Autotradecenter Com Inc – ‘10KSB’ for 3/31/02

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Annual Report — Small Business   —   Form 10-KSB
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10KSB       Form 10KSB - March 31, 2002                           53    368K 
 2: EX-99       Exhibit 99 - Certification                             1      5K 

10KSB   —   Form 10KSB – March 31, 2002
Document Table of Contents

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

 FORM 10-KSB

(Mark One)                                                                      
[X]      ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT 
OF 1934                                                       
FOR THE FISCAL YEAR ENDED MARCH 31, 2002                      
OR

[  ]     TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE 
ACT OF 1934                                                   
 FOR THE TRANSITION PERIOD FROM _____________ TO _______________

 Commission file number: 333-78659

AUTOTRADECENTER.COM INC.
 (Exact name of small business issuer as specified in its charter)

     ARIZONA                                    86-0879572
(State or other jurisdiction of                      (I.R.S. Employer     
incorporation or organization)                     Identification No.)  

1620 SOUTH STAPLEY DRIVE, SUITE 232, MESA, ARIZONA 85204
 (Address of principal executive offices) (Zip code)

 Issuer's telephone number: (480) 556-6701

Securities registered under Section 12(b) of the Act: NONE

Securities registered under Section 12(g) of the Act: NONE

Check  whether  the issuer  (1) has filed all  reports  required  to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days. Yes X  No    
                                                                     ---   ---

Check  if no  disclosure  of  delinquent  filers  in  response  to  Item  405 of
Regulation S-B is contained in this form,  and no disclosure  will be contained,
to the best of  registrant's  knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment to this Form 10-KSB. [ ]                                              

Issuer's revenues for the fiscal year ended March 31, 2002:  $2,567,910         

Aggregate  market  value of the  voting and  non-voting  common  equity  held by
non-affiliates of the registrant as of June 28, 2002: $2,289,729                

Number of shares of common stock outstanding as of June 28, 2002:  66,088,851   

Documents incorporated by reference: None                                       

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PART I

ITEM 1.  DESCRIPTION OF BUSINESS.                                               

         Unless the context otherwise requires, the terms "we," "our," and "us,"
refers to AutoTradeCenter.com Inc.                                              

GENERAL                                                                         

  We assist automobile manufacturers, finance companies, financial
institutions, lease and rental companies, and automobile dealers in marketing   
their inventories of used automobiles over the Internet. This is referred to as 
"remarketing" in the automotive industry. We have developed technology that     
enables businesses with used vehicles to post their inventories on a website,   
provide detailed information about each vehicle, and sell these vehicles to     
other dealers. We believe that our services provide businesses with an efficient
and cost-effective used vehicle redistribution or remarketing system as an      
alternative to traditional auto auctions.                                       

Presently, all of our revenues are derived from developing and
operating remarketing websites for businesses, such as American Honda Finance   
Corporation, American Suzuki Motor Corporation, and Volvo Finance North America,
Inc. for which we are paid listing fees and fees when a vehicle is bought or    
sold on the website. We are trying to market our services to other similar types
of companies.                                                                   

CORPORATE BACKGROUND                                                            

        We were organized as an Arizona corporation on July 10, 1997 under the
name Auto Network USA, Inc., and commenced operations on September 22, 1997. In 
December 1998, we changed our name to Auto Network Group, Inc. as a result of an
agreement reached with an entity with a similar name. We again changed our name 
to AutoTradeCenter.com in April 1999 to more accurately reflect our Internet    
presence and our future direction of providing automotive remarketing services  
over the Internet.                                                              

     SUBSIDIARIES. The presentation includes a discussion of us with our
wholly-owned subsidiaries, NDSCo.com, Inc., AutoTradeCenter Remarketing         
Services, Inc. formerly Walden Remarketing Services, Inc., and                  
BusinessTradeCenter.com Inc., as well as subsidiaries in which we formerly      
carried out our wholesale land-based operations. These subsidiaries are Auto    
Network Group of Arizona, Inc., Auto Network Group of New Mexico, Inc., Auto    
Network Group Northwest, Inc., Auto Network Group of Eastern Pa., Inc., Auto    
Group of San Antonio Ltd., Auto Network Group of Denver Inc., and Pinnacle      
Dealer Services, Inc.                                                           

As of December 29, 2000, we sold our interest in our wholesale
land-based operations in Auto Network Group of New Mexico, Inc.; Auto Group of  
San Antonio Ltd.; and Auto Network Group Northwest, Inc. to Automotive          
Disposition Management Services, Inc. ("Automotive Disposition"), an affiliated 
Arizona corporation, in exchange for a 16% interest in Automotive Disposition.  
We also placed into escrow 746,493 shares of our common stock representing the  
maximum earn-out shares that could be issued to management of the operations in 
Bend, Oregon and San Antonio, Texas. In the first quarter of the fiscal year    
ended March 31, 2002, 430,675 of our common shares held in escrow for the       
management of our former subsidiary in Oregon were exchanged for 9% of our      
interest in Automotive Disposition, thereby reducing our interest therein to    
approximately 7%. In January 2002, Auto Network Group of New Mexico, Inc.       
terminated its association with Automotive Disposition. In March 2002, we       
entered into a further agreement with the management of our former subsidiary in
San Antonio and Automotive Disposition whereby we fixed the number of earn-out  
shares for San Antonio management at 261,034 for the three remaining years of   
our prior agreement with them and cancelled 54,784 shares of common stock       
remaining in escrow. In addition, we received cash of $1,000 and returned to    
Automotive Disposition the shares representing the approximate 7% interest in   
Automotive Disposition. We no longer have any interest in Automotive            
Disposition. Automotive Disposition is a private company now owned exclusively  
by Jules Gollins, the former manager of the New Mexico wholesale land-based     
operation, and by Mark Moldenhauer, one of our founders, a principal            
shareholder, and a former officer and director.                                 

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   We disposed of our wholesale land-based operations in Scottsdale,
Arizona, as of February 28, 2001 and formally dissolved Auto Network Group of   
Arizona, Inc. in March 2002. Also in March 2002 we dissolved Auto Network Group 
of Denver Inc. thereby discontinuing all wholesale land-based operations and    
allowing us to focus on providing automotive remarketing services via the       
Internet.                                                                       

 In March 2002, we also dissolved our subsidiary Pinnacle Dealer
Services, Inc. ("Pinnacle") and we are in the process of dissolving NDSCo.com,  
Inc. No corporate activity occurred in Pinnacle, NDSCo, or AutoTradeCenter      
Remarketing Services, Inc. for fiscal year end March 31, 2002.                  
BusinessTradeCenter.com Inc.'s activity is included in our consolidated         
financial statements and all material inter-company accounts and transactions   
have been eliminated.                                                           

        EQUITY FINANCING. In December 1997, we sold 1,002,500 shares of common
stock, in a private placement, for gross proceeds of $25,063. In February 1998, 
we sold 6,750 shares of Series A preferred stock, in a private placement, for   
$675,000. From November 1998 to December 1998, we sold 47,000 shares of Series B
preferred stock for gross proceeds of $470,000 in a private placement. In       
February 2000, we sold through a private placement 20,800 shares of Series C    
preferred stock and 31,200 shares of Series D preferred stock for gross proceeds
of $5,200,000. In July 2001 we sold 1,300 shares of Series E preferred stock for
gross proceeds of $130. From March 2001 through March 2002, we sold 19,350,047  
shares of common stock in a private placement for gross proceeds of $1,935,004. 

INTERNET OPERATIONS                                                             

On February 1, 1999, we introduced an Internet site:          
AutoTradeCenter.com. Our wholly-owned subsidiary, BusinessTradeCenter.com,      
controls the legal rights to the Internet domain name, technology, systems, and 
programming required to operate this site. Upon introduction, access to this    
site was limited to registered members including automobile dealers, leasing    
companies, banks, and fleet or rental companies. It was our intent, at the time,
to provide to members information on used vehicles offered for sale by us and by
others. To encourage use of this site, initially we offered free membership. We 
planned to charge a membership fee at an undetermined future date. From         
inception, approximately 500 businesses registered as members. Initially up to  
ten members posted cars on the Internet site. Our entire inventory also was     
listed on the Internet site. To date, no revenue has been generated from the    
AutoTradeCenter.com web site. Our current business plan does not include        
generating revenue from this site. The start-up costs for the development of the
site were not material, since the prior minority owner of our wholly-owned      
subsidiary BusinessTradeCenter.com, contributed the technology for the site     
design for its ownership interest. Software relating to Internet                
dealer-to-dealer used car exchanges acquired from NDSCo.com, as part of the     
purchase price of that company, was written off as impaired in our fiscal year  
ended March 31, 2001.                                                           

The development of our website and our acquisition of Walden  
Remarketing Services led to the execution of a Motor Vehicle Remarketing        
Agreement with American Honda Finance Corporation in February 2000. The         
agreement gave us the exclusive contract to remarket all of the vehicles        
returned to Honda after termination of a lease. Access to the website is        
restricted to users approved by Honda. As of June 15, 2000, the Honda Web site  
was operational with all Honda and Acura dealers throughout the United States.  
We amended our agreement with American Honda Finance in February 2001 and again 
in October 2001. Among other things, the amendments extended our contract to    
remarket Honda and Acura vehicles through January 31, 2004, and increased the   
fees we could earn for each vehicle marketed on the website. The Honda agreement
is terminable upon 60 days notice by Honda upon the payment of certain fees to  
AutoTradeCenter.                                                                

 We developed a pilot program for Suzuki, similar to the program
developed for Honda, utilizing our Internet technology systems and procedures to
remarket their program vehicles to dealers. The Suzuki pilot program began in   
September 2000 (www.suzukiproline.com) and we signed an agreement with Suzuki in
January 2001 to remarket their program cars over the Internet for a one-year    
period. This agreement was extended in February 2002 for an additional year term
ending January 2003.                                                            

      In April of 2001, we entered into an agreement to remarket off-lease
Volvo vehicles with Volvo Finance North America for one year commencing with the
start of operations of the Volvo program. The Volvo Finance                     

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web site, www.volvoride.com, began operating on a pilot basis on October 29,    
2001 and became fully operational on December 13, 2001. We are currently        
negotiating an extension of our contract with Volvo.                            

     By combining the BusinessTradeCenter and NDSCo.com technologies, we
created the next generation of AutoTradeCenter technology called ATCADVANTAGE,  
to better service current clients such as Honda, Suzuki and Volvo, as well as   
prospective clients. These prospective clients most likely will be automobile   
manufacturers, finance companies, financial institutions, lease and rental      
companies, and automobile dealers with an inventory of used vehicles to sell. We
launched ATCADVANTAGE in February 2001 with the Honda website. The Honda, Suzuki
and Volvo websites utilize the ATCADVANTAGE platform, as will other clients when
or if obtained.                                                                 

     The ATCADVANTAGE web site offers, among other things, the following
services and features:                                                          

o   Inventory Listing - A consignor can post inventory for sale. The listing can
include a complete description of each vehicle, including make, model, trim,
  equipment, mileage and a wholesale price. Condition reports and digital images
of the vehicle can also be included with the vehicle description.           

o   Condition Report Display Standards - ATC's condition report display         
standards mean that all vehicle inspection results can be displayed in a    
similar format, irrespective of the inspection company completing the       
  condition report. It also reduces integration costs for sellers, enabling them
to integrate a single standardized inspection data feed into their systems. 

o   Car Groups - Consignor vehicles are organized into groups that follow the   
same business rules or behaviors. This technology allows differing groups of
vehicles to be searched and viewed side by side with vehicles from other Car
  Groups. Consignors can make all their portfolios available for sale to any, or
all, prospective buyers through the use of one or more car groups.          

o   Marketing Programs - ATCADVANTAGE enables sellers to provide marketing and  
purchase incentive programs from time to time. These can include rebates,   
transport discounts or other incentives. Dealers purchasing a vehicle on    
ATCADVANTAGE can select these marketing programs if they apply to their     
specific vehicle purchases.                                                 

o   Private Label Communities - Consignors can set up private branded sites for 
 the purpose of providing an information center for their buying dealers. This
area on the site facilitates dealer buying histories, remarketing activities
 calendar, transportation links, newsletter and other static links. Consignors
can advertise here, through the use of banner ads, and other tools to market
information to prospective buyers.                                          

o   Transaction Engine - The ATC transaction engine enables dealers to purchase 
vehicles from the website. Once vehicles have been purchased, appropriate   
notifications are sent to the consignor, including all relevant details     
associated with the transaction.                                            

o   Auction Consignment - ATCADVANTAGE enables consignors to automatically      
consign vehicles to physical auctions using business rules set by the       
consignor. These rules can be based on vehicle type, vehicle value, vehicle 
location etc.                                                               

o   Auction Extension - Consignors can continue to list vehicles on the         
ATCADVANTAGE system while those vehicles are still in route to auction, or  
while they're located at the auction itself. ATC's auction extension        
facilitates tracking of the vehicle while it is being transported from the  
dealership through to the auction. Dealers purchasing vehicles located at   
auction can also purchase reconditioning services provided by the auction.  

o   Integration to ATC CRM System - All dealers viewing and purchasing vehicles 
on the ATCADVANTAGE system have accounts set up in the ATC Customer         
  Relationship Management system. All inbound and outbound calls with the dealer
are logged in this system, and the dealer's transaction history is also     
  recorded. This enables the ATC Dealer Services team to have access to the most
up to date information when interacting with the dealers.                   

o   Reporting - Consignors can access online reports relating to vehicles       
listed, sold, purchased by specific dealers. ATC also provides sellers with 
significant levels of end of week and end of month reporting, sales data,   

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comparisons and other related management information. The ATC websites also 
support individual vehicle tracking by VIN, enabling consignors to track the
history of specific vehicles.                                               

We intend to charge new clients for services provided on our  
ATCADVANTAGE site a listing fee for each vehicle listed on the website and a    
transaction fee for each vehicle sold on the website. We also intend to charge  
fees for extra services such providing a call center, generating reports and    
analyzing data collected through the website, and to pass certain custom        
programming costs on to clients. Currently, we charge for additional call center
activities and custom programming cost based upon specific requests of our      
clients.                                                                        

        Since we have been unable to generate revenue from posting and selling
vehicles on the AutoTradeCenter.com site as a result of, among other things,    
obstacles relating to the dealer-to-dealer exchanges of used vehicles over the  
Internet, we decided to change the functionality of our AutoTradeCenter.com web 
site as follows:                                                                
o   No automobiles are posted on the site.                              
o   We are redirecting dealers to the ATCADVANTAGE site.                

We are using the AutoTradeCenter.com site to provide information about our      
company, such as financial statements, press releases, personnel information,   
etc.                                                                            

CUSTOMERS                                                                       

       Our e-commerce Internet automotive solutions and initiatives provides
us with the opportunity to serve the large suppliers of used automobiles such as
finance companies, lease companies and car rental companies. These customers are
also considered to be automobile dealers; however, they only supply the industry
with used vehicles, they are not purchasers of used automobiles.                

SEASONALITY OF BUSINESS                                                         

The sale of used automobiles is a year-round process. However,
generally sales slow down during the fourth quarter of the calendar year due to 
the introduction of new models and the holiday season. Business generally picks 
up in January. Similarly, there are fewer vehicles returned after the           
termination of a lease in the fourth quarter of the calendar year. This is      
followed by a return to higher volumes in the first and second calendar         
quarters, followed by a further increase in vehicles being returned after lease 
terminations during the summer months.                                          

WORKING CAPITAL PRACTICES                                                       

During the past year we met our working capital needs through 
operations, the sale of equity pursuant to a private placement, and borrowing on
our line of credit facility with our former lender, Eagle Capital Group, LLC    
("Eagle"). Our indebtedness under the Eagle credit facility was repaid on June  
28, 2002, through a loan made to us in connection with our Agreement and Plan of
Reorganization dated June 28, 2002 with Autodaq Corporation. Concurrently with  
our repayment of this indebtedness, the credit facility with Eagle was          
terminated. See Item 6 - "Management's Discussion and Analysis or Plan of       
Operation - Anticipated Trends and Plan of Operation."                          

COMPETITION                                                                     

        We compete with other Internet-based entities that maintain commercial
Web sites for the wholesale remarketing of vehicles on the Internet including   
Autodaq Corporation, The Cobalt Group, OnLane, Manheim Auto Auction, Adesa Auto 
Auction, Fleet Lease Disposal, Inc., and GMAC's Smart Auction. We also compete  
with various financial institutions that remarket their own off-lease vehicles. 
We believe that we compete for customers, which are entities with inventories of
off-lease or program vehicles to sell, primarily on the basis of:               
      o   The cost of using our services as opposed to the services of
others;                                           
   o   The experience and expertise of our personnel in Internet
    technology and the automobile remarketing/retail sales
industries;                                       
          o   Our call center, which is staffed 24 hours a day, 7 days a week;

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 o   Whether the needs of these entities are being addressed
adequately; and                                   
       o   The quality of service to be rendered to all users of the Web
site - primarily the seller and the buyer.        

We currently assess our competition as follows:               
           o   AUTODAQ CORPORATION - We believe that we compete directly against
             Autodaq, an entity that currently provides an Internet Web site
            that competes with our Internet initiatives. These initiatives
            are directed to the acquisition and redistribution of vehicles
            returned to finance companies after termination of a lease. We
            consider Autodaq to be a major competitor. On June 28, 2002 we
            entered into a Reorganization Agreement to merge with Autodaq.
            (See Item 6 - "Management's Discussion and Analysis or Plan of
     Operation - Anticipated Trends and Plan of Operation.")
           o   THE COBALT GROUP - The Cobalt Group is a private company. It also
            is better capitalized than our company. Currently, Cobalt is a
         leading provider of e-business products and services to the
            automotive industry.  Nearly half of the nation's auto dealers
            use Cobalt's technology, including 8,500 Web services clients.
     Its e-business products and services are endorsed by 15
          automotive manufacturers and more than 50 of the 100 largest
               dealer groups in the United States. Cobalt is the only e-business
               provider endorsed by the National Automobile Dealers Association.
               Cobalt has developed an Internet based remarketing program called
             Motorplace Exchange.  We expect Cobalt's Motorplace Exchange to
            become increasingly popular as a dealer-to-dealer exchange for
used vehicle inventory management.                
     o   ONLANE - OnLane Corporation is a private company located in
               Toronto, Canada which provides certain Internet applications that
              compete with our products and services. To date, the majority of
               their customers are located in Canada. Because they are privately
              held, little information is available on the financial resources
              and operations of OnLane. However, we have experienced increased
       competition from OnLane during the past six months and we
            anticipate that OnLane will be very competitive with us in the
future.                                           
          o   MANHEIM - Manheim Online is an Internet-based program of Manheim
              Auto Auction, which is the largest automobile auction company in
               the United States. Until recently, Manheim Online had limited its
              presence only to vehicles grounded at Manheim auctions. However,
             we believe that Manheim intends to expand its Internet presence
               to include other vehicles. Manheim is far better capitalized than
        we, as it is owned by Cox Enterprises, a subsidiary of Cox
           Communications. We expect Manheim to be a major competitor in
Internet remarketing.                             
        o   ADESA - Adesa Corporation, like Manheim, is one of the largest
           physical auction companies in the United States. Adesa's Open
         initiative supports programs that will compete with various
              programs and services that we currently provide our customers on
               the Internet. Adesa is better capitalized that we, as it is owned
by Allete Corporation.                            
          o   FLEET LEASE DISPOSAL, INC. - Fleet Lease Disposal is a privately
               held Florida-based corporation that competes against us for large
            financial institution clients. It appears to have a management
             team with a significant amount of experience both in automobile
        sales and Internet technology. Its Veretack program offers
      vehicle remarketing services, lease disposal/termination
              solutions, title services, or personalized customer programs. It
        recently introduced new, web-based, Internet technology to
              expedite the process of remarketing off-lease and fleet vehicles
        for manufacturers, banks and other financial institutions.
       o   GMAC - Although the GMAC web site has been limited to General
  Motors' vehicles, an expansion of this site to other
         manufacturers and financial institutions also could provide
substantial competition.                          

GOVERNMENT REGULATION                                                           

    Compliance with government regulations does not currently impose a
significant impact on our Internet operations.                                  

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EMPLOYEES                                                                       

     As of March 31, 2002 we had 17 full-time employees and no part-time
employees. We depend upon a limited number of key management and technical      
personnel. None of our employees is represented by labor organizations; we have 
never had a work stoppage or slowdown as a result of labor issues; and we have  
excellent relations with our employees. Management believes that the adoption of
our stock plans, along with other Company benefits, will enhance employees'     
interest in remaining with us. In the future, management is planning to add     
further incentives to attract and retain high quality personnel.                

ITEM 2.  DESCRIPTION OF PROPERTIES.                                             

      Effective May 15, 2002, we moved our administrative offices to Mesa,
Arizona after entering into a sub-lease with an unrelated third party consisting
of approximately 7,000 square feet that will expire March 31, 2004. Until the   
move in May 2002 to our current office space, we leased from an unrelated third 
party approximately 6,000 square feet of office space in Scottsdale, Arizona.   
The 13,500 square-foot administrative and warehouse facility, also in           
Scottsdale, Arizona, that formerly housed our wholesale land-based and warehouse
facilities, is leased from an unrelated third party under an operating lease    
expiring September 30, 2002. This facility is currently subleased to two        
unrelated parties. During the year we successfully negotiated a settlement of   
both the Denver, Colorado and Philadelphia, Pennsylvania facilities terminating 
our lease obligations with the respective lessors.                              

ITEM 3.  LEGAL PROCEEDINGS.                                                     

     We and certain of our subsidiaries have been named as defendants in
various claims, complaints and other legal actions arising in the normal course 
of business. In the opinion of management, the outcome of these matters will not
have a material adverse effect upon our financial condition, results of         
operations or cash flows.                                                       

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

None.                                                         

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 PART II

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

         Our common stock traded over-the-counter on the OTC Bulletin Board from
January 29, 1998 to August 2, 1999. From August 3, 1999 to November 5, 1999, our
common stock traded on the "pink sheets." Since November 8, 1999, it has traded 
on the OTC Bulletin Board. The following table sets forth the range of high and 
low bid quotations for each fiscal quarter since the stock began trading. These 
quotations reflect inter-dealer prices without retail mark-up, mark-down, or    
commissions and may not necessarily represent actual transactions.              

