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

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

                                   FORM 10-QSB

(MARK ONE)

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

                  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2002

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

              FOR THE TRANSITION PERIOD FROM _________ TO _________

                         COMMISSION FILE NUMBER: 0-24220

                             KBK CAPITAL CORPORATION
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                    DELAWARE                                     75-2416103
         (STATE OR OTHER JURISDICTION OF                      (I.R.S. EMPLOYER
          INCORPORATION OR ORGANIZATION)                     IDENTIFICATION NO.)

   2200 CITY CENTER II, 301 COMMERCE, FORT WORTH, TEXAS              76102-4122
       (ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)                       (ZIP CODE)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (817) 258-6000



CHECK WHETHER THE ISSUER (1) FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION
13 OR 15(d) OF THE EXCHANGE ACT DURING THE PAST 12 MONTHS (OR FOR SUCH SHORTER
PERIOD THAT THE REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN
SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS.
YES       X                NO
     ---------------           -------------

STATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES OF COMMON
EQUITY, AS OF THE LATEST PRACTICABLE DATE.

COMMON STOCK, $0.01 PAR VALUE                            2,181,514
                                         (SHARES OUTSTANDING AS OF MAY 10, 2002)

TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT

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

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

<PAGE>

KBK CAPITAL CORPORATION
FORM 10-QSB -- Quarter Ended March 31, 2002


<Table>
<Caption>
                                                                                                          Page
                                                                                                         Number
<S>           <C>                                                                                        <C>
PART I.       FINANCIAL INFORMATION

Item 1 -      Financial Statements

              Consolidated Balance Sheets at March 31, 2002 (unaudited) and December 31, 2001              2

              Consolidated Statements of Operations for the Three Months Ended March 31, 2002 and          3
              2001 (unaudited)

              Consolidated Statements of Changes in Stockholders' Equity for the                           4
              Year Ended December 4 31, 2001 and the Three Months Ended March
              31, 2002 (unaudited)

              Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2002 and          5
              2001 (unaudited)

              Notes to Unaudited Consolidated Financial Statements                                        6-8

Item 2 -      Management's Discussion and Analysis of Financial Condition and Results of Operations       9-13

PART II.      OTHER INFORMATION                                                                            14

Item 1 -      Legal Proceedings                                                                            14

Item 6 -      Exhibits and Reports on Form 8-K                                                             14

              Signatures                                                                                   14
</Table>



                                       1
<PAGE>
                    KBK CAPITAL CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                MARCH 31, 2002 (UNAUDITED) AND DECEMBER 31, 2001

<Table>
<Caption>
                                                                      MAR. 31, 2002
                                                                       (UNAUDITED)     DEC. 31, 2001
                                                                      -------------    -------------
<S>                                                                   <C>              <C>
                                 ASSETS
Cash                                                                  $   8,252,163    $   8,310,453
Receivables:
     Accounts receivable, net                                            52,525,529       64,981,840
     Loans receivable, net                                               52,850,170       52,982,983
     Less allowance for credit losses                                    (5,895,175)      (8,475,641)
                                                                      -------------    -------------
     Total receivables, net                                              99,480,524      109,489,182
Premises and equipment, net of accumulated depreciation                   1,402,420        1,528,588
Intangible assets, net of accumulated amortization                        2,305,767        2,305,767
Other loan-related assets, net                                            6,949,269        6,949,269
Income taxes receivable                                                   3,057,717        1,175,840
Deferred tax asset, net                                                   1,934,457        3,817,797
Other assets                                                              2,080,514        2,000,931
                                                                      -------------    -------------
            Total assets                                              $ 125,462,831    $ 135,577,827
                                                                      =============    =============

                  LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Bank line of credit                                                   $  86,949,325    $  95,416,050
Mandatorily redeemable preferred securities                              16,121,678       16,107,974
Due to clients                                                            9,327,569       10,500,872
Accounts payable and other liabilities                                      628,632          845,069
Deferred revenue                                                             81,214          147,836
                                                                      -------------    -------------
     Total liabilities                                                  113,108,418      123,017,801

STOCKHOLDERS' EQUITY:
Preferred stock, $.10 par value.  Authorized 100,000 shares; no
     shares issued and outstanding                                               --               --
Common stock, $.01 par value.  Authorized 10,000,000 shares; issued
     3,577,485 shares and outstanding 2,179,237 at
     March 31, 2002 and issued 3,577,485 shares and
     outstanding 2,176,646 at December 31, 2001                              35,775           35,775
Additional paid-in capital                                               16,224,907       16,224,907
Retained earnings                                                         3,791,549        4,011,438
Treasury stock, at cost, 1,398,248 shares at March 31, 2002 and
     1,400,839 shares at December 31, 2001                               (7,697,818)      (7,712,094)
                                                                      -------------    -------------
            Total stockholders' equity                                   12,354,413       12,560,026
                                                                      -------------    -------------
                                                                      $ 125,462,831    $ 135,577,827
                                                                      =============    =============
</Table>

See accompanying notes to consolidated financial statements.



