<PAGE>   1

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

                                   FORM 10-KSB

  X      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
-----    EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000

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

                         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 ST., FORT WORTH, TEXAS           76102
         (ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)                 (ZIP CODE)

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

           SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

       TITLE OF EACH CLASS           NAME OF EACH EXCHANGE ON WHICH REGISTERED
       -------------------           -----------------------------------------
   COMMON STOCK, .01 PAR VALUE   AMERICAN STOCK EXCHANGE, PACIFIC STOCK EXCHANGE
9.50% TRUST PREFERRED SECURITIES              AMERICAN STOCK EXCHANGE

           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
                                      NONE

CHECK WHETHER THE ISSUER (1) FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION
13 OR 15(d) OF THE EXCHANGE ACT DURING THE PAST 12 MONTHS (OR FOR SUCH SHORTER
PERIOD THAT THE REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN
SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS.

                                  YES  X     NO
                                      ---       ---

CHECK IF DISCLOSURE OF DELINQUENT FILERS IN RESPONSE TO ITEM 405 OF REGULATION
S-B IS NOT CONTAINED IN THIS FORM, AND NO DISCLOSURE WILL BE CONTAINED, TO THE
BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS
INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-KSB OR ANY AMENDMENT TO
THIS FORM 10-KSB [ ]

ISSUER'S REVENUES FOR ITS MOST RECENT FISCAL YEAR:  $22,347,925
                                                    -----------

THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NON-AFFILIATES OF THE
REGISTRANT, BASED UPON THE CLOSING SALE PRICE OF THE COMMON STOCK ON MARCH 6,
2001, AS REPORTED ON THE AMERICAN STOCK EXCHANGE, WAS APPROXIMATELY $5,154,139.
SHARES OF COMMON STOCK HELD BY EACH OFFICER AND DIRECTOR AND BY EACH PERSON WHO
OWNS 10% OR MORE OF THE OUTSTANDING COMMON STOCK HAVE BEEN EXCLUDED IN THAT SUCH
PERSONS MAY BE DEEMED TO BE AFFILIATES. THIS DETERMINATION OF AFFILIATE STATUS
IS NOT NECESSARILY A CONCLUSIVE DETERMINATION FOR OTHER PURPOSES.

AS OF MARCH 6, 2001 THE REGISTRANT HAD OUTSTANDING 2,709,259 SHARES OF COMMON
STOCK.

                       DOCUMENT INCORPORATED BY REFERENCE

  PORTIONS OF THE DEFINITIVE PROXY STATEMENT FOR THE REGISTRANT'S 2001 ANNUAL
 MEETING OF STOCKHOLDERS TO BE HELD MAY 15, 2001, ARE INCORPORATED BY REFERENCE
                                  IN PART III.




                                     Page 1
<PAGE>   2

                                      INDEX


<TABLE>
<CAPTION>
                                                                                                      PAGE NUMBER
<S>                       <C>                                                                                <C>
ITEM 1.                   DESCRIPTION OF BUSINESS                                                            3
                          PRODUCTS AND MARKETS                                                               3
                          SEGMENTS                                                                           4
                          CLIENTS                                                                            4
                          ACCOUNT DEBTORS                                                                    5
                          COMPETITION                                                                        6
                          GOVERNMENT REGULATION                                                              6
                          EMPLOYEES                                                                          7

ITEM 2.                   DESCRIPTION OF PROPERTY                                                            7
ITEM 3.                   LEGAL PROCEEDINGS                                                                  7
ITEM 4.                   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                7
ITEM 5.                   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS                           7
ITEM 6.                   MANAGEMENT'S DISCUSSION AND ANALYSIS                                               7
ITEM 7.                   FINANCIAL STATEMENTS                                                               13
ITEM 8.                   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL          28
                          DISCLOSURE
ITEM 9.                   DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS:  COMPLIANCE          28
                          WITH SECTION 16(a) OF THE EXCHANGE ACT
ITEM 10.                  EXECUTIVE COMPENSATION                                                             28
ITEM 11.                  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                     28
ITEM 12.                  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                     28
ITEM 13.                  EXHIBITS, LIST AND REPORTS ON FORM 8-K                                             29
                          (a)      EXHIBITS                                                                  29
                          (b)      REPORTS ON FORM 8-K                                                       30
</TABLE>



                                     Page 2
<PAGE>   3

                                     PART I

         CERTAIN OF THE STATEMENTS INCLUDED BELOW, INCLUDING THOSE REGARDING
FUTURE FINANCIAL PERFORMANCE OR RESULTS OR 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 THAT 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 OR INCLUDED BY REFERENCE IN THIS ANNUAL REPORT ON FORM 10-KSB.
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 IN THE FORWARD-LOOKING STATEMENTS.

ITEM 1. DESCRIPTION OF BUSINESS

         KBK Capital Corporation (the "Company") was incorporated in Delaware in
1992 to acquire its wholly owned subsidiary, KBK Financial, Inc. ("KBK"), a
commercial financial institution. KBK, in operation since 1962, is principally
engaged in providing financing to middle-market businesses through loans secured
by accounts receivable, inventory, equipment, owner-occupied real estate or
other assets of the borrower and through the discounted purchase of accounts
receivable. KBK or its predecessors have been engaged in the purchase of
accounts receivable for over thirty-eight years. During 2000, KBK closed a
transaction to sell its entire portfolio of purchased receivables and loans to
KBK Acceptance Company LP ("SPV"), a wholly-owned subsidiary, also known as a
special purpose vehicle. Under this structure, SPV pledges this portfolio of
receivables and loans to a multi-user conduit, which is sponsored by a bank, to
obtain the funds to purchase the assets from KBK.

         In 1993, KBK expanded the then-existing Houston, Texas marketing office
and established corporate, regional and national marketing headquarters in Fort
Worth, Texas. Through the acquisition of Coastal Financial Resources, Inc.
("Coastal") in December of 1994, a marketing office was established in New
Orleans, Louisiana, giving expanded market coverage across the Gulf Coast. In
addition, the Company established offices in Los Angeles, California in 1996 and
St. Louis, Missouri in 1998. The Company's Louisiana office was combined into
the Houston office during 2000.

         The Company's plan for continued growth in 2001 is based primarily on
growth in earning assets from the markets currently served. Another element of
the Company's growth plan is the introduction of new products and services. The
Company's strategy also includes the pursuit of opportunistic acquisitions and
formation of key partnerships.

         Unless otherwise noted, all references to the "Company" include KBK
Capital Corporation, KBK, SPV and its predecessors. The principal executive
offices of the Company are located at 2200 City Center II, 301 Commerce Street,
Fort Worth, Texas 76102 and the telephone number is (817) 258-6000.

Products and Markets

         The Company's business is providing financing to middle-market
businesses through loans secured by accounts receivable, inventory, equipment,
owner-occupied real estate or other assets of the borrower and through the
discounted purchase of accounts receivable. During 1998, the Company expanded
its product line to include a mezzanine product, which offers an attractive
financing alternative from traditional senior debt sources for clients whose
growth has outpaced their borrowing capacity. The Company believes it offers a
comprehensive product line of financing to commercial businesses in the
middle-market in order to provide a single source of financing for these
businesses. The Company may also generate fees and revenues through the
cross-selling of third party products to existing customers. These products
include lease financing and structuring and brokering asset securitizations.

         The Company has traditionally marketed its services, in part, by
soliciting referrals from providers of financial services to small businesses,
such as commercial bankers, lawyers and accountants. Management believes these
sources refer quality clients who are more likely to have the financial
information and reporting systems required for the Company's purchase of
accounts receivable. In addition, the Company relies on referrals from current
and former clients and direct inquiries from potential clients resulting from
the Company's reputation established over its long tenure in the business. The
Company has developed a formal



                                     Page 3
<PAGE>   4

network of referral sources who bring prospective client packages to KBK for
consideration. Such sources receive a fee when the Company actually advances
funds to the client referred.

         The Company has identified ten standard metropolitan statistical areas
("SMSA's") as having the highest concentrations of small commercial businesses
in the United States. The Company's goal is to develop correspondent networks in
each of the targeted SMSA's not currently served (New York City, Chicago,
Boston, Philadelphia, and Atlanta). The Company expects that it will, in the
future, offer its services through the addition of marketing offices in these
locations.

Segments

         The Company operates as one segment. The operating information used by
the Company's chief operating decision maker for purposes of assessing
performance and making operating decisions about the Company is the consolidated
financial statements presented herein. KBK management believes the only
significant activity of the Company is financing provided to its clients through
loans and purchase of accounts receivable.

Clients

         The Company's client portfolio of purchased receivables totaled 199
clients in twenty-three states during 2000 compared to 213 clients in twenty-two
states during 1999. As of December 31, 2000, no client exceeded 5% of total
managed receivables. The Company requires Board of Directors' approval of any
client facility (loan and/or working capital facility) in excess of $5,000,000
of committed funds.

         The Company's general policy has been to limit its exposure in a single
client to an amount which does not exceed the greater of the Company's allowance
for credit losses ($2.4 million at December 31, 2000, and $2.0 million at
December 31, 1999) or 15% of KBK's primary capital ($6.4 million at December 31,
2000 and $6.3 million at December 31, 1999). Based on facts and circumstances,
exceptions are made to this policy, with Board of Directors' approval, and there
can be no assurance that the Company's exposure to a particular client at any
time will not exceed such limits. At December 31, 2000, there was one client
which exceeded this limitation, with a balance of $6.9 million, or 28.9% of the
Company's net worth. At December 31, 1999, there were three clients which
exceeded this limitation, with balances of $6.9 million, $6.8 million and $6.5
million, or 29.0%, 28.6% and 27.0% of the Company's net worth. The Company is
continuing to reduce the client concentration on these accounts to conform to
its current concentration policy.

         The following table indicates the composition of the Company's total
volume of purchased receivables under management by type of client business for
the year ended December 31, 2000, as well as outstanding receivables under
management by type of client business at December 31, 2000, and December 31,
1999, and the related percentages thereon. The Company purchased $736.8 million
of receivables in 2000, a $94.1 million increase from the $642.7 million
purchased in 1999.

<TABLE>
<CAPTION>
                                                                   Gross Purchased                   Gross Purchased
                                     Total Volume                     Receivables                       Receivables
                                    of Receivables     Percent     Under Management      Percent     Under Management      Percent
                                   Under Management       of         Outstanding at         of        Outstanding at           of
Business of Client (Receivables)  Purchased in 2000      Total     December 31, 2000       Total     December 31, 1999       Total
--------------------------------  -----------------    --------    -----------------     --------    -----------------     --------
                                (dollars in thousands)           (dollars in thousands)           (dollars in thousands)
<S>                              <C>                   <C>        <C>                   <C>       <C>                     <C>

Manufacturing                       $    271,909          36.9%      $     21,756          31.0%      $     21,131            30.3%
Services                                  66,170           9.0              8,043          11.5             10,045            14.4
Wholesale and Retail Sales                58,976           8.0              5,664           8.1              6,606             9.5
Agriculture                               46,887           6.4              2,793           4.0              2,490             3.6
Engineering and Construction              35,398           4.8              3,095           4.4              4,160             6.0
Transportation                            21,144           2.9                936           1.3              1,706             2.4
Energy Related                             5,794            .8                191           0.3              1,336             1.9
Other                                         --            --                364           0.5                129             0.2
Pool Purchases*                          230,543          31.2             27,248          38.9             22,085            31.7
                                    ------------      --------       ------------      --------       ------------        --------
      Total                         $    736,821         100.0%      $     70,090         100.0%      $     69,688           100.0%
                                    ============      ========       ============      ========       ============        ========
</TABLE>

----------

* Pool purchases are not recorded as individual invoice purchases but as a
collection of invoices which have been purchased and recorded as the aggregate
sum of receivables purchased.



