UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549




FORM
10-K-A





(Mark
One)


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




For
the fiscal year ended December 31, 2008




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




For
the transition period from ___________ to ___________




Commission
file number




NORTHEAST
AUTOMOTIVE HOLDINGS, INC.


(Exact
name of registrant as specified in its charter)




Nevada
            65-0637308(State
      or other jurisdiction of incorporation or
              organization)
            (I.R.S.
      Employer Identification No.)2174
      Hewlett Avenue,
              Merrick,  New
      York
            11566(Address
      of principal executive offices)
            (Zip
      Code)




Registrant’s
telephone number, including area code: (516) 377-6311




Securities
      registered under Section 12(b) of the Exchange Act:Title
      of each class
            Name
      of each exchange on which registeredNone
            NoneSecurities
      registered under Section 12(g) of the Exchange Act:Class
      A Common Stock, par value $.0001(Title
      of class)




Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 the Securities Act.


Yes 
o    No
x




Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.


Yes 
o    No
x





Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§229.405 of this chapter) is not contained herein, and will not
be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. x


Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§229.405 of this chapter) is not contained herein, and will not
be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. x  Indicate by check
mark whether the registrant is a large accelerated filer, an accelerated filer,
a non-accelerated filer, or a smaller reporting company. See definition of
“large accelerated filer,” “accelerated filer” and “smaller reporting company”
in Rule 12b-2 of the Exchange Act.




Large
      Accelerated Filer   o
            Accelerated
      Filer     oNon-Accelerated
      Filer     o
              (Do
      not check if a smaller reporting company)
            Smaller
      reporting company x




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





State
issuer’s revenues for its most recent fiscal year. $43,015,451





The
aggregate market value of common stock held by non-affiliates of the Registrant
on April 14, 2009 based on the closing price on that date of $0.06 on the Over
the Counter Bulletin Board was $19,240. For the purposes of calculating this
amount only, all directors, executive officers and shareholders owning in excess
of ten percent (10%) of the Registrant’s outstanding common stock have been
treated as affiliates.





Number of
shares of the registrant’s common stock outstanding as of April 15, 2009:
554,017 shares of Common Stock.





Explanatory
Note: This amended Form 10-K is being filed to update the Notes to the financial
statements and to provide additional disclosure to the Management Discussion
& Analysis of Financial Condition and Plan of Operations
section.









TABLE
OF CONTENTS





PgPart
      IItem
      1.
              Business.
              3Item
      1A
              Risk
      Factors
              7Item
      1B
              Unresolved
      Staff Comments
              8Item
      2.
              Properties
              8Item
      3.
              Legal
      Proceedings.
              9Item
      4.
              Submission
      of Matters to a Vote of Security Holders.
              9Part
      IIItem
      5.
              Market
      for Common Equity and Related Stockholder Matters, and issuer Purchases of
      Equity Securities.
              9Item
      6
              Selected
      Financial Data
              9Item
      7.
              Management’s
      Discussion and Analysis of Financial Condition and Plan of
      Operations.
              9Item
      7A
              Quantitative
      and Qualitative Disclosures About Market Risk
              15Item
      8.
              Financial
      Statements.
              F-1Item
      9.
              Changes
      in and Disagreements With Accountants on Accounting and Financial
      Disclosure.
              16Item
      9A.
              Controls
      and Procedures.
              16Item
      9B.
              Other
      Information.
              16Part
      IIIItem
      10.
              Directors,
      Executive Officers, of the Registrant.
              17Item
      11.
              Executive
      Compensation.
              18Item
      12.
              Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters.
              19Item
      13.
              Certain
      Relationships and Related Transactions and Director
      Independence.
              20Item
      14.
              Principal
      Accountant Fees and Services
              20Part
      IVItem
      15.
              Exhibits
      and Financial Statement Schedules
              20Signatures
              
              21




2




Except as otherwise required
by the context, all references in this prospectus to "we", "us”, "our", or
"Company" refer to the operations of Northeast Automotive Holdings, Inc., a
Nevada corporation.




"NAAC" and “NEAA” are
trademarks and service marks of Northeast Automotive Holdings, Inc. (Formerly
Northeast Auto Acceptance Corp.).  All other trademarks, service marks
or trade names referred to in this Registration Statement on Form 10
("Registration Statement") are the property of their respective owners. Except
as otherwise required by the context, all references in this Registration
Statement to (a) "we," "us," "our," the “Company” or "NEA" refer to the
consolidated operations of Northeast Auto Acceptance Corp., a Florida
corporation, and its wholly-owned subsidiary, Northeast Auto Acceptance Corp., a
New York corporation and (b) "you" refers to prospective investors in our common
stock and other readers of this Registration Statement.





PART I


Item
      1.
            Business





BACKGROUND





Northeast
Automotive Holdings, Inc., (the “Company”), was incorporated on October 12, 2007
in the State of Nevada.    Pursuant to an Agreement and Plan
of Merger with Northeast Auto Acceptance Corp., a Florida Corporation
(“NEAA-FL”) in November 2007, we acquired title to all property owned by NEAA-FL
including its wholly owned subsidiary Northeast Auto Acceptance Corp., a New
York  Corporation (“NEAA-NY”).  All of our operating
business is currently conducted through our subsidiary,NEAA-NY, and our
principal executive offices are located at 2174 Hewlett Avenue, Suite 206,
Merrick, New York 11566. Our telephone number at this address is (516)
377-6311.





OUR
BUSINESS





The
Company currently seeks to exploit its 12 years of experience in the wholesale
automobile industry and the inefficiencies and geographic differences in the
used vehicle market by purchasing high quality, late model used vehicle from
dealers and institutional sellers in Northeastern states and transporting the
vehicles for resale in the Pacific Northwest . We are involved
only in the wholesale purchase and sale of vehicles acting as a middleman
between various dealer and institutional sellers and dealer
purchasers.  We generally sell our vehicles only through established
third-party auctions which act as a marketplace for used vehicles. We thus help
align institutional used vehicle sellers and wholesale buyers over a wide
geographic area.





During
our last audited year, which ended December 31, 2008, we had total revenue of
$43,029,332 and a net (loss) of ($1,114,312).





We
typically purchase vehicles from two types of sellers: institutional sellers and
dealers. Institutional sellers include vehicle manufacturers and their captive
finance arms, banks, vehicle finance companies, credit unions, other financial
institutions, vehicle rental companies, commercial fleets and fleet
management/licensing companies. Selling dealers include licensed franchised,
independent and wholesale vehicle dealers.  We deal only with
wholesale sellers and buyers and do not buy from or sell to
individuals.  In addition, we do not purchase or sell scrap
vehicles.





As a
principal in each transaction, we take title to, and ownership of, the vehicles
we purchase.  We generally earn revenue from reselling the used
vehicles to dealers in other geographic regions at a higher price than we paid
to purchase the vehicles.





Our
vehicles are purchased from institutional sellers and dealers located within a
limited geographic area, specifically, the Northeastern United
States.  We currently resell all of these vehicles at wholesale
vehicle auctions in the Pacific Northwest.  On a weekly basis, we hire
various third party automobile transporters to ship our vehicles from the East
coast where they are purchased to wholesale auctions in the Pacific
Northwest.





Generally
speaking, we do not own a vehicle for more than an average of 14 days since our
goal is to transport and then quickly sell, at a profit, the vehicles we
purchase from sellers.





Although
our business is not seasonal in nature, we do attempt to take advantage of how
seasonal tastes affect the buying habits of consumers.  For example,
prior to the spring months we attempt to purchase a greater number of sport
vehicles since consumer demand for sports models increases in the spring and
summer months.  Likewise, prior to the winter months, we attempt to
purchase more SUVs to meet the greater consumer demand in the winter
months.  In addition, the prices of certain kinds of used vehicles
fluctuate with the season.  For example, the prices of SUVs rise prior
to the winter months and drop after the winter ends.





3




INDUSTRY
OVERVIEW





With
calendar year 2004 sales of approximately $367 billion, used vehicles make up
nearly half of the U.S. auto retail market, the largest retail segment of the
economy. In calendar 2004, there were an estimated 42.5 million used vehicles
sold compared with 16.9 million new vehicles, of these vehicles approximately
9,666,000 were sold at auction, according to the National Auto Auction
Association.  Our primary focus, late-model vehicles that are one to
six years old, is estimated at approximately $265 billion in annual sales and 20
million units per year.





The
demand for used vehicles purchased at auction is driven by the retail demand for
used vehicles. Dealers in the United States sold approximately 29.5 million used
vehicles in 2002, which accounts for approximately 69% of the total used vehicle
sales in the United States. The demand for used vehicles has grown due to the
increase in the number of households that have more than one vehicle,
improvements by manufacturers to the quality of vehicles that have extended
vehicle lifespan and made used vehicles a more attractive option for retail
vehicle buyers and the affordability of used vehicles relative to new
vehicles.





To
satisfy this large demand for used vehicles, car dealers that sell used vehicles
utilize various sources of supply to stock their inventory, including trade-ins
from customers on new and used vehicle purchases, purchases from other dealers,
wholesalers, individuals or other entities.  It has been our
experience that used vehicle dealers are increasingly relying upon wholesale
used vehicle auctions, such as the auctions where we primarily sell our
vehicles, as a way to purchase high quality used vehicles and this has resulted
in an increase in the number of used vehicles sold annually at auctions and an
increase in the attendance at auctions by used vehicle dealers.





OUR
SALES AND DISTRIBUTION METHODS





We
attempt to have a sales cycle of as little as ten days starting with our
purchase of a vehicle, transporting it to auction, reselling it at a profit and
our receipt of full payment from the buyer.  On a continual basis, we
purchase used vehicles in the Northeast and transport and sell them in the
Pacific Northwest. In doing so, we seek to exploit a continual inefficiency in
the used vehicle market.  That is, the supply of high quality, late
model used cars is more limited in the Pacific Northwest as compared to the
Northeast, resulting in substantially higher wholesale prices.  This
anomaly in the used vehicle market is largely a factor of the Northeast’s larger
population which results in a greater number of cars being bought, sold and
leased in the Northeast.  The increased number of used vehicles sold
in the wholesale market in the Northeast tends to create lower wholesale prices
than would be paid for the same used vehicle in the Pacific
Northwest.





We
purchase used vehicles from one of two broad categories of wholesale sellers:
institutions and dealers. We do not purchase vehicles directly from private
sellers. The majority of the vehicles we buy are purchased from institutional
sellers and dealers located within a limited geographic area, specifically, the
Northeastern United States.  When we purchase vehicles from
institutional sellers, the purchases are most commonly made utilizing a
wholesale vehicle auction as a middleman, although, at times, we do purchase
directly from institutional sellers.





Institutional
sellers include vehicle manufacturers and their captive finance arms, banks,
vehicle finance companies, credit unions, other financial institutions, vehicle
rental companies, commercial fleets and fleet management/licensing
companies.  The vehicles we purchase from these sellers include
vehicles that have come off lease, repossessed vehicles, rental and other
program fleet vehicles that have reached a predetermined age or mileage at which
time they are automatically repurchased by manufacturers and vehicles purchased
by dealers as trade-ins from consumers.  Our most important sellers
are the captive finance arms of automobile manufacturers such as GMAC and Ford
Motor Credit.





We also
purchase cars from selling dealers which include licensed franchised,
independent and wholesale vehicle dealers.  Most of the vehicles we
purchase from selling dealers were acquired by the dealers as trade-ins towards
the purchase of a new vehicle since many new car dealers find it more efficient
to sell trade-in vehicles to wholesale dealers like us than to offer the
vehicles in their own used car departments.





Although
our business is not seasonal in nature, we do attempt to take advantage of how
seasonal tastes affect the buying habits of consumers.  For example,
prior to the spring months we attempt to purchase a greater number of sport
vehicles since consumer demand for sports models increases in the spring and
summer months.  Likewise, prior to the winter months, we attempt to
purchase more SUVs to meet the greater consumer demand in the winter
months.  In addition, the prices of certain kinds of used vehicles
fluctuate with the season.  For example, the prices of SUVs rise prior
to the winter months and drop after the winter ends.





Our
management has extensive experience in selecting used vehicles for
purchase.  Prior to purchase, we learn about the availability of our
used vehicles being sold by institutional sellers, directly from the sellers,
either via their Web sites or from lists they provide to us.  We use a
combination of industry guidebooks and management’s experience in determining
what the proper price to bid for and purchase a used vehicle.  Once we
successfully bid on a vehicle, we use third party contractors to inspect the
vehicles for substantial defects and we reserve the right to reject the purchase
of any vehicle showing substantial defects.





4




Currently,
we purchase vehicles, on a monthly basis, through six (6) auction houses, which
each comprise over ten percent (10%) of our purchases, namely, Skyline Auto
Exchange, Southern Auto Auction , ADESA Boston Auto Auction , NADE (National
Auto Dealers Exchange) , ADESA New Jersey Auto Auction and   Manheim Auto
Auction.  It should be noted that we are not dependant upon any one
auction house for our purchases, since in the event that any particular auction
house should go out of business, the sellers utilizing such auction house would
shift to other auctions.  We currently utilize a revolving line of
credit of up to $975,000  provided by
Manheim Automotive Financial Services, Inc., an affiliate of Manheim Auto
Auction, Inc. (“Manheim”).  Pursuant to such line of credit, which is
designed specifically for the purchase of vehicles from Manheim, we are
obligated to repay each advance against the line of credit in no more than 21
days after it is advanced to the Company.  The Manheim line of credit
also contains several other material terms, specifically, the loan is secured
against vehicles purchase with the funds, we have agreed to maintain reasonable
amount of adequate cash necessary to operate our business and we have agreed not
to make any material changes in our business or material change in our capital
structure.