FISCAL QUARTER ENDING                       HIGH BID           LOW BID  

June 30, 2000.........................      $ 3.2500           $ 1.1000 
September 30, 2000....................      $ 2.6250           $ 0.9375 
December 31, 2000.....................      $ 2.3750           $ 0.3125 
March 31, 2001........................      $ 1.2344           $ 0.2969 
June 30, 2001.........................      $ 0.4062           $ 0.1400 
September 30, 2001....................      $ 0.2500           $ 0.0800 
December 31, 2001.....................      $ 0.1200           $ 0.0900 
March 31, 2002........................      $ 0.2500           $ 0.0900 

         On June 28, 2002, the closing price for the common stock was $0.06. The
number of record holders of common stock as of June 28, 2002 was 158 according  
to our transfer agent.                                                          

      Our common stock is subject to SEC rules relating to "penny stocks,"
which apply to non-NASDAQ companies whose stock trades at less than $5.00 per   
share or whose tangible net worth is less than $2,000,000. Prior to the sale of 
a penny stock recommended by the broker-dealer to a new customer who is not an  
accredited investor, the broker-dealer must approve the customer's account for  
transactions in penny stocks in accordance with procedures set forth in the     
SEC's rules. The broker-dealer must obtain information about the customer's     
financial situation, investment experience, and investment objectives. Using    
this information, the broker-dealer must be able to determine that transactions 
in penny stocks are suitable for this customer and that the customer has        
sufficient knowledge and experience in financial matters to be capable of       
evaluating the risks of transactions in penny stocks. The broker-dealer must    
furnish the customer with a written statement setting forth the basis for the   
broker's determination of suitability. The customer must sign, date, and return 
the statement to the broker-dealer. In addition, the broker-dealer must obtain a
written agreement from the customer to purchase the penny stock that sets forth 
the identity of the stock and number of shares to be purchased. A separate      
agreement must be obtained for each penny stock purchased by the customer until 
he or she becomes an "established customer."                                    

       Holders of shares of common stock are entitled to dividends when, and
if, declared by the board of directors out of funds legally available for the   
payment of dividends. We have never paid any cash dividends on our common stock 
and intend to retain future earnings, if any, to finance the development and    
expansion of our business. Our future dividend policy is subject to the         
discretion of the board of directors and will depend upon a number of factors,  
including future earnings, capital requirements, and our financial condition.   

During the quarter ending March 31, 2002, we sold 2,020,000   
unregistered shares of our common stock for gross proceeds of $202,000 to 8     
persons in reliance upon the exemption from registration contained in Section   
4(2) of the Securities Act of 1933. No underwriters were used in the above      
transactions. The purchasers were deemed to be sophisticated with respect to    
this investment in our securities by virtue of their financial condition and    
previous investment experience. A restrictive legend was placed on the stock    
certificates evidencing the purchased shares.                                   

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ITEM 6.     MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.          

      The balance sheet and income statement data shown below were derived
from our audited financial statements. We have restated our financial statements
due to our disposition of our land-based operations, which represents the       
disposal of a business segment. You should read this data in conjunction with   
"Management's Discussion and Analysis of Financial Condition and Results of     
Operations," as well as our financial statements and notes thereto, included    
elsewhere in this report.                                                       

                                                        [Enlarge/Download Table]

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 BALANCE SHEET DATA:                                                   MARCH 31,                                     
                                  -----------------------------------------------------------------------------------
                                       2002             2001             2000             1999             1998      
                                                     (RESTATED)       (RESTATED)       (RESTATED)       (RESTATED)   
                                  -----------------------------------------------------------------------------------
                                                                                                                     
Current assets                     $      713,107   $      628,595    $  5,489,176     $    401,628      $        0  
Total assets                       $    6,974,283   $   10,267,582    $ 20,102,747     $  4,790,817      $  743,333  
Current liabilities                $    1,562,688   $      446,039    $  1,118,542     $  1,343,936      $        0  
Long-term liabilities              $      663,201   $      538,807    $    528,807     $    535,817      $    3,465  
Stockholders' equity               $    4,748,395   $    9,282,736    $ 18,455,398     $  2,911,064      $  739,868  
Working capital (deficiency)       $     (849,581)  $      182,556    $  4,370,634     $   (942,308)     $        0  
---------------------------------------------------------------------------------------------------------------------

                                                        [Enlarge/Download Table]

--------------------------------------------------------------------------------------------------------------------- 
INCOME STATEMENT DATA:                                                                                 JULY 10, 1997  
                                                                                                        (INCEPTION)   
                                                                                                       THROUGH MARCH  
                                                         YEAR ENDED MARCH 31,                               31,       
                                  -------------------------------------------------------------------      1998       
                                       2002             2001             2000             1999                        
                                  ------------------------------------------------------------------------------------
                                                     (RESTATED)       (RESTATED)       (RESTATED)       (RESTATED)    
                                  ------------------------------------------------------------------------------------
                                                                                                                      
Net sales                          $  2,567,910    $     870,474    $     291,587     $         0      $         0    
Net loss from continuing                                                                                              
operations                         $ (7,902,552)   $  (9,060,369)   $    (946,202)    $  (276,671)     $         0    
Income (loss) from discontinued                                                                                       
operations                         $          0    $  (2,663,285)   $  (1,697,585)    $   448,491      $    15,899    
Net income (loss) before taxes     $ (7,902,552)   $ (11,723,654)   $  (2,643,787)    $   171,820      $    15,899    
Net income (loss)                  $ (7,902,662)   $ (11,723,654)   $  (2,587,753)    $   115,241      $    12,384    
Basic earnings (loss) per share                                                                                       
    Continuing operations          $      (0.17)   $       (0.28)   $       (0.04)    $     (0.02)     $         0    
    Discontinued operations        $          0    $       (0.08)   $       (0.08)    $      0.03      $         0    
Diluted earnings (loss) per share                                                                                     
    Continuing operations          $      (0.17)   $       (0.28)   $       (0.04)    $     (0.01)     $         0    
    Discontinued operations        $          0    $       (0.08)   $       (0.08)    $      0.02      $         0    
----------------------------------------------------------------------------------------------------------------------

The following discussion contains trend information and other 
forward-looking statements that involve a number of risks and uncertainties. Our
actual future results could differ materially from our historical results of    
operations and those discussed in the forward-looking statements. All period    
references are for the years ended March 31, 2000, 2001, and 2002.              

GENERAL                                                                         

    The presentation includes a discussion of us with our wholly-owned
subsidiaries, NDSCo.com, Inc., AutoTradeCenter Remarketing Services, Inc.       
formerly Walden Remarketing Services, Inc., and BusinessTradeCenter.com Inc., as
well as subsidiaries in which we formerly carried out our wholesale land-based  
operations. These subsidiaries are Auto Network Group of Arizona, Inc., Auto    
Network Group of New Mexico, Inc., Auto Network Group Northwest, Inc., Auto     
Network Group of Eastern Pa., Inc., Auto Group of San Antonio Ltd., Auto Network
Group of Denver Inc., and Pinnacle Dealer Services, Inc.,                       

As of December 29, 2000, we sold our interest in our wholesale
land-based operations in Auto Network Group of New Mexico, Inc.; Auto Group of  
San Antonio Ltd.; and Auto Network Group Northwest, Inc. to Automotive          
Disposition Management Services, Inc. ("Automotive Disposition"), an affiliated 
Arizona corporation, in exchange for a 16% interest in Automotive Disposition.  
We also placed into escrow 746,493 shares of our common stock, representing the 
maximum earn-out shares that could be issued to management of the operations in 
Bend, Oregon and San Antonio, Texas. In the first quarter of the fiscal year    
ended March 31, 2002, 430,675 of our                                            

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common shares held in escrow for the management of our former subsidiary in     
Oregon were exchanged for 9% of our interest in Automotive Disposition          
Management thereby reducing our interest therein to approximately 7%. In January
2002, Auto Network Group of New Mexico, Inc. terminated their association with  
Automotive Disposition. In March 2002, we entered into a further agreement with 
the management of our former subsidiary in San Antonio and Automotive           
Disposition whereby we fixed the number of earn-out shares for San Antonio      
management at 261,034 for the three remaining years of our prior agreement with 
them and cancelled 54,784 shares of common stock remaining in escrow. In        
addition, we received cash of $1,000 and returned to Automotive Disposition the 
shares representing the approximate 7% interest in Automotive Disposition. We no
longer have any interest in Automotive Disposition. Automotive Disposition is a 
private company now owned exclusively by Jules Gollins, the former manager of   
the New Mexico wholesale land-based operation, and by Mark Moldenhauer, one of  
our founders, a principal shareholder, and a former officer and director.       

   We disposed of our wholesale land-based operations in Scottsdale,
Arizona, as of February 28, 2001 and formally dissolved Auto Network Group of   
Arizona, Inc. in March 2002. Also in March 2002, we dissolved Auto Network Group
of Denver Inc. thereby discontinuing all wholesale land-based operations and    
allowing us to focus on providing automotive remarketing services via the       
Internet.                                                                       

 In March 2002, we also dissolved our subsidiary Pinnacle Dealer
Services, Inc. ("Pinnnacle"), and we are currently taking action to dissolve    
NDSCo.com, Inc. No corporate activity occurred in Pinnacle, NDSCo, and          
AutoTradeCenter Remarketing Services for fiscal year end March 31, 2002.        
BusinessTradeCenter.com Inc's activity is included in our consolidated financial
statements and all material intercompany accounts and transactions have been    
eliminated.                                                                     

         As a result of the disposition of our land-based operations, as further
described in the following paragraphs, the trend information should be carefully
read and evaluated. See "Anticipated Trends and Plan of Operation" below.       

OVERVIEW                                                                        

   We began operations on September 22, 1997 and completed our first
fiscal year on March 31, 1998 as a wholesale auto remarketer. We continued this 
activity up until February of 2001, when we sold our wholesale land-based       
operations. Due to the discontinuance of our land-based operations, we now focus
all of our efforts on remarketing vehicles over the Internet.                   

    In January 1999, we announced the development of our Internet site
WWW.AUTOTRADECENTER.COM. No revenues have been generated from the operations of 
this site, which is now used for informational purposes only. However, effective
February 1, 2000, a new web site developed for American Honda Finance           
Corporation, powered by our technology, began generating revenue. We generated  
$291,587 of revenue in the year ended March 31, 2000 from remarketing activities
that were not related either to our Internet remarketing business or our        
wholesale land-based operations. Our existing remarketing agreement with Honda  
Finance Corporation gives us an exclusive contract to remarket, over the        
Internet through January 31, 2004, all of the vehicles returned to Honda and    
Acura after termination of a lease. These are referred to in the industry as    
"off-lease" vehicles. The Honda web site, www.hfcarsales.com, became operational
in all Honda and Acura dealerships by June 15, 2000 upon completion of a phase  
in period beginning April 2000. The Honda agreement is terminable upon 60 days  
notice by Honda upon the payment of certain fees to AutoTradeCenter.            

 We developed a pilot program for Suzuki, similar to the program
developed for Honda, utilizing our Internet technology systems and procedures to
remarket their program vehicles to dealers. The Suzuki pilot program began in   
September 2000 (www.suzukiproline.com), and we signed an agreement with Suzuki  
in January 2001 to remarket their program cars over the Internet for a one-year 
period. In February 2002, our contract with Suzuki was extended for an          
additional year.                                                                

      In April of 2001, we entered into an agreement to remarket off-lease
Volvo vehicles with Volvo Finance North America for one year commencing with the
start of operations of the Volvo program. The Volvo Finance web site,           
www.volvoride.com, began operating on a pilot basis on October 29, 2001 and     
became fully operational on December 13, 2001. We are currently negotiating an  
extension of the contract with Volvo.                                           

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RESULTS OF OPERATIONS                                                           

    Our financial statements reflect Internet operations as continuing
operations and land-based operations as discontinued operations, even though we 
did not generate any revenue from our Internet remarketing operations until     
April 2000. On November 30, 2000, our management and Board of Directors decided 
to discontinue all of our wholesale land-based operations. We believe that our  
best opportunity to maximize profitability and shareholder value is to          
concentrate all of our efforts on remarketing used vehicles utilizing the       
Internet as the backbone of our operations. We sold our wholesale land-based    
subsidiaries in New Mexico, Oregon, and Texas on December 29, 2000, and closed  
our operations in Pennsylvania and Colorado by the end of the year. We began to 
down-size our Scottsdale, Arizona operations in December 2000, and transferred  
these operations to certain of the independent-contractor brokers who formerly  
purchased and sold vehicles for us primarily in Scottsdale, Arizona, effective  
February 28, 2001.                                                              

         The following schedule shows the computation of the loss resulting from
discontinuing our land-based operations:                                        

Loss from sale of Albuquerque, Bend, and San Antonio operations:
Carrying value                             $  1,596,933     
Sales price                                   1,200,000     
                                      ------------
Loss                                         396,933  
Unamortized goodwill                            351,542     
                                      ------------
          Total loss                                                 $   748,475

Loss from transfer and closing of Scottsdale operation:         
Sale of equipment                                17,793     
Inventory losses due to sale                    425,693     
Uncollectible brokers accounts                  593,635     
Costs of closing operations                     226,461     
Accrued future costs of closing operations       50,000     
                                      ------------
                                                                       1,313,582
        Loss from closing Pennsylvania                                   277,388
                                                                     -----------
        Total loss from discontinuing wholesale land-based segment   $ 2,339,445
                                                                     ===========

    The following statement of operations for the wholesale land-based
operations reflects the details of these operations for the periods herein      
presented:                                                                      

RESULTS OF OPERATIONS OF DISCONTINUED WHOLESALE LAND-BASED OPERATIONS:          
                                              FOR THE YEAR ENDED MARCH 31,
                                            ------------------------------------
                                               2001*                2000
                                            ------------------------------------
    Net sales                              $  123,171,010       $  131,569,705
    Cost of sales                             117,257,094          125,770,135
                                           --------------       --------------
       Gross profit                             5,913,916            5,799,570
                                           --------------       --------------
Operating expenses                                                    
       Selling                                  4,376,272            3,843,922
       General and administrative               1,199,064            1,783,874
       Bad debt expenses                           75,000            1,045,970
       Depreciation and amortization               36,165               38,428
                                           --------------       --------------
        Total operating expenses                5,686,501            6,712,194
                                           --------------       --------------

     Income (loss) from operations                 227,415             (912,624)
                                           --------------       --------------

Other income (expense):                                               
       Miscellaneous                              139,599              102,133
        Interest expense                          (690,854)            (887,094)
                                           --------------       --------------
         Total other income (expense) - net       (551,255)            (784,961)
                                           --------------       --------------

     Net (loss) before income taxes         $     (323,840)      $   (1,697,585)
                                           ==============       ==============
* Through 12/31/00 - date of discontinuance                                     

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  Net losses from continuing operations were $7,902,662 ($0.17 per
share), $9,060,369 ($0.28 per share), and $946,202 ($0.04 per share) for the    
fiscal years ended March 31, 2002, 2001, and 2000, respectively.                

      INTERNET REVENUES. Internet revenues from continuing operations were
$2,542,610, $870,474 and $291,587 for our fiscal years ended March 31, 2002,    
2001, and 2000, respectively. Substantially all revenue for the fiscal years    
ended March 31, 2002 and 2001 was earned from remarketing vehicles. For the     
fiscal year ended March 31, 2000, AutoTradeCenter Remarketing Services Inc.     
generated all revenue from contracts entered into by Walden Remarketing Services
prior to our acquisition of Walden. These contracts were with American Honda    
Finance and others. The revenue derived from these contracts resulted from      
services provided by us to encourage dealers to attend and purchase off-lease   
and other vehicles at auctions. None of this revenue resulted from Internet     
activities, and it ceased upon expiration of the contracts in July and August of
1999.                                                                           

    COST OF REVENUES. Cost of revenues in addition to salary and wages
included our website hosting costs and an allocated share of operating expenses 
and overhead. Salary and wages were higher for the year ended March 31, 2002    
because of the addition of two employees who are software design engineers. This
also changed the allocated share of operating expenses and overhead.            

 SALES AND MARKETING. Our sales and marketing expenses consisted
primarily of compensation for sales personnel. Sales salary expense decreased   
$501,435 for the year ended March 31, 2002 compared to the prior year because of
a reduction in sales personnel. The reduction in salary expense also changed and
reduced the allocated portion of operating expenses and overhead. During the    
period ended March 31, 2001, sales and marketing expenses increased $832,834    
from the period ended March 31, 2000 as we focused our attention on the Internet
portion of our business.                                                        

 PRODUCT DEVELOPMENT. Our product development expenses consisted
primarily of compensation for product development personnel and outside         
consulting costs. Product development expense was substantially less for the    
year ended March 2002, as compared to the same period ended March 2001 because  
of the costs incurred in the year 2001 to significantly enhance the             
functionality of our system. The bulk of our product development costs are      
capitalized into cost of software in accordance with Statement of Position 98-1,
Accounting for the Costs of Computer Software Developed or Obtained for Internal
Use, in determining the amount of software costs developed in-house to be       
capitalized. We apply Emerging Issues Task Force 00-02, Accounting for Website  
Development Costs, in determining the amount of website development costs to be 
capitalized.                                                                    

      These standards require capitalization of certain direct development
costs associated with internal use software and website development costs. Costs
to be capitalized include internal and external direct project costs including, 
among others, payroll and labor, material, and services. These costs are        
included in software and are being amortized over a period not to exceed three  
years beginning when the software is substantially ready for use. Costs incurred
on new projects, projects in a preliminary phase and projects that contract     
negotiations have not begun, as well as maintenance and training costs, are     
charged to expense as incurred. During the year ended March 2002, we capitalized
over $828,000 in software development costs, as compared to $1,206,020 during   
the year ended March 2001 and $206,816 for the year ended March 2000.           

    GENERAL AND ADMINISTRATIVE. Our general and administrative expense
consists primarily of compensation for administrative personnel, including our  
executive officers, facility expenses and fees for outside professional         
services. General and administrative expenses increased by $132,239 to          
$1,601,536 from $1,469,297 for the years ended March 31, 2002 as compared to    
March 31, 2001. The increase primarily is attributable to professional fees.    
General and administrative expenses increased $909,829 for the year ended March 
31, 2001 as compared to March 31, 2000 primarily due to a full year of increased
staffing that increased salaries and wages, contracted professional fees and    
certain other general and administrative expenses. Some of the general and      
administrative expense that had previously been absorbed by our discontinued    
operations are included in the general and administrative expense classification
of our continuing operations.                                                   

        DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased
to $4,175,891 for the period ended March 31, 2002, as compared to depreciation  
and amortization of $3,836,788 for the same period last year. The increase of   
$339,103 primarily relates to depreciation on the cost of acquired software     
during the year. Depreciation primarily is capitalized software costs resulting 
from the acquisition of a minority interest in                                  

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BusinessTradeCenter.com and the acquisition of NDSCo.com, as well as from       
computers and equipment required to run our Internet sites and office furniture 
and equipment. Depreciation and amortization related to continuing operations   
increased to $3,836,788 for the fiscal year ended March 31, 2001, as compared to
$319,800 for the fiscal year ended March 31, 2000. Included in depreciation and 
amortization for the fiscal year ended March 31, 2001 are $3,265,247 for        
depreciation of software acquired when we purchased the minority interest in    
BusinessTradeCenter.com and amortization of $198,538 of goodwill resulting from 
our acquisition (during our fiscal year ended March 31, 2000) of Walden         
Remarketing. The balance of depreciation expense resulted from depreciation of  
our furniture, fixtures, and computer hardware.                                 

         We also recorded a charge for the loss on disposal of impaired software
of $49,122 and $2,261,486 for years ended March 31, 2002 and March 31, 2001,    
respectively. During the year ended March 31, 2002 the loss on impairment of    
software is a result of writing off old software purchased by the company. The  
software written off is no longer of value for current or future Company        
operations. In the prior year ending March 31, 2001, the impaired software was  
acquired from NDSCo.com as part of the purchase price when we acquired NDSCo on 
March 31, 2000. This software that assists in dealer-to-dealer Internet         
exchanges of used vehicles does not fit in our current business plan of         
remarketing off-lease and program cars. Since we cannot determine when or if we 
will use the software, we are unable to assess its value and accordingly        
consider it impaired.                                                           

       INTEREST EXPENSE. Interest expenses for the year increased $2,908,433
due mainly to an increase in interest expense related to the amortization and   
accretion on stock issued and warrant costs of $2,678,621. Interest expense also
increased $122,924 because of our line of credit with Eagle. For the year ended 
March 31, 2001, interest expense increased $43,432 over the previous fiscal year
because of interest charges on related party debt allocated to continuing       
operations.                                                                     

BAD DEBT EXPENSE. We did not incur a charge for bad debts from
continuing operations for the years ended March 31, 2002, 2001 or 2000.         

FLUCTUATIONS IN OPERATING RESULTS                                               

       We have had limited experience to determine if our operations will be
subjected to major fluctuations or trends. Historically, the used car market has
remained relatively stable as an industry. Industry projections over the next   
few years indicate there will be an upward trend in used car sales. Vehicles    
coming off-lease during the next three years are predicted to remain relatively 
constant as are the availability of program cars. However, there can be no      
assurance that our sales will parallel industry projections or that industry    
projections will materialize.                                                   

FINANCIAL CONDITION                                                             

     ASSETS. Total assets decreased to $6,974,283 at March 31, 2002 from
$10,267,582 at March 31, 2001. Total assets declined due to non-cash            
depreciation and amortization of our software, furniture and equipment, goodwill
and write down of impaired software. As a result of our decision to discontinue 
our wholesale land-based operations, our total assets decreased to $10,267,582  
at March 31, 2001, from $20,102,747 at March 31, 2000. This decrease primarily  
results from the substantial completion of the sale of assets formerly used in  
our wholesale land-based operations (as is reflected in the following schedule) 
and our use of cash in funding operations. Total assets also declined due to    
non-cash depreciation and amortization of our software, furniture and equipment,
and goodwill, and the write-off of impaired software.                           

