<PAGE>


                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                              WASHINGTON, DC 20549

                                    FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2002

                                       OR

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

For the transition period from _______ to _______

                        Commission file number 000-21673

                              AGILITY CAPITAL, INC.

             (Exact name of registrant as specified in its charter)


                Texas                                           75-2487218

     (State or other jurisdiction                            (I.R.S. Employer
   of incorporation or organization)                        Identification No.)

1512 West 35th Street Cut-Off, Suite 310                          78731

 (Address of principal executive offices)                       (Zip Code)

                                 (512) 436-7200

               Registrant's telephone number, including area code

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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
    ---       ---

As of June 30, 2002 there were 5,962,561 shares of the registrant's Common
Stock, no par value, and 1,073,500 shares of registrant's 15% Preferred Stock,
no par value, outstanding.





<PAGE>





Table of Contents

<TABLE>
<S>                                                                                                     <C>
PART I- FINANCIAL INFORMATION............................................................................1

   ITEM 1. Financial Statements..........................................................................1
   ITEM 2. Management's Discussion And Analysis Of Financial Condition And Results of Operation.........12

PART II-OTHER INFORMATION...............................................................................20

   ITEM 1. Legal Proceedings............................................................................20
   ITEM 2. Changes in Securities and Use of Proceeds....................................................21
   ITEM 3. Defaults Upon Senior Securities..............................................................21
   ITEM 4. Submission of Matters to a Vote of Security Holders..........................................21
   ITEM 5. Other Information............................................................................21
   ITEM 6. Exhibits and Reports on Form 8-K.............................................................21

SIGNATURES..............................................................................................22

</TABLE>



                                       ii




<PAGE>


                          PART I- FINANCIAL INFORMATION

ITEM 1. Financial Statements

                     AGILITY CAPITAL, INC. AND SUBSIDIARIES
                      CONSOLIDATED CONDENSED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                                      September 30,          June 30,
                                                                                           2001               2002
                                                                                                           (Unaudited)
                                                                                      -------------        -----------
                                     ASSETS
<S>                                                                                    <C>                 <C>
Cash and cash equivalents                                                             $  3,308,105        $   208,619
Investments                                                                                817,000            346,500
Notes receivable                                                                           600,000          2,423,229
Other assets                                                                               122,284            133,215
                                                                                      -------------------------------
Total assets                                                                          $  4,847,389        $ 3,111,563
                                                                                      ===============================


                      LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:

     Payables and accrued liabilities                                                 $    506,523        $   508,172
                                                                                      -------------------------------
Total liabilities                                                                     $    506,523        $   508,172
Commitments and Contingencies
Shareholders' equity:
Preferred stock, no par value; 5,000,000 shares authorized; 1,073,500 shares of
   15% Series A cumulative preferred stock, $10 liquidation preference,
   issued and outstanding, (Dividends in arrears of $4,428,188 and
   $5,635,875)                                                                          10,341,000         10,341,000
Common stock, no par value; 25,000,000 shares authorized; 5,962,561 shares
   issued and outstanding                                                                    1,000              1,000
      Capital in excess of stated capital                                                7,563,566          7,563,566
      Due from shareholders                                                                (10,592)           (10,592)
      Accumulated deficit                                                              (13,554,108)       (15,291,583)
                                                                                      -------------------------------
Total shareholders' equity                                                               4,340,866          2,603,391
                                                                                      -------------------------------
Total liabilities and shareholders' equity                                            $  4,847,389        $ 3,111,563
                                                                                      ===============================

</TABLE>

               The accompanying notes are an integral part of
              the consolidated condensed financial statements

                                       1




<PAGE>



                     AGILITY CAPITAL, INC. AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                  Three Months Ended                Nine Months Ended
                                                                       June 30,                          June 30,
                                                                 2001            2002             2001            2002
<S>                                                        <C>              <C>             <C>              <C>
Revenues:
    Interest income                                        $     64,334     $   51,834      $    252,685     $    142,975
    Net investment income                                                      128,232                             78,801
    Other income                                                     26                          119,852            4,050
                                                           --------------------------------------------------------------
Total revenues                                                   64,360        180,066           372,537          225,826
                                                           --------------------------------------------------------------

Expenses:
    Salaries and benefits                                       232,862        265,515           789,308          749,295
    General and administrative                                  433,313        345,507         1,241,914        1,096,723
    Loss on settlement of litigation                                                                               86,000
    Other operating expenses                                     24,830         20,791            43,392           41,283
                                                           --------------------------------------------------------------
Total expenses                                                  691,005        631,813         2,074,614        1,973,301
                                                           --------------------------------------------------------------
Loss before gain on sale of broker dealer license             (626,645)      (451,747)       (1,702,077)      (1,747,475)
Gain on sale of broker dealer license                                           10,000                             10,000
                                                           --------------------------------------------------------------
Net loss                                                      (626,645)      (441,747)       (1,702,077)      (1,737,475)

Income attributable to preferred shareholders                   402,563        402,563         1,207,689        1,207,689
                                                           --------------------------------------------------------------
Net loss available to common shareholders                 $ (1,029,208)    $ (844,310)     $ (2,909,766)    $ (2,945,164)
                                                           ==============================================================

Weighted average number of common shares:
    Basic and diluted                                         5,962,561      5,962,561         5,962,561        5,962,561

Loss per common share - basic and diluted                       $(0.17)        $(0.14)           $(0.49)          $(0.49)
                                                           ==============================================================

</TABLE>

               The accompanying notes are an integral part of
              the consolidated condensed financial statements

                                       2




<PAGE>


                     AGILITY CAPITAL, INC. AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                         Nine months Ended June 30,
                                                                                        2001                   2002
<S>                                                                                 <C>                    <C>
OPERATING ACTIVITIES:
Net Loss                                                                            $(1,702,077)          $(1,737,475)
Changes in operating assets and liabilities
    Due from affiliates                                                                 (37,154)
    Other assets                                                                        (31,343)              (52,722)
    Payables and accrued liabilities                                                   (204,275)                 1,649
                                                                                    ----------------------------------
CASH USED BY OPERATIONS                                                              (1,974,849)           (1,798,548)
                                                                                    ----------------------------------

INVESTING ACTIVITIES:
    Note receivable funded                                                             (500,000)           (1,259,438)
    Gain on sale of broker dealer license                                                                       10,000
    Purchase of investments                                                            (400,000)              (51,500)
                                                                                    ----------------------------------
CASH USED BY INVESTING                                                                 (900,000)           (1,300,938)
                                                                                    ----------------------------------

DECREASE IN CASH                                                                     (2,874,849)            3,099,486)
BEGINNING CASH BALANCE                                                                 7,050,088             3,308,105
                                                                                    ----------------------------------
ENDING CASH BALANCE                                                                 $  4,175,239          $    208,619
                                                                                    ==================================

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING ACTIVITY -
    Conversion of investment and accrued interest into note receivable                                    $    563,791

</TABLE>

               The accompanying notes are an integral part of
              the consolidated condensed financial statements

                                       3




<PAGE>


                     AGILITY CAPITAL, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                                   (Unaudited)

     1.  Basis of Presentation

         The consolidated condensed financial statements of Agility Capital,
Inc. (the "Company") included herein are unaudited and have been prepared in
accordance with generally accepted accounting principles ("GAAP") for interim
financial reporting and Securities and Exchange Commission ("SEC") regulations.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with GAAP have been condensed or omitted
pursuant to regulations. In the opinion of management, the financial statements
reflect all adjustments (consisting only of a normal and recurring nature) which
are necessary to present fairly the financial position, results of operations,
and cash flows for the interim periods. Results for interim periods are not
necessarily indicative of the results for a full year. For further information,
refer to the audited financial statements and footnotes thereto included in the
Company's Annual Report on Form 10-K for the year ended September 30, 2001 (SEC
File Number 000-21673). Certain data from the prior periods have been
reclassified to conform to the 2002 presentation.