                                       2
<PAGE>
                    KBK CAPITAL CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS



<Table>
<Caption>
                                                                THREE MONTHS ENDED MARCH 31,
                                                                         (UNAUDITED)
                                                                ----------------------------
                                                                   2002            2001
                                                                ------------    ------------
<S>                                                             <C>             <C>
Earned discount income                                          $  2,019,762    $  2,685,268
Interest income - Loans                                            1,040,673       2,117,210
Other income - Fees                                                  425,568         623,508
                                                                ------------    ------------
     Total revenue                                                 3,486,003       5,425,986
Interest expense                                                   1,292,670       2,455,330
                                                                ------------    ------------
     Income after interest expense                                 2,193,333       2,970,656
Provision for credit losses                                          300,000       4,555,104
Provision for losses on other loan-related assets                         --       1,635,000
                                                                ------------    ------------
Income (loss) after interest expense and provision for losses      1,893,333      (3,219,448)
Operating expenses:
     Salaries and employee benefits                                1,358,836       1,523,761
     Occupancy and equipment                                         336,345         349,667
     Professional fees                                                71,000         164,673
     Other                                                           441,252         745,069
                                                                ------------    ------------
          Total operating expenses                                 2,207,433       2,783,170
                                                                ------------    ------------
Loss before income taxes                                            (314,100)     (6,002,618)
Income tax expense (benefit):
     Federal                                                        (104,864)     (1,981,460)
     State                                                               113         (76,931)
                                                                ------------    ------------
          Total income tax benefit                                  (104,751)     (2,058,391)
                                                                ------------    ------------

Net loss                                                        $   (209,349)   $ (3,944,227)
                                                                ============    ============
Net loss per share-basic and diluted                            $      (0.10)   $      (1.46)
                                                                ============    ============
Weighted-average common shares outstanding-basic and diluted       2,179,237       2,701,836
                                                                ============    ============
</Table>



See accompanying notes to consolidated financial statements.


                                       3
<PAGE>

                    KBK CAPITAL CORPORATION AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

                     YEAR ENDED DECEMBER 31, 2001 AND THREE
                    MONTHS ENDED MARCH 31, 2002 (UNAUDITED)

<Table>
<Caption>
                                          Common Stock
                                 ------------------------------    Additional                                            Total
                                     Shares                          paid-in         Retained          Treasury       stockholders'
                                  Outstanding        Amount          capital         earnings           stock            equity
                                 -------------    -------------   -------------    -------------    -------------    -------------
<S>                              <C>              <C>             <C>              <C>              <C>              <C>
Balance at December 31, 2000         2,764,404    $      35,775   $  16,263,709    $  12,991,900    $  (5,408,883)   $  23,882,501

Purchase of stock for treasury        (600,255)              --              --               --       (2,381,708)      (2,381,708)

Issuance of common stock from
     treasury                           12,497               --              --          (44,049)          78,497           34,448

Forfeiture of stock options                 --               --         (38,802)              --               --          (38,802)

Net loss                                    --               --              --       (8,936,413)              --       (8,936,413)
                                 -------------    -------------   -------------    -------------    -------------    -------------

Balance at December 31, 2001         2,176,646           35,775      16,224,907        4,011,438       (7,712,094)      12,560,026

Issuance of common stock from
     treasury                            2,591               --              --          (10,540)          14,276            3,736

Net loss                                    --               --              --         (209,349)              --         (209,349)

                                 -------------    -------------   -------------    -------------    -------------    -------------
Balance at March 31, 2002            2,179,237    $      35,775   $  16,224,907    $   3,791,549    $  (7,697,818)   $  12,354,413
                                 =============    =============   =============    =============    =============    =============
</Table>




                                       4
<PAGE>
                    KBK CAPITAL CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS


<Table>
<Caption>
                                                                   THREE MONTHS ENDED MARCH 31,
                                                                           (UNAUDITED)
                                                                  ------------------------------
                                                                      2002             2001
                                                                  -------------    -------------
<S>                                                               <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss                                                          $    (209,349)   $  (3,944,227)
Adjustments to reconcile net loss to net cash provided by
   operating activities:
     Depreciation and amortization                                      149,090          255,641
     Accretion on mandatorily redeemable preferred securities            13,704           12,535
     Provision for credit losses                                        300,000        4,555,104
     Losses on other loan-related assets                                     --        1,635,000
     Deferred income taxes                                            1,883,340       (1,369,158)
     Changes in operating assets and liabilities:
                   Accounts receivable, net                          12,063,063        7,853,433
                   Other assets                                         (79,583)        (267,249)
                   Due to clients                                    (1,173,303)         298,844
                   Accounts payable and other liabilities              (216,437)        (372,816)
                   Income taxes receivable/payable                   (1,881,877)      (1,477,952)
                   Deferred revenue                                     (66,622)          25,023
                                                                  -------------    -------------
                   Net cash provided by operating activities         10,782,026        7,204,178
                                                                  -------------    -------------

CASH FLOWS FROM INVESTING ACTIVITIES
     Net decrease (increase) in loans receivable, net                (2,354,405)       3,357,538
     Purchases of premises and equipment                                (22,922)        (497,677)
                                                                  -------------    -------------
                   Net cash provided by (used in) investing
                     activities                                      (2,377,327)       2,859,861
                                                                  -------------    -------------

CASH FLOWS FROM FINANCING ACTIVITIES
     Net repayments to the bank line of credit                       (8,466,725)     (17,812,402)
     Repurchase of common stock                                              --         (361,411)
     Issuance of common stock from treasury                               3,736           10,198
                                                                  -------------    -------------
                   Net cash used in financing activities             (8,462,989)     (18,163,615)
                                                                  -------------    -------------
                   Net decrease in cash                                 (58,290)      (8,099,576)
Cash at beginning of period                                           8,310,453       12,675,230
                                                                  -------------    -------------
Cash at end of period                                             $   8,252,163    $   4,575,654
                                                                  =============    =============
</Table>


See accompanying notes to consolidated financial statements.



                                       5
<PAGE>
                    KBK CAPITAL CORPORATION AND SUBSIDIARIES

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


1. GENERAL. The consolidated financial statements of KBK Capital Corporation
(the "Company") and its wholly owned subsidiaries, KBK Financial, Inc., ("KBK"),
KBK Receivables Corporation, ("SPC"), KBK Capital Trust I, (the "Trust"), and
KBK Acceptance Company LP ("SPV"), included herein, are unaudited as of and for
the three months ended March 31, 2002 and 2001. However, such unaudited
statements reflect all adjustments (consisting of normal recurring adjustments)
which are, in the opinion of management, necessary to fairly depict the results
for the periods presented. Certain information and note disclosures, normally
included in financial statements prepared in accordance with the accounting
principles generally accepted in the United States of America, have been
condensed or omitted pursuant to rules and regulations of the Securities and
Exchange Commission. The Company believes that the disclosures made herein are
adequate to make the information presented not misleading.

The results of operations for the three months ended March 31, 2002 are not
necessarily indicative of the results of operations to be expected for the
remainder of the year. It is suggested that these consolidated financial
statements be read in conjunction with the audited consolidated financial
statements and notes thereto for the years ended December 31, 2001 and 2000
which are included in the Company's 2001 annual report.

2. OTHER LOAN-RELATED ASSETS. During 2001, the Company foreclosed on a loan
which was secured by a Boeing 727 jet. As of March 31, 2002 and December 31,
2001, the Company valued this airplane at approximately $6.9 million and
classified it as other loan-related assets on the consolidated balance sheets.
The Company is actively marketing the airplane for sale.

3. LINE OF CREDIT. During 2000, KBK transferred all its purchased accounts
receivable and loans receivable to SPV on a non-recourse basis. Upon transfer to
SPV, the assets were pledged as security for a $350 million facility
("Facility") to a multi-user conduit sponsored by a bank. This revolving
Facility replaced KBK's "off-balance sheet" securitization as well as the
multi-bank revolving line of credit which was executed in 1993. The Facility has
an initial five-year commitment of $200 million, which may be increased up to
$350 million upon request by SPV and consent by the conduit sponsor. The
Facility matures December 15, 2005 and bears interest at the sponsor's
commercial paper rate plus 1.28%. At March 31, 2002, the outstanding
indebtedness under the Facility was approximately $87 million. The terms of the
Facility require SPV and KBK to comply with certain financial covenants
including the maintenance of a certain tangible net worth. The Facility also
provides for a borrowing base against eligible receivables and loans pursuant to
the terms of the Facility. KBK was in compliance with the financial covenants
and borrowing base limitations, and there was approximately $1.2 million in
available credit under this line at March 31, 2002.

