<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, 2003
                                   ----------






                       Commission file number: 33-49261-D


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


                 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)


                   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. Yes [X] 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, 2003, 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, 2003


<Table>
<Caption>
                                                                                                           Page No.
PART I.  FINANCIAL INFORMATION                                                                             --------
<S>                                                                                                        <C>
      ITEM 1.           Financial Statements

               Balance Sheets..................................................................................3
                March 31, 2003 (Unaudited) and December 31, 2002

               Statements of Income (Unaudited)................................................................5
                Quarter ended March 31, 2003 and March 31, 2002

               Statements of Cash Flows (Unaudited)............................................................6
                Three Months ended March 31, 2003 and March 31, 2002

               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..............................................................................14

      ITEM 2.  Changes in Securities and Use of Proceeds......................................................14

      ITEM 3.  Defaults Upon Senior Securities................................................................14

      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...............................................................15


      Signatures    ..........................................................................................16
</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
                                                  3/31/2003         12/31/2002
                                                 (unaudited)       (See Note 1)
                                                --------------    --------------
<S>                                             <C>               <C>
CURRENT ASSETS
  Cash and cash equivalents                     $      458,535    $      573,137
  Accounts receivable                                  335,353           345,134
  Vehicles held for sale                               134,997            47,285
  Other Assets                                          30,625            31,250
                                                --------------    --------------
      Total Current Assets                             959,510           996,806
                                                --------------    --------------
PROPERTY, at cost
  Vehicles leased                                    1,117,807         1,542,247
  Less accumulated depreciation                       (719,019)         (824,131)
                                                --------------    --------------
      Net Property                                     398,788           718,116
                                                --------------    --------------
OTHER ASSETS
  Debt issuance costs, net of amortization of
    $1,118,932 and $1,118,932                              -0-               -0-
  Due from an affiliate                                  9,286             9,286
                                                --------------    --------------
       Total other assets                                9,286             9,286
                                                --------------    --------------
TOTAL ASSETS                                    $    1,367,584    $    1,724,208
                                                ==============    ==============
</Table>


See accompanying notes to financial statements.



                                       3
<PAGE>


                        TRANSITION AUTO FINANCE II, INC.

                           BALANCE SHEETS (Continued)

                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)


<Table>
<Caption>
                                                           3 Months Ended         FYE
                                                              3/31/2003        12/31/2002
                                                             (Unaudited)      (See Note 1)
                                                           --------------    --------------
<S>                                                        <C>               <C>
CURRENT LIABILITIES
  Accrued liabilities                                      $       26,843    $       24,576
  Investor notes payable                                        5,652,000         5,966,000
  Current portion of deferred revenue                              46,368            85,954
                                                           --------------    --------------
        Total Current Liabilities                               5,725,211         6,076,530
                                                           --------------    --------------

OTHER LIABILITIES
  Due to affiliate                                                 55,029            47,301

      Total Other Liabilities                                      55,029            47,301
                                                           --------------    --------------

TOTAL LIABILITIES                                               5,780,240         6,123,831
                                                           --------------    --------------

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)                                  (4,784,986)       (4,771,953)
                                                           --------------    --------------
       Total Stockholders' Equity (Deficit)                    (4,783,986)       (4,770,953)
                                                           --------------    --------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)                                                  $    1,367,584    $    1,724,208
                                                           ==============    ==============
</Table>

    Note 1: The balance sheet at December 31, 2002, 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, 2003    March 31, 2002
                                       --------------    --------------
<S>                                    <C>               <C>
REVENUES

  Vehicle monthly lease payments       $       87,204    $      249,740
   Amortization of down payments               20,722            81,847
                                       --------------    --------------

        Total Revenues                        107,926           331,587
                                       --------------    --------------
OPERATING EXPENSES

  Operating costs                               7,195            21,462
  General and administrative                   22,134            28,903
  Depreciation and amortization                53,983           230,364
  Impairment loss                                 -0-               -0-
                                       --------------    --------------

        Total Operating Expenses               83,312           280,729
                                       --------------    --------------

Operating Income (Loss)                        24,614            50,858
                                       --------------    --------------
OTHER INCOME (EXPENSE)

Investment income                                 772               153
Other income (expense)                             13                39
Interest expense                                  -0-          (183,993)
Loss on sale of inventory                     (38,432)         (114,020)
                                       --------------    --------------
        Total Other Income (Expense)          (37,647)         (297,821)
                                       --------------    --------------

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

Net Loss                               $      (13,033)   $     (246,963)
                                       ==============    ==============