                                     Page 4
<PAGE>   5

         The following table indicates the composition of the Company's loan
balances under management by type of client business for the years ended
December 31, 2000 and 1999, and the related percentages thereon. The Company's
outstanding loan balance as of December 31, 2000 was $84.2 million, a $3.2
million decrease from the $87.4 million balance at December 31, 1999.

<TABLE>
<CAPTION>
                                  Loan Balance            Percent         Loan Balance            Percent
                               Outstanding as of            of           Outstanding at             of
Business of Client (Loans)     December 31, 2000           Total        December 31, 1999          Total
--------------------------     -----------------        ------------    -----------------       ------------
                            (dollars in thousands)                   (dollars in thousands)
<S>                          <C>                        <C>          <C>                         <C>

Manufacturing                    $     32,558                38.7%        $     33,075                37.8%
Wholesale and Retail Sales             19,484                23.1               10,896                12.5
Transportation                         13,703                16.3               15,294                17.5
Services                                8,744                10.4               10,408                11.9
Energy Related                          3,656                 4.3                7,715                 8.8
Engineering and Construction            2,555                 3.0                2,340                 2.7
Agriculture                             2,050                 2.4                4,554                 5.2
Other                                   1,469                 1.8                3,125                 3.6
                                 ------------        ------------         ------------        ------------
      Total                      $     84,219               100.0%        $     87,407               100.0%
                                 ============        ============         ============        ============
</TABLE>

Account Debtors

         During 2000 and 1999, the accounts receivable under management
underlying the Company's working capital facility portfolio represented 6,089
and 6,693 different debtor entities, respectively. The most significant
concentration in 2000 was debtors in the wholesale and retail sales industry.
This category of debtors made up 20.0% of the total balance of purchased
receivables under management outstanding at December 31, 2000, as compared to
10.8% at December 31, 1999. Due to the diversity of products in this industry,
management does not feel this level of industry concentration is a significant
negative concentration. The most significant concentration in 1999 was debtors
in the manufacturing industry. This category made up 16.5% of the total balance
of purchased receivables under management outstanding at December 31, 1999, as
compared to 10.5% at December 31, 2000.

<TABLE>
<CAPTION>
                                                                    Gross Purchased                    Gross Purchased
                                 Total Volume                      Receivables Under                  Receivables Under
                                Of Receivables                         Management                         Management
                               Under Management     Percent of      Outstanding at      Percent of      Outstanding at    Percent of
     Account Debtors           Purchased in 2000      Total        December 31, 2000      Total       December 31, 1999     Total
     ---------------           -----------------    ----------     -----------------    ----------    -----------------   ----------
                            (dollars in thousands)              (dollars in thousands)             (dollars in thousands)
<S>                          <C>                    <C>         <C>                     <C>         <C>                   <C>

Manufacturing                    $       99,538          13.5%      $        7,320          10.5%       $       11,523         16.5%
Wholesale and Retail Sales              159,734          21.7               14,008          20.0                 7,541         10.8
Transportation                           62,633           8.5                5,351           7.6                 4,808          6.9
Federal, State Local Govt.               77,392          10.5                4,189           6.0                 2,801          4.0
Energy Related                           29,273           4.0                2,122           3.0                 4,406          6.3
Engineering and Construction             32,007           4.3                3,938           5.6                 6,255          9.0
Services                                 26,609           3.6                3,865           5.5                 2,002          2.9
Agriculture                              16,823           2.3                1,470           2.1                 2,920          4.2
Other                                     2,269           0.3                  579           0.8                 5,347          7.7
Pool Purchases*                         230,543          31.3               27,248          38.9                22,085         31.7
                                 --------------       -------       --------------       -------        --------------      -------
        Totals                   $      736,821         100.0%      $       70,090         100.0%       $       69,688        100.0%
                                 ==============       =======       ==============       =======        ==============      =======
</TABLE>

* Pool purchases are not recorded as individual invoice purchases but as a
collection of invoices, which have been purchased and recorded as the aggregate
sum of receivables purchased.

       During 2000, one individual account debtor's total receivables purchased
by the Company reached 7.9% of the total volume of receivables purchased during
the year. During 1999, no individual account debtor's total receivables
purchased by the Company exceeded 5.0% of the total volume of receivables
purchased during such year. Due to the constantly changing nature of the
Company's clients and the changing volume and nature of receivables that clients
may offer the Company for purchase, the receivables purchased from the Company's
clients may result in the Company holding receivables from one account debtor
which constitute 5% to 10% of outstanding receivables then held by the Company.
There may also be times when a related group of debtors exceed such levels of
concentration. These concentrations are in excess of the Company's allowance for
credit losses and can be a significant percentage of the Company's net worth.
This account debtor concentration exposes the Company to credit risk with
respect to particular account debtors which could have a material negative
effect on the Company's operations. Although



                                     Page 5
<PAGE>   6

specific exposure limits are set for each account, which at any time does not
generally exceed 20% of the Company's net worth, exceptions are regularly made
to this policy, and there can be no assurance that the Company's exposure to a
particular account debtor (or group of affiliated account debtors) will not at
any time exceed such percentage.

Competition

       The Company encounters significant competition from factoring companies,
asset based lenders, commercial banks and other financial institutions engaged
in secured lending. Due to the size of facilities offered by the Company and the
size of target clients, the Company competes with a large number of local and
regional sources of financing, as well as large national competitors. Many of
these competitors have significantly greater financial and other resources than
the Company and have access to capital markets at a lower cost than the Company
is currently able to obtain.

         The Company's competitors include Heller Financial, CIT, Bank of
America Business Credit, BayView Financial, Coast Business Credit, Congress
Financial, the Foothill Group, a subsidiary of NORWEST, GE Capital Commercial
Credit, and Wells Fargo Business Credit. The competition for earning assets has
had the effect of reducing yields.

Government Regulation

         Federal Assignment of Claims Act. In connection with certain of its
clients whose account debtors include the United States or departments or
agencies thereof (the "Federal Government"), certain receivables sold or pledged
to the Company are subject to the Federal Assignment of Claims Act ("FACA").
FACA provides that an assignment of a client's contractual claim for monies due
from the Federal Government will be enforceable against the Federal Government
by a third party assignee of such client only under limited circumstances.
Certain aspects of the Company's purchased or pledged receivables make
compliance with FACA impractical or impossible, or make the protections afforded
by FACA unavailable to the Company. As a result, the Company does not always
comply with FACA when it purchases or receives a pledge of receivables where the
Federal Government is the account debtor, causing all assignments of receivables
purchased by the Company to which the Federal Government is the account debtor
to be unenforceable by the Company as regards the Federal Government. Such
failure to comply with FACA has no effect on the validity of assignment or
pledge among the Company, the client and third parties other than the Federal
Government. Non-compliance with FACA causes the Company to lose any right it may
have to receive payments directly from the Federal Government or cause the
Federal Government to acknowledge the Company's claim in such receivables.
However, FACA does not limit the Company's ability to require its clients to
direct payments made by the Federal Government to a lockbox controlled by the
Company. The Federal Government also has significant rights of setoff in
connection with its contractual payments. Typically, the Company can protect
itself from certain rights of setoff by account debtors, either by pursuing its
rights against clients for breach of representation regarding the absence of
setoffs with respect to purchased receivables, or sending the account debtors a
notice of assignment pursuant to the Uniform Commercial Code. In cases where the
Federal Government is the account debtor, an assignee must comply with FACA in
order to protect itself from such setoffs, thus the Company is unable to avail
itself of such protection (other than by pursuing its rights against clients for
breach of representations). The Federal Government has broad setoff rights,
including setoffs for unpaid taxes and setoffs arising from other contracts
between the client and the Federal Government. During 2000 and 1999,
respectively, the Federal Government comprised 10.3% and 5.7% of the account
debtors for the Company's total volume of purchased receivables under
management. The Company has not experienced a disproportionate dilution rate
with respect to such receivables compared to other of the Company's receivables.

       State Usury Laws. Usury laws generally limit the amount of interest that
a creditor may contract for, charge or receive in connection with the loan of
money. In the State of Texas (in which the Company's primary offices are
presently located), state law prohibits creditors from contracting for,
charging, reserving, taking or receiving interest at a rate in excess of a
varying index. For loans in which the interest rate is fixed, the usury ceiling
is equal to the index preceding the week in which the contract is entered into.
For varying rate loans, the index floats. Under the provisions of Texas law, the
index may never exceed 24% per year (or, in the case of business purpose loans
exceeding $250,000, 28% per year). If the amount of the index is less than 18%
per year, the creditor may, nevertheless, charge interest pursuant to a written
agreement at the rate of 18% per year. Because of the low interest rate
environment, the Texas usury ceiling has, since early in 1985, prohibited a
business creditor from contracting for, charging, reserving, taking or receiving
interest at a rate in excess of 18% per year. Section 306.103 of the Texas
Finance Code defines an "account purchase transaction" as an agreement in which
a commercial enterprise sells accounts receivable at a discount with or without
a related repurchase obligation. This law provides that the amount of any
discount associated with the purchase or any fees paid to an account service
provider is not interest. Also, the law provides that the parties'
characterization of an account purchase transaction is conclusive that the
transaction is not a loan.



                                     Page 6
<PAGE>   7

Employees

         The Company had 79 full-time employees at December 31, 2000, of whom
six were employed in executive and administrative positions and 18 were employed
in marketing. None of the Company's employees are a party to any collective
bargaining agreement, and the Company considers its relations with employees to
be satisfactory.

ITEM 2. DESCRIPTION OF PROPERTY

         The Company leases its offices at each of its locations in Fort Worth
and Houston, Texas, Pasadena, California, and St. Louis, Missouri under lease
agreements expiring at various dates through 2004. The Company believes that its
facilities are adequate to meet the Company's needs in these markets; however,
space will be required at the location of any new marketing office opened by the
Company.

ITEM 3. 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 Company.

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

         None.

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         The Company's common stock is traded on the American Stock Exchange and
the Pacific Stock Exchange. At March 20, 2001 there were 109 holders of record
of the Company's common stock. The Company has not paid or declared dividends on
its common stock during the two most recent fiscal years and does not currently
intend to pay cash dividends on its common stock in the foreseeable future. The
following table provides market data for the Company's common stock based on
closing prices:

PER SHARE MARKET DATA

<TABLE>
<CAPTION>
                                                   2000                                1999
                                       ----------------------------        ----------------------------
        QUARTER                           High              Low               High              Low
        -------                        ----------        ----------        ----------        ----------
<S>                                    <C>               <C>               <C>               <C>
         First                         $     4.50        $     3.38        $     9.25        $     7.00
         Second                              4.38              3.25              7.13              6.00
         Third                               4.38              4.00              6.25              5.38
         Fourth                              4.13              3.00              5.50              3.38
</TABLE>

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

The following commentary presents management's discussion and analysis of the
Company's financial condition and results of operations. Certain of the
statements included below, including those regarding future financial
performance or results or that are not historical facts, are or contain
"forward-looking" information as that term is defined in the Securities 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. 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 in the forward-looking statements.
This



                                     Page 7
<PAGE>   8

review should be read in conjunction with information provided in the financial
statements, accompanying notes and selected financial data appearing elsewhere
in this report.

OVERVIEW

The Company, through its wholly owned subsidiaries, KBK Financial, Inc. ("KBK"),
KBK Capital Trust I (the "Trust"), and KBK Acceptance Company LP ("SPV"), is 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-three states and are engaged in a range of businesses, including
energy-related, manufacturing, and wholesale and retail distribution. The
Company has consistently employed a disciplined credit approach, which has
enabled it to increase earning assets, minimize credit losses and generate 38
consecutive years of profitability.

