<PAGE>

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

                                    FORM 10-K
             ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

                     For the fiscal year ended July 31, 2000

                                       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 0-19404

                          AMERICAN UNITED GLOBAL, INC.
             (Exact name of registrant as specified in its charter)

         Delaware                                         95-4359228

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

2495 152nd Avenue
Redmond, Washington                                          98052
(Address of principal executive offices)                    (Zip Code)

       (425) 869-7410 (Registrant's telephone number, including area code)

      Securities registered pursuant to Section 12 (b) of the Exchange Act

Title of each class                        Name of exchange on which registered

None                                                 None
          Securities registered pursuant to Section 12 (g) of the Act:
                          Common Stock, $.01 par value
                                (Title of Class)

     Check whether the Registrant (1) has filed all reports required to be filed
by  Section  13 or 15(d)  of the  Securities  Exchange  Act of 1934  during  the
preceding 12 months,  and (2) has been subject to such filing  requirements  for
the past 90 days. Yes |X| No |_|

         Transitional Small Business Disclosure Format    Yes  |_|  No |X|

     Check if there is no disclosure  of  delinquent  filers in response to item
405 of  Regulation  S-B  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-K
or any amendment to this Form 10-K. |_|

     The aggregate  market value of the voting stock held by  non-affiliates  of
the issuer as of November 2, 2000 was approximately $6,335,000.

      ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS

     Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the  distribution  of
securities under a plan confirmed by a court. Yes |_| No |_|


                    APPLICABLE ONLY TO CORPORATE REGISTRANTS

     The number of shares outstanding of the registrant's Common Stock, $.01 Par
Value, on November 8, 2000 was 12,150,623 shares.

         Documents incorporated by reference: None
<PAGE>

     PART I

         ITEM 1.     DESCRIPTION OF BUSINESS

         SUMMARY


     American United Global, Inc., a Delaware corporation (the "Company"),  is a
holding company which, through its operating  subsidiary,  was engaged primarily
in the  distribution,  rental  and  servicing  of  construction  equipment  (the
"Distribution  Business")  during the fiscal year ending July 31, 2000  ("Fiscal
2000").  The Company intends to engage in businesses other than the Distribution
Business,  including  an  Internet/new  media  business  segment (the "New Media
Business"),  and to that end  during  and since the end of Fiscal  2000 has made
minority  investments in both a start-up  diversified media business including a
website and a magazine  targeted for a  sophisticated  audience,  and a start-up
video content management company and global provider of multimedia applications.
The  Company  was  engaged,  through  its one  operating  subsidiary,  in active
operations during Fiscal 2000.

         The Distribution Business

     The  Distribution  Business  operates  through  the  Company's  59.6%-owned
subsidiary, Western Power & Equipment Corp., a Delaware corporation ("Western").
Western is engaged in the sale,  rental,  and servicing of light,  medium-sized,
and heavy construction, agriculture, and industrial equipment, parts and related
products which are manufactured by Case  Corporation  ("Case") and certain other
manufacturers.  The Company  believes,  based upon the number of locations owned
and  operated,   that  Western  is  the  largest   independent  dealer  of  Case
construction equipment in the United States. Products sold, rented, and serviced
by Western include  backhoes,  excavators,  crawler dozers,  skid steer loaders,
forklifts,  compactors, log loaders,  trenchers, street sweepers, sewer vacuums,
and mobile highway signs.

     Western  operates  out of 20  facilities  located  in  Washington,  Oregon,
Nevada,  California,  and  Alaska.  The  equipment  distributed  by  Western  is
furnished to contractors,  governmental  agencies, and other customers primarily
for use in the  construction  of residential  and commercial  buildings,  roads,
levees,  dams,   underground  power  projects,   forestry  projects,   municipal
construction, and other projects.

     Western's    strategy    focuses   on   acquiring    additional    existing
distributorships  and rental operations,  opening new locations,  and increasing
sales at its existing locations.  In connection with this strategy,  it may seek
to operate additional Case or other equipment retail distributorships, and sell,
lease  and  service  additional  lines of  construction  equipment  and  related
products not manufactured by Case.  Western reduced its acquisition  activity in
the fiscal year ending July 31, 1999  ("Fiscal  1999") due to market  conditions
affecting  the industry in which Western  conducts its  business,  and has since
concentrated on  consolidating  its stores to improve  operating  efficiency and
profitability.  During Fiscal 2000,  Western  consolidated  four facilities into
larger  stores  in each  region  and sold  one  facility  in  order to  increase
efficiencies  and  reduce  costs.  Western  added  two  facilities  in  Southern
California to assist Case in a dealership  transaction for Southern  California.
During the first quarter of Fiscal 2001, the Company  consolidated one branch in
Washington.

     Western sustained a net loss of approximately  $7.2 million on net sales of
approximately  $155.7  million in Fiscal 2000,  and a net loss of  approximately
$1.8  million on net sales of  approximately  $163.7  million in the fiscal year
ended  July  31,  1999,   ("fiscal  1999")  whereas  it  earned  net  income  of
approximately  $1.8 million on net sales of approximately  $163.5 million in the
fiscal year ended July 31, 1998 ("Fiscal 1998").  The Distribution  Business has
in Fiscal 2000,  Fiscal 1999 and Fiscal 1998 accounted for 100% of the Company's
net sales due to the  discontinuation  of operations of all entities engaging in
the Technology Business. In all likelihood, any material adverse effect upon the
Distribution  Business or Western will have a material  adverse  effect upon the
business,  financial  condition,  results from  operations  and prospects of the
Company.

         STRATEGIC GOALS

     The Company  continues to engage in the  Distribution  Business through its
subsidiary,  Western,  of which  the  Company  owns  approximately  59.6% of the
outstanding  Common  Stock.  The Company is currently  considering  focusing its
strategy  on  acquisitions  into  other  businesses,  including  the  New  Media
Business,  but aside from minority investments in two companies,  it has not yet
identified any definitive acquisition candidates.


                                       1
<PAGE>

     The Distribution  Business.  Western's growth strategy focuses on acquiring
additional  existing   distributorships  and  rental  operations,   opening  new
locations,  and increasing sales at its existing locations.  Western reduced its
acquisition  activity in Fiscal 1999 due to market conditions in the industry in
which  Western  conducts  its  business,  and  since  then has  concentrated  on
consolidating  its stores to improve  operating  efficiency  and  profitability.
Western  presently  operates out of 20 facilities  located in five states in the
Western  United  States.  When market  conditions  improve and as  opportunities
arise, Western may then elect to make strategic acquisitions of other authorized
Case  construction  equipment  retail dealers  located in established or growing
markets,  as well as dealers or distributors  of  construction,  industrial,  or
agricultural equipment, and related parts,  manufactured by companies other than
Case. In addition to  acquisitions,  Western may open new retail outlets,  as in
Fiscal  2000 when it opened two  facilities  in Southern  California.  Western's
strategy  has been to test market  areas by placing  sales,  parts,  and service
personnel  in the target  market  through  the  efforts of  salespeople.  If the
results  are deemed  favorable,  Western  may open a retail  outlet with its own
inventory  of  equipment.  Western  believes  that,  to the extent it decides to
expand,  this  approach  reduces both the  business  risk and the cost of market
development.

     The third prong of  Western's  growth  strategy  is to expand  sales at its
existing locations,  which it believes can be done in three ways. First, Western
will continue to broaden its product line by adding equipment and parts produced
by  manufacturers  other than Case.  Western has already  added  products to its
inventories  produced  by  such  quality  manufacturers  as  Dynapac,  Champion,
Link-Belt,  Takeuchi,  Tymco, Vactor,  Kawasaki,  Kubota,  Daewoo, and Stewart &
Stevenson.  Second,  Western  will seek to  increase  sales of parts and service
fees,  categories which have  considerably  higher margins than equipment sales.
The Company  believes  Western can accomplish  this growth through the continued
diversification  of its parts  product  lines  and the  servicing  of  equipment
produced  by  manufacturers  other than Case.  Third,  Western  plans to further
develop  its  fleet of rental  equipment.  As the cost of  purchasing  equipment
escalates,  short and  long-term  rental  is  predicted  to become  increasingly
attractive to Western's customers.  Western's management anticipates that rental
of equipment will make up an increasing share of revenues.

     New Media  Business.  The  Company  has made two  minority  investments  in
companies engaged in the Internet/new media business segment.  EGO Magazine.com,
Inc.  ("EGO")  operates  an  Internet  website  and a  magazine  targeted  for a
sophisticated  audience,  while New Media  Technology  Corp.  ("NMT") is a video
content  management  start-up  company  which  is  also  a  global  provider  of
multimedia applications.

      HISTORY AND RECENT ACQUISITIONS AND DIVESTITURES

     The Company was initially  organized as a New York  corporation on June 22,
1988 under thename  Alrom Corp.,  and  completed an initial  public  offering of
securities in August 1990. The Company  effected a statutory  merger in December
1991,  pursuant to which the Company was reincorporated in the State of Delaware
under the name American United Global, Inc.

 Western

     Western commenced  business in November 1992 with the acquisition from Case
of seven  retail  distribution  facilities  located  in Oregon  and  Washington.
Western   became  a  subsidiary  of  the  Company,   simultaneously   with  such
acquisition.  The Company held  approximately  59.6  percent of the  outstanding
shares of Western  common stock as of July 31, 2000.  Pursuant to the  Company's
final settlement of a shareholder class action, the Company  transferred 777,414
shares of Western  common stock to the class,  on November 1, 2000 and effective
on that date owns approximately 36.5% of Western's outstanding common stock.

     In September 1994 and February 1996, in two different transactions, Western
acquired  from  Case  four  retail  construction  equipment  stores  located  in
California and Nevada. In addition,  in June 1996 and January 1997, Western made
two additional  acquisitions of distributorships of predominantly  non-competing
lines of equipment, with locations in California, Oregon, Washington and Alaska.
From Fiscal 1993 through Fiscal 1997, Western also opened nine new stores in the
states served by the acquired stores, ending Fiscal 1997 with 24 stores.

     In  Fiscal  1998,  Western  acquired  four  additional  facilities  through
acquisition,  located in California and Alaska. The pre-existing Alaska facility
was  discontinued  as it was combined  with the  acquired  Alaska  facility.  In
addition, in Fiscal 1998 Western opened one new store in Washington. On December
11, 1997,  Western  acquired  substantially  all of the operating assets used by
Case in  connection  with  its  business  of  servicing  and  distributing  Case
agricultural equipment at a facility located in Yuba City, California.


                                       2
<PAGE>

 Business Strategy

     The  Company's  business  strategy  has  focused  on  acquiring  additional
existing  distributorships  and rental  operations,  opening new locations,  and
increasing sales at its existing locations.  The Company reduced its acquisition
activity in Fiscal 1999 due to market conditions and since then has concentrated
on consolidating its stores to improve operating  efficiency and  profitability.
Whenmarket  conditions  improve and opportunities  arise, the Company intends to
make strategic  acquisitions  of other  authorized Case  construction  equipment
retail dealers located in established or growing markets,  as well as dealers or
distributors of construction, industrial, or agricultural equipment, and related
parts, manufactured by companies other than Case.

     In addition to acquisitions,  the Company may open new retail outlets.  The
strategy in opening  additional  retail outlets has been to test market areas by
placing sales, parts, and service personnel in the target market. If the results
are  favorable,  a retail  outlet is opened with its own inventory of equipment.
This approach reduces both the business risk and the cost of market development.
Western presently has 20 facilities located in five states.

     The third prong of the  Company's  business  strategy is to expand sales at
its  existing  locations  in three ways.  First,  the Company  will  continue to
broaden its product line by adding equipment and parts produced by manufacturers
other than Case.  The  Company  has already  added  products to its  inventories
produced  by  such  quality  manufacturers  as  Dynapac,  Champion,   Link-Belt,
Takeuchi,  Tymco,  Vactor,  Kawasaki,  Kubota,  Daewoo, and Stewart & Stevenson.
Second,  the Company will seek to increase  sales of parts and service - both of
which have considerably  higher margins than equipment sales. This increase will
be  accomplished  through the continued  diversification  of the Company's parts
product lines and the  servicing of equipment  produced by  manufacturers  other
than Case.  Third,  the  Company  plans to further  develop  its fleet of rental
equipment.  As the cost of purchasing equipment  escalates,  short and long-term
rental  will  become  increasingly   attractive  to  the  Company's   customers.
Management anticipates that rental of equipment will make up an increasing share
of the Company's revenues.

 Products
 Case Construction Equipment

     The construction  equipment (the "Equipment")  sold, rented and serviced by
the Company  generally  consists of: backhoes (used to dig large,  wide and deep
trenches);  excavators  (used to dig deeply for the construction of foundations,
basements,  and other  projects);  log  loaders  (used to cut,  process and load
logs); crawler dozers (bulldozers used for earth moving,  leveling and shallower
digging  than  excavators);  wheel  loaders  (used for loading  trucks and other
carriers with  excavated  dirt,  gravel and rock);  roller  compactors  (used to
compact  roads and other  surfaces);  trenchers  (a  smaller  machine  that digs
trenches for sewer lines,  electrical  power and other utility pipes and wires);
forklifts (used to load and unload pallets of materials); and skid steer loaders
(smaller version of a wheel loader,  used to load and transport small quantities
of  material-e.g.,  dirt and rocks-around a job site).  Selling prices for these
units range from $15,000 to $350,000 per piece of equipment.

     In Fiscal 1998, Western acquired four additional facilities,  in California
and  Alaska,  and  opened  one  new  store  in  the  state  of  Washington.  The
pre-existing  Alaska  facility  was  discontinued  as it was  combined  with the
acquired Alaska facility.  On December 11, 1997, Western acquired  substantially
all of the  operating  assets used by Case in  connection  with its  business of
servicing and distributing Case agricultural  equipment at a facility located in
Yuba City, California.  On April 30, 1998, Western acquired substantially all of
the operating  assets of Yukon  Equipment,  Inc.  ("Yukon") in  connection  with
Yukon's business of servicing and  distributing  construction,  industrial,  and
agricultural equipment in Alaska. Yukon has facilities in Anchorage,  Fairbanks,
and Juneau, Alaska.

     In Fiscal  1999,  the Company  closed three of its smaller  facilities  and
began  servicing  the  territories  served  by  these  small  stores  by  larger
facilities  in the region.  The  Company has  consolidated  an  additional  four
facilities  in the first  quarter  of Fiscal  2000  into  larger  stores in each
region.  The Company  ended  Fiscal 2000 with 21  facilities.  The  closures are
intended to increase efficiencies and reduce costs.

 National O-Ring and Stillman Seal

     In January 1996, the Company sold all of the assets of its National  O-Ring
and Stillman  Seal  businesses,  comprising  the  manufacturing  business of the
Company,   to  Hutchinson   Corporation   ("Hutchinson")  for  $24,500,000  (the
"Hutchinson  Transaction"),  of  which  $20,825,000  was  paid in  cash  and the
aggregate  $3,675,000 balance was paid by delivery of two 24-month  non-interest
bearing promissory notes due and paid in January 1998.



                                       3
<PAGE>
 Connectsoft

     Effective as of July 31, 1996, the Company acquired,  through a merger with
an  acquisition  subsidiary  of the  Company  consummated  in  August  1996 (the
"Connectsoft Merger"), all of the outstanding capital stock of Connectsoft, Inc.
a closely-held company located in Bellevue, Washington ("Old Connectsoft") which
provided a variety of computer  products and services.  In  connection  with the
Connectsoft Merger, Old Connectsoft  stockholders received, on a pro rata basis,
an aggregate of 976,539 shares of the Company's  Series B-1 Preferred Stock (the
"Preferred Stock"). Such Preferred Stock does not pay a dividend, is not subject
to  redemption,  has a liquidation  preference of $3.50 per share over Company's
Common  Stock and votes  together  with the  Company's  Common Stock as a single
class on a one share  for one vote  basis.  Each  share of  Preferred  Stock was
convertible  into either one, two or three shares of Common Stock of the Company
if certain benchmarks for pre-tax income of Old Connectsoft and its consolidated
subsidiaries, and Exodus Technologies, Inc., a direct subsidiary of the Company,
were achieved.  As such  benchmarks  were not achieved,  the Preferred Stock has
been and is only convertible into Common Stock on a one-for-one  basis. To date,
560,276  shares of Preferred  Stock have been  converted into an equal number of
shares  of  Common  Stock,   and  416,263  shares  of  Preferred   Stock  remain
outstanding.

     On  July  10,  1998,  the  Company   entered  into  an  agreement  to  sell
substantially  all of the assets of its Connectsoft  Communications  Corporation
subsidiary,   including   the  network   operations   center,   to  eGlobe.   As
consideration,  eGlobe  issued  approximately  $2,000,000  (as  valued)  of  its
convertible preferred stock to the Company and assumed approximately  $5,182,000
of  Connectsoft  liabilities  and leases,  of which about  $2,900,000  are lease
obligations  guaranteed by the Company.  The sale to eGlobe was  consummated  in
June 1999.  Thereafter,  in August 1999,  the agreement with eGlobe was amended.
Although  eGlobe will be responsible  for payment of those assumed  liabilities,
the  assumption  of such  liabilities  will not  relieve  the  Company  from its
guarantees until such liabilities have been paid. See also "Item 1 - Description
of Business-Summary-Technology Business."

 InterGlobe

     In September  1996,  the Company  acquired  InterGlobe for a purchase price
paid to the InterGlobe  stockholders in the aggregate of approximately $400,000,
plus 800,000 shares of the Company's  Common Stock.  The former  stockholders of
Interglobe also received four-year employment agreements with Interglobe and the
Company,  pursuant  to which they  received  seven-year  options to  purchase an
additional aggregate 800,000 shares of the Company's Common Stock at an exercise
price  of  $6.00  per  share  (the  "Interglobe  Options"),  of  which  all such
Interglobe  Options  have since  been  canceled.  In August  1998,  the  Company
discontinued the operations of InterGlobe.


 Exodus

     The Company,  through its Exodus  subsidiary,  had designed and developed a
proprietary software program,  marketed as NTERPRISE,  which allows users to run
WindowsTM  application  server software  programs  designed for the Microsoft TM
Windows NT TM operating  system  developed  by Microsoft on (i) users'  existing
Unix  TM  workstations,   X-terminals  and  other  X-widows  devices,  Macintosh
terminals  and  Java-enabled  network  computers,  which would  otherwise not be
Windows   compatible,   and  (ii)  on  older  versions  of  Windows   compatible
workstations  which  are  otherwise  incapable  of  running  newer  versions  of
Microsoft  compatible  software,  such as  Office95  TM or Lotus  Notes TM.  The
Company decided to discontinue  its Exodus  operations in January 1998 following
Microsoft's decision not to renew its license with Exodus.


 Seattle OnLine

     In November 1996, the Company  acquired the assets of Seattle OnLine,  Inc.
("Seattle OnLine"), a company engaged in providing a regional  Internet/Intranet
telecommunication  service in the form of high bandwidth  Internet  connectivity
and hosting for businesses in the Pacific  Northwest.  The Company purchased the
Seattle OnLine assets for the sum of $147,000 and 16,000 shares of the Company's
Common Stock which were used to settle certain creditor claims. The Company also
issued to the former  stockholders of such  corporation  warrants to purchase an
aggregate of 333,333 shares of the Company's Common Stock. Seattle OnLine ceased
operations in August 1997 and its remaining assets were sold to a privately held
company for  $25,000  and shares of  preferred  stock of the  acquiring  company
valued at approximately $50,000 on the date of receipt of such shares.

 TechStar and IDF

     Effective  December 11, 1996, the Company acquired TechStar  Communications
Corp.  ("TechStar").  In connection  therewith the Company  issued to the former
TechStar  stockholders  an aggregate of 507,246  shares of Company Common Stock,
paid  $780,000  in cash and  delivered  three  year  Company  notes  aggregating
$600,000.  In a related  transaction,  in April 1997 the Company  also  acquired
Arcadia Consulting, Inc., a company formed by Solon L. Kandel for the purpose of
providing  consulting  services  to clients in the  wireless  telecommunications
industry.  The Company paid $220,000 and issued to Mr. Kandel  192,754 shares of
Common Stock.


                                       4
<PAGE>

     In August 1997, the Company sold TechStar to IDF,  pursuant to an agreement
and plan of merger, dated July 31, 1997 (the "IDF Merger Agreement"),  among the
Company,  TechStar,  IDF and an acquisition subsidiary of IDF. Upon consummation
of the transaction,  the Company received  6,171,553 shares of IDF common stock,
representing  approximately  58% of the fully  diluted  outstanding  IDF  common
stock, and as a result, for accounting purposes,  the Company was deemed to have
acquired IDF.

     Robert M. Rubin, the Chief Executive  Officer and Chairman of the Board and
a Director of the Company,  is also a principal  stockholder and was a member of
the  board of  directors  of IDF.  Prior  to  consummation  of the  transactions
contemplated by the IDF Merger  Agreement,  Mr. Rubin converted an $800,000 loan
previously made to IDF into preferred stock  convertible  into 400,000 shares of
IDF common stock.

     During Fiscal 2000 and 1999,  the Company  advanced IDF a total of $364,000
and $992,000,  respectively.  However, IDF has throughout all of Fiscal 2000 and
in the last two  fiscal  quarters  of  Fiscal  1999  experienced  a  significant
decrease  in revenue  and has been unable to obtain  further  financing.  Due to
these  circumstances  and the  uncertainty of recovery,  the Company has taken a
full reserve against all advances to and investments in IDF.

     During the third fiscal  quarter of Fiscal 1999,  the Company  discontinued
the  operations of TechStar and during the first Fiscal  quarter of Fiscal 2001,
the Company also discontinued the operations of Hayden/Weginan, Inc.

         Conese Enterprises Transaction

     Effective  March 24,  1998,  the  Company,  Western and IDF entered  into a
securities purchase agreement with Conese Enterprises, Ltd. ("Enterprises").  As
a result of subsequent  discussions,  however,  the parties  mutually  agreed to
terminate  the  securities  purchase  agreement.  On June 27, 1998,  the parties
entered into an agreement  releasing each other from any  obligations  under the
securities  purchase  agreement,  and  pursuant  which  the  Company  reimbursed
Enterprises  $150,000  for  their  expenses  in  connection  with  the  proposed
transactions.

 THE DISTRIBUTION BUSINESS

 General

     The Company engages in the Distribution  Business through Western, of which
it owns  approximately  59.6% of its  outstanding  Common Stock.  On November 1,
2000,  the Company  transferred  777,414  shares of Western  common stock to the
shareholder  plaintiff class as part of the settlement of a class action lawsuit
against the Company,  and currently owns approximately  36.5% of the outstanding
common stock of Western.  Western is engaged in the sale,  rental, and servicing
of light,  medium-sized,  and heavy construction,  agricultural,  and industrial
equipment,  parts,  and  related  products  which are  manufactured  by Case and
certain  other  manufacturers.  The Company  believes,  based upon the number of
locations owned and operated,  that it is the largest independent dealer of Case
construction equipment in the United States. Products sold, rented, and serviced
by the Company include backhoes, excavators, crawler dozers, skid steer loaders,
forklifts,  compactors, log loaders,  trenchers, street sweepers, sewer vacuums,
and mobile highway signs.

     Western  operates  out of 20  facilities  located  in  Washington,  Oregon,
Nevada,  California,  and  Alaska.  The  equipment  distributed  by  Western  is
furnished to contractors,  governmental agencies, and other customers, primarily
for use in the  construction  of residential  and commercial  buildings,  roads,
levees,  dams,   underground  power  projects,   forestry  projects,   municipal
construction, and other projects.

     Western's  growth  strategy  consists  of  acquiring   additional  existing
distributorships  and rental operations,  opening new locations,  and increasing
sales at its  existing  locations.  In such  connection,  it may seek to operate
additional Case or other equipment retail distributorships, and sell, lease, and
service  additional  lines of  construction  equipment and related  products not
manufactured by Case. See "Growth Strategy".


 Growth Strategy

     Western's  growth  strategy  focuses  on  acquiring   additional   existing
distributorships,  opening new  locations and  increasing  sales at its existing
locations.   As   opportunities   arise,   Western  intends  to  make  strategic
acquisitions of other  authorized  Case  construction  equipment  retail dealers
located in established or growing markets, as well as of dealers or distributors
of industrial or  construction  equipment,  and related parts,  manufactured  by
companies  other than Case. In addition to  acquisitions,  Western plans to open
new retail outlets.  Western's strategy has been to test market areas by placing
sales,  parts,  and service  personnel in the target market.  If the results are
deemed favorable, a retail outlet is opened with its own inventory of equipment.
Western  believes this  approach  reduces both the business risk and the cost of
market development.


                                       5
<PAGE>


     The third  aspect of  Western's  growth  strategy is to expand sales at its
existing  locations in three ways.  First,  Western will continue to broaden its
product line by adding equipment and parts produced by manufacturers  other than
Case. Western has already added to its inventories  products produced by quality
manufacturers such as Dynapac,  Champion,  Link-Belt,  Takeuchi,  Tymco, Vactor,
Kawasaki,  Kubota, Daewoo and Stewart & Stevenson.  Second, Western will seek to
increase  sales of parts and  service  fees,  categories  which the  Company and
Western have found to have considerably higher margins than equipment sales. The
Company  believes  Western  can  accomplish  this growth  through the  continued
diversification  of the parts  product  lines  and the  servicing  of  equipment
produced  by  manufacturers  other than Case.  Third,  Western  plans to further
develop  its  fleet of rental  equipment.  As the cost of  purchasing  equipment
escalates, short and long-term rental will become increasingly attractive to the
Western's customers.  Western's management  anticipates that rental of equipment
will make up an increasing shares of Western's revenues.

 The Equipment

 Case Construction Equipment

     The construction  equipment (the "Equipment")  sold, rented and serviced by
Western  generally  consists  of:  backhoes  (used to dig  large,  wide and deep
trenches);  excavators  (used to dig deeply for the construction of foundations,
basements,  and other  projects);  log  loaders  (used to cut,  process and load
logs); crawler dozers (bulldozers used for earth moving,  leveling and shallower
digging  than  excavators);  wheel  loaders  (used for loading  trucks and other
carriers with  excavated  dirt,  gravel and rock);  roller  compactors  (used to
compact roads and other surfaces); trenchers (a small machine that digs trenches
for sewer lines, electrical power and other utility pipes and wires);  forklifts
(used to load and  unload  pallets  of  materials);  and skid  steer  loaders (a
smaller version of a wheel loader,  used to load and transport small  quantities
of material such as dirt and rocks around a job site).  Selling  prices for this
Equipment ranges from $15,000 to $350,000 per piece of equipment.