The
current focus of our sales activity is the sale of our vehicles at wholesale
auctions located in the Pacific Northwest.  On a weekly basis, we hire
various non-union, third party automobile shippers to transport our vehicles to
wholesale auctions in the Pacific Northwest.  We utilize the services
of established third party vehicle shippers that take our vehicles from the New
York metropolitan area and ship them to the Pacific Northwest on our
behalf.  We have non-exclusive arrangements with these shipping
companies and we regularly contract with several different
transporters.





The
average time it takes to ship a vehicle is five days.  Our shipping
costs are partially dependant on the price of fuel and may rise or fall
depending upon the then-current fuel costs at any point in time and as of
December 31, 2008, our average cost to ship a vehicle is $768 per
vehicle.  Once our vehicles are shipped to the third party auction
locations, they are cleaned and minor repairs, if necessary, are made by third
party contractors who are provided by the auction houses as add-on services
available to all of its sellers.





We
utilize third party wholesale used vehicle auctions for almost all of our sales
and they are a key element in our business.  Auctions serve as a
real-time independent marketplace for the industry and efficiently transfer
ownership and title, administer the flow of funds between sellers and buyers of
vehicles and facilitate the storing, transporting, reconditioning and selling of
vehicles.





By
selling at wholesale auctions, we help assure that we receive the highest
possible prices for our vehicles in an efficient marketplace and we help assure
that we can quickly sell the vehicles we purchase.  Equally important,
auctions assure payment from buyers by escrowing title until payment is
received, so that the Company’s credit risk on vehicle sales is substantially
reduced.





We
believe that auctions are the best means of transferring ownership of used
vehicles based on the short time-to-cash cycle auctions offer, the low cost of
utilizing auctions as a percent of the gross market value of the vehicles placed
at auction and the relative transparency of the auction process.  As a
result, auctions offer a large and liquid market resulting in true real time
market prices for each vehicle sold.





Growth
Strategy





We are
pursuing strategic initiatives that are designed to capitalize on our underlying
business strengths, grow our business and improve our
profitability.  Key elements of our growth strategy
include:





Growing vehicle sales
volume.  We expect to grow our business by capitalizing on the
increasing volume of used vehicles purchase and sold annually.  We
intend to increase vehicle volume from existing institutional customers and to
add new accounts by increased marketing efforts and through the acquisition of
smaller competitors.





Identifying new
markets.  We expect to expand our resale efforts from the
Pacific Northwest to other geographic markets within the United States where we
can identify similar market inefficiencies and where the supply of high quality,
late model used vehicles is limited.





Acquisitions of Smaller
Competitors.  We have a large number of smaller competitors
whose sales volume is less than ours, but who have established relationships
with dealers with whom we do not currently do business.  We plan on
either acquiring one or more of these smaller competitors or entering into other
relationships with such companies which allows us to take advantage of their
existing relationship.





Optimizing profit per vehicle
sold. In 2008, we had a net (loss) per car sold of ($371.19). We
plan to increase our average profit per car by negotiating better terms from
sellers and by reducing transportation costs through greater volume commitments
to shippers and through the possible utilization of railroad shipping for
vehicles which are now available to us due to the larger number of vehicles that
we now ship.





5




COMPETITIVE
STRENGTHS





We
believe that the following key competitive strengths are critical to our
continuing success:





Experienced management team.
The members of our senior management team have an average of 18 years of
experience in the auto industry and have successfully grown our company to
become a leader in the wholesale used vehicle market. Our management team has
accomplished this by implementing a disciplined strategy of selective vehicle
purchases and increasing sales. Over the past several years, our management team
has demonstrated its ability to efficiently and successfully integrate both
large and small acquisitions of used vehicles and has increased the number of
vehicles bought and sold annually.





Established relationships with
diversified customer base.   Since the supply of high quality
used vehicles is limited, our long standing business relationships with
institutional sellers and our ability to quickly close and pay for purchases are
a strong competitive advantage. We have established strong business
relationships with selling dealers and institutional customers, such as vehicle
manufacturers, financial institutions, rental agencies and fleet companies. Our
customer base is primarily comprised of repeat customers, which allows us to
reduce the amount of time required to close a purchase or sale and allows us
access to dealer and institutional vehicles for sale which would not be
available to less established competitors.  Due to the diversity of
our customer base, we do not have a major concentration of business with any one
customer on either the buy or sale side of a transaction.  In fact,
none of sellers from which we purchase vehicles, accounts for more than 10% of
our purchasing volume and no one purchaser of our vehicles accounts for 10% or
more of our selling.  This diversity also allows us to better
withstand changes in the economy and market conditions.  Our sales and
marketing team seeks to foster and maintain strong relationships with our
customers through frequent contact and customer service.  These open
lines of communication allow us to be more responsive and timely in meeting our
customers' needs and goals, regardless of the size of their portfolio of
vehicles.





Experienced Administrative
Staff .  We have developed streamlined administrative services
which handle title processing and administrative paperwork resulting in lower
administrative costs, greater efficiency and reduced turnaround times for
vehicles we purchase and sell.





COMPETITION





All
aspects of the automotive industry are highly competitive. We regularly compete
for the purchase of used vehicles with small and large dealers and other
wholesalers. At our auctions, we compete with numerous other sellers of used
vehicles including the same types of sellers from whom we purchase
vehicles.





INTELLECTUAL
PROPERTY PROTECTION





We regard
the protection of our service marks, trademarks and trade secrets as critical to
our future success and rely on a combination of trademark, service mark and
trade secret laws and contractual restrictions to establish and protect our
proprietary rights in our services.  Although we do not believe that
we infringe the proprietary rights of third parties, there can be no assurance
that third parties will not claim infringement by us with respect to past,
current or future services.





GOVERNMENTAL
REGULATION





In
addition to the laws and regulations which apply to all businesses, our
operations are subject to regulation, supervision and licensing under various
state and local statutes and regulations applicable to wholesale used vehicle
dealers.  We are licensed by the New York State Department of Motor
Vehicles as a wholesale motor vehicles dealer and by the New Jersey Department
of Motor Vehicles as an automobile leasing company. The cost of compliance with
all such regulations is minimal.





Since we
sell automobiles and are not engaged in manufacturing, we did not spend any
material amounts on compliance with environmental laws.





EMPLOYEES





As of
December 31, 2008, we had five full and part time employees, including two in
Sales and Support and three in Administration.  In addition, we have
on-going relationships with six contactors who work as sales representatives for
the Company. Although talented and qualified employees are difficult to find in
the current tight job market, we have experienced relative success in attracting
and retaining highly motivated and talented employees.





6




We
believe that the future success of the Company will depend in part on our
continued ability to attract, integrate, retain and motivate highly qualified
sales and managerial personnel, and upon the continued service of our senior
management. The competition for qualified personnel in our industry and
geographical location is intense, and there can be no assurance that we will be
successful in attracting, integrating, retaining and motivating a sufficient
number of qualified personnel to conduct our business in the future. From time
to time, we also employ independent contractors to support our marketing and
sales organization. We have never had a work stoppage, and no employees are
represented under collective bargaining agreements. We consider our relations
with our employees to be good.





SUBSIDIARIES





We have
one subsidiary, Northeast Auto Acceptance Corp., a New York corporation, which
was incorporation in 1996 and is a wholly-owned subsidiary of Northeast
Automotive Holdings, Inc. (Formerly Northeast Auto Acceptance Corp.), a Nevada
corporation.  All of our operating business is handled by our New York
subsidiary and information contained herein regarding the business of the
Company reflects the operating business of our New York subsidiary.





ITEM
      1A.
            RISK
      FACTORS





The
Company is subject to various risks, including the risks described
below.  The Company’s business, operating results, and financial
condition could be materially and adversely affected by any of these risks.
Additional risks not presently known to the company or that the Company
currently deems immaterial may also impair the business and its
operations.





Economic Conditions and Gasoline
Prices May Affect Sales . In the normal course of business, the Company
is subject to changes in general or regional U.S. economic conditions,
including, but not limited to, consumer credit availability, consumer credit
delinquency and default rates, interest rates, gasoline prices, inflation,
personal discretionary spending levels, and consumer sentiment about the economy
in general. Any significant changes in economic conditions could adversely
affect consumer demand and/or increase our costs resulting
in lower profitability for the Company.  In addition, our
transportation costs are partially tied to the cost of gasoline and any
additional increases to the cost of gasoline may increase our costs and may
result in lower profitability.





Our Business is Highly
Competitive. The reselling of late model used vehicles is a highly
competitive business. The Company’s competition includes publicly and privately
owned franchised new car dealers and independent dealers, as well as millions of
private individuals.  The company’s competitors may sell the same or
similar makes of vehicles that the Company offers in the same or similar markets
at competitive prices. Further, new entrants to the market could result in
increased wholesale costs for used vehicles and lower-than-expected vehicle
sales and margins.   Additionally, competition on vehicle sales
is increasing as these products are now being marketed and sold over the
Internet. Customers are using the Internet to compare pricing for cars and
related financing, which may further reduce the Company’s
profitability.





Retail and Wholesale Prices May Vary
Depending Upon Factors Beyond the Company’s Control. Any significant
changes in retail or wholesale prices for used and new vehicles could result in
lower sales and margins for the Company.  If any of the Company’s
competitors seek to gain or retain market share by reducing prices for used
vehicles, the Company would likely reduce its prices in order to remain
competitive, which may result in a decrease in its sales and profitability and
require a change in its operating strategies.





There are Risks Associated with
Purchasing Inventory. A reduction in the availability or access to
sources of inventory would adversely affect the Company’s business. A failure to
adjust the price that the Company offers to purchase vehicles from sellers to
stay in line with market trends, or a failure to recognize those trends, could
negatively impact the Company’s ability to acquire inventory.





We are Highly Dependant Upon Our
Management and Workforce. The Company’s success depends upon the
continued contribution of its corporate management team. Consequently, the loss
of the services of key employees could have a material adverse effect on the
Company’s results of operations. In addition, in order to expand the Company’s
business, the Company will need to hire additional personnel. The market for
qualified employees in the industry and in the regions in which the Company
operates is highly competitive and may subject the company to increased labor
costs during periods of low unemployment.





We are Dependant Upon Our Information
Systems. The Company’s business is dependent upon the efficient operation
of its information systems. In particular, the Company relies on its information
systems to effectively manage its sales, inventory and customer information. The
failure of the Company’s information systems to perform as designed or the
failure to maintain and continually enhance or protect the integrity of these
systems could disrupt the Company’s business, impact sales and profitability, or
expose the Company to customer or third-party claims.





Our Availability to Capital May
Vary. Changes in the availability or cost of capital and
working capital financing, including the availability of long-term financing to
support development of the Company, could adversely affect the company’s growth
and operating strategies. Further, the Company’s current credit facilities
contains certain financial covenants and the Company’s future credit facilities
may contain covenants and/or performance triggers. Any failure by the Company to
comply with these covenants and/or performance triggers could have a material
adverse effect on the Company’s business.





7




Our Purchases and Sales are
Geographically Concentrated. The Company’s performance is subject to
local economic, competitive, and other conditions prevailing in geographic areas
where the Company operates.  Since currently, all of our vehicles are
purchased in the Northeast and are sold in the Pacific Northwest, the Company’s
current results of operations depend substantially on general economic
conditions and consumer spending habits in these markets.  In the
event that any of the geographic areas in which the Company does business
experiences a downturn in economic conditions, it may adversely affect the
Company’s business.  Furthermore, in the event that the regional price
discrepancies of vehicles that the Company exploits should decrease or
disappear, it may adversely affect the Company’s business.





We Currently Have Just One
Director.  Our Board of Directors is currently comprised of
just one member, our Chief Executive Officer William Solko.  Thus,
without any independent directors, conflicts of interest between the Company and
our Chief Executive Officer may occur regarding issues such as executive
compensation.  We intend to increase the size of the Board of
Directors in 2009.





Our Costs Are Partially Dependant
Upon Fuel Costs. Because all of the vehicles we purchase must
be shipped from the Northeast to the Pacific Northwest, we are dependant upon
variations in the cost of fuel.  Any significant rise in the cost of
fuel will increase our transportation costs and we may not be able to pass these
increased costs along to our customers, resulting in lower net profits on each
vehicle we sell.





We will
be subject to substantial and growing competition in all aspects of our
business. Barriers to entry to the asset management business are relatively low,
and our management anticipates that we will face a growing number of
competitors. Although no one company dominates the asset management industry,
many companies are larger, better known and have greater resources than we
do.




We will
compete against an ever-increasing number of investment dealers, banks,
insurance companies, trust companies and others that offer investment advice and
trust services. In short, the competitive landscape in which we will operate is
both intense and dynamic and there can be no assurance that we will be able to
compete effectively in the future.




Patent and
Trademarks




We
currently do not own any patents, trademarks or licenses of any kind and
therefore we have no protected rights with respect to our services.




Governmental
Regulations





We have
not yet received regulatory approval to provide our services. However, we will
seek the necessary approvals from any governmental agencies required to conduct
our business prior to commencing operations.





We will
operate in a highly regulated environment and be subject to extensive
supervision and examination. As a chartered trust company, we would be subject
to state rules and regulations and supervision by the State Department of
Banking in which we will operate.  These laws are intended primarily for
the protection of clients and creditors, rather than for the benefit of
investors and generally provide for and regulate a variety of matters, such as
minimum capital maintenance requirements; restrictions on dividends;
restrictions on investments of restricted capital; lending and borrowing
limitations; prohibitions against engaging in certain activities; periodic
examinations by the office of the Department of Banking Commissioner; furnishing
periodic financial statements to the Department of Banking Commissioner;
fiduciary record-keeping requirements; and sometimes prior regulatory approval
for certain corporate events (such as mergers, sale/purchase of all or
substantially all of the assets and transactions transferring control of a trust
company).