Loss per share (basic and diluted)     $        13.03    $       246.96
                                       ==============    ==============
</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, 2003    March 31, 2002
                                                              --------------    --------------
<S>                                                           <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss                                                      $      (13,033)   $     (246,963)
Adjustments to reconcile net income to net cash provided
  by operating activities:
     Depreciation and amortization                                    53,983           230,364
     Amortization of down payments                                   (20,722)          (81,847)
     Impairment loss                                                     -0-               -0-
     Provision for allowance for doubtful accounts                     2,579               -0-
     (Gain) loss on sale of property                                  38,432           114,020
Net changes in operating assets and liabilities:
     Accounts receivable                                               9,780             7,072
     Other Assets                                                        625            (1,516)
     Accrued liabilities                                               2,267            (1,608)
     Deferred revenue                                                (18,864)           17,272
                                                              --------------    --------------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES                      55,047            36,794
                                                                                --------------
CASH FLOWS FROM INVESTING ACTIVITIES
   Purchase of fixed assets                                              -0-               -0-
   Cash proceeds from sale of property                               136,623           250,575
                                                              --------------    --------------
NET CASH (USED) BY INVESTING ACTIVITIES                              136,623           250,575
                                                                                --------------
CASH FLOWS FROM FINANCING ACTIVITIES
   Proceeds from issuance of common stock                                -0-               -0-
   Net advances (payments) to affiliates                               7,730          (138,437)
   Debt issuance costs                                                   -0-               -0-
   Proceeds from notes payable                                           -0-               -0-
   Payments of Notes Payable                                        (314,000)         (137,000)
                                                              --------------    --------------
NET CASH PROVIDED BY FINANCING ACTIVITIES                           (306,270)         (275,437)
                                                              --------------    --------------

NET INCREASE (DECREASE) IN CASH                                     (114,602)           11,932

CASH AND CASH EQUIVALENTS, beginning of period                       573,137           263,633
                                                              --------------    --------------

CASH AND CASH EQUIVALENTS, end of period                      $      458,535    $      275,565
                                                              ==============    ==============

CASH PAID DURING THE YEAR FOR
   Interest                                                   $          -0-    $      184,612
                                                              ==============    ==============
   Income taxes                                               $          -0-    $          -0-
                                                              ==============    ==============
</Table>

    NON-CASH INVESTING ACTIVITIES

    Vehicle purchases during the nine months ended March 31, 2003 with a net
    book value of $87,712 were reclassified from vehicles leased to vehicles
    held for sale.

    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


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.

            As of March 31, 2003, all cash balances are restricted in nature and
            managed by Trust Management due to Company in default of their
            Indenture Agreement. All cash distributions from these accounts must
            be authorized by the Trust Management and are for the sole purpose
            of repaying investor notes payable after any authorized expenses
            have been paid.

         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.



                                       7
<PAGE>


                        TRANSITION AUTO FINANCE II, INC.

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


NOTE 2:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
         (CONTINUED)

         ACCOUNTS RECEIVABLE
             The Company provides for uncollectible accounts receivable using
             the allowance method of accounting for bad debts. Under this method
             of accounting, a provision for uncollectible accounts is charged to
             earnings. The allowance account is increased or decreased based on
             past collection history and management's evaluation of accounts
             receivable. All amounts considered uncollectible are charged
             against the allowance account and recoveries of previously
             charged-off accounts are added to the allowance.

         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 cost or fair value. Cost of these
             vehicles is the net book value of the vehicle after it has been
             returned to the Company either through repossession or early
             termination of the lease. Generally the Company will sell these
             vehicles at auction.

         PROPERTY
             Property consists of leased vehicles, which 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.

         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
             matured on June 30, 2002. These were fully amortized as of March
             31, 2003.

         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.



                                       8
<PAGE>


                        TRANSITION AUTO FINANCE II, INC.

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


NOTE 2:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
         (CONTINUED)

         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.

         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.

NOTE 3: INVESTOR NOTES PAYABLE

        The Company has issued fixed rate redeemable asset-backed notes
        (Investor Notes). During the first Quarter ended March 31, 2003,
        approximately $314,000 was repaid to investors. The remaining balance as
        of March 31, 2003 was $5,652,000.

        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.

        The Investors Notes matures on June 30, 2002 and the Company was unable
        to pay the remaining debt. The Company is in default on the investor
        notes payable as of March 31, 2003. As of that date all income from
        leasing activities is used to repay Investor Notes. All Company
        disbursements require approval of Trust Management.


                                       9
<PAGE>


                        TRANSITION AUTO FINANCE II, INC.

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


NOTE 4: INCOME TAX

        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 $413,000 and $1,472,000 as of
        December 31, 2002 and 2001 (primarily from net operating loss
        carry-forward), which has been completely offset by recognition of a
        valuation allowance.