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The following table reflects the detail of our net assets from
discontinued operations:                                                        

AUTOTRADECENTER.COM INC.                                                        
SCHEDULE OF NET ASSETS FROM DISCONTINUED OPERATIONS                             

                                                                [Download Table]

                                         MARCH 31, 2002  MARCH 31, 2001
                                         --------------  --------------
                                                                       
ASSETS                                                                 
  Accounts receivable - trade, net       $       26,300  $       60,659
  Inventory                                          --          28,000
                                         --------------  --------------
      Total Assets                               26,300          88,659
                                         --------------  --------------

LIABILITIES                                                            
  Accounts payable - trade                           --          66,847
                                         --------------  --------------
     Total liabilities                               --          66,847
                                         --------------  --------------

NET ASSETS FROM DISCONTINUED OPERATIONS  $       26,300  $       21,812
                                         ==============  ==============

 LIABILITIES. Current liabilities at March 31, 2002 increased to
$1,562,688 from $446,039 at March 31, 2001, primarily due to the increased      
borrowing on our line of credit. Our indebtedness under this line of credit was 
repaid on June 28, 2002 though a loan to us from Autodaq Corporation in         
connection with our Agreement and Plan of Reorganization with Autodaq dated June
28, 2002. See "Anticipated Trends and Plan of Operations-Merger with Autodaq    
Corporation."                                                                   

         STOCKHOLDERS' EQUITY. Stockholders' equity decreased from $9,282,736 at
March 31, 2001, to $4,748,395 at March 31. 2002. The decrease primarily resulted
from our net loss for the fiscal year ended March 31, 2002 of $7,902,662 offset 
by: $467,777 of net proceeds from private placement of common shares in fiscal  
year 2002; common stock issued for services of $221,794; and the issuance of    
additional shares to private placement holders and C and D holders of           
$2,678,620. During our fiscal year ended March 31, 2002, holders of $10,000 and 
$268,236 of our Series C and D preferred stock (102 and 2,736 shares,           
respectively) elected to convert such shares to 3,118,010 common shares based on
the formulae contained in the terms of the preferred shares. On May 17, 2000, we
filed a registration statement to register the resale of the common shares      
issued or to be issued upon conversion of the Series C and Series D preferred   
stock. That registration statement has not yet been declared effective.         

LIQUIDITY AND CAPITAL RESOURCES                                                 

Working capital (current assets minus current liabilities) was
$(849,581) at March 31, 2002, as compared to working capital at March 31, 2001  
of $182,556. The decrease of $1,032,137 substantially was due to the increase in
borrowing on our line of credit of $968,311 during the fiscal year ended March  
31, 2002.                                                                       

      For the fiscal ended March 31, 2002, we used cash of $432,631 in our
operating activities. The major components of which were our net loss for the   
period from continuing operations of $7,902,662. Cash primarily was provided by 
the non-cash charges for depreciation and amortization of $4,175,891 and        
non-cash interest expense on warrants and additional stock of $2,678,621 plus   
the non-cash loss on disposal of impaired assets of $49,122. An additional      
non-cash expense related to the issuance of stock and options for services      
valued at $251,971. Other accounts affecting our cash balances included         
decreases in our prepaid expenses along with increases in accounts payable and  
accrued liabilities offset by an increase in accounts receivable.               

       We used cash of $4,371,599 in our operating activities for the fiscal
year ended March 31, 2001, the major components of which were our net losses for
the period of $9,060,369 from continuing operations, $323,840 from discontinued 
operations, and $2,339,445 from the charge off of our discontinued wholesale    
land-based operations. Cash primarily was provided by the non-cash charges for  
depreciation and amortization of $3,836,788, plus the non-cash loss on disposal 
of impaired assets of $2,261,486. An additional non-cash expense related to the 
issuance of stock and options for services valued at $299,955. Other accounts   
affecting our cash balances included cash received from liquidation of assets of
discontinued operations of $1,001,354, an additional short-term loan from a     
related party, and increases in accounts payable and accrued liabilities offset 
by an increase in accounts receivable.                                          

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      For the fiscal year ended March 31, 2000, net cash used in operating
activities was $742,328. The major component contributing to the cash used in   
operations for the fiscal year ended March 31, 2000 were our net losses for the 
period of $946,202 and $1,641,551 from continuing operations and discontinued   
operations, respectively. Cash primarily was provided by the non-cash charges   
for depreciation and amortization of $319,800 and the additional non-cash       
expense related to the issuance of stock and options for services valued at     
$351,280. Other accounts affecting our cash balances included cash received from
discontinued operations of $1,257,062 and small changes, both positive and      
negative, to other current assets and liabilities.                              

     Our investing activities for the fiscal years ended March 31, 2002,
2001, and 2000 used cash of $847,808, $1,123,690, and $374,420, respectively.   
For the fiscal year ended March 31, 2002, cash was used primarily for the       
purchase of computer software required for our e-commerce and Internet          
operations. For the fiscal year ended March 31, 2001, cash was used primarily   
for the purchase of computer hardware and software required for business        
expansion and our e-commerce and Internet operations, and offset by the sale of 
certain company-owned vehicles. For the fiscal year ended March 31, 2000, we    
acquired computer software and hardware, company cars, and office furniture and 
fixtures.                                                                       

       For our fiscal year ended March 31, 2002, we supported our cash needs
by net borrowings on our line of credit in the amount of $968,311 and proceeds  
from the issuance of convertible preferred stock and common stock of $130 and   
$437,599, respectively.                                                         

     Financing activities provided net cash of $1,348,619 for our fiscal
year ended March 31, 2001, as compared to $5,174,734 during the previous year.  
Increases in cash included $1,452,487 from the proceeds of the sale of 5,865,212
common shares in March 2001, $498,550 in proceeds received from the exercise of 
previously issued stock options, and additional borrowings of $310,000 from     
related parties. Our related-party debt of $738,807 was due on April 1, 2002: it
has been restructured and is described below at "Anticipated Trends and Plan of 
Operations." We used $1,112,418 to repay the Wells Fargo Business Credit, Inc.  
line of credit that had provided sufficient short-term liquidity and capital to 
implement our business plan, including the expansion of our now discontinued    
wholesale land-based operations. The note that evidenced this obligation to     
Wells Fargo Business Credit bore interest at 1.5% over prime and was extended   
from its original due date of March 31, 2000 to January 31, 2001. At March 31,  
2000, our bank line of credit was $1,112,418. On February 16, 2001 we repaid    
Wells Fargo Business Credit in full.                                            

       For our fiscal year ended March 31, 2000, we supported our cash needs
by net borrowings of $158,393 and proceeds from the issuance of convertible     
preferred stock and common stock of $4,766,341 and $250,000, respectively.      

ANTICIPATED TRENDS AND PLAN OF OPERATION                                        

We intend to continue the development of our Internet based   
initiatives. We believe that focusing on providing automotive remarketing       
services via the Internet will improve our long-term prospects for              
profitability. Internet operations generate a lower amount of revenue, but      
result in higher profit margins.                                                

We anticipate that our agreement with American Honda Finance  
Corporation will generate revenues for the next one and one-half years. We      
anticipate the volume of lease vehicles being returned to Honda will remain at  
approximately the current levels for the remaining term of our contract.        
However, we anticipate an overall increase in revenues for the ensuing year     
resulting from the price increase we negotiated in October 2001, plus we        
anticipate additional revenues from new programs and initiatives currently being
introduced to Honda. We expect the revenue generated from our contract with     
Suzuki to remain at approximately the same level as generated this past year.   
The Volvo web site, www.volvoride.com, became fully operational in December 2001
and therefore contributed only four months of revenue in our fiscal year ending 
March 31, 2002; we expect to generate revenue from our Volvo for the entire     
twelve months of our current fiscal year. Internet vehicle remarketing is       
currently gaining broader acceptance by consignors charged with the             
responsibility of disposing of lease returns and other used vehicle inventories.
We are attempting to enter into similar contracts with other manufacturers and  
financial institutions to assist them in remarketing their inventories of used  
vehicles; however, no such other contracts exist at this time.                  

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     We have sustained operating losses resulting in little tangible net
worth at March 31, 2002. However, beginning in December 2001 we took measures to
generate positive cash flow and operating profits by (1) increasing revenues    
through the expansion of our Internet remarketing of off-lease and program      
vehicles with new customers and developing new products and services for our    
current customer base, and (2) further reducing our cash requirements for       
software and website development and continuing to reduce our costs of          
operations. Additionally, on June 28, 2002, we entered into an agreement to     
merge with Autodaq Corporation, which is described below.                       

MERGER WITH AUTODAQ                                                             

      On June 28, 2002, we entered into an agreement to merge with Autodaq
Corporation ("Autodaq"). Under the Agreement and Plan of Reorganization dated   
June 28, 2002 (the "Agreement"), AutoTradeCenter and Autodaq, along with        
AutoTradeCenter, Inc., a Delaware corporation ("ATC Delaware") and AUTC Autodaq 
Corporation, a Delaware Corporation ("AUTC Autodaq") agreed that upon         
shareholder approval and completion of certain closing conditions: (1)          
AutoTradeCenter will reincorporate in Delaware by merging with and into ATC     
Delaware, with ATC Delaware surviving the merger; and (2) AUTC Autodaq, a       
wholly-owned subsidiary of ATC Delaware, will merge with and into Autodaq, with 
Autodaq surviving the merger (the "Merger").                                    

Under the terms and conditions of the Agreement and after the 
completion of the Merger, the current shareholders of AutoTradeCenter will own  
approximately 27.15% of ATC Delaware's fully-diluted capital stock (including,  
for purposes of this calculation, shares of Common Stock reserved for issuance  
pursuant to ATC Delaware's stock option plan and the warrant issued to an       
affiliate of Autodaq described below), and the current shareholders of Autodaq  
will own approximately 63.35% of ATC Delaware's fully-diluted capital stock.    
Senior management of AutoTradeCenter will receive options to purchase up to an  
aggregate of 4.5% of ATC Delaware's Common Stock. Shares of Common Stock        
reserved for issuance pursuant to ATC Delaware's stock plan will constitute the 
remaining 5% of ATC Delaware's capital stock. The Merger will be accounted for  
as a purchase and is intended to qualify as tax-free to the shareholders of     
AutoTradeCenter and Autodaq. The Merger is expected to close in the second half 
of 2002 and is subject to approval of the shareholders of AutoTradeCenter and   
Autodaq, as well as other customary closing conditions. Autodaq shareholders    
holding shares sufficient to approve the Merger delivered voting agreements and 
proxies in which they agreed to vote their shares in favor of the Merger. The   
Agreement requires AutoTradeCenter to deliver voting agreements and proxies from
shareholders holding shares sufficient to approve the Merger on or before July  
19, 2002; AutoTradeCenter satisfied this condition by delivering voting         
agreements and proxies for shares representing (i) 100% of AutoTradeCenter's    
Series D Preferred Stock, and (ii) approximately 52% of AutoTradeCenter's Common
Stock on a fully-diluted basis (excluding shares of Common Stock issuable upon  
conversion of the Series D Preferred Stock). In the event AutoTradeCenter had   
failed to deliver such voting agreements as previously described, an affiliate  
of Autodaq could have exercised a warrant convertible into a majority of        
AutoTradeCenter's capital stock for nominal consideration.                      

Additionally, as part of the Agreement, Autodaq loaned to     
AutoTradeCenter approximately $1 million, which AutoTradeCenter used to retire  
its indebtedness under a credit facility with Eagle Capital due on June 30,     
2002, to redeem its Series E Preferred Stock, and to terminate a services       
agreement related to such credit facility. AutoTradeCenter is not required to   
make payments to Autodaq under the loan prior to the closing of the Merger. The 
loan is secured by a first priority security interest in all of                 
AutoTradeCenter's assets. As partial consideration for such loan,               
AutoTradeCenter provided an affiliate of Autodaq with a warrant to purchase     
shares equal to approximately 5% of AutoTradeCenter's Common Stock on a         
fully-diluted basis at an exercise price equal to the fair market value of      
AutoTradeCenter's Common Stock at the time the warrant was issued ($0.061 per   
share).                                                                         

In connection with the retirement of indebtedness under       
AutoTradeCenter's credit facility with Eagle Capital and the redemption of      
AutoTradeCenter's Series E Preferred Stock, Neil Elsey and Chris Arnold resigned
as Directors of AutoTradeCenter effective June 28, 2002.                        

     As part of the above transactions, AutoTradeCenter also amended and
restated the terms of its subordinated promissory note to one of its former     
founders. As restructured, the note (in the principal amount of $814,253)       
requires that (i) interest (accruing at 12% per annum from June 28, 2002) will  
be paid monthly commencing on July 31, 2002, (ii) principal payments of $25,000 
will be paid monthly on the last day of each month commencing on January 31,    
2003 and continuing through September 30, 2003, and (iii) all remaining         
principal, and accrued and                                                      

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unpaid interest, will be due and payable on September 30, 2003. The note is     
secured by a security interest in all of AutoTradeCenter's assets, which        
security interest is subordinated to the security interest granted in connection
with the loan from Autodaq to AutoTradeCenter described immediately above.      
AutoTradeCenter also issued to the note holder a five-year warrant to purchase  
1,000,000 shares of AutoTradeCenter's Common Stock with an exercise price equal 
to the lesser of (i) $0.125 per share, or (ii) 120% of the daily per share      
closing price of AutoTradeCenter's Common Stock for the 30 consecutive trading  
days immediately preceding the date of exercise of the warrant. Concurrently    
with the issuance of this warrant, the note holder cancelled existing warrants  
to purchase shares of AutoTradeCenter's Common Stock.                           

        The boards of directors of AutoTradeCenter and Autodaq have determined
that, in the event the Merger closes, it will be in the best interest of the    
combined company to raise additional equity to provide the company with         
additional capital resources. Therefore, the Agreement contemplates that        
following the closing of the Merger, certain investors, including August Capital
III, L.P. ("August Capital"), a principal investor in Autodaq, will purchase    
additional shares and warrants of the new parent company (ATC Delaware). Such   
financing would consist of (i) shares of senior preferred stock of ATC Delaware,
for a purchase price of $3.0 - $4.0 million, and (ii) warrants to purchase      
additional shares of ATC Delaware Common Stock equal to 200% of the number of   
shares of senior preferred stock purchased. The exercise price for these        
warrants will equal the fair market value of AutoTradeCenter's Common Stock at  
the time the senior preferred financing closes, as determined by the board of   
directors of the new company at the time the senior preferred financing closes. 
The financing is subject to a number of closing conditions, including the       
closing of the Merger and ATC Delaware's receipt of commitments for a minimum of
$1.0 million from investors other than August Capital. There is no assurance    
that such conditions will be satisfied or that such financing will close. In the
event that the financing does close and the maximum senior preferred shares and 
warrants which may be offered in such financing are purchased, such shares and  
warrants would represent approximately 9.52% and 19.05%, respectively, of ATC   
Delaware's fully-diluted capital stock. In such an event, the ownership of the  
current shareholders of AutoTradeCenter in ATC Delaware would be reduced from   
27.15% to approximately 19.39% upon consummation of such financing.             

         In the event that the Merger does close and the Series E financing does
not close immediately following the Merger, the new company will be required to 
immediately attempt to raise additional capital through the sale of equity, debt
financing or other means (all of which would require the approval of certain of 
its preferred stockholders); there is no assurance that the new company would be
successful in raising additional funds. The failure to immediately close the    
Series E financing or to raise additional funds in another fashion would require
the new company to significantly modify its planned operations and could result 
in the new company filing a Chapter 11 petition under the U.S. Bankruptcy Code  
or taking other similar action to restructure its operations.                   

ITEM 7.     FINANCIAL STATEMENTS.                                               

See the financial statements beginning with page F-1.         

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

None.                                                         

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PART III

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

The officers and directors of the company are as follows:     

NAME                        AGE     POSITION                                    

Roger L. Butterwick         56      President, Chief Financial Officer,         
              Treasurer and Director
Mark R. Jensen              37      Secretary, Vice President and Chief         
          Technology Officer
James Kaiser                58      Director                                    
David Livingston            68      Director                                    
R. Gary McCauley            59      Director                                    
L. David Sikes              60      Director                                    
A. Marvin Strait            68      Director                                    

     The term of office of each director of our company ends at the next
annual meeting of our stockholders or when such director's successor is elected 
and qualifies. No date for the next annual meeting of stockholders is specified 
in our Bylaws or has been fixed by the board of directors. The term of office of
each officer of our company ends at the next annual meeting of our board of     
directors, expected to take place immediately after the next annual meeting of  
stockholders, or when such officer's successor is elected and qualifies.        

  ROGER L. BUTTERWICK has been the President and a director of our
company since December 8, 1999, our Treasurer since April 2, 1999 and Chief     
Financial Officer since August 1, 2001. Prior to joining our company, Mr.       
Butterwick devoted the majority of his time as a partner in Cambridge Management
Associates, LLP, an organization in the business of structuring and securing    
financing for developing organizations. Previously, Mr. Butterwick was an owner 
of Lehman, Butterwick & Company, P.C., a large local certified public accounting
firm located in Denver, Colorado. In addition, he has been involved with the    
finance and mortgage banking industries. Mr. Butterwick received his Bachelor of
Science in Business Administration from the University of Denver. He is a member
of the American Institute of CPA's                                              

        MARK R. JENSEN has been our Chief Technology Officer since March 2000.
He is responsible for all operations that relate to our Internet initiatives.   
Mr. Jensen joined us from NDSCo.com, a privately-held Internet automotive       
remarketing company that we acquired in March 2000. As acting chief operations  
officer, he managed NDSCo.com's business operations from April 1999 to March    
2000. Mr. Jensen founded The Deanox Group, Inc. in 1989 and operated that       
company until 1998. As a privately-held company in Logan, Utah, The Deanox Group
provided computer software, hardware, and consulting services to customers      
desiring to apply computer technologies to their business operations. Mr. Jensen
has been a frequent speaker and trainer for groups and academic forums including
the State of Utah, Utah State University, Bernina of America, Weber State       
College, Mountain West Center for Regional Studies, Utah State Continuing       
Education Department, and the Office of the Governor for the State of Utah.     

      JAMES KAISER has been a director since November 2000. Mr. Kaiser has
been the chairman, chief executive officer, and a director of Avenir Partners   
Inc., a privately-owned franchised automobile dealership located in Memphis,    
Tennessee, since December 1998. He has also been the president of Kaiser        
Services, LLC, a business development company, located in Manhattan Beach,      
California, since 1998. From 1994 to 1996, Mr. Kaiser was the president, chief  
executive officer, and a director of Quanterra Inc., a subsidiary jointly owned 
by Corning Inc. and International Technology Inc., engaged in the business of   
environmental testing laboratories and located in Denver, Colorado. Mr. Kaiser  
serves as a director of the following public companies: Sunoco, Inc. since 1993;
and The Mead Corporation since 1995.                                            

 DAVID LIVINGSTON has been a director since November 2000. Since
December 1995, Mr. Livingston has been the managing partner of The Corporate    
Development Group, a private firm located in Mission Viejo, California offering 
corporate development and investment banking services. He was the executive vice
president of                                                                    

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the Bank of New Mexico (a Western Bancorporation/First Interstate Bancorporation
bank) from 1962 to 1970 and chairman, chief executive officer, and a director of
First National Bank of Albuquerque from January 1970 to March 1975. During his  
career, Mr. Livingston has served on numerous boards for corporate, civic, and  
charitable organizations. He is also the current chairman of David Livingston & 
Associates, Inc., dba Pacific-Southwest Capital Group since 1975.               

       R. GARY MCCAULEY has been a director since November 2000. Since 1964,
he has owned and/or operated a number of private businesses. Mr. McCauley has   
been the owner, developer, and manager of retail shopping centers in Florida and
Colorado since 1986. In addition, since 1972, he has held oil and gas interests 
through D&G Enterprises, a private company co-owned by him. He has owned and    
been the president and/or general manager of various automobile dealerships from
time to time: Scott Toyota, Inc., Scottsdale, Arizona (1998-2000); McCauley     
Mazda, Phoenix, Arizona (1989-1990); McCauley Oldsmobile/Honda, Colorado        
Springs, Colorado (1977-1990); McCauley Volkswagen, Albuquerque, New Mexico     
(1966-1977); and McCauley Volkswagen, Yuma, Arizona (1964-1966). From 1979 to   
1990, Mr. McCauley was the co-founder and an officer of Sunwest Life Insurance  
Co., which provided life, accident, health, and extended warranty insurance     
products to over 50 automobile dealerships in the western United States.        

         L. DAVID SIKES has been a director since November 2000. From March 1995
through June 2001, Mr. Sikes was the Chairman of the Board and chief executive  
officer of Ramtron International Corporation, a publicly owned specialty        
semiconductor company located in Colorado Springs, Colorado. He is presently the
Chairman of the Board of Ramtron. Mr. Sikes was president and chief executive   
officer of the U.S. operations of ASM International N.V., a public semiconductor
company domiciled in the Netherlands, from January 1990 to July 1992. His       
background also includes management positions with the following: vice president
for the semiconductor product sector of Motorola, Inc., Phoenix, Arizona, from  
June 1984 to June 1987; an executive for National Semiconductor Corporation,    
Santa Clara, California, from July 1972 to January 1974; and an engineering     
management position for Eastman Kodak Company, Rochester, New York, from July   
1963 to January 1967.                                                           

      A. MARVIN STRAIT has been a director since November 2000. Mr. Strait
has been in the practice of public accountancy under the name of A. Marvin      
Strait, CPA, since June 1994. He specializes in litigation support and performs 
other financial consulting services. Mr. Strait was previously the managing     
partner and later chairman with Strait oKushinsky and Company, P.C. in Colorado 
Springs, Colorado, from October 1977 to May 1993. Mr. Strait was a past chairman
(1987-1988) and served on the board of directors (1983-1989) of the American    
Institute of Certified Public Accountants. He received the AICPA Gold Medal for 
Distinguished Service in 1992. Mr. Strait currently serves as a director of the 
following: Whitman Education Group, Inc., a publicly-held company based in      
Miami, Florida, since late 1998; and, Colorado Technical University, a private  
university with campuses in Colorado and South Dakota, since 1990. Mr. Strait is
also a member of the Community Advisory Board of Western National Bank, a       
privately held bank located in Colorado Springs, Colorado.                      