4. MANDATORILY REDEEMABLE PREFERRED SECURITIES. In 1998, the Trust issued
1,725,000 shares of mandatorily redeemable Trust Preferred Securities. The
principal assets of the Trust are approximately $16.0 million in subordinated
debentures issued by the Company. The subordinated debentures, which are
eliminated upon consolidation of the Trust with the Company, bear interest at a
rate of 9.50% and mature in 2028, subject to extension or earlier redemption in
certain events. The Company owns all of the common securities of the Trust.



                                       6
<PAGE>
The Preferred Securities are redeemable for cash, at the option of the Trust, in
whole or in part, from time to time on or after November 30, 2001, at a
redemption price of $10.00 per share plus accumulated and unpaid distributions
thereon. The Preferred Securities will also be redeemable upon the repayment
either at maturity of the subordinated debentures or as a result of the
acceleration of the subordinated debentures upon an event of default.
Distributions on the Preferred Securities are cumulative and accrue at 9.50% per
annum on the sum of liquidation value thereof, plus unpaid distributions which
have been accrued in prior quarters. Accrued and unpaid distributions are
reflected in accounts payable and other liabilities in the accompanying
consolidated balance sheets.

The obligations of the Company with respect to the issuance of the Preferred
Securities constitute an irrevocable guarantee by the Company of the Trust's
obligation with respect to the Preferred Securities. Subject to certain
limitations, the Company may, from time to time, defer subordinated debenture
interest payments to the Trust, which would result in a deferral of distribution
payments on the related Preferred Securities. In such case, the distributions on
the Preferred Securities will accumulate and compound quarterly at 9.50% per
annum. The difference between the carrying value and liquidation value of the
Preferred Securities, $1,128,322 as of March 31, 2002, is being accreted over 15
years by making periodic charges to the Company's operations.

5. LOSS PER SHARE. Following is a reconciliation between the weighted average
shares outstanding used in the basic and diluted earnings per share
computations:

<Table>
<Caption>
                                                        Three Months Ended March 31
                                                      ------------------------------
                                                          2002             2001
                                                      -------------    -------------
<S>                                                   <C>              <C>
Net loss                                              $    (209,349)   $  (3,944,227)
                                                      =============    =============
Weighted average shares outstanding - basic               2,179,237        2,701,836
                                                      =============    =============
Loss per share - basic                                $        (.10)   $       (1.46)
                                                      =============    =============

Weighted average shares outstanding - basic               2,179,237        2,701,836
Effect of dilutive securities:
     Assumed exercise of stock options and warrants              --               --
                                                      -------------    -------------
Weighted average shares outstanding - diluted             2,179,237        2,701,836
                                                      =============    =============
Loss per share - diluted                              $        (.10)   $       (1.46)
                                                      =============    =============
</Table>

For the three months ended March 31, 2002 and 2001, 0 and 4,663 stock options,
respectively, were excluded from the calculation of diluted weighted average
shares outstanding because their inclusion would have been antidilutive.

6. STOCKHOLDERS' EQUITY. Pursuant to the Stock Repurchase Plan initiated in
1995, the Company held 1,398,248 shares of Treasury Stock at a cost of
$7,697,818 as of March 31, 2002. The Company purchased no shares during the
quarter ended March 31, 2002.




                                       7
<PAGE>
7. NEW ACCOUNTING PRONOUNCEMENT. The Company adopted Statement No. 142, Goodwill
and Other Intangible Assets, as of January 1, 2002 and no longer amortizes
goodwill. As of the date of adoption, the Company had unamortized goodwill in
the amount of approximately $1,805,000, which was subject to the transition
provisions of Statement No. 142. There was no amortization expense for the three
months ended March 31, 2002 related to the Company's goodwill, whereas this
expense amounted to approximately $58,000 for the quarter ended March 31, 2001.
The Company's reported net loss for the three months ended March 31, 2001
adjusted for excluding the effects of goodwill amortization would have been
approximately $3,886,000 compared to approximately $209,000 for the three months
ended March 31, 2002. Likewise, the Company's basic and diluted loss per share
for the three months ended March 31, 2001 adjusted for excluding the effects of
goodwill amortization would have been ($1.44) compared to ($.10) for the three
months ended March 31, 2002.