The Company's factoring facilities generally involve an on-going or revolving
agreement to purchase eligible new receivables. Factoring involves the Company's
purchase and the clients' true sale of accounts receivable, which usually are
individually ledgered, invoice-by-invoice, on the Company's books. The Company
offers a full range of factoring products and services, including notification,
non-notification, verification, non-verification and non-recourse factoring as
well as several other hybrid variations. The obligors or "debtors" of the
factored receivables typically represent large, financially strong businesses,
many of which are ranked in Fortune Magazine's Fortune 1000 list. As of December
31, 2000, KBK's portfolio of owned and managed receivables purchased under
factoring facilities totaled $42.9 million. The Company's yield on its factoring
portfolio was 23.8% in 2000 and 20.1% in 1999.

In addition to factoring or purchasing accounts receivable on a specific
"invoice-by-invoice" ledgered basis, the Company also purchases accounts
receivable as a revolving "pool." Under this arrangement, the client sells all
receivables, and when they are generated by the business, KBK makes periodic
advances upon request by the client, in aggregate amounts up to the client's
maximum availability limit. As of December 31, 2000, KBK's portfolio of owned
and managed purchased revolvers totaled $27.2 million. The Company's yield on
purchased revolvers was 12.7% in 2000 and 11.2% in 1999.

KBK's commercial loan portfolio includes working capital and term loan
facilities that are typically secured by a first lien on accounts receivable,
inventory, equipment, owner-occupied real estate or other assets. The working
capital lines of credit have maturities of up to two years, while term loans are
structured with monthly payments and maturities, which typically range from one
to five years. Most of the Company's commercial loan products are priced on a
floating rate basis over the Company's announced base rate. During 2000 and
1999, the Company's yield on its commercial loan portfolio was 12.7% and 12.3%,
respectively.

The Company's mezzanine loan product, which was introduced in 1998, offers an
attractive financing alternative for customers whose growth has outpaced their
borrowing capacity from senior debt sources. The Company's strategy with respect
to mezzanine loans is to extend the duration of its current relationships and
offer the Company's traditional products to new customers. KBK's mezzanine
financings typically have fixed interest rates as well as warrants to acquire
equity in the borrower. As of December 31, 2000 the Company has outstanding
mezzanine loans for an aggregate investment of $8.4 million.

In 1992, in connection with the formation of the Company, the Company sold
warrants to two former directors and one current director to purchase 500,000
shares of the Company's common stock. During 1999, the Company paid $572,500 to
repurchase from a former director warrants to purchase 160,000 shares. The
remaining 340,000 warrants are exercisable at $5 per share and expire on
February 25, 2005.

Pursuant to the Stock Repurchase Plan initiated in 1995, the Company holds
813,081 shares of Treasury Stock at a cost of $5,408,883, as of December 31,
2000. During October, 1999, the Company entered into an agreement to repurchase
483,795 shares of its common stock over an 18-month period. The per share prices
are fixed, ranging from $5.00 to $5.53, depending on the timing of the purchase.
The stock is being acquired from the previous shareholders of Coastal Financial
Resources Inc., which was acquired



                                     Page 8
<PAGE>   9

by the Company in December, 1994. Pursuant to this agreement, the Company had
repurchased 320,000 shares for an aggregate cost of $1,641,800 through December
31, 2000.

During 2000, KBK began selling all of 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 replaces KBK's
"off-balance sheet" securitization as well as the multi-bank revolving line of
credit which was executed in 1993. The new Facility initially carries a
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 conduit's commercial paper rate plus
1.15%. At December 31, 2000, the outstanding indebtedness under the Facility was
$122,533,454 (at a weighted average interest rate of 7.93%). 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 $25.3 million in
available credit under this line at December 31, 2000.

The above Facility replaces the $72,875,000 multi-bank revolving line of credit
("Credit Facility"), which was to mature on April 30, 2001 and bore interest at
the agent bank's prime rate or LIBOR plus 1.75% at the election of KBK, and
secured by substantially all of KBK's assets. At December 31, 1999, $72,875,000
was committed with outstanding indebtedness under this Credit Facility of
$56,000,000 (at a weighted average interest rate of 8.11%) and there were
$940,048 in letters of credit outstanding under this revolving line of credit.
The terms of the Credit Facility required KBK to comply with certain financial
covenants and included the maintenance of a certain tangible net worth,
limitations on its debt to tangible net worth, limitations on chargeoffs and
non-performing assets and an interest coverage ratio. The Credit Facility also
provided for a borrowing base against eligible receivables and eligible loans
pursuant to the terms of the Credit Facility. KBK was in compliance with the
financial covenants and borrowing base limitations, and there was approximately
$2,553,000 in available credit under this line at December 31, 1999.

During 1997, KBK completed a sale of purchased receivables and inventory loans,
in which a substantial portion of KBK's owned receivables and inventory loans
were transferred into KBK Receivables Corporation ("SPC"), also known as a
special purpose corporation. Under this structure, SPC sold eligible receivables
to a conduit, which in turn issued commercial paper to fund its purchase of
assets. The assets sold to SPC and the commercial paper conduit were serviced by
KBK, which received periodic revenue in the form of a servicing fee. The
Company's participation in this conduit facility was terminated in December 2000
upon execution of the new Facility. As of December 31, 1999, KBK had $55.9
million of receivables and inventory loans outstanding in the conduit facility;
and during 2000 and 1999 the Company had recorded approximately $7.9 million and
$5.1 million, respectively, in fees related to managing and servicing such
assets. The Company had the ability to fund up to $85.0 million through the
conduit facility. The financing provided by this facility was off-balance sheet
and the Company realized no gain on transfer of the assets to the conduit.
Servicing income was credited as received.

In 1998, the Company issued 1,725,000 shares of 9.50% mandatorily redeemable
Trust Preferred Securities through its subsidiary, KBK Capital Trust I. The
principal assets of the Trust are 9.50% subordinated debentures of the Company
due 2028. The approximately $16.0 million in net proceeds from the sale of the
securities were invested by the Trust in the debentures. The Company in turn
utilized the funds from the debentures as an equity investment in KBK, and KBK
repaid approximately $16.0 million of short-term indebtedness.

STRATEGY

The Company's long-term goal is to be a leader in providing financial products
and services to middle market businesses in the United States. By serving the
financial and capital needs of this growing segment, the Company believes that
it can achieve strong growth and generate a return on assets above that of other
financial institutions. The Company believes that it has been very successful in
achieving an appropriate balance between asset growth, asset quality and
profitability through strict adherence to proven systems for origination,
underwriting and monitoring. During the course of the past five years, the
Company has leveraged its existing market presence into new product lines to
enable its clients to transition into lower-priced financial products and
services as their businesses expanded and credit quality improved. Additionally,
the Company expanded its geographic presence in key metropolitan markets through
both new office openings and the development of relationships with regional
correspondent banks. The Company remains committed to focusing on its core
middle market commercial finance business. Going forward, KBK's growth
strategies include increasing market penetration, introducing additional
products and services, and pursuing strategic acquisitions and partnerships.



                                     Page 9
<PAGE>   10

         Increase Market Penetration. A critical aspect of KBK's long-term
growth objective is to increase its earning asset base from existing markets.
The Company's strategy is to (i) continue improving the productivity of its
marketing force through extensive market planning and a compensation program
tied directly to targeted objectives, (ii) add additional marketing
professionals and (iii) train its marketing force to cross-sell existing and new
products. Each year, KBK's account officers are required to develop a marketing
plan with respect to existing customer business and new business prospects. This
active business development program is designed to enable KBK account officers
to identify an ample number of new high-quality business opportunities, thereby
improving selectivity and increasing market penetration. In order to meet their
objectives, account officers are provided with on-going training in the areas of
credit analysis, product application and relationship development and retention.

         Expand Product Line. Another element of KBK's growth plan is the
continued introduction of new products and services. Since 1995, the Company has
introduced a variety of commercial finance products and services designed to
meet the needs of its core middle market clients, broaden its client base and
diversify its portfolio mix. Many of these products enable KBK's former
factoring clients to transition to other financial products and services as
their credit quality improves and, accordingly, have allowed the Company to
lengthen the duration of its relationships. In addition, a growing component of
KBK's portfolio is comprised of conventional commercial loans extended to
clients with more than two years of tenure with the Company. The mezzanine
market has also generated a number of high quality conventional commercial loan
prospects.

         Pursue Strategic Acquisitions and Partnerships. Also important to the
Company's strategy is the pursuit of opportunistic acquisitions and formation of
key partnerships. The Company focuses on acquisition candidates who can expand
KBK's origination capabilities, product line, cross-selling potential and market
penetration, as well as those which add to its asset base. Given current
conditions in the specialty finance market, the Company's management continually
evaluates potential acquisition opportunities. Accordingly, at any particular
time, the Company may be involved in negotiations (at various stages) to acquire
other companies.

         In addition to acquisitions, KBK will continue to explore partnerships,
which complement or leverage the Company's product portfolio or client
relationships. During the past several years, KBK has formed a number of
important partnerships. For example, KBK currently offers equipment lease
financing through third party equipment leasing companies. KBK also originates
real estate loans to its clients and may participate or sell such loans to an
unaffiliated real estate lender. KBK collects an origination or placement fee
from its client or the third party.

RESULTS OF OPERATIONS ANALYSIS
2000 COMPARED TO 1999

<TABLE>
<CAPTION>
                                              YEAR ENDED                      YEAR ENDED
                                          DECEMBER 31, 2000               DECEMBER 31, 1999
                                      -------------------------      -------------------------
                                                       (dollars in thousands)
<S>                                   <C>           <C>              <C>            <C>
Average Net Earning Assets
     Managed and Owned                $  142,247                     $  131,712
     Owned                            $   85,191                     $   75,295

Total revenue                         $   22,348            100%     $   19,133            100%
Interest expense                           7,049             32           5,522             29
Provision for credit losses                2,773             12           1,600              8
Provision for impairment losses               40             --             500              3
Other income                                 291              1              --             --
Operating expenses                        10,726             48          11,177             58
Income taxes                                 813              3             184              1
                                      ----------     ----------      ----------     ----------
Net income                            $    1,238              6%     $      150              1%
                                      ==========     ==========      ==========     ==========
</TABLE>

Average net earning assets owned increased 13.1% to $85.2 million for the year
ended December 31, 2000, from $75.3 million for the year ended December 31,
1999. This asset growth resulted in a total revenue increase of 16.8%, or $3.2
million, for the year ended December 31, 2000, from year ended December 31,
1999, in which the Company reported total revenue of $19.1 million. Average net
earning assets under management for the year ended December 31, 2000 increased
8.0% or $10.5 million, from the year ended December 31, 1999.

Interest expense increased 27.7% to $7.0 million for the year ended December 31,
2000, compared to $5.5 million for the year ended December 31, 1999. This
increase resulted primarily from the $11.6 million increase in average funded
debt required to fund the $9.9 million increase in net average earning assets
owned and the $1.1 million cost of treasury stock purchases. The net effect of
the



                                    Page 10
<PAGE>   11

$3.2 million increase in revenue and the $1.5 million increase in interest
expense resulted in a $1.7 million increase in income after interest expense for
the year ended December 31, 2000 compared to the year ended December 31, 1999.

The provision for credit losses was $2.8 million for 2000 compared to $1.6 for
1999, representing a 73.3% increase. During 2000, the Company had charge-offs of
$2.6 million while recovering $180,000. Net charge-offs for 2000 of $2.4 million
and a provision of $2.8 million for 2000 resulted in an allowance for credit
losses of $2.4 million or 1.5% of gross receivables outstanding as of December
31, 2000 (2.8% of average owned receivables outstanding during 2000). During
1999, the Company had charge-offs of $1.6 million while recovering $40,000,
resulting in net charge-offs of $1.5 million. The Company's 1999 provision for
credit losses of $1.6 million brought the allowance for credit losses to $2.0
million, or 2.0% of gross receivables outstanding as of December 31, 1999 (2.7%
of average owned receivables outstanding during 1999). In addition, in 1999 the
Company recorded a $500,000 provision for impairment loss related to the
valuation of other assets. The Company believes that the allowance for credit
losses is adequate in light of the historical loss experience and the risk
inherent in the earning asset portfolio at year-end 2000.