We may
also be subject to the Employee Retirement Income Security Act of 1974, as
amended (“ERISA”), and to the related regulations, insofar as we are a
“fiduciary” under ERISA with respect to some of our clients. ERISA and
applicable provisions of the Code impose certain duties on persons who are
fiduciaries under ERISA or who provide services to ERISA plan clients and
prohibit certain transactions involving ERISA plan clients.





We may
also be subject to other regulatory agencies including the Securities and
Exchange Commission.  Our failure to comply with any of these
regulatory requirements could have a material adverse effect on us.





ITEM
1B.        Unresolved Staff
Comments





Not
applicable




Item
      2.
            Properties




Our
executive offices are located at 2174 Hewlett Avenue, Suite 206, Merrick, New
York 11566. The Company rents office space on a month-to-month
basis.  Rent expense was approximately $7,200 for 2007. At December
31, 2007, future minimum lease payments were $2,800 for 2008. We believe that
these spaces are sufficient and adequate to operate our current
business.





8




Item
      3.
            Legal
      Proceedings.




The
Company is not a party to any pending or threatened legal
proceedings.




Item
      4.
            Submission
      of Matters to a Vote of Security
Holders.





None.




P ART II





Item
      5.
            Market
      for Registrant’s Common Equity, Related Stockholder Matters and Issuer
      Purchase of Equity Securities.




Market
Information





Our
common stock is currently quoted on the Over the Counter Bulletin Board (“OTC
BB”) under the symbol NEAU.  There is a limited trading market for our
common stock.  The low and high share price between September 2008 and
December 2008 was $0.08 and $1.05.





Dividends





Holders
of our common stock are entitled to receive dividends if, as and when declared
by the Board of Directors out of funds legally available therefore. We have
never declared or paid any dividends on our common stock. We intend to retain
any future earnings for use in the operation and expansion of our business.
Consequently, we do not anticipate paying any cash dividends on our common stock
to our stockholders for the foreseeable future.





Recent Sales of Unregistered
Securities




None.





Item
      6.
            Selected
      Financial Data





Not
Applicable





Item
      7.
            Management’s
      Discussion and Analysis or Plan of
Operations.





MANAGEMENT'S
DISCUSSION AND ANALYSIS





The
following discussion and analysis addresses material changes in the results of
operations and financial condition of Northeast Automotive Holdings, Inc. and
Subsidiaries (the "Company" or "we") for the
periods presented. This discussion and analysis should be read in conjunction
with theConsolidated Financial
Statements, the related Notes toConsolidated Financial
Statements and Management's Discussion and Analysis of Results of Operations and
Financial Condition included in the Company's Form 10-K for the fiscal year
ended December 31, 2008, the unaudited interim Condensed Consolidated Financial
Statements and related Notes included in Item I of this Report on Form 10-Q
("Form 10-Q") and the Company's other
SEC filings and public disclosures.





This
Form 10-K may contain “forward-looking statements”. These statements are
made pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Such forward-looking statements may include, without
limitation, statements about the Company’s market opportunities, strategies,
competition and expected activities and expenditures, and at times may be
identified by the use of words such as “may”, “will”, “could”, “should”,
“would”, “project”, “believe”, “anticipate”, “expect”, “plan”, “estimate”,
“forecast”, “potential”, “intend”, “continue” and variations of these words or
comparable words. Forward-looking statements inherently involve risks and
uncertainties. Accordingly, actual results may differ materially from those
expressed or implied by these forward-looking statements. Factors that could
cause or contribute to such differences include, but are not limited to, the
risks described below under “Risk Factors” in Part I, Item 1b. The
Company undertakes no obligation to update any forward-looking statements for
revisions or changes after the date of this Form 10-K.





Overview





We are a
wholesale automobile sales company which seeks to exploit the inefficiencies and
geographic differences in the used vehicle market by purchasing high quality,
late model used vehicles from dealers and institutional sellers in Northeastern
states and transporting the vehicles for resale in the Pacific Northwest. We are
involved only in the wholesale purchase and sale of vehicles acting as a
middleman between various dealer and institutional sellers and dealer
purchasers.  We generally sell our vehicles only through established
third-party auctions which act as a marketplace for used vehicles. We thus help
align institutional used vehicle sellers and wholesale buyers over a wide
geographic area.





9




Recent
Accounting Pronouncements





In
December 2003, the Securities and Exchange Commission released Staff Accounting
Bulletin No. 104, "Revenue Recognition" ("SAB 104").  SAB 104
clarifies existing guidance regarding revenue recognition.  Neither
the Company's adoption of SAB 104 nor its adoption of proposed Standards will
have an impact on its consolidated results of operations, financial position or
cash flows.





No other
recently issued accounting standards adopted by the Company during 2008, 2007
and 2006 nor any proposed standards will have an impact on its consolidated
results of operations, financial position or cash flows.





For
the Year Ended December 31, 2008, 2007, and 2006





The
following table sets forth certain data derived from the consolidated statements
of operations, expressed as a percentage of net revenues for each of the year
ended December 31, 2008, 2007, and 2006.





ANNUAL
      RESULTS OF OPERATIONS
                          
                          Years Ended December 312008
                          
                          
                          2007
                          
                          
                          2006(In thousands)
                          
                          Amount
                          
                          
                          %
                          
                          
                          Amount
                          
                          
                          %
                          
                          
                          Amount
                          
                          
                          %Net
      Revenues
                          
                          $
                          43,015
                          
                          
                          
                          100.00
                          %
                          
                          $
                          73,704
                          
                          
                          
                          100.00
                          %
                          
                          $
                          71,318
                          
                          
                          
                          100.00
                          %Cost
      of Revenues
                          
                          
                          42,796
                          
                          
                          
                          99.49
                          %
                          
                          
                          72,124
                          
                          
                          
                          97.86
                          %
                          
                          
                          69,398
                          
                          
                          
                          97.31
                          %Gross
      Profit
                          
                          
                          220
                          
                          
                          
                          0.51
                          %
                          
                          
                          1,580
                          
                          
                          
                          2.14
                          %
                          
                          
                          1,920
                          
                          
                          
                          2.69
                          %Sales,
      general and administrative expenses
                          
                          
                          724
                          
                          
                          
                          1.68
                          %
                          
                          
                          825
                          
                          
                          
                          1.12
                          %
                          
                          
                          818
                          
                          
                          
                          1.15
                          %Other
      operating expenses
                          
                          
                          642
                          
                          
                          
                          1.49
                          %
                          
                          
                          946
                          
                          
                          
                          1.28
                          %
                          
                          
                          1,067
                          
                          
                          
                          1.50
                          %Total
      operating expenses
                          
                          
                          1,366
                          
                          
                          
                          3.18
                          %
                          
                          
                          1,771
                          
                          
                          
                          2.40
                          %
                          
                          
                          1,885
                          
                          
                          
                          2.64
                          %Profit
      (loss) from operations
                          
                          $
                          (1,147
                          )
                          
                          
                          (2.67
                          )%
                          
                          $
                          (191
                          )
                          
                          
                          (0.26
                          )%
                          
                          $
                          35
                          
                          
                          
                          0.05
                          %





Revenues





Revenue
for the year ended December 31, 2008 were $43,015,415, a decrease of $30,688,578
or 41.6% over revenues for the year ended December 31, 2007 of $73,704,029. The
decrease in revenue was a result of a decrease in the number of vehicles we sold
in the year 2008 over 2007. Specifically, in the year ended December 31, 2008,
we sold 3,002 vehicles at an average sales price of $14,329 as compared to 4,871
vehicles at an average sales price of $15,131 during the comparable period in
2007. The sharp decrease in revenues was due to a dramatic slowdown in the auto
industry in 2008. As gas prices rose steadily, we experienced a significant drop
in demand for used vehicles. Sales of light trucks and sport utility vehicles,
our core product, dropped sharply. As dealers nationwide scrambled to sell off
their light truck and SUV inventory, prices plummeted. This led to a glut of
these types of vehicles in the market and a further erosion of vehicle values.
For the first time since the formation of our company, we saw little demand for
these vehicles. We expended tremendous amounts of time and energy attempting to
market our existing obsolete inventory, which prevented us from buying and
selling new inventory which would have offset the dramatic drop in revenues we
reported.





Revenue
for the year ended December 31, 2007 were $73,704,029, an increase of $2,386,137
or 3.3% over revenues for the year ended December 31, 2006 of $71,317,892. The
increase in revenue was a result of an increase in the number of vehicles we
sold in the year 2007 over 2006. Specifically, in the year ended December 31,
2007 we sold 4,871 vehicles at an average sales price of $15,131 as compared to
4,707 vehicles at an average sales price of $15,151 during the comparable period
in 2006





Cost
of Revenues and Gross Profit Margin





The
Company's cost of revenues is composed primarily of the cost of purchasing
vehicles for resale. Cost of revenues was $42,795,611 or 99.5% of net revenues
during the year ended December 31, 2008, a decrease of $29,328,452, as compared
to $72,124,063 or 97.9% for the comparable period in 2007. Thus, our gross
margin was 0.51% for the year ended December 31, 2008 as compared to 2.14 % for
the comparable period in 2007. The decrease in our cost of revenue is
attributable to a decrease in the number of the vehicles sold during the year
ended December 31, 2008 as compared to the comparable period in 2007.The decrease in the
number of units sold was the result of higher fuel prices, which led to a
dramatic drop in demand for our core product, light trucks and sport utility
vehicles.


Cost of
revenues was $72,124,063 or 97.9% of net revenues during the year ended December
31, 2007, an increase of $2,726,366, as compared to $69,397,697 or 97.3% for the
comparable period in 2006. Thus, our gross margin was 2.14% for the year ended
December 31, 2007 as compared to 2.69 % for the comparable period in 2006. The
increase in our cost of revenue is attributable to an increase in the number of
the vehicles sold during the year ended December 31, 2007 as compared to the
comparable period in 2006.The increase in the
number of units sold was the result of an increase in demand for our core
product, light trucks and sport utility vehicles.




10




Operating
Expenses





Our
operating expenses are comprised primarily of salaries, consulting fees and
sales, general and administrative expenses.





Sale,
General and Administrative


Sale,
general and administrative ("SGA") expenses are composed principally of
commission, salaries of administrative personnel, fees for professional services
and facilities expenses. These expenses were $724,352 for the year ended
December 31, 2008 or 1.68% of net revenue as compared to $825,454 or 1.12 % of
net revenue for the comparable period in 2007, a decrease in such expenses of
$101,102 or (12.25%). The decrease in the ratio of SGA expenses to net revenue
was primarily due to a decrease in operating expenses. As the slowdown in the
used vehicle industry took hold, we made every attempt to reduce our expenses
wherever we saw fit. Most significantly, we reduced our workforce. This
reduction included the elimination of full time salaried positions, as well as
the termination of our relationship with certain subcontracted
personnel.





The SGA
expenses were $825,454 for the year ended December 31, 2007 or 1.12% of net
revenue as compared to $817,601 or 1.14 % of net revenue for the comparable
period in 2006, an increase in such expenses of $7,853 or 0.96%. The increase in
the ratio of SGA expenses to net revenue was primarily due to an increase in
operating expenses. Net revenues had increased 3.35% compared to SGA expenses
increasing 0.96%.





Other
Expenses





Our
combined expenses for officerssalaries, consulting
fees and interest was $642,019 for the year ended December 31, 2008 or 1.49% of
net revenue compared to the comparable period in 2007 when such expenses were
$945,649 or 1.28% of net revenue. The decrease in such expenses is attributable
to decreased officers’ salaries and interest expense.


Our
combined expenses for officerssalaries, consulting
fees and interest was $945,649 for the year ended December 31, 2007 or 1.28% of
net revenue compared to the comparable period in 2006 when such expenses were
$1,067,211 or 1.50% of net revenue. The decrease in such expenses is
attributable to decreased officers’ salaries and consulting fees while interest
expense increased. The following table shows the changes in the components these
expenses during the comparable periods.