The unamortized non-compete agreement of approximately $500,000 is being
amortized on a straight-line basis over an original life of nine and one-half
years. Upon initial application of Statement No. 142, the Company reassessed the
useful life of its intangible assets and determined that the non-compete
agreement has a remaining useful life of three and one-quarter years, unchanged
from previous estimates. The Company will amortize the remaining balance related
to the non-compete over the next 3.25 years.




                                       8
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
         AND RESULTS OF OPERATIONS

GENERAL

The following commentary presents management's discussion and analysis of the
Company's financial condition and results of operations for the periods
presented. Certain of the statements included below, including those regarding
future financial performance or results or those that are not historical facts,
are, or contain, "forward-looking" information as that term is defined in the
Securities Exchange Act of 1934, as amended. The words "expect," "believe,"
"anticipate," "project," "estimate," and similar expressions are intended to
identify forward-looking statements. The Company cautions readers that any such
statements are not guarantees of future performance or events and such
statements involve risks, uncertainties and assumptions, including, but not
limited to, industry conditions, general economic conditions, interest rates,
competition, ability of the Company to successfully manage its growth, and other
factors discussed below and in the Company's Annual Report on Form 10-KSB for
the year ended December 31, 2001. Should one or more of these risks or
uncertainties materialize or should the underlying assumptions prove incorrect,
those actual results and outcomes may differ materially from those indicated or
implied in the forward-looking statements. This narrative should be read in
conjunction with information provided in the financial statements and
accompanying notes appearing in this report and the audited financial statements
appearing in the Company's Annual Report on Form 10-KSB for the year ended
December 31, 2001.

KBK Capital Corporation is the holding company for KBK Financial, Inc., an
independent financial services company that provides a broad line of financial
products and services to middle market commercial businesses with credit needs
of less than $10 million. KBK was founded in 1962 as a factoring company for
energy-related receivables in Texas. Factoring has served as the cornerstone of
KBK's growth. In 1994, KBK began introducing new products in an effort to expand
its client base and to meet the needs of its existing clients as their credit
quality improves. These products include purchase revolvers, working capital
loans, term loans and mezzanine loans.

KBK's client base consists primarily of businesses with annual revenues ranging
from $1 million to $50 million. The Company's clients typically have rapidly
expanding operations that drive their need for capital. KBK strives to provide
fast, flexible and creative solutions that are tailored to meet these needs.
This approach has provided KBK with a strong reputation in the middle market and
a well-diversified client base. The Company's clients are located in twenty-four
states and are engaged in a range of businesses, including energy-related,
manufacturing, and wholesale and retail distribution.

KBK's growth strategies include increasing market penetration, extending its
product line, and opportunistically pursuing strategic acquisitions and
partnerships that will complement or leverage the Company's product portfolio or
client relationships.

RESULTS OF OPERATIONS

         Analysis of First Quarter 2002 Compared to First Quarter 2001

The following table sets forth the results of operations and certain other data
of the Company for the first quarter of 2002 and the first quarter of 2001.



                                       9
<PAGE>
<Table>
<Caption>
                                               Quarter Ended               Quarter Ended
                                               March 31, 2002              March 31, 2001
                                                (unaudited)                 (unaudited)
                                        -------------------------   ------------------------
                                                       (dollars in thousands)
<S>                                     <C>           <C>           <C>           <C>
Average Net Assets                      $  103,197                  $  122,008
Total Revenue                                3,486         100.0%        5,426         100.0%
Interest Expense                             1,293          37.1%        2,455          45.3%
Provision for Credit Losses                    300           8.6%        4,555          83.9%
Losses on investments in other assets           --            --         1,635          30.1%
Operating Expenses                           2,207          63.4%        2,783          51.3%
Income Tax Benefit                            (105)         -3.1%       (2,058)        -37.9%
                                        ----------     ----------   ----------     ----------
Net Loss                                      (209)         -6.0%       (3,944)        -72.7%
                                        ==========     ==========   ==========     ==========
</Table>

Average net assets decreased 15.4% to $103.2 million for the quarter ended March
31, 2002 from $122.0 million for the quarter ended March 31, 2001. This $18.8
million decrease resulted from payoffs and liquidations related primarily to
deteriorating economic conditions during 2001.

Due to the decrease in outstanding assets and the significant decline in market
interest rates, revenue declined 35.8%, or $1.9 million, to $3.5 million for the
quarter ended March 31, 2002 from $5.4 million for the quarter ended March 31,
2001.