        The Company has a net operating loss (NOL) carry-forward of
        approximately $2,000,000 and $1,264,000 for the year ended December 31,
        2002 and the year ended December 31, 2001, respectively. The Company's
        NOL carry-forward expires between December 31, 2012 and December 31,
        2022.

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. The Company paid
        TLMI $7,460 and $64,395 in the 1st Quarter of 2003 and 2002 for
        servicing, documentation and marketing fees. The Company also has a
        payable to TLMI for $42,301 and $55,029 as of December 31, 2002 and
        March 31, 2003, respectively. The Company has a receivable from an
        affiliate for $9,286 and $9,286 as of December 31, 2002 and March 31,
        2003, respectively.


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 can not be repaid
        before any other creditors or investors.



                                       10
<PAGE>


                        TRANSITION AUTO FINANCE II, INC.

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


NOTE 7: GOING CONCERN

        The accompanying 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 has defaulted on investor notes payable
        that were due in 2002. Management intends to service existing leases and
        attempt to raise additional capital and or secure additional financing
        in order to continue repayment of the investor notes payable. Management
        recognizes that full payment may take several years to complete and that
        full repayment may not occur. This situation raises substantial doubt
        about the Company's ability to continue as a going concern.






                                       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,
2003. 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.

        On June 30, 2002 Transition Auto Finance II, Inc. defaulted on its
$10,000,000 11% Redeemable Secured Notes.

Results of Operations: Three months ended March 31, 2003, compared to three
months ended March 31, 2002.

        For the three months ended March 31, 2003, the company had received
monthly contract lease payments of $87,204 and amortization of down payments of
$20,722. For the same period in 2002, the Company had contract lease income of
$249,740 and amortization of down payments of $81,847. The drop in monthly
contract lease payments and amortization of down payments for the three month
period ended March 31, 2003, compared to the same period in 2002, was the result
of a decline in the number of active leases due to increased repossessions,
early terminations and matured leases. Until the economy improves, the company
believes that increased levels of repossessions will continue.

        Operating costs including general and administrative expenses were
$29,329 for the first quarter of 2003, compared to $50,365 for the same period
in 2002. The lower operating costs for the 2003 period were due to a smaller
lease base and the lower cost of servicing fewer leases.

        Depreciation and amortization was $53,983 for the three months ended
March 31, 2003, compared to $230,364 for the same period in 2002. The decline of
$176,381 for the first quarter of 2003 was due to fewer active leases, the
result of repossessions, early terminations and matured leases.


        Interest expense for the three months ended March 31, 2003 was zero ($0)
compared to $183,993 for the same period in 2002. The reduction in interest
expense for the first quarter of 2003 was due to the Company's default June 30,
2002 on its 11% notes.

        Loss on sale of inventory for the first quarter of 2003 was $38,432
compared to a loss of $114,020 for the same period in 2002. 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 quarter ended March 31, 2003 was $13,033 compared
to a loss of $246,963 for the same period in 2002. The nominal loss in 2003 is
primarily the result of fewer active leases than for the same period in 2002.

        On June 30, 2002, TAF II, Inc. defaulted on its $10,000,000 11%
Redeemable Secured Notes. At the time of the default the company had paid to
investors a total of $7,058,413. This figure is comprised of $3,338,413 in
interest and $3,720,000 of principal. As of March 31, 2003, the principal amount
paid to Noteholders was $4,348,000. The Company estimates that its remaining
lease portfolio will generate approximately $450,000 in additional funds not
including $301,980 currently held by the trustee, Trust Management, Inc.

        The adverse economic effects of the current recession and events of
September 11, resulted in an unusually high number of early lease payoffs and
automobile repossessions. The major reasons for the excessive early payoffs and
repossessions appear to have been (1) the weak economy, and (2) low-cost
incentive financing (such as "zero financing") offered by new car manufacturers.
The weak economy hurt the personal finances of many customers causing an
increased number of repossessions, while low-cost incentive financing enticed
many other customers to purchase new cars, which resulted in these customers
paying off their leases early. Additionally, low-cost financing negatively
impacted used car prices by flooding the market with late model cars.


                                       12
<PAGE>


         The early payoffs and repossessions were not, by themselves,
extraordinary. What was extraordinary - and unprecedented - was the pace and
rate at which these early payoffs and repossessions occurred. Most damaging,
however, was the timing of the excessive early payoffs and repossessions, which
began to accelerate in September 2000. Under the terms of the indenture that
governs the notes, all payments after August 2000, from early payoffs and
repossessions had to be returned to the note-holders rather than retained by the
company for further investment. This "sinking fund" provision in the indenture
had a devastating effect on the company's capital, and stripped the company of
its ability to generate sufficient cash flow to repay the notes.