     2.  Liquidity and capital resources

         As of June 30, 2002 the Company had $208,619 in cash and no long-term
indebtedness. Management believes the Company has sufficient liquidity to meet
its obligations (primarily employee/consultant fees and expenses, rent,
litigation and professional expenses) through September 30, 2002 relying on the
repayment of the interim Modelwire notes. Management hopes to generate
additional liquidity and revenues through the monetization of existing positions
in companies such as Modelwire.

         The Company has focused its current efforts on its investment in
Modelwire, a provider of software and services for the model and talent
industry. Executives of the Company have taken board and management positions
with Modelwire and are currently involved in the day-to-day operations of
Modelwire. In addition to management activities, the Company continues to
advance funds to Modelwire in anticipation of Modelwire reaching a positive cash
flow position. In April and May 2002 Modelwire signed contracts with several
large modeling agencies for their booking and imaging software. Invoicing for
services performed on these contracts began in May 2002. However, the billing
levels were well below expectations. Collections have been also. The Company
expected that these collections would allow Modelwire to generate sufficient
cash flow to begin repaying the $403,438 interim notes (see note 5). If
Modelwire is unable to generate sufficient cash flow, the Company's limited cash
resources combined with the inability of Modelwire to raise additional third
party capital may result in the liquidation of Modelwire resulting in the
Company's notes receivable becoming impaired.

         The Company is relying on the repayment of the interim notes to fund
its operations through September 30, 2002. If Modelwire is unable to repay these
advances, and management is unable to generate other sources of funding, the
Company expects that it will need to take significant cost cutting actions to
fund its operations through September 30, 2002.

                                       4




<PAGE>


     The Company is pursuing research projects which include performing
due diligence, conducting technology assessment and development, operations
management, board representation, and managing liquidity events for a
portfolio of private companies on a fee for services basis. If
these sources of revenue are not sufficient to cover the Company's operations
and investment activities doubt may be raised about the Company's ability to
continue as a going concern.

     3.  Summary of Significant Accounting Policies

         Principles of Consolidation

         The consolidated condensed financial statements include the accounts of
the Company and its wholly owned subsidiaries. All significant intercompany
balances and transactions have been eliminated in consolidation. Southcoast
Investment Group, Inc. was consolidated through April 18, 2002 when it was sold.

         Pervasiveness of Estimates

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

         Cash and Cash Equivalents

         The Company considers highly liquid investments with maturities of
three months or less when purchased to be cash equivalents.

         Investments.

         The Company records its investments at fair value. The fair value of
investments is determined based upon the Company's valuation policy.

         Under the valuation policy of the Company, unrestricted securities are
valued at the average closing price for publicly held securities for the last
three days of the month. Investments in portfolio companies and restricted
securities, including securities of publicly owned companies which are subject
to restrictions on resale, are valued at cost at the date of acquisition until
there is a sustained basis for recognizing appreciation or depreciation in the
valuation. Estimated fair value is determined by the Board of Directors based on
a number of factors including, if available, significant subsequent equity
financings by unrelated new investors, secondary offerings, independent
valuations, comparable publicly traded securities as well as current and
projected operating performance and other analytical data relating to the
investment. The valuations do not necessarily represent amounts which will
ultimately be realized from the investments.

         Notes receivable.

         The carrying value of notes receivable approximates the fair value,
which is based on cash flows discounted at current interest rates for similar
loans.

         Income Taxes


                                       5




<PAGE>


         The Company uses the liability method in accounting for income taxes.
Under this 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. Valuation
allowances are established, when necessary, to reduce deferred tax assets to the
amount expected to be realized. The provision for income taxes represents the
tax payable for the period and the change during the year in deferred tax assets
and liabilities. The Company files a consolidated federal income tax return.

         Earnings per Share

Basic earnings per share excludes dilution and is computed by dividing income
available to common shareholders by the weighted-average number of common shares
outstanding for the period. Diluted earnings per share reflects the potential
dilution that could occur if securities or other contracts to issue common stock
were exercised or converted into common stock or resulted in the issuance of
common stock that then shared in the earnings of the Company, unless such
issuance would be anti-dilutive.

         Basic earnings per share excludes potential dilution of potential
shares and is computed by dividing income available to common shareholders by
the weighted-average number of common shares outstanding for the period. Diluted
earnings per share reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or converted
into common stock or resulted in the issuance of common stock that then shared
in the earnings of the Company unless such issuance would be anti-dilutive.

         As the Company posted a net loss for the nine months ended June 30,
2001 and 2002, the effects of stock options and contingently issuable shares for
those years were anti-dilutive and not included in the computation of diluted
loss per share.

         Interest Income

         The Company generally uses the simple interest method to determine
interest.

         Recent Accounting Pronouncements

         The Financial Accounting Standards Board ("FASB") issued Statement of
Financial Accounting Standards No. 141 ("SFAS 141"), "Business Combinations",
Statement of Financial Accounting Standards No. 142 ("SFAS 142"), "Goodwill and
Other Intangible Assets", Statement of Financial Accounting Standards No. 143
("SFAS 143"), "Accounting for Asset Retirement Obligations" and Statement of
Financial Accounting Standards No. 144 ("SFAS 144"), Accounting for the
Impairment or Disposal of Long-Lived Assets. SFAS 141 requires the purchase
method of accounting for business combinations initiated after June 30, 2001 and
eliminates the pooling-of-interests method. SFAS No. 142 requires companies to
cease amortizing goodwill that existed at June 30, 2001 and establishes a new
method of testing goodwill for impairment on an annual basis or on an interim
basis if an event occurs or circumstances change that would reduce the fair
value of a reporting unit below its carrying value. SFAS 143 addresses financial
accounting and reporting for obligations associated with the retirement of
tangible long-lived assets and the associated asset retirement costs and is
effective for fiscal years beginning after June 15, 2002. SFAS 144 clarifies the
accounting for disposals of long-lived assets and is effective for fiscal years
beginning after December 31, 2001. The Company does not believe that the
adoption of SFAS 141, SFAS 142, SFAS 143 and SFAS 144 will have a significant
impact on its financial statements.