ANNUAL
      OPERATING EXPENSES
                              
                              Year Ended
                              
                              
                              Year Ended
                              
                              
                              VarianceDecember 31, 2008
                              
                              
                              December 31, 2007
                              
                              
                              Amount
                              
                              
                              %Sale,
      General and Administrative Expenses
                              
                              $
                              724,352
                              
                              
                              
                              825,454
                              
                              
                              $
                              (101,102
                              )
                              
                              
                              (12.25
                              )%Officers
      Salaries
                              
                              
                              315,955
                              
                              
                              
                              612,090
                              
                              
                              
                              (296,135
                              )
                              
                              
                              (48.38
                              )%Consulting
      Fees
                              
                              
                              20,000
                              
                              
                              
                              -
                              
                              
                              
                              20,000
                              
                              
                              
                              -Interest
      Expense
                              
                              
                              306,064
                              
                              
                              
                              333,559
                              
                              
                              
                              (27,495
                              )
                              
                              
                              (8.24
                              )%Total
      Operating Expenses
                              
                              $
                              1,366,371
                              
                              
                              
                              1,771,103
                              
                              
                              $
                              (404,732
                              )
                              
                              
                              (22.85
                              )%




Year Ended
                              
                              
                              Year Ended
                              
                              
                              VarianceDecember 31, 2007
                              
                              
                              December 31, 2006
                              
                              
                              Amount
                              
                              
                              %Sale,
      General and Administrative Expenses
                              
                              $
                              825,454
                              
                              
                              
                              817,601
                              
                              
                              $
                              7,853
                              
                              
                              
                              0.96
                              %Officers
      Salaries
                              
                              
                              612,090
                              
                              
                              
                              634,022
                              
                              
                              
                              (21,932
                              )
                              
                              
                              (3.46
                              )%Consulting
      Fees
                              
                              
                              -
                              
                              
                              
                              148,556
                              
                              
                              
                              (148,556
                              )
                              
                              
                              -Interest
      Expenses
                              
                              
                              333,559
                              
                              
                              
                              284,633
                              
                              
                              
                              48,926
                              
                              
                              
                              17.18
                              %Total
      Operating Expenses
                              
                              $
                              1,771,103
                              
                              
                              
                              1,884,812
                              
                              
                              $
                              (113,709
                              )
                              
                              
                              (6.03
                              )%




Operating
Gain (Loss)


Operating
profit (loss) from operations is calculated as our revenues less all of our
operating expenses. Our operating profit (loss) for the year ended December 31,
2008 was ($1,146,311) or (2.67%) of net revenue as compared to an operating loss
of ($191,137) or (0.26%) of net revenue for comparable period in 2007. This
decrease in operating gain (shouldn’t this say increase in operating loss?) was
primarily as a result of a decrease in gross revenues which were greater than
the decrease of operating expense. Our operating loss was a direct result of
losses we incurred due to the dramatic drop in the value of our inventory. This
condition resulted from the rapid rise of fuel prices. 2008 was the first year
in which we experienced a drastic decrease in the value of our
inventory.




11




Operating
profit (loss) from operations is calculated as our revenues less all of our
operating expenses. Our operating profit (loss) for the year ended December 31,
2007 was ($177,689) or (0.02%) of net revenue as compared to an operating profit
of $36,983 or (0.01%) of net revenue for comparable period in 2006.





For
the Three Months EndedDecember 31, 2008 and December 31, 2007





The
following table sets forth certain data derived from the unaudited consolidated
statements of operations, expressed as a percentage of net revenues for each of
the three month periods ended December 31, 2008 and December 31,
2007.





QUARTERLY
      RESULTS OFOPERATIONS
                        
                        Three Months ended December 312008
                        
                        
                        2007(In thousands)
                        
                        Amount
                        
                        
                        %
                        
                        
                        Amount
                        
                        
                        %Net
      Revenues
                        
                        $
                        4,629
                        
                        
                        
                        100.00
                        %
                        
                        $
                        15,422
                        
                        
                        
                        100.00
                        %Cost
      of Revenues
                        
                        
                        4,956
                        
                        
                        
                        107.06
                        %
                        
                        
                        15,346
                        
                        
                        
                        99.50
                        %Gross
      Profit
                        
                        
                        (327
                        )
                        
                        
                        (7.06
                        )%
                        
                        
                        77
                        
                        
                        
                        0.50
                        %Sales,
      general and administrative expenses
                        
                        
                        155
                        
                        
                        
                        3.35
                        %
                        
                        
                        219
                        
                        
                        
                        1.42
                        %Other
      operating expenses
                        
                        
                        94
                        
                        
                        
                        2.03
                        %
                        
                        
                        269
                        
                        
                        
                        1.75
                        %Total
      operating expenses
                        
                        
                        249
                        
                        
                        
                        5.37
                        %
                        
                        
                        488
                        
                        
                        
                        3.16
                        %Profit
      (loss) from operations
                        
                        $
                        (575
                        )
                        
                        
                        (12.43
                        )%
                        
                        $
                        (411
                        )
                        
                        
                        (2.67
                        )%




Revenues


Revenue
for thethree
month period ended December 31, 2008 were $4,629,155 a decrease of $10,793,123
or 69.98 % as compared to revenues for the three month period ended December 31,
2007 of $15,422,278. The decrease in revenue was a result of a decrease in the
number of vehicles we sold in the three month period in 2008 over 2007.
Specifically, in the three month period ended December 31, 2008 we sold 330 (for
year 2008 sold 3002 – 2008 10Q 9 month ) vehicles at an average sales price of
$14,028 as compared to 1,010 vehicles at an average sales price of $15,270
during the comparable period in 2007.  Despite a significant drop in
the price of fuel, market conditions did not improve as we had hoped they would
in the fourth quarter.  Relief from high fuel prices was met with a
further worsening of the economy in general. Our customer’s appetite for our
product did not return, and we were unable to successfully implement our
business strategies.





Cost
of Sales and Gross Profit
Margin


The
Company's cost of sales is composed primarily of the cost of purchasing vehicles
for resale. Cost of revenues was $4,955,906 or 107.06% of net revenues during
the three month period ended December 31, 2008 as compared to $15,345,628 or
95.5% for the comparable period in 2007, a decrease of $10,793,123 or 69.98%.
Thus, our gross margin was (7.06%) for the three month period ended December 31,
2008 as compared to 0.5% for the comparable period in 2007. The decrease in our
cost of revenue as a percent of revenue is attributable to a decrease in the
cost of the vehicles sold during the three month period ended September 30, 2008
as compared to the comparable period in 2007. Our cost of sales and gross profit
margin were impacted by our inability to purchase and sell vehicles in an
unstable used vehicle market. Supply of late model used vehicles outstripped
demand in the fourth quarter, and we were unable to find new customers given a
market that was so overly saturated.





Operating
Expenses


Our
operating expenses are comprised primarily of salaries, consulting fees and
sales, general and administrative expenses.





Sale,
General and Administrative


Sale,
general and administrative ("SGA'') expenses are composed principally of
commission, salaries of administrative personnel, fees for professional services
and facilities expenses. These expenses were $154,882 for the three month period
ended December 31, 2008 or 3.35% of net revenue as compared to $218,509 or 1.42%
of net revenue for the comparable period in 2007, a decrease in such expenses
of$63,627 or
(29.12%). The decrease in the ratio ofSGA expenses to net
revenue was primarily due to a decrease in operating expenses.We aggressively
implemented cost saving measures in the fourth quarter of 2008 in an effort to
reduce our operating expense. These measures included the elimination of full
time positions,as
well as the termination of our relationships with certain independent
contractors.





Other
Expenses


Our
combined expenses for officers salaries, consulting fees and interest was
$93,849 for the three month period ended December 31, 2008 or 2.03 % of net
revenue compared to the comparable periodin 2007 when such
expenses were $269,308 or 1.75% of net revenue. The decrease in such expenses is
attributable to decreased officers' salaries and interest expense and an
increase in consulting fees in 2008. Given the challenges the company
experienced in 2008, the company’s officers accepted a significant decrease in
compensation in the third and fourth quarter of 2008 as compared to 2007. The
following table shows the changes in the components of these expenses during the
comparable periods.




12




QUARTERLY
      OPERATINGEXPENSES
                                    
                                    Three Months Ended
                                    
                                    
                                    VarianceDecember 31, 2008
                                    
                                    
                                    December 31, 2007
                                    
                                    
                                    Amount
                                    
                                    
                                    %Sale,
      General and Administrative Expenses
                                    
                                    $
                                    154,882
                                    
                                    
                                    
                                    218,509
                                    
                                    
                                    $
                                    (63,627
                                    )
                                    
                                    
                                    (29.12
                                    )%Officers
      Salaries
                                    
                                    
                                    34,756
                                    
                                    
                                    
                                    174,756
                                    
                                    
                                    
                                    (140,000
                                    )
                                    
                                    
                                    (80.11
                                    )%Consulting
      Fees
                                    
                                    
                                    8,667
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    8,667
                                    
                                    
                                    
                                    -Interest
      Expense
                                    
                                    
                                    50,426
                                    
                                    
                                    
                                    94,552
                                    
                                    
                                    
                                    (44,126
                                    )
                                    
                                    
                                    (46.67
                                    )%Total
      Operating Expenses
                                    
                                    $
                                    248,731
                                    
                                    
                                    
                                    487,817
                                    
                                    
                                    $
                                    (239,086
                                    )
                                    
                                    
                                    (49.01
                                    )%





Operating
Gain (Loss)


Operating
gain or loss is calculated as our revenues less all of our operating expenses.
Our operating (loss) for the three month period ended December 31, 2008 was
($575,482) or (12.43%) of net revenue as compared to an operating loss of
($411,167) or (2.67%) of net revenue for comparable period in 2007, an increased
loss of ($164,315). This decrease in operating profit was primarily as a result
of a decrease in gross revenues which was greater than the decrease of operating
expense.Our
operating loss in the fourth quarter directly resulted from losses we incurred
due to the dramatic drop in the value of our inventory. The devaluation of our
inventory was the result of the rapid rise of fuel prices; these events
prevented us from finding buyers for our product.





Critical
Accounting Policies and Estimates





Our
management’s discussion and analysis of our financial condition and results of
our operations are based on our consolidated financial statements, which have
been prepared in accordance with accounting principles generally accepted in the
United States of America. The preparation of these consolidated financial
statements requires management to make estimates and judgments that affect the
amounts reported for assets, liabilities, revenue, expenses and the disclosure
of contingent liabilities. A summary of our significant accounting policies is
more fully described in Note 2 to our consolidated financial statements included
elsewhere in this Registration Statement.





Our
critical accounting policies are those that we believe are both important to the
portrayal of our financial condition and results of operations and that involve
difficult, subjective or complex judgments, often as a result of the need to
make estimates about the effect of matters that are inherently uncertain. The
estimates are based on historical experience and on various assumptions about
the ultimate outcome of future events. Our actual results may differ from these
estimates in the event unforeseen events occur or should the assumptions used in
the estimation process differ from actual results.





We
believe the following critical accounting policies affect our more significant
judgments and estimates used in the preparation of our consolidated financial
statements.





Revenue
Recognition





Securities
and Exchange Commission released Staff Accounting Bulletin No. 104, "Revenue
Recognition" ("SAB 104").  All of our revenue is generated from the
sales of used vehicles.  We recognize revenue only when one of
vehicles is sold at auction to a buyer and upon the occurrence of either the
title being transferred or when buyer assumes the responsibility of ownership
such as the risk of loss.





Allowance
for Doubtful Accounts





All of
our vehicles are sold through wholesale auctions houses.  The terms of
the auction sales require that payment be received by the seller prior to the
title being transferred to the purchaser.  Thus, we receive payment
upon the sale of each vehicle and therefore, we do not maintain an allowance for
doubtful accounts on our financial statements.




13




Income
Taxes





We
account for income taxes in accordance with the asset and liability method
required by SFAS No. 109, "Accounting for Income Taxes", issued by the Financial
Accounting Standards Board ("FASB").  Under this method, deferred
income tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial reporting and tax basis of
assets and liabilities.  Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled.





Inventory





Inventory
is stated at the lower of cost or market using the specific identification
basis.  Since we generally only own vehicles in our inventory for less
than 14 days, we do not have to estimate the realizability of our inventory
since it is generally 100% sold within 14 days.





Stock-Based
Compensation





We do not
maintain share-based incentive plans for our employees and have not granted any
stock as compensation.





14




Recent
Accounting Pronouncements





In
December 2003, the Securities and Exchange Commission released Staff Accounting
Bulletin No. 104, "Revenue Recognition" ("SAB 104").  SAB 104
clarifies existing guidance regarding revenue recognition.  Neither
the Company's adoption of SAB 104 nor its adoption of proposed Standards will
have an impact on its consolidated results of operations, financial position or
cash flows.





No other
recently issued accounting standards adopted by the Company during 2006, 2005
and 2004 nor any proposed standards will have an impact on its consolidated
results of operations, financial position or cash flows.





Item
      7A.
            QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK





As of
December 31, 2008, we had cash and cash equivalents of $328,658 invested in
standard bank checking accounts and highly liquid money market
instruments.  Such investments are subject to interest rate and credit
risk.  Such risks and a change in market interest rates would not be
expected to have a material impact on our financial condition and/or results of
operations. As of December 31, 2008, we had an outstanding balance of $69,856 on
our revolving credit facility with Manheim Auto Financial Services,
Inc.  Borrowings under such revolving credit facility would bear
interest at a variable rate equal to prime plus 2.0%.  In addition, as
of December 31, 2008, we had an outstanding balance of $100,000 on a bank
revolving credit facility which bears interest at a variable rate equal to prime
plus 1.0%.




15




Item
      8.
              Financial
      Statements and Supplementary
Data.





NORTHEAST
AUTOMOTIVE HOLDINGS, INC.
 
 FINANCIAL
STATEMENTS
 
 DECEMBER
31, 2008
 
 ORTHEAST
AUTOMOTIVE HOLDINGS, INC.
 
 INDEX





PAGEREPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
                  F-2CONSOLIDATED
      BALANCE SHEETS
                  F-3CONSOLIDATED
      STATEMENTS OF OPERATIONS
                  F-4CONSOLIDATED
      STATEMENTS OF CASH FLOWS
                  F-5CONSOLIDATED
      STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
                  F-6NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS
                  F-7-F-13





F-1




KEMPISTY
& COMPANY
 CERTIFIED
PUBLIC ACCOUNTANTS, P.C.
 
 15 MAIDEN
LANE - SUITE 1003 - NEW YORK, NY 10038 - TEL (212) 406-7272 - FAX (212)
513-1930
  REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  Board of
Directors
 Northeast
Automotive Holdings, Inc.




We have
audited the accompanying consolidated balance sheets of Northeast Automotive
Holdings, Inc. as of December 31, 2008 and 2007 and the related consolidated
statements of operations, changes in stockholders' equity and cash flows for
each of the years in the three year period ended December 31, 2008. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.