Interest expense decreased $1.2 to $1.3 million for the first quarter of 2002
compared with $2.5 million for the first quarter of 2001. This decrease resulted
primarily from the $20.9 million decrease in average funded debt related to the
$18.8 million decrease in average net assets, as well as the significant
decrease in market interest rates. The net effect of the decreased revenue and
interest expense was a decrease of $777,000, or 26.2%, in income after interest
expense for the quarter ended March 31, 2002, compared to the prior year
quarter.

A provision for credit losses of $300,000 was recorded for the first quarter of
2002, compared to $4.6 million for the first quarter of 2001. The decreased
provision for losses returns the Company to a more normalized provision compared
to the prior year charge, which was required by deterioration of the loan
portfolio during the first quarter of 2001. During the first quarter of 2002 the
Company had net chargeoffs of $2.9 million compared to $660,000 of net
chargeoffs for the first quarter of 2001. The increased chargeoffs relates to
final liquidation of assets which became nonperforming during 2001. The Company
recorded no losses on investments in other assets during the quarter ended March
31, 2002.

The allowance for credit losses at March 31, 2002 of $5.9 million represents
5.6% of total outstanding loans and accounts receivables and 5.7% of average net
assets for the quarter then ended. The allowance for credit losses at March 31,
2001 of $6.3 million represented 4.4% of total outstanding loans and accounts
receivables and 5.2% of average net assets for the quarter then ended.
Management believes the current allowance is adequate to cover potential losses
which might result from the purchased accounts receivable and loan portfolio at
March 31, 2002.

Operating expenses of $2.2 million for the three months ended March 31, 2002
decreased $576,000, compared with $2.8 million for the three months ended March
31, 2001. The Company implemented a cost reduction program during the fourth
quarter of 2001 and experienced significant reductions in salaries and employee
benefits, professional fees and marketing expenses.

As a result of the Company's adoption of Statement of Financial Accounting
Standards No. 142, "Goodwill and Other Intangible Assets," as of January 1,
2002, the Company no longer records amortization of goodwill. During the first
quarter of 2001, the Company reported goodwill amortization of approximately
$58,000, the elimination of which would have resulted in an adjusted net loss of
approximately $3,886,000 for that quarter, and an adjusted net loss per share of
($1.44) compared to actual net loss per share of ($1.46).



                                       10
<PAGE>
The unamortized non-compete agreement of approximately $500,000 is being
amortized on a straight-line basis over an original life of nine and one-half
years. Upon initial application of Statement No. 142, the Company reassessed the
useful life of its intangible assets and determined that the non-compete
agreement has a remaining useful life of three and one-quarter years, unchanged
from previous estimates. The Company will amortize the remaining balance related
to the non-compete over the next 3.25 years.

Due to the $314,000 loss before income taxes, the Company recorded an income tax
benefit of $105,000 for the first quarter of 2002 compared to a benefit of $2.1
million for the first quarter of 2001.

As a result of the foregoing, the Company reported a net loss of $209,000 for
the first quarter of 2002 compared to a net loss of $3.9 million for the first
quarter of 2001.

CHANGES IN FINANCIAL CONDITION

Total assets decreased 7.5% from $135.6 million at December 31, 2001 to $125.5
million at March 31, 2002. This decrease is primarily related to the $10.0
million decrease in net receivables from December 31, 2001 to March 31, 2002 and
the corresponding decrease in the bank line of credit from $95.4 million at
December 31, 2001 to $86.9 million at March 31, 2002. The balance in due to
clients decreased $1.2 million in relation to the $12.5 million decrease in
accounts receivable.

Stockholders' equity decreased $206,000, from $12.6 million at December 31, 2001
to $12.4 million at March 31, 2002, which was primarily the result of the
$209,000 net loss.

LIQUIDITY AND CAPITAL RESOURCES

The Company's capital requirements generally increase and decrease
proportionately to the change in earning assets. The method of funding the
portfolio changed significantly during 2000 with the implementation of the new
financing structure. The Company continues to search for ways to employ its
capital and to expand its portfolio through increased market penetration,
expansion of its current product line and pursuit of strategic acquisitions and
partnerships which enable the Company to provide complete financial services to
middle-market businesses.

KBK's financing is provided through a $350 million revolving facility. The
facility has an initial five-year commitment of $200 million, which may be
increased up to $350 million upon request by SPV and consent by the conduit
sponsor. The facility matures December 15, 2005 and bears interest at the
sponsor's commercial paper rate plus 1.28%.

The Company has not paid dividends on its common stock and currently does not
intend to pay cash dividends; rather, it intends to retain its cash for the
continued expansion of its business and the continuation of the stock repurchase
program initiated in 1995.