                                       6




<PAGE>


     4.  Investments.

         The following table provides a listing of investments at September 30,
         2001 and June 30, 2002:

<TABLE>
<CAPTION>
                                                                       September 30,       June 30,
                                                                           2001              2002
                                                                       ----------------------------
        <S>                                                             <C>               <C>
         Yehti                                                           $100,000          $100,000
         Access Ventures                                                   75,000           100,000
         Tanisys Technology                                               120,000           120,000
         Modelwire                                                        522,000                 -
         Transmeridian Exploration                                                           26,500
                                                                         --------------------------
             Total                                                       $817,000          $346,500
                                                                         ==========================
</TABLE>


         During the quarter ended December 31, 2001, the Company exchanged its
investment of $522,000 in Modelwire into a series of notes bearing interest at
8% and 9%. See Notes Receivable

     5.  Notes receivable

The following table provides a listing of notes receivable at September 30, 2001
and June 30, 2002:

<TABLE>
<CAPTION>

                                                                       September 30,      June 30,
                                                                           2001             2002
                                                                       -----------------------------
         <S>                                                             <C>             <C>
         Modelwire 8% convertible note                                   $500,000        $        -
         Modelwire 9% note                                                                1,041,791
         Modelwire 8% senior convertible note                                               828,000
         Modelwire 8% interim note                                                          403,438
         Yehti 8.5% convertible note                                      100,000           100,000
         Yehti 10% convertible note                                                          50,000
                                                                         --------------------------
             Total                                                       $600,000        $2,423,229
                                                                         ==========================
</TABLE>

         In October 2000, the Company purchased at par a $500,000 convertible
note bearing interest at 8%(the "8% Note") from Modelwire, Inc. ("Modelwire").
The 8% Note was convertible at the option of the Company into shares of
securities being offered at the time of a Qualifying Financing. A Qualifying
Financing is defined as a private financing resulting in proceeds before
expenses of $5,000,000 or more to Modelwire. The number of shares was to be
computed by dividing (i) the outstanding principal amount of the 8% Note
together with accrued interest on such principal amount as of the date of
conversion by (ii) the lower of (x) $4.00 per common equivalent share or (y) the
price per share of the securities issued in such Qualifying Financing discounted
by 35% of such price.

         The 8% Note was due and payable upon the earliest to occur of the
following:

                  (a)  the second anniversary of the date issued; or

                  (b)  upon sale of all or substantially all of its assets; or

                  (c)  upon liquidation of Modelwire; or

                  (d)  upon any merger involving Modelwire in which Modelwire is
                       not the resulting or surviving entity.

                                       7




<PAGE>


         In October 2001, substantially all of the Company's investment in
Modelwire and the 8% Note (including accrued interest) was converted at par into
a secured promissory note bearing interest at 9% (the "9% Note") from Modelwire
in the principal amount of approximately $1,042,000. Subject to the Senior Note
(as defined below), the 9% Note is secured by all of the tangible and intangible
assets of Modelwire.

         The 9% Note is due and payable upon the earliest to occur of the
following:

                  (a)  August 31, 2002; or

                  (b)  upon the sale, license or lease by Modelwire of all or
                       substantially all of its assets; or

                  (c)  upon the liquidation, dissolution or winding up of
                       Modelwire; or

                  (d)  upon any merger involving Modelwire in which Modelwire is
                       not the resulting or surviving entity; or

                  (e)  upon the occurrence of certain events of default by
                       Modelwire, such as any material breaches by Modelwire of
                       any covenants contained in the 9% Note.

         In December 2001, the Company purchased at par a senior secured
convertible promissory note bearing interest at 8% (the "Senior Note") from
Modelwire in the principal amount of $828,000. The Senior Note is convertible at
the option of the Company into shares of Series C Convertible Preferred Stock,
par value $0.01, of Modelwire (the "Series C Stock"). The number of shares of
Series C Stock to be issued to the Company upon conversion is computed by
dividing (i) the outstanding principal amount of the Senior Note together with
accrued interest on such principal amount as of the date of conversion by (ii)
$0.05. The Senior Note is secured by a first priority lien on all of the
tangible and intangible assets of Modelwire.

         The Senior Note is due and payable upon the earliest to occur of the
following:

                  (a)  September 15, 2002; or

                  (b)  upon the occurrence of certain events of default by
                       Modelwire, such as the failure of Modelwire to make
                       payment of any amount due under the Senior Note or the
                       default by Modelwire under certain agreements.

         In connection with the purchase of the 9% Note, the Company received
2,604,479 warrants to acquire common stock of Modelwire at $0.40 per share
subject to adjustments from time to time for: subdivisions, combinations, and
other issuances; reclassification, reorganization and consolidation; sale of
shares below exercise price.

         The Company made additional advances of $403,438 during the nine months
ended June 30, 2002 under terms expected to be similar to the 8% senior note.

         In March 2001, the Company purchased at par a $100,000 convertible note
bearing interest at 8.5% from Yehti Corporation. The note is to be converted
into Series B Preferred Stock at the time of a Qualifying Financing. A
Qualifying Financing is defined as a financing resulting in proceeds before
expenses of at least $1,500,000 to Yehti Corporation. Upon the consummation of
the Qualified Financing, the unpaid principal on this Note shall be converted
into shares of Series B Preferred Stock, and the Lender shall receive that
number of shares of Series B Preferred Stock that is equal to the outstanding
principal balance due to the Lender divided by the lesser of (i) $0.50 per share
or (ii) the lowest per share purchase price of the Series B Preferred Stock
issued in the Qualified Financing, rounded to the nearest whole share with 0.5
rounded upward to avoid fractional share interests.

         In December 2001, the Company purchased at par a $50,000 convertible
note bearing interest at 10% from Yehti Corporation. The note is to be converted
into Series B Preferred Stock at the time of a Qualifying Financing. A
Qualifying Financing is defined as a financing resulting in

                                       8




<PAGE>


proceeds before expenses of at least $1,500,000 to Yehti Corporation. Upon the
consummation of the Qualified Financing, the unpaid principal on this Note shall
be converted into shares of Series B Preferred Stock, and the Lender shall
receive that number of shares of Series B Preferred Stock that is equal to the
outstanding principal balance due to the Lender divided by the lesser of (i)
$0.50 per share or (ii) the lowest per share purchase price of the Series B
Preferred Stock issued in the Qualified Financing, rounded to the nearest whole
share with 0.5 rounded upward to avoid fractional share interests.

     6.  Other assets

         The Company engaged an investment firm to raise the venture capital
fund and paid $125,000, of which $75,000 was reported as deferred offering costs
representing the fee that would be refunded if the securities did not get
placed. The investment firm has gone out of business. It is unlikely that the
$75,000 will be refunded. Therefore the $75,000 was expensed during the third
quarter of 2002.