     Under  the  terms  of  standard  Case  dealer  agreements,  Western  is  an
authorized  Case dealer for sales of equipment and related parts and services at
locations  in  Oregon,   Washington,   Nevada  and  Northern   California   (the
"Territory").  The dealer  agreements have no defined term or duration,  but are
reviewed on an annual basis by both parties, and can be terminated without cause
at any time either by Western on 30 days' notice or by Case on 90 days'  notice.
Although the dealer  agreements do not prevent Case from arbitrarily  exercising
its right of  termination,  based  upon  Case's  established  history  of dealer
relationships  and industry  practice,  Western does not believe that Case would
terminate its dealer agreement without good cause.

     The dealer  agreements  do not contain  requirements  for specific  minimum
purchases from Case. In consideration for Western's  agreement to act as dealer,
Case  supplies  to  Western  items  of  Equipment  for sale  and  lease,  parts,
cooperative advertising benefits,  marketing brochures related to Case products,
access to Case product  specialists  for field  support,  the ability to use the
Case name and logo in connection  with  Western's  sales of Case  products,  and
access to Case floor plan financing for Equipment purchases. Such floor planning
arrangements  currently  provides  Western  with  interest  free credit terms of
between  one month and twelve  months on  purchases  of  specified  types of new
Equipment.  Principal  payments are  generally due at the earlier of sale of the
equipment or six months from the date of shipment by Case.

 Other Products

     Although the principal  products  sold,  leased and serviced by Western are
manufactured by Case, Western also sells, rents and services equipment and sells
related parts (e.g., tires, trailers and compaction  equipment)  manufactured by
others.  Approximately  42% of  Western's  net  sales for  Fiscal  2000 and 1999
resulted from sales, rental and servicing of products  manufactured by companies
other than Case, a higher  percentage than the 35% of total net sales for Fiscal
1998 from this category as Western continued its planned growth in product lines
other than Case.  Manufacturers  other than Case  represented  by Western  offer
various levels of supplies and marketing  support along with purchase terms that
vary from cash upon delivery to interest-free 12-month floor plans.

     Western's  distribution business is generally divided into three categories
of activity:  (i) equipment  sales,  (ii) equipment  rentals,  and (iii) product
support.

 Equipment Sales

     At each of its distribution  outlets,  Western maintains a fleet of various
equipment  for sale.  The  equipment  purchased  for each  outlet is selected by
Western's  marketing staff based upon the types of customers in the geographical
areas  surrounding  each outlet,  historical  purchases  as well as  anticipated
trends.  Subject to applicable  limitations in Western's  manufacturers'  dealer
contracts,  each  distribution  outlet has access to Western's full inventory of
equipment.  Western provides only the standard  manufacturer's  limited warranty
for new  equipment,  which is  generally  a one-year  parts and  service  repair
warranty. Customers can purchase extended warranty contracts.


                                       6
<PAGE>


     Western sells used Equipment that has been reconditioned in its own service
shops.  It generally  obtains such used Equipment as "trade-ins"  from customers
who purchase new items of Equipment and from Equipment previously rented and not
purchased. Unlike new Equipment,  Western's used Equipment is generally sold "as
is" and without a warranty.

 Equipment Rentals

     Western  maintains a separate  fleet of equipment  that it holds solely for
rental. Such equipment is generally held in the rental fleet for 12 to 36 months
and then sold as used  equipment with  appropriate  discounts  reflecting  prior
rental usage. As rental equipment is taken out of the rental fleet, Western adds
new  equipment  to its rental fleet as needed.  The rental  charges  vary,  with
different  rates for  different  types of  equipment  rented.  In October  1998,
Western opened its first rental-only store,  located in the Seattle,  Washington
area,  under the name  Western  Power  Rents.  This store  rents a wide range of
products including equipment from Case and other manufacturers with whom Western
has dealer agreements as well as equipment from companies with which Western has
had no prior relationship.  This store was consolidated with another facility in
August 2000.

     Rentals  have  increased  to 17% of  Western's  revenue  in Fiscal  2000 as
compared to 8% of its revenue in Fiscal 1998. See "Sales and Marketing."

 Product Support

     Western  operates  a service  center and yard at each  retail  distribution
outlet for the repair and storage of Equipment.  Both warranty and  non-warranty
service work is performed,  with the cost of warranty  work being  reimbursed by
the manufacturer following the receipt of invoices from Western. Western employs
approximately 115 manufacturer-trained service technicians who perform Equipment
repair,  preparation  for  sale,  and  other  servicing  activities.   Equipment
servicing is one of the higher  profit  margin  businesses  operated by Western.
Western has expanded this business by hiring additional personnel and developing
extended warranty  contracts to be purchased by customers for Equipment sold and
serviced  by  Western,  and  independently   marketing  such  contracts  to  its
customers.  Western  services  items and types of Equipment  which include those
that are neither sold by Western nor manufactured by Case.

     Western  purchases a large inventory of parts,  principally  from Case, for
use in its Equipment  service  business,  as well as for sale to other customers
who are independent servicers of Case Equipment.  Generally, parts purchases are
made on standard net 30 day terms.

     Western  employs one or more  persons who take  orders from  customers  for
parts purchases at each retail distribution  outlet. The majority of such orders
are placed in person by walk-in  customers.  Western  provides only the standard
manufacturer's  warranty on the parts that it sells, which is generally a 90-day
replacement guaranty.

 Sales and Marketing

     Western's  customers  are typically  residential  and  commercial  building
general contractors, road and bridge contractors,  sewer and septic contractors,
underground  power line contractors,  persons engaged in the forestry  industry,
equipment  rental  companies  and  state  and  municipal  authorities.   Western
estimates  that it has  approximately  19,000  customers,  with most being small
business owners, none of which accounted for more than three percent (3%) of its
total sales in the fiscal year ended July 31, 2000.

     For fiscal years 2000,1999,  and 1998 the approximate  revenue breakdown by
source for the business operated by the Company were as follows:



                          FY 2000        FY 1999         FY 1998

 Equipment Sales          59%            60%             69%
 Equipment Rental         17%            16%             8%
 Product Support          24%            24%             23%
                          --             --              --
                          100%           100%            100%
                          ===            ===             ===


     Western  advertises  its  products  in  trade  publications  and its  sales
representatives  appear  at  trade  shows  throughout  the  Territory.  It  also
encourages  its  salespersons  to  visit  customer  sites  and  offer  Equipment
demonstrations when requested.

     Western  believes  its sales and  marketing  activities  do not result in a
significant  backlog of orders.  Although  Western has  commenced  acceptance of
orders from customers for future delivery following manufacture by Case or other
manufacturers, during Fiscal 2000 a majority of its sales revenues resulted from
products  sold  directly out of  inventory,  or the  providing of services  upon
customer request.

                                       7
<PAGE>


     Western employed  approximately 60 Equipment salespersons on July 31, 2000.
All of Western's sales personnel are employees of Western, and all are under the
general  supervision  of C. Dean McLain,  the  Executive  Vice  President  and a
director of the Company,  and the President of Western.  Western assigns to each
Equipment  salesperson a separate exclusive territory,  the size of which varies
based upon the number of potential  customers and anticipated volume of sales as
well as the geographical characteristics of each area.

     On July 31, 2000,  Western  employed six product support  salespersons  who
sell Western's parts and repair  services to customers in assigned  territories.
Western has no independent distributors or non-employee sales representatives.

Suppliers

     Western purchases the majority of its inventory of Equipment and parts from
Case. No other  supplier  currently  accounts for more than ten percent (10%) of
such inventory  purchases in Fiscal 2000.  While  maintaining  its commitment to
Case to  primarily  purchase  Case  Equipment  and parts as an  authorized  Case
dealer,  in the  future  Western  plans to expand  the  number of  products  and
increase the aggregate  dollar value of those products  which Western  purchases
from manufacturers other than Case in the future.

Competition

     Western  competes  with  distributors  of  construction,  agricultural  and
industrial  equipment and parts manufactured by companies other than Case on the
basis of price,  the  product  support  (including  technical  service)  that it
provides  to its  customers,  brand  name  recognition  for  its  products,  the
accessibility  of its  distribution  outlets and the overall quality of the Case
and other products that it sells. Western management believes that it is able to
effectively  compete with  distributors of products  produced and distributed by
such other manufacturers  primarily on the basis of overall product quality, and
the superior  product support and other customer  services  provided by Western.
Case's two major  competitors in the  manufacture of a full line of construction
equipment of comparable sizes and quality are Caterpillar  Corporation and Deere
& Company. In addition,  other manufacturers produce specific types of equipment
which  compete  with the Case  Equipment  and  other  Equipment  distributed  by
Western. These competitors and their product specialties include JCB Corporation
(backhoes),  Kobelco  Corporation  (excavators),  Dresser  Industries (light and
medium duty bulldozers),  Komatsu Corporation (wheel loaders and crawler dozers)
and Bobcat, Inc. (skid steer loaders).

     Western is  currently  the only Case dealer for  construction  equipment in
Washington,  Alaska,  Nevada and in the  Northern  California  area  (other than
Case-owned  distribution  outlets),  and is one of two Case  dealers  in Oregon.
However,  Case has the right to establish other dealerships in the future in the
same territories in which the Company operates. In order to maintain and improve
its competitive position, revenues and profit margins, Western plans to increase
its sales of products produced by companies other than Case.

Environmental Standards and Government Regulation

     Western's  operations are subject to numerous rules and  regulations at the
federal,  state and local levels which are designed to protect the  environment,
including  regulating the discharge of hazardous materials into the environment.
Western is subject to federal  environmental  standards  because,  in connection
with its  operations,  it  handles  and  disposes  of  hazardous  materials  and
discharges sewer water in its equipment rental and servicing operations. Western
is also subject to local rules and regulations  regarding the discharge of waste
water  into  sewer  systems.   Western's  internal  staff  is  trained  to  keep
appropriate  records  with  respect  to its  handling  of  hazardous  waste,  to
establish  appropriate  on-site storage  locations for hazardous  waste,  and to
select  regulated  carriers to transport and dispose of hazardous  waste.  Based
upon current laws and regulations, Western believes that its policies, practices
and  procedures  are  properly  designed  to  prevent  an  unreasonable  risk of
environmental  damage and the  resultant  financial  liability  to  Western.  No
assurance  can be given  that  future  changes  in such  laws,  regulations,  or
interpretations thereof,  changes in the nature of Western's operations,  or the
effects of former  occupants'  past  activities  at the  various  sites at which
Western  operates,  will not have a material  adverse  effect upon the Company's
operations.

                                       8
<PAGE>

     Western is subject to federal environmental standards because in connection
with its  operations  it  handles  and  disposes  of  hazardous  materials,  and
discharges  sewer  water  in its  equipment  rental  and  servicing  operations.
Western's internal staff is trained to keep appropriate  records with respect to
its  handling of  hazardous  waste,  to establish  appropriate  on-site  storage
locations for hazardous waste, and to select regulated carriers to transport and
dispose of hazardous waste. Local rules and regulations also exist to govern the
discharge of waste water into sewer systems.

Insurance

     Western currently has general,  product  liability,  and umbrella insurance
policies  with  limits,  terms,  and  conditions  which  Western and the Company
believe to be consistent with reasonable business practice, although there is no
assurance  that such  coverage  will  prove to be  adequate  in the  future.  An
uninsured or partially  insured claim, or a claim for which  indemnification  is
not available, or a change in or lapse of any previously existing coverage could
have a material  adverse  effect upon  Western,  and in such event would  likely
materially  adversely  affect the Company's  financial  condition,  results from
operations and prospects.

Employees

     At July 31, 2000, Western employed  approximately 377 full-time  employees,
or  approximately  43 fewer than at July 31,  1999.  Of that  number,  22 are in
corporate  administration,  25 are  involved  in  administration  at the  branch
locations,  108 are employed in Equipment sales and rental, and 222 are employed
in product  support.  Staff  reductions  during Fiscal 2000 and Fiscal 1999 were
considered to be relatively even across all departments.

     At  July  31,  2000,  approximately  19 of  Western's  service  technicians
employed in the  Sacramento,  California  operation  were being  represented  by
Operating  Engineers Local Union No. 3 of the  International  Union of Operating
Engineers,  AFL-CIO under the terms of a five-year  contract expiring August 31,
2001. As of May 1999, approximately 19 service technicians employed at Western's
facility  in  Auburn,  Washington  had  voted to be  represented  in  collective
bargaining  by  Operating  Engineers  Local  Union  Nos.  302  and  612  of  the
International  Union of  Operating  Engineers,  AFL - CIO.  As of  January  2000
approximately   five  service   technicians  and  two  parts  employees  at  the
Springfield,  OR operation had voted to be represented in collective  bargaining
by Operating Engineers Local Union No. 701 of the Operating  Engineers.  Western
and the local unions'  representatives are currently in contract negotiations as
to a contract for these employees.  Western believes that its relations with its
employees are satisfactory.

     The Company has three executive  officers and no administrative  employees,
but uses some consultants to perform certain administrative duties.

Western Merger Agreement

     On November 3, 2000, Western and e-Mobile, Inc. ("EMI") signed a definitive
Merger  Agreement  pursuant to which a newly formed holding company will acquire
both Western and e-Mobile.  In addition,  Western also signed an Asset  Purchase
Agreement. Under the terms of the agreement, a newly formed holding company will
issue 52 million  shares of its common stock to acquire the  existing  shares of
EMI and  approximately  3.3  million  shares to acquire the  existing  shares of
Western. The holding company will assume all outstanding options of both EMI and
Western.  It is  anticipated  that a new board of directors will be appointed at
the  closing and that the  officers  of EMI will become  officers of the holding
company. As a condition of the merger, Western will seek shareholder approval to
allow certain members of Western's management, officers and certain directors to
purchase  Western's  assets and assume its liabilities  for $4.1 million,  which
will be paid by a secured  note (the note  will be  subordinate  to the  current
security  interest of DFS) over seven years at seven  percent  (7.0%)  interest,
with interest only  payments for the first year and  thereafter  self-amortizing
with quarterly interest payments and semi-annual principal payments.  Closing of
these  transactions  is  conditioned  on  approval  of the  transactions  by the
shareholders  of Western  and EMI and certain  other  regulatory  approvals  and
contractual conditions.


     Dependence on Key Personnel. Western's success in its Distribution Business
depends to a significant degree upon the continuing  contributions of its senior
management  and  other key  employees.  The  Company  believes  that the  future
prospects  and success of Western  will also depend in large part on its ability
to attract and retain highly-skilled sales and marketing personnel.  Competition
for such  personnel is intense,  and there can be no assurance that Western will
be successful in attracting,  integrating and retaining such personnel.  Failure
to attract or retain existing and additional key personnel could have a material
adverse  effect  on the  Company's  Distribution  Business,  operating  results,
financial condition or prospects.

Future Performance and Risk Factors

     The future  performance,  operating results and financial  condition of the
Company's  Distribution Business are subject to various risks and uncertainties,
including those described below.

                                       9
<PAGE>

         Risk Factors Relating to the Company's Distribution Business

     Competition.  The  Company's  Distribution  Business  operates  in a highly
competitive  industry  and market in which many  companies  have  financial  and
personnel resources  significantly  greater than those of Western,  and in which
Western faces a great deal of  competition  on the basis of price.  Such intense
price  competition  has the effect of holding down  Western's  profit margins on
product sales. The retail construction equipment industry,  including the states
of Washington,  Oregon, California, Alaska and Nevada in which Western operates,
is also highly fragmented with many brands of equipment and distributors of such
brands active in the market,  thus presenting Western with intense  competition.
Moreover,  Western's  dealership  arrangements  with Case do not provide Western
with exclusive  dealerships in any territory.  Although management believes that
it is  unlikely  that Case will  create  additional  independent  dealers in the
states of Oregon, Washington,  California, Alaska or Nevada, or will reinstitute
its own proprietary  dealerships in that  territory,  there is no assurance that
Case will not elect to do so in the future. If Western cannot adequately compete
with competing companies or adopt to changes in the marketplace or industry, the
business,  financial condition, results from operations and prospects of Western
will  be  materially   adversely   affected.   See  "Business-The   Distribution
Business-Competition."

     Government Regulation and Environmental Standards. Western's operations are
subject to numerous rules and regulations at the federal, state and local levels
which  are  designed  to  protect  the  environment,  including  regulating  the
discharge  of  certain  hazardous  materials  into  the  environment.  Western's
internal  staff is  trained  to keep  appropriate  records  with  respect to its
handling of hazardous waste, to establish  appropriate on-site storage locations
for hazardous waste,  and to select regulated  carriers to transport and dispose
of  hazardous  waste.  There is always  the risk that  such  materials  might be
mishandled,  or that there might occur equipment or technology  failures,  which
could result in  significant  claims for personal  injury,  property  damage and
clean-up or remediation. Any such claims could have a material adverse effect on
Western.  If such  claims  are upheld and  Western is fined or  sanctioned,  the
business,  financial  condition and results from operations of Western,  and the
Company,  may be materially  adversely affected.  No assurance can be given that
future changes in such laws, regulations, or interpretations thereof, changes in
the nature of Western's  operations,  or the effects of former  occupants'  past
activities  at the  various  sites at which  Western  operates,  will not have a
material  adverse  effect upon the Company's  operations,  financial  condition,
business or prospects.  See  "Business-The  Distribution  Business-Environmental
Standards and Government Regulation."

     Risk of  Termination  of Case  Dealership.  Under the terms of the standard
Case  construction  equipment  sales and  services  agreement  with its dealers,
including Western, Case reserves the right to terminate Western as an authorized
Case  dealer at any retail  locations,  for any  reason,  upon 90 days notice to
Western.  In the Agreement of Purchase and Sale by and between Case and Western,
dated December 4, 1992 (the "Case Purchase  Agreement"),  Case acknowledged that
its corporate  business  policy is not to exercise such  discretionary  right of
termination arbitrarily, and agreed that if Western's operations at a particular
location  acquired from Case are  profitable  and are terminated by Case for any
reason other than "for cause" (defined as any grounds which Case shall determine
in the exercise of its reasonable  business judgment) it would not reinstate its
own retail  operations at such location through  December 1997.  Should its Case
dealerships  at any one or more  locations be terminated by Case,  the Company's
business,  financial  condition,  results from operations and prospects could be
materially  adversely  affected.  In the  event of such  termination,  Western's
liquidity  position and cash reserves would be materially  adversely affected as
all of  Western's  indebtedness  to Case  under its  various  secured  financing
agreements  would  become   immediately  due  and  payable.   All  of  Western's
indebtedness  to its  institutional  lenders could also be  accelerated  at that
time.  Furthermore,  in  the  event  that  Western  accelerates  growth  of  its
Distribution Business,  dependence upon Case as its principal supplier, at least
in the near  term,  will  increase.  In the event of any of the  foregoing,  the
business,  financial condition, results from operations and prospects of Western
will likely be materially  adversely  affected.  See "Business-The  Distribution
Business-The Equipment."
                                       10
<PAGE>

     Importance of Case Corporation to Operations. During Fiscal 1999 and Fiscal
2000 the Company's Western  subsidiary  accounted for all of the Company's total
net sales from continuing  operations.  Approximately 58% of Western's  revenues
result from sales,  leasing and servicing of equipment and parts manufactured by
Case. As a result, the ability of Case to continue to manufacture  products that
Western can successfully market and distribute, largely based on the quality and
pricing of such products,  is of material importance to the business,  financial
condition,  results from  operations and prospects of the Company.  In the event
that Case should cease to manufacture  equipment for the construction  equipment
industry, fail to produce sufficient products to stock the Company's inventories
adequately,  fail to maintain certain product price levels on its products or to
maintain a good reputation for quality in such industry, the Company's business,
results from  operations,  financial  condition and prospects will be materially
adversely  affected.   Effects  of  Downturn  in  General  Economic  Conditions,
Cyclicality and Seasonality.  Demand for all of Western's construction equipment
distributed  through its retail operations is significantly  affected by general
domestic  economic  conditions.  All of such  products  and  services are either
capital goods themselves, principally sold for inclusion in capital equipment or
used for the  provision  of  construction  services by others.  Sales of capital
goods tend to fluctuate widely along with trends in overall economic activity in
the national economy. A general  inflationary spiral or a continuing increase in
prevailing   interest  rates  could  adversely  affect  new  construction,   and
consequently  result in a significant  reduction in demand for the  construction
equipment  sold  by  Western.  The  construction  equipment  business  has  also
historically been cyclical,  and is subject to periodic reductions in the levels
of  construction  (especially  housing  starts)  and  levels  of total  industry
capacity and equipment  inventory,  irrespective  of the effects of inflation or
increasing  interest rates. In addition,  housing  construction in the northwest
slows down beginning in November and continuing through to January. Accordingly,
Western's  operations  may be  materially  adversely  affected  by  any  general
downward economic pressures, adverse cyclical trends, or seasonal factors.


         Risk Factors Relating to the Company in General

     Volatility  of Market Prices for the  Company's  Common  Stock.  The market
price for the  Company's  publicly  traded  Common  Stock has been  historically
volatile,  and recently has been very depressed,  and there is limited liquidity
in the  market.  The  Common  Stock is quoted on the  Over-The-Counter  Bulletin
Board,  and stocks  quoted  thereon may suffer from  limited  liquidity.  Future
announcements   concerning   the  Company's   Distribution   Business,   or  its
competitors, including operating results, government regulations, or foreign and
other  competition,  could have a significant  impact on the market price of the
Common  Stock  in  the  future.  See  "Market  for  Common  Equity  and  Related
Stockholder Matters."

     Forward Looking Statements and Associated Risks. This annual report on Form
10-K contains  certain  forward-looking  statements,  including among others (i)
anticipated  trends  in  the  Company's   financial  condition  and  results  of
operations,  and (ii) the Company's  business  strategy.  These  forward-looking
statements  are based  largely on the  Company's  current  expectations  and are
subject to a number of risks and  uncertainties.  Actual  results  could  differ
materially  from these  forward-looking  statements.  In addition to other risks
described  elsewhere in this "Risk  Factors"  discussion,  important  factors to
consider in evaluating such  forward-looking  statements  include (a) changes in
external  competitive  market  factors or in the  Company's  internal  budgeting
process which might impact trends in the Company's  results of  operations;  (b)
unanticipated  working  capital or other cash  requirements;  (c) changes in the
Company's  business  strategy or an  inability  to execute its  strategy  due to
unanticipated  changes in the  industries in which it operates;  and (d) various
competitive factors that may prevent the Company from competing  successfully in
the marketplace.  In light of these risks and  uncertainties,  many of which are
described in greater detail elsewhere in this "Risk Factors"  discussion,  there
can be no  assurance  that the events  predicted in  forward-looking  statements
will, in fact, transpire.


                                       11
<PAGE>



ITEM 2.  Properties

     The following  table sets forth  information  as to each of the  properties
which the Company owns or leases (all of which are retail sales, rental service,
storage and repair  facilities expect as otherwise noted) in connection with its
Distribution Business at July 31, 2000 The store located in Kent, Washington was
closed in the first quarter of Fiscal 2001.

<TABLE>
<CAPTION>

     Location and Use               Lessor              Lease      Annual Rental    Size/Square Feet  Purchase
                                                      Expiration                                      Options
                                                         Date
<S>                        <C>                      <C>           <C>             <C>                 <C>
1745 N.E. Columbia Blvd.    Carlton O. Fisher, CNJ   12/31/2000    $84,000(1)      Approx. 4 Acres;    No
Portland, Oregon 97211      Enterprises                            plus CPI        Building 17,622
                                                                   adjustments     sq.ft.

1665 Silverton Road, N.E.   LaNoel Elston Myers      7/10/2001     $33,600(1)      Approx. 1 Acre;     No
Salem, Oregon 97303         Living Trust                                           Buildings 14,860
                                                                                   sq.ft.

1702 North 28th Street      McKay Investment         6/14/2001     $69,000(1)      Approx. 5 Acres;    No
Springfield, Oregon 97477   Company                                                Building 17,024
                                                                                   sq.ft.

West 7916 Sunset Hwy.       US Bank                  9/30/2003     $69,600(1)      Approx. 5 Acres;    No
Spokane, Washington 99204                                                          Building 19,200
                                                                                   sq.ft.

12406 Mukilteo Speedway     Phil & Jana Pickering    10/31/2008    $114,000(1)     Approx. 2.1         No
Mukilteo, Washington 98275                                                         Acres; Building
                                                                                   13,600 sq.ft.

620 N. Oregon Avenue        Dress Bros. Partnership 11/15/2000     $66,000(1)      Approx. 3 Acres;    No
Pasco, Washington 99301                                                            Building 10,000
                                                                                   sq.ft.

4601 N.E. 77th Avenue       Parkway Limited          1/31/2001     $157,200        8,627 sq. ft.       No
Suite 200                   Partnership
Vancouver, Washington
98662

2702 W. Valley Hwy No.      Avalon Island LLC        11/30/2015    $204,000(1)     Approx. 8 Acres;    No
Auburn, Washington 98001                                                           Building 33,000
                                                                                   sq. ft.

500 Prospect Lane           Owned                    N/A           N/A            Approx. 1.9          No
Moxee, Washington 98936                                                            Acres; Building
                                                                                   6,200 sq. ft.

1455 Glendale Avenue        McLain-Rubin Realty      1/31/2019     $252,000(2)     Approx. 5 Acres;    No
Sparks, Nevada 89431        Group (3)                                              Building 22,475
                                                                                   sq.ft.

25886 Clawiter Road         Fred Kewel II, Agency    11/30/99      $110,088(1)     Approx. 2.8         No
Hayward, California 94545                                                          Acres; Building
                                                                                   21,580 sq.ft.

3540 D Regional Parkway     Soiland                  2/28/99       $48,234(1)      5,140 sq. ft.       No
Santa Rosa, California                                             plus CPI        approximately
95403                                                              adjustments     1.25 acres

1751 Bell Avenue            McLain-Rubin Realty      2/2/2016      $168,000(2)     Approx. 8 Acres;    No
Sacramento, California      Company LLC(2)(3)                                      Buildings 35,941
95838                                                                              sq. ft.

1041 S. Pershing Avenue     Raymond Investment       3/14/2001     $44,000(1)      Approx. 2 Acres;    No
Stockton, California 95206  Corp.                                  plus annual     Buildings 8,000
                                                                   CRI             sq. ft.
                                                                   adjustments

8271 Commonwealth Avenue,   M.E. Robinson            3/31/2001     $89,964(1)      Approx. 1 acre;     Yes
Buena Park, California                                                             Building 11,590
90621                                                                              sq.ft.

                                       12
<PAGE>


2535 Ellis Street           Hart Enterprises         2/15/2002     $33,600         Approx. 2 Acres;    Yes
Redding, Oregon 96001                                                              Building 6,200
                                                                                   sq. ft.