We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required at
this time, to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.




In our
opinion, the financial statements referred to above present fairly, in all
material respects, the consolidated financial position of Northeast Automotive
Holdings, Inc. at December 31, 2008 and 2007 and the results of
its   operations, cash flows, and stockholders’ equity for each
of the years in the three year period ended December 31, 2008 in conformity with
accounting principles generally accepted in the in the United States of
America.




The
accompanying consolidated financial statements have been prepared assuming the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has an accumulated deficit of $ 3,948,755 and
a working capital deficiency of $502,192 at December 31, 2008. The consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.




Kempisty
& Company
 Certified
Public Accountants PC
 New York,
New York
 April 15,
2009





F-2




NORTHEAST
AUTOMOTIVE HOLINGS, INC.




CONSOLIDATED
BALANCE SHEETS




December 31,
                                  
                                  
                                  December 31,2008
                                  
                                  
                                  2007ASSETSCurrent
      Assets:Cash
                                  
                                  $
                                  934,118
                                  
                                  
                                  $
                                  328,658Inventory
      (Note 4)
                                  
                                  
                                  1,485,247
                                  
                                  
                                  
                                  4,804,127Accounts
      receivable
                                  
                                  
                                  421,909
                                  
                                  
                                  
                                  829,498Total
      Current Assets
                                  
                                  
                                  2,841,275
                                  
                                  
                                  
                                  5,962,283Equipment,
      net (Note 5)
                                  
                                  
                                  21,698
                                  
                                  
                                  
                                  23,464Other
      assets (Note 6)
                                  
                                  
                                  8,479
                                  
                                  
                                  
                                  26,153TOTAL
      ASSETS
                                  
                                  $
                                  2,871,452
                                  
                                  
                                  $
                                  6,011,900LIABILITIES
      AND STOCKHOLDERS' EQUITY (DEFICIT)Current
      Liabilities:Accounts
      payable
                                  
                                  $
                                  159,040
                                  
                                  
                                  $
                                  298,168Note
      payable to bank (Note 7)
                                  
                                  
                                  100,000
                                  
                                  
                                  
                                  100,000Credit
      line (Note 7)
                                  
                                  
                                  198,006
                                  
                                  
                                  
                                  849,842Demand
      loans payable (Note 7)
                                  
                                  
                                  904,246
                                  
                                  
                                  
                                  1,816,576Credit
      Card loan payable (Note 7)
                                  
                                  
                                  -
                                  
                                  
                                  
                                  173,299Due
      to stockholders (Note 7)
                                  
                                  
                                  1,746,269
                                  
                                  
                                  
                                  1,605,707Accrued
      expenses (Note 17)
                                  
                                  
                                  133,946
                                  
                                  
                                  
                                  373,357Payroll
      taxes withheld and accrued
                                  
                                  
                                  1,961
                                  
                                  
                                  
                                  140,655Total
      Current Liabilities
                                  
                                  
                                  3,243,467
                                  
                                  
                                  
                                  5,357,604Commitments
      and contingencies (Note 15)
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Stockholders'
      equity (deficit)Preferred
      stock, 0.0001 par value , 10,000,000 shares authorized, 10,000,000 issued
      and outstanding (Note 8)
                                  
                                  
                                  1,000
                                  
                                  
                                  
                                  -Common
      stock, 0.001 par value , 300,000,000 shares authorized, 554,017 shares
      issued and outstanding December 31, 2008 and 887,285 shares issued and
      outstanding December 31, 2007 (Note 7)
                                  
                                  
                                  554
                                  
                                  
                                  
                                  887Capital
      Stock to be issued (500,000 Shares)(Note 13)
                                  
                                  
                                  20,000
                                  
                                  
                                  
                                  -Additional
      Paid in Capital
                                  
                                  
                                  3,556,363
                                  
                                  
                                  
                                  3,457,030Deficit
                                  
                                  
                                  (3,948,756
                                  )
                                  
                                  
                                  (2,802,445
                                  )(370,839
                                  )
                                  
                                  
                                  655,472Less:
      Treasury stock (6,667 common shares)
                                  
                                  
                                  (1,176
                                  )
                                  
                                  
                                  (1,176
                                  )Total
      Stockholders' Equity (deficit)
                                  
                                  
                                  (372,015
                                  )
                                  
                                  
                                  654,296TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
                                  
                                  $
                                  2,871,452
                                  
                                  
                                  $
                                  6,011,900




See
Notes to Financial Statements.




F-3





NORTHEAST
AUTOMOTIVE HOLDINGS, INC.


CONSOLIDATED
STATEMENTS OF OPERATIONS





Year Ended December 31,2008
                                
                                
                                2007
                                
                                
                                2006Net
      sales
                                
                                $
                                43,015,451
                                
                                
                                $
                                73,704,029
                                
                                
                                $
                                71,317,892Cost
      of sales
                                
                                
                                42,795,611
                                
                                
                                
                                72,124,063
                                
                                
                                
                                69,397,697Gross
      profit
                                
                                
                                219,840
                                
                                
                                
                                1,579,966
                                
                                
                                
                                1,920,195Operating
      expenses:Officers
      salaries
                                
                                
                                315,955
                                
                                
                                
                                612,090
                                
                                
                                
                                634,022Consulting
      fees
                                
                                
                                20,000
                                
                                
                                
                                -
                                
                                
                                
                                148,556Interest
      expense
                                
                                
                                306,064
                                
                                
                                
                                333,559
                                
                                
                                
                                284,633Selling,
      general and administrative
                                
                                
                                724,352
                                
                                
                                
                                825,454
                                
                                
                                
                                817,601Total
      operating expenses
                                
                                
                                1,366,371
                                
                                
                                
                                1,771,103
                                
                                
                                
                                1,884,812Profit
      (Loss) from operations
                                
                                
                                (1,146,531
                                )
                                
                                
                                (191,137
                                )
                                
                                
                                35,383Interest
      Income
                                
                                
                                -
                                
                                
                                
                                1,848
                                
                                
                                
                                431Income
      taxes (Note 14)
                                
                                
                                (220
                                )
                                
                                
                                (11,600
                                )
                                
                                
                                (1,169
                                )Net
      profit (loss)
                                
                                $
                                (1,146,311
                                )
                                
                                $
                                (177,689
                                )
                                
                                $
                                36,983Net
      profit (loss) per share basic and diluted
                                
                                $
                                (1.65
                                )
                                
                                $
                                (0.20
                                )
                                
                                $
                                0.04Weighted
      average number of shares outstanding
                                
                                
                                692,879
                                
                                
                                
                                887,285
                                
                                
                                
                                887,285




See
Notes to Financial Statements.




F-4




NORTHEAST
AUTOMOTIVE HOLDINGS, INC.




CONSOLIDATED
STATEMENTS OF CASH FLOWS





Year Ended December 31,2008
                                          
                                          
                                          2007
                                          
                                          
                                          2006CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      profit (loss)
                                          
                                          $
                                          (1,146,311
                                          )
                                          
                                          $
                                          (177,689
                                          )
                                          
                                          $
                                          36,983Adjustments
      to reconcile net loss to net cash used by operating
      activities:Depreciation
      and amortization
                                          
                                          
                                          5,113
                                          
                                          
                                          
                                          426
                                          
                                          
                                          
                                          2,309Stock
      issued for consulting fees
                                          
                                          
                                          20,000
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -Changes
      in operating assets and liabilities:(Increase)
      decrease in accounts receivable
                                          
                                          
                                          407,589
                                          
                                          
                                          
                                          (134,317
                                          )
                                          
                                          
                                          (100,381
                                          )(Increase)
      decrease in inventory
                                          
                                          
                                          3,318,880
                                          
                                          
                                          
                                          (1,148,068
                                          )
                                          
                                          
                                          (1,022,300
                                          )(Increase)
      decrease in other assets
                                          
                                          
                                          17,674
                                          
                                          
                                          
                                          13,338
                                          
                                          
                                          
                                          150,409Increase
      (decrease) in accounts payable
                                          
                                          
                                          (139,128
                                          )
                                          
                                          
                                          34,518
                                          
                                          
                                          
                                          116,003Increase
      (decrease) in accrued expenses
                                          
                                          
                                          (239,411
                                          )
                                          
                                          
                                          (2,403
                                          )
                                          
                                          
                                          (95,742
                                          )Increase
      (decrease) in payroll taxes
                                          
                                          
                                          (138,694
                                          )
                                          
                                          
                                          (41,063
                                          )
                                          
                                          
                                          70,702Total
      adjustments
                                          
                                          
                                          3,252,022
                                          
                                          
                                          
                                          (1,277,569
                                          )
                                          
                                          
                                          (879,000
                                          )CASH
      PROVIDED OR (USED) BY OPERATING ACTIVITIES
                                          
                                          
                                          2,105,712
                                          
                                          
                                          
                                          (1,455,258
                                          )
                                          
                                          
                                          (842,017
                                          )CASH
      FLOWS FROM INVESTING ACTIVITIES:Purchase
      of fixed assets
                                          
                                          
                                          (3,347
                                          )
                                          
                                          
                                          (23,890
                                          )
                                          
                                          
                                          (2,309
                                          )CASH
      USED BY INVESTING ACTIVITIES
                                          
                                          
                                          (3,347
                                          )
                                          
                                          
                                          (23,890
                                          )
                                          
                                          
                                          (2,309
                                          )CASH
      FLOWS FROM FINANCING ACTIVITIES:Proceeds
      of line of credit
                                          
                                          
                                          5,113,005
                                          
                                          
                                          
                                          8,846,708
                                          
                                          
                                          
                                          8,767,633Repayment
      of line of credit
                                          
                                          
                                          (5,764,841
                                          )
                                          
                                          
                                          (8,157,346
                                          )
                                          
                                          
                                          (8,607,153
                                          )Proceeds
      of stockholders loans
                                          
                                          
                                          884,415
                                          
                                          
                                          
                                          465,544
                                          
                                          
                                          
                                          142,178Repayment
      of stockholders loan
                                          
                                          
                                          (643,854
                                          )
                                          
                                          
                                          (61,833
                                          )
                                          
                                          
                                          (118,408
                                          )Proceeds
      of demand loans
                                          
                                          
                                          257,214
                                          
                                          
                                          
                                          517,245
                                          
                                          
                                          
                                          491,030Repayment
      of demand loans
                                          
                                          
                                          (1,169,545
                                          )
                                          
                                          
                                          (8,000
                                          )
                                          
                                          
                                          (239,469
                                          )Proceeds/(Repayments)
      on credit card loan
                                          
                                          
                                          (173,299
                                          )
                                          
                                          
                                          17,451
                                          
                                          
                                          
                                          60,018CASH
      PROVIDED OR (USED) BY FINANCING ACTIVITIES
                                          
                                          
                                          (1,496,905
                                          )
                                          
                                          
                                          1,619,769
                                          
                                          
                                          
                                          495,829NET
      INCREASE (DECREASE) IN CASH
                                          
                                          
                                          605,460
                                          
                                          
                                          
                                          140,621
                                          
                                          
                                          
                                          (348,497
                                          )CASHBeginning
      of year
                                          
                                          
                                          328,658
                                          
                                          
                                          
                                          188,037
                                          
                                          
                                          
                                          536,534End
      of year
                                          
                                          $
                                          934,118
                                          
                                          
                                          $
                                          328,658
                                          
                                          
                                          $
                                          188,037SUPPLEMENTAL
      CASH FLOW INFORMATIONCash
      paid for:Income
      tax payments
                                          
                                          $
                                          -
                                          
                                          
                                          $
                                          -
                                          
                                          
                                          $
                                          6,960Interest
      payments
                                          
                                          $
                                          306,064
                                          
                                          
                                          $
                                          333,559
                                          
                                          
                                          $
                                          284,633NON-CASH
      FINANCING ACTIVITIESDebt
      exchange for preferred stock
                                          
                                          $
                                          (100,000
                                          )
                                          
                                          $
                                          -
                                          
                                          
                                          $
                                          -Preferred
      stock issued for debt
                                          
                                          $
                                          100,000
                                          
                                          
                                          $
                                          -
                                          
                                          
                                          $
                                          -





See
Notes to Financial Statements.




F-5






NORTHEAST
AUTOMOTIVR HOLDINGS, INC.


CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY


FOR
THE YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006





Preferred Stock
                              
                              
                              Common Stock
                              
                              
                              Capital Stock
                              
                              
                              Additional0.0001 Par Value
                              
                              
                              0.001 Par Value
                              
                              
                              to be issued
                              
                              
                              Paid In
                              
                              
                              
                              
                              
                              TreasuryShares
                              
                              
                              Amount
                              
                              
                              Shares
                              
                              
                              Amount
                              
                              
                              Shares
                              
                              
                              Amount
                              
                              
                              Capital
                              
                              
                              Deficit
                              
                              
                              Stock
                              
                              
                              TotalsBalances
      at January 1, 2006
                              
                              
                              
                              
                              
                              
                              
                              
                              887,285
                              
                              
                              
                              3,457,917
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              (2,661,739
                              )
                              
                              
                              (1,176
                              )
                              
                              
                              795,002Net
      Profit
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              36,983
                              
                              
                              
                              -
                              
                              
                              
                              36,983-Balances
      December 31, 2006
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              887,285
                              
                              
                              
                              3,457,917
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              (2,624,756
                              )
                              
                              
                              (1,176
                              )
                              
                              
                              831,985Reincorporation
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              (3,455,255
                              )
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              3,455,255Net
      (Loss)
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              
                              
                              
                              
                              (177,689
                              )
                              
                              
                              -
                              
                              
                              
                              (177,689
                              )Balances
      at December 31, 2007
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              887,285
                              
                              
                              
                              2,662
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              3,455,255
                              
                              
                              
                              (2,802,445
                              )
                              
                              
                              (1,176
                              )
                              
                              
                              654,296Change
      in par value of common stock
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              
                              
                              
                              
                              (1,775
                              )
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              1,775
                              
                              
                              
                              
                              
                              
                              
                              -
                              
                              
                              
                              -Restated
      balances at December 31, 2007
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              887,285
                              
                              
                              
                              887
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              3,457,030
                              
                              
                              
                              (2,802,445
                              )
                              
                              
                              (1,176
                              )
                              
                              
                              654,296Reverse
      Split Adjustment (Note 9)
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              65Cancellation
      of Loan due to Shareholder (Note 8)
                              
                              
                              10,000,000
                              
                              
                              
                              1,000
                              
                              
                              
                              (333,333
                              )
                              
                              
                              (333
                              )
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              99,333
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              100,000Common
      Stock issued for consulting fees (Note 12)
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              500,000
                              
                              
                              
                              20,000
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              20,000Net
      (Loss)
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              
                              
                              
                              
                              (1,146,311
                              )
                              
                              
                              -
                              
                              
                              
                              (1,146,311
                              )Balances
      at December 31, 2008
                              
                              
                              10,000,000
                              
                              
                              $
                              1,000
                              
                              
                              
                              554,017
                              
                              
                              $
                              554
                              
                              
                              
                              500,000
                              
                              
                              $
                              20,000
                              
                              
                              $
                              3,556,363
                              
                              
                              $
                              (3,948,756
                              )
                              
                              $
                              (1,176
                              )
                              
                              $
                              (372,015
                              )




See
Notes to Financial Statements.


F-6





NORTHEAST
AUTOMOTIVE HOLDINGS, INC.





NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS





NOTE
1 - ORGANIZATION AND NATURE OF BUSINESS





Northeast
Automotive Holdings, Inc., (the “Company”), was incorporated on October 12, 2007
in the State of Nevada.    Pursuant to an Agreement and Plan
of Merger with Northeast Auto Acceptance Corp., a Florida Corporation
(“NEAA-FL”) in November 2007, we acquired title to all property owned by NEAA-FL
including its wholly owned subsidiary Northeast Auto Acceptance Corp., a New
York  Corporation (“NEAA-NY”).  All of our operating
business is currently conducted through our subsidiary,NEAA-NY, and our
principal executive offices are located at 2174 Hewlett Avenue, Suite 206,
Merrick, New York 11566. Our telephone number at this address is (516)
377-6311.





On
January 14, 2004, the Company issued 200,000 shares of it’s common stock to
Northeast Auto Acceptance Corp (a New York corporation) (“NAAC-NY”) when the
Company had 181,886 shares outstanding as consideration for the acquisition of
NAAC-NY. NAAC-NY was incorporated in New York on December 31,
1996.  NAAC-NY buys used automobiles at auctions, then repairs,
cleans, transports and resells them wholesale throughout the Pacific
Northwest.





On March
4, 2004, the Company acquired NAAC-NY the accounting acquirer and to change its
name to Northeast Auto Acceptance Corporation.  Catadyne Corporation,
the legal acquirer, was a non-operating public shell corporation at the time of
the transaction.





Also on
March 4, 2004, the Company issued its two officer/shareholders 17,000,000 shares
of common stock in exchange for (a) $100,000 as part of the acquisition of
NAAC-NY by reducing a loan payable to the officers by this amount and (b) the
200 shares of NAAC-NY they owned, which were all of the shares of NAAC-NY issued
and outstanding at the time.  Effectively, Mr. William Solko, the new
President and sole Director owns more than 50% of the voting Common Stock and
can pass any item that is subjected to approval of a stockholders
vote.





The
Company is treating this transaction as a reverse acquisition and reorganization
for accounting purposes.  The financial statements include the
operations of NAAC-NY, the accounting acquirer, for all periods
presented.




Going
Concern





The
financial statements have been prepared on the basis of a going concern which
contemplates the realization of assets and the satisfaction of liabilities in
the normal course of business. The Company has a working capital deficiency of $
502,192 at December 31, 2008 and the Company has an accumulated deficit of $
3,948,755 since inception.





While the
Company is attempting to produce sufficient revenues, the Company's cash
position may not be enough to support the Company's daily operations. Management
believes that the actions presently being taken to further implement its
business plan and generate sufficient revenues provide the opportunity for the
Company to continue as a going concern. While the Company believes in the
viability of its strategy to increase revenues and in its ability to raise
additional funds, there can be no assurances to that effect. The ability of the
Company to continue as a going concern is dependent upon the Company's ability
to further implement its business plan and generate sufficient revenues. The
financial statements do not include any adjustments that might be necessary if
the Company is unable to continue as a going concern.




NOTE-2
– SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Accounting
Estimates





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





Inventory





Inventory
is stated at the lower of cost or market using the specific identification
basis.





Depreciation





The cost
of equipment is depreciated over the estimated useful lives of the related
assets of five years.





Principles of
Consolidation





These
consolidated financial statements include the accounts of the Company and its
wholly owned subsidiary Northeast Auto Acceptance (New York). All inter-company
accounts and transactions have been eliminated.





These
consolidated financial statements have been prepared by management in accordance
with accounting principles generally accepted in the United
States.


F-7




NORTHEAST
AUTOMOTIVE HOLDINGS, INC.





NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS





NOTE-2
– SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)





Revenue
Recognition





The
Company buys used autos and recognizes revenue when it resells them and title is
transferred to the buyer. The costs of the auto, any fees charged, and any
repair costs are included in the costs of sales. The Company is the owner of the
vehicle until the sale is complete and as such has all risks inherent with such
ownership.





Income
Taxes





The
Company accounts for income taxes under the asset and liability method as
required by SFAS No. 109, "Accounting for Income Taxes", issued by the Financial
Accounting Standards Board ("FASB"). Under this method, deferred income tax
assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial reporting and tax basis of
assets and liabilities. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or
settled.





Reverse Stock
Split





The
Company effected a 1-for-5 reverse stock split of its common stock no par value
on February 20, 2004. Accordingly all share and per share information included
in the consolidated financial statements has been adjusted to reflect the
reverse stock split.





Adopted Accounting
Principles





In the
first quarter of 2009, we adopted Statement of Financial Accounting Standards
(SFAS) No. 141 (revised 2007), “Business Combinations” (SFAS
No. 141(R)) as amended by FASB staff position FSP 141(R)-1, “Accounting for
Assets Acquired and Liabilities Assumed in a Business Combination That Arise
from Contingencies.” SFAS No. 141(R) generally requires an entity to
recognize the assets acquired, liabilities assumed, contingencies, and
contingent consideration at their fair value on the acquisition date. In
circumstances where the acquisition-date fair value for a contingency cannot be
determined during the measurement period and it is concluded that it is probable
that an asset or liability exists as of the acquisition date and the amount can
be reasonably estimated, a contingency is recognized as of the acquisition date
based on the estimated amount. It further requires that acquisition-related
costs be recognized separately from the acquisition and expensed as incurred,
restructuring costs generally be expensed in periods subsequent to the
acquisition date, and changes in accounting for deferred tax asset valuation
allowances and acquired income tax uncertainties after the measurement period
impact income tax expense. In addition, acquired in-process research and
development is capitalized as an intangible asset and amortized over its
estimated useful life. SFAS No 141(R) is applicable to business combinations on
a prospective basis beginning in the first quarter of 2009. We did not complete
any business combinations in the first quarter of 2009.


In
February 2008, the FASB issued FSP 157-2, “Effective Date of FASB Statement
No. 157” (FSP 157-2), which delayed the effective date of SFAS
No. 157, “Fair Value Measurements” (SFAS No. 157) for all
non-financial assets and non-financial liabilities, except for items that are
recognized or disclosed at fair value in the financial statements on a recurring
basis (at least annually), until the beginning of the first quarter of 2009.
Therefore, in the first quarter of 2009, we adopted SFAS No. 157 for
non-financial assets and non-financial liabilities. The adoption of SFAS
No. 157 for non-financial assets and non-financial liabilities that are not
measured and recorded at fair value on a recurring basis did not have a
significant impact on our consolidated financial statements.





Recent
Accounting Pronouncements





In
December 2008, the FASB issued FSP 132(R)-1, “Employers’ Disclosures about
Postretirement Benefit Plan Assets” (FSP 132(R)-1). FSP 132(R)-1 requires
additional disclosures for plan assets of defined benefit pension or other
postretirement plans. The required disclosures include a description of our
investment policies and strategies, the fair value of each major category of
plan assets, the inputs and valuation techniques used to measure the fair value
of plan assets, the effect of fair value measurements using significant
unobservable inputs on changes in plan assets, and the significant
concentrations of risk within plan assets. FSP 132 (R)-1 does not change the
accounting treatment for postretirement benefits plans. FSP 132(R)-1 is
effective for us for fiscal year 2009.





In
April 2009, the FASB issued FSP FAS 157-4, “Determining Fair Value When
Volume and Level of Activity for the Asset or Liability Have Significantly
Decreased and Identifying Transactions That Are Not Orderly” (FSP 157-4). FSP
157-4 provides guidance on how to determine the fair value of assets and
liabilities when the volume and level of activity for the asset/liability has
significantly decreased. FSP 157-4 also provides guidance on identifying
circumstances that indicate a transaction is not orderly. In addition, FSP 157-4
requires disclosure in interim and annual periods of the inputs and valuation
techniques used to measure fair value and a discussion of changes in valuation
techniques. FSP 157-4 is effective for us beginning in the second quarter of
fiscal year 2009. The adoption of FSP 157-4 is not expected to have a
significant impact on our consolidated financial statements.





In
April 2009, the FASB issued FSP FAS 115-2 and FAS 124-2, “Recognition and
Presentation of Other-Than-Temporary Impairment” (FSP 115-2/124-2). FSP
115-2/124-2 amends the requirements for the recognition and measurement of
other-than-temporary impairments for debt securities by modifying the
pre-existing “intent and ability” indicator. Under FSP 115-2/124-2, an
other-than-temporary impairment is triggered when there is an intent to sell the
security, it is more likely than not that the security will be required to be
sold before recovery, or the security is not expected to recover the entire
amortized cost basis of the security. Additionally, FSP 115-2/124-2 changes the
presentation of an other-than-temporary impairment in the income statement for
those impairments involving credit losses. The credit loss component will be
recognized in earnings and the remainder of the impairment will be recorded in
other comprehensive income. FSP 115-2/124-2 is effective for us beginning in the
second quarter of fiscal year 2009. Upon implementation at the beginning of the
second quarter of 2009, FSP 115-2/124-2 is not expected to have a significant
impact on our consolidated financial statements.





In
April 2009, the FASB issued FSP FAS 107-1 and APB 28-1, “Interim Disclosure
about Fair Value of Financial Instruments” (FSP 107-1/APB 28-1). FSP 107-1/APB
28-1 requires interim disclosures regarding the fair values of financial
instruments that are within the scope of FAS 107, “Disclosures about the Fair
Value of Financial Instruments.” Additionally, FSP 107-1/APB 28-1 requires
disclosure of the methods and significant assumptions used to estimate the fair
value of financial instruments on an interim basis as well as changes of the
methods and significant assumptions from prior periods. FSP 107-1/APB 28-1 does
not change the accounting treatment for these financial instruments and is
effective for us beginning in the second quarter of fiscal year
2009.





NOTE
3 – ACCOUNTS RECEIVABLE





Accounts
receivable consists of the following:


2008
                  
                  
                  2007Accounts
      receivable-trade
                  
                  $
                  421,909
                  
                  
                  $
                  829,498





The
accounts receivable are due from the sale of used autos. No provision for
doubtful accounts has been recorded since most all receivables are collected
within 14 to 23 days. The Company has not had any unpaid receivables in the past
five years.


F-8




NORTHEAST
AUTOMOTIVE HOLDINGS, INC.





NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS





NOTE
4 – INVENTORIES





Inventory
consists of the following:


2008
                    
                    
                    2007Automobiles
      purchased for resale
                    
                    $
                    1,485,247
                    
                    
                    $
                    4,804,127





Inventory
is stated at the lower of cost or market using the specific identification
basis.





The
inventory is valued by comparing the total cost of the vehicle to our net
realizable value at the time of sale or to the "Blue Book" value for unsold
vehicles. The lower of these is used to price the inventory. Our experience has
been that costs are usually equal to or lower than our net realizable value or
the "Blue Book" value. Since our inventory is usually turned over in a short
time, our pricing is not sensitive to wide deviations from the actual results.
The Company has not had to make revisions to its pricing of inventory as a
result of deviations from actual results. The inventories are limited by the
amount of working capital the Company has at any one time.





NOTE
5 – EQUIPMENT


The
following is a summary of equipment:


2008
                    
                    
                    2007Equipment
                    
                    $
                    39,764
                    
                    
                    $
                    36,418Less:
      Accumulated depreciation
                    
                    
                    (18,067
                    )
                    
                    
                    (12,954
                    )$
                    21,698
                    
                    
                    $
                    23,464





NOTE
6 – OTHER ASSETS


December
      31,
                  
                  
                  December31,Other
      assets consists of the following:
                  
                  2008
                  
                  
                  2007Prepaid
      federal corporate taxes
                  
                  $
                  -
                  
                  
                  $
                  -Prepaid
      state corporate taxes
                  
                  
                  6680
                  
                  
                  
                  24,353Security
      deposit
                  
                  
                  1,800
                  
                  
                  
                  1,800$
                  8,479
                  
                  
                  $
                  26,153




F-9


NORTHEAST
AUTOMOTIVE HOLDINGS, INC.





NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS




NOTE
7 – NOTES AND LOANS PAYABLE





December
      31,
                    
                    
                    December
      31,2008
                    
                    
                    2007Line
      of credit (On October 4, 2004, the Company was approved for a line of
      credit of $975,000, as an inventory financing ("Floor Plan") loan with
      interest set at 2% above the Wall Street Journal Prime rate. The agreement
      requires any advances to be repaid for a vehicle on the earliest of forty
      eight (48) hours from the time of sale or within twenty four (24) hours
      from the time the Company receives payment by or on behalf of the purchase
      of such vehicle or demand. The agreement is personally guaranteed by the
      officers and their respective spouses. The collateral for the loan is any
      vehicle owned by the Company) The agreement does not have any other
      restrictive covenants.
                    
                    $
                    198,006
                    
                    
                    $
                    849,842Note
      payable bank (Note payable to bank due February 2008, is an open line of
      credit interest payable monthly at 1% over the prime rate, secured by a
      lien on all of the Company's assets and personally guaranteed by the
      majority stockholders. Interest is paid monthly on
account)
                    
                    $
                    100,000
                    
                    
                    $
                    100,000Convertible
      demand notes - The convertible demand notes in the amounts of $150,000,
      $250,000 and $75,000, issued September 15, 2004, December 19, 2005 and
      June 15, 2007 respectively, earn interest at the rate of 9% through May
      31, 2008, and at the rate of 6% thereafter, The notes are convertible at
      $0.25 per share. Interest is payable monthly.
                    
                    $
                    100,000
                    
                    
                    $
                    700,0006%
      unsecured demand notes payable
                    
                    $
                    804,246
                    
                    
                    $
                    1,116,576Loans
      payable-credit cards payable (Credit cards payable are unsecured, pay
      interest from 8.24% to 12.25% per annum and are payable in monthly
      installments)
                    
                    $
                    -
                    
                    
                    $
                    173,299Due
      to stockholders (The stockholder loans are unsecured, pay interest at 6%
      per annum, are subordinated to the bank loan and have no specific terms of
      repayment)
                    
                    $
                    1,746,269
                    
                    
                    $
                    1,605,707$
                    2,948,521
                    
                    
                    $
                    4,545,424




F-10


NORTHEAST
AUTOMOTIVE HOLDINGS, INC.





NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS





NOTE
8 – PREFERRED STOCK




On April
22, 2008 a Debt Exchange Agreement (“Agreement”) was entered into between
Northeast Automotive Holdings, Inc. (the “Company” or “NEAH”) and William Solko
(the “Holder”). The Agreement calls for the Holder to waive, release, forgive
and cancel a portion of the debt in the amount of $100,000 owed to the Holder by
the Company.




In
exchange and in consideration for the cancellation of the forgiveness of the
$100,000 of Debt, NEAH will issue to the Holder 10,000,000 shares of Series A
Convertible Preferred Stock (“Series A Preferred”).




Each share of the Series A Preferred
carries with it (i) voting rights equal to 30 times the number of Common Stock
votes, (ii) no dividends, (iii) liquidation preference equal to eight times the
sum available for distribution to Common Stock holders, (iv) automatically
convert after three years to one (1) common share, (v) not be subject to reverse
stock splits and other changes to the common stock capital of the Company, and
(vi) convertible at the option of the holder after forty-five (45)
days.




To
determine the Fair Value of the Series A Preferred stock, the Company sets out
to value each of the preferences of the Series A Preferred stock since there was
no market for the Series A Preferred.




First
preference:  (i) voting rights equal to 30 times the number of Common
Stock votes.




A value
can be associated to these voting rights when the Company, as a shell, would be
worth about $100,000 especially in consideration of the $ 5,106,455 of
liabilities at March 31, 2008 that would have to be taken over by any new
owners.




Second
preference: (ii) not entitled
to receive dividends paid on the Common stock.




The
Company believes this preference has no value.




Third
preference: (iii) liquidation preference equals to eight times the sum available
for distribution to Common stock holders.




The
estimated maximum liquidation value would approximate the stockholders equity
since any gross profit on liquidation of the inventory would be offset by
operating and liquidating expenses.  With the deterioration of the
used vehicle market during late 2007 and into 2008, the chances of a breakeven
liquidation was extremely unlikely in the near future.  Since the
preferred stock will automatically convert to common shares in a short three
years, this liquidation preference right is of limited value especially to an already
controlling
shareholder.  The Company therefore places no value on this
preference.




Fourth
preference: (iv) automatically convert after three years to one share of Common
stock.




The
Company believes this preference has no value since it is a forced conversion at
the same ratio as the voluntary conversion that is available after May 6,
2008.





The Fifth
preference: (v) not to be subject to reverse stock splits and other changes to
the Common stock capital of the Company and Sixth preference: (vi) convertible
at the option of the holder after forty-five (45) days.


The
exchange rate is one share of Common stock for each share of Preferred
stock.




The book
value of the underlying Common stock that the Series A Preferred stock is
convertible into was estimated to be $378,545 at April 22, 2008 (estimated
stockholders equity of $629,089 at April 22, 2008 divided by 16,618,586 shares
times 10,000,000 shares). The fair value of the Common stock cancelled owned by
Mr. Solko was $600,000 (10,000,000 shares returned to the Company times $0.06
market per share) and the loan forgiven by Mr. Solko was $100,000. The fair
value of what Mr. Solko gave up was $700,000.




On April
22, 2008, the common stock of the Company was trading at $0.06 per
share.




Since the
restricted Preferred Stock has no trading market, the Preferred needs to be
discounted by 30 to 40% for the $0.06 per share of freely trading Common stock
which gives us $0.042 at 30% discount to $0.036 at 40% discount. But even if we
used the Common stock value of $0.06 per share: Mr. Solko was trading more value
($700,000) {the 10,000,000 shares returned to the Company @ $0.06 plus the
$100,000 debt forgiveness} for less value ($600,000) [ the preferred stock of
10,000,000 convertible to 10,000,000 common stock @ $0.06] provided the Company
with $100,000 capital contribution.




As a
result of the above analysis, no expense was recorded for this transaction
because the fair value of the consideration given was equal to the fair value of
the preferred stock received.





NOTE
9-COMMON STOCK





On April
22, 2008 a Debt Exchange Agreement (“Agreement”) was entered into between
Northeast Automotive Holdings, Inc. (the “Company” or “NEAH”) and William Solko
(the “Holder”). The Agreement calls for the Holder to waive, release, forgive
and cancel a portion of the debt in the amount of $100,000 owed to the Holder by
the Company. In addition, in consideration for this Agreement, the Holder hereby
agrees to cancel 333,333 shares of the Holders’ 500,000 shares Common Shares.
All the shares have been restated for the reverse stock split.





On June
20,2008, the Company agreed to file Form S-8 and to issue 500,000 shares of the
Company’s common stock for consulting services. The Company will expense the
$20,000 over six months period.





NOTE
10- REVERSE STOCK SPLIT





The Board
of Directors and Shareholders have voted and approved a 1-for-30 reverse share
split (the “Reverse Stock Split”) of the common stock of the Corporation, $0.001
par value per share (the “Common Stock”).




NOTE
11- RELATED PARTY TRANSACTIONS





During
2006, 2007 and 2008, the Company paid $165,000, $120,000, and $ 20,000
respectively to William Solko's wife as a salary.





NOTE
12- PROFIT OR LOSS PER COMMON SHARE





Profit or
loss per common share is calculated as the profit or loss for the period divided
by the weighted average number of shares of the Company's common
stock.





NOTE
13 – CONSULTING AGREEMENT





On June
20, 2008, the Company entered into a consulting agreement for a period of six
months and agreed to file a Form S-8 for 500,000 shares of common stock. The
Company has charged the prepaid consulting expense $20,000 and is expensing this
amount over six months. The closing price for the Company’s common stock was
$0.04 on June 30, 2008.


F-11




NORTHEAST
AUTOMOTIVE HOLDINGS, INC.





NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS





NOTE
14 - INCOME TAXES


Due to
the Company’s net loss, there was no provision for income taxes. The Company has
net operating loss carry forwards for income tax purposes of approximately
$1,014,000 at December 31, 2008, $576,000 at December 31, 2007, and $398,000 at
December 31, 2006. These carry forward losses are available to offset future
taxable income, if any, and expire starting in the year 2024. The Company’s
utilization of this carry forward against future taxable income may become
subject to an annual limitation due to a cumulative change in ownership of the
Company of more than 50 percent.




The
components of the Company’s tax provision were as follows:





2008
                  
                  
                  2007
                  
                  
                  2006Current
      income tax (benefit) expense
                  
                  $
                  (465,000
                  )
                  
                  $
                  (13,000
                  )
                  
                  $
                  13,000Deferred
      income tax expense (benefit)
                  
                  
                  465,000
                  
                  
                  
                  68,000
                  
                  
                  
                  (13,000
                  )$
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -




The
reconciliation of the income tax computed at the U.S. Federal statutory rate to
income tax expense for the periods ended December 31, 2008 and
2007:


2008
                    
                    
                    2007
                    
                    
                    2006Tax
      expense (benefit) at Federal rate (34%)
                    
                    $
                    (390,000
                    )
                    
                    $
                    (57,000
                    )
                    
                    $
                    11,000State
      and local income tax, net of Federal benefit
                    
                    
                    (75,000
                    )
                    
                    
                    (11,000
                    )
                    
                    
                    2,000Effect
      of timing difference
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Change
      in valuation allowance
                    
                    
                    465,000
                    
                    
                    
                    68,000
                    
                    
                    
                    (13,000
                    )Net
      income tax (benefit) allowance
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -





Deferred
income taxes reflect the net income tax effect of temporary differences between
the carrying amounts of the assets and liabilities for financial reporting
purposes and amounts used for income taxes. The Company’s deferred income tax
assets and liabilities consist of the following:




Deferred
tax asset:




December 31,
                    
                    December 31,
                    
                    December 31,2008
                    
                    2007
                    
                    2006Deferred
      tax asset from loss carry forward
                    
                    $
                    683,000
                    
                    
                    $
                    218,000
                    
                    
                    $
                    150,000Valuation
      allowance
                    
                    
                    (683,000
                    )
                    
                    
                    (218,000
                    )
                    
                    
                    (150,000
                    )Net
      deferred tax assets
                    
                    $
                    0
                    
                    
                    $
                    0
                    
                    
                    $
                    0




The
Company recognized no income tax benefit for the loss generated for the periods
through December 31, 2008.





SFAS No.
109 requires that a valuation allowance be provided if it is more likely than
not that some portion or all of a deferred tax asset will not be realized. The
Company's ability to realize the benefit of its deferred tax asset will depend
on the generation of future taxable income. Because the Company has yet to
recognize significant revenue from the sale of its products, it believes that
the full valuation allowance should be provided.


F-12


NORTHEAST
AUTOMOTIVE HOLDINGS, INC.





NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS





NOTE
15-COMMITMENTS AND CONTINGENCIES





The
Company rents office space on a month-to-month basis at two locations and
beginning during 2008, warehouse space on a month-to-month
basis.  Rent expense was approximately $34,500 for 2008, $7,200 for
2007 and $7,500 for 2006. At December 31, 2007, future minimum lease payments
were $2,800 for 2008.





NOTE
16- OFF BALANCE SHEET RISK





Included
in the accompanying balance sheet is inventory of used automobiles at a carrying
value of $1,485,247 at December 31, 2008 and $4,804,127 at December 31, 2007,
which represents management's estimate of its net realizable value which
approximate market. Such value is based on forecasts for sales of used
automobiles in the ensuing year.  The used automobile industry is
characterized by rapid price changes.  Should demand for used
automobiles prove to be significantly less than anticipated, the ultimate
realizable value of such products could be substantially less than the amount
shown in the balance sheet.  This risk is increased by the Company's
need to move inventory due to the lack of working capital.





The
Company has not experienced any significant write-downs or write-offs of
inventory over the last three years.





NOTE
17- ACCRUED EXPENSES





Accrued
expenses consist of the following:





Accrued
expenses consist of the following:


2008
                    
                    
                    2007Interest
                    
                    $
                    59,444
                    
                    
                    $
                    89,920Auto
      repairs
                    
                    
                    19,302
                    
                    
                    
                    79,435Transportation
                    
                    
                    3,355
                    
                    
                    
                    122,147Commissions
                    
                    
                    -
                    
                    
                    
                    10,236Professional
      fees
                    
                    
                    51,845
                    
                    
                    
                    52,500Other
      expenses
                    
                    
                    -
                    
                    
                    
                    19,118$
                    133,946
                    
                    
                    $
                    373,356





NOTE
18- BUSINESS AND CREDIT CONCENTRATIONS





The
amount reported in the financial statements for cash, trade accounts receivable
and inventories approximates fair market value.  Because the
difference between cost and the lower of cost or market is immaterial, no
adjustment has been recognized in the financial statements.  See Note
14 for more details.


F-13





Item
      9.
            Changes
      In and Disagreements With Accountants on Accounting and Financial
      Disclosure.





None.




Item
      9A.
            Controls
      and Procedures.