         The company worked on a plan that would have extended the maturity of
the notes and the reinvestment period, and lower the interest rate. The effect
of these changes should have increased the ultimate amount of funds available
for note repayment but since these modifications would require 100% approval of
the Noteholders, the plan was never submitted to the Noteholders. Management
does not expect inflation to have a material impact on revenue.


Liquidity and Capital Resources

        During the three months ended March 31, 2003 the Company used cash of
$136,621 in its investing activities from the sale of property and used $306,270
in its financing activities. For the same period in 2002, the Company utilized
cash of $250,575 in its investing activities and used $275,437 in its financing
activities.

        The Company's portfolio, which consisted of 426 leases, included 372
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
                 Contracts     Of Vehicle      Expenses       Payments       Payment         Amount
               ------------   ------------   ------------   ------------   ------------   ------------
<S>            <C>            <C>            <C>            <C>            <C>            <C>
Repossession            225   $  5,366,968   $    141,667   $  2,576,343   $  1,061,028   $  2,397,736
Early Payoff            147   $  3,220,569   $      5,751   $  1,724,586   $    682,781   $  2,066,949
               ------------   ------------   ------------   ------------   ------------   ------------
Total                   372   $  8,587,537   $    147,418   $  4,300,929   $  1,743,809   $  4,464,685
</Table>

<Table>
<Caption>
                                                               Total
                Sales Tax       Warranty       Marketing       Amount         Profit
                  Credit         Rebate        Fee Paid       Received        (Loss)
               ------------   ------------   ------------   ------------   ------------
<S>            <C>            <C>            <C>            <C>            <C>
Repossession   $    108,329   $     57,340   $    590,151   $  5,610,625   $    101,990
Early Payoff   $     99,098   $     15,805   $    375,666   $  4,213,553   $    987,233
               ------------   ------------   ------------   ------------   ------------
Total          $    207,427   $     73,145   $    965,817   $  9,824,178   $  1,089,223
</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

        Although the Company is not a party to any material legal proceedings,
it is possible that one or more note-holders may institute legal action against
the company in light of the default of the company's notes.


                                       13
<PAGE>


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

        On June 30, 2002, the Company defaulted on its $10,000,000 11%
Redeemable Secured Notes.

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 2003.


ITEM 5. OTHER INFORMATION

None




                                       14
<PAGE>


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 nine months ended March 31,
2003.





                                       15
<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: May 14, 2003                              /s/ Kenneth C. Lowe
                                       -----------------------------------------
                                               Kenneth C. Lowe, President/
                                               Chief Executive Officer


Date: May 14, 2003                              /s/ Kenneth C. Lowe
                                       -----------------------------------------
                                               Kenneth C. Lowe, President/
                                               Chief Operating Officer


Date: May 14, 2003                              /s/ Kenneth C. Lowe
                                       -----------------------------------------
                                               Kenneth C. Lowe, President/
                                               Chief Financial Officer




                                       16
<PAGE>

           CERTIFICATE OF CHIEF EXECUTIVE AND CHIEF FINANCIAL OFFICER

I, Kenneth C. Lowe, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Transition Auto Finance
II (TAF II).

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report.

3. Based on my knowledge, the financial statements and other financial
information included in this quarterly report fairly present, in all material
respects, the financial condition, results of operations and cash flows of TAF
II as of, and for, the periods presented in this quarterly report.

4. TAF II's other certifying officers and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in the Exchange Act
Rules 13a-14 and 15d-14) for TAF II and we have:

         a. designed such disclosure controls and procedures to ensure that
         material information relating to TAF II, including its consolidated
         subsidiaries, is made known to us by others within those entities,
         particularly during the period in which this quarterly report is being
         prepared;

         b. evaluated the effectiveness of TAF II's disclosure controls and
         procedures as of a date within 90 days prior to the filing date of this
         quarterly report (the "Evaluation Date"); and

         c. presented in this quarterly report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date.

5. TAF II's other certifying officers and I have disclosed, based on our most
recent evaluation, to our auditors and TAF II's Board of Directors:

         a. all significant deficiencies in the design or operation of internal
         controls which could adversely affect TAF II's ability to record,
         process, summarize and report financial data and have identified for
         TAF II's auditors any material weaknesses in internal controls; and

         b. any fraud, whether or not material, that involves management or
         other employees who have a significant role in TAF II's internal
         controls.

6. TAF II's other certifying officers and I have indicated in this quarterly
report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date:  May 14, 2003

/s/ Kenneth C. Lowe
-------------------------------------------
Kenneth C. Lowe,
Chief Executive and Chief Financial Officer




                                       17
<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.**

99.1          Certification of Reporting Officer

</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.