913 S. Central              McLain-Rubin Realty III  5/31/2017     $205,200(2)     Approx. 4.4         No
Kent, WA 98032 (Rental      (3)                                    plus CPI        Acres; Building
only)                                                              adjustments     21,400 sq. ft.
                                                                                                       Yes
723 15TH Street                                      11/02/2002    $18,600         Approx. 1.2
Clarkston, WA 99403         Mark Flerchinger                                       Acres; Building
                                                                                   3,750 sq. ft.

3199 E. Onstott Road                                 12/31/2017    $66,000 (2)     Approx. 13 Acres;   No
Yuba City, CA 95991         McLain-Rubin Realty                                    Building 23,900
                            III (2)(3)                                             sq. ft.



2020 E.Third Avenue         Owned                    N/A           N/A             Approx. 4 Acres;    N/A
Anchorage, AK 99501                                                                Building 15,650
                                                                                   sq. ft.


3511 International Way,     C & N Partners           11/30/09      $74,400         Approx. 1.4 Acres;   No
Fairbanks, AK 99701                                                                Building 4500 sq.
                                                                                   ft.


 1445 Simpson Way           SMA Equipment Company    11/30/02      $99,395         Approx. 1 Acre       No
 Escondido, CA 92029                                                               Building 9,700 sq.
                                                                                   ft.

 10062 Live Oaks Ave,       Fruehauf Trailer         4/30/01       $120,000        Approx 1.8 Acres,    No
 Fontana, CA 92335          Services                                               Bldg. 16,000 sq. ft





</TABLE>



     (1)  Net lease with payment of insurance,  property  taxes and  maintenance
          costs by the Company.

     (2)  Net lease with payment of insurance,  property  taxes and  maintenance
          costs by the Company, which also pays for structural repairs.

     (3)  C.  Dean  McLain  and  Robert  M.  Rubin  are (i) the  Executive  Vice
          President and Director of the Company and Chief  Executive  Officer of
          Western, and (ii) the President,  Chief Executive Officer and Chairman
          of the Company, respectively.  Messrs. Rubin and McLain are the equity
          owners of McLain-Rubin  Realty  Company,  LLC. The terms of its leases
          with  McLain-Rubin  Realty  Company  LLC  provide  for a "triple  net"
          arrangement  under  which  Western  pays,  in  addition  to rent,  all
          insurance,  property taxes, maintenance costs and structural and other
          repairs.


     Western's operating facilities are separated into ten "hub" outlets and ten
"sub-stores" and one "rental-only" store in Kent, Washington (since closed). The
hub stores are the main distribution  centers located in Auburn, Buena Vista and
Spokane, Washington;  Portland and Springfield,  Oregon; Sparks, Nevada; Hayward
and  Sacramento,  California;  and  Anchorage,  Alaska.  The  sub-stores are the
smaller retail facilities in Mukilteo, Pasco and Clarkston,  Washington;  Salem,
Oregon;  Santa Rosa,  Stockton,  Fontana,  Escondido  and Redding and Yuba City,
California; and Fairbanks, Alaska.

     All of the leased and owned  facilities  used by Western are believed to be
adequate in all material  respects for the current and anticipated  needs of the
Distribution Business.
                                       13
<PAGE>





     ITEM 3. LEGAL PROCEEDINGS


     Except as set forth below,  there are no pending material legal proceedings
in which the Company or any of its  subsidiaries  is a party, or to which any of
their  respective  properties are subject,  which either  individually or in the
aggregate  may have a material  adverse  effect on the results of  operations or
financial position of the Company.

     The  Derivative  Action In May 1998 a  purported  derivative  lawsuit  (the
"Derivative  Action")  was  brought on behalf of the Company  against  Robert M.
Rubin, the Company's Chief Executive Officer,  and the Company's other directors
and officers who served between  November 1996 and February 1998. The Derivative
Action alleged breaches of fiduciary duty and waste of corporate  assets.  Final
judicial approval of the most recent amendment to a settlement of the Derivative
Action was  received  in July 2000,  pursuant  to which the  Company  received a
payment  (the  "Rubin  Payment")  of cash  and  securities  with an  approximate
aggregate value of $2,800,000 from Mr. Rubin.  Mr. Rubin paid to the Company (a)
an  account   containing   cash  an   unrestricted   common   stock  of  various
publicly-traded  companies,  which  account was found by the  Superior  Court of
Washington  to have a value  of  approximately  $556,224,  (b)  common  stock of
Response  USA,  Inc. and  Etravnet.com,  Inc.,  valued at $264,841 and $594,540,
respectively,  by such court, and (c) unrestricted common stock of Help At Home,
Inc. and Magna Labs,  Inc. valued in the aggregate at  approximately  $1,435,000
including interest.

     In connection with the settlement of the Derivative Action, the Company has
agreed to (a) immediately appoint two new independent  directors to the Board of
Directors  pending  stockholder  approval,  (b) have its chief financial officer
report on the Company's  financial condition and prospects at each regular board
meeting,  (c)  establish  an audit  committee  of the Board of  Directors  to be
comprised  entirely of  independent  directors,  (d)  establish  a  compensation
committee  to be  composed of a majority of  independent  directors,  (e) pass a
board resolution regarding the review of unsolicited bona fide offers to acquire
at least a  controlling  stake in the Company,  and (f) pass a board  resolution
regarding "related party" transaction.

     The  Company  and Mr.  Rubin  previously  agreed  that,  if the  Hutchinson
Transaction were to be ratified by the Company's stockholders, the Company would
release Mr. Rubin, the Company's Chairman and Chief Executive Officer,  from the
obligation to repay a $1,200,000  principal amount  promissory note (the "Note")
issued by Mr.  Rubin to the  Company.  In return  for such  release,  Mr.  Rubin
assigned to the Company his rights to receive payments under the Non-Competition
Agreement and Consulting  Agreement with Hutchinson.  Mr. Rubin has now paid the
amounts owed under the Note pursuant to the settlement of the derivative  action
and the Company has  cancelled  the  foregoing  assignment  by Mr.  Rubin of his
rights to receive payments from Hutchinson under such agreements.

         The Class Action

     In June 1998 a  stockholder  class  action (the "Class  Action")  was filed
against the Company's  directors alleging breaches of fiduciary duty and loyalty
to the  Company  and its  stockholders  in  connection  with a letter  of credit
guarantee by the Company for ERD Waste Corp.  ("ERD"),  and the delisting of the
Company's  Common  Stock and  publicly-traded  warrants  from NASDAQ in February
1998.  During Fiscal 1997 the Company paid $4,400,000  pursuant to its guarantee
for ERD, which sought  protection from creditors under Chapter 11 of the federal
bankruptcy laws on September 30, 1997. Final judicial  approval of a settlement,
pursuant to which the company  will pay  $2,500,000  (the  "Class  Payment")  to
members of the stockholder class, was received in August 1999. The Class Payment
was paid in the form of $600,000 in cash and  $1,900,000  in the form of 777,414
shares  of  common  stock of  Western.  As of July 31,  2000 the  Company  owned
approximately  59.6% of the  outstanding  common  stock of Western  and,  giving
effect to the Class  Payment made on November 1, 2000 it now owns  approximately
36.5%  of the  Western  common  stock.  In  addition,  two of the  officers  and
directors of the Company are officers or directors of Western.  As a result, the
Company  will remain able to  materially  influence  the outcome of votes by the
directors and  stockholders  of Western on matters before its board of directors
and stockholders.


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

Not required.


                                       14
<PAGE>

     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

     On February 4, 1998, The Nasdaq Stock Market,  Inc. ("Nasdaq") delisted the
Company's common stock and warrants (the "Public  Warrants") from Nasdaq for (i)
failure to hold an annual stockholders meeting for fiscal year 1997 in violation
of Nasdaq's rules requiring an annual stockholder meeting, (ii) adopting a stock
option  plan  without  stockholder  approval  in  violation  of  Nasdaq's  rules
requiring such  stockholder  approval,  and (iii) the issuance of the Series B-1
Convertible  Preferred Stock to the Old Connectsoft  stockholders in August 1996
and the private placement of Series B-2 Convertible  Preferred Stock in the 1997
private  placement  violation  of  Nasdaq's  rules  which,  in  effect,  require
stockholder  approval for any  transactions  involving  the present or potential
issuance of voting  securities  representing more than 20% of the voting capital
stock outstanding immediately before such transaction.  The principal market for
trading the  Company's  securities  is the National  Association  of  Securities
Dealers Over-the-Counter Bulletin Board ("OTCBB"). The following is a table that
lists the high and low selling  prices for shares of the Company's  Common Stock
and for the Company's  Public  Warrants on the Nasdaq National Market System and
the OTCBB during the periods identified:

                     Common Stock                       Public Warrants
                     ------------                       ---------------
                     High                Low              High              Low
                     ----                ---              ----              ---
Fiscal 1998
-----------
First Quarter         7.8125             1.9375            5.25            2.25

Second Quarter        3.625              1.75              1.75            1.00

Third Quarter         2.125              0.78               *               *

Fourth Quarter        0.875              0.33

Fiscal 1999
-----------
First Quarter         0.88               0.63

Second Quarter        0.59               0.28

Third Quarter         0.33               0.28

Fourth Quarter        0.32               0.28

Fiscal 2000
-----------
First Quarter         0.31               0.25

Second Quarter        0.75               0.19

Third Quarter         1.50               0.41

Fourth Quarter        1.00               0.44

Fiscal 2001
----------
First Quarter         0.75               0.25

     * Since the Public  Warrants were delisted from the Nasdaq  National Market
on  February  4,  1998,   they  have  been   extremely   thinly  traded  on  the
Over-The-Counter Bulletin Board. It is the Company's opinion that since February
4, 1998  price  information  for the Public  Warrants  is either  unreliable  or
unavailable,  and that  trading  activity  since  such  date has been  extremely
sporadic,  and that for such  reasons any such price  information  may either be
misleading, inaccurate, or not indicative of the true market price of the Public
Warrants  since  such  date.  However,   according  to  the  most  recent  price
information  provided to the Company, the Public Warrants had a bid/ask price on
November 5, 1999 of $.25 and $.63,  respectively,  and that  cumulative  trading
volume in the Public  Warrants  between  August  1999 and October  1999  totaled
approximately 6,500 Public Warrants.

     The Company  extended the exercise  period of the Public Warrants from July
31, 1999 to July 31, 2001. On November 3, 2000 the last sale price of the Common
Stock was $0.54 per share. As of November 3 2000, the Company had  approximately
110  record  holders  of its  Common  Stock and 6 record  holders  of its Public
Warrants.


                                       15
<PAGE>


Dividend Policy

     In the foreseeable future, the Company intends to retain earnings,  if any,
to assist in financing the expansion of its business. In the future, the payment
of  dividends  by the  Company  on its  Common  Stock  will  also  depend on its
financial  condition,  results of operations and such other factors as the Board
of  Directors  of the  Company  may  consider  relevant.  The  Company  does not
currently intend to pay dividends on its Common Stock.


         ITEM 6.  SELECTED FINANCIAL DATA

     The  following  summary  financial  information  for the fiscal years 2000,
1999,  1998,  1997, and 1996 have been derived from the financial  statements of
the Company which have been audited by  PricewaterhouseCoopers  LLP, independent
accountants.

<TABLE>
<CAPTION>

                Income Statement Data (all figures in thousands):


                                                                       Year ended July 31,
                                                                       -------------------

                                                  2000       1999(1,3)       1998(1)        1997           1996(2)
                                                  ----       -------         -------        ----           ----

<S>                                           <C>           <C>           <C>             <C>            <C>

                                               $155,637      $163,650       $163,478        $152,021        $106,555
 Net sales

 (Loss) income from
 continuing operations                           (7,030)       (5,054)        (5,121)         (7,944)            685

 Net (loss)                                      (7,030)       (3,065)        (9,615)        (27,257)         (1,835)

 Basic and Diluted (Loss)
 Earnings Per Share:

 (Loss) income from
 continuing operations                           (0.59)        (0.43)         (0.43)        (1.05)            0.12

 Net (loss)                                      (0.59)        (0.26)         (0.85)        (2.75)           (0.32)


</TABLE>
<TABLE>
<CAPTION>
                 Balance Sheet Data (all figures in thousands):

                                                      July 31,
                                                      --------

                                  2000         1999           1998           1997          1996
                                  ----         ----           ----           ----          ----

<S>                           <C>             <C>           <C>            <C>           <C>
Total assets                   $128,549        $142,409        $146,904      $144,723       $119,055

Total liabilities              $115,413        $121,700         121,914       110,742         87,015

Working capital (deficit)       (17,579)        (18,751)         (5,972)        2,467         17,218

Stockholders' equity              7,373          12,797          15,862        24,101         22,581

</TABLE>

(1)  Includes   loss  from   discontinued   operations   for  Old   Connectsoft,
     Connectsoft, Seattle OnLine, InterGlobe, and Exodus.

(2)  Includes  income from  discontinued  operations and the gain on the sale of
     the  manufacturing  business  of $7.8  million,  net of tax,  the loss from
     discontinued  operations of Old Connectsoft for the day ended July 31, 1996
     of $10.0 million, net of tax and the discontinued operations of TechStar of
     $1.1 million.

(3)  Includes a gain on disposal of $1,989,000.


                                       16
<PAGE>



     ITEM 7.  MANAGEMENT'S  DISCUSSION  AND ANALYSIS OF FINANCIAL  CONDITION AND
RESULTS OF OPERATIONS

     The following discussion and analysis of the Company's financial conditions
and results of  operations  contains  certain  "forward-looking  statements"  as
defined in the Private Securities Litigation Reform Act of 1995. Such statements
relating  to  future  events  and  financial   performance  are  forward-looking
statements that involve certain risks and  uncertainties,  detailed from time to
time in the Company's various commission filings. Such statements are subject to
risks and  uncertainties  that could cause actual  results to differ  materially
from those  projected,  including,  but not limited to,  projected sales levels,
expense reductions,  reduced interest expense, and increased inventory turnover,
any one or more of which may not be  realized.  See  "Description  of Business -
Future  Performance  and Risk  Factors." No assurance can be given that any such
matters will be realized.

         General Overview

     The Company is a holding company which engages in the Distribution Business
through  Western  and is  also a  minority  investor  in two  private  companies
(EgoMagazine.com,  Inc. and New Media  Technologies,  Inc.), which engage in the
New Media Business.  In previous years the Company  engaged in other  additional
businesses  such  as the  Technology  Business  and the  Telecommunications  and
Construction Businesses,  which it has since discontinued.  The Company formerly
was a  stockholder  of the  majority  of the  outstanding  common  stock  of IDF
International,  Inc.  through  which it  engaged  in the  Telecommunication  and
Construction  Businesses,  but since early  fiscal 1998 has been only a minority
stockholder.  TechStar and Hayden-Wegman,  IDF's operating subsidiaries,  ceased
operations in June 1999 and September 2000  respectively.  The Company has also,
during Fiscal 1998 and Fiscal 1999,  either divested itself of all assets of, or
otherwise discontinued all operations of, the Technology Business. Consequently,
the Company's current operations and its operations during Fiscal 2000 consisted
entirely  of the  Distribution  Business  which the  Company  engages in through
Western.   Accordingly,   the  following  discussion  consists  primarily  of  a
discussion of Western.

     Store activity for the last three fiscal years is summarized as follows:

<TABLE>
<CAPTION>

            Fiscal        No. of Stores at
          Year Ending      Beginning of        No. of Stores     No. of Stores    No. of Stores     No. of Stores at
           July 31,         Fiscal Year           Opened           Closed           Acquired          End of Year
           --------         -----------           ------           ------           --------          -----------

        <S>                    <C>                 <C>               <C>              <C>               <C>

           1998                 23                  1                 1                4                  27

           1999                 27                  0                 3                0                  24

           2000                 24                  2                 5                0                  21
</TABLE>


     Western plans to open and acquire additional  distribution outlets for Case
products,  as well as for products which may be manufactured by other companies.
Western's  results  can be  impacted  by the timing of,  and costs  incurred  in
connection with, new store openings and acquisitions.

     Subsequent  to  the  end of  Fiscal  2000,  Western  had  consolidated  one
additional store into a larger neighboring  store.  Western may open and acquire
additional distribution outlets for Case products, as well as for products which
may be  manufactured  by other  companies  as  circumstances  permit.  Western's
results can be impacted by the timing of, and costs incurred in connection with,
new store  openings and  acquisitions  as well as the costs of closing  existing
stores.

                                       17
<PAGE>

Results of Operations

Fiscal Year 2000, as Compared with Fiscal Year 1999

     Western reported net revenue for Fiscal 2000 of $155,637,000  compared with
net revenue of $163,650,000 for Fiscal 1999. Stores opened longer than 12 months
showed an overall  revenue  decrease  of 4.9  percent  from  prior year  revenue
reflecting a general  softening in economic  conditions in the  northwest  along
with  increased  competitive   pressures.   Western  consolidated  five  of  its
facilities  during fiscal 2000 into larger  facilities in the region in order to
reduce costs and leverage existing, larger facilities in the region to cover the
territories previously served by the closed facilities.

     Western  had a net loss for Fiscal  2000 of  $7,198,000  or $2.18 per share
compared  with a net loss of  $1,815,000  or $0.55 per share in Fiscal 1999.  In
Fiscal 2000, Western recognized a fourth quarter pre-tax non-recurring charge of
approximately  $2,547,000  to provide  allowances in  recognition  of decreasing
market  prices on aged  equipment  in the last half of the  year.  In  addition,
Western recorded a valuation  allowance of $2,956,000  related to its tax asset.
Other income  consists  primarily of net gains related to asset  dispositions by
Western.

     The  Company's  share of Western's  Fiscal 2000 loss was $  4,294,000.  The
Company also  accrued a loss of  $1,434,000  on the  transfer of 777,414  common
shares of Western pursuant to the settlement of shareholder litigation (see note
16);  recorded a full  reserve of $364,000 in  connection  with  advances to and
investment  in IDF  and  sold a  patent  having  to do with  certain  technology
previously developed by eXodus for a gain of $240,000. Exclusive of Western, the
Company also incurred $940,000 of selling,  general and administrative  expenses
(primarily  salaries,  taxes and professional fees) and $238,000 of net interest
expense.

     Western's  gross margin was 7.4 percent  during  Fiscal 2000 which is lower
than its 8.9 percent  gross  margin  during  Fiscal 1999.  Margins  decreased in
Fiscal 2000 due mainly to competitive pressures and the fourth quarter equipment
reserve.  Management  continues to place a high  priority on  improving  overall
gross margins by working to increase  higher margin service,  parts,  and rental
revenues,  focusing more sales efforts on specialty and niche product lines, and
by obtaining higher prices for new and used equipment.

     Selling,  general,  and  administrative  expenses  were $ 14,474,000 or 9.3
percent of revenues for Fiscal 2000  compared to $ 15,705,000  or 9.6 percent of
sales  for  Fiscal  1999.  The  decrease  was  primarily  due to a  decrease  of
approximately  $938,000 in expenses  relative to shareholder  litigation and bad
debts in 2000  compared  to the  amount  incurred  in 1999  somewhat  offset  by
slightly  higher  expenses at Western which included the costs of closing stores
during the year.

     Net interest  expense for Fiscal 2000 was $ 6,307,000,  up from $ 5,329,000
in Fiscal 1999  primarily due to an increase in interest  rates at Western and a
decrease in interest income due to lesser principle amounts having been invested
during  fiscal  2000.  In June 1997,  Western  obtained a $75 million  inventory
flooring  and  operating  line of credit  facility  through  Deutsche  Financial
Services ("DFS").  The facility is a three year, floating rate facility at rates
as low as 50 basis  points  under the prime  rate.  Prime  interest  rates  have
increased from those in Fiscal 1999.  Management has used this facility to allow
Western  to take  advantage  of more  purchase  discounts  and to lower  overall
interest expense. The DFS credit facility expired August 18, 2000 and Western is
currently in negotiation  with DFS to extend the term of the facility and modify
some of its terms.  See Liquidity and Capital  Resources below for a description
of the status of the DFS facility.

                                       18
<PAGE>

Fiscal 1999 as Compared with Fiscal 1998

     The  Company  reported  net revenue  for Fiscal  1999 of  $163,650,000,  an
increase of 0.1 percent over net revenue of $163,478,000  for Fiscal 1998 and an
increase of  $15,520,000  (10.5%)  over  comparable  1997 sales of  $148,130,000
excluding  TechStar's revenue.  Approximately $17.4 million of revenue came from
stores  opened or acquired in Fiscal 1998 by  Western.  Stores  opened  prior to
Fiscal 1998 showed an overall  revenue  decrease of 3.9% from prior year revenue
reflecting  a  general  softening  in  economic  conditions  in  the  Northwest,
increased   competitive   pressures,    and   some   weather-related    business
interruptions.

     Western's gross margin was 8.9 percent during Fiscal 1999,  which was lower
than its 11.7 percent  gross margin  during  Fiscal 1998.  Margins  decreased in
Fiscal 1999 due mainly to continued  competitive pressures and the first quarter
equipment reserve.  The Company believes that Western's  management continues to
place a high priority on improving  overall gross margins by working to increase
its higher margin segments such as service, parts and rental revenues,  focusing
more sales efforts on specialty and niche product lines, and by obtaining higher
prices for new and used equipment.

     Selling,  general,  and  administrative  expenses were $15,705,000,  or 9.6
percent of revenues for Fiscal 1999 as compared to  $13,879,000,  or 8.5 percent
of revenues for Fiscal  1998.  The  increase is  primarily  attributable  to net
expenses related to the shareholder  litigation of approximately $310,000 and an
increase  in bad debt  expense  related  to  advances  to IDF of  $992,000.  The
remaining  increase  in  selling,  general,  and  administrative  expenses  as a
percentage  of revenues  resulted  in part from  Western's  lower than  expected
revenue  levels and full year  expenses for stores  opened or acquired in Fiscal
1998.

     Net interest  expense for Fiscal 1999 was $5,329,000 up from  $4,197,000 in
Fiscal  1998.  This was due to the  Company's  decreased  interest  income  from
decreasing  cash  reserves  and to an  increase  in rental  equipment  levels at
Western. In addition, effective with deliveries after July 1, 1998, Case changed
factory to dealer  terms,  lowering  from three percent (3%) to two percent (2%)
the cash  payment  discount if the dealer pays for the machine  outright  rather
than  utilizing  the  interest-free  floor  planning.  Western  was able to take
advantage of the cash  discounts  on a majority of its Case  purchases in Fiscal
1998.

     In June  1997,  Western  obtained  a $75  million  inventory  flooring  and
operating line of credit  facility  through  Deutsche  Financial  Services.  The
facility is a  three-year,  floating  rate  facility at rates as low as 50 basis
points  under the prime rate.  Western's  management  has used this  facility to
allow  Western to take  advantage of more  purchase  discounts  and to lower the
overall interest rate on borrowings.

     The gain on disposal of  $1,989,000  in Fiscal 1999  reflects the gain from
the disposal of the remaining assets of Connectsoft Communications Corp. in June
1999 to eGlobe.  The after tax loss from  discontinued  operations of $4.690,000
for Fiscal 1998 arises from the  discontinuation  of the  operations  of the Old
Connectsoft,  Connectsoft,  Exodus  Technologies,  Seattle OnLine and InterGlobe
subsidiaries.  Effective  during the third  quarter of Fiscal  1998 the  Company
discontinued the operations of these subsidiaries. Losses of $2,300,000 from the
discontinued  operations  after the measurement date of April 30, 1998 have been
offset  against  an  anticipated  gain  from  the  sale  of  certain  assets  of
Connectsoft  and Old  Connectsoft  to eGlobe Inc.  in the amount of  $3,800,000,
resulting in a deferred gain of $1,500,000.  The change in the amount of gain is
due primarily to changes in the consideration  given by eGlobe for the assets of
Connectsoft.

                                       19
<PAGE>

Fiscal 1998 Compared with Fiscal 1997

     The  Company  reported  net revenue  for Fiscal  1998 of  $163,478,000,  an
increase of 9.3 percent over net revenue of $152,021,000  for Fiscal 1997 and an
increase  of  $15,348,000   (10.4  percent)  over   comparable   1997  sales  of
$148,130,000  excluding  TechStar's  revenue.  Approximately  $17.4  million  of
revenue  came from stores  opened or acquired in fiscal 1998 by Western.  Stores
opened  prior to Fiscal  1998  showed an overall  revenue  decrease of 3.9% from
prior year revenue reflecting a general softening in economic  conditions in the
northwest,  increased competitive  pressures,  and some weather related business
interruptions.  Also,  $3,891,000  of sales from TechStar from December 11, 1996
(date of  acquisition)  to July 31, 1998 are included in Fiscal 1997 sales,  for
which no comparable  amount exists for Fiscal 1998 due to the merger of TechStar
and IDF, which combined entities are accounted for on the equity method.

     Overall,  the Company's  gross margins for Fiscal 1998 and Fiscal 1997 were
the same at 11.7 percent.  Western's gross margin was 11.7 percent during Fiscal
1998,  which is higher than their 10.7 percent  gross margin during Fiscal 1997.
Margins  increased  in  Fiscal  1998 on new  unit  sales,  rental,  and  service
business.  Western's  Management continues to place a high priority on improving
overall gross margins by working to increase higher margin service,  parts,  and
rental  revenues,  focusing  more sales  efforts on specialty  and niche product
lines,  and by obtaining  higher prices for new  equipment.  Fiscal 1997 amounts
included  the gross  margin of TechStar  for the period of December  11, 1996 to
July 31,  1997,  which  contributed  50.7  percent or  $1,971,000  to 1997 gross
margin, for which no comparable Fiscal 1998 amount exists.

     Selling,  general,  and  administrative  expenses were  $13,879,000  or 8.5
percent of revenues for Fiscal 1998 compared to  $23,440,000  or 15.4 percent of
sales for Fiscal 1997.  The decrease is due largely to the 1997 amounts  charged
for ERD totaling  $4,985,000  as well as 1997  TechStar and Arcadia  expenses of
$1,823,000 for the period from December 11, 1996 to July 31, 1997. The remaining
decrease in selling,  general, and administrative expenses resulted in part from
significantly  decreased  professional  fees and other corporate  administrative
expenses  due  to  the   discontinuation   of  the  technology  group  and  from
management's cost control and efficiency improvement efforts.