Operating expenses decreased $451,000, or 4.0%, to $10.7 million, or 48.0%, of
total revenue for 2000 compared with $11.2 million or 58.4% of total revenue for
1999. This decrease was primarily a result of decreased salaries and benefits
and other employment expenses of $391,000, related to decreases in executive
staff in 1999. In addition, professional fees decreased $263,000, resulting
primarily from costs incurred during 1999 in connection with due diligence
efforts related to a terminated acquisition attempt. The Company also
experienced a $131,000 decrease in occupancy expense attributable to closure of
the Louisiana office and a decrease in depreciation as assets became fully
depreciated.

The increased income after interest expense, combined with decreased operating
expenses and the provision for losses, resulted in a 514.1% increase in income
before income taxes compared to the prior year. Therefore, income taxes of
$813,000 for 2000 increased 341.8% compared to income taxes of $184,000 for
1999.

As a result of the above, net income of the Company for 2000 increased $1.1
million, or 725.3%, to $1.2 million or 5.5% of total revenue, from $150,000 or
0.8% of total revenue in 1999.

LIQUIDITY AND CAPITAL RESOURCES

The Company's capital requirements generally increase proportionately to the
increase in earning assets. The method of funding the portfolio changed
significantly during 2000 with the implementation of the new financing
structure. Total average net earning assets owned increased by $9.9 million,
from $75.3 million in 1999 to $85.2 million in 2000. 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, expansion
of market presence, and pursuit of strategic acquisitions and partnerships which
enable the Company to provide complete financial services to middle-market
businesses.

As discussed in the overview, KBK's financing is provided through a $350 million
revolving Facility. The Facility currently carries a five-year commitment of
$200 million, which may be increased up to $350 million upon request by SPV and
consent by the conduit sponsor. Prior to execution of this Facility, KBK
maintained a $72,875,000, multi-bank line of credit which had $72,875,000
committed and $56,000,000 outstanding at December 31, 1999. Borrowings under the
credit facility accrued interest at the agent bank's prime rate or applicable
LIBOR plus 1.75%.

In May 1998, the Company reinstated its commercial paper program (CP Program).
During the 19 year period preceding mid-1994, KBK used the proceeds from the
private issuance of short-term, unrated commercial paper to finance a portion of
its portfolio. The CP Program was canceled by management concurrent with its
June 1994 initial public offering of common stock. Under the Company's CP
Program, certificates may be issued for tenures ranging from 30 to 270 days at
interest rates comparable to the Company's alternative unsecured funding
sources. The certificates will be placed directly by the Company, however, the
Company reserves the right to name a placement agent in the future. The
certificates are not rated by any independent agency and the Company does not
maintain a back-up liquidity facility to support outstanding certificates. As of
December 31, 2000, the program was inactive and KBK had no commercial paper
outstanding. As of December 31, 1999, KBK had issued two certificates with a
balance outstanding of $100,000 at a coupon rate of 6.52%, maturing March 20,
2000.

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 November 1995.



                                    Page 11
<PAGE>   12

Under the Company's stock repurchase program, the Company may buy back in open
market transactions, block trades or private transactions, up to 500,000 shares
(18.1% of the outstanding shares at year end 2000) of the Company's common stock
at the current market price. At December 31, 2000 and 1999, 813,081 and 591,656
shares of common stock were held in the treasury at a cost of $5.4 million and
$4.3 million, respectively. All of such purchases have been funded out of the
general funds of the Company, which may have had the result of increasing
advances under credit facilities. During October, 1999, the Company entered into
an agreement to repurchase an aggregate of 483,795 shares of its common stock
over an 18-month period. The per share prices are fixed, ranging from $5.00 to
$5.53, depending on the timing of the purchase. The stock is being acquired from
the previous shareholders of Coastal Financial Resources Inc., which was
acquired by the Company in December, 1994. Pursuant to this agreement, the
Company had repurchased 320,000 shares for an aggregate cost of $1,641,800
through December 31, 2000.

The $53.4 million increase in outstanding loans and accounts receivable
purchased as of December 31, 2000 was funded by an increase in the balance
outstanding under the Facility, which also funded the $7.8 million increase in
cash and the $6.8 million decrease in due to clients.

The Company expended $174,000 and $331,000 on premises and equipment in 2000 and
1999, respectively, principally in connection with upgrades to its management
information systems, computer equipment, office furniture and equipment, and
leasehold improvements. The Company funded such expenditures from internally
generated funds or advances under the various credit facilities. The Company
plans to continue enhancements of its management information systems for
providing tracking and supporting new products.

CHANGES IN FINANCIAL CONDITION

Total assets increased 53.4% to $172.4 million as of December 31, 2000. This
growth occurred primarily in a $53.0 million growth in net receivables, which
resulted from the Facility, which was implemented in December, 2000. Under this
structure, the receivables assets are sold to SPV, a consolidated subsidiary,
and pledged to a multi-user conduit; whereas, the previous structure involved
the sale of a substantial portion of KBK's purchased receivables and inventory
loans through SPC to a third party. Additionally, cash increased $7.8 million at
December 31, 2000 compared to December 31, 1999 in anticipation of expected
fundings. The Company's allowance for credit losses stood at $2.4 million on
December 31, 2000, 1.5% of gross outstanding accounts receivable or 2.8% of
average owned receivables outstanding during 2000. At year-end 1999, the
allowance for credit losses was $2.0 million, 2.0% of gross outstanding accounts
receivable or 2.7% of average owned receivables outstanding during 1999.
Management believes that the Company's allowance for credit losses is adequate
as of December 31, 2000 and 1999.

EFFECTS OF RECENTLY ISSUED ACCOUNTING STANDARDS

In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities," which
requires derivatives to be recognized in the consolidated statements of
financial condition at fair value. Changes in such fair value are required to be
recognized in earnings to the extent the derivative is not effective as a hedge.
SFAS No. 133 is effective for fiscal years beginning after June 15, 1999 and
should be applied prospectively. However, the FASB has subsequently issued SFAS
No. 137, "Accounting for Derivative Instruments and Hedging Activities -
Deferral of the Effective Date of FASB Statement No. 133" which postpones
initial application until fiscal years beginning after June 15, 2000. In June
2000, the Financial Accounting Standards Board ("FASB") issued SFAS No. 138,
"Accounting for Derivative Instrument and Hedging Activities - an amendment of
FASB Statement No. 133" which amends and supercedes certain provisions of SFAS
No. 133. Management has determined that SFAS No. 133 and 138 will have no
material impact on the Company.

SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities," replaces SFAS No. 125, Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities," but
carries over most of SFAS 125's provisions without change. SFAS No. 140
elaborates on the qualifications necessary for a special-purpose entity,
clarifies sales accounting criteria in certain circumstances, refines accounting
for collateral, and adds disclosures for collateral, securitizations, and
retained interests in securitized assets. This statement should be applied
prospectively and is effective for transactions occurring after March 31, 2001.
Disclosure requirements of this statement and any changes in accounting for
collateral are effective for fiscal years ending after December 15, 2000 or
fiscal 2001 for the Company. The Company is evaluating the impact, if any, this
statement may have on its future consolidated financial statements.



                                    Page 12
<PAGE>   13

KBK CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                                         Years Ended December 31
                                                                      ------------------------------
                                                                          2000              1999
                                                                      ------------      ------------
<S>                                                                   <C>               <C>
Earned discount income                                                $  1,574,948      $  2,596,704
Interest income - Loans                                                  9,186,680         8,044,142
Servicing fees (note 2)                                                  7,889,326         5,142,035
Other income - Fees                                                      3,696,971         3,350,320
                                                                      ------------      ------------
         Total revenue                                                  22,347,925        19,133,201
Interest expense (note 6)                                                7,049,234         5,522,259
                                                                      ------------      ------------
          Income after interest expense                                 15,298,691        13,610,942
Provision for credit losses (note 4)                                     2,773,000         1,600,000
Provision for impairment losses (note 3)                                    40,000           500,000
                                                                      ------------      ------------
Income after interest expense and provision for losses                  12,485,691        11,510,942
                                                                      ------------      ------------
Operating expenses:
     Salaries and employee benefits (note 16)                            5,808,035         6,198,839
     Amortization of intangible assets                                     393,513           393,513
     Occupancy and equipment (note 14)                                   1,473,865         1,604,715
     Professional fees                                                     602,434           865,470
     Other                                                               2,447,515         2,114,426
                                                                      ------------      ------------
         Total operating expenses                                       10,725,362        11,176,963
                                                                      ------------      ------------
Gain on sale of other assets                                               290,859                --
                                                                      ------------      ------------
Income before income taxes                                               2,051,188           333,979
Income tax expense (benefit):
     Federal (note 10):
         Current                                                           924,901           393,839
         Deferred                                                         (143,880)
                                                                                            (221,534)
     State                                                                  31,771            11,599
                                                                      ------------      ------------
         Total income taxes                                                812,792           183,904
                                                                      ------------      ------------
         Net income                                                   $  1,238,396      $    150,075
                                                                      ============      ============
Earnings per share - basic (note 11)                                  $       0.43      $       0.05
                                                                      ============      ============
Weighted-average common shares outstanding - basic (note 11)             2,852,453         3,173,413
                                                                      ============      ============
Earnings per share - diluted (note 11)                                $       0.43      $       0.05
                                                                      ============      ============
Weighted-average common shares outstanding - diluted (note 11)           2,852,819         3,300,180
                                                                      ============      ============
</TABLE>

See accompanying notes to consolidated financial statements.



                                    Page 13
<PAGE>   14

KBK CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                               December 31         December 31
                                                                                  2000                1999
                                                                             --------------      --------------
<S>                                                                          <C>                 <C>

ASSETS
Cash                                                                         $   12,675,230      $    4,854,980

Accounts receivable, net (note 6)                                                70,089,726          14,475,250
Loans receivable, net (note 6)                                                   84,219,170          77,328,257
Retained interest in sold assets (note 2)                                                --           9,150,992
Less allowance for credit losses                                                 (2,389,463)         (2,018,787)
                                                                             --------------      --------------
Total receivables, net (notes 4 and 6)                                          151,919,433          98,935,712

Premises and equipment, net of accumulated depreciation
     of $3,730,929 and  $3,023,383 at December 31, 2000
     and 1999, respectively (note 5)                                              1,074,454           1,607,567

Intangible assets less accumulated amortization of $3,058,961
     and $2,665,447 at December 31, 2000
     and 1999, respectively                                                       2,699,280           3,092,794

Other investments, net (note 3)                                                   1,210,000           1,250,000
Other assets (note 10)                                                            2,850,323           2,636,509
                                                                             --------------      --------------
              Total assets                                                   $  172,428,720      $  112,377,562
                                                                             ==============      ==============

LIABILITIES AND STOCKHOLDERS' EQUITY
Bank Line of credit (note 6)                                                 $  122,533,454      $   56,000,000
Mandatorily redeemable preferred securities (note 7)                             16,056,061          16,008,622
Commercial paper (note 8)                                                                --             100,000
Due to clients (note 9)                                                           8,247,564          15,060,845
Accounts payable and other liabilities (note 7)                                     852,262             970,241
Deferred revenue                                                                    106,021             339,856
Income taxes payable (note 10)                                                      750,857                  --
                                                                             --------------      --------------
              Total liabilities                                                 148,546,219          88,479,564

Stockholders' equity (notes 12, 13, and 17):
     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 2,764,404 at
         December 31, 2000 and issued 3,577,485 shares and outstanding
         2,985,829 shares at December 31, 1999                                       35,775              35,775
     Additional paid-in capital                                                  16,263,709          16,326,919
     Retained earnings                                                           12,991,900          11,833,443
     Treasury stock, at cost, 813,081 shares at December 31, 2000
         and 591,656 shares at December 31, 1999                                 (5,408,883)         (4,298,139)
                                                                             --------------      --------------
              Total stockholders' equity                                         23,882,501          23,897,998
Commitments and contingencies (notes 6, 7, 12, 14, 15)
                                                                             --------------      --------------
              Total liabilities and stockholders' equity                     $  172,428,720      $  112,377,562
                                                                             ==============      ==============
</TABLE>

See accompanying notes to consolidated financial statements.