ITEM 10.   EXECUTIVE COMPENSATION.                                              

        The following table sets forth the remuneration for Mr. Butterwick and
Mr. Jensen, by fiscal year, who functions as our chief executive officer and    
chief technology officer, respectively. We are not required to set forth        
information for any officer whose total annual salary and bonus does not exceed 
$100,000.                                                                       

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                                                        [Enlarge/Download Table]

                           SUMMARY COMPENSATION TABLE                                                                 
----------------------------------------------------------------------------------------------------------------------

                                                                            LONG TERM COMPENSATION                    
                                   ANNUAL COMPENSATION                        AWARDS            PAYOUTS               
                                                          OTHER       RESTRICTED  SECURITIES                          
 NAME AND PRINCIPAL                                       ANNUAL         STOCK    UNDERLYING      LTIP      ALL OTHER 
      POSITION                                          COMPENSA-      AWARD(S)    OPTIONS/      PAYOUTS    COMPENSA- 
                       YEAR    SALARY ($)   BONUS ($)    TION ($)         ($)       SARS (#)       ($)       TION(S)  
----------------------------------------------------------------------------------------------------------------------
                                                                                                                      
 Roger Butterwick,                                                                                                    
     President,        2000    $  54,000       -0-          -0-           -0-       500,000        -0-         -0-    
  Chief Financial      2001    $ 158,400       -0-          -0-           -0-         -0-          -0-         -0-    
      Officer          2002    $ 208,333       -0-          -0-           -0-       375,000        -0-         -0-    

----------------------------------------------------------------------------------------------------------------------
    Mark Jensen,       2001    $ 151,500       -0-          -0-           -0-       150,000        -0-         -0-    
  Secretary, Chief     2002    $ 170,000       -0-          -0-           -0-       200,000        -0-         -0-    
 Technology Officer                                                                                                   
----------------------------------------------------------------------------------------------------------------------

EXECUTIVE COMPENSATION                                                          

       Currently, we pay the following monthly salaries plus car allowances:
o        Roger Butterwick - $18,750                     
o        Mark Jensen - $14,166                          

  We reimburse all officers and directors for actual out-of-pocket
expenses incurred on our behalf.                                                

         We have no retirement, pension, profit sharing or medical reimbursement
plans exclusively covering our officers and directors. A Company-sponsored      
401(k) plan and major medical and dental health insurance coverage for all      
employees has been implemented.                                                 

                                                        [Enlarge/Download Table]

                                   OPTION/SAR GRANTS IN LAST FISCAL YEAR                                            
--------------------------------------------------------------------------------------------------------------------
                          NUMBER OF SECURITIES   % OF TOTAL OPTIONS/SARS                                            
                           UNDERLYING OPTIONS/   GRANTED TO EMPLOYEES IN     EXERCISE OR BASE                       
NAME                        SARS GRANTED (#)          FISCAL YEAR              PRICE ($/SH)         EXPIRATION DATE 
--------------------------------------------------------------------------------------------------------------------
                                                                                                                    
Roger Butterwick             375,000(1)<F1>              15.4%                   $0.10                11/14/11      
--------------------------------------------------------------------------------------------------------------------
Mark Jensen                  200,000 (2)<F2>              8.2%                   $0.10                11/14/11      
--------------------------------------------------------------------------------------------------------------------
<FN>                                                                                                                
<F1>                                                                                                                
(1)  On November 14, 2001, we granted Mr. Butterwick an option for 375,000                                          
     shares, 225,000 of which vested upon their grant. The remainder of the                                         
     options vest 50,000 on each anniversary of the grant date. The option is                                       
     exercisable for five years from date of vesting.                                                               
<F2>                                                                                                                
(2)  On November 14, 2001, we granted Mr. Jensen an option for 200,000 shares,                                      
     80,000 of which vested upon their grant. The remainder of the options vest                                     
     40,000 on each anniversary of the grant date. The option is exercisable for                                    
     five years from date of vesting.                                                                               
</FN>                                                                                                               

                                                        [Enlarge/Download Table]


                   AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES                   
----------------------------------------------------------------------------------------------------------------------
                                                                        NUMBER OF SECURITIES                          
                                                                             UNDERLYING         VALUE OF UNEXERCISED  
                          SHARES ACQUIRED ON                                UNEXERCISED             IN-THE-MONEY      
         NAME                EXERCISE (#)        VALUE REALIZED ($)       OPTIONS/SARS AT         OPTIONS/SARS AT     
                                                                        FISCAL YEAR END (#)     FISCAL YEAR END ($)   
----------------------------------------------------------------------------------------------------------------------
                                                                            EXERCISABLE/            EXERCISABLE/      
                                                                           UNEXERCISABLE           UNEXERCISABLE      
----------------------------------------------------------------------------------------------------------------------
                                                                                                                      
Roger Butterwick                  -0-                    -0-              450,000/425,000             -0-/-0-         
----------------------------------------------------------------------------------------------------------------------
Mark Jensen                       -0-                    -0-               50,000/100,000             -0-/-0-         
----------------------------------------------------------------------------------------------------------------------


         In addition to the stock options granted to Mr. Butterwick shown in the
above table, stock options have also been granted to Mr. Butterwick in          
connection with loan guarantees. In addition, certain stock options were granted
to Cambridge Management Associates, LLP, an entity controlled by Mr. Butterwick,
that provided contracted financial services to our company prior to Mr.         
Butterwick becoming an officer, as described in Item 12 - "Certain Relationships
and Related Party Transactions."                                                

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DIRECTORS' COMPENSATION AND COMMITTEES                                          

         We pay each non-employee director $3,000 for his attendance at both the
annual stockholders' meeting and annual directors' meeting, $1,000 to $2,000 for
his attendance at each physical meeting of the board of directors, $750 for his 
attendance at each physical committee meeting, and $500 for his attendance at   
each telephonic meeting of the board of directors. We also reimburse them for   
their travel expenses incurred in connection with these meetings.               

We have the following committees of the board of directors:   
 o     Audit Committee, consisting of A. Marvin Strait (committee chairman),
David G. Livingston and L. David Sikes.                       
  o     Technical Committee, consisting of L. David Sikes (committee chairman)
and James G. Kaiser.                                          
o     Compensation Committee, consisting of R. Gary McCauley (committee   
chairman) and David G. Livingston.                            

STOCK OPTION PLAN                                                               

         On August 5, 1997, the shareholders adopted the 1997 Stock Option Plan,
which provides for the grant of both incentive stock options and non-qualified  
options to eligible employees, officers, and directors. The option pool is      
adjusted annually at the beginning of each fiscal quarter to a number equal to  
10% of the number of shares of common stock outstanding at the end of our last  
completed fiscal quarter. At March 31, 2002, the number of shares eligible      
pursuant to the plan was 5,858,436. The plan is administered by the compensation
committee of the board of directors or, if there is no committee, by the board  
of directors. A registration statement on Form S-8 was filed on May 15, 2000    
registering the underlying shares of the options granted. At March 31, 2002,    
2,186,158 options had vested and were eligible for exercise at a total exercise 
price of $1,246,110.                                                            

         The plan provides that disinterested directors, defined as non-employee
directors or persons who are not directors of one of our subsidiaries, will     
receive automatic option grants to purchase 10,000 shares of common stock upon  
their appointment or election to the board of directors. Options shall have an  
option price equal to 100% of the fair market value of our common stock on the  
grant date and shall have a minimum vesting period of one year from the date of 
grant.                                                                          

   Each option granted under the plan will be evidenced by a written
option agreement between our company and the optionee. Incentive stock options  
may be granted only to employees as defined by the Internal Revenue Code. The   
option price of any incentive stock option may not be less than 100% of the fair
market value per share on the date of grant of the option; provided, however,   
that any incentive stock option granted under the plan to a person owning more  
than 10% of the total combined voting power of our common stock will have an    
option price of not less than 110% of the fair market value per share on the    
date of grant of the incentive stock option. Each non-qualified stock option    
granted under the plan will be at a price no less than 85% of the fair market   
value per share on the date of grant thereof, except that the automatic stock   
option grants to disinterested directors will be at a price equal to the fair   
market value per share on the date of grant. The exercise period of options     
granted under the plan may not exceed ten years from the date of grant thereof. 
Incentive stock options granted to a person owning more than 10% of the total   
combined voting power of the common stock cannot be exercisable for more than   
five years. No portion of any option will be exercisable prior to the first     
anniversary of the grant date.                                                  

         An option may not be exercised unless the optionee then is an employee,
officer, or director of our company or its subsidiaries, and unless the optionee
has remained continuously as an employee, officer, or director of our company   
since the date of grant of the option. If the optionee ceases to be an employee,
officer, or director of our company or any subsidiary other than by reason of   
death, disability, retirement, or for cause, all options granted to such        
optionee, fully vested to such optionee but not yet exercised, will terminate 90
days after the date the optionee ceases to be an employee, officer, or director.
All options, which are not vested to an optionee, under the conditions stated in
this paragraph for which employment ceases, will immediately terminate on the   
date the optionee ceases employment or association.                             

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Options have been granted under this plan as follows:         

Balance, March 31, 1999........................    1,523,175  
Granted........................................    1,419,080  
Exercised......................................            0  
Cancelled/expired..............................      (25,000) 
                                               -------------
Balance, March 31, 2000........................    2,917,255  
Granted........................................      554,474  
Exercised......................................     (362,925) 
Cancelled/expired..............................     (394,885) 
                                               -------------
Balance, March 31, 2001........................    2,713,919  
Granted........................................    2,440,398  
Exercised......................................            0  
Cancelled/expired..............................   (2,145,167) 
                                               -------------
Balance, March 31, 2002........................    3,009,150  
                                               =============

2000 EQUITY INCENTIVE COMPENSATION PLAN                                         

      On November 29, 2000, the board of directors adopted the 2000 Equity
Incentive Compensation Plan, which provides for granting stock options, stock   
appreciation rights, restricted and deferred stock, bonus stock, and other      
stock-based awards to officers, directors, employees, and independent           
contractors. Management and the board of directors determined that it was not in
the best interest of the company to bring the adoption of the 2000 Equity       
Incentive Compensation Plan to a vote of the shareholders and, on November 14,  
2001, the plan was recinded.                                                    

OTHER OPTIONS                                                                   

In addition to the stock options granted under the 1997 stock option plan and   
2000 equity incentive compensation plan, we have granted options as follows:    

Balance, March 31, 1999.......................    2,089,810   
Granted.......................................      465,000   
Exercised.....................................            0   
Cancelled/expired.............................     (300,000)  
                                             -------------
Balance, March 31, 2000.......................    2,254,810   
Granted.......................................            0   
Exercised.....................................     (210,000)  
Cancelled/expired.............................      (75,000)  
                                             -------------
Balance, March 31, 2001.......................    1,969,810   
Granted.......................................            0   
Exercised.....................................            0   
Cancelled/expired.............................   (1,094,810)  
                                             -------------
Balance, March 31, 2002.......................      875,000   
                                             =============

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ITEM 11.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT      
AND RELATED STOCKHOLDER MATTERS.                        

        The following table provides beneficial stock ownership information as
to the directors and certain executive officers individually and as a group, and
the holders of more than 5% of our common stock as of June 28, 2002:            

                                                        [Enlarge/Download Table]

        NAME AND ADDRESS OF OWNER                   NUMBER OF SHARES OWNED(1)<F1>    PERCENT
        -------------------------                   -------------------------        -------
                                                                                            

        Almond Investors, LLC                            18,025,261 (2)<F2>           21.70%
        110 Colabaugh Pond Road                                                             
        Croton-on-Hudson, NY 10520                                                          

        John Charles Hakala                               9,291,639 (3)<F3>           13.54%
        12873 W. Harvard Ave.                                                               
        Lakewood, CO 80228                                                                  
        Eagle Capital Group LLC                           6,875,000 (4)<F4>           9.43% 
        2425 E. Camelback Rd., Suite 100                                                    
        Phoenix, AZ 85016                                                                   

        Mark Moldenhauer                                  5,310,041 (5)<F5>           7.91% 
        14500 N. Northsight Blvd. #213                                                      
        Scottsdale, AZ 85260                                                                

        Red Rock Advisors Fund, LLC                         4,967,692                 7.52% 
        1192 E. Draper Parkway, Suite 410                                                   
        Draper, UT 84020                                                                    

        R. Gary McCauley                                  2,105,000 (6)<F6>           3.14% 

        A. Marvin Strait                                  1,020,000 (7)<F7>           1.53% 

        James Kaiser                                      1,005,000 (7)<F7>           1.51% 

        Roger L. Butterwick                                974,400 (8)<F8>            1.46% 

        L. David Sikes                                     647,000 (9)<F9>            0.98% 

        David Livingston                                  275,000 (10)<F10>           0.42% 

        Mark R. Jensen                                    200,000 (11)<F11>           0.30% 

        All officers and directors as a group             6,226,400(12)<F12>          8.99% 
        (7 persons)                                                                         

----------------                                                                            
<FN>                                                                                        
(1)<F1>  Where persons listed on this table have the right to obtain additional             
         shares of common stock through the exercise of outstanding options or              
         warrants or the conversion of convertible securities within 60 days                
         from June 28, 2002, these additional shares are deemed to be                       
         outstanding for the purpose of computing the percentage of common stock            
         owned by such persons, but are not deemed to be outstanding for the                
         purpose of computing the percentage owned by any other person.                     
         Percentages are based on 66,088,851 shares outstanding.                            

(2)<F2>  Includes 16,961,753 shares issuable upon conversion of 7,894 shares of             
         Series D preferred stock, assuming a conversion price of $0.04654 for              
         the Series D preferred stock.                                                      

(3)<F3>  Includes 2,541,000 shares issuable upon conversion of 846 shares of                
         Series D Preferred Stock.                                                          

(4)<F4>  Includes 6,750,000 shares issuable upon exercise of stock purchase                 
         warrant and stock options, including those stock options held by the               
         principals of Eagle Capital Group LLC.                                             

(5)<F5>  Includes 1,000,000 shares issuable upon exercise of stock purchase warrant.        

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(6)<F6>  Includes 500,000 shares issuable upon exercise of stock purchase                   
         warrant and 450,000 shares issuable upon the exercise of options.                  

(7)<F7>  Includes 250,000 shares issuable upon exercise of stock purchase                   
         warrant and 125,000 shares issuable upon the exercise of options.                  

(8)<F8>  Includes 99,400 shares held of record by Cambridge Consulting Group, an            
         entity controlled by Mr. Butterwick.  Includes 875,000 shares issuable             
         upon the exercise of options.                                                      

(9)<F9>  Includes 124,000 shares issuable upon exercise of stock purchase                   
         warrant and 125,000 shares issuable upon the exercise of options.                  

(10)<F10>Includes 125,000 shares issuable upon exercise of options.                         

(11)<F11>Includes 200,000 shares issuable upon exercise of options.                         

(12)<F12>Includes 3,149,000 shares issuable upon exercise of stock purchase                 
         warrants and the exercise of options.                                              
</FN>                                                                                       

CHANGE OF CONTROL                                                               

        See Item 6. "Management's Discussion and Analysis or Plan of Operation
- Anticipated Trends and Plan of Operation" for a description of our proposed   
merger with Autodaq Corporation.                                                

EQUITY COMPENSATION PLAN INFORMATION                                            

                                                        [Enlarge/Download Table]

                                                                                        Number of securities   
                                                                                       remaining available for 
                               Number of securities to be  Weighted average exercise    future issuance under  
                                 issued upon exercise of     price of outstanding     equity compensation plans
                                  outstanding options,      options, warrants and       (excluding securities  
Plan catagory                      warrants and rights              rights            reflected in column (a)) 
-------------                      -------------------              ------            ------------------------ 
                                                                                                               

Equity compensation plans                                                                                      
approved by security holders.           3,009,150                   $0.57                     2,043,576        

Equity compensation plans not                                                                                  
approved by security holders                    0                       0                             0        
                                        ---------                   -----                     ---------        

            Total                       3,009,150                   $0.57                     2,043,576        
                                        =========                   =====                     =========        

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.                        

        All of the terms of agreements and other transactions included in this
section were as fair as those we could have obtained from unrelated third       
parties at arms-length transactions.                                            

      Jeff Erskine, Mike Stuart, and Mark Moldenhauer and their respective
spouses personally guaranteed the operating lease dated July 24, 1997, pursuant 
to which we lease our office and warehouse facilities in Scottsdale, Arizona. At
July 24, 1997, Messrs. Erskine, Stuart, and Moldenhauer were officers,          
directors, and principal shareholders of our company. The lease expires         
September 30, 2002.                                                             

    During the two years ended March 31, 2002, we entered into various
lending arrangements involving officers, directors and other affiliated entities
owned or controlled by officers, directors and other key personnel. At March 31,
2002 and 2001, the outstanding balances on these notes were $738,201 and        
$738,807, respectively. The total interest paid to these entities on all        
financing activities for the years ended March 31, 2002 and 2001 were $229,812  
and $106,888, respectively. Total interest paid to these entities on all        
financing activities for discontinued operations was $0 and $699,288 for the    
fiscal years ended March 31, 2002 and 2001, respectively.                       

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DATE OF                                                                         
TRANSACTION      RELATED PARTY            TRANSACTION                           

03/31/01         Mark Moldenhauer         Secured promissory note for $402,000, 
                                  12% interest per annum payable
                                       monthly, principal and interest due
                                        April 1, 2002, collateralized by all
                                   accounts receivable, inventory,
                                         equipment, and certain intangibles of
                                        AutoTradeCenter.com Inc., personally
                                         guaranteed by Roger L. Butterwick and
                                       John E. Rowlett, convertible at the
                                    option of the holder into common
                                      shares at the lesser of $0.375 per
                                         share or the average trading price of
                                       the common stock for the 30 trading
                                        days preceding conversion. Paid by a
                                        consolidated promissory note to Mark
                                      Moldenhauer and Pinnacle Financial
                                    Corporation dated July 19, 2001.

03/31/01         Pinnacle Financial       Secured promissory note for $336,807, 
         Corporation              12% interest per annum payable
                                       monthly, principal and interest due
                                        April 1, 2002, collateralized by all
                                   accounts receivable, inventory,
                                         equipment, and certain intangibles of
                                        AutoTradeCenter.com Inc., personally
                                         guaranteed by Roger L. Butterwick and
                                       John E. Rowlett, convertible at the
                                    option of the holder into common
                                      shares at the lesser of $0.375 per
                                         share or the average trading price of
                                       the common stock for the 30 trading
                              days preceding conversion,
                                          subordinated to senior debt. Paid by a
                                        consolidated promissory note to Mark
                                      Moldenhauer and Pinnacle Financial
                                    Corporation dated July 19, 2001.

05/16/01         R. Gary McCauley         Promissory note for $150,000 and      
                (director)               subsequently increased to $200,000 on
                                         May 31, 2001, due upon receipt of and
                                      secured by specific trade accounts
                                          receivable, interest at 12% per annum.
                                Principal balance reduced to
                                     approximately $50,000 on June 29,
                               2001. Paid August 29, 2001.

07/16/01         R. Gary McCauley         Promissory note for $65,000, due upon 
             (director)               receipt of and secured by specific
                                          trade accounts receivable, interest at
                                        12% per annum. Paid August 29, 2001.

07/19/01         Mark Moldenhauer and     Consolidated promissory note for      
              Pinnacle Financial       $738,200, interest at 12% per annum
                 Corporation              payable monthly, principal payments of
                                       $25,000 per month for the months of
                                         November and December 2001, principal
                                     payments of $50,000 per month for
                                          January 2002 through May 2002, balance
                                          due June 30, 2002, subordinated to the
                                        first lien of Eagle Capital Funding,
                                          LLC. Paid by amended and restated note
                        dated June 28, 2002.

06/28/02         Mark Moldenhauer         Promissory note for $814,252.71,      
                                       interest at 12% per annum, interest
                                     only payable through December 31,
                                       2002, principal payments of $25,000
                                      per month for January 2003 through
                                         September 2003, balance due September
                                          30, 2003, secured by all assets of the
                                     company, subordinated to the note
                                   payable to Autodaq Corporation.

     AUTOMOTIVE DISPOSITION MANAGEMENT SERVICES, INC. As of December 29,
2000, we sold our interest in our land-based operations in Albuquerque, New     
Mexico; San Antonio, Texas; and Bend, Oregon to Automotive Disposition          
Management Services, Inc., an affiliated Arizona corporation ("Automotive       
Disposition"), in exchange for a 16% interest in Automotive Disposition. In     
addition, promissory notes for $1,200,000 owed to us by the land-based          
operations were assigned to Pinnacle Financial Corporation, a private company   
owned by Mr. Moldenhauer.                                                       

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Pinnacle Financial Corporation in turn reduced the outstanding principal balance
of our promissory note to Pinnacle by $1,200,000 and extended the principal     
installment, originally due December 31, 2000, to January 30, 2001. As of       
February 16, 2001, Automotive Disposition assumed a portion of the note owed to 
Pinnacle Financial Corporation. The remaining portion was paid with a new note  
to Pinnacle Financial Corporation in the amount of $366,200 due April 1, 2002.  
The older note due April 1, 2002 was paid with a consolidated note due June 30, 
2002 and the consolidated note was amended with a new note to Mr. Moldenhauer   
due September 30, 2003.                                                         

       As described above, we originally acquired the New Mexico, Texas, and
Oregon operations with earn-out agreements, which enabled the managers of these 
operations to earn shares and options if certain performance goals were met. We 
agreed to place a total of 805,465 shares of our common stock in escrow to      
satisfy, in full, our obligations under these agreements. For the year ended    
March 31, 2001, 59,177 shares were earned and issued to the appropriate party.  