     Net interest  expense for Fiscal 1998 was  $4,197,000,  up $1,570,000  from
$2,627,000  in Fiscal 1997. A total of $1,169,000 of this increase was due to an
increase in Western's  inventory  levels,  particularly  inventory  dedicated to
rentals. In addition, effective with deliveries after July 1, 1998, Case changed
factory to dealer terms lowering from 3% to 2% the cash payment  discount if the
dealer pays for the machine  outright  rather than  utilizing the  interest-free
floor  planning.  Western was able to take  advantage of the cash discounts on a
majority of its Case purchases in fiscal 1998. In June 1997,  Western obtained a
$75,000,000  inventory  flooring and operating line of credit  facility  through
Deutsche  Financial  Services.  The  facility  is a  three-year,  floating  rate
facility  at rates as low as 50 basis  points  under the prime  rate.  Western's
management  has used this  facility to allow  Western to take  advantage of more
purchase discounts and to lower the overall interest rate on borrowings. Western
believes  that the positive  impact of the  discounted  cost of new inventory on
gross margins has more than offset the  increased  interest  expense  related to
foregoing the  interest-free  flooring  periods.  The remaining  increase in net
interest  expense of $401,000 is primarily  due to decreases in interest  income
earned on investments as a result of lower principle  invested amounts in Fiscal
1998.

     Loss from discontinued  operations of $4,500,000 for Fiscal 1998 arose from
the  discontinuation  of the  operations  of the Old  Connectsoft,  Connectsoft,
Exodus  Technologies,  Seattle  OnLine and  InterGlobe  subsidiaries.  Effective
during the third quarter of Fiscal 1998 the Company  discontinued the operations
of these  subsidiaries.  Losses of $2,300,000 from the  discontinued  operations
after the  measurement  date of April  30,  1998 have  been  offset  against  an
anticipated  gain  from  the  sale of  certain  assets  of  Connectsoft  and Old
Connectsoft to eGlobe Inc. in the amount of $3,800,000,  resulting in a deferred
gain of $1,500,000 which was recognized in the second quarter of Fiscal 1999. In
Fiscal  1997,  the  Company  incurred  a loss from  discontinued  operations  of
$16,900,000  primarily  comprised of $8,200,000 from its Exodus subsidiary and a
net loss of $3,000,000 from the operations of Old Connectsoft.  In addition, the
Free  agent  development  and  marketing  activities  conducted  by  Connectsoft
incurred  an  additional  $2,800,000  of net losses in Fiscal  1997.  InterGlobe
incurred a net loss of $2,224,000 including $1,600,000 of write-offs of goodwill
and  investment) on total  revenues of $1,040,590 and Seattle OnLine  incurred a
net loss of $1,575,000 on total revenues of $87,000.  These losses were slightly
offset by tax benefits recognized of $1,000,000.

                                       20
<PAGE>

Liquidity and Capital Resources

         General

     During Fiscal 2000 the Company's  cash,  cash  equivalents  and  marketable
securities decreased by $375,000,  from $5,285,000 to $4,910,000,  primarily due
to losses from operations and increased interest expense partially offset by the
$1,400,000 of securities  contributed  by Mr. Rubin  pursuant to the  Derivative
Action settlement.

     The  Company's  cash,  cash   equivalents  and  marketable   securities  of
$4,910,000  as of July 31, 2000 and available  credit  facilities of Western are
considered  sufficient to support  current levels of operations for at least the
next twelve months.

     The Company invests  substantially  all cash and cash  equivalents in money
market funds,  United States Treasury  securities and similar  instruments.  The
Company seeks to provide a high current  return on its  investments  of cash and
cash equivalents  while  preserving both liquidity and capital.  The established
policy guidelines for its investment  portfolio include investments that include
United States Treasury securities,  United States government agency obligations,
deposit-type  obligations  of United  States  banking  institutions,  repurchase
agreements,  United States denominated A1 grade commercial paper,  United States
money market funds and interests in mutual funds that invest in the above listed
instruments.  Concentration  of the portfolio is limited to not more than 20% of
the  investment  portfolio in the  securities  of any one bank,  corporation  or
non-government issuer.

         Western


     During  Fiscal  2000,  Western's  cash and cash  equivalents  decreased  by
$1,805,000  primarily due to required debt  payments.  Western had positive cash
flow from  operating  activities  during the year of $3,539,000  reflecting  net
income for the year after adding back depreciation and  amortization.  Purchases
of fixed assets during the period were related mainly to the ongoing replacement
of aged operating assets.

     Western's  primary needs for liquidity and capital resources are related to
its  inventory  for sale and its  rental  and  lease  fleet  inventories,  store
openings,  and acquisitions of additional  stores.  Western's  primary source of
internal liquidity has been its profitable  operations.  As more fully described
below,  Western's primary sources of external liquidity are equipment  inventory
floor plan financing  arrangements  provided to Western by the  manufacturers of
the products Western sells and by Deutsche  Financial Services ("DFS") and, with
respect to acquisitions, secured loans from Case.

     Under inventory floor planning  arrangements the  manufacturers of products
sold by Western  provide  interest free credit terms on new equipment  purchases
for periods ranging from one to twelve months, after which interest commences to
accrue  monthly at rates ranging from zero percent to two percent over the prime
rate of interest.  Principal  payments are typically made under these agreements
at scheduled  intervals and/or as the equipment is rented,  with the balance due
at the earlier of a specified date or sale of the  equipment.  At July 31, 2000,
Western was indebted under manufacturer  provided floor planning arrangements in
the aggregate amount of $14,768,000.

                                       21
<PAGE>

     In June  1997,  Western  obtained  a  $75,000,000  inventory  flooring  and
operating line of credit  through DFS. The DFS credit  facility is a three-year,
floating  rate  facility  based on prime with rates between 0.50% under prime to
1.00% over prime  depending on the amount of total borrowing under the facility.
Amounts are advanced against Western's assets,  including  accounts  receivable,
parts, new equipment,  rental fleet, and used equipment.  Western expects to use
this borrowing  facility to lower  flooring  related  interest  expense by using
advances  under such line to finance  inventory  purchases  in lieu of financing
provided by suppliers,  to take  advantage of cash purchase  discounts  from its
suppliers,  to provide  operating  capital for further growth,  and to refinance
some of its  acquisition  related debt at a lower  interest rate. As of July 31,
2000 and July 31, 1999, approximately  $67,671,000 was outstanding under the DFS
credit  facility.  At July 31,  2000,  Western was in  technical  default of the
leverage  covenant in its loan agreement  with DFS, and has  requested,  but not
obtained,  a waiver  letter  regarding its default for the period since July 31,
2000. There is no guarantee that Deutsche  Financial Services will not call this
debt at any time.  Although the credit facility  expired on August 18, 2000, DFS
and Western are  negotiating an extension of the credit  facility and a revision
of certain  leverage  covenants.  If an extension is not  negotiated and Western
does not cure the  defaults,  DFS may call the  loan,  in which  case  Western's
ability to continue operations may be adversely affected.  Assuming a successful
renegotiation  with DFS,  Western's cash and cash  equivalents of $824,000 as of
July 31, 2000 and  available  credit  facilities  are  considered  sufficient to
support the current levels of operations by Western for at least the next twelve
months.  Western and DFS have reached a preliminary  agreement to revise certain
leverage  covenants and provide for financial  penalties for  violations of such
covenants.  Finalization  of this  increase is expected  by November  30,  2000.
Amounts owing under the DFS credit  facility are secured by inventory  purchases
financed by DFS, as well as all  proceeds  from their sale or rental,  including
accounts receivable thereto.

     Inventory;  Effects of  Inflation  and  Interest  Rates;  General  Economic
Conditions

         Distribution Business

     Controlling  inventory is a key  ingredient  to the success of an equipment
distributor  because  the  equipment  industry  is  characterized  by long order
cycles,  high ticket prices,  and the related  exposure to "flooring"  interest.
Western's  interest  expense may  increase if  inventory is too high or interest
rates rise. Western manages its inventory through  company-wide  information and
inventory  sharing systems wherein all locations have access to Western's entire
inventory.  In addition,  Western closely monitors inventory turnover by product
categories and places equipment orders based upon targeted turn ratios.

     All of the  products and  services  provided by Western are either  capital
equipment or included in capital equipment,  which are used in the construction,
agricultural, and industrial sectors. Accordingly,  Western's sales are affected
by  inflation  or  increased   interest  rates  which  tend  to  hold  down  new
construction,  and consequently adversely affect demand for the construction and
industrial  equipment  sold  and  rented  by  Western.  In  addition,   although
agricultural  equipment  sales are less than two percent (2%) of Western's total
revenues, factors adversely affecting the farming and commodity markets also can
adversely affect Western's agricultural equipment related business.

     Western's  business can also be affected by general economic  conditions in
its  geographic  markets  as  well  as  general  national  and  global  economic
conditions that affect the construction,  agricultural,  and industrial sectors.
An erosion in North American and/or other  countries'  economies could adversely
affect the Company's  business.  Market  specific  factors could also  adversely
affect one or more of Western's target markets and/or products.

                                       22
<PAGE>

         The Technology Business

     During Fiscal 2000 and1999, the Company had no operations in its Technology
Business. During Fiscal 1999, the Company consummated the sale of certain assets
comprising the Technology Business to eGlobe. Prior to such sale the Company had
either  discontinued or divested itself of all assets  comprising the Technology
Business.

         The New Media Business

     During Fiscal 2000,  the Company began its  involvement in this business by
making  minority  equity  investments  in two  startup,  closely-held  companies
EgoMagazine.com,  Inc. (EGO) and New Media Technologies, Inc. (NMT). The Company
has invested  approximately  $175,000 in EGO and approximately  $250,000 in NMT.
The Company  intends to explore other  opportunities  to invest in the New Media
Business  or  invest  additional  amounts  in  either  EGO or NMT.  The  Company
considers the New Media Business to include, among other things, new or emerging
technologies  or  infrastructure  in the  Internet,  audio and video  streaming,
multimedia and communications industries.

Proposed Western Merger

     On November 3, 2000, Western and e-Mobile, Inc. ("EMI") signed a definitive
Merger  Agreement  pursuant to which a newly formed holding company will acquire
both Western and e-Mobile.  In addition,  Western also signed an Asset  Purchase
Agreement. Under the terms of the agreement, a newly formed holding company will
issue 52 million  shares of its common stock to acquire the  existing  shares of
EMI and  approximately  3.3  million  shares to acquire the  existing  shares of
Western. The holding company will assume all outstanding options of both EMI and
Western.  It is  anticipated  that a new board of directors will be appointed at
the  closing and that the  officers  of EMI will become  officers of the holding
company. As a condition of the merger, Western will seek shareholder approval to
allow certain members of Western's management, officers and certain directors to
purchase  Western's  assets and assume its liabilities  for $4.1 million,  which
will be paid by a secured  note (the note  will be  subordinate  to the  current
security  interest of DFS) over seven years at seven  percent  (7.0%)  interest,
with interest only  payments for the first year and  thereafter  self-amortizing
with quarterly interest payments and semi-annual principal payments.  Closing of
these  transactions  is  conditioned  on  approval  of the  transactions  by the
shareholders  of Western  and EMI and certain  other  regulatory  approvals  and
contractual  conditions.  There is no assurance that either  transaction will be
consummated.


ITEM 7A. QUANTITATIVE AND QUALITATIVE MARKET RISK

         Not Applicable

                                       23
<PAGE>

ITEM 8.  FINANCIAL STATEMENTS




                          AMERICAN UNITED GLOBAL, INC.

                              FINANCIAL STATEMENTS


                                      INDEX



                                                                   Page

Report of Independent Accountants .......................           F-2

Consolidated Balance Sheets .............................           F-3

Consolidated Statements of Operations and
 Comprehensive Income (Loss).............................           F-4

Consolidated Statements of Shareholders' Equity .........           F-5

Consolidated Statements of Cash Flows ...................           F-6

Notes to Consolidated Financial Statements ..............           F-7



                                      F-1
<PAGE>


                        REPORT OF INDEPENDENT ACCOUNTANTS


To the Board of Directors
and Shareholders of
American United Global, Inc.


     In our  opinion,  the  accompanying  consolidated  balance  sheets  and the
related  consolidated  statements of operations and comprehensive income (loss),
of  shareholders'  equity  and of cash flows  present  fairly,  in all  material
respects,  the  financial  position  of American  United  Global,  Inc.  and its
subsidiaries at July 31, 2000 and 1999, and the results of their  operations and
their cash flows for each of the three years in the period  ended July 31, 2000,
in conformity with accounting principles generally accepted in the United States
of America.  These financial  statements are the responsibility of the Company's
management;  our  responsibility  is to express  an  opinion on these  financial
statements  based on our audits.  We conducted our audits of these statements in
accordance with auditing  standards  generally  accepted in the United States of
America  which  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,   assessing  the
accounting  principles  used and significant  estimates made by management,  and
evaluating the overall  financial  statement  presentation.  We believe that our
audits provide a reasonable basis for the opinion expressed above.



PricewaterhouseCoopers LLP





Portland, Oregon
November 7, 2000






                                      F-2
<PAGE>

<TABLE>
<CAPTION>

                  AMERICAN UNITED GLOBAL, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                                                                                                      JULY 31,
                                                                                                      --------
                                                                                                2000           1999
                                                                                                ----           ----
                                         ASSETS
<S>                                                                                     <C>             <C>

Current assets:
  Cash and cash equivalents.............................................................  $    1,281,000  $   2,914,000
   Investment in marketable debt securities.............................................       3,629,000      2,371,000
   Trade accounts receivable, less allowance
    for doubtful accounts of $563,000 and $724,000, respectively........................      17,347,000     15,500,000
   Inventories (Note 4).................................................................      58,297,000     67,068,000
   Prepaid expenses and other receivables...............................................         478,000        885,000
   Deferred tax asset (Note 7)..........................................................       2,273,000      1,410,000
   Receivable from Chairman (Note 10)...................................................         299,000      1,700,000
   Notes receivable (Note 10)...........................................................       1,161,000      1,140,000
                                                                                               ---------      ---------

       Total current assets.............................................................      84,765,000     92,988,000

   Property and equipment, net (Note 5).................................................       9,450,000      9,818,000
   Rental equipment fleet, net (Note 5).................................................      26,076,000     31,366,000
   Leased equipment fleet, net (Note 5).................................................       4,975,000      5,264,000
   Intangibles and other assets, net of accumulated
    amortization of $1,263,000 and $1,460,000, respectively (Note 12)...................       2,858,000      2,952,000
   Other assets.........................................................................         425,000          -
   Note Receivable, net of current portion .............................................           -            521,000
                                                                                              ----------      ---------

                                                                                          $  128,549,000  $ 142,909,000
                                                                                          ==============  =============
                          LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
   Borrowings under floor financing lines (Note 6)......................................  $   14,768,000  $  17,128,000
   Short-term borrowings (Note 6).......................................................      69,171,000     72,383,000
   Current portion of capital lease obligations (Note 10)...............................          17,000         17,000
   Accounts payable.....................................................................      10,810,000     13,038,000
   Accrued liabilities..................................................................       5,097,000      4,046,000
   Income taxes payable (Note 7)........................................................         581,000        627,000
   Due to shareholders (Note 10)........................................................       1,900,000      2,500,000
                                                                                             -----------    -----------
       Total current liabilities........................................................     102,344,000    109,739,000

Long-term borrowings (Note 6)...........................................................          28,000         48,000
Capital lease obligations, net of current portion (Note 10).............................       4,786,000      4,755,000
Deferred taxes (Note 7).................................................................       2,273,000        837,000
Deferred gain...........................................................................           -            140,000
Deferred lease income...................................................................       5,982,000      6,181,000
                                                                                               ---------      ---------
       Total liabilities                                                                     115,413,000    121,700,000

Minority interest.......................................................................       5,763,000      8,412,000

Commitments and contingencies (Note 10)

Shareholders' equity (Notes 8 and 11):

   Series B-1  preferred stock, convertible to common, $3.50 per share
     liquidation value, $.01 par value; 1,000,000 shares authorized; 416,263 and
     425,620 shares issued and outstanding, respectively................................           4,000          4,000
   Common stock, $.01 par value; 40,000,000 shares authorized; 12,143,385 and 11,921,529
     shares issued and outstanding, respectively........................................         121,000        119,000
   Common stock, Class B, non-voting, .01 par value, 25,000,000
     shares authorized, no shares issued and outstanding ...............................           -              -
   Additional contributed capital.......................................................      50,274,000     49,954,000
   Accumulated deficit..................................................................     (44,310,000)   (37,280,000)
   Accumulated other comprehensive income...............................................       1,284,000          -
                                                                                             -----------    -----------
       Total shareholders's equity......................................................       7,373,000     12,797,000
                                                                                              ----------     ----------
                                                                                          $ 128,549,000    $142,909,000
                                                                                          ==============   ============

</TABLE>

         The accompanying notes are an integral part of this statement.

                                      F-3
<PAGE>



<TABLE>
<CAPTION>


                             AMERICAN UNITED GLOBAL, INC. AND SUBSIDIARIES


                                 CONSOLIDATED STATEMENTS OF OPERATIONS


                                                                                        YEAR ENDED JULY 31,
                                                                                        -------------------

                                                                                2000           1999           1998
                                                                                ----           ----           ----
<S>                                                                       <C>            <C>            <C>

Net sales................................................................  $ 155,637,000  $  163,650,000 $  163,478,000
Cost of goods sold.......................................................    144,099,000     149,056,000    144,302,000
                                                                             -----------     -----------    -----------

       Gross profit......................................................     11,538,000      14,594,000     19,176,000

Selling, general and administrative expenses.............................     14,474,000      15,705,000     13,879,000
                                                                              ----------      ----------     ----------

       Operating income (loss)...........................................     (2,936,000)     (1,111,000)     5,297,000


Gain on sale of patent...................................................        240,000            -              -
Loss on transfer of Western shares.......................................     (1,434,000)           -              -
Other income.............................................................      1,646,000         530,000        796,000
Interest expense, net....................................................     (6,307,000)     (5,329,000)    (4,197,000)
                                                                               ---------       ---------      ---------

Income (loss) from continuing operations before income taxes, equity
       in loss of unconsolidated subsidiary and minority interest........     (8,791,000)     (5,910,000)     1,896,000

Benefit (provision) for income taxes (Note 7)............................       (779,000)      1,101,000     (1,354,000)
Equity in loss of unconsolidated subsidiary..............................       (364,000)       (961,000)    (4,730,000)
Minority interest in loss (earnings) of consolidated subsidiaries........      2,904,000         716,000       (713,000)
                                                                                 -------        --------       --------

       Loss from continuing operations ..................................     (7,030,000)     (5,054,000)    (4,901,000)


Discontinued operations, net of taxes (Note 9):

   Loss from operations, net of tax benefit of $1,423,000 ................                                   (4,690,000)
   Gain on disposal......................................................          -           1,989,000
                                                                               ---------      ----------    ------------

                                                                                   -           1,989,000     (4,690,000)

Net loss ................................................................     (7,030,000)     (3,065,000)    (9,591,000)
Dividends on preferred stock.............................................         -                -            (24,000)
                                                                              -----------     ----------     ----------

Net loss available for common shareholders...............................  $  (7,030,000) $   (3,065,000)$   (9,615,000)
                                                                           =============  ============== ==============

Basic and diluted earnings (loss) per share:
   (Loss) earnings from continuing operations............................  $       (0.59) $       (0.43)  $      (0.43)
   Gain (loss) from discontinued operations..............................           -              0.17          (0.42)
                                                                           -------------  -------------   -------------

Basic and diluted loss per share.........................................  $       (0.59) $       (0.26)  $  (0.85)
                                                                           =============  =============    ============


Weighted average number of shares........................................     11,948,368      11,748,210     11,311,791
                                                                              ==========      ==========     ==========


Comprehensive income (loss):

     Net loss............................................................  $  (7,030,000) $  (3,065,000)  $  (9,615,000)

     Unrealized gain on marketable securities............................      1,284,000          -              -
                                                                              -----------  -------------  --------------
-
     Comprehensive loss..................................................  $  (5,746,000) $   (3,065,000)$   (9,615,000)
                                                                            =============  ============== ==============


</TABLE>


             The accompanying notes are an integral part of this statement.


                                      F-4
<PAGE>

<TABLE>
<CAPTION>

                                       AMERICAN UNITED GLOBAL, INC. AND SUBSIDIARIES

                                      CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

                                                                   PREFERRED STOCK                 COMMON STOCK
                                                                   ---------------                 ------------

                                                              NUMBER OF                      NUMBER OF
                                                               SHARES          AMOUNT         SHARES         AMOUNT
                                                               ------          ------         ------         ------
<S>                                                       <C>             <C>            <C>              <C>

Balance at July 31, 1997.................................    1,097,000         11,000      10,427,000        104,000
Net loss ................................................
Dividend on preferred stock..............................
Issuance of common shares................................                                     250,000          3,000
Conversion of preferred stock to common..................     (373,000)        (4,000)        838,000          8,000
Amortization of deferred compensation....................
Exercise of stock options................................                                     102,000          1,000
                                                             ----------       --------    -----------     ----------

Balance at July 31, 1998.................................      724,000          7,000      11,617,000        116,000
Net loss ................................................
Conversion of preferred stock to common..................     (298,000)        (3,000)        304,000          3,000
                                                              --------         ------         -------          -----

Balance at July 31, 1999.................................      426,000  $       4,000      11,921,000  $     119,000
119,000
Net loss ................................................
Issuance of common stock.................................                                     213,000          2,000
Stock option compensation................................
Accumulated unrealized gains, net........................
Conversion of preferred stock to common..................       (9,000)                         9,000
                                                                ------        --------    -----------    -----------

Balance at July 31, 2000.................................      417,000          4,000      12,143,000        121,000
                                                               =======          =====      ==========        =======
</TABLE>
<TABLE>
<CAPTION>
                                                                           ACCUMULATED
                                            ADDITIONAL                        OTHER        RETAINED            TOTAL
                                            CONTRIBUTED                   COMPREHENSIVE    EARNINGS        SHAREHOLDERS'
                                              CAPITAL          OTHER      INCOME (LOSS)    (DEFICIT)          EQUITY
                                              -------          -----      -------------    ---------          ------
<S>                                         <C>             <C>          <C>            <C>                 <C>
Balance at July 31, 1997..................   $48,782,000      $(196,000)                  $(24,600,000)        $24,101,000
Net loss .................................                                                  (9,591,000)         (9,591,000)
Dividend on preferred stock...............       141,000                                       (24,000)            117,000
Issuance of common stock..................       473,000                                                           476,000
Conversion of preferred stock to common...        (4,000)                                         -
Amortization of deferred compensation.....                      196,000                                            196,000
Exercise of stock options.................       562,000                                                           563,000
                                                 -------      ---------   ------------   -------------       -------------

Balance at July 31, 1998..................    49,954,000         -                         (34,215,000)         15,862,000
Net loss .................................                                                  (3,065,000)         (3,065,000)
                                             -----------     ---------    ------------    -- ----------          ----------

Balance at July 31, 1999.................. $  49,954,000  $       -                      $ (37,280,000)      $  12,797,000
Net loss .................................                                                  (7,030,000)         (7,030,000)
Issuance of common stock..................        83,000                                                            85,000
Stock option compensation.................       237,000                                                           237,000
Accumulated unrealized gains, net.........        -              -            1,284,000                          1,284,000
                                             -----------    -----------       ---------    ------------      -------------
Conversion of preferred stock to common...

Balance at July 31, 2000.................. $  50,274,000  $     -             1,284,000  $ (44,310,000)       $  7,373,000
                                           =============  =============     ===========  =============        ============
</TABLE>

         The accompanying notes are an integral part of this statement.

                                      F-5
<PAGE>

<TABLE>
<CAPTION>
                                       AMERICAN UNITED GLOBAL, INC. AND SUBSIDIARIES

                                           CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                                        YEAR ENDED JULY 31,
                                                                                        -------------------

                                                                                2000           1999           1998
                                                                                ----           ----           ----
<S>                                                                       <C>            <C>             <C>
Cash flows from operating activities:
   Net loss from continuing operations...................................  $ (7,030,000)    $ (5,054,000)  $ (4,901,000)
   Net gain (loss) from discontinued operations .........................          -           1,989,000     (4,690,000)
Adjustments to reconcile net loss to net cash
     used in operating activities:
     Depreciation and amortization.......................................     11,712,000      11,779,000      1,448,000
     Loss on settlement..................................................          -             310,000          -
Amortization of deferred compensation....................................          -              -             196,000
     Gain on disposal of business........................................          -          (1,989,000)      (220,000)
     Gain on sale of fixed assets........................................        (59,000)        (45,000)        -
     (Loss) income applicable to minority interest.......................     (2,904,000)       (716,000)       713,000
     Undistributed loss of affiliate.....................................        364,000       1,553,000      4,730,000
     Stock option compensation...........................................        236,000
     Gain on sale of patent..............................................       (240,000)          -              -
     Gain on sale investments............................................        (52,000)          -              -
       Change in assets and liabilities, net of effects of acquisition
       and dispositions:
       Trade accounts receivable.........................................     (1,847,000)      8,208,000    (10,584,000)
       Inventories.......................................................      2,903,000       1,299,000     (2,280,000)
       Notes receivable..................................................        500,000        (500,000)     3,503,000
       Intangible assets.................................................          -               -          1,638,000
       Prepaid expenses and other receivable.............................       (192,000)          1,000         70,000
       Lease equipment, net..............................................        289,000      (2,504,000)          -
       Accounts payable..................................................     (2,416,000)     (5,295,000)    (2,122,000)
       Accrued liabilities...............................................      1,051,000      (1,290,000)    (5,462,000)
       Income taxes payable..............................................        817,000        (164,000)    (2,254,000)
       Change in deferred revenue........................................       (339,000)      2,707,000       (950,000)
       Change in deferred gain on disposition of Technology Group........          -              -           1,480,000
                                                                              ----------    ------------   ------------

       Net cash provided by (used in) operating activities...............      2,793,000      10,289,000    (19,685,000)
                                                                               ---------      ----------    -----------
Cash flows from investing activities:
   Purchase of property and equipment....................................     (1,254,000)     (2,711,000)    (6,332,000)
   Purchase of rental equipment, ........................................     (9,531,000)    (27,984,000)
   Sales of rental equipment.............................................     10,574,000      14,669,000
   Sale of marketable securities.........................................      1,268,000       4,078,000      5,569,000
   Purchase of other assets..............................................        (18,000)          -              -
   Purchase of equity and debt investments...............................       (425,000)          -              -
   Proceeds on sales of fixed assets.....................................        189,000       2,235,000          -
                                                                                 -------       ---------      ----------

       Net cash provided by (used in) investing activities...............        803,000      (9,713,000)      (763,000)
                                                                                 -------      ----------       ---------
Cash flows from financing activities
   Long term debt repayments.............................................        (20,000)     (1,068,000)          -
   Net borrowings (payments) under revolving credit agreements...........            -             -         (7,323,000)
   Borrowings under term loans...........................................     (2,390,000)     (4,286,000)    67,179,000
    Inventory floor financing............................................     (3,192,000)      6,090,000    (47,246,000)
   Principal payments under capitalized lease obligations................         32,000         (60,000)      (348,000)
   Proceeds from sale of stock...........................................         85,000            -           480,000
          Subsidiary sale/purchase of treasury stock.....................        256,000           -         (1,816,000)
   Exercise of stock options.............................................           -              -            562,000
   Collections (increase) of receivable from shareholder, net............           -         (1,700,000)        38,000
                                                                              -----------     ----------     ----------

       Net cash provided by (used in) financing activities...............     (5,229,000)     (1,024,000)    11,526,000
                                                                              ----------      ----------     ----------
Net (decrease) in cash and cash equivalents..............................     (1,633,000)       (448,000)    (8,922,000)
Cash and cash equivalents beginning of year..............................      2,914,000       3,362,000     12,284,000
                                                                               ---------       ---------     ----------
Cash and cash equivalents end of year....................................  $   1,281,000  $    2,914,000  $   3,362,000
                                                                           =============  ==============  =============
</TABLE>

         The accompanying notes are an integral part of this statement.