Under the Company's stock repurchase program, the Company may buy back in open
market transactions, block trades or private transactions, up to an aggregate of
1,500,000 shares (41.9% of the issued shares as of March 31, 2002) of the
Company's common stock at the current market price. At March 31, 2002, 1,398,248
shares of common stock were held in the treasury at a cost of $7.7 million. All
of such purchases have been funded out of the general funds of the Company,
which may have had the result of increasing the outstanding balance under the
credit facility.

Future sources of liquidity to fund growth in earning assets are anticipated
from the sale of earning assets, the issuance of unsecured and secured corporate
debt obligations, preferred and common stock issuance, as well as from
traditional bank financing.

CRITICAL ACCOUNTING POLICIES

The Company and its subsidiaries have established various accounting policies
which govern the application of accounting principles generally accepted in the
United States of America in the preparation and presentation of




                                       11
<PAGE>

the Company's consolidated financial statements. The significant accounting
policies of the Company are described in Note 1 of the Company's December 31,
2001 consolidated financial statements. Certain accounting policies involve
significant judgments, assumptions and estimates by management that have a
material impact on the carrying value of certain assets and liabilities, which
management considers to be critical accounting policies. The judgments,
assumptions and estimates used by management are based on historical experience,
knowledge of the accounts and other factors, which are believed to be reasonable
under the circumstances. Because of the nature of the judgments and assumptions
made by management, actual results could differ from these judgments and
estimates, which could have a material impact on the carrying values of assets
and liabilities and the results of operations of the Company.

Management analyzes the total receivables portfolio and other loan-related
assets to determine the adequacy of the allowance for credit losses and the
carrying value of other loan-related assets and the appropriate provision
required to maintain an adequate allowance. Estimating the allowance for credit
losses is a critical accounting policy. It is subjective in nature and requires
material estimates that may be subject to revision as facts and circumstances
warrant. In assessing the adequacy of the allowance, management reviews the
size, quality and risks of the assets in the portfolio and considers factors
such as specific known risks, past experience, the status and amount of
nonperforming assets and economic conditions. A specific allowance is provided
for individual loans considered to have specific loss potential. In addition,
the Asset Quality Committee of the Board of Directors reviews the assessments of
management in determining the adequacy of the Company's allowance for credit
losses on a quarterly basis. Based on this review, the provision is recorded to
maintain the allowance at a level deemed appropriate by management based on
probable losses in the portfolio. The same process is applied for evaluation of
the carrying value of other loan-related assets as is applied for estimating the
allowance for credit losses. While management uses available information to
recognize losses on assets, there can be no assurance that future additions to
the allowance will not be necessary.

CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS

The following table presents contractual cash obligations of the Company as of
March 31, 2002 (dollars in thousands):

<Table>
<Caption>
                                                                          Payments due by Period
                                                  ------------------------------------------------------------------------
                                                                  Less than        One to        Three to        After
Contractual Cash Obligations                         Total        One Year       Three Years    Five Years     Five Years
----------------------------                      ------------   ------------   ------------   ------------   ------------
<S>                                               <C>            <C>            <C>            <C>            <C>
Bank Line of Credit                               $     86,949   $         --   $         --   $     86,949   $         --
Mandatorily Redeemable Preferred Securities             17,250             --             --             --         17,250
Operating Leases                                           871            503            320             48             --
                                                  ------------   ------------   ------------   ------------   ------------
     Total Contractual Cash Obligations           $    105,070   $        503   $        320   $     86,997   $     17,250
                                                  ============   ============   ============   ============   ============
</Table>

The balance of mandatorily redeemable preferred securities is the fully accreted
amount due at maturity.

The following table presents contractual commercial commitments of the Company
as of March 31, 2002 (dollars in thousands):

<Table>
<Caption>
                                                                 Amount of Commitment Expiration Per Period
                                                  ------------------------------------------------------------------------
                                                   Unfunded       Less than        One to        Three to        After
Commercial Commitments                            Commitments      One Year      Three Years    Five Years     Five Years
----------------------                            ------------   ------------   ------------   ------------   ------------
<S>                                               <C>            <C>            <C>            <C>            <C>
Lines of Credit                                   $     39,768   $     17,038   $     22,665   $          0   $         65
Standby Letters of Credit                                  485            485             --             --             --
                                                  ------------   ------------   ------------   ------------   ------------
     Total Commercial Commitments                 $     40,253   $     17,523   $     22,665   $          0   $         65
                                                  ============   ============   ============   ============   ============
</Table>

