incorporated by reference from Registration Statement on Form SB-2 of
     Transition Auto Finance II, Inc. Registration No. 33-49261-D, filed April
     2, 1998.

**   Incorporated by reference from Amendment No. 1 to Registration Statement on
     Form SB-2 of Transition Auto Finance II, Inc., Registration No. 33-49261-D,
     filed June 19, 1998.

***  Incorporated by reference from Amendment No. 2 to Registration Statement on
     Form SB-2 of Transition Auto Finance II, Inc., Registration No. 33-49261-D,
     filed July 9, 1998.