                                      F-6
<PAGE>

                 AMERICAN UNITED GLOBAL, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.       DESCRIPTION OF BUSINESS

     American  United Global,  Inc., a Delaware  corporation  (the "Company") is
engaged in the distribution business through its 59.6% owned subsidiary, Western
Power & Equipment Corp. ("Western").  Western is engaged in the sale, rental and
service of light,  medium and heavy  construction,  industrial and  agricultural
equipment  and  related  parts.  These  sales  are  conducted  from 21  regional
distribution  operations  owned by Western  located in the states of Washington,
Oregon,  California,  Alaska  and  Nevada.  A  majority  of  this  equipment  is
manufactured by Case Corporation ("Case").

     The  Company  was  previously  involved  in  the  engineering,  design  and
construction  business through a minority owned subsidiary,  IDF  International,
Inc. ("IDF"). IDF ceased business operations in September 2000.

     The  Company  had  been  engaged  in  the   technology   business   through
subsidiaries,   which  provided  telecommunications  products  and  services,  a
proprietary   intelligent   communications  system,  as  well  as  software  and
networking  products.  Such products and services were provided by the Company's
wholly and majority owned subsidiaries as follows:

     Connectsoft  Communications  Corp.  ("CCC"),  a wholly owned subsidiary had
been  developing  a  telephony  server  product  that reads email and select web
content over the telephone which was marketed under the name "Vogo Server".  The
assets  of CCC  were  sold to an  unrelated  third  party  on June  15,  1999 as
discussed in Note 9.

     Exodus  Technologies,  Inc.,  an  80.4%-owned  subsidiary,  had developed a
proprietary  application server software,  marketed as NTERPRISE,  which allowed
users to run Windows application server software programs designed for Microsoft
Windows NT operating system on users' existing non-windows enabled workstations.
Exodus ceased operations in January 1998

     InterGlobe Networks,  Inc.(Interglobe) provided network consulting services
and  managed  a  network  operations  center  providing  internet   connectivity
services. Interglobe ceased operations in November 1997.

     The technology  business has been accounted for as discontinued  operations
for the years ending July 31, 1999 and 1998.


2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Consolidation

     The consolidated  financial  statements include the accounts of the Company
and  its  wholly  owned  and   majority-owned   subsidiaries.   All  significant
intercompany  balances and transactions  have been eliminated in  consolidation.
Minority interest represents the minority  shareholders'  proportionate share of
the equity of Western, which was 40.4% at July 31, 2000 and 39.4% 1999.

         Cash Equivalents

     For financial reporting  purposes,  the Company considers all highly liquid
investments  purchased  with an original  maturity of three months or less to be
cash equivalents. Cash and cash equivalents consist of bank demand deposits with
three  financial  institutions.  At times,  demand  deposits may exceed  amounts
insured by the Federal Deposit Insurance Corporation.

         Restricted Cash

     In accordance with Western's  borrowing  agreement with Deutsche  Financial
Services ("DFS"),  Western has a cash account  restricted by DFS for the purpose
of paying down the line of credit. Restricted cash included in the cash balances
totaled $543,000 and $724,000 at July 31, 2000 and 1999, respectively. (See note
6.)

                                      F-7
<PAGE>

         Inventory Valuation

     Inventories  are stated at the lower of cost or market.  Cost is determined
based upon the first-in,  first-out  method for parts inventory and the specific
identification for equipment inventories.


         Investment Securities

     Investments in marketable  securities  represent primarily common shares of
publicly  traded  companies and are carried at market value.  These  investments
have been classified as available for sale securities at July 31, 2000 and 1999.
Unrealized  gains and losses are  excluded  from  earnings and are included as a
component of  accumulated  other  comprehensive  income(loss)  in  shareholders'
equity, net of applicable taxes, until realized.


         Property and Equipment

     Property,  plant,  and  equipment  are  stated  at  cost  less  accumulated
depreciation. Depreciation and amortization are computed using the straight-line
method  over the  estimated  useful  lives of the assets,  ranging  from 5 to 20
years.  Expenditures for  replacements  and major  improvements are capitalized.
Repairs  and  maintenance  costs are  expensed as  incurred.  The cost of assets
retired or otherwise  disposed of and the related  accumulated  depreciation are
eliminated  from the  accounts;  any gain or loss  thereon  is  included  in the
results of operations.


         Goodwill

     Intangible assets acquired in business  acquisitions such as goodwill,  are
amortized using the straight-line method over the assets' estimated useful lives
ranging from 20 to 40 years. Such lives are based on the factors influencing the
acquisition decision and on industry practice.

     The carrying value of goodwill is assessed for any permanent  impairment by
evaluating the operating  performance and future  undiscounted cash flows of the
underlying  assets.  Adjustments  are made if the sum of the expected future net
cash flows is less than book value.


         Income Taxes

     The Company accounts for income taxes using an asset and liability approach
which requires the  recognition of deferred tax  liabilities  and assets for the
expected  future  consequences  of  temporary  differences  between the carrying
amounts  for  financial  reporting  purposes  and the tax  bases of  assets  and
liabilities.

     Revenue Recognition

     Revenue  on  equipment  and parts  sales is  recognized  upon  shipment  of
products and passage of title. Equipment rental and service revenue is generally
recognized over the period such services are provided.

                                      F-8
<PAGE>

         Advertising Expense

     Western  expenses  all  advertising  costs as incurred.  Total  advertising
expense for the years ended July 31, 2000, 1999 and 1998 was $320,000,  $311,000
and $434,000, respectively.

         Fair Value of Financial Instruments

     The recorded  amounts of cash and cash  equivalents,  accounts  receivable,
short term borrowings,  accounts payable and accrued liabilities as presented in
the  consolidated  financial  statements  approximate  fair  value  based on the
short-term  nature of these  instruments.  The recorded amount of long-term debt
approximates  fair  value  as the  actual  interest  rates  approximate  current
competitive rates. The recorded value of marketable  securities held at July 31,
2000 and 1999 is the market value as quoted on the respective  exchange on which
each security trades.

         Use of Estimates

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


         Employee Stock Options

     The Company accounts for stock based employee  compensation plans under the
provisions of Statement of Financial  Accounting  Standards No. 123, "Accounting
for Stock-Based  Compensation."  This standard defines a fair value-based method
of accounting for these equity  instruments.  This method measures  compensation
cost based on the value of the award and  recognizes  that cost over the service
period.  The Company has elected to continue  using the rules of APB Opinion No.
25 and provides  pro forma  disclosures  of net income and  earnings  (loss) per
share as if Statement No. 123 had been applied.

         Earnings Per Share

     The following table sets forth the  computations of basic and fully diluted
earnings per share for the years ended July 31, 2000,  1999 and 1998:
<TABLE>
<CAPTION>
                                                                                     YEAR ENDED JULY 31,
                                                                          2000               1999            1998
                                                                          ----               ----            ----
<S>                                                                 <C>              <C>              <C>
Numerators:
  Net loss from continuing operations.............................   $    (7,030,000) $    (5,054,000)  $    (4,901,000)
  Dividend on preferred stock.....................................            -               -                 (24,000)
                                                                          -----------      -----------       ----------
  Net loss after preferred dividends..............................        (7,030,000)      (5,054,000)       (4,925,000)

  Discontinued operations.........................................            -             1,989,000        (4,690,000)
                                                                          -----------       ---------        ----------
  Net loss .......................................................        (7,030,000)      (3,065,000)       (9,615,000)
                                                                          ==========       ==========        ==========
Denominator:
 Denominator for basic and diluted earnings per share -
  Weighted average outstanding shares.............................        11,948,368       11,748,210        11,311,791
                                                                          ==========       ==========        ==========
Basic and diluted earnings (loss) per share:

Loss from continuing operations...................................             (0.59)          (0.43)            (0.43)
Income (loss) from discontinued operations........................              -               0.17             (0.42)
                                                                             --------       ----------        ---------
Basic and diluted net loss per share..............................   $         (0.59) $        (0.26)   $        (0.85)
                                                                      ===============   ==============    ==============
</TABLE>

     Diluted and basic  earnings per share are the same,  since the inclusion of
common stock equivalents in the computation would be antidilutive.

                                      F-9
<PAGE>

Reclassifications

     Certain  reclassifications  have been made to the fiscal year 1998 and 1999
financial  statements to conform to the  financial  statement  presentation  for
fiscal 2000.  Such  reclassifications  have had no effect on the  Company's  net
loss, shareholders' equity or cash flows.


3.       ACQUISITIONS


     Distribution Business Acquisitions

     On December 11, 1997,  Western acquired  substantially all of the operating
assets  used  by  Case  in  connection   with  its  business  of  servicing  and
distributing  Case  agricultural  equipment at a facility  located in Yuba City,
California.  The acquisition was consummated for approximately $142,000 in cash,
$628,000 in  installment  notes payable to Case and the assumption of $1,175,000
in inventory floor plan debt with Case and its  affiliates.  The acquisition was
accounted for as a purchase.

     On April 30, 1998,  Western  acquired  substantially  all of the  operating
assets of Yukon  Equipment,  Inc. (Yukon) in connection with Yukon's business of
servicing and distributing construction,  industrial, and agricultural equipment
in Alaska. Yukon has facilities in Anchorage, Fairbanks, and Juneau, Alaska. The
acquisition was consummated for approximately $4,766,000 in cash, the assumption
of approximately $2,786,000 in floor plan debt with Case and its affiliates, and
50,000 shares of Western's  common stock. The acquisition was accounted for as a
purchase.

     The following unaudited pro forma summary combines the consolidated results
of operations as if the aforementioned  acquisitions had been acquired as of the
beginning of fiscal 1998, including the impact of certain adjustments.

                                             YEAR ENDED JULY 31, 1998
                                             ------------------------


Net sales.....................................$   173,414,000
Net loss .....................................$    (9,654,000)

Basic and diluted loss per share...............  $     (.85)


     The pro forma results are not necessarily indicative of what actually would
have  occurred  if the  acquisitions  had been in effect for the entire  periods
presented.  In  addition,  they are not  intended to be a  projection  of future
results of combined operations.


Technology acquisitions

     During  the year ended  July 31,  1997,  the  Company  acquired  InterGlobe
Networks,  Inc. and the assets of Seattle  OnLine,  Inc. These  operations  were
discontinued in the year ended July 31, 1998. See Note 9.

     During  August 1997 the Company  merged  TechStar  Communications  Corp,  a
wholly owned  subsidiary,  into IDF, pursuant to an agreement and plan of merger
dated July 31, 1997. The Company received  6,171,553 shares of IDF common stock,
representing  approximately  62% of the then  outstanding  shares as a result of
which, the Company was deemed to have acquired IDF.  TechStar ceased  operations
in April 1999.

                                      F-10
<PAGE>

     Messrs.  Robert M. Rubin and Lawrence Kaplan,  the Chief Executive  Officer
and Chairman of the Board and a Former  Director of the  Company,  respectively,
were also  principal  stockholders  and members of the board of directors of IDF
prior to the  consummation  of the IDF merger.  Pursuant to the terms of the IDF
Merger  Agreement,  Mr. Rubin  converted an $800,000 loan previously made to IDF
into  Preferred  Series B stock of IDF which  was  subsequently  converted  into
400,000 shares of IDF common stock. GV Capital Inc., an affiliate of Mr. Kaplan,
offered  $3,000,000 of IDF five year, 8.0% notes  convertible  into IDF Series A
Convertible  Preferred  Stock at $1.25 per share. GV Capital  received  separate
compensation  for acting as  placement  agent in  connection  with such  private
offering.  During  fiscal 1998,  IDF's  Convertible  Notes were  converted  into
2,480,000  shares of IDF Convertible  Preferred Stock at $1.25 per share and the
Preferred Stock was subsequently converted to 2,480,000 shares of common stock.

     The IDF Convertible Preferred Stock had voting rights that were the same as
IDF Common Stock voting  rights,  thus,  subsequent  to the  conversion  of said
Notes,  although the Company owned 62% of the outstanding  common stock, it only
represented  47.6% of the voting  capital stock as of July 31, 1998. As a result
of the decrease in the ownership percentage by the Company to less than 50%, the
Company has accounted for the results of the  operations of IDF using the equity
method of accounting effective as of August 1, 1997.

     During late fiscal 1999 and  throughout  fiscal  2000,  IDF  experienced  a
significant decrease in revenue and was unable to obtain further financing. As a
result,  IDF had severe cash flow problems and other financial  difficulties and
therefore pursued alternative measures.  Such measures included the shut down of
TechStar in April 1999, as well as downsizing  Hayden-Wegman,  its New York City
based operating  subsidiary.  In addition,  attempts to sell  Hayden-Wegman were
unsuccessful.  Due to the  circumstances  described above and the uncertainty of
recovery,  the  Company  recorded  a  full  reserve  against  the  advances  and
investments  of $992,000  and $364,000  made to IDF during  fiscal 1999 and 2000
respectively. In September 2000, Hayden-Wegman ceased operations.


4.       INVENTORIES

          Inventories consist of the following:
<TABLE>
<CAPTION>


                                                                                         JULY 31,
                                                                                         --------

                                                                                 2000            1999
                                                                                 ----            ----

<S>                                                                      <C>               <C>

Equipment (net of allowances of $4,770,000 and
 $1,671,000, respectively):

New equipment...........................................................  $    40,148,000   $    49,325,000
Used equipment..........................................................        7,442,000         7,642,000
Parts  (net of allowances of $22,000 and $42,000, respectively).........       10,707,000        10,101,000
                                                                               ----------        ----------

  .                                                                         $  58,297,000    $   67,068,000
                                                                            =============    ==============

</TABLE>

                                      F-11
<PAGE>


5.       FIXED ASSETS

         Fixed assets consist of the following:

<TABLE>
                                                             JULY 31,
                                                             --------
                                                       2000            1999
                                                      ----            ----
<S>                                           <C>               <C>
Machinery and equipment....................  $     4,030,000   $     3,869,000
Furniture and office equipment.............        2,360,000         2,291,000
Computer hardware and software.............        1,869,000         1,299,000
Land     ..................................          500,000           420,000
Building and leasehold improvements........        5,334,000         5,126,000
Leasehold improvements.....................          550,000           360,000
Vehicles ..................................        1,428,000         1,841,000
                                                   ---------         ---------
                                                  16,071,000        15,206,000
Less:  Accumulated depreciation............       (6,621,000)       (5,388,000)
                                                  ----------        ----------
Property plant & equipment, net............  $     9,450,000   $     9,818,000
                                             ===============   ===============

Rental equipment fleet.....................       32,493,000        36,395,000
Less:  Accumulated depreciation............       (6,417,000)       (5,029,000)
                                                  ----------        ----------
Rental equipment fleet, net................  $    26,076,000   $    31,366,000
                                             ===============   ===============

Leased equipment fleet.....................        5,481,000         5,481,000
Less:  Accumulated depreciation............         (506,000)         (217,000)
                                                    --------          --------
Leased equipment fleet, net................  $     4,975,000   $     5,264,000
                                             ===============   ===============

</TABLE>



6.       BORROWINGS

     The  Company is in default on an  unsecured  note  payable in the amount of
$1,500,000 to an unrelated third party. The note bore interest at 8% through its
original due date of April 30, 1999.  While in default,  the note bears interest
at 10%.

     Western has inventory  floor plan financing  arrangements  with Case Credit
Corporation,  an affiliate of Case,  for Case  inventory  and with other finance
companies  affiliated  with other  equipment  manufacturers.  The terms of these
agreements  generally  include  a  one-month  to  six-month  interest  free term
followed by a term during  which  interest is charged.  Principal  payments  are
generally due at the earlier of sale of the  equipment or twelve to  forty-eight
months from the invoice date.

     In June  1997,  Western  obtained  a  $75,000,000  inventory  flooring  and
operating line of credit  through DFS. The DFS credit  facility is a three-year,
floating  rate  facility  based on prime with rates between 0.50% under prime to
1.00% over prime  depending on the amount of total borrowing under the facility.
Amounts may be advanced against Western's assets, including accounts receivable,
parts, new equipment, rental fleet, and used equipment. Interest payments on the
outstanding balance are due monthly.

     All floor plan debt is  classified  as current since the inventory to which
it relates is generally sold within twelve months of the invoice date.

                                      F-12
<PAGE>

     The following table  summarizes the debt and inventory floor plan financing
arrangements:
<TABLE>
<CAPTION>


                                                                 Maturity               July 31,
                                          Interest Rate          Date            2000            1999
                                          -------------          ----            ----            ----
<S>                                    <C>                     <C>          <C>                <C>

       Note Payable                     8%(12% default           4/30/99     $1,500,000         $1,500,000
                                            rate)


       Case Credit Corporation              Prime + 2%           8 - 48      14,738,000         17,128,000
                                              (10.00%)            months


       Deutsche Financial Services         Prime - 0.5%         12 - 36      67,671,000         70,883,000
                                              (7.50%)             months


       Other                                variable            12 - 48           -                 48,000
                                        (8.00%-10.00%)            months
                                                                            -----------        -----------
                                                                            $83,939,000        $89,559,000
                                                                            ===========        ===========
</TABLE>


     At July 31, 2000 and 1999, Western was in technical default of the leverage
covenant and the minimum  tangible net worth covenant in the Deutsche  Financial
Services Loan Agreement. Western asked for but did not obtain a waiver letter as
of July 31, 2000 and thereafter. The credit facility expired on August 18, 2000,
however, Western and DFS are negotiating an extension of the credit facility and
a revision of certain  leverage  covenants.  There is no assurance that Deutsche
Financial  Services  will not call this debt at any time after July 31, 2000. If
DFS were to call the debt, it would become  immediately  due and payable in full
and Western may not be able to continue  operations.  The amount due to Deutsche
Financial Services is therefore included as a current liability.


                                      F-13
<PAGE>

7.       INCOME TAXES

          The provision  (benefit) for income taxes from  continuing  operations
     comprises the following:
<TABLE>
<CAPTION>

                                                          YEAR ENDED JULY 31,
                                                          -------------------

                                                2000              1999               1998
                                                ----              ----               ----
<S>                                     <C>              <C>               <C>
Current:

   Federal............................   $       179,000  $      (978,000)  $     1,227,000)
   State .............................            26,000         (156,000)          162,000
                                                --------          -------           -------

                                                 205,000       (1,134,000)        1,389,000
Deferred:
   Federal............................           500,000           29,000           (32,000)
   State .............................            74,000            4,000            (3,000)
                                              ----------           ------           -------

                                                 574,000           33,000           (35,000)
                                              ----------          -------          --------

                                         $       779,000  $    (1,101,000)  $     1,354,000
                                         ===============  ===============   ===============
</TABLE>

          The   principal   reasons  for  the   variation   from  the  customary
     relationship  between  income taxes at the statutory  federal rate and that
     shown in the consolidated statement of operations are as follows:
<TABLE>
<CAPTION>
                                                                              YEAR ENDED JULY 31,
                                                                              -------------------

                                                                  2000               1999            1998
                                                                  ----               ----            ----

<S>                                                         <C>              <C>               <C>
Statutory federal income tax rate..........................     $ (2,989,000   $   (2,009,000)   $     495,000
Valuation allowance........................................        4,101,000        1,011,000          590,000
State income taxes, net of federal income tax benefit......         (334,000)        (152,000)         159,000
Other    ..................................................            1,000           49,000          110,000
                                                                  ----------      -----------       -----------

                                                                 $   779,000  $   1,101,000       $   (703,000)
                                                                   ============================== ===============
</TABLE>

                                      F-14
<PAGE>

          Temporary   differences  and  carryforwards   which  give  rise  to  a
     significant portion of deferred tax assets and liabilities are as follows:

<TABLE>
<CAPTION>

                                                             JULY 31,

                                                      2000            1999
                                                      ----            ----
<S>                                           <C>               <C>

Depreciation and amortization................  $    (2,273,000)  $      (837,000)
                                                    ----------        ----------

Gross deferred tax liabilities...............       (2,273,000)         (837,000)
                                                    ----------        ----------

Inventory reserve............................        1,739,000           918,000
Bad debt reserve.............................          219,000           282,000
Accrued vacation and bonuses.................          127,000            96,000
Other    ....................................          444,000           482,000
Loss carryforwards...........................        8,227,000         4,107,000
Loss on Western initial public offering......          131,000           131,000
Stock options................................          874,000           782,000
                                                       -------           -------

Gross Deferred Tax Assets....................       11,761,000         6,798,000
Less valuation allowance.....................       (9,488,000)       (5,387,000)
                                                     ---------         ---------
Net deferred tax asset                               2,273,000         1,411,000
                                                     ---------         ---------
                                               $         -       $       574,000
                                               ===============   ===============
</TABLE>

     At July 31, 2000, the Company had federal income tax loss  carryforwards of
$21,094,000  which  will  begin  to  expire  in  2011.  Utilization  of such net
operating losses will be subject to annual  limitations in the event of a change
in ownership of the Company of more than 50%. As the Company  cannot  anticipate
future  income with  reasonable  certainty  and because  Western is in technical
default  of its  borrowing  agreement  with DFS and may not be able to  continue
operations  should DFS call the debt, a valuation  allowance of  $9,488,000  has
been recorded.


8.       SHAREHOLDERS' EQUITY

     On February 25, 1994,  the Company  completed a public  offering of 920,000
units at $5.25 per unit, each unit consisting of one share of common stock, $.01
par value,  and one  redeemable  common  stock  purchase  warrant.  Each warrant
entitled  the holder to purchase  one share of common stock until July 31, 1998,
at an exercise price of $7.50.  During fiscal 1999, the exercise  period for the
920,000  warrants  was  extended to July 31,  2001.  The warrants are subject to
redemption  by the  Company  at a  redemption  price of $.10 per  warrant  under
certain circumstances.


     A total of 976,539 shares of the Company's Series B-1 convertible preferred
stock were  issued in  September  1996 in  connection  with the  acquisition  of
ConnectSoft,  Inc. Such shares have a $3.50 per share  liquidation value and are
convertible  into shares of the Company's  common stock at a conversion ratio of
one for one.  Through  the four  fiscal  years  ended  July 31,  2000 a total of
560,276  shares  were  converted  to  common  stock at the ratio of one for one,
leaving 416,263 shares outstanding at July 31, 2000.

                                      F-15
<PAGE>


     In  January  of 1997,  the  Company  issued  400,000  shares of Series  B-2
preferred  stock in a private  placement.  Proceeds  from the private  placement
totaled  $10,000,000.  The Series B-2  preferred  stock  carried a $25 per share
liquidation preference over the Company's common stock, and paid a 7% cumulative
quarterly  dividend in additional  shares of Series B-2 preferred  stock.  As of
July 31, 1998, all of the preferred shares had been converted into approximately
2,616,000 common shares at prices ranging from $3.31 to $5.37. Purchasers of the
preferred shares acquired 350,000 five-year warrants at a purchase price of $.01
per warrant,  entitling the holders to purchase 350,000 shares of Company common
stock at $8.58 per share.


     During the fourth  quarter of fiscal 2000,  the Company sold 212,500 shares
of common stock at $0.40 per share pursuant to a private placement memorandum.

     Western has been  authorized  to issue  10,000,000  shares of "blank check"
preferred stock, with respect to which all the conditions and privileges thereof
can be  determined  solely by action of  Western's  Board of  Directors  without
further  action  of its  shareholders.  As of July 31,  2000 and 1999  none were
issued and outstanding.



9. DISCONTINUED OPERATIONS

     In April,  1998, the Company  approved a formal plan to dispose of or close
down the remaining  operations of the  Technology  Group of Companies  including
Exodus Technologies,  Connectsoft,  Inc.,  Connectsoft  Communications Corp. and
InterGlobe  Networks,  Inc.  Although  the  results of these  subsidiaries  have
previously  been  included  in  the  consolidated   financial  statements,   the
subsidiaries operated as a separate line of business whose products,  activities
and  customers  differed from other  operations of the Company.  Based upon this
determination,  the  results  of  operations  of these  subsidiaries  have  been
accounted  for as  discontinued  operations  and  accordingly,  their  operating
results are segregated in the accompanying statements of operations.


     Revenues for the  Technology  group of companies  for the years ending July
31, 1999 and 1998 were $67,000 and $2,108,000 respectively.


Sale of the assets of Connectsoft Communications Corporation

     On  July  10,  1998,  the  Company   entered  into  an  agreement  to  sell
substantially  all of the assets of its  Connectsoft  subsidiary,  including the
network operations center ("NOC") to eGlobe,  Inc.,  formerly known as Executive
TeleCard, Ltd. ("eGlobe"). The agreement, as amended June 17 and September, 1999
provided   consideration  for  the  assets  acquired  to  be  paid  with  eGlobe
Convertible  Preferred  Stock initially  valued by the Company at  approximately
$2,000,000.  Such Preferred Stock was converted into 1,923,077  shares of eGlobe
common  stock  in  Fiscal  2000.  In  addition,   eGlobe  assumed  approximately
$5,182,000  of  Connectsoft  liabilities  and  leases,  of  which  approximately
$2,900,000 were lease obligations guaranteed by the Company.  Although eGlobe is
responsible  for payment of those assumed  liabilities,  the  assumption of such
liabilities  will not  relieve  the  Company  from  its  guarantees  until  such
liabilities  have been paid in full. The Company  provided eGlobe with a working
capital loan of $500,000 secured by a promissory note bearing interest at prime.
The promissory note and all accrued interest were paid in full in January 2000.

     For the year ending July 31, 1998,  the net deferred gain of $1,480,000 had
been included under the caption Deferred gain on discontinued  operations in the
accompanying  consolidated  balance  sheets  and the final gain on  disposal  of
$1,989,000  was  recognized  in  the  accompanying   consolidated  statement  of
operations for the year ended July 31, 1999.