         The Company accrued interest on its notes receivable of $124,134 and on
its interest bearing cash accounts of $4,281 which has been earned but not paid
as of June 30, 2002.

         The Company paid a security deposit of $4,800 for an apartment in New
York to reduce the expenses necessary to assist Modelwire.

         The Company acquired all of the outstanding common stock of Southcoast
Investment Group, Inc. ("Southcoast") for $25,000. With the exception of a
broker dealer license, Southcoast had no assets or liabilities. The Company
recorded the license as an intangible asset valued at the purchase price. The
Company sold Southcoast on April 18, 2002. In connection therewith, the Company
recorded a gain on disposal of $10,000. Proceeds from the sale were $35,000.

     7.  Income taxes

         Management has reduced the deferred tax asset by a valuation allowance
due to uncertainty of realizing certain tax loss carry-forwards and other
deferred tax assets. The increase in net deferred tax assets during the nine
month period ended June 30, 2002 was offset by a corresponding increase in the
valuation allowance. Accordingly no tax benefit was recognized for the net loss.

     8.  Stockholders' Equity

         Preferred Stock

         Pursuant to the Company's amended articles of incorporation; the
Company is authorized to issue from time to time up to 5,000,000 shares of
preferred stock, in one or more series. The Board of Directors is authorized to
fix the dividend rights, dividend rates, any conversion rights or right of
exchange, any voting right, any rights and terms of redemption (including
sinking fund provisions), the redemption rights or prices, the liquidation
preferences and any other rights, preferences, privileges and restrictions of
any series of preferred stock and the number of shares constituting such series
and the designation thereof.

         In February 1998, the Company completed the underwritten public
offering of 1,125,000 shares of its 15% Series A Cumulative Preferred Stock (the
"Preferred Stock"), with a liquidation preference of $10 per share. The price to
the public was $10 per share, with net proceeds to the Company of approximately
$9,631,000. Dividends on the Preferred Stock are cumulative and payable
quarterly on the last day of March, June, September and December of each year,
commencing on June 30, 1998, at the rate of 15% per annum. After three years
from the date of

                                       9




<PAGE>


issuance, the Company may, at its option, redeem one-sixth of the Preferred
Stock each year, in cash at the liquidation price per share (plus accrued and
unpaid dividends), or, if in common stock, that number of shares equal to $10
per share of Preferred Stock to be redeemed, divided by 85% of the average
closing sale price per share for the common stock for the 5 trading days prior
to the redemption date. The Preferred Stock is not redeemable at the option of
the holder and has no stated maturity. Cumulative unpaid dividends at June 30,
2002 were $5,635,875.

         The Company has not paid the quarterly dividend on its Preferred Stock
since December 31, 1998. If dividends on the Preferred Stock are in arrears for
two quarterly dividend periods, holders of the Preferred Stock have the right to
elect two additional directors to serve on the Company's Board until such
dividend arrearage is eliminated. Two of the Company's directors have been
designated as representing the Preferred Stock holders. In addition, certain
changes that could materially affect the holders of Preferred Stock, such as a
merger of the Company, cannot be made without the affirmative vote of the
holders of two-thirds of the shares of Preferred Stock, voting as a separate
class. There have been no directors elected by the Preferred Shareholders. The
Preferred Stock ranks senior to the common stock with respect to the payment of
dividends and amounts upon liquidation, dissolution or winding up. In the event
of liquidation, dissolution or winding up of the Company, the amount required to
satisfy the preferred shareholders is $16.37 million at June 30, 2002.

     9.  Commitments and Contingencies

         In 1998, the Company initiated suit in state court in Houston, Texas
against Progressive Northern Insurance Co. arising out of insurance policies
issued by Progressive affiliates to the Company. The policies provided
deficiency balance coverage and physical damage coverage on automobile loans
acquired by the Company and sold into certain securitizations. Progressive
contended that there was a cumulative limit on claims under the Deficiency
Balance Policy of 88% of the total premiums paid on that Policy, which was
contrary to the Company's position. On this point, the Company's position was
confirmed by the court. Progressive also contended that it had the right to
cancel the Policies, without any refund of the fully-paid premiums, at any time
pursuant to 30 days' notice and in fact did so in March 1998. The Company and
the securitization trustees disputed this termination as contrary to the terms
and understandings reached with Progressive and relied upon by the parties in
interest, including the securitization market. This issue was submitted by the
court to the jury. After a three week trial in January 2000, the Company failed
to win a verdict against Progressive. The Company filed a motion to set aside
the verdict based on various legal issues and the court denied this motion and
entered a take nothing judgment against the Company. The Company is currently
appealing this verdict.

         In June 2000, Mellon U.S. Leasing brought suit against the Company for
payment of $336,647 it asserts that it is owed on equipment leased to the
Company and for attorney fees and costs. On or about July 12, 2000, the Company
unconditionally tendered Mellon U.S. Leasing all of the equipment the subject of
the Master Lease Agreement, and the Company tendered to Mellon U.S. Leasing, as
an accord and satisfaction a check in the sum of $5,000. Mellon U.S. Leasing has
failed to pick up the equipment subject to the Master Lease Agreement. The
Company intends to vigorously defend this case.

         In January 2002, Dresner Investment Services, Inc. brought suit against
the Company. This is a suit recently filed in the United States District Court
for the Northern District of Illinois Eastern District against the Company for
breach of contract. The complaint asserts that the Company entered into an
agreement whereby Dresner would consult with and advise the Company in raising
unsecured debt and approach investors and/or creditors on behalf of the Company,
and assist the Company in the course of negotiations concerning financings with
prospective investors and/or creditors. The complaint further asserts that the
parties agreed that Dresner would be paid a fee of 6% of the committed debt in
the event of a financing. Dresner alleges that the Company obtained a commitment
of $20 million from an introduction provided by

                                       10




<PAGE>



Dresner, and that the Company now owes Dresner a fee of $1.2 million and late
fees of approximately $750,000. The parties agreed to transfer the case to the
Western District of Texas, Austin Division where the case will be litigated. The
Company denies all allegations in the complaint and the Company intends to
vigorously defend this case.

         In April 2002, the Company brought suit against CIT Communications
("CIT"). This is a suit for declaratory judgment pursuant to Chapter 37 of the
Texas Civil Practices and Remedies Code, and for other relief. Beginning on or
about June 19, 1996, the Company entered into a Master Equipment Lease Agreement
("Equipment Lease Agreement") with Defendant's predecessor, AT&T Credit
Corporation, pursuant to which the Company leased certain equipment and agreed
to pay for the same.

         The Company, no longer needing the equipment due to the significant
reduction in employees since the equipment was leased, has tendered to CIT all
of the equipment subject to the Equipment Lease Agreement, and, as an accord and
satisfaction, tendered a check in the sum of $1,469. CIT has failed to reclaim
the equipment and seeks to collect $204,582. The Company intends to vigorously
defend this case.