       In the first quarter of the fiscal year ended March 31, 2002, 430,675
of our common shares held in escrow for the management of our former subsidiary 
in Oregon were exchanged for 9% of our interest in Automotive Disposition       
Management thereby reducing our interest therein to approximately 7%. In January
2002, Auto Network Group of New Mexico, Inc. terminated its association with    
Automotive Disposition. In March 2002, we entered into a further agreement with 
the management of our former subsidiary in San Antonio and Automotive           
Disposition whereby we fixed the number of earn-out shares for San Antonio      
management at 261,034 for the three remaining years of our prior agreement with 
them, and cancelled 54,784 shares of common stock remaining in escrow. In       
addition, we received cash of $1,000 and returned to Automotive Disposition the 
shares representing the approximate 7% interest in Automotive Disposition. We no
longer have any interest in Automotive Disposition.                             

         FUTURE TRANSACTIONS. All future affiliated transactions will be made or
entered into on terms that are no less favorable to us than those that can be   
obtained from any unaffiliated third party. A majority of the independent,      
disinterested members of our board of directors will approve future affiliated  
transactions and forgiveness of loans.                                          

       We believe that all loans made to affiliates by us meet the foregoing
standard. All loans to affiliates made by us carry an interest rate of 12% per  
annum. This is the same interest rate paid by us on all notes payable to both   
affiliates and outside third parties.                                           

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.                                      

EXHIBITS                                                                        

The following exhibits are filed with this report:            
REGULATION                                                                      
S-B NUMBER                            DOCUMENT                                  
2.1         Agreement and Plan of Reorganization with Autodaq Corporation 
dated June 28, 2002 (1)                           
3.1         Articles of Incorporation, as amended (2)                     
3.2         Bylaws (2)                                                    
4.1         Warrant to Purchase Common Stock Issued to Anthony & Company, 
Inc. (2)                                          
4.2         Statement Pursuant to Section 10-602 of The Arizona Business  
            Corporation Act of AutoTradeCenter.com Inc. Regarding Series C
Preferred Stock (3)                               
4.3         Statement Pursuant to Section 10-602 of The Arizona Business  
            Corporation Act of AutoTradeCenter.com Inc. Regarding Series D
Preferred Stock (3)                               
4.4         Statement Pursuant to Section 10-602 of the Arizona Business  
            Corporation Act of AutoTradeCenter.com Inc. Regarding Series E
Preferred Stock (4)                               
10.1         Stock Option Plan (2)                                          
  10.2         Amended and Restated Secured Promissory Note dated March 31, 2000
to Mark Moldenhauer (2)                           
  10.3         Amended and Restated Secured Promissory Note dated March 31, 2000
to Pinnacle Financial Corporation (2)             
10.4         Agreement with American Honda Finance (3)(5)                   
10.5         Extension and Exchange Agreement with Pinnacle Financial       
Corporation dated December 29, 2000 (6)           

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REGULATION                                                                      
S-B NUMBER                            DOCUMENT                                  

10.6         Motor Vehicle Remarketing  Agreement with American Suzuki Motor
Corporation dated January 10, 2001 (5) (7)        
 10.7         Letter agreement with Sutro & Co. Incorporated dated October 11,
2000 (3)                                          
10.8         First Amendment to Motor Vehicle Remarketing Agreement with    
American Honda Finance Corporation (8)            
10.9         Secured Promissory Note to Mark Moldenhauer dated December 29, 
2000 (3)                                          
 10.10        Secured Promissory Note to Mark Moldenhauer dated March 31, 2001
(9)                                               
10.11        Secured Promissory Note to Pinnacle Financial Corporation dated
March 31, 2001 (10)                               
10.12        Promissory Note to R. Gary McCauley dated May 31, 2001 (11)    
10.13        Promissory Note to R. Gary McCauley dated July 16, 2001 (12)   
 10.14        Amended and Restated secured Promissory Note to Mark Moldenhauer
dated July 19, 2001 (13)                          
10.15        Eagle Capital Group, LLC Pay-Off Agreement dated June 28, 2002 
(1)                                               
10.16        Amended and Restated secured Promissory Note and Subordination 
   Agreement to Mark Moldenhauer dated June 28, 2002 (1)
  10.17        Autodaq loan agreement, security agreement, common stock warrants
(1)                                               
21          Subsidiaries of the registrant (8)                            
99          Certification Pursuant to 18 U.S.C. Section 1350, as Adopted  
       Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

--------------                                                                  
(1)      Incorporated by reference to Exhibit No. 2.1 filed to the Current      
Report on Form 8-K dated July 25, 2002 (File No. 333-78659).  
(2)      Incorporated by reference to the exhibits filed to the Registration    
Statement on Form S-1 (File No. 333-78659).                   
(3)      Incorporated by reference to the exhibits filed to the registration    
statement on Form S-1 (File No. 333-37090).                   
(4)      Incorporated  by reference to Exhibit No. 4.6 to the Annual Report on  
      Form 10-K for the year ended  March 31, 2001 (the "1991 Form 10-K").
(5)      Portions of this exhibit have been omitted pursuant to a request for   
confidential treatment.                                       
(6)      Incorporated by reference to the exhibits filed to the current report  
on Form 8-K dated December 29, 2000 (File No. 333-78659).     
(7)      Incorporated by reference to Exhibit No. 10.20 to the 1991 Form 10-K.  
(8)      Incorporated by reference to Exhibit No. 10.22 to the 1991 Form 10-K.  
(9)      Incorporated by reference to Exhibit No. 10.24 to the 1991 Form 10-K.  
(10)     Incorporated by reference to Exhibit No. 10.25 to the 1991 Form 10-K.  
(11)     Incorporated by reference to Exhibit No. 10.26 to the 1991 Form 10-K.  
(12)     Incorporated by reference to Exhibit No. 10.27 to the 1991 Form 10-K.  
(13)     Incorporated by reference to Exhibit No. 10.28 to the 1991 Form 10-K.  

REPORTS ON FORM 8-K                                                             

     During the last quarter of the period covered by this report, no reports on
Form 8-K were filed.                                                            

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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.                                                      

            AUTOTRADECENTER.COM INC.
(Registrant)

Date:  August 13, 2002            By:      /S/ ROGER L. BUTTERWICK              
                                     -------------------------------------------
                              Roger L. Butterwick, President

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

                                                        [Enlarge/Download Table]

               SIGNATURE                                 TITLE                      DATE            
                                                                                                    
                                         President, Chief Financial Officer,                        
                                         Treasurer and a director                                   
/S/ ROGER L. BUTTERWICK                  (Principal Executive, Financial and     AUGUST 13, 2002    
------------------------------------     Accounting Officer)                  --------------------- 
Roger L. Butterwick                                                                                 

/S/ JAMES KAISER                         Director                                AUGUST 13, 2002    
------------------------------------                                          --------------------- 
James Kaiser                                                                                        

/S/ DAVID LIVINGSTON                     Director                                 AUGUST 13, 2002   
------------------------------------                                          ----------------------
David Livingston                                                                                    

/S/ R. GARY MCCAULEY                     Director                                 AUGUST 13, 2002   
------------------------------------                                          ----------------------
R. Gary McCauley                                                                                    

/S/ L. DAVID SIKES                       Director                                 AUGUST 13, 2002   
-----------------------------------------                                     ----------------------
L. David Sikes                                                                                      

/S/ A. MARVIN STRAIT                     Director                                 AUGUST 13, 2002   
------------------------------------                                          ----------------------
A. Marvin Strait                                                                                    


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NEFF + RICCI LLP
CONSULTANTS & CERTIFIED PUBLIC ACCOUNTANTS

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders                                      
AutoTradeCenter.com, Inc. and Subsidiaries                                      

We have audited the consolidated balance sheets of AutoTradeCenter.com, Inc. and
Subsidiaries  as of  March  31,  2002 and  2001,  and the  related  consolidated
statements of income,  changes in stockholders'  equity,  and cash flows for the
years ended March 31, 2002, 2001, and 2000.  These financial  statements are the
responsibility of AutoTradeCenter.com,  Inc. and Subsidiaries'  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audits.                                                                     

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of  AutoTradeCenter.com,  Inc. and
Subsidiaries as of March 31, 2002 and 2001, and the results of their  operations
and their cash  flows for the years  ended  March 31,  2002,  2001,  and 2000 in
conformity with accounting principles generally accepted in the United States of
America.                                                                        

/s/ NEFF + RICCI LLP                                                            

Albuquerque, New Mexico                                                         
April 24, 2002, except for Note Q and R, as to which the date is July 19, 2002. 

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AUTOTRADECENTER.COM INC.
CONDENSED CONSOLIDATED BALANCE SHEET

                                                        [Enlarge/Download Table]

                                     ASSETS                                                                     
                                                                                           March 31,            
                                                                              ----------------------------------
                                                                                    2002              2001      
                                                                              ----------------   ---------------
                                                                                                                
Current assets:                                                                                                 
   Cash                                                                       $       334,669    $      209,068 
   Accounts receivable - trade                                                        295,067           224,298 
   Accounts receivable - employees                                                      1,500             8,535 
   Prepaid loan fees                                                                   19,909                 - 
   Prepaid expenses and other                                                          35,662           164,882 
   Assets from discontinued operations, net                                            26,300            21,812 
                                                                              ----------------   ---------------
      Total current assets                                                            713,107           628,595 
                                                                              ----------------   ---------------

Property and equipment, net                                                           265,100           508,949 
Software, net                                                                       4,605,548         7,539,338 
                                                                              ----------------   ---------------
                                                                                    4,870,648         8,048,287 
                                                                              ----------------   ---------------
Intangible assets, net                                                              1,390,528         1,590,700 
                                                                              ----------------   ---------------
      Total assets                                                            $     6,974,283    $   10,267,582 
                                                                              ================   ===============

                      LIABILITIES AND STOCKHOLDERS' EQUITY                                                      

Current liabilities:                                                                                            
   Accounts payable - trade                                                   $       235,878    $      110,063 
   Line of credit - Eagle Capital Group                                               968,311                 - 
   Long term debt - notes payable to related parties current portion                   75,000           200,000 
   Accrued liabilities                                                                283,499           135,976 
                                                                              ----------------   ---------------
      Total current liabilities                                                     1,562,688           446,039 
                                                                              ----------------   ---------------

Long term debt - notes payable to related parties                                     663,201           538,807 
                                                                              ----------------   ---------------

Stockholders' equity:                                                                                           
   Convertible preferred stock, Series C; $0.10 par value;                                                      
      398,700 shares authorized; 21,216 issued, and 11,016 and 11,118                                           
      outstanding in 2002 and 2001, respectively; liquidation preference                                        
      $100.00 per share                                                               924,828           914,828 
   Convertible preferred stock, Series D; $0.10 par value;                                                      
      600,000 shares authorized; 31,824 issued, and 11,800 and 14,536 shares                                    
      outstanding in 2002 and 2001, respectively; liquidation preference                                        
      $100.00 per share                                                             1,227,296           959,060 
   Convertible preferred stock, Series E; $0.10 par value;                                                      
      1,300 shares authorized; 1,300 issued, and 1,300 and 0 outstanding                                        
      in 2002 and 2001, respectively                                                      130                 - 
   Common stock, no par value; 100,000,000 shares authorized;                                                   
      59,678,125 and 40,954,759 shares issued and 59,462,575                                                    
      and 40,954,759 outstanding in 2002 and 2001, respectively                    29,964,441        24,944,750 
Capital stock contra account                                                       (1,373,264)                 -
Retained deficit                                                                  (25,716,800)      (17,814,138)
                                                                              ----------------   ---------------
Total stockholders' equity                                                          4,748,395         9,282,736 
                                                                              ----------------   ---------------
Total liabilities and stockholders' equity                                    $     6,974,283    $   10,267,582 
                                                                              ================   ===============


         See notes to condensed consolidated financial statements.

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AUTOTRADECENTER.COM INC. AND SUBSIDIARIES               
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS               
YEARS ENDED MARCH 31, 2002, 2001 AND 2000               

                                                        [Enlarge/Download Table]

                                                                    2002             2001              2000      
                                                              ----------------  ---------------  ----------------
                                                                                   (RESTATED)        (RESTATED)  
                                                                                                                 
Revenue:                                                                                                         
   Internet fees                                              $     2,542,610   $      870,474   $       291,587 
   Other                                                               25,300                -                 - 
                                                              ----------------  ---------------  ----------------
      Total revenues                                                2,567,910          870,474           291,587 
                                                              ----------------  ---------------  ----------------

Cost of revenues:                                                                                                
   Salary and wages                                                   450,856          397,122                 - 
   Other                                                              415,536          325,304                 - 
                                                              ----------------  ---------------  ----------------
      Total cost of revenues                                          866,392          722,426                 - 
                                                              ----------------  ---------------  ----------------

      Gross profit                                                  1,701,518          148,048           291,587 
                                                              ----------------  ---------------  ----------------

Operating expenses:                                                                                              
   Sales and marketing                                                626,464        1,127,899           295,065 
   Product development                                                208,403          411,058                 - 
   General and administrative                                       1,601,536        1,469,297           559,468 
   Depreciation and amortization                                    4,175,891        3,836,788           319,800 
   Loss on disposal of impaired software                               49,122        2,261,486                 - 
                                                              ----------------  ---------------  ----------------
      Total operating expenses                                      6,661,416        9,106,528         1,174,333 
                                                              ----------------  ---------------  ----------------

   (Loss) from operations                                          (4,959,899)      (8,958,480)         (882,746)
                                                              ----------------  ---------------  ----------------

Other income (expense):                                                                                          
   Interest expense                                                  (229,812)        (106,888)          (63,456)
   Interest expense - warrants and additional stock issued         (2,678,621)                -                 -
   Other expense                                                      (34,598)                -                 -
   Other income                                                           268            4,999                 - 
                                                              ----------------  ---------------  ----------------
      Total other income (expense) - net                           (2,942,763)        (101,889)          (63,456)
                                                              ----------------  ---------------  ----------------

   (Loss) from continuing operations                               (7,902,662)      (9,060,369)         (946,202)
                                                              ----------------  ---------------  ----------------

Discontinued operations:                                                                                         
   Loss from operations of land-based segment                               -        (323,840)       (1,697,585) 
   Loss from disposition of land-based segment                                     (2,339,445)                 - 
                                                              ----------------  ---------------  ----------------
                                                                            -      (2,663,285)       (1,697,585) 
                                                              ----------------  ---------------  ----------------

   (Loss) before income taxes                                      (7,902,662)     (11,723,654)       (2,643,787)

Income tax (expense) benefit:                                                                                    
   Continuing operations                                                    -                -                 - 
   Discontinued operations                                                  -                -            56,034 
                                                              ----------------  ---------------  ----------------
                                                                            -                -            56,034 
                                                              ----------------  ---------------  ----------------

Net (loss)                                                    $    (7,902,662)  $  (11,723,654)  $    (2,587,753)
                                                              ================  ===============  ================

Basic (loss) per share:                                                                                          
   Continuing operations                                      $         (0.17)  $        (0.28)  $         (0.04)
   Discontinued operations                                    $            -    $        (0.08)  $         (0.08)

Diluted earnings (loss) per share:                                                                               
   Continuing operations                                      $         (0.17)  $        (0.28)  $         (0.04)
   Discontinued operations                                    $            -    $        (0.08)  $         (0.08)

Weighted average shares number of common shares outstanding:                                                     
   Basic                                                           47,740,879       32,777,824        21,638,671 
   Fully diluted                                                   47,740,879       32,777,824        21,638,671 


 See notes to condensed consolidated financial statements.

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AUTOTRADECENTER.COM INC. AND SUBSIDIARIES 
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED MARCH 31, 2002, 2001 AND 2000 

                                                        [Enlarge/Download Table]

                                             Series B,              Series C,               Series D,              Series E,        
                                            Convertible            Convertible             Convertible            Convertible       
                                          Preferred Stock        Preferred Stock         Preferred Stock         Preferred Stock    
                                     ----------------------- ----------------------- ----------------------- -----------------------
                                        Shares      Amount      Shares      Amount      Shares      Amount      Shares     Amount   
                                     ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
                                                                                                                                    
Balance - March 31, 1999                 47,000  $  372,037           -  $        -           -  $        -           -  $        - 

April 1999 - Exercise of stock                                                                                                      
  options                                                                                                                           

December 1999 - Note payable                                                                                                        
  converted into stock                                                                                                              

January 2000 - Preferred stock                                                                                                      
  conversion                            (47,000) $ (372,037)                                                                        

February 2000 - Issued common                                                                                                       
  shares for software development                                                                                                   

February 2000 - Warrants conversion                                                                                                 

February 2000 - Issued convertible                                                                                                  
  Series C preferred stock                                       20,800   1,906,536                                                 

February 2000 - Issued convertible                                                                                                  
  Series D preferred stock                                                               31,200   2,859,805                         

March 2000 - Issued common shares for                                                                                               
  purchase of minority interest in                                                                                                  
  subsidiary                                                                                                                        

March 2000 - Issued common shares for                                                                                               
  purchase of subsidiary                                                                                                            

March 2000 - Effect of constructive                                                                                                 
  dividend on convertible Series C                                                                                                  
  preferred stock                                                                                                                   

March 2000 - Effect of constructive                                                                                                 
  dividend on convertible Series D                                                                                                  
  preferred stock                                                                                                                   

March 2000 - Fair value of stock                                                                                                    
  options granted for the year ended                                                                                                

March 2000 - Issued restricted common                                                                                               
  shares for purchase of subsidiary                                                                                                 

Net loss for the year ended March                                                                                                   
  31, 2000                                                                                                                          
                                     ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Balance - March 31, 2000                      -  $        -      20,800  $1,906,536      31,200  $2,859,805           -  $        - 
                                     =========== =========== =========== =========== =========== =========== =========== ===========


                                         Capital Stock                                                                              
                                         Contra Account            Common Stock                                                     
                                        ---------------  ----------------------------------       Retained                          
                                              Amount           Shares           Amount             Deficit            Total         
                                        ---------------  ----------------  ----------------  -----------------  -----------------   
                                                                                                                                    
Balance - March 31, 1999                $            -       20,385,084    $     2,664,479   $      (125,452)    $     2,911,064    

April 1999 - Exercise of stock                                                                                                      
  options                                                       100,000            200,000                               200,000    

December 1999 - Note payable                                                                                                        
  converted into stock                                          314,475            314,475                               314,475    

January 2000 - Preferred stock                                                                                                      
  conversion                                                    543,515            372,037                                     -    

February 2000 - Issued common                                                                                                       
  shares for software development                                40,000             80,000                                80,000    

February 2000 - Warrants conversion                             100,000             50,000                                50,000    

February 2000 - Issued convertible                                                                                                  
  Series C preferred stock                                                                                             1,906,536    

February 2000 - Issued convertible                                                                                                  
  Series D preferred stock                                                                                             2,859,805    

March 2000 - Issued common shares for                                                                                               
  purchase of minority interest in                                                                                                  
  subsidiary                                                  5,000,000          9,375,000                             9,375,000    

March 2000 - Issued common shares for                                                                                               
  purchase of subsidiary                                      1,100,000          2,801,590                             2,801,590    

March 2000 - Effect of constructive                                                                                                 
  divident on convertible Series C                                                                                                  
  preferred stock                                                                1,697,280        (1,697,280)                  -    

March 2000 - Effect of constructive                                                                                                 
  dividend on convertible Series D                                                                                                  
  preferred stock                                                                1,680,000        (1,680,000)                  -    

March 2000 - Fair value of stock                                                                                                    
  options granted for the year ended                                               351,280                               351,280    

March 2000 - Issued restricted common                                                                                               
  shares for the purchase of subsidiary                          69,535            193,401                               193,401    

Net loss for the year ended March                                                                                                   
  31, 2000                                                                                        (2,587,753)         (2,587,753)   
                                        ---------------  ---------------  -----------------  -----------------  ------------------  
Balance - March 31, 2000                $            -       27,652,609   $     19,779,542   $    (6,090,485)   $     18,455,398    
                                        ===============  ===============  =================  =================  ==================  


See notes to condensed consolidated financial statements. 