                                      F-16
<PAGE>

10.      COMMITMENTS AND CONTINGENCIES

         LEASE COMMITMENTS

     Western leases certain facilities under non-cancelable lease agreements. As
more fully  described in Note 14, the building  portion of five of the Western's
facility leases qualify under SFAS 13 as "capital  leases" (i.e., an acquisition
of an asset  and  incurrence  of a  liability).  The  remaining  facility  lease
agreements have terms ranging from month-to-month to nine years.  Certain of the
facility lease agreements provide for options to renew and generally require the
Company to pay property  taxes,  insurance,  and  maintenance  and repair costs.
Total rent expense under all operating leases aggregated $2,129,000, $2,000,000,
and $1,833,000 for the years ended July 31, 2000, 1999 and 1998, respectively.


Assets recorded under capital leases included in fixed assets are as follows:

<TABLE>
<CAPTION>
                                                                   JULY 31,

                                                     2000             1999             1998
                                                     ----             ----             ----
<S>                                         <C>              <C>               <C>

Capitalized asset value....................  $     4,553,000  $     4,978,000   $     3,036,000
Less:  Accumulated amortization............         (667,000)        (550,000)         (315,000)
                                                    --------         --------          --------
                                             $     3,886,000  $     4,428,000   $     2,721,000
                                             ===============  ===============   ===============
</TABLE>

     Future minimum lease payments  under all  non-cancelable  leases as of July
31, 1999 are as follows:

<TABLE>
<CAPTION>

                                                                                     CAPITAL        OPERATING
YEAR ENDING JULY 31,                                                                  LEASES          LEASES
--------------------                                                                  ------          ------
<S>                                                                               <C>            <C>
2000     ..........................................................................$  459,000     $   1,664,000
2001     ...........................................................................  485,000         1,224,000
2002     ...........................................................................  510,000         1,166,000
2003     ...........................................................................  525,000           977,000
2004     ...........................................................................  538,000           810,000
Thereafter..........................................................................8,336,000         5,382,000
                                                                                   ----------         ---------
Total annual lease payments........................................................10,853,000   $    11,243,000
                                                                                                    ===========
Less:  Amount representing interest with imputed rates from 6% to 15%.............. 6,050,000
                                                            -     --                ---------
Present value of minimum lease payments............................................ 4,803,000

Less:  Current portion.............................................................    17,000
                                                                                  -----------
Long-term portion.................................................................$ 4,786,000
                                                                                  ===========
</TABLE>

                                      F-17
<PAGE>


Other Contingencies

     The Company is  guarantor  on certain  liabilities,  including  the capital
lease obligations assumed by eGlobe as described in Note 9.

     Western issues purchase orders to Case Corporation for equipment purchases.
Upon acceptance by Case, these purchases become  non-cancellable by Western.  As
of July 31, 2000 the total of such purchase orders was $11,130,000.



         Legal Proceedings

     Except as set forth below,  there are no pending material legal proceeds in
which the  Company  or any of its  subsidiaries  is a party,  or to which any of
their  respective  properties are subject,  which either  individually or in the
aggregate,  may have a material  adverse  effect on the results of operations or
financial position of the Company.

     In May 1998,  a lawsuit  was filed on behalf of the  Company in a purported
shareholder  derivative  action against Mr. Rubin and certain other directors of
the Company. In June 1998, a shareholder class action was filed against the same
directors.

     On June 1, 1999 an agreement  was entered  into by all parties  whereby the
class  action was settled for  $2,500,000  which is  payable,  net of costs,  to
approved  claimant  shareholders.  The settlement  consisted of $600,000 in cash
from insurance proceeds and $1,900,000 by 777,414 shares of Western common stock
owned by the Company.  The $600,000 was paid to the claims administrator for the
benefit of claimants  during  fiscal 2000 and the common  shares of Western were
distributed to the claimant  stockholders on November 1, 2000. As a result,  the
Company no longer owns greater than 50% of Western, and will account for Western
using the equity method  effective  November 1, 2000. A loss of  $1,434,000  was
accrued at July 31, 2000  representing the difference  between the book value of
the Western shares transferred and their market value pursuant to the settlement
agreement.  In addition,  on June 1, 1999 the derivative  action was settled for
$2,800,000  which  amount is  payable by Robert M.  Rubin to the  Company.  This
settlement originally consisted of $1,100,000 from Mr. Rubin's assignment of his
rights to  certain  consulting  payments  from  Hutchinson  Corporation  and the
transfer by Mr. Rubin to the Company of $1,700,000 of cash, securities and notes
in a brokerage account. Both settlement agreements were approved by the court on
August 23, 1999 and the settlements  were reflected in the financial  statements
as of July 31, 1999.  All amounts due from Mr. Rubin to the Company  pursuant to
the derivative  action settlement were received by February 11, 2000, except for
the Hutchinson  payments,  the receipt of which is conditioned  upon shareholder
approval  of  the  Hutchinson  Transaction,  and  $299,000  of  publicly  traded
securities.  Mr. Rubin was nonetheless obligated to pay both the $1,100,000,  if
not  previously  paid by  Hutchinson,  as well as the $299,000  plus interest no
later than July 31, 2000. An amendment to the settlement  agreement had extended
Mr. Rubin's obligation to pay until September 30, 2000 and on September 21, 2000
Mr.  Rubin  contributed  publicly  traded  securities  to the Company  valued at
$1,435,000.  Such  amount  included  interest  of  $36,000.  As  a  result,  the
Hutchinson  payments  will revert to being  payable by  Hutchinson to Mr. Rubin.
Payments  by  Hutchinson  to Mr.  Rubin will not be made until  approval  of the
Hutchinson  transaction,  effective  January 19, 1996, is obtained from American
United Global, Inc. shareholders.


                                      F-18
<PAGE>


11.      STOCK OPTION PLANS

     The 1991 and 1996 Stock Option Plans

     The 1991 Plan was approved by the Board of Directors  and  shareholders  in
June 1991 and the 1996 Plan was  approved  by the  Board of  Directors  in April
1996.  Both of these plans were  cancelled  in  December  1999 when the Board of
Directors  approved  the 2000  Employee  Incentive  Stock  Option Plan (The 2000
Plan).  All  outstanding  stock  options  under  the 1991 and  1996  Plans  were
cancelled  and  replaced  with the same number of stock  options  under the 2000
Plan.



     The 2000 Plan

     The 2000 Plan was  approved by the Board of  Directors  on December 7, 1999
and  1,375,000  stock  options  were  simultaneously  granted to  replace  those
cancelled from the 1991 and 1996 Plans.  The Company granted 415,000  additional
stock options to certain Board members as well as 250,000 options to each of two
nominees  for  election  to the Board and  10,000  options to a  consultant  for
services rendered. The exercise price of all 2,300,000 options granted under the
2000 Plan on December  7, 1999 was $0.21 per share (110% of the market  value on
such date).

     On April 27, 2000 the Company  granted  1,650,000  stock options to a newly
elected director,  500,000,  100,000 and 50,000  respectively to certain special
consultants to the Company, 250,000 to a third nominee for election to the Board
and 300,000 and 250,000  respectively to two law firms for services rendered and
to be rendered. The exercise price of all 3,100,000 options granted on April 27,
2000 was  $0.3485  per  share  (85% of the  fair  market  value  on such  date).
Compensation  in connection  with these option grants has been  accounted for by
the Black-Scholes method where applicable.




The 2001 Plan

     Subsequent  to year  end,  on  October  3,  2000,  the  Board of  Directors
cancelled  the 2000 Plan and approved the 2001 Stock Option Plan.  All 5,400,000
options  previously  granted under the 2000 Plan were  cancelled and replaced by
the same number of options in the 2001 Plan.  The Company also  granted  500,000
options to a special  consultant,  50,000  additional  options to a law firm and
10,000 options to a financial consultant.

     On April 3, 2000 the FASB issued FASB  Interpretation  No. 44,  "Accounting
for Certain  Transactions  Involving Stock  Compensation - an  Interpretation of
Accounting  Principles  Board  Opinion No. 25" (FIN 44).  FIN 44  clarifies  the
application  of  Opinion  25  for  certain   issues   including  the  accounting
consequences of various  modifications  to the terms of a previously fixed stock
option or award.  In accordance  with FIN 44,  effective  July 31, 2000,  any of
these  options  which are not  exercised or  cancelled,  will be  accounted  for
pursuant to a variable stock option plan. Accordingly, compensation expense will
be recorded to the extent that the quoted market price of the  Company's  common
stock exceeds the revised exercise price of the repriced options.


                                      F-19
<PAGE>

         Western Stock Option Plan

     In March 1995, the Company,  as the sole  shareholder of Western,  approved
Western's  1995  Stock  Option  Plan,  as  previously  adopted  by the  Board of
Directors  (the  "Plan"),  under which key  employees,  officers,  directors and
consultants  of Western can receive  incentive  stock options and  non-qualified
stock options to purchase up to an aggregate of 300,000  shares of common stock.
In  December  1995,  the  shareholders  amended  the 1995 stock  option  plan to
increase  the  number of shares  underlying  the plan from  300,000  to  850,000
shares. In December 1996 the stockholders  amended the 1985 stock option plan to
increase the number of shares underlying the plan to 1,500,000 shares.  The Plan
provides that the exercise price of incentive stock options be at least equal to
100 percent of the fair market  value of the common  stock on the date of grant.
With respect to non-qualified stock options, the Plan requires that the exercise
price be at least 85 percent of fair value on the date such  option is  granted.
Upon approval of the Plan,  Western's Board of Directors  awarded  non-qualified
stock  options for an aggregate of 200,000  shares,  all of which provide for an
exercise  price of $6.50 per share.  On December 28, 1995, the exercise price of
the options  previously granted was lowered to $4.50 per share, the market price
as of that date. All options  granted upon approval of the Plan are  exercisable
commencing August 1, 1996 and expire on July 31, 2005.

     On August 1, 1996,  Western's  Board of Directors  approved the grant of an
additional 347,000 options to employees, directors and consultants of Western at
an exercise price of $4.375 per share, the market price as of the date of grant.
These options vest ratably over a two-year period commencing August 1, 1996.

     In January, 1998, Western's shareholders approved an amendment to this plan
providing  for the  grant on  August  1 of each  fiscal  year,  a total of 5,000
options to each non-employee  director of Western.  The options have an exercise
price  equal to the market  price on the date of the grant and a term of 5 years
from the date of the grant.

     During  the  fiscal  year ended  July 31,  1998  Western  issued a total of
714,000  options at average  exercise price of $4.62 and an expiration date of 5
years from the date of grant.

     During  Western's  fiscal year ended July 31,  2000,  50,000  options  were
exercised, 1,453,000 were surrendered and at July 31, 2000 there were a total of
10,000 options remaining outstanding at an exercise price of $4.375 per share.

                                      F-20
<PAGE>


     The following table includes option information for the Company's plans:

<TABLE>
<CAPTION>
                                                                                WEIGHTED AVERAGE
                                                                                  FAIR VALUE OF
                                           NUMBER OF          WEIGHTED              OPTION
         STOCK OPTION ACTIVITY               SHARES        EXERCISE PRICE           GRANTED
         ---------------------               ------        --------------           -------
<S>                                       <C>               <C>                   <C>

         July 31, 1997                       4,138,000          5.55

           Options granted                     150,000          6.50                 2.000
           Options exercised                   (50,000)         4.75
           Options canceled                 (2,366,000)         5.97
                                           -----------
           July 31, 1998                     1,872,000

           Options granted                       -               -                     -
           Options exercised                     -               -
           Options canceled                   (190,000)         5.50
                                           -----------
           July 31, 1999                     1,682,000          4.48

           Options granted                   5,350,000          0.29                 0.29
           Options exercised                     -
           Options canceled                 (1,412,000)         4.25
                                           ------------
         July 31, 2000                       5,620,000          0.76
                                           ============

</TABLE>

     The following table  summarizes  stock options  outstanding and exercisable
for the Company at July 31, 2000:

<TABLE>
<CAPTION>
                                              OUTSTANDING                    EXERCISABLE
                                              -----------                    -----------
                             Weighted          Weighted                Weighted
                              Average           Average                 Average
                             Remaining         Exercise                Exercise
Exercise Price Range          Shares             Life       Price       Shares           Price
--------------------          ------             ----       -----       ------           -----
<S>                         <C>                <C>        <C>       <C>               <C>
$0.21 to 0.34                5,350,000          4.6         $0.29     3,108,000         $0.27

$3.20 to 3.78                   70,000          1.0          3.62        70,000          3.62

$6.13 to 6.50                  200,000          0.5          6.41       200,000          6.41
-----    ----                  -------                                  -------

$0.21 to 6.50                5,620,000          4.4          0.55     3,378,000         $0.70
=====    ====                =========                                =========


</TABLE>


                                      F-21
<PAGE>

     The Company has adopted the  disclosure-only  provisions  of  Statement  of
Financial   Accounting   Standards   No.  123.   "Accounting   for   Stock-Based
Compensation."  If  compensation  cost for the Company's  stock option plans had
been  determined  based on the fair value at the grant date for awards in fiscal
2000 and fiscal 1999 in  accordance  with the  provisions  of SFAS No. 123,  the
Company's  net loss per  share  would  have  changed  to the pro  forma  amounts
indicated below:

<TABLE>
<CAPTION>
                                                                      YEAR ENDED JULY 31,

                                                                    2000            1999
                                                                    ----            ----
<S>                                                         <C>               <C>

Net loss, as reported......................................  $    (7,030,000)  $    (3,065,000)
Net loss, pro forma........................................  $    (8,041,000)  $    (3,202,000)
Net basic and diluted loss per share, as reported..........  $         (0.59)  $         (0.26)
Net basic and diluted loss per share, pro forma............  $         (0.67)  $         (0.47)

</TABLE>


    The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option-pricing model with the following assumptions:

<TABLE>
<CAPTION>

                                                     YEAR ENDED JULY 31,

                                                   2000            1999
                                                   ----            ----
<S>                                               <C>            <C>
Expected volatility........................        3.82             .79
Risk-free interest rate....................        5.25%          6.11%
Expected life of options in years..........         5.0             5.0
Expected dividend yield....................        0.00%           0.00%

</TABLE>


12.      INTANGIBLE ASSETS


     Goodwill  arose pursuant to  acquisitions  by Western and is amortized over
lives ranging from 20 to 40 years.


13.  SUPPLEMENTAL  DISCLOSURES OF CASH FLOW INFORMATION AND SCHEDULE OF NON-CASH
     INVESTING AND FINANCING ACTIVITIES


     The Company paid interest of $5,922,000,  $5,482,000  and 5,221,000  during
the fiscal  years 2000,  1999 and 1998  respectively.  The  Company  received an
income  tax  refund of  $834,000  during  fiscal  1999,  and paid  $219,000  and
$1,097,000  in  income  taxes,  net of  refunds,  during  fiscal  2000 and 1998,
respectively.

     In December  1997 a capital  lease  obligation  of $397,000 was incurred by
Western  when they  entered  into a 20 year lease for the Yuba City,  California
facility.


     Western has consummated various acquisitions using, in part, the assumption
of notes  payable and the issuance of Western  common  stock and notes  payable.
Such non-cash transactions have been excluded from the statements of cash flows.


                                      F-22
<PAGE>


14.      RELATED PARTIES

     The real property and  improvements  used in connection with the Sacramento
Operations,  and upon which the  Sacramento  Operation is located,  were sold by
Case for $1,500,000 to the McLain-Rubin Realty Company,  LLC ("MRR"), a Delaware
limited liability  company the owners of which are Messrs.  C. Dean McLain,  the
President  and a director of Western,  and Robert M. Rubin,  the  Chairman and a
director  of  Western.  Simultaneous  with  its  acquisition  of the  Sacramento
Operation  real  property and  improvements,  MRR leased such real  property and
improvements to Western under the terms of a 20 year commercial  lease agreement
dated March 1, 1996 with  Western  paying an initial  annual  rate of  $168,000.
Under the lease,  such annual rate increases to $192,000 after five years and is
subject to fair market  adjustments at the end of ten years. In addition to base
rent,  Western is  responsible  for the payment of all  related  taxes and other
assessments,  utilities,  insurance  and repairs  (both  structural  and regular
maintenance)  with  respect to the leased real  property  during the term of the
lease.  In accordance  with SFAS 13, the building  portion of the lease is being
accounted  for as a capital  lease  (see Note 9) while the land  portion  of the
lease qualifies for treatment as an operating leas

     On June 1, 1997, the real property and improvements used in connection with
the  Sahlberg   operation  located  in  Kent,   Washington,   was  purchased  by
McLain-Rubin  Realty  Company II, LLC ("MRR II"), a Delaware  limited  liability
company,  the owners of which are Messrs.  C. Dean McLain,  the  President and a
director  of  Western,  and Robert M.  Rubin,  the  Chairman  and a director  of
Western.  Simultaneous  with  its  acquisition  of the  Kent,  Washington,  real
property and improvements,  MRR II leased such real property and improvements to
Western under the terms of a 20-year  commercial  lease  agreement dated June 1,
1997 with Western  paying an initial  annual rate of $205,000.  Under the lease,
such  annual  rate  increases  to  $231,000  after  five years and is subject to
additional  adjustments at the end of ten and fifteen years. In addition to base
rent,  Western is  responsible  for the payment of all  related  taxes and other
assessments,  utilities,  insurance,  and repairs (both  structural  and regular
maintenance)  with  respect to the leased real  property  during the term of the
lease.  In accordance  with SFAS 13, the building  portion of the lease is being
accounted  for as a capital  lease  (see Note 10) while the land  portion of the
lease qualifies for treatment as an operating lease.

     On December 11, 1997, the real property and improvements used in connection
with Case's Yuba City,  California  operation,  was  purchased  by  McLain-Rubin
Realty Company III, LLC ("MRR III"), a Delaware limited liability  company,  the
owners of which are Messrs.  C. Dean  McLain,  the  President  and a director of
Western,  and  Robert  M.  Rubin,  the  Chairman  and  a  director  of  Western.
Simultaneous with its acquisition of the Yuba City, California real property and
improvements,  MRR III leased such real  property  and  improvements  to Western
under the terms of a 20-year commercial lease agreement dated effective December
11, 1997 with Western paying an initial annual rate of $54,000. Under the lease,
such  annual  rate  increases  to  $59,000  after  five  years and is subject to
additional  adjustments at the end of ten and fifteen years. In addition to base
rent,  Western is  responsible  for the payment of all  related  taxes and other
assessments,  utilities,  insurance,  and repairs (both  structural  and regular
maintenance)  with  respect to the leased real  property  during the term of the
lease.  In accordance  with SFAS 13, the building  portion of the lease is being
accounted  for as a capital  lease  (see Note 9) while the land  portion  of the
lease qualifies for treatment as an operating lease.

                                      F-23
<PAGE>

     In February,  1999, the real property and  improvements  used in connection
with  Western's  Sparks,  Nevada  operation  and upon  which such  operation  is
located,  were sold to McLain-Rubin  Realty,  L.L.C.  (MRR) under the terms of a
real property  purchase and sale agreement.  MRR is a Delaware limited liability
company  the owners of which are  Messrs.  C. Dean  McLain,  the  President  and
Chairman of Western,  and Robert M. Rubin, a director of Western. The sale price
was  $2,210,000  in cash at  closing.  Subsequent  to the  closing  of the sale,
Western  entered  into a 20-year  commercial  lease  agreement  with MRR for the
Sparks,  Nevada  facility at an initial  rental  rate of $252,000  per year with
increases at five,  ten, and fifteen years  resulting in a maximum annual rental
rate of  $374,000.  The  present  value of the  minimum  lease  payments  at the
commencement of the lease back transaction aggregated $3,052,000. The lease is a
net lease with payment of insurance,  property taxes and maintenance  costs paid
by Western.  The sale resulted in a deferred  gain which will be amortized  over
the life of the lease pursuant to generally accepted accounting  principles.  In
accordance  with SFAS 13, the building  portion of the lease is being  accounted
for as a  capital  lease  (see  Note 10)  while  the land  portion  of the lease
qualifies for treatment as an operating lease.

     Pursuant to an Agreement,  dated May 30, 1996 (the "ERD Agreement") between
the Company and ERD Waste Corp.  ("ERD"),  the Company agreed to provide certain
financial accommodation to ERD by making available a $4.4 million standby letter
of credit  expiring May 31, 1998 issued by  Citibank,  N.A. in favor of Chemical
Bank (the "Letter of Credit") on behalf of ERD.  Chemical Bank was the principal
lender to ERD and its  subsidiaries,  and upon  issuance  of the Letter of Chase
Bank (formerly  Chemical Bank) made available $4.4 million of additional funding
to ERD under ERD's existing lending facility.  The funding was used to refinance
certain  outstanding  indebtedness of  Environmental  Services of America,  Inc.
("ENSA"),  a wholly owned  subsidiary of ERD. Robert M. Rubin,  the Chairman and
Chief Executive Officer, and a principal stockholder of the Company was also the
Chairman,  Chief Executive  Officer,  a director and a principal  stockholder of
ERD, owning approximately 23.0% of the outstanding ERD Common Stock.

     In consideration for making the Letter of Credit available,  in addition to
repayment  by ERD of all amounts  drawn under the Letter of Credit and the grant
of a security interest in certain machinery and equipment of ENSA to secure such
repayment, ERD agreed (i) to pay to the Company all of the Company's fees, costs
and expenses in connection with making the Letter of Credit  available,  as well
as the amount of all interest  paid by the Company on drawings  under the Letter
of Credit prior to their repayment by ERD.

     In September  1996, a subsidiary of ERD which  operated a waste facility in
Nassau  County,  New  York  was  cited  by the  New  York  State  Department  of
Environmental  Conservation ("DEC") for violating certain DEC regulations.  Such
waste  facility  had  accounted  for  approximately  13% of  ERD's  consolidated
revenues.  The  Company  has been  advised  by ERD  that  under  the  terms of a
Settlement  Agreement  reached with the State of New York in November  1996, all
violations  alleged by the DEC have been resolved in  consideration  for,  among
other things,  ERD's agreement to voluntarily cease  incineration  operations at
the waste  facility on or before March 31, 1997.  Such  incineration  operations
ceased on April 15, 1997.

                                      F-24
<PAGE>

     On November  8, 1996,  the  Company  and ERD  amended  and  restated  their
agreements  to  provide  that if and to the  extent  that the  Letter  of Credit
provided by the Company is called for payment, ERD will issue to the Company its
convertible note bearing interest at 12% per annum, payable monthly, and payable
as to  principal  on the  earliest  to occur of:  (i) May 30,  1999,  (ii) ERD's
receipt of the initial proceeds from any public or private  placement of debt or
equity securities of ERD, or (iii) completion of any bank refinancing by ERD, to
the  extent  of  all  proceeds   available   after   payment  of  other  secured
indebtedness. In addition, the ERD notes, if issued, will be convertible, at any
time at the option of the Company,  into ERD Common Stock at a conversion  price
equal to $4.40 per  share,  or a maximum of  1,000,000  ERD shares if the entire
$4.4 million note is issued and converted into ERD Common Stock.  In addition to
the collateral provided under the May 30, 1996 agreement,  ERD also provided the
Company with a junior mortgage on the waste facility owned by ERD's  subsidiary,
subordinated to existing indebtedness encumbering such facility.


     Under the terms of an indemnity  agreement,  dated May 30, 1996,  Robert M.
Rubin agreed to indemnify  the Company for all losses,  if any,  incurred by the
Company as a result of  issuance of the Letter of Credit for the benefit of ERD.
In consideration  of his negotiating the  modification of the ERD agreement,  on
November 8, 1996, the Company's Board of Directors (Mr. Rubin abstaining) agreed
to amend  the  indemnity  agreement  with Mr.  Rubin  to  limit  his  contingent
liability  thereunder to the extent of 23% (Mr. Rubin's  approximate  percentage
beneficial ownership in the outstanding Company Common Stock as of May 30, 1996)
of all losses that the Company may incur in connection  with its having provided
the  Letter of Credit  financial  accommodation  on behalf of ERD.  Mr.  Rubin's
reimbursement  obligations  are also subject to pro rata reduction to the extent
of any repayments made directly by ERD or from proceeds  received by the Company
from the sale of ERD capital stock described above.

     In February of 1997,  the Company  loaned  $500,000 to ERD Waste Corp.  The
loan was  secured by a short term note  bearing  interest  at 2% above the prime
lending  rate of the  Company's  commercial  bank (8.5% at April 30, 1997) and a
second  collateral  and  security  position on all  accounts  receivable  of ERD
subject to the primary collateral position held by Chase Bank and was personally
guaranteed  by Mr.  Rubin.  Principal  together  with  accrued  interest was due
October 5, 1997.

     In September 1997 ERD filed for protection  from creditors under Chapter 11
of federal bankruptcy laws. In October, 1997 Chemical bank drew the $4.4 million
available on the standby letter of credit.  As a result,  the Company recorded a
loss of  approximately  $5.0  million,  related  to the  February  Note  and the
September letter of credit.  Mr. Rubin had personally  guaranteed  approximately
$1.6 million of the ERD loss.

     On June 28, 1996 the Company entered into a credit agreement with Mr. Rubin
pursuant  to  which  Mr.  Rubin  delivered  a demand  promissory  note for up to
$1,200,000 and payment in full was due July 31, 1998.  Mr. Rubin's  indebtedness
was  secured  by his pledge of 150,000  shares of company  common  stock and his
collateral  assignment of all payments to him under the terms of his  consulting
and  non-competition  agreements  with  Hutchinson,  in the aggregate  amount of
$1,200,000.  Such  collateral  assignment  was  converted  to a  payment  rights
assignment  agreement in July 1998 calling for  Hutchinson  to make all payments
pursuant to Mr. Rubin's consulting and non-competition agreement directly to the
company. Simultaneously the due date of the note was extended from July 31, 1998
to the earlier of shareholder approval of the Hutchinson transaction or July 31,
1999. On June 1, 1999 all payments due to Mr. Rubin  pursuant to the  consulting
agreements  were  formally  assigned  to the  Company as part of the  derivative
action settlement and further  amendments to the settlement  agreement  required
Mr. Rubin to pay the present value of the Hutchinson  payments  ($1,100,000)  to
the Company by  September  30, 2000 if not  previously  paid by  Hutchinson.  On
September 21, 2000, Mr. Rubin contributed  certain publicly traded securities to
the  Company  the value of which  included  the  $1,100,000.  As a  result,  the
Hutchinson  payments revert to being due to Mr. Rubin. The payments to Mr. Rubin
by Hutchinson can not be made until  approval of the  Hutchinson  Transaction by
American United Global shareholders is obtained.