         The Company has made a capital commitment of $500,000 to an investment
fund that co-invests in private venture-stage companies with whom the principals
of the fund have business or professional relationships. $75,000 of the
commitment was paid in October 2000. The Company paid an additional $25,000 of
the commitment in May 2002 due to a capital call by the fund managers.

         The Company is the plaintiff or the defendant in several legal
proceedings that its management considers to be the normal kinds of actions to
which an enterprise of its size and nature might be subject. It is possible that
even a small adverse ruling could have a material adverse effect on the Company
while it is in its current cash poor condition. During the quarter ended
December 31, 2001, the Company settled two lawsuits resulting in payments
totaling $86,000.

                                       11




<PAGE>


ITEM 2. Management's Discussion And Analysis Of Financial Condition And Results
of Operation

The following analysis of the financial condition and results of operations of
the Company should be read in conjunction with the Company's Consolidated
Financial Statements and Notes thereto and the other financial data
included herein. Certain of the financial information set forth below has been
rounded in order to simplify its presentation. However, the ratios and
percentages set forth below are calculated using the detailed financial
information contained in the Financial Statements and the Notes thereto, and the
financial data included elsewhere in this Form 10-Q. For further information,
refer to the audited consolidated financial statements and footnotes thereto
included in the Company's Form 10-K for the year ended September 30, 2001 (SEC
File Number 000-21673).

         As of August 15, 2002, the Company's available cash will have been
reduced below $40,000. Accordingly, until the sources of funding discussed below
are realized (which realization cannot be assured), management will need to
reduce the Company's operating expenses. In considering the interests of the
Company's creditors and preferred shareholders, the Board of Directors has been
concerned with the cost of maintaining sufficient directors and officers
liability insurance. In order to reduce the expense of this item, the Company
recently reduced coverage to $3 million, and may have to reduce the coverage
further. If future revenues are not realized by the Company, future coverage
may lapse, with adverse effects on the Company's ability to maintain a Board of
Directors. On July 18, 2002, David Wulf resigned his position as a member of the
Board of Directors.

         In order to obtain much-needed cash, the Company is focusing its
current efforts on its investment in Modelwire, a provider of software and
services for the model and talent industry. Executives of the Company have
taken board and management positions with Modelwire and are currently
involved in the day-to-day operations of Modelwire. In addition to management
activities, the Company has advanced funds to Modelwire throughout the first
half of 2002, in anticipation of Modelwire reaching a positive cash flow
position. In April and May 2002 Modelwire signed contracts with several large
modeling agencies for their booking and imaging software. Invoicing for
services performed on these contracts began in May 2002. However, the billing
and collection levels were below expectations. The Company had hoped that these
collections would allow Modelwire to generate sufficient cash flow to begin
repaying the $403,438 interim notes (see note 5). If Modelwire is unable to
generate sufficient cash flow, the Company's limited cash resources combined
with the inability of Modelwire to raise additional third party capital may
result in the liquidation of Modelwire resulting in the Company's notes
receivable becoming impaired.

         The Company is relying on the repayment of the $403,438 interim notes
to fund its operations through September 30, 2002. In the interim, the Company
is reducing its operations and conserving cash, including the suspension of SEC
reporting after the filing of this report, salary cuts and staff reduction,
suspension of fundraising activities for the Agility Capital Fund, deferral
of payables, and the aforementioned reduction in insurance coverage and
premiums.

          Prior to implementing these cost-cutting measures, the Company was in
the process of raising pursuant to a private placement, a $100,000,000 venture
capital investment fund with a projected 10-year term, to be called the Agility
Capital Fund, LLC (the "Fund"). The Fund was to sell and issue membership
interests to accredited and institutional investors. The Company's plan was to
invest in such interests and also serve as the managing member and the initial
advisor to the Fund. The Fund would invest in early stage, privately held
companies operating in the e-commerce business services/internet, information
technology and services, new media, enterprise and application software, and
communications industries. On a select basis, later stage companies in other
industries may also be considered.

          The Company's management had concentrated its efforts to raise the
capital necessary to establish the Fund as a viable venture. The Company had
engaged a securities broker/dealer to serve as placement agent assembled an
initial advisory board and engaged the services of additional employees and
various consultants. However, market conditions for private equity funds have
been and remain challenging, competitive and volatile. Accordingly, there can be
no assurance that the Company will be successful in establishing the Fund. The
failure to establish the Fund within a reasonable timeframe has strained the
Company's capital resources, and the Company may be unable to monetize the
investments currently made in anticipation of their conveyance to the Fund.





                                       12




<PAGE>


          The inability of the Company to raise the Fund has left the Company
with the need to pursue other sources of revenue outside of interest income
earned on existing cash balances. To that end the Company is pursuing research
projects which include performing due diligence, conducting technology
assessment and development, operations management, board representation, and
managing liquidity events for a portfolio of private companies on a fee for
services basis. If these sources of revenue, along with reimbursements of
advances to Modelwire are not sufficient to cover the Company's operations and
liabilities, doubt may be raised about the Company's ability to continue as a
going concern.

          In December 2001, the Company acquired all of the outstanding common
stock of Southcoast Investment Group, Inc. ("Southcoast"). With the exception
of a broker dealer license, Southcoast had not assets or liabilities. The
Company recorded the license as an intangible asset valued at the purchase
price. The Company sold Southcoast April 18, 2002 because it no longer needed
the broker dealer license to implement its business plan.

REVENUES

         The Company's current source of revenues consists of interest and
dividends on its cash and investments.

RESULTS OF OPERATIONS

         Period-to-period comparisons of operating results may not be
meaningful, and results of operations from prior and current periods may not be
indicative of future results. The following discussion and analysis should be
read in conjunction with the Company's Consolidated Financial Statements and the
Notes thereto.

Three Months Ended June 30, 2002 Compared to Three Months Ended June 30, 2001

Net Loss

         In the three months ended June 30, 2002, net loss decreased $184,898 to
a net loss of $441,747 from a net loss of $626,645 for the three months ended
June 30, 2001.

                                       13




<PAGE>


Total Revenues

         Total revenues increased $115,706 to $180,066 for the three months
ended June 30, 2002 from $64,360 for the three months ended June 30, 2001. The
increase was due to an increase in the Company's net investment income.

         Interest Income. Interest income decreased $12,500 to $51,834 from
$64,334. Interest during the three months ended June 30, 2002 was generated from
the Company's notes receivable and its money market fund. Interest during the
three months ended June 30, 2001 was generated from cash and cash equivalents.

         Net Investment Gain. During the three months ended June 30, 2002, net
investment gain of $128,232 resulted from securities sold. The Company did not
have investment income during the three months ended June 30, 2001.

         Other Income. For the three months ended June 30, 2002 the Company had
no other income.

Total Expenses

         Total expenses of the Company decreased $59,192 to $631,813 for the
three months ended June 30, 2002 from $691,005 for the three months ended June
30, 2001.

         Salaries and Benefits. Salaries and benefits increased $32,653 to
$265,515 for the three months ended June 30, 2002 from $232,862 for the three
months ended June 30, 2001. The employee census increased by two during the
three months ended June 30, 2002 over the same period in 2001.