                                    Page 14
<PAGE>   15

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

For the Years ended December 31, 2000 and 1999

<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, 1998          3,194,871     $     35,507    $ 16,759,567     $ 11,693,807     $ (3,059,577)    $ 25,429,304
Purchase of stock for treasury
     (note 12)                         (239,608)              --              --               --       (1,271,280)      (1,271,280)
Exercise of stock options
     (note 13)                           23,800              238         117,270               --               --          117,508
Purchase of stock warrants
     (note 12)                               --               --        (572,500)              --               --         (572,500)
Issuance of common stock
     from treasury (note 17)              3,819               --              --          (10,439)          32,718           22,279
Issuance of common stock
     (note 17)                            2,947               30          22,582               --               --           22,612
Net income                                   --               --              --          150,075               --          150,075
                                   ------------     ------------    ------------     ------------     ------------     ------------
Balance at December 31, 1999          2,985,829           35,775      16,326,919       11,833,443       (4,298,139)      23,897,998
Purchase of stock for treasury
     (note 12)                         (237,000)              --              --               --       (1,219,360)      (1,219,360)
Issuance of common stock from
     treasury  (note 17)                 15,575               --              --          (79,939)         108,616           28,677
Forfeiture of stock options
     (note 12)                               --               --         (63,210)              --               --          (63,210)
Net income                                   --               --              --        1,238,396               --        1,238,396
                                   ------------     ------------    ------------     ------------     ------------     ------------
Balance at December 31, 2000          2,764,404     $     35,775    $ 16,263,709     $ 12,991,900     $ (5,408,883)    $ 23,882,501
                                   ============     ============    ============     ============     ============     ============
</TABLE>

See accompanying notes to consolidated financial statements.



                                    Page 15
<PAGE>   16

KBK CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                 Years Ended December 31
                                                                             ------------------------------
                                                                                 2000              1999
                                                                             ------------      ------------
<S>                                                                          <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income                                                                   $  1,238,396      $    150,075
Adjustments to reconcile net income to net cash
     used in operating activities:
         Depreciation and amortization                                          1,101,060         1,147,402
         Accretion on mandatorily redeemable preferred securities                  47,439            43,390
         Provision for credit losses                                            2,773,000         1,600,000
         Provision for impairment losses                                           40,000           500,000
         Increase in accounts receivable, net                                 (58,016,800)          (81,866)
         Net decrease (increase) in retained interest in sold assets            9,418,528        (6,813,808)
         Increase in intangible assets                                                 --            (4,748)
         (Increase) decrease in other assets                                     (213,814)           10,360
         Decrease in due to clients                                            (6,813,281)       (2,171,490)
         (Decrease) increase in accounts payable and other liabilities           (117,979)          233,813
         (Decrease) increase in interest payable for the sold assets             (267,536)           40,700
         Increase in income taxes payable                                         750,857                --
         (Decrease) increase in deferred revenue                                 (233,835)           82,534
                                                                             ------------      ------------
     Net cash used in operating activities                                    (50,293,965)       (5,263,638)

CASH FLOWS FROM INVESTING ACTIVITIES
     Net increase in loans receivable, net                                     (6,890,913)      (16,180,713)
     Sale of premises and equipment                                                    --            75,402
     Purchases of premises and equipment                                         (174,433)         (330,913)
                                                                             ------------      ------------
              Net cash used in investing activities                            (7,065,346)      (16,436,224)

CASH FLOWS FROM FINANCING ACTIVITIES
     Net borrowings from the banks                                             66,533,454        30,000,000
     Decrease in commercial paper                                                 100,000        (1,900,000)
     Purchase of stock warrants                                                        --          (572,500)
     Repurchase of common stock                                                (1,219,360)       (1,271,280)
     Exercise (forfeiture) of stock options                                       (63,210)          117,508
     Issuance of common stock                                                      28,677            44,891
                                                                             ------------      ------------
              Net cash provided by financing activities                        65,179,561        26,418,619
                                                                             ------------      ------------
              Net increase in cash                                              7,820,250         4,718,757
Cash at beginning of year                                                       4,854,980           136,223
                                                                             ------------      ------------
Cash at end of year                                                          $ 12,675,230      $  4,854,980
                                                                             ============      ============
Supplemental disclosure of cash flow information:
     Cash paid for interest                                                  $  4,682,453      $  3,080,665
     Income taxes paid                                                       $         --      $    126,000
     See note 3 for additional supplemental cash flow information
                                                                             ============      ============
</TABLE>

See accompanying notes to consolidated financial statements.



                                    Page 16
<PAGE>   17

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The financial statements presented herein reflect the consolidated financial
statements for 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"). All material intercompany balances and transactions have been
eliminated in consolidation.

The accounting and reporting policies of the Company conform to accounting
principles generally accepted in the United States of America and to practices
within the finance industry. In preparing the consolidated financial statements,
management is required to make estimates and assumptions that affect the
reported amounts of assets and liabilities as of the date of the consolidated
balance sheets and revenues and expenses for the period, and actual results
could differ from those estimates. The Company provides financial services
through the extension of secured loans and the discounted purchase of accounts
receivable.

Discount Income and Interest Income

Variable discount income from purchased receivables and interest income from
loans receivable are recorded on an accrual basis in accordance with the terms
of the agreements. Fixed discounts from accounts receivable are earned in the
month in which the receivables are purchased. The financial result of this
method of recognizing such fixed discounts does not differ materially from the
accrual method utilized in recognizing variable discounts.

Loans Receivable

Loans receivable are recorded at cost, less the related allowance for estimated
impairment and credit losses. Management, considering current information and
events regarding the borrowers' ability to repay their obligations, considers a
note to be impaired when it is probable that the Company will be unable to
collect all amounts due according to the contractual terms of the note
agreement. When a loan is considered to be impaired, the amount of the
impairment is measured based on the present value of expected future cash flows
discounted at the note's effective interest rate. Impairment losses are included
in the allowance for credit losses through a charge to provision for credit
losses. Cash receipts on impaired loans receivable are applied to reduce the
principal amount of such loans until the principal has been recovered and are
recognized as interest income, thereafter.

Allowance for Credit Losses

The allowance for credit losses represents the provision charged to operations,
less accounts receivable or loans receivable charged off, net of recoveries. The
allowance for credit losses is an amount which, in the judgment of management,
is adequate to absorb the estimated losses of accounts receivable or loans
receivable. The amount of provision for credit losses is set with reference to
the adequacy of the allowance. Management's periodic evaluation of the adequacy
of the allowance is based upon the Company's past credit loss experience, known
and inherent risks in the receivables, adverse situations that may affect
repayment, the potential for additional costs to perfect title to collateral and
current and prospective economic situations.

Management regularly reviews the portfolio of earning assets to identify
accounts which have or may become collection problems. When any account becomes
doubtful as to collection of discount or interest income, the account is placed
on non-accrual status. Any discount or interest income accrued during the
current year, but not received at the time its collectability becomes doubtful,
is reversed in that year to the extent deemed uncollectable. Additional
discounts and interest accrued in prior years, which are subsequently determined
to have doubtful collectability, are charged to the allowance for credit losses.
Payments of discount and interest income subsequently received on accounts or
relationships classified as non-accrual are recognized as received. After an
account relationship is placed on non-accrual status, no income is accrued until
circumstances indicate that such income is collectable.

Segment Information

Segment information has been considered in accordance with SFAS No. 131,
Disclosures about Segments of an Enterprise and Related Information. SFAS No.
131 establishes standards for the way public business enterprises are to report
information about operating segments. SFAS No. 131 utilizes the management
approach as a basis for identifying reportable segments. The management approach
is based on the way that management organizes the segments within the enterprise
for making operating



                                    Page 17
<PAGE>   18

decisions and assessing performance. KBK management views its operations as one
segment, and believes the only significant activity is financing provided to its
clients through loans and purchase of accounts receivable.

Premises and Equipment

Premises and equipment are carried at cost, net of accumulated depreciation.
Depreciation is computed primarily using the straight-line method over the
useful lives of the assets. When assets are retired or otherwise disposed of,
the cost and related accumulated depreciation are removed from the accounts and
any resulting gain or loss is recognized in income for the period. The cost of
maintenance and repairs is charged to expense as incurred.

Intangible Assets

Goodwill, which represents the excess of purchase price over the fair value of
net assets acquired in the 1994 acquisition of Coastal Financial Resources,
Inc., is amortized on a straight-line basis over fifteen years. The Company
assesses the recoverability of this intangible asset by determining whether the
amortization of the goodwill balance over its remaining life can be recovered
through the operating cash flows of the acquired business. The assessment of the
recoverability of goodwill will be impacted if estimated future operating cash
flows are not achieved.

The noncompetition agreement entered into with the previous owner of KBK is
amortized on a straight-line basis over the life of the agreement, approximately
thirteen years, through March 31, 2005.

Mandatorily Redeemable Preferred Securities

In 1998, the Company issued 1,725,000 shares of 9.50% mandatorily redeemable
Trust Preferred Securities ("Preferred Securities") through its subsidiary, the
Trust. The principal assets of the Trust are 9.50% subordinated debentures from
the Company due in 2028. The Preferred Securities are recorded at total proceeds
from the sale less the related offering costs and are classified as debt in the
accompanying consolidated balance sheets (note 7).

Income Taxes

The Company accounts for income taxes using the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. 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. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.

The Company files a consolidated Federal income tax return and reflects a
consolidated tax provision.

Stock Option Plan

Prior to January 1, 1996, the Company accounted for its stock option plan in
accordance with the provisions of Accounting Principles Board ("APB") Opinion
No. 25, "Accounting for Stock Issued to Employees," and related interpretations.
As such, compensation expense would be recorded on the date of grant only if the
current market price of the underlying stock exceeded the exercise price. SFAS
No. 123, "Accounting for Stock-Based Compensation," permits entities to
recognize as expense over the vesting period the fair value of all stock-based
awards on the date of grant. Alternatively, SFAS No. 123 allows entities to
continue to apply the provisions of APB Opinion No. 25 and provide pro forma net
income and pro forma earnings per share disclosures for employee stock option
grants made in 1996 and future years as if the fair-value-based method defined
in SFAS No. 123 had been applied. The Company has elected to continue to apply
the provisions of APB Opinion No. 25 and provides the pro forma disclosure
provisions of SFAS No. 123 (note 13).

Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of

The Company reviews for impairment of long-lived assets and certain identifiable
intangibles whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying amount of an asset
to future net cash flows expected to be generated by the asset. If such assets
are considered to be impaired, the impairment to be recognized is measured by
the amount by which the carrying amount of



                                    Page 18
<PAGE>   19

the assets exceed the fair value of the assets. Assets to be disposed of are
reported at the lower of the carrying amount or fair value less costs to sell.