                                      F-25
<PAGE>

15.EMPLOYEE SAVINGS PLAN

     The Company has a voluntary  savings plan pursuant to Section 401(k) of the
Internal Revenue Code, whereby eligible participants may contribute a percentage
of compensation  subject to certain  limitations.  The Company has the option to
make  discretionary  qualified  contributions to the plan,  however,  no Company
contributions were made for fiscal 2000, 1999 or 1998.

16.      SEGMENT INFORMATION


     In fiscal 1999,  the Company  adopted  Statement  of  Financial  Accounting
Standards No. 131 (SFAS 131),  "Disclosures  about Segments of an Enterprise and
Related   Information,"  which  requires  the  reporting  of  certain  financial
information  by  business   segment.   For  the  purpose  of  providing  segment
information, management believes that all of the Company's operations consist of
one segment.  However,  the Company  evaluates  performance based on revenue and
gross margin of three distinct business components.  Revenue and gross margin by
component are summarized as follows:

<TABLE>
<CAPTION>



Business Component              Year Ended        Year Ended       Year Ended
Net Revenues                   July 31, 2000    July 31, 1999     July 31, 1998
------------                   -------------    -------------     -------------
<S>                           <C>              <C>                <C>



Equipment Sales                $   92,513       $     98,450       $  112,061

Equipment Rental                   26,334             25,771           13,389

Product Support                    36,790             39,429           38,028
                                   ------             ------           ------

    Totals                      $ 155,637        $   163,650       $  163,478
                                =========        ===========       ==========



     Business Component         Year Ended        Year Ended       Year Ended
       Gross Margins           July 31, 2000    July 31, 1999     July 31, 1998


Equipment Sales               $   (    66)      $       2,591     $      8,334

Equipment Rental                     5,556              5,017            3,555

Product Support                      6,048              6,986            7,287
                                     -----              -----            -----

    Totals                    $     11,538       $     14,594      $    19,176
                              ============       ============      ===========


</TABLE>

     There  are no  inter-segment  revenues.  Asset  information  by  reportable
segment is not  reported,  since the Company does not produce  such  information
internally.



                                      F-26
<PAGE>

17.  UNAUDITED QUARTERLY CONSOLIDATED FINANCIAL DATA

<TABLE>
<CAPTION>
                                                                  Quarter                                Total
                                            First         Second           Third         Fourth           Year
                                            -----         ------           -----         ------           ----
Fiscal 2000:
------------
<S>                                      <C>            <C>            <C>            <C>           <C>

Net sales                                 $42,063        $33,988         $35,340        $44,246       $155,637
Gross Profit                                4,920          3,865           3,236           (483)        11,538
Net income (loss)                            (333)          (281)           (799)        (5,617)        (7,030)
Basic income (loss) per share              (0.03)          (0.02)         (0.07)          (0.47)         (0.59)
Diluted income (loss) per share            (0.03)          (0.02)         (0.07)          (0.47)         (0.59)


                                                                  Quarter                                Total
                                            First         Second           Third         Fourth           Year
                                            -----         ------           -----         ------           ----
Fiscal 1999:
------------

Net sales                                 $40,365        $41,279         $40,371        $41,635       $163,650
Gross Profit                                2,475          4,492           4,094          3,533         14,594
Loss from continuing operations            (1,386)          (368)         (1,360)        (1,940)        (5,054)
Income (loss) from
  discontinued operations                    (731)        (1,925)          2,656          1,989          1,989
Net income (loss)                          (2,117)        (2,283)          1,296           (796)        (3,065)
Loss from continuing operations            (0.12)          (0.03)         (0.11)          (0.17)         (0.43)
Income (loss) from
  discontinued operations                  (0.06)          (0.17)          0.22            0.18           0.17
Basic earnings per share                   (0.18)          (0.20)          0.11            0.01           0.26
Basic earnings per share                   (0.18)          (0.20)          0.11            0.01           0.26

</TABLE>


16.      SUBSEQUENT EVENTS



     On October 3, 2000,  the Board of  Directors of the Company  cancelled  the
2000 Stock Option Plan and approved the 2001 Stock Option Plan. All options that
had been granted  under the 2000 Plan were  cancelled and replaced with the same
number of options under the 2001 Plan.


     On  November  1,  2000,   777,414  shares  of  Western  common  stock  were
distributed  pursuant to the final court approved  settlement of the shareholder
class  action.  Effective on that date,  the Company's  percentage  ownership of
Western  became 36.5%.  Accordingly,  Western's  results of  operations  will no
longer be  consolidated  with those of the Company and will be accounted  for on
the equity method as of November 1, 2000. A loss of $1,434,000  has been accrued
at July 31,  2000  representing  the  difference  between  the book value of the
Western  shares  transferred  and their market value  pursuant to the settlement
agreement.


     On November 3, 2000, Western and e-Mobile, Inc. ("EMI") signed a definitive
Merger  Agreement  pursuant to which a newly formed holding company will acquire
both Western and e-Mobile.  In addition,  Western also signed an Asset  Purchase
Agreement. Under the terms of the agreement, a newly formed holding company will
issue 52 million  shares of its common stock to acquire the  existing  shares of
EMI and  approximately  3.3  million  shares to acquire the  existing  shares of
Western. The holding company will assume all outstanding options of both EMI and
Western.  It is  anticipated  that a new board of directors will be appointed at
the  closing and that the  officers  of EMI will become  officers of the holding
company. As a condition of the merger, Western will seek shareholder approval to
allow certain members of Western's management, officers and certain directors to
purchase  Western's  assets and assume its liabilities  for $4.1 million,  which
will be paid by a secured  note (the note  will be  subordinate  to the  current
security  interest of DFS) over seven years at seven  percent  (7.0%)  interest,
with interest only  payments for the first year and  thereafter  self-amortizing
with quarterly interest payments and semi-annual principal payments.  Closing of
these  transactions  is  conditioned  on  approval  of the  transactions  by the
shareholders  of Western  and EMI and certain  other  regulatory  approvals  and
contractual  conditions.  There is no assurance that either  transaction will be
consummated.

                                      F-27
<PAGE>


     SCHEDULE II

                          AMERICAN UNITED GLOBAL INC.

                       VALUATION AND QUALIFYING ACCOUNTS
                For the Fiscal Years Ended July 31, 1999 and 1998

<TABLE>
<CAPTION>



                                              Balance at      Charged to    Charged to                  Balance at
                                              Beginning       Costs and        Other                      End of
               Description                    of Period        Expenses      Accounts     Deductions      Period
               -----------                    ---------        --------      --------     ----------      ------

Accounts Receivable Reserve:
<S>                                         <C>             <C>           <C>          <C>              <C>

  Fiscal year ended July 31, 2000            $724,000        $690,000      $ ---        $(851,000)        $563,000

  Fiscal year ended July 31, 1999             670,000         732,000        ---         (678,000)         724,000


Inventory Reserve:

  Fiscal year ended July 31, 2000            2,513,000      2,188,000        ---         (591,000)       5,292,000

  Fiscal year ended July 31, 1999            2,833,000        884,000        ---       (1,204,000)       2,513,000


</TABLE>


                                      F-28
<PAGE>


To the Board of Directors and
Stockholders of American United Global, Inc.

     Our Audits of the  consolidated  financial  statements  referred  to in our
report dated  November 7, 2000  appearing on page F-28 of this annual  report on
Form 10K also included an audit of the financial  statement  schedules listed in
Item 14(a)(2)of this Form 10K. In our opinion, this financial statement schedule
presents  fairly,  in all material  respects,  the information set forth therein
when read in conjunction with the related financial statements.



PRICEWATERHOUSECOOPERS LLP
Portland, Oregon
November 7, 2000



                                      F-29
<PAGE>






     ITEM 9. CHANGES IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON ACCOUNTING AND
FINANCIAL DISCLOSURE

                  None.



     PART III

     ITEM 10.  DIRECTORS,  EXECUTIVE  OFFICERS,  PROMOTERS AND CONTROL  PERSONS,
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.

Officers, Directors and Key Employees

     The  following  table sets forth  information  with  respect to  directors,
nominees for directors,  executive  officers and key employees of the Company as
of  November  1, 2000.  Except for  matters  discussed  in Item 3 of this Annual
Report,  there are no pending legal  proceedings to which any director,  nominee
for  director  or  executive  officer of the  Company is a party  adverse to the
Company.


Name                   Age                           Position

Robert M. Rubin         60        Chairman of the Board of Directors, President
                                  and Chief Executive Officer

C. Dean McLain          44        Director and Executive Vice President of the
                                  Company; President and Chief Executive
                                  Officer of Western

Howard Katz             57        Director

                                  Vice President of Finance, Chief Financial
David M. Barnes         57        Officer and Director

Jeffrey Berman          39        Director

Stephen Byers           46        Nominee for Director (1)

Seymour Kessler         68        Nominee for Director (1)

Allen Perres            48        Nominee for Director (1)

Eric Staffin            33        Nominee for Director (1)

     (1)  Nominee  for  election  as a Director  at the  Company's  2000  Annual
Meeting.

                                       24
<PAGE>


     Robert M.  Rubin.  Mr.  Rubin has  served as the  Chairman  of the Board of
Directors of the Company  since May 1991,  and was its Chief  Executive  Officer
from May 1991 to January 1, 1994.  Between October 1990 and January 1, 1994, Mr.
Rubin  served as the  Chairman of the Board and Chief  Executive  Officer of the
Company  and its  subsidiaries;  from  January 1, 1994 to January 19,  1996,  he
served only as Chairman of the Board of the Company and its  subsidiaries.  From
January 19, 1996 to the present,  Mr. Rubin has served as Chairman of the Board,
President and Chief Executive Officer of the Company. Mr. Rubin was the founder,
President, Chief Executive Officer and a Director of Superior Care, Inc. ("SCI")
from its inception in 1976 until May 1986. Mr. Rubin  continued as a director of
SCI (now known as Olsten  Corporation  ("Olsten") until the latter part of 1987.
Olsten,  a New York Stock Exchange listed company,  is engaged in providing home
care and institutional  staffing  services and health care management  services.
Mr.  Rubin  was  Chairman  of the Board and  Chief  Executive  Officer  and is a
stockholder of ERD Waste Technology, Inc., a diversified waste management public
company  specializing  in the management and disposal of municipal  solid waste,
industrial and commercial  non-hazardous waste and hazardous waste. In September
1997, ERD filed for protection under the provisions of Chapter 11 of the federal
bankruptcy act. Mr. Rubin is a former director and Vice Chairman,  and currently
a minority stockholder, of American Complex Care, Incorporated ("ACC"), a public
company  formerly engaged in providing  on-site health care services,  including
intra-dermal infusion therapies. In April 1995, ACC, operating subsidiaries made
assignments  of their  assets for the  benefit of  creditors  without  resort to
bankruptcy proceedings.  Mr. Rubin is also the Chairman of the Board of Western.
The Company owns approximately 59.6% of the outstanding common stock of Western.
Mr. Rubin owns  approximately 6% of the common stock of IDF. Mr. Rubin is also a
director of Western,  StyleSite  Marketing,  Inc., a public company  principally
engaged in the women's apparel catalog retailing business and Med-Emerg, Inc., a
publicly-held  Canadian  management  company for  hospital  emergency  rooms and
out-patient facilities. Mr. Rubin devotes approximately 35 hours per week to the
business of the Company.

     C. Dean McLain. Mr. McLain has served as an Executive Vice President of the
Company  since March 1, 1993,  as a director of the Company  since March 7, 1994
and  President  of Western  since June 1, 1993.  From 1989 to 1993,  Mr.  McLain
served as Manager of Privatization of Case  Corporation.  From 1985 to 1989, Mr.
McLain served as General Manager of Lake State Equipment,  a distributor of John
Deere  construction  equipment.  Mr. McLain holds a B.S.  degree in Business and
Economics,  and a Master's  of  Business  Administration  from West Texas  State
University.

     David M. Barnes.  Mr. Barnes has served as the Chief  Financial  Officer of
the Company since May 15, 1996,  and has been a director since November 8, 1996.
Mr. Barnes is presently the Chief Financial Officer of  EGOMagazine.com,Inc.,  a
privately-held  Internet and  diversified  media company based in Beverly Hills,
CA, and a member of the  Advisory  Board of  Interactive  Imagination,  Inc.,  a
privately-held  start-up video game developer  based in Seattle,  WA. Mr. Barnes
has been a director,  the President and a minority  stockholder of ACC. In April
1995,  ACC's  operating  subsidiaries  made  assignments of their assets for the
benefit of creditors without resort to bankruptcy proceedings.

     Howard  Katz.  Mr. Katz was  Executive  Vice  President of the Company from
April 15, 1996  through  July 31,  1998 and has been a director  since April 15,
1996.  Since  August 1998 to the  present Mr. Katz has been the Chief  Executive
Officer of Imagine  Networks,  LLC.,  which engages in advanced  technology  and
software development.  From December 1995 through April 15, 1996, Mr. Katz was a
consultant  for, and from January  1994  through  December  1995 he held various
executive  positions,  including  Chief  Financial  Officer from  December  1994
through   December   1995,   with   National   Fiber  Network  (a  fiber  optics
telecommunications company).

     Jeffrey  Berman.  Mr. Berman has been a Director of the Company since June,
2000. Mr. Berman has been an employee to the Company since April,  2000. Between
January 1998 and April 2000 Mr.  Berman was the Director of  Investment  Banking
for  Gruntal  & Co.,  LLC (  "Gruntal")  and had  held the  same  position  with
Hampshire Securities, Inc., from 1994 until January 1998 when it was acquired by
Gruntal. Mr. Berman has been involved in investment banking since 1991.

     Stephen  Byers.  Mr. Byers is a nominee for Director of the Company . Since
January 2000 Mr. Byers has been the Director of the  Investment  Division of the
Dreyfus Corporation, the investment management company ("Dreyfus").  Between May
1997 and November  1999 Mr. Byers was the  Executive  Vice-President  of capital
Markets,  Chief Financial  officer and Treasurer of Gruntal,  after which he did
not begin his new position at Dreyfus until January 2000. Prior to May 1997, Mr.
Byers had been a managing director at PaineWebber, Inc.

                                       25
<PAGE>

     Seymour Kessler. Dr. Kessler is a nominee for Director of the Company. From
January  1999 to the present Dr.  Kessler has been  co-Managing  Director of RKP
Capital Partners,  a holding company for publicly and privately-held  companies.
Between 1996 and the present Dr. Kessler has been an active  investor in various
publicly and privately-held  companies. From 1992 through 1996 Dr. Kessler was a
founder,  Chief Executive  Officer and a director of Princeton Dental Management
Corporation.  Between 1982 and 1997 Dr.  Kessler served on the Board of Trustees
of University of Health Science Center, in Des Moines,  IA. Dr. Kessler also has
been a director of four  nationally-chartered  banks,  including serving as Vice
Chairman of the Board of Directors  of Peterson  Bank.  Dr.  Kessler is a former
podiatric  surgeon who since 1975 has held  majority and minority  interests and
actively  served  in over 85  partnerships,  privately-held  and  publicly-owned
companies and institutions.

     Allen  Perres.  Mr.  Perres is a nominee for Director of the Company.  From
January  1999 to the present  Mr.  Perres has been  co-Managing  Director of RKP
Capital Partners,  a holding company for publicly and privately-held  companies.
Mr. Perres is a partner in RB Partners,  Inc.,  an  investment  banking firm for
homebuilders,  and has served in such  capacity  from 1994 to the  present.  Mr.
Perres  co-founded and managed that firm's  commercial and residential  mortgage
unit, First Dearborn Mortgage Company, Inc., during such period.

     Eric  Staffen is a nominee  for  director  of the  Company  and has been an
employee  since  September,  2000.  From July 1999 to  through  August  2000 Mr.
Staffin was Vice  President of e-Citi's  internet  tools and services  group,  a
division of Citigroup. From June 1989 through July 1999 Mr. Staffin held various
executive  positions  with Bankers Trust Company  including  Director of Bankers
Trust Global Institutional Services Internet Management Group.


     ITEM 11. EXECUTIVE COMPENSATION

     SUMMARY COMPENSATION TABLE

     The following table sets forth the amount of all  compensation  paid by the
Company  for  services  rendered  during each of the three  fiscal  years of the
Company ended July 31, 1999, 1998, and 1997 to each of the Company's most highly
compensated  executive  officers  and key  employees  whose  total  compensation
exceeded  $100,000,  and to all  executive  officers  and key  employees  of the
Company as a group.
<TABLE>
<CAPTION>
                             ANNUAL COMPENSATION              LONG-TERM COMPENSATION
                             -------------------              ----------------------
                                                              AWARDS
                                                              ------
NAME AND           FISCAL    SALARY     BONUS    OTHER        RESTRICTED   SECURITIES     LTIP          ALL OTHER
PRINCIPAL          YEAR           ($)            ANNUAL       STOCK        UNDER-LYING    PAYOUTS       COMPEN-SATION
POSITION                                         COMPEN-SATIONAWARD(S)     OPTIONS/       ($)           SATION ($)
--------          -----     -------   -------    ---------------------     --------       ---           ----------
<S>               <C>       <C>         <C>     <C>          <C>          <C>            <C>           <C>
                                                 ($)          ($)          SARS(#)
Robert M. Rubin    2000      400,000    -0-      -0-          -0-          -0-            -0-           -0-
Chairman,          1999      375,000    -0-      -0-          -0-          -0-            -0-           -0-
President and      1998      350,000    -0-      -0-          -0-          -0-            -0-           -0-
Chief Executive
Officer(1)

David M. Barnes    2000      140,000    -0-      -0-          -0-          -0-            -0-           -0-
Chief Financial    1999      125,000    -0-      2,000        -0-          -0-            -0-           -0-
Officer and        1998      156,000    -0-      -0-          -0-          -0-            -0-           -0-
Director

C. Dean McLain (2) 2000      300,000    -0-      -0-          -0-          -0-            -0-           -0-
Executive Vice     1999      290,000    -0-      -0-          -0-          -0-            -0-           -0-
President and      1998      280,000    68,935   -0-          -0-          -0-            -0-           -0-
Director;
President of
Western
</TABLE>

     (1)  Includes  $150,000 paid under Mr.  Rubin's  Consulting  Agreement with
          Western during Fiscal 1999 and Fiscal 2000 and $150,000 paid under Mr.
          Rubin's  now-expired  employment  agreement with Western during Fiscal
          1997 and Fiscal 1998. See "Employment Agreements."

     (2)  Paid by Western.

                                       26
<PAGE>


         STOCK OPTION PLANS


OPTION GRANTS IN FISCAL 2001

     The Company has granted a total of  5,910,000  options  under the 2001 Plan
during Fiscal 2001. This amount includes  5,400,000  options which replace those
issued as of various dates during Fiscal 2000 under the 2000 Plan,  all of which
options were  cancelled on October 3, 2000. The 2001 Plan was adopted on October
3, 2000 and also as of such date the 2000 Plan was cancelled.  As of November 8,
2000, a total of  5,910,000  options have been granted and all such options were
granted under the 2001 Plan subsequent to the end of Fiscal 2000.

     The Board of Directors amended the employment  agreement of Robert M. Rubin
as of October 3, 2000,  pursuant to which the Company  made a one-time  grant of
250,000 incentive stock options under the 2001 Plan to Mr. Rubin exercisable for
five years after issuance at $0.275 per share. See "Employment Agreements."

     The Company also on October 3, 2000  granted  500,000  non-qualified  stock
options to each of Michael Sweeney, and Eric Staffin 250,000 non-qualified stock
options to Stephen  Byers (a nominee for  Director)  and  100,000  non-qualified
stock options to Michael Metter,  all in consideration for services rendered and
to be rendered by such persons who have agreed to be engaged as  consultants  to
the  Company,  and 250,000  non-qualified  stock  options to  Gersten,  Savage &
Kaplowitz, LLP ("GSK") and 250,000 non-qualified stock options to Stephen Berger
in consideration for legal services.  Except for the options issued to GSK which
vested  fully  upon  issuance  and the  100,000  options to Mr.  Metter  vesting
one-third at issuance  and at each of the two years  thereafter,  the  foregoing
options  vest in  one-fifth  (20%)  increments  at issuance and each of the four
years thereafter. The Company also issued 50,000 non-qualified stock options, on
such date and on the same terms,  to Bert Gusrae in  consideration  of corporate
finance consulting  services rendered to the Company,  which options vested upon
issuance.  The Company also issued 1,650,000  incentive stock options to Jeffrey
Berman,  which options vest one-half at issuance and the remaining  one-half May
27, 2001.  All of the  foregoing  options are  exercisable  for five years after
issuance  at $0.275,  110 % of the fair market  value on the date of grant.  The
Company  also  issued a total of  1,790,000  incentive  stock  options,  vesting
immediately upon granting,  to Messrs. Rubin (840,000),  Katz (350,000),  McLain
(300,000)  and Barnes  (300,000) to replace an equal number of options under the
2000 Plan that were  cancelled,  and such options are exercisable for five years
after issuance for $0.275 per share.  Except for Mr. Staffin's  options,  all of
the preceding  options granted replace an identical number of options granted to
such persons under the 2000 Plan and since cancelled.

     As of December 7, 1999 the Company cancelled all outstanding options issued
under the 1996 Plan (the "1996  Plan") and 1991 Stock  Option  Plan,  (the "1991
Plan")  adopted the 2000 Plan and issued new  incentive  stock options under the
2000 Plan for an identical number of shares of Common Stock as was issuable upon
exercise of all such cancelled  options under the 1996 Plan and 1991 Plan. These
options  were  exercisable  for five  years  after  the date of  issuance  at an
exercise  price of $0.21 per share,  or  approximately  110% of the closing sale
price of the Company's Common Stock on December 7, 1999.

     The following table provides  information  concerning the exercise of stock
options during the last completed fiscal year by each executive officer named in
the Summary  Compensation  Table,  and the fiscal year-end value (as of July 31,
2000) of  unexercised  options held by each such person.  None of these  options
have been exercised as of November 7, 2000.


                                       27
<PAGE>

                          Aggregated Options Exercised
                         in Last Fiscal Year and Fiscal
                             Year-End Option Values
                                                                  Value of
                                                Number of        Unexercised
                                               Unexercised      In-the-Money
                       Shares                  Options/SARs     Options/SARs
                     Acquired on    Value       at FY-End        at FY-End
Name                 Exercise (#)  Realized    Exercisable      Exercisable


Robert Rubin              -0-        -0-        840,000         $453,600

David Barnes               -0-       -0-        300,000         $162,000

C. Dean McLain             -0-       -0-        300,000         $162,000


THE 2001 STOCK OPTION PLAN

     The 2001 Plan was adopted on October 3, 2000 and as of such date  5,910,000
options were granted.  Previously the Company's Board of Directors  cancelled as
on  October  3, 2000 all  options  outstanding  under the  Company's  2000 Plan,
adopted on  December  7, 1999,  adopted as of such date the 2001 Plan and issued
new  stock  options  under the 2001  Plan for an  identical  number of shares of
Common Stock as were  issuable upon  exercise of the  cancelled  options.  As of
November 8, 2000 the Company has granted an aggregate of 5,910,000 options under
the 2001 Plan.

     As of November 8, 2000,  the  directors,  nominees and  executive  officers
listed below hold outstanding  non-qualified options to acquire shares of Common
Stock granted under the Company's 2001 Plan, as follows:

Recipient          Date of Grant      Number of Options   Exercise Price (2)(3)

Robert M. Rubin    October 3, 2000      840,000 (1)(4)             $0.275

C. Dean McLain     October 3, 2000      300,000 (1)(4)             $0.275

Howard Katz        October 3, 2000      350,000 (1)(4)             $0.275

David M. Barnes    October 3, 2000      300,000 (1)(4)             $0.275

Jeffrey Berman     October 3, 2000    1,650,000 (4)(6)             $0.275

Stephen Byers      October 3, 2000      250,000 (5)(7)             $0.275

Allen Perres       October 3, 2000      250,000 (5)(7)             $0.275

Seymour Kessler    October 3, 2000      250,000 (5)(7)             $0.275

Eric Staffin       October 3, 2000      500,000 (4)(6)             $0.275

     (1)  These  options are fully  exercisable

     (2)  As the market  value of the Common  Stock  underlying  options  issued
          under the 2001 plan  (measured  as the  average of the closing bid and
          ask price) on November 3, 2000,  was $0.593 per share,  the  foregoing
          options issued under the 2001 Plan (including  unexercisable  options)
          are "In-the-money."

     (3)  The exercise  prices of all options equal 110% of the closing price of
          the Common Stock as reported on the OTC Bulletin  Board on the date of
          grant.

     (4)  These are incentive stock options.

     (5)  These are non-qualified stock options.

     (6)  These  options  vested  one-half upon granting and one-half on May 27,
          2001.

     (7)  These  options  will  vest only upon  their  election  to the Board of
          Directors.

                                       28
<PAGE>


Employment, Incentive Compensation and Termination Agreements

     Robert M. Rubin Mr. Rubin is employed by the Company as the Chairman of the
Board of  Directors  of the Company  and of its  subsidiaries.  Mr.  Rubin is so
employed pursuant to an amended and restated employment  agreement,  dated as of
June 3, 1998 (the "Restated  Agreement")  for a term expiring July 31, 2001. The
Restated Agreement was amended in connection with the initial public offering of
Western (the "Western IPO"). The Restated  Agreement  provides for a base salary
payable to Mr.  Rubin of $175,000  for the fiscal  year  ending  July 31,  1997,
$200,000 for the fiscal year ending July 31, 1998,  $225,000 for the fiscal year
ending July 31,  1999,  and a base salary for the fiscal  years  ending July 31,
2000  and July 31,  2001 as  determined  by the  Compensation  Committee  of the
Company's  Board of Directors  and ratified by a majority of the entire Board of
Directors of the Company (other than Mr. Rubin).  The base salary in each of the
fiscal years ending July 31, 2000 and 2001 will not be less than the annual base
salary in effect in the immediately  preceding  fiscal year, as adjusted for any
increase  in the  annual  cost of living  as  published  by the  Bureau of Labor
Statistics of the United States  Department of Labor for wage earners in the New
York  City  metropolitan  area  measured  over  the  course  of the  immediately
preceding fiscal year.

     Mr. Rubin also  received as  compensation  under the  Restated  Agreement a
one-time  grant of 250,000  incentive  stock options under the 2001 Plan,  which
options are immediately exercisable at $0.275 per share (110% of the closing bid
price of the Common Stock on October 3, 2000, the date of grant).

     The Restated  Agreement also provides for incentive  bonuses  consisting of
10% of the  sale  price  in  excess  of the  Company's  basis,  up to a  maximum
aggregate  bonus of  $3,000,000,  to be paid to Mr.  Rubin  contingent  upon the
Company's  ability  to  dispose of its  holdings  of the common  stock of either
eGlobe,  Inc.  or  Western  and  receive  net  aggregate  proceeds  in excess of
$3,000,000  from the sale of the shares of either eGlobe or Western  shares.  In
addition,  Mr. Rubin, Mr. McLain and Western have contemplated their acquisition
of certain of the assets of Western,  but there is no agreement  with regards to
such acquisition.