         General and Administrative Expenses. General and administrative
expenses decreased $87,806 to $345,507 for the three months ended June 30, 2002
from $433,313 for the three months ended June 30, 2001. During the three months
ended June 30, 2002 and 2001, the Company's general and administrative expenses
were primarily professional expenses including accounting fees, corporate
counsel fees, and fees and expenses related to the pursuit of the Company's new
business plan. Travel along with meals and entertainment during the three months
ended June 30, 2002 increased $24,736 because the Company made presentations of
its business plan to potential investors, and made several site visits to its
portfolio companies.

         Other Operating Expenses. Other operating expenses decreased $4,039 to
$20,791 for the three months ended June 30, 2002 from $24,830 for the three
months ended June 30, 2001. Insurance costs increased while communication
expenses decreased.

         Gain on Disposal of Business. The Company sold Southcoast Investment
Group in April 2002 because the Company no longer needed the broker dealer
license associated with Southcoast to pursue its business plan. Proceeds from
the sale were $35,0000 which resulted in a gain of $10,000.

Nine months ended June 30, 2002 Compared to Nine months ended June 30, 2001

Net Loss

         In the nine months ended June 30, 2002, net loss increased $35,398 to a
net loss of $1,737,475 from a net loss of $1,702,077 for the nine months ended
June 30, 2001. The increase in net loss resulted primarily from a decrease in
interest income and the settlement of two lawsuits pertaining to the Company's
prior business in which the Company paid $86,000.

                                       14




<PAGE>



Total Revenues

         Total revenues decreased $146,711 to $225,826 for the nine months ended
June 30, 2002 from $372,537 for the nine months ended June 30, 2001. The
decrease was due to decrease in the Company's interest bearing accounts, and the
Company did not have additional miscellaneous collections from insurance or
previously written off accounts.

         Interest Income. Interest income decreased $109,710 to $142,975 from
$252,685. Interest during the nine months ended June 30, 2002 was generated from
the Company's notes receivable and its money market fund. Interest during the
nine months ended June 30, 2001 was generated from cash and cash equivalents.

         Net Investment Income. During the nine months ended June 30, 2002, net
investment gain resulted from sale of securities of $78,000. The Company did not
have investment income during the nine months ended June 30, 2001.

         Other Income. For the nine months ended June 30, 2002 and 2001 other
income was $4,050 and $119,852, respectively. For the nine months ended June 30,
2001 actual collections on receivables exceeded the estimated collectible
amount.

Total Expenses

         Total expenses of the Company decreased $101,313 to $1,973,301 for the
nine months ended June 30, 2002 from $2,074,614 for the nine months ended June
30, 2001. The Company settled two lawsuits related to its previous business for
$86,000. The Company incurred higher than normal travel expenses related to
protecting its investment in one of its portfolio companies. Professional
services expenses were reduced as a result of the settlement of the two
lawsuits.

         Salaries and Benefits. Salaries and benefits decreased $40,013 to
$749,295 for the nine months ended June 30, 2002 from $789,308. The Company did
not pay bonuses in the nine months ended June 30, 2002 compared to $127,200 paid
during the nine months ended June 30, 2001. The Company had two additional
employee during the nine months ended June 30, 2002.

         General and Administrative Expenses. General and administrative
expenses decreased $145,191 to $1,096,723 for the nine months ended June 30,
2002 from $1,241,914 for the nine months ended June 30, 2001. During the nine
months ended June 30, 2002 and 2001, the Company's general and administrative
expenses were primarily professional expenses including accounting fees,
corporate counsel fees, litigation fees related to the Progressive suit, and
fees and expenses related to the pursuit of the Company's new business plan.
Travel along with meals and entertainment during the nine months ended June 30,
2002 increased $146,436 because the Company made presentations of its business
plan to potential investors, and made several site visits to its portfolio
companies.

         Other Operating Expenses. Other operating expenses decreased $2,109 to
$41,283 for the nine months ended June 30, 2002 from $43,392 for the nine months
ended June 30, 2001. Insurance premiums for the Company increased which were
offset by a decrease in communication expenses.

FINANCIAL CONDITION

         Cash and cash equivalents. Cash and cash equivalents decreased
$3,099,486 to $208,619 at June 30, 2002 from $3,308,105 at September 30, 2001.
The decrease in cash and cash equivalents was mainly the result of an operating
loss of $1,747,475, the funding of notes receivable of $1,259,438, and
additional investments of $51,500.

                                       15




<PAGE>


         Investments. The following table provides a listing of investments at
         September 30, 2001 and June 30, 2002:

<TABLE>
<CAPTION>

                                                                       September 30,       June 30,
                                                                           2001              2002
                                                                       ----------------------------
         <S>                                                             <C>               <C>
         Yehti                                                           $100,000          $100,000
         Access Ventures                                                   75,000           100,000
         Tanisys Technology                                               120,000           120,000
         Transmeridian Exploration                                                           26,500
         Modelwire                                                        522,000                 -
                                                                         --------------------------
             Total                                                       $817,000          $346,500
                                                                         ==========================
</TABLE>


         Notes Receivable. The following table provides a listing of notes
         receivable at September 30, 2001 and June 30, 2002:

<TABLE>
<CAPTION>
                                                                      September 30,        June 30,
                                                                           2001             2002
                                                                      ------------------------------
         <S>                                                             <C>             <C>
         Modelwire 8% convertible note                                   $500,000        $        -
         Modelwire 9% note                                                                1,041,791
         Modelwire 8% senior convertible note                                               828,000
         Modelwire 8% interim note                                                          403,438
         Yehti 8.5% convertible note                                      100,000           100,000
         Yehti 10% convertible note                                                          50,000
                                                                         --------------------------
             Total                                                       $600,000        $2,423,229
                                                                         ==========================
</TABLE>


         Other Assets. The Company engaged an investment firm to raise the
venture capital fund and paid $125,000, of which $75,000 was reported as
deferred offering costs representing the fee that would be refunded if the
securities did not get placed. The investment firm has gone out of business. It
is unlikely that the $75,000 will be refunded. Therefore the $75,000 was
expensed in the third quarter of 2002.

         The Company accrued interest on its notes receivable of $126,563 and on
its interest bearing cash accounts of $4,281, which has been earned but not paid
as of June 30, 2002.

         On June 1, 2002 the Company paid $4,800 as a security deposit on a
three-month apartment lease. The purpose of the lease is to reduce travel
expenses.

         The Company acquired all of the outstanding common stock of Southcoast
Investment Group, Inc. ("Southcoast") for $25,000. With the exception of a
broker dealer license, Southcoast had no assets or liabilities. The Company
recorded the license as an intangible asset valued at the purchase price. The
Company sold Southcoast on April 18, 2002. In connection therewith, the Company
recorded a gain on disposal of $10,000. Proceeds from the sale were $35,000.