Fair value of Financial Instruments

The carrying amount of cash, accounts receivable, retained interest in sold
assets, due to clients, accounts payable and other liabilities approximates fair
value because of the short maturity of these instruments. The carrying value of
loans receivable approximates fair value because the loans are earning interest
at floating rates, which approximate rates currently offered by local lending
institutions for loans of similar terms to companies with comparable credit
risk. The carrying value of the Company's bank debt and commercial paper
approximates fair value because it bears interest at floating rates that are
similar to current borrowing rates for loans of comparable maturity and credit
risk and because of the short maturities of the commercial paper and LIBOR
tranches of the line of credit. The fair market value of the mandatorily
redeemable preferred stock, which approximates carrying value, is estimated
using rates offered on similar types of risk commensurate instruments,
considering the risks associated with those instruments.

(2)   SALE OF ASSETS

In April of 1997, KBK completed a sale of purchased receivables and inventory
loans, in which a substantial portion of KBK's owned receivables and inventory
loans were transferred into SPC, also known as a special purpose corporation.
Under this structure, SPC sold eligible receivables to a conduit, which in turn
issued commercial paper to fund its ongoing purchase of assets. This structure
allowed KBK to effectively fund its portfolio of earning assets on a
non-recourse basis, through the commercial paper conduit. The transfer of
earning assets into SPC, and subsequent sale to the commercial paper conduit,
was treated as a sale. The assets sold to SPC and the commercial paper conduit
were serviced by KBK, which received periodic revenue in the form of a servicing
fee, as outlined in the servicing agreement. Neither a servicing asset nor a
servicing liability was recorded due to the term of the receivables initially
transferred and the commitment obligation during the Revolving Period. The
determination of a value was not practicable and, therefore, no value was
recorded. No gain or loss resulted from the sale of these receivables to SPC or
to the conduit. A retained interest in the sold assets, shown on the
consolidated balance sheet, represented the amounts due from the conduit,
amounted to $9,150,992 at December 31, 1999.

As of December 31, 1999, KBK had $55.9 million of receivables and inventory
loans outstanding in the conduit facility and during 2000 and 1999 the Company
had recorded approximately $7.9 million and $5.1 million, respectively, in fees
related to managing and servicing such assets.

During December of 2000, KBK terminated its sale of assets to this commercial
paper conduit. At that time, SPC purchased the sold assets from the conduit
entity and transferred those assets to KBK. KBK sold the assets to a newly
formed special purpose vehicle, KBK Acceptance Company LP (SPV), which is a
Texas limited partnership. Under the new structure, SPV does not sell the
assets, but funds the purchase by pledging these receivables to a multi-user
conduit which is sponsored by a bank (note 6).

(3)   SUPPLEMENTAL CASH FLOW INFORMATION

During 1998, a receivable balance of the Company was deemed non-performing due
to allegedly fraudulent invoices being sold to KBK. To partially offset the
unsecured portion of the receivables purchased balance, KBK was offered and
accepted an ownership interest in a newly formed entity, which took over the
operations of the company selling KBK the invoices. The ownership interest of
this newly formed entity, amounting to $1,750,000, has been included in other
investments as an equity investment in the new entity. During 2000 and 1999, the
Company established a $40,000 and $500,000, respectively, provision for
impairment loss related to this asset. The net fair value of $1,210,000 and
$1,250,000 at December 31, 2000 and 1999, respectively, was determined by
reference to the present value of the estimated future cash flows of the asset.



                                    Page 19
<PAGE>   20

(4)   RECEIVABLES

Receivables at December 31, 2000 and 1999 are summarized as follows:

<TABLE>
<CAPTION>
                                            2000                1999
                                       --------------      --------------
<S>                                    <C>                 <C>
Accounts receivable                    $   76,306,797      $   21,969,340
  Less participation                       (6,217,071)         (7,494,090)
Loans receivable                           86,211,853          80,346,222
  Less participation                       (2,540,428)         (3,391,512)
Employee advances                             547,745             373,547
Retained interest in sold assets                   --           9,150,992
                                       --------------      --------------
                                          154,308,896         100,954,499
Less allowance for credit losses            2,389,463           2,018,787
                                       --------------      --------------
                                       $  151,919,433      $   98,935,712
                                       --------------      --------------
</TABLE>

Accounts receivable are purchased from clients engaged in a variety of
industries including, but not limited to, wholesale and retail sales,
engineering and construction, energy, manufacturing, transportation, and
marketing related companies. At December 31, 2000, the two largest clients
represented 4.4% and 3.2%, respectively, of total receivables or 28.7% and
20.9%, respectively, of stockholders' equity. At December 31, 1999, the two
largest clients represented 6.9% and 6.8%, respectively, of total receivables or
29.0% and 28.6%, respectively, of stockholders' equity.

At December 31, 2000, approximately 31.0 % and 11.5% of the outstanding accounts
receivable under management were purchased from clients in manufacturing related
and services related industries, respectively. At December 31, 1999,
approximately 30.3% and 14.4% of the outstanding accounts receivable under
management were purchased from clients in manufacturing related and services
related industries, respectively.

The two largest debtors at December 31, 2000, had outstanding accounts
receivable under management of $2.7 million and $2.2 million, which represented
approximately 3.8% and 3.2%, respectively, of the total outstanding accounts
receivables under management at that date. The two largest debtors at December
31, 1999, had outstanding accounts receivable under management of $4.1 million
and $3.9 million, which represented approximately 5.9% and 5.6%, respectively,
of the total outstanding accounts receivables under management at that date.

Accounts receivable generally have terms of 30 days and are normally collected
within 30 to 60 days from the date of purchase. Loans receivable are secured by
accounts receivable, inventory, and equipment, and generally guaranteed by the
individual or corporate owners of the business.

The following is an analysis of the activity in the allowance for credit losses:

<TABLE>
<CAPTION>
                                          Year Ended December 31
                                      ------------------------------
                                          2000              1999
                                      ------------      ------------
<S>                                   <C>               <C>
Balance at beginning of year          $  2,018,787      $  1,949,573
Provision for credit losses              2,773,000         1,600,000
Charge-offs                             (2,582,387)       (1,570,297)
Recoveries                                 180,063            39,511
                                      ------------      ------------
Balance at end of year                $  2,389,463      $  2,018,787
                                      ------------      ------------
</TABLE>

(5)   PREMISES AND EQUIPMENT

Premises and equipment at December 31, 2000 and 1999 are summarized as follows:

<TABLE>
<CAPTION>
                                                                          Estimated
                                                                        useful lives
                                          2000             1999           in years
                                      ------------     ------------     ------------
<S>                                   <C>              <C>              <C>
Office equipment                      $  4,111,024     $  3,938,434              3-7
Automotive                                  21,352           21,352                5
Leasehold improvements                     673,007          671,164             2-10
                                      ------------     ------------     ------------
                                         4,805,383        4,630,950
Less accumulated depreciation            3,730,929        3,023,383
                                      ------------     ------------
                                      $  1,074,454     $  1,607,567
                                      ------------     ------------
</TABLE>



                                    Page 20
<PAGE>   21

(6)    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 replaces KBK's "off-balance
sheet" securitization as well as the multi-bank revolving line of credit which
was executed in 1993. The new Facility initially carries a 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 1.15%. At December
31, 2000, the outstanding indebtedness under the Facility was $122,533,454 (at a
weighted average interest rate of 7.93%). 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 $25.3 million in available credit under
this line at December 31, 2000. The average amount outstanding under this
facility was $116,408,642 (at a weighted average interest rate of 7.87%) from
the date of execution, December 15, 2000 through December 31, 2000. The maximum
amount outstanding during this period was $122,533,454.

Prior to execution of the Facility, KBK maintained a $72,875,000 multi-bank
revolving line of credit ("Credit Facility"), maturing on April 30, 2001 and
bearing interest at the agent bank's prime rate or LIBOR plus 1.75% at the
election of KBK, and secured by substantially all of KBK's assets. At December
31, 1999, $72,875,000 was committed with outstanding indebtedness under this
Credit Facility of $56,000,000 (at a weighted average interest rate of 8.11%).
Under this revolving credit facility, KBK was entitled to the issuance of one or
more letters of credit which in total would not exceed the lesser of $7.5
million or the remainder of the revolving borrowing base, less all amounts
outstanding on the revolving credit facility. There were $940,048 in letters of
credit outstanding at December 31, 1999. The terms of the Credit Facility
required KBK to comply with certain financial covenants and included the
maintenance of a certain tangible net worth, limitations on its debt to tangible
net worth, limitations on chargeoffs and non-performing assets and an interest
coverage ratio. The Credit Facility also provided for a borrowing base against
eligible receivables and eligible loans pursuant to the terms of the Credit
Facility. KBK was in compliance with the financial covenants and borrowing base
limitations, and there was approximately $2,553,000 in available credit under
this line at December 31, 1999.

The following is an analysis of the activity under the Credit Facility for the
years indicated:

<TABLE>
<CAPTION>
                                          Years Ended December 31
                                      ------------------------------
                                          2000              1999
                                      ------------      ------------
<S>                                   <C>               <C>
Average amount outstanding            $ 57,706,967      $ 46,059,000
                                      ------------      ------------
Maximum outstanding as of
     any month-end                    $ 66,000,000      $ 58,000,000
                                      ------------      ------------
Weighted-average interest rate                 7.9%              7.1%
                                      ------------      ------------
</TABLE>

(7)   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.

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 Debentures or as a result of the acceleration of the
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.



                                    Page 21
<PAGE>   22

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, $1,193,939 and $1,241,378 as of December 31, 2000 and 1999,
respectively, is being accreted over 15 years by making periodic charges to the
Company's earnings.

(8)   COMMERCIAL PAPER

Under the Company's commercial paper program, certificates were issued for
tenures ranging from 30 to 270 days at interest rates comparable to the
Company's alternative unsecured funding sources. The certificates were placed
directly by the Company. The certificates were not rated by any independent
agency and the Company did not maintain a back-up liquidity facility to support
outstanding certificates. As of December 31, 2000, the program was inactive and
KBK had no commercial paper outstanding. As of December 31, 1999, KBK had issued
two certificates with a balance outstanding of $100,000 at a coupon rate of
6.52%, which matured March 20, 2000.

(9)   DUE TO CLIENTS

The Company typically pays less than the face value of the invoice at the time a
receivable is purchased from a client. Upon collection of the purchased
invoices, amounts collected in excess of discount income and the initial payment
are remitted to clients. Such amounts may, in some instances, be applied to
offset uncollected account balances due to clients' breach of representations or
warranties.

(10)  INCOME TAXES

The tax effects of temporary differences that give rise to the deferred tax
assets and liabilities at December 31, 2000 and 1999 are as follows:

<TABLE>
<CAPTION>
                                                                2000              1999
                                                            ------------      ------------
<S>                                                         <C>               <C>
Deferred tax assets:
     Allowance for credit losses                            $    578,430      $    444,578
     Allowance for impairment losses                             180,985           168,865
     Premises and equipment, due to differences
        in depreciation                                           10,360                --
Deferred tax liabilities:
     Premises and equipment, due to differences
        in depreciation                                               --           (10,044)
     Amortization of non-compete agreement                      (126,195)         (103,699)
                                                            ------------      ------------
     Net deferred tax asset, included in other assets       $    643,580      $    499,700
                                                            ------------      ------------
</TABLE>

No valuation allowance has been established for the deferred tax assets at
December 31, 2000 or 1999 as management believes that realizability of such
assets is more likely than not. The income tax expense was different than the
amount computed by using the U.S. Federal income tax rate of 34.0% as a result
of the following:

<TABLE>
<CAPTION>
                                          Years Ended December 31
                                          2000              1999
                                      ------------      ------------
<S>                                   <C>               <C>
Computed "expected" tax expense       $    697,404      $    113,553
Nondeductible amortization                  81,453            81,453
Nondeductible, other                        14,293            14,413
State Income Tax, net                       20,968             7,655
Other, net                                  (1,326)          (33,170)
                                      ------------      ------------
                                      $    812,792      $    183,904
                                      ------------      ------------
</TABLE>



                                    Page 22
<PAGE>   23

(11)  EARNINGS PER SHARE

Following is a reconciliation between the weighted average shares outstanding
used in the basic and diluted EPS computations:

<TABLE>
<CAPTION>
                                                                Years Ended December 31
                                                            -----------------------------
                                                                2000             1999
                                                            ------------     ------------
<S>                                                         <C>              <C>
Net Income                                                  $  1,238,396     $    150,075
                                                            ============     ============
Weighted average shares outstanding - Basic                    2,852,453        3,173,413
                                                            ============     ============
Earnings per share - Basic                                  $        .43     $        .05
                                                            ============     ============

Weighted average shares outstanding - Basic                    2,852,453        3,173,413
Effect of dilutive securities:
     Assumed exercise of stock options and warrants                  366          126,767
                                                            ------------     ------------
Weighted average shares outstanding - Diluted                  2,852,819        3,300,180
                                                            ============     ============
Earnings per share - Diluted                                $        .43     $        .05
                                                            ============     ============
</TABLE>

(12)  STOCKHOLDERS' EQUITY

In 1992, in connection with the formation of the Company, the Company sold
warrants to two former directors and one current director to purchase 500,000
shares of the Company's common stock. During 1999, the Company paid $572,500 to
repurchase from a former director warrants to purchase 160,000 shares. The
remaining 340,000 warrants are exercisable at $5 per share and expire on
February 25, 2005.