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AUTOTRADECENTER.COM INC. AND SUBSIDIARIES 
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED MARCH 31, 2002, 2001 AND 2000 

                                                        [Enlarge/Download Table]

                                          Series B,              Series C,               Series D,              Series E,        
                                         Convertible            Convertible             Convertible            Convertible       
                                       Preferred Stock        Preferred Stock         Preferred Stock         Preferred Stock    
                                  ----------------------- ----------------------- ----------------------- -----------------------
                                     Shares      Amount      Shares      Amount      Shares      Amount      Shares     Amount   
                                  ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
                                                                                                                                 

Balance forward from March 31,                                                                                                   
  2000                                     -  $        -      20,800  $1,906,536      31,200  $2,859,805           -  $        - 

April 2000 - Exercise of stock                                                                                                   
  options                                                                                                                        

April 2000 - Issued common                                                                                                       
  shares for purchase of                                                                                                         
  subsidiary contingent on                                                                                                       
  performance                                                                                                                    

April 2000 - Issued common                                                                                                       
  shares for purchase of                                                                                                         
  subsidiary contingent on                                                                                                       
  performance                                                                                                                    

May 2000 - Note payable                                                                                                          
  converted into stock                                                                                                           

July 2000 - Exercise of stock                                                                                                    
  options                                                                                                                        

August 2000 - Exercise of stock                                                                                                  
  options                                                                                                                        

September 2000 - Exercise of                                                                                                     
  stock options                                                                                                                  

September 2000 - Issuance of                                                                                                     
  shares for goodwill                                                                                                            

September 2000 - Conversion                                                                                                      
  of preferred shares                                         (8,200)   (751,615)                                                

September 2000 - Conversion                                                                                                      
  of preferred shares                                                                (14,900) (1,365,740)                        

October 2000 - Exercise of stock                                                                                                 
  options                                                                                                                        

October 2000 - Stock issued for                                                                                                  
  services                                                               (91,598)               (137,396)                        

January 2001 - Conversion of                                                                                                     
  preferred shares                                              (700)    (17,495)                                                

January 2001 - Conversion of                                                                                                     
  preferred shares                                                                    (1,000)    (47,532)                        

March 2001 - Conversion of                                                                                                       
  preferred shares                                                                    (1,049)    (50,340)                        

March 2001 - Conversion of                                                                                                       
  preferred shares                                            (1,000)   (100,000)                                                

March 2001 - Shares issued for                                                                                                   
  services                                                               (21,000)                (31,500)                        

March 2001 - Shares issued                                                                                                       
  upon exercise of options                                                                                                       

March 2001 - Common shares                                                                                                       
  sold pursuant to Private                                                                                                       
  Placement                                                                                                                      

March 2001 - Options and                                                                                                         
  warrants issued for services                                                                                                   

March 2001 - Adjust Preferred                                                                                                    
  shares for 2% bonus shares                                     218                     285                                     
  issued -net                                                                                                                    

Net loss from discontinued                                                                                                       
  operations for the year ended                                                                                                  
  March 31, 2001                                                                                                                 

Net loss from continuing                                                                                                         
  operations for the year ended                                                                                                  
  March 31, 2001                                                                                                                 

Rounding                                                                                                                         
                                                                                                      (1)                        
                                  ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Balance - March 31, 2001                   -  $        -      11,118  $  924,828      14,536  $1,227,296           -  $        - 
                                  =========== =========== =========== =========== =========== =========== =========== ===========


                                      Capital Stock                                                                              
                                      Contra Account            Common Stock                                                     
                                     ---------------  ----------------------------------       Retained                          
                                           Amount           Shares           Amount             Deficit            Total         
                                     ---------------  ----------------  ----------------  -----------------  -----------------   
                                                                                                                                 

Balance forward from March 31,                                                                                                   
  2000                               $            -        27,652,609   $    19,779,542   $     (6,090,485)  $     18,455,398    

April 2000 - Exercise of stock                                                                                                   
  options                                                      10,000            10,000                                10,000    

April 2000 - Issued common                                                                                                       
  shares for purchase of                                                                                                         
  subsidiary contingent on                                                                                                       
  performance                                                       -                       -                               -    

April 2000 - Issued common                                                                                                       
  shares for purchase of                                                                                                         
  subsidiary contingent on                                                                                                       
  performance                                                       -                       -                               -    

May 2000 - Note payable                                                                                                          
  converted into stock                                      3,000,000                 300,000                         300,000    

July 2000 - Exercise of stock                                                                                                    
  options                                                     163,875                 124,792                         124,792    

August 2000 - Exercise of stock                                                                                                  
  options                                                       5,000                   4,375                           4,375    

September 2000 - Exercise of                                                                                                     
  stock options                                                50,000                  22,500                          22,500    

September 2000 - Issuance of                                                                                                     
  shares for goodwill                                         266,667                  53,333                          53,333    

September 2000 - Conversion                                                                                                      
  of preferred shares                                         669,120                 751,615                               -    

September 2000 - Conversion                                                                                                      
  of preferred shares                                       1,838,741               1,365,740                               -    

October 2000 - Exercise of stock                                                                                                 
  options                                                     374,750                 317,583                         317,583    

October 2000 - Stock issued for                                                                                                  
  services                                                    134,683                 282,430                          53,436    

January 2001 - Conversion of                                                                                                     
  preferred shares                                             57,120                  17,495                               -    

January 2001 - Conversion of                                                                                                     
  preferred shares                                            357,143                  47,532                               -    

March 2001 - Conversion of                                                                                                       
  preferred shares                                            348,939                  50,340                               -    

March 2001 - Conversion of                                                                                                       
  preferred shares                                             81,600                 100,000                               -    

March 2001 - Shares issued for                                                                                                   
  services                                                     60,000                  52,500                               -    

March 2001 - Shares issued                                                                                                       
  upon exercise of options                                     19,300                  19,300                          19,300    

March 2001 - Common shares                                                                                                       
  sold pursuant to Private                                                                                                       
  Placement                                                 5,865,212               1,452,487                       1,452,487    

March 2001 - Options and                                                                                                         
  warrants issued for services                                                        193,186                         193,186    

March 2001 - Adjust Preferred                                                                                                    
  shares for 2% bonus shares                                                                                                     
  issued -net                                                                                                               -    

Net loss from discontinued                                                                                                       
  operations for the year ended                                                                                                  
  March 31, 2001                                                                                (2,663,285)        (2,663,285)   

Net loss from continuing                                                                                                         
  operations for the year ended                                                                                                  
  March 31, 2001                                                                                (9,060,369)        (9,060,369)   

Rounding                                                                                                                         

Balance - March 31, 2001                                                                                 1                  -    
                                     ---------------  ----------------  ----------------  -----------------  -----------------   
                                     $            -        40,954,759   $    24,944,750   $    (17,814,138)  $      9,282,736    
                                     ===============  ================  ================  =================  =================   

See notes to condensed consolidated financial statements. 

F-5 

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AUTOTRADECENTER.COM INC. AND SUBSIDIARIES 
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED MARCH 31, 2002, 2001 AND 2000 

                                                        [Enlarge/Download Table]

                                            Series B,              Series C,               Series D,              Series E,        
                                           Convertible            Convertible             Convertible            Convertible       
                                         Preferred Stock        Preferred Stock         Preferred Stock         Preferred Stock    
                                    ----------------------- ----------------------- ----------------------- -----------------------
                                       Shares      Amount      Shares      Amount      Shares      Amount      Shares     Amount   
                                    ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
                                                                                                                                   
Balance forward from March 31,                                                                                                     
  2001                                       -  $        -      11,118  $  924,828      14,536  $1,227,296           -  $        - 

April 2001 - Stock issued                                                                                                          
  pursuant to Private Placement                                                                                                    

April 2001- Common shares                                                                                                          
  and warrents issued for services                                                                                                 

April 2001 - Conversion of                                                                                                         
  preferred shares                                                                        (204)    (20,000)                        

April 2001 - Issuance of earn                                                                                                      
  out shares                                                                                                                       

August 2001 - Conversion of                                                                                                        
  preferred shares                                                                        (500)    (49,020)                        

August 2001 - Issuance of                                                                                                          
  shares for directors fees                                                                                                        

August 2001- Issue additional                                                                                                      
  Common shares for Preferred                                                                                                      
  C Holders                                                                                                                        

August 2001 - Issued convertible                                                                                                   
  Series E Preferred stock                                                                                       1,300         130 

August 2001 - Issued anti-                                                                                                         
  dilution shares to Private                                                                                                       
  Placement holders                                                                                                                

September 2001 - Stock issued                                                                                                      
  pursuant to Private Placement                                                                                                    

September 2001 - Record                                                                                                            
  purchase of stock - permanently                                                                                                  
  retired                                                                                                                          

September 2001 - Additional                                                                                                        
  paid in capital - Eagle                                                                                                          

September 2001 - Contra                                                                                                            
  accounts Eagle warrants                                                                                                          

October 2001 - Stock issued                                                                                                        
  pursuant to Private Placement                                                                                                    

November 2001 - Conversion                                                                                                         
  of preferred shares                                                                     (500)    (49,020)                        

December 2001 - Additional                                                                                                         
  paid in capital - Eagle                                                                                                          

December 2001 - Contra                                                                                                             
  accounts Eagle warrants                                                                                                          

January 2002 - Stock issued                                                                                                        
  pursuant to Private Placement                                                                                                    

January 2002 - Additional paid                                                                                                     
  in capital - Eagle                                                                                                               

January 2002 - Contra accounts                                                                                                     
  Eagle warrants                                                                                                                   

January 2002 - Conversion of                                                                                                       
  preferred shares                                                (102)    (10,000)       (532)    (52,157)                        

February 2002 - Common                                                                                                             
  shares issued for services                                                                                                       

February 2002 - Contra                                                                                                             
  accounts Eagle warrants                                                                                                          

February 2002 - Stock issued                                                                                                       
  pursuant to Private Placement                                                                                                    

March 2002 - Common shares                                                                                                         
  issued for services                                                                                                              

March 2002 - Contra accounts                                                                                                       
  Eagle warrants                                                                                                                   

March 2002 - Cost of Stock                                                                                                         
  issued pursuant to Private                                                                                                       
  Placement                                                                                                                        

March 2002 - Conversion of                                                                                                         
  preferred shares                                                                      (1,000)    (98,039)                        

March 2002 - Issuance of earn                                                                                                      
  out shares                                                                                                                       

March 2002 - Adust book                                                                                                            
  shares to Transfer Agent total                                                                                                   

Net loss from operations for the                                                                                                   
  year ended March 31, 2002                                                                                                        

                                    ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Balance - March 31, 2002                     -  $        -      11,016  $  914,828      11,800  $  959,060       1,300  $      130 
                                    =========== =========== =========== =========== =========== =========== =========== ===========


                                        Capital Stock                                                                              
                                        Contra Account            Common Stock                                                     
                                       ---------------  ----------------------------------       Retained                          
                                             Amount           Shares           Amount             Deficit            Total         
                                       ---------------  ----------------  ----------------  -----------------  -----------------   
                                                                                                                                   

Balance forward from March 31,                                                                                                     
  2001                                 $            -        40,954,759   $    24,944,750   $    (17,814,138)  $      9,282,736    

April 2001 - Stock issued                                                                                                          
  pursuant to Private Placement                                 746,808           186,702                               186,702    

April 2001- Common shares                                                                                                          
  and warrents issued for services                               25,000            34,711                                34,711    

April 2001 - Conversion of                                                                                                         
  preferred shares                                              111,732            20,000                                     -    

April 2001 - Issuance of earn                                                                                                      
  out shares                                                     93,750            35,156                                35,156    

August 2001 - Conversion of                                                                                                        
  preferred shares                                              440,820            49,020                                     -    

August 2001 - Issuance of                                                                                                          
  shares for directors fees                                     510,000            51,000                                51,000    

August 2001- Issue additional                                                                                                      
  Common shares for Preferred                                                                                                      
  C Holders                                                     538,560           112,721                               112,721    

August 2001 - Issued convertible                                                                                                   
  Series E Preferred stock                                                                                                  130    

August 2001 - Issued anti-                                                                                                         
  dilution shares to Private                                                                                                       
  Placement holders                                           9,918,027         2,075,844                             2,075,844    

September 2001 - Stock issued                                                                                                      
  pursuant to Private Placement                                 450,000            45,000                                45,000    

September 2001 - Record                                                                                                            
  purchase of stock - permanently                                                                                                  
  retired                                                      (215,550)          (30,177)                              (30,177)   

September 2001 - Additional                                                                                                        
  paid in capital - Eagle                                                       1,814,925                             1,814,925    

September 2001 - Contra                                                                                                            
  accounts Eagle warrants                  (2,014,838)                                                               (2,014,838)   

October 2001 - Stock issued                                                                                                        
  pursuant to Private Placement                                 350,000            35,000                                35,000    

November 2001 - Conversion                                                                                                         
  of preferred shares                                           732,600            49,020                                     -    

December 2001 - Additional                                                                                                         
  paid in capital - Eagle                                                           6,159                                 6,159    

December 2001 - Contra                                                                                                             
  accounts Eagle warrants                    (422,753)                                                                 (422,753)   

January 2002 - Stock issued                                                                                                        
  pursuant to Private Placement                               1,500,000           150,000                               150,000    

January 2002 - Additional paid                                                                                                     
  in capital - Eagle                                                               42,235                                42,235    

January 2002 - Contra accounts                                                                                                     
  Eagle warrants                              307,426                                                                   307,426    

January 2002 - Conversion of                                                                                                       
  preferred shares                                              764,482            62,157                                     -    

February 2002 - Common                                                                                                             
  shares issued for services                                     75,000             7,500                                 7,500    

February 2002 - Contra                                                                                                             
  accounts Eagle warrants                     367,998                                                                   367,998    

February 2002 - Stock issued                                                                                                       
  pursuant to Private Placement                                 520,000            52,000                                52,000    

March 2002 - Common shares                                                                                                         
  issued for services                                           555,000            67,478                                67,478    

March 2002 - Contra accounts                                                                                                       
  Eagle warrants                              388,903                                                                   388,903    

March 2002 - Cost of Stock                                                                                                         
  issued pursuant to Private                                                                                                       
  Placement                                                                          (925)                                 (925)   

March 2002 - Conversion of                                                                                                         
  preferred shares                                            1,068,376            98,039                                     -    

March 2002 - Issuance of earn                                                                                                      
  out shares                                                    320,214            56,126                                56,126    

March 2002 - Adust book                                                                                                            
  shares to Transfer Agent total                                  2,997                                                       -    

Net loss from operations for the                                                                                                   
  year ended March 31, 2002                                                                       (7,902,662)        (7,902,662)   
                                       ---------------  ----------------  ----------------  -----------------  -----------------   
Balance - March 31, 2002               $   (1,373,264)       59,462,575   $    29,964,441   $    (25,716,800)  $      4,748,395    
                                       ===============  ================  ================  =================  =================   


See notes to condensed consolidated financial statements. 

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 AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 YEARS ENDED MARCH 31, 2002, 2001 AND 2000

                                                        [Enlarge/Download Table]

                                                                2002             2001            2000      
                                                          ---------------  ---------------  ---------------
                                                                                                           
Cash flows from operating activities:                                                                      
  Net loss:                                                                                                
    From continuing operations                            $   (7,902,662)  $   (9,060,369)  $     (946,202)
    From discontinued operations of land-based segment                 -         (323,840)      (1,641,551)
    From disposition of land-based segment                             -       (2,339,445)               - 
                                                          ---------------  ---------------  ---------------
                                                              (7,902,662)     (11,723,654)      (2,587,753)
                                                          ---------------  ---------------  ---------------
Adjustments to reconcile net (loss) to net cash provided                                                   
  by operating activities:                                                                                 
    Depreciation and amortization                              4,175,891        3,836,788          319,800 
    Interest expense - warrants and additional stock           2,678,621                -                - 
    Loss on disposal of impaired software                         49,122        2,261,486                - 
    Stock or stock options issued for services                   251,971          299,955          351,280 
(Increase) decrease in:                                                                                    
  Net assets of discontinued operations                           (4,488)        1,001,354        1,257,062
  Accounts receivable                                            (63,734)        (232,834)           98,610
  Prepaid expenses and other current assets                      109,311         (54,610)        (105,006) 
Increase (decrease) in:                                                                                    
  Accounts payable                                               125,814          110,063         (24,712) 
  Accrued liabilities                                            147,523          129,852         (44,599) 
  Deferred income taxes                                                -                -          (7,010) 
                                                          ---------------  ---------------  ---------------
    Net cash used in operating activities                       (432,631)      (4,371,600)        (742,328)
                                                          ---------------  ---------------  ---------------

Cash flows from investing activities:                                                                      
  Purchase of property, equipment and software                  (847,808)      (1,552,232)        (420,365)
  Sale of property and equipment                                       -          428,542           45,945 
                                                          ---------------  ---------------  ---------------
    Net cash used in investing activities                       (847,808)      (1,123,690)        (374,420)
                                                          ---------------  ---------------  ---------------

Cash flows from financing activities:                                                                      
  Net proceeds from borrowings                                         -        (802,418)          158,393 
  Proceeds from long term debt                                         -          200,000                - 
  Draws on line of credit - Eagle Capital Group                1,519,536                -                - 
  Repayments on line of credit - Eagle Capital Group            (551,225)                -                -
  Proceeds from issuance of convertible preferred stock              130                -        4,766,341 
  Proceeds from exercise of stock options                              -          498,550                - 
  Proceeds from issuance of common stock - net                   437,599        1,452,487          250,000 
                                                          ---------------  ---------------  ---------------
    Net cash  provided by financings activities                1,406,040        1,348,619        5,174,734 
                                                          ---------------  ---------------  ---------------

Net change in cash                                               125,601      (4,146,671)        4,057,986 

Beginning cash balance                                           209,068        4,355,738          297,752 
                                                          ---------------  ---------------  ---------------

Ending cash balance                                       $      334,669   $      209,067   $    4,355,738 
                                                          ===============  ===============  ===============

Supplemental disclosures:                                                                                  
  Interest paid for discontinued operations               $            -   $      690,853   $      887,094 
                                                          ===============  ===============  ===============
  Interest paid for continuing operations                 $      119,870   $      106,888   $       63,456 
                                                          ===============  ===============  ===============
  Income taxes paid                                       $            -   $            -   $        3,000 
                                                          ===============  ===============  ===============
  Issuance of common stock for:                                                                            
    Software                                              $            -   $            -   $   11,493,673 
                                                          ===============  ===============  ===============
    Goodwill                                              $            -   $       53,333   $      246,724 
                                                          ===============  ===============  ===============


 See notes to condensed consolidated financial statements.

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 AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2002

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                             

INCORPORATION AND NATURE OF BUSINESS                                            

         AutoTradeCenter.com  Inc. ("the Company") was incorporated  pursuant to
the laws of the  State of  Arizona  on July 10,  1997 and  began  operations  on
September 22, 1997.  In December  1998,  the Company  changed its name from Auto
Network USA, Inc. to Auto Network  Group,  Inc. In April 1999, the Company again
changed its name to AutoTradeCenter.com Inc. to more properly reflect its future
direction as an Internet based  wholesaler  and remarketer of used  automobiles.
The wholesale  automobile  business  principally  involves activities related to
redistributing used vehicles, typically acquired from franchised and independent
auto dealers,  lessors,  banks and other finance companies and reselling them to
other franchised and independent dealers. Prior to December 31, 2000 the Company
engaged in these activities either as a fee-based service or as a principal.  As
a principal  (land-based  operations),  the  Company  performed  these  services
through  independent  wholesale  brokers.  Each broker bought,  titled, and sold
vehicles in the name of the Company.  In November 2000,  the Company  decided to
discontinue all of its wholesale  land-based  operations in order to concentrate
efforts on remarketing  used vehicles  utilizing the Internet.  Accordingly,  it
sold its wholesale  land-based  subsidiaries  located in New Mexico,  Texas, and
Oregon on December 29, 2000,  and  transferred  ownership of  substantially  all
vehicles  owned by its  Scottsdale,  Arizona  operations on February 28, 2001 to
certain of its former brokers.                                                  

         The Company's Internet operations facilitate the exchange (remarketing)
of used vehicles from lessors,  captive and other finance companies,  banks, and
franchised and  independent  auto dealers,  to other  franchised and independent
dealers. The Company, generally, earns fees from these exchanges,  utilizing its
proprietary software. The Company currently has three contracts to remarket late
model  off-lease  and program  vehicles to  specified  franchised  dealers.  The
Company currently does not act as principal in its Internet business.           

         AutoTradeCenter.com  Inc.  stock is traded on the NASD  Bulletin  Board
under the symbol AUTC.OB.                                                       

PRINCIPLES OF CONSOLIDATION                                                     

         The  consolidated  financial  statements  include  the  accounts of the
Company and its wholly owned subsidiaries:  Auto Network Group of Arizona,  Inc.
("ANET-AZ")  Pinnacle Dealer Services,  Inc.  ("PDS"),  National Dealer Services
("NDSCo"), AutoTradeCenter Remarketing Services Inc. formerly Walden Remarketing
Services, Inc. ("Walden Remarketing"), and BusinessTradeCenter.com Inc. ("BTC").
All material intercompany accounts and transactions have been eliminated.       

         Information   regarding   the   discontinued   operations   of   former
subsidiaries;  Auto Network Group of New Mexico, Inc. ("ANET-NM"),  Auto Network
Group  Northwest,  Inc.  ("ANET-NW"),   and  Auto  Group  of  SanAntonio,   Ltd.
("ANET-SA"), is contained herein.                                               

         Information regarding two other land-based  subsidiaries that currently
have  no  assets  or  liabilities,   Auto-Network  Group  of  Eastern  PA,  Inc.
("ANET-PA")  and  Auto  Network  Group  of  Denver,  Inc.  ("ANET-Den")  also is
contained herein.                                                               

RECLASSIFICATIONS                                                               

         Certain  prior  period  amounts have been  reclassified  or restated to
conform to the current year presentation.                                       

USE OF ESTIMATES                                                                

         The  preparation of financial  statements in conformity with accounting
principles   generally  accepted  in  the  United  States  of  America  requires
management to make estimates and assumptions that affect certain                

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2002

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):                

reported  amounts of assets  and liabilities, and disclosures at the date of the
financial statements and  reported amounts  of revenues  and expenses during the
reporting period. Accordingly, actual results could differ from those estimates.

CASH AND CASH ITEMS                                                             

         Cash  and  cash  items  include  all  highly  liquid  debt  instruments
purchased with a maturity of three months or less at the date of acquisition. At
times, cash balances held at financial  institutions were in excess of federally
insured limits. No losses have been experienced by the Company.                 

DEPRECIATION METHOD                                                             

         Equipment   and  leasehold   improvements   are  stated  at  cost  less
accumulated  depreciation  and  amortization.  Depreciation and amortization are
computed using the  straight-line  method over the assets estimated useful lives
ranging from 3 to 10 years.                                                     

SOFTWARE CAPITALIZATION AND WEBSITE DEVELOPMENT COSTS                           

         The Company  follows  Statement of Position  98-1,  Accounting  for the
Costs  of  Computer  Software   Developed  or  Obtained  for  Internal  Use,  in
determining the amount of software costs  developed  in-house to be capitalized.
The Company  applies  Emerging  Issues Task Force 00-02,  Accounting for Website
Development Costs, in determining the amount of website  development costs to be
capitalized.                                                                    

         These standards require  capitalization  of certain direct  development
costs associated with internal use software and website development costs. Costs
to be capitalized  include internal and external direct project costs including,
among  others;  payroll  and labor,  material,  and  services.  These  costs are
included in software and are being  amortized  over a period not to exceed three
years beginning when the software is substantially ready for use. Costs incurred
on new  projects,  projects in a  preliminary  phase and projects  that contract
negotiations  have not begun,  as well as  maintenance,  and training  costs are
charged to expense as incurred.                                                 

AMORTIZATION OF INTANGIBLES                                                     

         Goodwill and other  intangibles are amortized on a straight-line  basis
over  periods  ranging up to 10 years.  The Company  periodically  assesses  the
recoverability  of the cost of its  goodwill  based  upon a review of  projected
undiscounted  cash  flows of the  related  operating  entity.  These  cash  flow
estimates  are  prepared  and  reviewed by  management  in  connection  with the
Company's annual long-range  planning  process.  As of March 31, 2002, there had
been no write down of goodwill (See information  regarding  reclassification and
restatement of goodwill- Note B).                                               

         The  Company  intends to adopt  Financial  Accounting  Standards  Board
Statement 142 "Goodwill and Other Intangible Assets," effective during its first
quarter ending June 30, 2002. Management believes,  that with its pending merger
as  disclosed  in Note Q to these  financial  statements,  that the  Company may
experience a resulting loss in value to this intangible asset of goodwill.      