         Accounts Payable and Accrued Liabilities. Accounts payable and accrued
liabilities increased $1,649 to $508,172 at June 30, 2002 from $506,523 at
September 30, 2001. Accounts payable and accrued liabilities consists primarily
of lease obligations and professional fees.

LIQUIDITY AND CAPITAL RESOURCES


         As of August 15, 2002, the Company's available cash will have been
reduced below $40,000. Accordingly, until the sources of funding discussed below
are realized (which realization
                                       16




<PAGE>

cannot be assured), management will need to reduce the Company's operating
expenses. In considering the interests of the Company's creditors and preferred
shareholders, the Board of Directors has been concerned with the cost of
maintaining sufficient directors and officers liability insurance. In order to
reduce the expense for this item, the Company recently reduced coverage to $3
million, and may have to reduce the coverage further. If future revenues are
not realized by the Company, future coverage may lapse, with adverse effects on
the Company's ability to maintain a Board of Directors. On July 18, 2002, David
Wulf resigned his position as a member of the Board of Directors.

         In order to obtain much-needed cash, the Company is focusing its
current efforts on its investment in Modelwire, a provider of software and
services for the model and talent industry. Executives of the Company have
taken board and management positions with Modelwire and are currently
involved in the day-to-day operations of Modelwire. In addition to management
activities, the Company has advanced funds to Modelwire throughout the first
half of 2002, in anticipation of Modelwire reaching a positive cash flow
position. In April and May 2002 Modelwire signed contracts with several large
modeling agencies for their booking and imaging software. Invoicing for
services performed on these contracts began in May 2002. However, the billing
and collection levels were below expectations. The Company had hoped that these
collections would allow Modelwire to generate sufficient cash flow to begin
repaying the $403,438 interim notes (see note 5). If Modelwire is unable to
generate sufficient cash flow, the Company's limited cash resources combined
with the inability of Modelwire to raise additional third party capital may
result in the liquidation of Modelwire resulting in the Company's notes
receivable becoming impaired.

         The Company is relying on the repayment of the $403,438 interim notes
to fund its operations through September 30, 2002. In the interim, the Company
is reducing its operations and conserving cash, including the suspension of SEC
reporting after the filing of this report, salary cuts and staff reduction,
suspension of fundraising activities for the Agility Capital Fund, deferral
of payables, and the aforementioned reduction in insurance coverage and
premiums.

         The Company is relying on the repayment of the $403,438 interim notes
to fund its operations through September 30, 2002. If Modelwire is unable to
repay these advances, and management is unable to generate other sources of
funding, the Company expects that it will need to take significant cost cutting
actions to fund its operations through September 30, 2002.

         The inability of the Company to raise the Fund has left the Company
with the need to pursue other sources of revenue outside of interest income
earned on existing cash balances. To that end the Company is pursuing research
projects which include performing due diligence, conducting technology
assessment and development, operations management, board representation, and
managing liquidity events for a portfolio of private companies on a fee for
services basis. If these sources of revenue are not sufficient to cover the
Company's operations and investment activities doubt may be raised about the
Company's ability to continue as a going concern.

         Cash Flows. Significant cash flows related to the Company's operating
activities include the use of cash to pay salaries, professional and consultant
fees. Net cash used by operating activities totaled $1,798,548 during the nine
months ended June 30, 2002.

                                       17




<PAGE>


         Cash flows used by investing activities totaled $1,300,938. Significant
cash flows used by investing activities consisted of the purchase of investments
of $51,500 and the funding of notes receivable for $1,259,438. Cash flow
provided by investing activity of $10,000 resulted from the sale of Southcoast.

         There were no cash flows from financing activities during the nine
months ended June 30, 2002.

         Equity Offerings. In February 1998, the Company completed the
underwritten public offering of 1,125,000 shares of its 15% Series A Cumulative
Preferred Stock (the "Preferred Stock"), with a liquidation preference of $10
per share. The price to the public was $10 per share, with net proceeds to the
Company of approximately $10,386,000. Such net proceeds have been utilized for
working capital purposes, including the funding of finance contracts. Dividends
on the Preferred Stock are cumulative and payable quarterly on the last day of
March, June, September and December of each year, commencing on June 30, 1998,
at the rate of 15% per annum. After three years from the date of issuance, the
Company may, at its option, redeem one-sixth of the Preferred Stock each year,
in cash at the liquidation price per share (plus accrued and unpaid dividends),
or, if in Common Stock, that number of shares equal to $10 per share of
Preferred Stock to be redeemed, divided by 85% of the average closing sale price
per share for the Common Stock for the 5 trading days prior to the redemption
date. The Preferred Stock is not redeemable at the option of the holder and has
no stated maturity.

         As dividends on the Preferred Stock are in arrears for at least two
quarterly dividend periods, holders of the Preferred Stock have exercised their
right to call a special meeting of the Preferred Stock holders for the purpose
of electing two additional directors to serve on the Company's Board of
Directors until such dividend arrearage is eliminated. Such meeting was held on
October 1, 1999; however, because a quorum of preferred shareholders did not
attend or provide proxies for the meeting, no additional directors were elected.
Two of the Company's directors have been designated by the board as representing
the Preferred Stock holders. In addition, certain changes that could materially
affect the holders of Preferred Stock, such as a merger of the Company, cannot
be made without the affirmative vote of the holders of two-thirds of the shares
of Preferred Stock, voting as a separate class. The Preferred Stock ranks senior
to the Common Stock with respect to the payment of dividends and amounts upon
liquidation, dissolution or winding up. Dividends have not been paid on the
Preferred Stock since 1998 and the Company at June 30 is $5,635,877 in arrears
in dividend payments.

IMPACT OF INFLATION AND CHANGING PRICES

         The Company does not believe that inflation directly has a material
adverse effect on its financial condition or results of operations. Inflation
can adversely affect the Company's operating expenses, such as occupancy and
employee expenses.

IMPACT OF NEW ACCOUNTING PRONOUNCEMENTS

         The Financial Accounting Standards Board ("FASB") recently issued
Statement of Financial Accounting Standards No. 141 ("SFAS 141"), "Business
Combinations", Statement of Financial Accounting Standards No. 142 ("SFAS 142"),
"Goodwill and Other Intangible Assets", Statement of Financial Accounting
Standards No. 143 ("SFAS 143"), "Accounting for Asset Retirement Obligations"
and Statement of Financial Accounting Standards No. 144 ("SFAS 144"),
"Accounting for the Impairment or Disposal of Long-Lived Assets". SFAS 141
requires the purchase method of accounting for business combinations initiated
after June 30, 2001 and eliminates the pooling-of-interests method. SFAS No. 142
requires companies to cease amortizing goodwill that existed at June 30, 2001
and establishes a new method of testing goodwill for impairment on an annual
basis or on an interim basis if an event occurs or circumstances change that
would reduce the fair value of a reporting unit below its carrying value. SFAS
143 addresses financial accounting and reporting for obligations associated with
the

                                       18




<PAGE>


retirement of tangible long-lived assets and the associated asset retirement
costs and is effective for fiscal years beginning after June 15, 2002. SFAS 144
clarifies the accounting for disposals of long-lived assets and is effective for
fiscal years beginning after December 31, 2001. The Company does not believe
that the adoption of SFAS 141, SFAS 142, SFAS 143 and SFAS 144 will have a
significant impact on its financial statements.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Market risk generally represents the risk of loss that may result from
the potential change in the value of a financial instrument as a result of
fluctuations in interest and currency exchange rates and in equity and commodity
prices. Market risk is inherent to both derivative and non-derivative financial
instruments. The Company's market risk management procedures include all market
risk sensitive financial instruments. The Company has no exposure to currency
exchange rates nor commodity risk exposure.