EFFECTS OF RECENTLY ISSUED ACCOUNTING STANDARDS

In June 2001, the Financial Accounting Standards Board issued SFAS No. 141,
"Business Combinations", and SFAS No. 142. "Goodwill and Other Intangible
Assets". SFAS No. 141 requires that the purchase method of accounting be used
for all business combinations initiated after June 30, 2001. SFAS No. 142
requires that goodwill and intangible assets with indefinite useful lives no
longer be amortized, but instead tested for impairment at least annually. The
Company adopted the provisions of SFAS No. 141 in 2001 and SFAS No. 142
effective January 1, 2002.



                                       12
<PAGE>
SFAS No. 141 requires upon adoption of SFAS No. 142, that the Company evaluate
its existing intangible assets and goodwill that were acquired in a prior
purchase business combination, and to make any necessary reclassifications in
order to conform with the new criteria in SFAS No. 141 for recognition apart
from goodwill. Upon adoption of SFAS No. 142, the Company is required to
reassess the useful lives and residual values of all intangible assets acquired
in purchase business combinations, and make any necessary amortization period
adjustments by the end of the first interim period after adoption. In addition,
to the extent an intangible asset is identified as having an indefinite useful
life, the Company is required to test the intangible asset for impairment in
accordance with the provisions of SFAS No. 142 within the first interim period.
Any impairment loss will be measured as of the date of adoption and recognized
as the cumulative effect of a change in accounting principle in the first
interim period.

In connection with the transitional goodwill impairment evaluation, SFAS No. 142
requires the Company to perform an assessment of whether there is an indication
that goodwill is impaired as of the date of adoption. To accomplish this, the
Company must identify its reporting units and determine the carrying value of
each reporting unit by assigning the assets and liabilities, including the
existing goodwill and intangible assets, to those reporting units as of the date
of adoption. The Company has until June 30, 2002 to determine the fair value of
each reporting unit and compare it to the reporting unit's carrying amount. To
the extent a reporting unit's carrying amount exceeds its fair value, an
indication exists that the reporting unit's goodwill may be impaired and the
Company must perform the second step of the transitional impairment test. In the
second step, the Company must compare the implied fair value of the reporting
unit's goodwill, determined by allocating the reporting unit's fair value to all
of its assets (recognized and unrecognized) and liabilities in a manner similar
to a purchase price allocation in accordance with SFAS No. 141, to its carrying
amount, both of which would be measured as of the date of adoption. This second
step is required to be completed as soon as possible, but no later than the end
of the year of adoption. Any transitional impairment loss will be recognized as
the cumulative effect of a change in accounting principle in the Company's
consolidated statements of operations.

The Company adopted SFAS No. 142 as of January 1, 2002 and no longer amortizes
goodwill. As of the date of adoption, the Company had unamortized goodwill in
the amount of $1.8 million which will be subject to the transition provisions of
SFAS Nos. 141 and 142. Amortization expense related to goodwill was $58,000 for
the quarter ended March 31, 2001. Because of the detailed assessment required to
comply with adopting SFAS Nos. 141 and 142, it is not practicable to reasonably
estimate the impact of adopting these statements on the Company's consolidated
financial statements at the date of this report, including whether any
transitional impairment losses will be required to be recognized as the
cumulative effect of a change in accounting principle.

The unamortized non-compete agreement of approximately $500,000 is being
amortized on a straight-line basis over an original life of nine and one-half
years. Upon initial application of Statement No. 142, the Company reassessed the
useful life of its intangible assets and determined that the non-compete
agreement has a remaining useful life of three and one-quarter years, unchanged
from previous estimates. The Company will amortize the remaining balance related
to the non-compete over the next 3.25 years.




                                       13
<PAGE>
PART II  - OTHER INFORMATION

ITEM 1  -  LEGAL PROCEEDINGS

The Company is not a party to any litigation other than routine proceedings
incidental to its business and the Company does not expect that these
proceedings will have a material adverse effect on the consolidated financial
position or results of operations of the Company.

ITEM 6  -  EXHIBITS AND REPORTS ON FORM 8-K

         (a)      Exhibits

                  None

         (b)      Reports on Form 8-K

                  None



                                   SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the
Registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.




                                     KBK CAPITAL CORPORATION



Date  May 15, 2002                         /s/ Deborah B. Wilkinson
     ------------------     ----------------------------------------------------
                                            Deborah B. Wilkinson,
                            Executive Vice President and Chief Financial Officer




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