REVENUE RECOGNITION                                                             

         Revenue and the corresponding  cost of revenue are recognized  monthly.
Customers  are billed a per vehicle  sales fee for vehicles sold while listed on
the Company's  hosted web sites.  These sales are recorded in trade  receivables
until cash is received.  The Company has implemented  the  requirements of Staff
Accounting  Bulletin  101,  which  did not have a  material  impact  on  revenue
recognition in the financial statements.                                        

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2002

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):                

EARNINGS (LOSS) PER SHARE                                                       

         Basic  earnings  (loss)  per  share  have  been  computed  based on the
weighted average number of common shares  outstanding.  The computations for the
years  ending  March 31, 2000 and 2001,  exclude  430,465  shares held in escrow
pending  certain  earn-out  provisions.  For the  year  ending  March  31,  2002
agreement  was  reached on the  earn-out  provisions  and the shares  issued are
included  in the  weighted  number of  shares  outstanding.  Basic  and  diluted
earrings per share are the same for all years presented, as the Company reported
losses for these years and a  computation  of fully  diluted  earnings  would be
anti-dilutive.                                                                  

VALUATION OF STOCK OPTIONS                                                      

         The Company uses the  intrinsic  value method for valuing stock options
issued  to  employees.  The  Company  uses the fair  value of goods or  services
received or the fair value of the options or warrants issued,  whichever is more
readily  measurable,  to determine the expense to record for options or warrants
issued to non-employees.                                                        

INCOME TAXES                                                                    

         The Company  recognizes  deferred  tax  liabilities  and assets for the
expected  future tax  consequences  of events that have been  recognized  in its
financial statements or tax returns. Under this method, deferred tax liabilities
and assets are determined based upon the difference between financial  statement
carrying amounts and tax basis of assets and liabilities using enacted tax rates
in effect in the years in which the differences are expected to reverse.        

SEGMENT AND CONCENTRATION REPORTING                                             

         The  Company is  required  to report  information  about its  operating
segments, as well as related disclosures about products and services, geographic
areas and  major  customers.  At March 31,  2001,  Internet  remarketing  is the
Company's only operating segment.  For the years ending March 31, 2002 and 2001,
84% and 100% respectively, of the Company's revenue was earned from its contract
with American Honda Finance Corporation.                                        

NOTE B - RECLASSIFICATION AND RESTATEMENT OF GOODWILL                           

         When the Company  acquired  NDSCo on March 31, 2000,  $2,039,123 of the
purchase  price was  allocated to  goodwill.  The goodwill was assigned a useful
life of 10 years.  Upon  further  consideration  the  Company  reclassified  and
restated  this  amount from  goodwill  to cost of  software  to more  succinctly
categorize the nature of the assets purchased. During the quarter ended December
31,  2000,  as a result  of the  changes  in its  business  plan  including  the
disposition of its  dealer-to-dealer  land based  business,  the Company further
determined  that it could no longer  estimate the useful  life,  if any, of this
software.  Accordingly,  the carrying cost of this asset was considered impaired
and written off in full during the year ended March 31, 2001.                   

         When the Company acquired the remaining 45% minority interest of BTC on
March 23, 2000,  $9,374,550 of the purchase price was allocated to goodwill with
an  estimated  life  of  10  years.  Upon  further  consideration,  the  Company
reclassified  and restated this amount from goodwill to cost of software to more
succinctly categorize the nature of the assets purchased. Effective for the year
ended March 31,  2000,  the Company  changed its  estimate of the useful life of
this asset from 10 years to 3 years.                                            

         The reclassified and restated  consolidated  balance sheet at March 31,
2000, and the consolidated  and condensed  statements of operation for the years
ended  March 31, 2000 and 2001,  reflects  both of these  reclassifications  and
restatements.                                                                   

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2002

NOTE C -  DISCONTINUED OPERATIONS                                               

         On November 30, 2000,  the Company  formalized its decision to exit its
land-based  operations no later than March 31, 2001, the end of its fiscal year.
The  disposition  of the  land-based  operations  represents  the  disposal of a
business  segment  under APB  Opinion  No.  30.  Accordingly,  results  of these
operations  have been  classified  as  discontinued  and prior periods have been
restated,  including the reallocation of fixed overhead charges to both business
segments.                                                                       

         Information   regarding   the   discontinued   operations   of   former
subsidiaries;  Auto Network Group of New Mexico, Inc. ("ANET-NM"),  Auto Network
Group  Northwest,  Inc.  ("ANET-NW"),   and  Auto  Group  of  SanAntonio,   Ltd.
("ANET-SA"),  is contained  herein.  Information  regarding two other land-based
subsidiaries that currently have no assets or liabilities, Auto-Network Group of
Eastern PA, Inc. ("ANET-PA") and Auto Network Group of Denver, Inc. ("ANET-Den")
also is contained herein.                                                       

NOTE D - ACCOUNTS RECEIVABLE                                                    

Accounts  receivable  consist  of  the  following:  (No  allowance  for doubtful
accounts   is  considered   necessary  since   all  accounts  are  deemed  fully
collectible.)                                                                   
                                                 March 31,
                                                --------------------------------
                                                 2002             2001
                                                 ----             ----
Trade accounts receivable                        $ 295,067        $ 224,298 
Due from employees                                   1,500            8,535 
                                                  -------          -------
                                                $ 296,567        $ 232,833
                                                  =======          =======

NOTE E - PROPERTY AND EQUIPMENT                                                 

Property and equipment consist of the following:                            

                                                        [Enlarge/Download Table]

                                                                                     March 31,          
                                                            DEPRECIATION  ------------------------------
                                                             LIFE/METHOD           2002            2001 
                                                             -----------           ----            ---- 
                                                                                                        
Computers and equipment                                       3 years/SL    $   712,689     $   739,638 
Furniture and fixtures                                        7 years/SL         62,072          62,072 
Leasehold improvements                                        5 years/SL          6,200           6,300 
                                                                                --------        --------
                                                                                780,961         808,110 
Less accumulated depreciation                                                  (515,861)       (299,061)
                                                                               ---------       ---------
                                                                            $   265,100     $   508,949 
                                                                                ========        ========

Software and Website programming consist of the following:                                              
  Software/systems design                                     3 years/SL    $11,633,524     $10,804,765 
  Less accumulated amortization                                              (7,027,976)     (3,265,427)
                                                                             -----------     -----------
                                                                            $ 4,605,548     $ 7,539,338 
                                                                             ===========     ===========

         The  Company,  in its fiscal  year ended  March 31,  2001,  recorded an
impairment  loss of  $2,261,486  on the disposal of software  acquired  when the
Company  purchased all of the outstanding  common stock in NDSCo.  This software
provides  dealer-to-dealer Internet trading for the exchange of used automobiles
and is not included in the Company's  current  business plan which is focused on
the remarketing of off-lease and program vehicles.                              

         The  Company,  in its fiscal  year  ended  March 31,  2002,  charged an
impairment loss of $49,122 on the disposal of software previously acquired since
it was determined that it had no future value to the Company and its activities.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2002

NOTE  F - GOODWILL AND INTANGIBLES                                              

                                                                [Download Table]

                                                          March 31,           
                               AMORTIZATION  ---------------------------------
                                LIFE/METHOD              2002            2001 
                                -----------              ----            ---- 
                                                                              
Goodwill and intangibles                          $ 1,987,511     $ 1,988,612 
Less accumulated amortization   10 years/SL          (596,983)       (398,912)
                                                   ----------       --------- 
                                                  $ 1,390,528     $ 1,590,700 
                                                   ==========       ========= 

NOTE G - LONG-TERM DEBT AND NOTES PAYABLE:                                      

                                                        [Enlarge/Download Table]

RELATED PARTY AND AFFILIATES:                                                         2002          2001     
-----------------------------                                                         ----          ----     
                                                                                                             
     o   Notes  payable to former  officer  and  director,  12% annual  interest                             
         payable   monthly,   collateralized   by  all   accounts   receivable,                              
         inventory,  equipment and certain  intangibles  due April 1, 2002. The                              
         note can be  accelerated  if  either  Roger L.  Butterwick  or John E.                              
         Rowlett  ceases to be an officer or director.  The note is  guaranteed                              
         by Mr.  Butterwick  and  Mr.  Rowlett  as  individuals.  The  note  is                              
         convertible  at the option of the  holder  into  common  shares of the                              
         Company  at the  lesser of $0.375  per  share or the  average  trading                              
         price of such  common  shares for 30  previous  trading  days prior to   $         0   $   402,000  
         conversion.                                                                                         
     o   Note payable to an entity  controlled by a former  officer and director                             
         of the Company,  12% annual interest payable  monthly,  collateralized                              
         by  all  accounts  receivable,   inventory,   equipment,  and  certain                              
         intangibles  due April 1, 2002  This  note is  subordinated  to senior                              
         debt and can be accelerated  if either Roger L.  Butterwick or John E.                              
         Rowlett cease to be an officer or director.  The note is guaranteed by                              
         Mr.   Butterwick  and  Mr.  Rowlett  as   individuals.   The  note  is                              
         convertible  at the option of the  holder  into  common  shares of the                              
         Company  at the  lesser of $0.375  per  share or the  average  trading                              
         price of such  common  shares for 30  previous  trading  days prior to                              
         conversion.                                                                        0        336,807 
     o   Note  payable to a former  officer and  director,  12% annual  interest                             
         payable monthly, collateralized by all accounts receivable, inventory,                              
         equipment and certain intangibles, and is due June 30, 2002. The                                    
         security interest is subordinated to the first lein of Eagle Capital                                
         Group, LLC. The note is convertible at the option of the holder into                                
         common shares of the Company at $0.10 per share. The Company also                                   
         issued a warrant to the holder to purchase one share of the Company's                               
         common stock for every two shares of common stock received upon                                     
         conversion. The note is guaranteed by Mr. Butterwick. This note has                                 
         been restated and amended (see Note Q - Subsequent events)                   738,201              0 
                                                                                      -------        --------
Total notes payable                                                                   738,201        738,807 
Less long-term portion of notes payable                                              (663,201)      (538,807)
                                                                                   -----------     ----------
Notes payable-current portion  (see Note Q - Subsequent events)                   $    75,000     $  200,000 
                                                                                   ===========     ==========

         On May 16, 2001 a Director of the Company loaned the Company  $150,000.
On May 31, 2001,  the note was  rewritten  and  increased to $200,000 and is due
upon the Company's receipt of specific trade accounts  receivable The note bears
interest at the rate of 12% per annum and is secured by specific  trade accounts
receivable.  On July 16, 2001,  this  director  loaned the Company an additional
$65,000  under a new note with the same  terms and  conditions  as the  original
note. Subsequent principal payments have reduced the balances                   

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2002

NOTE G - LONG-TERM DEBT AND NOTES PAYABLE (CONTINUED):                          

due at July 26, 2001 on both notes to approximately $150,000. As part of the    
financing arangement with Eagle Capital Group, LLC as described below, the due  
dates of the notes were extended until September 30, 2001. These notes were paid
on August 29, 2001.                                                             

                                                        [Enlarge/Download Table]

LINE OF CREDIT - EAGLE CAPITAL GROUP, LLC:                                           2002        2001  
------------------------------------------                                           ----        ----  
                                                                                                       
     o   A $1,300,000 line of credit,  12% annual interest payable  monthly, due                       
         June 30, 2002.  The  Company paid  a commitment  fee of  $13,000 and is                       
         obligated to pay a 1% facility use fee of up  to $13,000  each quarter.                       
         The line of credit is  secured by  all assets including but not limited                       
         to  furniture, fixtures, leasehold improvements, personal property, and                       
         intellegtual  property.  The  Company is  also  required to pay monthly                       
         principal payments of not less that 5% of  the outstanding loan balance                       
         each month. (See 1. below and also Note Q - Subsequent events)           $ 968,311  $        -
                                                                                    =======    ========

1.      The loan  is convertible  into common  stock of the  Company at any time
up to 90 days after the due date, including any extensions, at the rate of $0.10
per share.  This right was  terminated on June 28, 2002 (see Note Q - Subsequent
events). In addition, the Company issued a warrant to Eagle that allows Eagle to
purchase,  for a period of up to five years,  up to  6,500,000  shares of Common
Stock at an exercise price of $0.125 per share. Had the Company prepaid the loan
in full prior to December  31,  2001,  the Company  would have been  required to
issue to Eagle 1,500,000 shares of Common Stock as consideration.               

         In  addition,  the  Company  issued  to  Eagle  1,300  shares  Series E
Preferred Stock, at a par value of $0.10 per share. The Series E Preferred Stock
grants Eagle the right to vote an equivalent of 13,000,000 common shares.  Eagle
was provided two representatives on the Company's board of directors. As of June
28, 2002, the Series E Preferred Stock was redeemed resulting in the termination
of the  voting  rights  and the two  Eagle  representatives  resigned  from  the
Company's board of directors. (See Note Q - Subsequesnt Events.)                

         Also,  as additional  consideration  given for the line of credit,  the
Company entered into a Facilities Use and Administrative Services Agreement with
Eagle  for  the  use  of  office  facilities,  technical  engineers,  marketing,
accounting,  and other management  services that may vary from time to time. The
fee for these services was $264,000 during the year ended March 31, 2002.       

         As a result of this transaction,  the Company was required to reset the
pricing of the units sold in February through April, 2001. The additional shares
of Common Stock issued to private  placement  investors  was  9,918,027  and the
additional warrants were 4,959,013 exercisable at $0.125 per share.             

NOTE H - FAIR VALUE OF FINANCIAL INSTRUMENTS                                    

         The methods  and  assumptions  used to estimate  the fair value of each
class of financial instrument are as follows:                                   

CASH AND CASH EQUIVALENTS, RECEIVABLES, AND ACCOUNTS PAYABLE                    

         The  carrying  amount  approximates  fair  value due to the  short-term
maturity of these instruments.                                                  

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2002

NOTE H - FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED):                       

LONG-TERM DEBT                                                                  

         The fair value of  long-term  debt was based upon market  prices  where
available or current  borrowing rates available for financing with similar terms
and maturities.                                                                 

                                                        [Enlarge/Download Table]

                                                              MARCH 31,                             
                                  ------------------------------------------------------------------
                                               2002                              2001               
                                  -------------------------------- ---------------------------------
                                                        CARRYING                      CARRYING      
                                    FAIR VALUE            VALUE         FAIR VALUE      VALUE       
                                                                                                    
Cash and cash equivalents             $334,669          $334,669         $209,068      $209,068     

Notes payable and line of credit    $1,706,512        $1,706,512         $738,807      $738,807     

NOTE I - INCOME TAXES                                                           

The income tax provision (benefit)  shown in the  consolidated  income statement
is detailed for each year.                                                      

                                                                [Download Table]

                                                        MARCH 31,                 
                                 -------------------------------------------------
                                       2002             2001             2000     
                                       ----             ----             ----     
                                                                                  
Currently payable (receivable):                                                   
       Federal                      $       -        $       -      $  (38,459)   
       State                                -                -         (10,565)   
                                     --------         --------       ----------   
       Total currently payable              -                -         (49,024)   
                                     --------         --------       ----------   
Deferred:                                                                         
       Federal                              -                -          (5,105)   
       State                                -                -          (1,905)   
                                     --------         --------       ----------   
       Total deferred                       -                -          (7,010)   
                                     --------         --------       ----------   
Total                               $       -        $       -      $  (56,034)   
                                     ========         ========       ==========   

         The income tax provision  (benefit) for  continuing  operations  varied
from the federal statutory rate as follows for each year.                       

                                                        [Enlarge/Download Table]

                                                                           MARCH 31,                    
                                                       -------------------------------------------------
                                                            2002            2001             2000       
                                                            ----            ----             ----       
                                                                                                        
U.S. Statutory rate                                           -34%            -34%             -34%     
State income taxes, net of federal income tax benefit          -8%             -8%              -8%     
Valuation allowance                                            42%             42%              39%     
                                                               ---             ---              ---     
                                                                0%              0%               3%     
                                                               ===             ===              ===     

         The  Company  has a  federal  tax loss  carryforward  of  approximately
$9,736,000 of which approximately  $809,000 expires in 2020, $4,750,000 in 2021,
and $4,177,000 in 2022.                                                         

         The following  summarizes the tax effects of the significant  temporary
differences which comprise the deferred tax asset or liability for each year.   

                                                        [Enlarge/Download Table]

                                                         MARCH 31,                    
                                     -------------------------------------------------
                                          2002            2001             2000       
                                          ----            ----             ----       
                                                                                      
Bad debt reserve                     $         -     $         -      $   439,307     
Other                                          -               -                -     
Net operating loss carryforward        4,177,000       4,750,000          809,000     
                                       ---------      ----------          -------     
Net deferred tax asset (liability)     4,177,000       4,750,000        1,248,307     

Valuation allowance                   (4,177,000)     (4,750,000)      (1,248,307)    
                                      -----------     -----------      -----------    
Net deferred income tax (liability)  $         -     $         -      $         -     
                                      ===========     ===========      ===========    

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2002

NOTE J - EARNINGS PER SHARE                                                     

         Basic  earnings  per  common  share are based on the  weighted  average
number of common shares  outstanding in each year.  Diluted  earnings per common
share assume that any dilutive convertible preferred shares and convertible debt
outstanding  during each year were converted at the first  available  conversion
date, with related interest and outstanding common shares adjusted  accordingly.
It also assumes that outstanding common shares were increased by shares issuable
upon exercise of those stock options and warrants for which market price exceeds
exercise price, to the extent they are not anti-dilutive.                       

         The  computation  of basic  and  dilutive  earnings  per  common  share
follows:                                                                        

                                                        [Enlarge/Download Table]

                                                                            YEAR ENDED MARCH 31,            
                                                             -----------------------------------------------
                                                                  2002            2001             2000     
                                                                  ----            ----             ----     
                                                                                                            
Income (loss) available to common stockholders:                                                             
Continuing operations-basic and diluted                      $  (7,902,662)  $  (9,060,369)   $    (946,202)
Discontinued operations                                                 -       (2,663,285)      (1,641,551)
                                                             -----------------------------------------------
                                                             $  (7,902,662)  $ (11,723,654)   $  (2,587,753)
------------------------------------------------------------------------------------------------------------
============================================================================================================

Weighted average number of common shares                                                                    
outstanding - basic                                             47,740,879      32,777,824       21,638,671 

Weighted average number of common shares                                                                    
outstanding - diluted                                           47,740,879      32,777,824       21,638,671 
------------------------------------------------------------------------------------------------------------
============================================================================================================

Basic (loss) per common share:                                                                              
  Continuing operations                                      $       (0.17)  $       (0.28)   $       (0.04)
  Discontinued operations                                    $          -    $       (0.08)   $       (0.08)

Dilited (loss) per common share                                                                             
  Continuing operations                                      $       (0.17)  $       (0.28)   $       (0.04)
  Discontinued operations                                    $          -    $       (0.08)   $       (0.08)

         The  effects of  convertible  debt and  preferred  stock along with the
stock options and warrants have not been included in the  calculation of diluted
earnings  per share for the years ended March 31, 2002,  2001,  and 2000 because
they are anti-dilutive.                                                         

         As  described in Notes G, M, and Q, the Company has  convertible  debt,
contingently issuable stock, options, warrants and convertible preferred stock. 

NOTE K - COMMITMENTS AND CONTINGENCIES                                          

         The Company leases a facility in Scottsdale,  Arizona from an unrelated
third party under an operating  lease  expiring  September 30, 2002 at an annual
cost of  $87,737.  The  lease  requires  the  Company  to pay  all  maintenance,
insurance,  and taxes on the leased  property.  A lease in Denver,  Colorado was
terminated in August 2001.                                                      

         The  future  minimum  lease  payments   required  under  the  remaining
operating lease is $43,868 for the year ended March 31, 2003.                   

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2002

NOTE K - COMMITMENTS AND CONTINGENCIES (CONTINUED)                              

         The Company  sub-leases a portion of its former  land-based  Scottsdale
facility to two  unrelated  third  parties.  One of the  sub-leases  is a $3,000
month-to-month  rental.  The other third party's  sub-lease is a  non-cancelable
agreement  that  expires on September  30, 2002 and calls for annual  rentals of
$62,064.  Neither of these  sub-leases  have been used to reduce  the  Company's
minimum annual  operating lease  obligation as stated above.  Rental expense was
$244,541,  $435,938,  and $192,296 for the years ended March 31, 2002, 2001, and
2000 respectively.                                                              

    See Note Q - Subsequent events for discussion regarding sub-lease.

         The  Company  and  certain  of  its  subsidiaries  have  been  named as
defendants in various claims, complaints and other  legal actions arising in the
normal course of business.  In the  opinion of  management, the outcome of these
matters will not have a material adverse  effect  upon  the financial condition,
results of operations or cash flows of the Company.                             