Pursuant to the Stock Repurchase Plan initiated in 1995, the Company held
813,081 shares of Treasury Stock at a cost of $5,408,883 as of December 31,
2000, and 591,656 shares of Treasury Stock at a cost of $4,298,139 as of
December 31, 1999. During October, 1999, the Company entered into an agreement
to repurchase 483,795 shares of its common stock over an 18-month period. The
per share prices are fixed, ranging from $5.00 to $5.53, depending on the timing
of the purchase. The stock is being acquired from the previous shareholders of
Coastal Financial Resources Inc., which was acquired by the Company in December,
1994. Pursuant to the agreement, the Company had repurchased 320,000 shares for
an aggregate cost of $1,641,800 through December 31, 2000. During 2000, $63,210
in deferred compensation was reversed from other assets into additional paid-in
capital as a result of stock options which were issued in the money at the time
of grant and were forfeited during the period.

(13)  STOCK OPTION PLANS

In 1994, the stockholders approved the 1994 Stock Option Plan for the benefit of
the employees and non-employee directors. Such plan replaced both plans
previously adopted by the Board and the stockholders. This plan authorizes the
Company to grant incentive options or options which do not constitute incentive
options and an automatic grant of options which do not constitute incentive
options to non-employee directors. This plan is administered by the Compensation
Committee of the Board of Directors. The aggregate number of shares which may be
issued under this plan, shall not exceed 400,000 shares of common stock of the
Company. Such options become exercisable ratably over five years from the date
of grant and expire ten years from the grant date if not exercised.

In 1996, the stockholders approved the 1996 Long-Term Incentive Plan for the
benefit of employees, consultants and advisors of the Company. This plan did not
replace or affect the 1994 Stock Option Plan. The 1996 Plan is administered by
the Compensation Committee of the Board of Directors. The Committee is
authorized to grant to key employees, consultants and advisors of the Company
and its subsidiaries and affiliates, awards in the form of stock options,
performance shares, and restricted stock. In addition, the Committee will have
the authority to grant other stock-based awards in the form of stock
appreciation rights, restricted stock units, and stock unit awards. The types of
awards and terms of their issuance will be determined by the Committee and
specified in the option agreement evidencing the grant. A maximum of 675,000
shares of common stock may be issued under this Plan (as amended in 1999), with
a 200,000 share limitation for any individual. The Plan will expire ten years
from the effective date unless terminated earlier or extended by the Board of
Directors.

Since the adoption of these Plans, 25,200 options have been exercised through
December 31, 2000, and there were 374,550 shares available for grant under the
two Plans as of that date. The per share weighted-average fair value of stock
options granted during 2000 and 1999 was $2.51 and $3.49 on the date of grant
using the Black Scholes option-pricing model with the following

                                    Page 23
<PAGE>   24
weighted-average assumptions: expected dividend yield of 0%, expected volatility
of 32% in 2000 and 42% in 1999, risk-free interest rate of 6%, and an expected
life of 9 years.

The Company applies APB Opinion No. 25 in accounting for its Plan and,
accordingly, no compensation cost has been recognized for its stock options in
the consolidated financial statements. Had the Company determined compensation
cost based on the fair value at the grant date for its stock options under SFAS
No. 123, the Company's net income would have been reduced to the proforma
amounts indicated below:

<TABLE>
<CAPTION>
                                          2000             1999
                                      ------------     ------------
<S>                                   <C>              <C>
Net income As reported                $  1,238,396     $    150,075
                Pro Forma             $  1,225,050     $    100,000
Earnings per share - basic
                As reported           $        .43     $        .05
                Pro Forma             $        .43     $        .03
Earnings per share - diluted
                As reported           $        .43     $        .05
                Pro Forma             $        .43     $        .03
                                      ------------     ------------
</TABLE>

Pro forma net income reflects only options granted in 2000 and 1999. Therefore,
the full impact of calculating compensation cost for stock options under SFAS
No. 123 is not reflected in the pro forma net income amounts presented above
because compensation cost is reflected over the options' vesting period of 10
years and compensation cost for options granted prior to January 1, 1998 is not
considered.

Stock option activity during the periods indicated is as follows:

<TABLE>
<CAPTION>
                                       Number of      Weighted-Average
                                         Shares        Exercise Price
                                      ------------    ----------------
<S>                                   <C>             <C>
Balance at December 31, 1998               609,750              6.96
Granted                                    198,000              5.68
Exercised                                  (23,800)             4.94
Forfeited                                  (75,700)             8.73
                                      ------------      ------------
Balance at December 31, 1999               708,250              6.42
                                      ------------      ------------
Granted                                     73,396              4.63
Exercised                                       --                --
Forfeited                                 (106,396)             5.85
                                      ------------      ------------
Balance at December 31, 2000               675,250              6.31
                                      ------------      ------------
</TABLE>

The following table summarizes information about stock options outstanding at
December 31, 2000:

<TABLE>
<CAPTION>
                                                     Options Outstanding
                              --------------------------------------------------------
                                  Number         Weighted Average
    Range of                   Outstanding          Remaining         Weighted-Average
 Exercise Prices               at 12/31/00       Contractual Life      Exercise Price
 ---------------              ------------       ----------------     ----------------
<S>                           <C>                <C>                  <C>
$3.44 to $4.33                      53,500                 7.50 years   $       4.10
$5.00 to $5.94                     379,000                 6.23                 5.25
$6.00 to $7.75                     123,000                 4.93                 6.85
$9.00 to $9.94                      69,750                 5.37                 9.28
$11.00 to $12.00                    50,000                 7.00                11.30
                              ------------         ------------         ------------
$3.44 to $12.00                    675,250                 6.06                 6.31
                              ------------         ------------         ------------
</TABLE>

<TABLE>
<CAPTION>
                                      Options Exercisable
                              ------------------------------------
                                  Number               Weighted
    Range of                  Exercisable at            Average
 Exercise Prices                 12/31/00           Exercise Price
 ---------------              --------------        --------------
<S>                           <C>                   <C>
$3.44 to $4.33                       20,000         $       4.06
$5.00 to $5.94                      109,000                 5.36
$6.00 to $7.75                      115,400                 6.84
$9.00 to $9.94                       43,500                 9.18
$11.00 to $12.00                     38,000                11.32
                               ------------         ------------
$3.44 to $12.00                     325,900                 7.01
                               ------------         ------------
</TABLE>
                                    Page 24
<PAGE>   25

At December 31, 2000 and 1999, the number of options exercisable was 325,900 and
315,850, respectively, and the weighted-average exercise price of those options
was $7.01 and $6.90, respectively.

(14)  COMMITMENTS

The Company has several noncancelable operating leases for office space. Total
rent expense incurred was $723,000 and $742,000, during 2000 and 1999. At
December 31, 2000, future minimum payments on noncancelable operating leases are
as follows:

<TABLE>
<CAPTION>
  Year Ending
  December 31
  -----------
<S>              <C>
     2001          $730,978
     2002           684,294
     2003            11,491
     2004            43,762
     Thereafter          --
</TABLE>

(15)  FINANCIAL OBLIGATIONS WITH OFF-BALANCE SHEET RISK

The Company may have limited off-balance sheet risk due to agreements with
clients. In certain circumstances, the Company may have a commitment to continue
purchasing accounts receivable from a client during a 30-day notice period. A
notice of termination of the agreement is required, under some conditions,
before the agreement may be terminated.

The Company's exposure to credit loss with respect to future purchases of
accounts receivable, in the event of nonperformance by the other party, does not
exceed the amounts to be considered for purchase. The Company uses its
established credit policies to consider committing to purchase accounts
receivable, and all future purchases of receivables are contingent on the
individual clients maintaining specific credit and other standards at the time
of the purchase funding.

In the normal course of business, the Company accepts warrants to acquire equity
in its borrowers. As these warrants have no ready market and are thinly traded,
the Company does not recognize unrealized gains or losses relative to the
warrants' value.

The Company's average receivable purchases in a 30-day period (considered to be
the maximum future purchase commitment, although not a contractual obligation)
pursuant to its normal business practice were approximately $61,400,000 and
$53,600,000 for 2000 and 1999, respectively.

(16)  INVESTMENT PLAN

In 1996, the Company adopted a defined contribution plan ("the "Plan") that is a
qualified plan under Section 401(k) of the Internal Revenue Code for the benefit
of KBK employees. The Plan is available to substantially all employees with at
least six months of employment. Employee contributions are voluntary. The
Company may, at the discretion of the Board, annually elect to match some
portion of employee contributions to this Plan. The Company currently matches
50% of every employee contribution subject to a 6% salary limit. The Company's
contributions to the Plan totaled $91,000 for 2000 and $93,000 for 1999.



                                    Page 25
<PAGE>   26

(17)  EMPLOYEE STOCK PURCHASE PLAN

In 1998, the Company adopted the 1998 Employee Stock Purchase Plan, ("the Stock
Plan") which subsequently received shareholder approval. The Stock Plan provides
eligible full-time employees with an opportunity to purchase common stock of the
Company through payroll deductions. The aggregate number of shares of common
stock which may be purchased under the Stock Plan shall not exceed 150,000
(subject to adjustment in the event of stock dividends, stock splits,
combinations of shares, recapitalizations or other changes in the outstanding
common stock). The exercise price for the stock purchase shall be 90% of the
lower of the fair market value of the stock on the first day or the last day of
the calendar quarter of the applicable option period. The shares purchased by
employees through the Stock Plan totaled 8,675 in 2000 and 6,766 in 1999.

In addition, during 2000, the employees received 6,900 shares from the Company
as part of a marketing incentive program.





                                    Page 26
<PAGE>   27
INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders

KBK Capital Corporation:

We have audited the accompanying consolidated balance sheets of KBK Capital
Corporation and subsidiaries as of December 31, 2000 and 1999, and the related
consolidated statements of income, changes in stockholders' equity, and cash
flows for years then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of KBK Capital
Corporation and subsidiaries as of December 31, 2000 and 1999, and the results
of their operations and their cash flows for the years then ended in conformity
with accounting principles generally accepted in the United States of America.