     Mr. Rubin is also engaged by Western, the Company's 59.5%-owned subsidiary,
pursuant  to a  two-year  Consulting  Agreement,  effective  August  1, 1998 and
extended for seven years from August 1, 2000 under which starting in Fiscal 2001
he is now paid $200,000 annually plus reimbursment for his business expenses.

     C. Dean McLain C. Dean McLain serves as the  President and Chief  Executive
Officer of Western pursuant to a ten-year employment agreement expiring July 31,
2005.  This employment  agreement  superseded Mr.  McLain's  earlier  employment
agreement  with the  Company,  which is  further  described  below and which was
terminated upon the execution of his employment agreement with Western. Pursuant
to such agreement,  Mr. McLain received an annual base salary,  payable monthly,
of $250,000  through the end of Fiscal 1996,  $265,000 per annum in Fiscal 1997,
$280,000  per  annum in Fiscal  1998,  $290,000  per  annum in  Fiscal  1999 and
$300,000  per annum in Fiscal  2000.  For each of the fiscal  years ending 2001,
2002,  2003,  2004 and 2005, Mr. McLain's base salary shall be determined by the
Compensation Committee of Western and ratified by the full Board of Directors of
Western.  In each of the five fiscal  years from 2001  through  2005,  such base
salary  shall  not be  less  than  the  annual  base  salary  in  effect  in the
immediately preceding fiscal year plus a cost of living adjustment. In addition,
Mr.  McLain has been  entitled to receive  bonus  payments in each of the fiscal
years from Fiscal 1996 through and including  Fiscal 2000,  inclusive,  equal to
five percent (5%) of such fiscal year consolidated  pre-tax income of Western in
excess of $1,750,000 in each such fiscal year (the "Incentive Bonus"); provided,
that the maximum amount of the Incentive  Bonus payable by Western to Mr. McLain
shall not exceed $150,000 in any such fiscal year,  without regard to the amount
by which Western's  consolidated  pre-tax income shall exceed $1,750,000 in each
of such fiscal years. For each of the fiscal years ending 2001 through 2005, Mr.
McLain's  incentive bonus shall be determined by the  Compensation  Committee of
Western's  Board of Directors and ratified by Western's full Board of Directors.
The maximum annual incentive bonus which Mr. McLain shall be entitled to receive
under his Employment  Agreement shall not be less than $150,000.  As used in Mr.
McLain's Employment Agreement, the term "consolidated pre-tax income" is defined
as  consolidated   net  income  of  Western  and  any  subsidiaries  of  Western
subsequently  created or acquired,  before the Incentive Bonus, income taxes and
gains or losses from  disposition or purchases of assets or other  extraordinary
items. Mr. McLain was also granted 300,000 incentive stock options on October 3,
2000 under the 2001 Plan,  which options are  immediately  exercisable  for five
years at $0.275 per share.

                                       29
<PAGE>


     Howard Katz Howard Katz is a director of the Company. Mr. Katz is presently
receiving  severance  payments  of  approximately  $78,000  annually,   under  a
severance  agreement which provides for payments over a three-year period ending
July 31, 2001.  Mr. Katz  received  $78,000 in Fiscal 2000 and $91,738 in salary
severance and other compensation during Fiscal 1999. Prior to July 31, 1998, Mr.
Katz served as the Company's  Executive Vice President  since April 15, 1996 and
received an annual base salary of $185,000  for Fiscal  1998.  In  addition,  on
October 3, 2000 Mr. Katz  received  350,000  stock  options under the 2001 Plan,
which are immediately exercisable for five years at $0.275 per share.

     David M. Barnes David M. Barnes is a director and Chief  Financial  Officer
of the  Company.  In Fiscal  2000 Mr.  Barnes  received  total  compensation  of
$140,000.  In Fiscal 1999 Mr.  Barnes  received a base  salary of  $125,000  and
certain  executive  benefits which brought his total Fiscal 1999 compensation to
$127,000.  In Fiscal 2001 Mr.  Barnes will continue in these  capacities  with a
base salary of $150,000 plus certain  executive  benefits.  Between May 15, 1996
and July 31, 1998 Mr. Barnes received an annual salary of $150,000.  In addition
on October 3, 2000 Mr. Barnes received 300,000 incentive stock options under the
2001 Plan,  which options are  immediately  exercisable for five years at $0.275
per share.


         Compensation Committee Interlocks and Insider Participation

     During  Fiscal  1998 and Fiscal 1999 the Board of  Directors'  Compensation
Committee  (the  "Compensation  Committee")  did not meet.  During this time the
Company's Board of Directors  decided all  compensation  matters relating to the
Company's executive officers.  The Compensation  Committee has met in June 2000,
to discuss,  ratify and approve Mr. Rubin's  employment  agreement,  and discuss
other matters.

     Mr. Rubin's  annual  compensation,  identified in the Summary  Compensation
Table, was determined by his employment agreements with the Company,  which were
approved by the Board of Directors. Mr. Rubin's employment agreement was amended
in December 1999 and is now for a five year term expiring  December 7, 2004. For
information   concerning  Mr.  Rubin's  Restated  Agreement,   see  "Employment,
Incentive Compensation and Termination  Agreements." Mr. Rubin also entered into
a separate employment  agreement with Western.  Mr. McLain's annual compensation
was set by his amended  employment  agreement  with  Western.  See  "Employment,
Incentive Compensation and Termination Agreements."

     No director of the Company is paid to attend Board meetings,  although they
are reimbursed for their actual expenses. During the first nine months of Fiscal
2000 the Company has held two  meetings of the Board of  Directors  at which all
directors were present telephonically. During Fiscal 1999 there were no meetings
of the Board of  Directors  and  actions  of the Board were  taken  pursuant  to
resolutions  approved by the unanimous  written  consent of the  directors  (not
counting  abstentions).  During  Fiscal  1999,  there  were no  meetings  of the
Compensation  Committee and all matters regarding  compensation were resolved or
handled by the entire Board of Directors.  During Fiscal 2000, the  Compensation
Committee  has only met once in June 2000 to  discuss,  ratify and  approve  Mr.
Rubin's  employment  agreement and the 2000 Plan, and other  matters.  While Mr.
Rubin serves on the Compensation  Committees of the Boards of Directors of other
publicly held corporations, no executive officers or directors of such companies
serve  on the  Company's  Compensation  Committee.  The  Compensation  Committee
reviews the compensation for all employees and the granting of options under all
of the  Company's  employee  stock  option plans that may exist and be in effect
from time to time, and presently consists of Messrs. McLain, Berman and Katz. If
Mr. Byers is elected to the Board,  it is  anticipated  that he will replace Mr.
McLain on the Compensation Committee.

         Transactions with ERD Waste Corp.

     The  Company  incurred a loss of  approximately  $5,000,000  as a result of
certain  transactions  it entered  into with ERD Waste  Corp.  ("ERD") in Fiscal
1997. On September 30, 1997,  ERD filed for  reorganization  under Chapter 11 of
the federal  bankruptcy  laws. The Company has recorded a $5,000,000 net loss in
connection with these  transactions,  which included making  available for ERD's
benefit a $4,400,000  letter of credit and making an additional  $500,000  loan,
for Fiscal 1997.

                                       30
<PAGE>

     Robert M. Rubin,  the Chairman and Chief Executive  Officer and a principal
stockholder of the Company,  was previously  also the Chairman,  Chief Executive
Officer,  a director and a principal  stockholder of ERD, and owns approximately
25.1% of the outstanding ERD Common Stock.

     Pursuant to an agreement dated May 30, 1996 (the "ERD  Agreement")  between
the  Company  and  ERD,  the  Company  agreed  to  provide   certain   financial
accommodations to ERD by making available a $4,400,000  standby letter of credit
(the "Letter of Credit")  originally issued by Citibank,  N.A.  ("Citibank") and
later  assumed  by North  Fork  Bank in favor of Chase  Bank ( "Chase  Bank") on
behalf of ERD. Chase Bank was the principal lender to ERD and its  subsidiaries,
and upon  issuance  of the Letter of Credit,  Chase Bank made  available  to ERD
$4,400,000 of additional  funding under ERD's  existing  lending  facility.  The
funding was used to refinance certain outstanding  indebtedness of Environmental
Services of America, Inc. ("ENSA"), a wholly-owned subsidiary of ERD.

     In consideration for the Company making the Letter of Credit available, ERD
agreed  that,  in  addition to  repaying  all amounts  drawn under the Letter of
Credit and granting to the Company a security  interest in certain machinery and
equipment of ENSA to secure such  repayment,  it would (i) pay all the Company's
fees, costs and expenses payable to Citibank, N.A. and others in connection with
making  the  Letter of Credit  available,  as well as all  interest  paid by the
Company on monies drawn upon the Letter of Credit prior to repayment by ERD, and
(ii) issue to the Company an aggregate of 25,000  shares of ERD common stock for
each consecutive period of 90 days or any portion thereof,  commencing August 1,
1996, that the Letter of Credit remains  outstanding.  Pursuant to the foregoing
agreement,  ERD paid  nothing in fees and  expenses to Citibank on behalf of the
Company,  but issued  100,000  shares of ERD Common  Stock to the  Company.  ERD
Common Stock was then traded on the NASDAQ  National  Market and, at the time of
closing of the  transaction  with ERD, the closing price of ERD Common Stock, as
traded on NASDAQ was $9.25 per share.

     Under the terms of an indemnity  agreement,  dated May 30, 1996,  Robert M.
Rubin  agreed to indemnify  the Company for any and all of its losses  resulting
from  issuance  of  the  Letter  of  Credit  to  ERD.  In  consideration  of his
negotiating  the  modification  of the ERD  agreement,  on November 8, 1996, the
Company's  Board of  Directors  (Mr.  Rubin  abstaining)  agreed  to  amend  the
indemnity agreement with Mr. Rubin to limit his contingent  liability thereunder
to the extent of 23% (Mr. Rubin's approximate percentage beneficial ownership in
the  outstanding  Company Common Stock as of May 30, 1996) of any and all losses
incurred  by the  Company in  connection  with the Letter of Credit to ERD.  Mr.
Rubin's reimbursement  obligations are also subject to pro rata reduction to the
extent of any repayments made directly by ERD or from proceeds  received by AUGI
from the sale of ERD capital  stock  described  above.  In  addition,  Mr. Rubin
personally guaranteed the $500,000 additional advance from the Company to ERD.

     In August 1996, a subsidiary of ERD that operated a waste  facility in Long
Beach,  New York was cited by the New York  State  Department  of  Environmental
Conservation  ("DEC") for  violating  certain DEC  regulations.  ERD and the DEC
reached an agreement in November 1996 to settle such violations,  which resulted
in the closing of the Long Beach,  New York  facility  on April 15,  1997.  As a
result, the business of ERD was materially and adversely affected.

     On November  8, 1996,  the  Company  and ERD  amended  and  restated  their
agreements to provide that if and to the extent that the Company demands payment
on the Letter of Credit, ERD will issue to the Company its $4,400,000  principal
amount convertible note bearing interest at 12% per annum,  payable monthly, and
payable as to  principal  on the  earliest to occur of: (i) May 30,  1999,  (ii)
ERD's receipt of the initial  proceeds  from any public or private  placement of
debt or equity securities of ERD, or (iii) completion of any bank refinancing by
ERD, to the extent of all  proceeds  available  after  payment of other  secured
indebtedness. In addition, the ERD Notes, if issued, will be convertible, at any
time at the option of the Company,  into ERD Common Stock at a conversion  price
equal to $4.40 per  share,  or a maximum of  1,000,000  ERD shares if the entire
$4,400,000 principal amount of the convertible note is issued and converted into
ERD  Common  Stock.  In  addition  to the  collateral  provided  under  the  ERD
Agreement,  ERD also  provided the Company  with a junior  mortgage on the waste
facility  owned by  ERD's  subsidiary,  subordinated  to  existing  indebtedness
encumbering such facility.

     In February  1997,  the Company  advanced  an  additional  $500,000 to ERD,
payable on demand (the "Advance Loan").

                                       31
<PAGE>

     The Advance Loan is secured by a short-term promissory note, due October 5,
1997,  bearing  interest at two percent (2%) above the prime lending rate of the
Company's  commercial  bank  (which  was 8.5% on April  30,  1997)  and a second
collateral and security  position on all accounts  receivable of ERD, subject to
the priority interests of Chase Bank.

     On September 30, 1997, ERD filed for reorganization under Chapter 11 of the
federal  bankruptcy  laws. On October 29, 1997,  Chase Bank drew $4,400,000 from
the Letter of Credit. As a result, the Company became liable to North Fork Bank,
the  issuer of the Letter of  Credit,  for such  amount,  which  obligation  the
Company  paid in full on October  31,  1997.  As a result,  the Company is now a
creditor in the ERD reorganization,  holding approximately  $5,000,000 of claims
and a lien on certain ERD assets.  However,  the federal  bankruptcy courts will
not  sustain or honor this lien on the basis of the common  control  between the
Company and ERD resulting from Mr. Rubin's offices with each. If the lien is not
sustained,  the Company will be only a general  unsecured  creditor of ERD. As a
result of the foregoing development,  the Company recorded a $5,000,000 net loss
in  connection  with the Letter of Credit and  Advance  Loan to ERD for the year
ended July 31,  1997.  In the event that the Company does not recoup any portion
of such loss in connection with the ERD bankruptcy proceedings or otherwise, Mr.
Rubin had agreed to personally indemnify the Company for the first $1,600,000 of
such loss.  See "The Class  Action."  pursuant to the  settlement  agreement Mr.
Rubin has agreed to pay this amount  regardless  of whether it is recouped  from
ERD. (See note 10)

     Mr. Rubin was a director of IDF until August 1999 and owned 874,659  shares
of IDF common stock, representing approximately 9.0% of the then outstanding IDF
common stock after giving effect to the IDF Merger,  and  including Mr.  Rubin's
conversion  of an $800,000  loan  previously  made to IDF into  preferred  stock
convertible into an additional  400,000 shares of IDF common stock, prior to his
transfer of such shares to the Rubin Family Irrevocable Stock Trust.  Subsequent
the IDF Merger,  Mr.  Rubin has served as Chairman of the Board of  Directors of
IDF until August 1999 and received a three year employment agreement from IDF at
an annual  salary of  $75,000.  However,  Mr,  Rubin has not  received  payments
thereunder since IDF'S fiscal year ended July 31, 1998.

     During Fiscal 1999 and Fiscal 2000 the Company provided financing to IDF, a
minority-owned  subsidiary.  As of June 18,  1999,  the Company had provided IDF
with $992,000. These funds were used for working capital, the payment of certain
delinquent taxes and other liabilities of Hayden/Wegman,  Inc. an IDF subsidiary
("Hayden\Wegman"), and costs related to the discontinuation of operations of the
TechStar  subsidiary.  The Company took a full reserve  against the $992,000 and
$364,000 in advances  to IDF in fiscal 1999 and 2000  respectively  due to IDF's
significant  decrease in revenue and its inability to obtain further  financing.
In September 2000, IDF discontinued the operations of Hayden / Wegman.

     Lawrence Kaplan, a former director of the Company,  is also a member of the
Board of Directors of IDF and directly and through  affiliates owns an aggregate
of 497,859  shares of IDF common  stock.  In  addition,  GV  Capital,  Inc.,  an
affiliate of Mr. Kaplan, has acted as placement agent in connection with the IDF
private placement and received additional compensation for such services, in the
form of commission of 7.5%, a 2.5% non-accountable expense allowance and 180,000
shares of IDF common stock for nominal consideration.

                                       32
<PAGE>

Compensation Committee Report On Executive Compensation

     The Board of  Directors  has been  largely  responsible  for the  Company's
executive  compensation policy as the Compensation Committee did not meet during
Fiscal  1999 and only met once  during  Fiscal  2000.  The Board  believes  that
offering its senior executive officers employment  agreements is the best way to
attract and retain highly capable  employees on a basis that will encourage them
to perform at increasing  levels of effectiveness  and to use their best efforts
to promote the growth and profitability of the Company and its subsidiaries. The
Board  believes  this  enabled  it  to  concentrate  on  negotiating  particular
employment contracts rather than establishing more general compensation policies
for  all  management  and  other  personnel.   The  Company  believes  that  its
compensation  levels as to all of its  employees  were  comparable  to  industry
standards.  Currently,  Mr. Rubin and Mr.  Jeffrey Berman are the Company's only
senior executive  officers  employed under a contract approved by the full Board
of Directors. See "Executive Compensation-Employment, Incentive Compensation and
Termination Agreements."

     In setting levels of compensation  under such  employment  contracts and in
approving management's compensation of all other Company employees, the Board of
Directors  evaluates the Company's  overall  profitability,  the contribution of
particular  individuals to the Company's  performance and industry  compensation
standards.  A significant percentage of the compensation paid to each of Messrs.
Rubin and McLain under their  respective  employment  agreements  is tied to the
Company's achievement of prescribed levels of pre-tax income of the Company as a
whole or of the  subsidiary for which each such  executive is  responsible.  See
"Employment, Incentive Compensation and Termination Agreements," above.

Compliance with Section 16(a) of the Exchange Act.

     To the knowledge of the Company,  with the exception of Messrs.  Rubin,  Mc
Lain,  Barnes  and  Katz,  who  did  not  timely  file a Form 4  reflecting  the
cancellation  of their 1996 Plan options and granting of their new options under
the 2000 Plan, and Mr. Berman who did not timely file a Form 3 upon his election
to the Board, no officers, directors, beneficial owner of more than 1 percent of
any class of equity securities of the Company registered  pursuant to Section 12
of the Securities  Exchange Act of 1934, as amended (the "Exchange Act"), or any
other  person  subject  to Section 16 of the  Exchange  Act with  respect to the
Company,  failed to file on a timely basis reports  required by Section 16(a) of
the Exchange Act during Fiscal 2000.


                                       33
<PAGE>

     ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following  table sets forth certain  information as of November 1, 2000
with respect to the  beneficial  ownership of the Common Stock of the Company by
each  beneficial  owner of more than five  percent  (5%) of the total  number of
outstanding  shares of the Common  Stock of the Company,  each  director and all
executive  officers and  directors of the Company as a group.  Unless  otherwise
indicated,  the owners have sole  voting and  investment  power with  respect to
their respective  shares.  The table does not include  options or SARs that have
not yet vested or are not exercisable within 60 days of the date hereof.

<TABLE>
<CAPTION>

Name and Address*                                              Number of Shares                Percentage of
of Beneficial Owner               Office(s)                    Beneficially Owned(1)           Common Stock (1)
-------------------               ---------                    ---------------------           ----------------
<S>                              <C>                                <C>                             <C>

Robert M. Rubin                   Director, President, Chief          1,062,798(2)(3)(7)(9)          7.9
                                  Executive Officer and
                                  Chairman of the Board

C. Dean McLain                    Director, Executive                   300,000(3)                   2.4
4601 N.E. 77th Avenue             Vice-President and
Suite 200                         President of Western
Vancouver, WA 98662               Power and Equipment Corp.
                                  ("Western")


Howard Katz                       Director                              350,000 (4)                  2.8


David M. Barnes                   Chief Financial Officer               300,000 (5)                  2.4
                                  Vice President of Finance
                                  and Director

Rubin Family Irrevocable                                              1,025,000 (6)                  8.3
Stock Trust
25 Highland Blvd.
Dix Hills, NY 11746

Jeffrey Berman                    Director                              825,000 (7)                  5.9


Stephen Byers                     Nominee for Director                  250,000 (8)                  2.0


Seymour Kessler                   Nominee for Director                  250,000 (9)                  2.0


Allen Perres                      Nominee for Director                  250,000 (9)                  2.0


All Directors and Executive                                           2,837,798 (11)                17.3
Officers as a Group (5 persons)

</TABLE>


          *    Unless otherwise  indicated,  the address of each such beneficial
               owner is Buiding 17, 2489 152nd Avenue, Redmond, WA 98052.

          **   Pursuant  to the  rules and  regulations  of the  Securities  and
               Exchange Commission, shares of Common Stock that an individual or
               group has  a right  to  acquire  within 60 days  pursuant  to the
               exercise of options  or warrants are deemed to be outstanding for
               the  purposes  of  computing  the percentage  ownership  of  such
               individual or group, but are not deemed to be outstanding for the
               purposes  of  computing  the  percentage  ownership of  any other
               person shown in the table.

                                       34
<PAGE>

The Company has two classes of voting securities:

          (1)  Common  Stock  (12,143,885  shares  outstanding)  and  Series B-1
               Preferred Stock (416,263 shares outstanding)

          (2)  Includes  222,798 shares of Common Stock owned by Mr. Rubin,  and
               840,000  incentive  stock  options to  purchase  shares of Common
               Stock  granted to Mr.  Rubin at an  exercise  price of $0.275 per
               share under the Company's 2001 Plan which are fully exercisable.

          (3)  Includes  300,000  incentive  stock options granted to Mr. McLain
               under the 2001 Plan on October 3, 2000 to acquire  Common  Stock,
               exercisable at $0.275 per share.

          (4)  Includes 350,000 incentive stock options to purchase Common Stock
               at  $0.275  per  share  under  the 2001  Plan,  all of which  are
               exercisable.

          (5)  Includes  300,000  incentive  stock options granted to Mr. Barnes
               under the 2001 Plan to purchase Common Stock at an exercise price
               of $0.275 per share.


          (6)  Robert M. Rubin, a grantor of the Rubin Family  Irrevocable Stock
               Trust (the  "Trust")  does not have any voting  power  over,  and
               disclaims  beneficial  ownership of the shares held by the Trust.
               See "Insider Participation," "Executive  Compensation-Employment,
               Incentive   Compensation   and   Termination    Agreements"   and
               "Management's  Discussion and Analysis of Financial Condition and
               Results of Operations."


          (7)  Includes 825,000 incentive stock options to purchase Common Stock
               granted to Mr.  Berman  under the 2001 Plan on October 3, 2000 in
               consideration  of  past  and  anticipated  services,   which  are
               immediately  exercisable for five years at $0.275 per share. Does
               not include  825,000  incentive  stock options which will vest on
               May 7, 2001.

          (8)  Includes 250,000  non-qualified  options to purchase Common Stock
               granted under the 2001 Plan as of October 3, 2000 to Mr. Byers in
               consideration  for his anticipated  services as a director of the
               Company.  These options shall be  exercisable at $0.275 per share
               only upon, and for five years after, his election to the Board of
               Directors.

          (9)  Includes 250,000  non-qualified  options to purchase Common Stock
               granted  under the 2000 Plan as of October 3, 2000 to each of Dr.
               Kessler and Mr.  Perres in  consideration  for their  anticipated
               services as  directors  of the Company,  which  options  shall be
               exercisable  at $0.2125  per share only upon,  and for five years
               after their election to the Board of Directors.

          (10) Excludes  Dr.  Kessler  and Mr.  Perres  and Mr.  Byers,  who are
               nominees for Director.

          (11) See Notes (2) through (7), and Note (10).

                                       35
<PAGE>


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     See "Executive  Compensation-Compensation  Committee Interlocks and Insider
Participation" and "Executive  Compensation-Employment,  Incentive  Compensation
and  Termination  Agreements",  and  "Management's  Discussion  and  Analysis of
Financial Condition and Results of Operations."



PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)  1.  Financial  Statements  are included in Part II Item 8 beginning at page
          F-1.

     2. Financial Statement Schedule

          Schedule II Valuation and Qualifying Accounts



(b) Reports on Form 8-K.

                  None.


(c) Exhibits.


Exhibit
Number                  Description

3.1  Certificate of Incorporation of Registrant.(1)

3.2  By-laws of Registrant. (2)

4.1  Specimen Certificate of Common Stock. (3)

4.2  1991 Employee Stock Option Plan. (1)

21   Subsidiaries of the Company*.

27   Financial Data Schedule*


(1)  Included  with the filing of the Company's  Registration  Statement on Form
     S-1 on October 18, 1991, as amended by Amendment No. 1, dated  December 18,
     1991,  Amendment  No. 2,  dated  January 9,  1990,  Amendment  No. 3, dated
     January 24, 1992 and Amendment No. 4, dated January 28, 1992.

(2)  Filed as an Exhibit to the Definitive Proxy Materials of Alrom Corp., a New
     York  corporation  (the  Company's  predecision),  as filed on December 10,
     1991.

(3)  Filed as an Exhibit to the  Company's  Registration  Statement on Form S-18
     (Registration  No.  3303330  81-NY) and  incorporated  herein by  reference
     thereto.

*        Filed herewith

                                       36
<PAGE>


     SIGNATURES


     In accordance  with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

         Dated: November 13, 2000

     AMERICAN UNITED GLOBAL, INC.



                 By:./s/ Robert M. Rubin
                 -----------------------
                  Robert M. Rubin, Chairman

     In accordance with the Securities and Exchange Commission,  this report has
been signed below by the following  persons on behalf of the  Registrant  and in
the capacities and on the dates indicated.



Signature               Title                              Date


/s/ Robert M. Rubin     Chairman of the Board, Chief        November 13, 2000
--------------------    Executive Officer and Director
Robert M. Rubin




/s/ C. Dean McLain      Executive Vice President and        November 13, 2000
------------------      Director
C. Dean McLain



/s/ David M. Barnes     Vice President--Finance and Chief   November 13, 2000
--------------------    Financial and Chief Accounting
David M. Barnes         Officer



/s/ Howard Katz         Director                            November 13, 2000
-------------------
Howard Katz


/s/ Jeffrey Berman      Director                            November 13, 2000
-------------------
Jeffrey Berman


                                       37
<PAGE>

                                  EXHIBIT LIST


3.1  Certificate of Incorporation of Registrant.(1)

3.2  By-laws of Registrant. (2)

4.1  Specimen Certificate of Common Stock. (3)

4.2  1991 Employee Stock Option Plan. (1)

21   Subsidiaries of the Company*.

27   Financial Data Schedule*



(1)  Included  with the filing of the Company's  Registration  Statement on Form
     S-1 on October 18, 1991, as amended by Amendment No. 1, dated  December 18,
     1991,  Amendment  No. 2,  dated  January 9,  1990,  Amendment  No. 3, dated
     January 24, 1992 and Amendment No. 4, dated January 28, 1992.

(2)  Filed as an Exhibit to the Definitive Proxy Materials of Alrom Corp., a New
     York corporation, as filed on December 10, 1991.

(3)  Filed as an Exhibit to the  Company's  Registration  Statement on Form S-18
     (Registration  No.  3303330  81-NY) and  incorporated  herein by  reference
     thereto.

*          Filed herewith