         To the extent the Company maintains a short position in certain
securities, it is exposed to a further off-balance-sheet market risk, since the
Company's ultimate obligation may exceed the amount recognized in the financial
statements. The Company currently does not maintain a short position in
securities.

FORWARD LOOKING STATEMENTS

         The statements contained in this document that are not historical facts
are forward looking statements. Actual results may differ from those projected
in the forward looking statements. These forward looking statements involve
risks and uncertainties, including but not limited to the following risks and
uncertainties: changes in the performance of the financial markets, in the
demand for and market acceptance of the Company's services, and in general
economic conditions, including interest rates, presence of competitors with
greater financial resources and the impact of competitive products and pricing;
the effect of the Company's policies; the ability of the Company to find
adequate funding sources, the ability of the Company to raise a venture capital
fund, and the ability of the Company to find suitable investments for the
venture capital fund that provide an ongoing revenue stream to the Company.
Investors also are directed to other risks discussed in documents filed by the
Company with the SEC.

                                       19




<PAGE>


                            PART II-OTHER INFORMATION

ITEM 1. Legal Proceedings

         In the course of its previous business as a specialty finance company,
the Company from time to time has been made a party to litigation involving
consumer-law claims. These claims typically allege improprieties on the part of
the originating dealer and name the Company and/or its assignees as subsequent
holders of the finance contracts. To date, none of these actions have been
certified as eligible for class-action status. The Company settled for $86,000
two of these lawsuits.

         In 1998, the Company initiated suit in state court in Houston, Texas
against Progressive Northern Insurance Co. arising out of insurance policies
issued by Progressive affiliates to the Company. The policies provided
deficiency balance coverage and physical damage coverage on automobile loans
acquired by the Company and sold into certain securitizations. Progressive
contended that there was a cumulative limit on claims under the Deficiency
Balance Policy of 88% of the total premiums paid on that Policy, which was
contrary to the Company's position. On this point, the Company's position was
confirmed by the court. Progressive also contended that it had the right to
cancel the Policies, without any refund of the fully-paid premiums, at any time
pursuant to 30 days' notice and in fact did so in March 1998. The Company and
the securitization trustees disputed this termination as contrary to the terms
and understandings reached with Progressive and relied upon by the parties in
interest, including the securitization market. This issue was submitted by the
court to the jury. After a three week trial in January 2000, the Company failed
to win a verdict against Progressive. The Company filed a motion to set aside
the verdict based on various legal issues and the court denied this motion and
entered a take nothing judgment against the Company. The Company is currently
appealing this verdict.

         In June 2000, Mellon U.S. Leasing brought suit against the Company for
payment of $336,647 it asserts that it is owed on equipment leased to the
Company and for attorney fees and costs. On or about July 12, 2000, the Company
unconditionally tendered Mellon U.S. Leasing all of the equipment the subject of
the Master Lease Agreement, and the Company tendered to Mellon U.S. Leasing, as
an accord and satisfaction a check in the sum of $5,000. Mellon U.S. Leasing has
failed to pick up the equipment subject to the Master Lease Agreement.

         In January 2002, Dresner Investment Services, Inc. brought suit against
the Company. This is a suit originally filed in the United States District Court
for the Northern District of Illinois Eastern District against the Company for
breach of contract. It has since been transferred to the United States District
Court for the Western District of Texas, Austin Division. The complaint asserts
that the Company entered into an agreement whereby Dresner would consult with
and advise the Company in raising unsecured debt and approach investors and/or
creditors on behalf of the Company, and assist the Company in the course of
negotiations concerning financings with prospective investors and/or creditors.
The complaint further asserts that the parties agreed that Dresner would be paid
a fee of 6% of the committed debt in the event of a financing. Dresner alleges
that the Company obtained a commitment of $20 million from an introduction
provided by Dresner, and that the Company now owes Dresner a fee of $1.2 million
and late fees of approximately $750,000. The Company denies all allegations in
the complaint and the Company intends to vigorously defend this case.

         In April 2002, the Company brought suit against CIT Communications
("CIT"). This is a suit for declaratory judgment pursuant to Chapter 37 of the
Texas Civil Practices and Remedies Code, and for other relief. Beginning on or
about June 19, 1996, the Company entered into a Master Equipment Lease Agreement
("Equipment Lease Agreement") with Defendant's predecessor, AT&T Credit
Corporation, pursuant to which the Company leased certain equipment and agreed
to pay for the same.

         The Company, no longer needing the equipment due to the significant
reduction in employees since the equipment was leased, has tendered to CIT all
of the equipment subject to the Equipment Lease Agreement, and, as an accord and
satisfaction, tendered a check in the sum of $1,469. CIT has failed to reclaim
the equipment and seeks to collect $204,582.

         It is possible that even a small adverse ruling could have a material
effect on the Company while it is in its current cash-poor condition.

                                       20




<PAGE>



ITEM 2. Changes in Securities and Use of Proceeds

         None

ITEM 3. Defaults Upon Senior Securities

         None

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

         None

ITEM 5. Other Information

         None

ITEM 6. Exhibits and Reports on Form 8-K

(a)  Exhibits

EXHIBIT NO    DESCRIPTION OF EXHIBIT
------------  ----------------------------------------------------
3.1 (1). . .  Restated Articles of Incorporation of the Company
3.2 (1). . .  Amended and restated Bylaws of the Company
4.1 (1). . .  Specimen Common Stock Certificate
10.1 (1) . .  Employment Agreement effective as of May 1, 1996 between
              William O. Winsauer and the Company
10.2 (2)...   2001 Stock Option Plan
99.1 ......   Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
              Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(1) Incorporated by reference from the Company's Registration Statement on Form
    S-1 (Registration No.333-05359).

(2) Incorporated by reference to the Company's annual report on form 10-K for
    the period ended September 30, 2001

(b) Reports on Form 8 K

         None

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<PAGE>


                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized on August 15, 2002.


                              AGILITY CAPITAL, INC.


                                  By: /s/ WILLIAM O. WINSAUER
                                      -----------------------------------------
                                      William O. Winsauer, Chairman of the Board
                                      and Chief Executive Officer


                                  By: /s/ A. Dale Henry
                                      -----------------------------------------
                                      A. Dale Henry, Chief Financial Officer
                                      and Principal Accounting Officer


                                       22