                                                  KPMG LLP

Fort Worth, Texas
January 24, 2001


KBK CAPITAL CORPORATION and SUBSIDIARIES
QUARTERLY SUMMARY RESULTS (Unaudited)
(dollars in thousands except per share amounts)

<TABLE>
<CAPTION>
                                                                                 2000
                                       YTD          ---------------------------------------------------------------
                                       2000            4TH QTR          3RD QTR          2ND QTR          1ST QTR
                                   ------------
<S>                                <C>              <C>              <C>              <C>              <C>
Average Net Earning Assets
   Managed and Owned               $    142,247     $    136,417     $    141,088     $    147,328     $    144,231
   Owned                                 85,191           81,285           79,245           89,766           90,576
                                   ============     ============     ============     ============     ============

Revenue                            $     22,348     $      5,801     $      5,213     $      5,680     $      5,654
Interest expense                          7,049            1,763            1,650            1,841            1,795
Operating expenses                       10,726            2,604            2,556            2,782            2,784
                                   ------------     ------------     ------------     ------------     ------------
Operating profit                          4,573            1,434            1,007            1,057            1,075
Other income                                291               --               --               --              291
Provision for credit losses               2,773              875              550              438              910
Provision for impairment
   losses                                    40               --               --               --               40
                                   ------------     ------------     ------------     ------------     ------------
Income (loss) before
   Income taxes                           2,051              559              457              619              416
Taxes                                       813              256              179              214              164
                                   ------------     ------------     ------------     ------------     ------------
Net Income (Loss)                  $      1,238     $        303     $        278     $        405     $        252
                                   ============     ============     ============     ============     ============
Earnings (Loss)
   Per Share - Basic               $        .43     $        .11     $        .10     $        .14     $        .09
Earnings (Loss)
   Per Share - Diluted             $        .43     $        .11     $        .10     $        .14     $        .09
                                   ============     ============     ============     ============     ============

<CAPTION>
                                                                                  1999
                                       YTD          -----------------------------------------------------------------
                                       1999            4TH QTR           3RD QTR          2ND QTR           1ST QTR
                                   ------------
<S>                                <C>              <C>               <C>              <C>               <C>
Average Net Earning Assets
   Managed and Owned               $    131,712     $    137,455      $    129,183     $    126,459      $    133,739
   Owned                                 75,295           82,728            77,096           71,481            69,712
                                   ============     ============      ============     ============      ============

Revenue                            $     19,133     $      4,879      $      4,891     $      4,650      $      4,713
Interest expense                          5,522            1,588             1,427            1,281             1,226
Operating expenses                       11,177            2,777             2,687            3,013             2,700
                                   ------------     ------------      ------------     ------------      ------------
Operating profit                          2,434              514               777              356               787
Other income                                 --               --                --               --                --
Provision for credit losses               1,600              400               400              400               400
Provision for impairment
   losses                                   500              500                --               --                --
                                   ------------     ------------      ------------     ------------      ------------
Income (loss) before
   Income taxes                             334             (386)              377              (44)              387
Taxes                                       184             (123)              175               (3)              135
                                   ------------     ------------      ------------     ------------      ------------
Net Income (Loss)                  $        150     $       (263)     $        202     $        (41)     $        252
                                   ============     ============      ============     ============      ============
Earnings (Loss)
   Per Share - Basic               $        .05     $       (.08)     $        .06     $       (.01)     $        .08
Earnings (Loss)
   Per Share - Diluted             $        .05     $       (.07)     $        .06     $       (.01)     $        .07
                                   ============     ============      ============     ============      ============
</TABLE>


                                    Page 27
<PAGE>   28

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

         None.

                                    PART III


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

       The information required by this item is included in the Company's Proxy
Statement to be filed pursuant to Regulation 14A in connection with the
Company's 2001 Annual Meeting of Stockholders, under the captions "Election of
Directors," "Information Concerning Executive Officers" and "Section 16(a)
Beneficial Ownership Reporting Compliance" and is incorporated herein by
reference.

ITEM 10. EXECUTIVE COMPENSATION

       The information required by this item is included in the Proxy Statement
to be filed pursuant to Regulation 14A in connection with the Company's 2001
Annual Meeting of Stockholders, under the captions "Compensation of Executive
Officers" and is incorporated herein by reference.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

       The information required by this item is included in the Proxy Statement
to be filed pursuant to Regulation 14A in connection with the Company's 2001
Annual Meeting of Stockholders, under the captions "Share Ownership of
Directors, Executive Officers and Certain Beneficial Owners" and is incorporated
herein by reference.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

       The information required by this item is included in the Proxy Statement
to be filed pursuant to Regulation 14A in connection with the Company's 2001
Annual Meeting of Stockholders, under the captions "Certain Relationships and
Related Party Transactions" and is incorporated herein by reference.



                                    Page 28

<PAGE>   29

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

         (a)     Exhibits:

     Exhibit Number

          3.1              --Restated Certificate of Incorporation of the
                           Company (incorporated by reference to Exhibit 3.1 to
                           the Registrant's Registration Statement on form SB-2,
                           Registration No. 33-77378-D).

          3.2              --Bylaws of the Company and amendment thereto
                           (incorporated by reference to Exhibit 4.5 to the
                           Registrant's Registration Statement on Form S-8,
                           Registration No. 33-89377).

          4.1              --Specimen Stock Certificate for Common Stock of the
                           Company (incorporated by reference to Exhibit 4.1 to
                           the Registrant's Registration Statement on form SB-2,
                           Registration No. 33-77378-D).

          4.2              --Form of Registration Rights Agreement between the
                           Company and the parties named therein, as amended
                           (incorporated by reference to Exhibit 4.2 to the
                           Registrant's Registration Statement on Form SB-2,
                           Registration No. 33-77378-D).

      (*)10.1              --1992 Key Employee Stock Option Plan of the Company
                           (terminated), and forms of stock option agreements
                           and amendments thereto (incorporated by reference to
                           Exhibit 10.1 to the Registrant's Registration
                           Statement on Form SB-2, Registration No. 33-77378-D).

      (*)10.2              --1993 Non-Employee Director Stock Option Plan of the
                           Company (terminated), and form of stock option
                           agreement (incorporated by reference to Exhibit 10.2
                           to the Registrant's Registration Statement on form
                           SB-2, Registration No. 33-77378-D).

      (*)10.3              --1994 Stock Option Plan of the Company, and forms of
                           stock option agreements (incorporated by reference to
                           Exhibit 10.3 to the Registrant's Registration
                           Statement on Form SB-2, Registration No. 33-77378-D).

         10.4              --Form of Indemnification Agreement between the
                           Company and each of its directors (incorporated by
                           reference to Exhibit 10.4 to the Registrant's
                           Registration Statement on form SB-2, Registration No.
                           33-77378-D).

         10.5              --Stock Purchase Agreement dated as of April 2, 1992
                           among the Company, KBK, Inc. and R. Doyle Kelley
                           (incorporated by reference to Exhibit 10.5 to the
                           Registrant's Registration Statement on Form SB-2,
                           Registration No. 33-77378-D).

         10.6              --Employment and Non-Competition Agreement dated Aril
                           7, 1992 between the Company and R. Doyle Kelley
                           (incorporated by reference to Exhibit 10.6 to the
                           Registrant's Registration statement on form SB-2,
                           Registration No. 33-77378-D).

         10.7              documents (incorporated by reference to Exhibit 10.7
                           to the Registrant's registration Statement on form
                           SB-2, Registration No. 33-77378-D).

         10.8              --Form of Warrants of the Company (incorporated by
                           reference to Exhibit 10.8 to the Registrant's
                           Registration Statement on Form SB-2, Registration No.
                           33-77378-D).

         10.9              --Stock Exchange Agreement among the Company and
                           Coastal, Inc. and the Owners of the outstanding
                           capital stock of Coastal Financial Resources, Inc.
                           dated as of December 30, 1994 (incorporated by
                           reference to Exhibit 10.9 to the Registrant's
                           Registration Statement on Form SB-2, Registration No.
                           33-77378-D).

         10.10             --Amended and Restated Letter Loan Agreement dated as
                           of August 21, 1997 among KBK, as borrower, and the
                           Company, as guarantor, and the Banks listed on the
                           signature pages thereof and Bank One, Texas, N.A. as
                           Agent (incorporated by reference to Exhibit 10.10 to
                           the Registrant's Registration Statement on Form SB-2,
                           Registration No. 33-77378-D).

         10.11             --Amendment to Third Amended and Restated Loan
                           Agreement (incorporated by reference to Exhibit 10.11
                           to the Registrant's Registration Statement on Form
                           SB-2, Registration No. 33-77378-D).
                           --Receivables Purchase Agreement (dated April 11,
                           1997) (incorporated by reference to Exhibit 10.12 to
                           the Registrant's Registration Statement on Form SB-2,
                           Registration No. 33-77378-D).
                           --Purchase and Sale Agreement (dated April 11, 1997)
                           (incorporated by reference to Exhibit 10.13 to the
                           Registrant's Registration Statement on Form SB-2,
                           Registration No. 33-77378-D).

         10.14             --Stock Purchase Agreement by and between the Company
                           and Sirmon Commercial Finance, L.L.C. dated October
                           21, 1999.



                                    Page 29
<PAGE>   30

         10.15             --Fourth Amended and Restated Letter Loan Agreement
                           dated as of May 21, 1999 among KBK Financial, Inc.,
                           as borrower, and the Company, as guarantor, and the
                           Banks listed on the signature pages thereof and Bank
                           One, Texas, N.A. as Agent.

         10.16             Purchase and Sale Agreement dated as of December 15,
                           2000 between KBK and SPV.

         10.17             Receivables Financing Agreement dated December 15,
                           2000 among KBK; SPV; and the various financial
                           institutions named therein.

         21.1              --Subsidiary of the Company (incorporated by
                           reference to Exhibit 21.1 to the Registrant's
                           Registration Statement on Form SB-2, Registration No.
                           33-77378-D).

(*) Management contract or compensatory plan or arrangement

         (b)      Reports on form 8-K

The Company filed a Form 8-K during the fourth quarter of the year ended
December 31, 2000 reporting the Financing.



                                    Page 30
<PAGE>   31

                                   SIGNATURES

Pursuant to the requirements of Section 13 of 15(d) of the Securities Exchange
Act of 1934, the Company has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.


                                        KBK CAPITAL CORPORATION
                                        REGISTRANT

Date:  March 30, 2001                   By       /s/ Deborah B. Wilkinson
                                           -------------------------------------
                                            Deborah B. Wilkinson, Executive Vice
                                           President and Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities indicated below and on the dates indicated.


<TABLE>
<S>                                  <C>                                        <C>
By /s/ Robert J. McGee               Chairman and Chief Executive Officer         March 30, 2001
   -------------------------------
         (Robert J. McGee)


By /s/ Deborah B. Wilkinson          Executive Vice President and                 March 30, 2001
   -------------------------------   Chief Financial Officer
         (Deborah B. Wilkinson)      (Principal Financial Officer)


By /s/ Jack R. Roper                 Executive Vice President of                  March 30, 2001
   -------------------------------   Systems and Administration and Director
         (Jack R. Roper)


By /s/ L. Allen Jarboe               Executive Vice President and                 March 30, 2001
   -------------------------------   Chief Credit Officer and Director
         (L. Allen Jarboe)


By /s/ Thomas Simmons                Director                                     March 30, 2001
   -------------------------------
         (Thomas Simmons)


By /s/ Daniel R. Feehan              Director                                     March 30, 2001
   -------------------------------
         (Daniel R. Feehan)


By /s/ Thomas L. Healey              Director                                     March 30, 2001
   -------------------------------
         (Thomas L. Healey)


By /s/ Martha V. Leonard             Director                                     March 30, 2001
   -------------------------------
         (Martha V. Leonard)


By /s/ R. Earl Cox, III              Director                                     March 30, 2001
   -------------------------------
         (R. Earl Cox, III)


By /s/ Harris A. Kaffie              Director                                     March 30, 2001
   -------------------------------
         (Harris A. Kaffie)
</TABLE>



                                    Page 31