EVALUATION
OF DISCLOSURE CONTROLS AND PROCEDURES




Our
management team, under the supervision and with the participation of our
principal executive officer and our principal financial officer, evaluated the
effectiveness of the design and operation of our disclosure controls and
procedures as such term is defined under Rule 13a-15(e) promulgated under the
Securities Exchange Act of 1934, as amended (Exchange Act), as of the last day
of the fiscal period covered by this report, December 31, 2008. The term
disclosure controls and procedures means our controls and other procedures that
are designed to ensure that information required to be disclosed by us in the
reports that we file or submit under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the SEC’s rules
and forms. Disclosure controls and procedures include, without limitation,
controls and procedures designed to ensure that information required to be
disclosed by us in the reports that we file or submit under the Exchange Act is
accumulated and communicated to management, including our principal executive
and principal financial officer, or persons performing similar functions, as
appropriate to allow timely decisions regarding required disclosure. Based on
this evaluation, our principal executive officer and our principal financial
officer concluded that our disclosure controls and procedures were effective as
of December 31, 2008.





Our
principal executive officer and our principal financial officer, are responsible
for establishing and maintaining adequate internal control over financial
reporting, as such term is defined in Exchange Act Rules 13a-15(f). Management
is required to base its assessment of the effectiveness of our internal control
over financial reporting on a suitable, recognized control framework, such as
the framework developed by the Committee of Sponsoring Organizations (COSO). The
COSO framework, published in Internal Control-Integrated
Framework , is known as the COSO Report. Our principal executive officer
and our principal financial officer, have chosen the COSO framework on which to
base its assessment. Based on this evaluation, our management concluded that our
internal control over financial reporting was effective as of December 31,
2008.





This
annual report on Form 10-K does not include an attestation report of our
registered public accounting firm regarding internal control over financial
reporting. Our principal executive officer and our principal financial officer’s
report was not subject to attestation by our registered public accounting firm
pursuant to temporary rules of the Securities and Exchange Commission that
permit us to provide only management’s report in this annual report on Form
10-K.





There
were no changes in our internal control over financial reporting that occurred
during the last quarter of 2008 that have materially affected, or are reasonably
likely to materially affect, our internal control over financial
reporting.





It should
be noted that any system of controls, however well designed and operated, can
provide only reasonable and not absolute assurance that the objectives of the
system are met. In addition, the design of any control system is based in part
upon certain assumptions about the likelihood of certain events. Because of
these and other inherent limitations of control systems, there can be no
assurance that any design will succeed in achieving its stated goals under all
potential future conditions, regardless of how remote.





CHANGES
IN INTERNAL CONTROL OVER FINANCIAL REPORTING





During
the fiscal year ended December 31, 2008, there were no changes in our internal
control over financial reporting that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.




Item
      9B.
            Other
      Information.




None.


16





PART III




Item
      10.
            Directors,
      Executive Officers, Promoters and Control Persons; Compliance with Section
      16(a) of the Exchange Act.




The
following table sets forth the name and age of our sole executive officer and
director.




Name
                  
                  Age
                  
                  Position
                  
                  Date of AppointmentWilliam
      Solko
                  
                  39
                  
                  President,
      Chief Executive Officer, Chairman, Treasurer
                  
                  December
      2004Michael
      Shaw
                  
                  39
                  
                  Vice
      President
                  
                  December
      2004Marsha
      Solko
                  
                  39
                  
                  Director
      of Administration
                  
                  December
      2004





Set forth
below is a brief description of the background and business experience of our
sole executive officer and director for the past five years.





William
Solko





President,
Chief Executive Officer and Director.  Mr. Solko has served as
President, Chief Executive Officer and Director of the Company since the
acquisition of our Northeast Auto Acceptance (NY) subsidiary.  He
founded our Northeast Auto Acceptance (NY) subsidiary in 1995.  Mr.
Solko has over 21 years of experience in the automobile industry including over
18 years of experience in commercial automobile buying.  Prior to
forming the Company, from 1993 to 1995, Mr. Solko was employed as a buyer for
two public automobile auction companies in the Chicago area. Mr. Solko attended
The State University of New York at New Paltz.





Michael
Shaw





Vice
President.  Mr. Shaw has more than 11 years of experience in
automotive sales.  Prior to joining our Northeast Auto Acceptance (NY)
subsidiary in 1995, Mr. Shaw operated his own used vehicle sales
operation.





Marsha
Solko





Director
of Administration.  Ms. Solko has held this position since the
formation of the Company’s Northeast Auto Acceptance subsidiary in 1994. Her
primary responsibility is to oversee the day to day operations of the company.
In her supervisory role, she is responsible for the monitoring of accounts
payables and receivables, daily cash flows, as well as handling vehicle title
issues.  Ms. Solko has over 19 years experience in the automobile
industry, having held the position of bookkeeper and office manager for several
vehicle dealerships during that time.





BOARD
OF DIRECTORS





Our Board
of Directors currently has only one member, William Solko, our President and
Chief Executive Officer.  Pursuant to our By-Laws, our Board may be
expanded, from time to time, to include up to seven directors.  All
directors hold office until the next annual meeting of shareholders following
their election or until their successors have been elected and qualified.
Executive officers are appointed by and serve at the pleasure of the Board of
Directors. We may adopt provisions in our By-laws and/or Articles of
Incorporation to divide the board of directors into more than one class and to
elect each class for a certain term. These provisions may have the effect of
discouraging takeover attempts or delaying or preventing a change of control of
the Company.





BOARD
COMMITTEES





The Board
of Directors does not have any committees.





DIRECTORS’
COMPENSATION





Directors
who are also employees of the Company receive no compensation for serving on the
Board of Directors.  We do not have any directors who are not
employees.


17





Term of
Office




Our
directors are appointed for a one-year term to hold office until the next annual
general meeting of our shareholders or until removed from office in accordance
with our bylaws. Our officers are appointed by our board of directors and hold
office until removed by the board.





Significant
Employees





None.





Family
Relationships





William
Solko and Marsha Solko are husband and wife. No other family relationships exist
among our directors or executive officers.





Involvement in Certain Legal
Proceedings




To our
knowledge, during the past five years, none of our directors, executive
officers, promoters, control persons, or nominees has been:





•
            the
      subject of any bankruptcy petition filed by or against any business of
      which such person was a general partner or executive officer either at the
      time of the bankruptcy or within two years prior to that
    time;•
            convicted
      in a criminal proceeding or is subject to a pending criminal proceeding
      (excluding traffic violations and other minor
offenses);•
            subject
      to any order, judgment, or decree, not subsequently reversed, suspended or
      vacated, of any court of competent jurisdiction, permanently or
      temporarily enjoining, barring, suspending or otherwise limiting his
      involvement in any type of business, securities or banking activities;
      or•
            found
      by a court of competent jurisdiction (in a civil action), the Commission
      or the Commodity Futures Trading Commission to have violated a federal or
      state securities or commodities
law.




Code of
Ethics





We have
adopted a Code of Ethics applicable to our Chief Executive Officer and Chief
Financial Officer. This Code of Ethics is filed herewith as an
exhibit.





Compliance with Section
16(a) of the Exchange Act




Section
16(a) of the Securities Exchange Act of 1934 requires the Company's officers and
directors, and persons who own more than 10 percent of a registered class of the
Company's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission (SEC). Officers,
directors, and greater than 10 percent stockholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.




To the
Company's knowledge, based solely on a review of the copies of such reports
furnished to the Company, all reports under Section 16(a) required to be filed
by its officers and directors and greater than ten percent beneficial owners
were timely filed as of the date of this filing.





Item
      11.
            Executive
      Compensation.




Compensation of Executive
Officers




The
following summary compensation table sets forth all compensation awarded to,
earned by, or paid to the named executive officers paid by us during the fiscal
years ended December 31, 2008 in all capacities for the accounts of our
executives, including the Chief Executive Officer (CEO) and Chief Financial
Officer (CFO):


18




Compensation of Executive
Officers (continued)





SUMMARY
COMPENSATION TABLE





Name and Principal Position
                          
                          Year
                          
                          Salary
                            ($)
                          
                          
                          Bonus
                            ($)
                          
                          
                          Stock
                            Awards
                            ($)
                          
                          
                          Option
                            Awards
                            ($)
                          
                          
                          Non-Equity
                            Incentive
                            Plan
                            Compensat
                            ion ($)
                          
                          
                          Non-
                            Qualified
                            Deferred
                            Compensati
                            on Earnings
                            ($)
                          
                          
                          All Other
                            Compensati
                            on
                            ($)
                          
                          
                          Totals
                            ($)William
      Solko
                            President,
      Chief
                          
                          2008
                          
                          $
                          156,443
                          
                          
                          
                          -0-
                          
                          
                          
                          -0-
                          
                          
                          
                          -0-
                          
                          
                          
                          -0-
                          
                          
                          
                          -0-
                          
                          
                          
                          -0-
                          
                          
                          $
                          156,443Executive
      Officer, TreasurerMichael
      Shaw, Vice President
                          
                          2008
                          
                          $
                          159,511
                          
                          
                          
                          -0-
                          
                          
                          
                          -0-
                          
                          
                          
                          -0-
                          
                          
                          
                          -0-
                          
                          
                          
                          -0-
                          
                          
                          
                          -0-
                          
                          
                          $159,511Marsha
      Solko, Director of Administration
                          
                          2008
                          
                          
                          -0-
                          
                          
                          
                          -0-
                          
                          
                          
                          -0-
                          
                          
                          
                          -0-
                          
                          
                          
                          -0-
                          
                          
                          
                          -0-
                          
                          
                          
                          -0-
                          
                          
                          $
                          -0-




Outstanding Equity Awards at Fiscal
Year-End Table. There were no individual grants of stock options to
purchase our common stock made to the named executive officers in the Summary
Compensation Table during the fiscal year ended December 31, 2008, and the
subsequent period up to the date of the filing of this prospectus.




Compensation of
Directors




For the
fiscal year ended December 31, 2008, we did not compensate our directors for
their services.





Item
      12.
            Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters.




The
following table sets forth certain information regarding the ownership of our
capital stock, as of April 15, 2009, for: (i) each director; (ii) each person
who is known to us to be the beneficial owner of more than 5%of our outstanding
common stock; (iii) each of our executive officers named in the Summary
Compensation Table; and (iv) all of our current executive officers and directors
of as a group. Except as otherwise indicated in the footnotes, all information
with respect to share ownership and voting and investment power has been
furnished to us by the persons listed. Except as otherwise indicated in the
footnotes, each person listed has sole voting power with respect to the shares
shown as beneficially owned.





Title of Class
                          
                          Name and Address of
                            Beneficial Owner
                          
                          Amount and Nature of
                            Beneficial Ownership
                          
                          
                          Percent of
                            Class(2)Class
      A Common
                          
                          William
      Solko (1)
                          
                          
                          166,667
                          
                          
                          
                          30.08
                          %Stock
                          
                          Michael
      Shaw (1)
                          
                          
                          66,667
                          
                          
                          
                          12.03
                          %





(1)
            Unless
      otherwise indicated in the footnotes to the table, (1) the individuals
      listed have sole voting and sole investment control with respect to the
      shares they beneficially own and (2) the address of each beneficial owner
      listed is c/o the Company, 2174 Hewlett Avenue, Suite 206, Merrick, New
      York 11566.(2)
            Based
      on 100,000,000 shares of Common Stock authorized, 554,017 shares issued
      and outstanding.


19


Item
      13.
            Certain
      Relationships and Related Transactions, and Director
      Independence.





None.





Item
      14.
            Principal
      Accounting Fees and Services.




Audit
Fees




For our
fiscal year ended December 31, 2008, we were billed approximately $30,000.00 for
professional services rendered for the audit and reviews of our financial
statements.




Tax Fees




For our
fiscal year ended December 31, 2008, we were not billed for professional
services rendered for tax compliance, tax advice, and tax planning.




All Other
Fees




The
Company did not incur any other fees related to services rendered by our
principal accountant for the fiscal year ended December 31, 2008.




Audit Related
Fees




For our
fiscal year ended December 31, 2008, we were not billed for professional
services rendered for audit related fees.





Pre-approval
Policy





Our Board
of Directors has adopted a procedure for pre-approval of all fees charged by our
independent auditors. Under the procedure, the Board approves the engagement
letter with respect to audit, tax and review services. Other fees are subject to
pre-approval by the Board, or, in the period between meetings, by a designated
member of Board. Any such approval by the designated member is disclosed to the
entire Board at the next meeting. The audit and tax fees paid to the auditors
with respect to fiscal year 2008 were pre-approved by the entire Board of
Directors.




Item
      15.
            Exhibits.




Exhibit No.
                    
                    Title
      of Document
                    
                    Location3.1
                    
                    Articles
      of Incorporation
                    
                    Incorporated
      by reference to Information Statement filed on November 8,
      20073.2
                    
                    Bylaws
                    
                    Incorporated
      by reference to Information Statement filed on November 8,
      200714.1
                    
                    Code
      of Ethics
                    
                    Incorporated
      by reference to Form 10-K filed on April 14, 200831.1
                    
                    Certification
      of Chief Executive Officer Pursuant to Rule 13a-14(a) of the
      Securities Exchange Act of 1934
                    
                    Filed
      herewith32.1
                    
                    Certification
      of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
                    
                    Filed
      herewith


20




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.




NORTHEAST
      AUTOMOTIVE HOLDINGS, INC.By:
                    /s/
      William SolkoWILLIAM
      SOLKOPresident,
      Chief Executive Officer, TreasurerDate:
                    May
      22, 2009





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.





Name
                            
                            Title
                            
                            Date/s/
      William Solko
                            
                            President,
      Chief Executive Officer, Treasurer
                            
                            March 22,
      2009WILLIAM
      SOLKO
 
 21