NOTE L - BUSINESS ACQUISITIONS                                                  

PINNACLE  DEALER SERVICES, INC. ("PDS")                                         

         On August 20, 1998, the Company  acquired PDS, an Arizona  corporation,
by issuing  to the  shareholders  of PDS a total  300,000  restricted  shares of
common stock,  valued at $0.20 per share, in exchange for the outstanding shares
of PDS. PDS provides  financing  programs for dealers who purchase vehicles from
the Company.                                                                    

         The excess of the purchase  price over the fair value of the net assets
acquired (goodwill) was $47,813 and was being amortized on a straight-line basis
over 10 years.  At  December  31,  upon its  decision,  to close all  land-based
operations,  the Company charged the balance of the PDS unamortized  goodwill of
$36,657 to loss on discontinuance of land-based operations.                     

NATIONAL DEALER SERVICES CO. (" NDSCO")                                         

         On March 1, 2000, the Company  acquired NDSCo, a Utah  corporation,  by
issuing to the  shareholders  of NDSCo a total  1,100,000  restricted  shares of
common stock,  valued at $2.55 per share, in exchange for the outstanding shares
of NDSCo.  100,000  shares of stock were held in escrow  pending the  successful
completion of the new NDSCo software.  The software was subsequently  completed.
NDSCo  was a  privately  held  corporation  involved  in the  development  of an
electonic vehicle  distribution  system.  They utilized a network of auto buying
websites  that  empowered  auto  dealerships  to research,  finance and purchase
vehicles  online.  They also  provided  manufacturers  with the  ability to list
vehicles for sale to dealers in all parts of the country  almost  instantly from
their own lots.                                                                 

         Please  refer  to  Notes  B  and  E  for   information   regarding  the
reclassification  to software of the excess paid over  book-value  for the NDSCo
Common stock.  Subsequent to the  reclassification,  the Company determined that
this software is impaired, and accordingly has charged the remaining unamortized
balance to expense.                                                             

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2002

AUTOTRADECENTER REMARKETING SERVICES  INC. & WALDEN  REMARKETING  SERVICES, INC.
("WALDEN REMARKETING")                                                          

         On March 31, 1999, the Company acquired Walden Remarketing, a Minnesota
corporation,  by  issuing  the  shareholders  of Walden  Remarketing  a total of
2,050,000 restricted shares of common stock, cash of $125,000,  and a promissory
note in the principal amount of $425,000. The Company valued the common stock at
its estimated fair market value of $0.71 per share or $1,450,000. The promissory
note  accrues  interest at the rate of 12% per annum and requires the Company to
make 18 equal monthly payments of principal and interest beginning May 1, 1999. 

NOTE L - BUSINESS ACQUISITIONS  (CONTINUED):                                    

         The excess of the purchase  price over the fair value of the net assets
acquired  (goodwill) was $1,985,383  and is being  amortized on a  straight-line
basis over 10 years.                                                            

         On April 20, 1999, the Company entered into a Consulting Agreement with
the former majority  shareholder of Walden  Remarketing as part of the Company's
acquisition of Walden  Remarketing.  The consulting  services agreement is for a
period of three years ending April 20, 2002. As consideration for the agreement,
the  Company  has granted to the  shareholder  an option to  purchase  3,000,000
shares of the  Company's  common stock at $3.00 per share.  The  options,  which
expire April 20, 2009, vest according to a schedule that is based on the trading
price of the common stock.                                                      

         On  December 1, 1999,  the  Company  entered  into an  agreement  which
provides for the  termination  and unwinding of all oustanding  obligations  and
agreements that arose when the Company acquired Walden Remarketing.  The balance
on the  promissory  note  issued  as part of the  acquistion  in the  amount  of
$314,475  was  converted  into common  stock at a price of $1.00 per share.  The
Company changed the name from Walden Remarketing to AutoTradeCenter  Remarketing
Services Inc. and moved the operation to a new office in Scottsdale, Arizona.   

         The consulting services agreement entered into with the former majority
shareholder of Walden Remarketing as part of the Company's acquisition of Walden
Remarketing was also  terminated.  As a result the option to purchase  3,000,000
shares of the Company's common stock at $3.00 per share expired.                

BUSINESSTRADECENTER.COM INC. ("BTC")                                            

         On  January  7,  1999,  the  Company  incorporated  BTC in  Arizona  to
facilitate  the buying and selling of vehicles at wholesale  between  dealers on
the Internet. BTC has developed the technology and systems necessary to make the
Company's inventory,  as well as the inventory of member dealers,  available for
purchase and sale on the Company's  Internet site. On March 23, 2000 it acquired
the remaining 45% minority interest of BTC by issuing 5,000,000 shares of common
stock, valued at $1.88 per share, which represents  management's estimate of the
fair market value of the common stock on the date of the transaction, and paying
off a convertible $200,000 note, thereby making BTC a wholly-owned subsidiary.  

         The excess of the purchase  price over the fair value of the net assets
acquired  (goodwill) was $9,374,550 and was being  amortized on a  straight-line
basis  over 10  years.  Please  refer to Note B for  information  regarding  the
reclassification of the purchase price paid by the Company for BTC from goodwill
to software and the subsequent change in the estimate of its useful life from 10
years to 3 years.                                                               

         The  acquisitions  described  above were  accounted for by the purchase
method of accounting for business  combinations.  Accordingly,  the accompanying
consolidated  statements  of  operations do not include any revenues or expenses
related to these  acquisitions  prior to the respective  closing dates. The cash
portions of the acquisitions were financed through available cash and borrowings
from the Company's line of credit.                                              

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2002

NOTE M - STOCKHOLDERS' EQUITY                                                   

COMMON STOCK                                                                    

         On July 10, 1997  (inception)  the Company issued  9,000,000  shares of
no-par value common stock for $30,000 to its  founders.  In December  1997,  the
Company  sold  1,002,500  common  shares  for  $25,062  pursuant  to Rule 503 of
Regulation D under the Securities  Act of 1933  (commonly  referred to as a "504
offering").                                                                     

         On March 31, 2001, the Company, in a private placement,  sold 5,865,212
units at $0.25 per unit.  Each unit consists of one share of no par common stock
and one warrant (expiring March 31, 2006) enabling the warrant holder to acquire
one share of common stock at $0.3125 per share, for each two warrants  tendered.
Subsequent  to March 31, 2001,  an  additional  746,808  units were sold,  under
similar  terms.  The  private  placement   subscription  agreement  contains  an
anti-dilution provision.                                                        

         During the year ended March 31, 2002,  the Company issued an additional
2,820,000  shares  in  the  private  placement  referred  to in  the  preceeding
paragraph at $0.10 per share. As a result of the transaction  with Eagle Capital
Group LLC,  the Company  was  required to reset the pricing of the units sold in
March 2001 and April 2001.  The  anti-dilution  clause  contained in the Private
Placement required the Company to issue 9,918,027 shares of its common stock and
4,959,013 additional stock purchase warrants exercisable at $0.125 per share.   

         During the year ended March 31, 2002, the Company also issued 1,578,964
shares of common stock for  services  valued at $251,971  and  cancelled  54,784
shares of previously  issued common being held in escrow pursuant to an earn-out
agreement  with the  principals  of  AutoGroup of San  Antonio,  Ltd.  that were
un-earned.                                                                      

PREFERRED STOCK                                                                 

SERIES C                                                                        

         During  February,  2000 the Company  issued  20,800  shares of Series C
preferred  stock ("Series C") for  $2,080,000.  Each share of Series C preferred
stock is convertible,  at the option of the holder,  at any time, into 80 shares
of Common  Stock of the  Corporation,  which is based on the initial  conversion
price of $1.25.  The Company  assigned an intrinsic  value of $1,697,280 to this
conversion  feature.  As a result,  a  constructive  dividend in this amount was
recorded  in the  accompanying  financial  statements.  Each  share of  Series C
preferred  stock  is  entitled  to a $100  liquidation  preference  over  common
stockholders. The Series C preferred stock is non voting.                       

         The Company  shall have the right and option upon notice to the holders
of the Series C preferred stock to call,  redeem,  and acquire any or all of the
shares of Series C preferred stock at a price equal to $110.00 per share, at any
time to the extent such shares have not  previously  converted  to common  stock
pursuant to the terms described above;  provided,  however,  that the holders of
the Series C preferred  stock  shall,  in any event,  have the right  during the
30-day period immediately following the date of the Notice of Redemption,  which
shall fix the date for redemption, to convert their shares of Series C preferred
stock in accordance with the terms described above.                             

         As of May 31, 2002,  all of the Preferred  Series C had been  converted
into common stock.                                                              

SERIES D                                                                        

         During  February,  2000 the Company  issued  31,200  shares of Series D
preferred  stock ("Series D") for  $3,120,000.  Each share of Series D preferred
stock is convertible,  at the option of the holder,  at any time, into shares of
Common Stock of the Corporation equal to $100.00 divided by the conversion price
which  shall be a price  equal to 65% of the  average  closing bid price for the
common  stock  for  the 10  trading  days  immediately                          

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2002

NOTE M - STOCKHOLDERS' EQUITY (CONTINUED):                                      

preceding the date of conversion. Shareholders of Series D are limited to owning
at any given  time no more than 5% of the total  issued and  outstanding  Common
Stock of the Corporation after giving effect to the issuance of the Common Stock
to be received from any Series D conversion.  The maximum conversion price shall
be $4.00 per share.  The Company  assigned an intrinsic  value of  $1,680,000 to
this conversion feature. As a result, a constructive dividend in this amount was
recorded  in the  accompanying  financial  statements.  Each  share of  Series D
preferred  stock  is  entitled  to a $100  liquidation  preference  over  common
stockholders. The Series D preferred stock is non voting.                       

         The Company  shall have the right and option upon notice to the holders
of the Series D preferred stock to call,  redeem,  and acquire any or all of the
shares of Series D preferred stock at a price equal to $110.00 per share, at any
time to the extent such shares have not  previously  converted  to common  stock
pursuant to the terms described above;  provided,  however,  that the holders of
the Series D preferred  stock  shall,  in any event,  have the right  during the
30-day period immediately following the date of the Notice of Redemption,  which
shall fix the date for redemption, to convert their shares of Series D preferred
stock in accordance with the terms described above.                             

         In  accordance  with terms of the Series D preferred  stock the Company
has deemed to issue an additional 2% (624 Shares)  Series D preferred  shares to
its  shareholders.  As the  additional  shares  are  considered  to be a cost of
issuance, their cost is capitalized to the related equity account.              

         On June 26, 2002,  the Company  entered into an agreement with the sole
remaining  holder of  Preferrred  Series D, whereby the holder agreed to fix the
conversion  price  into  common  shares at  $0.04654  per  share.  (See Note Q -
Subsequent Events).                                                             

STOCK OPTION PLANS                                                              

1997 STOCK OPTION PLAN:                                                         

         On August 5, 1997,  the  shareholders  of the Company  adopted the 1997
Stock Option Plan  ("Plan"),  which  provides for the granting of both incentive
stock  options  and  non-qualified  options  to  eligible  employees  (including
independent  wholesale  brokers),   officers,  and  directors  of  the  Company.
Initially,  a total of  1,000,000  shares  of common  stock  were  reserved  for
issuance  pursuant to the exercise of stock options under this Plan (the "Option
Pool").  The Option Pool is adjusted  annually on the beginning of the Company's
fiscal year to a number  equal to 10% of the number of shares of common stock of
the  Company  outstanding  at the end of the  Company's  last  completed  fiscal
quarter,  or  1,000,000  shares,  whichever  is greater.  For the fiscal  years'
beginning  April 1, 2000,  April 1, 2001,  and April 1, 2002 the Option Pool was
2,765,261,   4,095,476  and  5,966,258   shares,   respectively.   The  Plan  is
administered  by the  Compensation  Committee of the Board of  Directors  or, if
there is no Committee, by the Board of Directors.                               

         The Plan provides that disinterested directors, defined as non-employee
directors or persons who are not directors of one of the Company's subsidiaries,
will receive  automatic  option grants to purchase 10,000 shares of common stock
upon their  appointment  or election to the Board of  Directors  of the Company.
Options shall have an option price equal to 100% of the fair market value of the
common  stock on the grant date and shall have a minimum  vesting  period of one
year from the date of grant.                                                    

         The following  table  reflects  activities in the Company's 1997 Option
Plan:                                                                           

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2002

NOTE M - STOCKHOLDERS' EQUITY (CONTINUED):                                      

                                                        [Enlarge/Download Table]

                                Options         Weighted Average         Options        
                              Outstanding       Price Per Share        Exercisable      
                          --------------------------------------------------------------
                                                                                        
Balance, March 31, 1999        1,523,175             $ 0.87               375,000       
                                                                          =======       
     Granted                   1,419,080               1.50                             
     Exercised                                           -                              
     Cancelled/Forfeited         (25,000)              0.15                             
                              -----------             -----                             
Balance, March 31, 2000        2,917,255               1.50             2,139,755       
                                                                        =========       
     Granted                     554,474               2.38                             
     Exercised                  (412,925)              0.79                             
     Cancelled/Forfeited        (397,535)              1.25                             
                              -----------             -----                             
Balance, March 31, 2001        2,661,269               1.47             2,606,729       
                                                                        =========       
     Granted                   2,440,398               0.10                             
     Exercised                     -                     -                              
     Cancelled/Forfeited      (2,092,517)              1.21                             
                              -----------             -----                             
Balance, March 31, 2002        3,009,150             $ 0.57             2,186,158       
                              ===========            ======             =========       

         These  shares vest  according  to length of service  provided  that the
recipient  is still  employed  by the  Company or under  contract  pursuant to a
work-for-hire  agreement as of the vesting date.  The vesting period for options
issued to brokers who were  performing  services  for the Company at the time of
its disposition of land-based  operations  remain  unchanged.  The option prices
range from $0.10 to $3.16.                                                      

2000 EQUITY INCENTIVE COMPENSATION PLAN:                                        

         On November  29, 2000,  the board of directors  adopted the 2000 Equity
Incentive  Compensation  Plan, which provides for granting stock options,  stock
appreciation  rights,  restricted  and deferred  stock,  bonus stock,  and other
stock-based   awards  to  officers,   directors,   employees,   and  independent
contractors. In November 2001, the board of directors recinded the plan.        

OTHER STOCK OPTION DISCLOSURES:                                                 

         SFAS No. 123,  "Accounting for Stock-Based  Compensation"  ("SFAS 123")
requires the Company to disclose pro forma  information  regarding option grants
made to its employees.  SFAS No. 123 specifies certain valuation techniques that
produce  estimated  compensation  charges  that are  included  in the pro  forma
results below. These amounts have not been reflected in the Company's  Statement
of  Operations,  because "APB 25",  "Accounting  for Stock Issued to Employees,"
specifies that no compensation charge arises when the stock price of the options
granted to the  Company's  employees is equal to or greater than the fair market
value of the stock price at the date of grant.                                  

         Under SFAS No. 123, the fair value of each option grant is estimated on
the  date of  grant  using  the  Black-Scholes  option  pricing  model  with the
following average assumptions:                                                  

                                                        [Enlarge/Download Table]

                                                Year ended March 31,                       
                           ----------------------------------------------------------------
                                   2002                 2001                  2000         
                           ----------------------------------------------------------------
                                                                                           
Expected dividend yield           0.00%                 0.00%                0.00%         
Risk free interest rate           2.10%                 5.74%                6.02%         
Expected volitility                99%                   168%                 166%         
Expected life (in months)          22                    16                    32          

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2002

NOTE M - STOCKHOLDERS' EQUITY (CONTINUED):                                      

         The  Black-Scholes  option  valuation  model was  developed  for use in
estimating  the fair value of traded  options that have no vesting  restrictions
and are fully  transferable.  In addition,  option  valuation models require the
input of highly  subjective  assumptions  including  the  expected  stock  price
volatility.  Because the Company's  employee stock options have  characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimates,  in
management's  opinion the existing models do not necessarily  provide a reliable
single measure of the fair value of the Company's options.  The weighted average
estimated fair value of employee  stock options  granted during the years ending
March  31,  2002,  2001 and  2000  were  $0.10,  $1.07,  and  $0.80  per  share,
respectively.                                                                   

                                                        [Enlarge/Download Table]

                                                                     Year ended March 31,                      
                                                 --------------------------------------------------------------
                                                        2002                  2001                 2000        
                                                 --------------------------------------------------------------
                                                                                                               
Net income (loss) as reported under APB 25:                                                                    
     Continuing operations                         $  (7,902,662)        $  (9,060,369)      $    (946,202)    
     Discontinued operations                                   -            (2,663,285)         (1,641,551)    
                                                    -------------          ------------        ------------    
                                                   $  (7,902,662)        $ (11,723,654)      $  (2,587,753)    
                                                    =============          ============        ============    

Net income (loss) pro forma under SFAS 123:                                                                    
     Continuing operations                         $  (7,971,311)        $ (10,712,316)      $  (1,578,305)    
     Discontinued operations                                   -            (2,663,285)         (2,075,079)    
                                                    -------------          ------------        ------------    
                                                   $  (7,971,311)        $ (13,375,601)      $  (3,653,384)    
                                                    =============          ============        ============    

Basic net income (loss) per common share as                                                                    
reported under APB 25:                                                                                         
     Continuing operations                            $ (0.17)              $ (0.28)             $ (0.04)      
     Discontinued operations                                -                 (0.08)               (0.08)      
                                                       -------                ------               ------      
                                                      $ (0.17)              $ (0.36)             $ (0.12)      
                                                       =======                ======               ======      

Diluted net income (loss) per share as reported                                                                
under APB 25:                                                                                                  
     Continuing operations                            $ (0.17)              $ (0.28)             $ (0.04)      
     Discontinued operations                                -                 (0.08)               (0.08)      
                                                       -------                ------               ------      
                                                      $ (0.17)              $ (0.36)             $ (0.12)      
                                                       =======                ======               ======      

Basic net income (loss) per share - pro forma                                                                  
under SFAS 123:                                                                                                
     Continuing operations                            $ (0.17)              $ (0.33)             $ (0.07)      
     Discontinued operations                                -                 (0.08)               (0.10)      
                                                       -------                ------               ------      
                                                      $ (0.17)              $ (0.41)             $ (0.17)      
                                                       =======                ======               ======      

Diluted net income (loss) per share - pro forma                                                                
under SFAS 123:                                                                                                
     Continuing operations                            $ (0.17)              $ (0.33)             $ (0.07)      
     Discontinued operations                                -                 (0.08)               (0.10)      
                                                       -------                ------               ------      
                                                      $ (0.17)              $ (0.41)             $ (0.17)      
                                                       =======                ======               ======      

Outstanding shares:                                                                                            
     Basic                                            47,740,879            32,777,824          21,638,671     
     Fully diluted                                    47,740,879            32,777,824          21,638,671     


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2002

NOTE M - STOCKHOLDERS' EQUITY (CONTINUED):                                      

OTHER STOCK OPTIONS                                                             

         The Company has also granted  stock  options to other third  parties as
part of the issuance of stock, debt and in business  acquisitions.  Some options
vest  according to various  agreed upon  conditions;  while others vested on the
date granted.  Following is a table reflecting  activities regarding other stock
options:                                                                        

                                                                [Download Table]

                               Options        Weighted  Average         Options    
                             Outstanding       Price Per Share        Exercisable  
                          ---------------------------------------------------------
                                                                                   
Balance, March 31, 1999       2,089,810            $ 1.16                          
     Granted                    465,000              1.43                          
     Exercised                    -                  -                             
     Cancelled/forfeited       (300,000)             3.50                          
                             -----------             ----                          
Balance, March 31, 2000       2,254,810              0.88              2,254,810   
                                                                       =========   
     Granted                      -                  -                             
     Exercised                 (210,000)             1.00                          
     Cancelled/forfeited        (75,000)             2.56                          
                             -----------             ----                          
Balance, March 31, 2001       1,969,810              0.80              1,969,810   
                                                                       =========   
     Granted                      -                  -                             
     Exercised                    -                  -                             
     Cancelled/forfeited     (1,094,810)             1.02                          
                             -----------             ----                          
Balance, March 31, 2002         875,000            $ 0.53               875,000    
                             ===========             ====               =======    

         The fair value of the options  issued  during the years ended March 31,
2002, 2001 and 2000 was determined using the Black-Scholes option pricing model.
For the year ended March 31, 2000 options  granted for  services  were valued at
$351,280.  No other  options were granted for the years ended March 31, 2001 and
2002.                                                                           

NOTE N - RELATED PARTY TRANSACTIONS                                             

         The  Company  has  entered  into  various  lending   arrangements  with
officers,  directors  and  other  affiliated  entities  owned or  controlled  by
officers,  directors  and other key  personnel  of the  Company.  As more  fully
detailed  in Note G, at March 31,  2002,  March 31,  2001 and March 31, 2000 the
outstanding  balance  on these  notes  was  $738,201,  $738,807,  and  $528,807,
respectively.  The  total  interest  paid to  these  entities  on all  financing
activities for the years ended March 31, 2002,  2001, and 2000 was $0, $106,888,
and $63,456,  respectively.  At March 31, 2002,  the Company has accrued but not
paid $73,906 of interest due on the related party debt.                         

         The outstanding balances on related party notes respecting discontinued
operations  were $0, $0,  and  $5,166,821  at March 31,  2002,  2001,  and 2000,
respectively.  Total interest paid to these entities on all financing activities
for discontinued  operations was $0, $699,288,  and $704,665 for the years ended
March 31, 2002, 2001, and 2000, respectively.                                   

NOTE O - CONCENTRATIONS                                                         

         Remarketing  off-lease  and  program  vehicles,   primarily  using  the
Internet,  represents  the Company's  primary  business  segment.  For the years
ending  March 31, 2002 and 2001,  84% and 100%  respectively,  of the  Company's
revenue was earned from its contract with American Honda Finance Corporation.   

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2002

NOTE P - LEGAL PROCEEDINGS                                                      

         The  Company  and  certain  of its  subsidiaries  have  been  named  as
defendants in various claims,  complaints and other legal actions arising in the
normal course of business.  In the opinion of  management,  the outcome of these
matters will not have a material  adverse  effect upon the financial  condition,
results of operations or cash flows of the Company.                             

NOTE Q - SUBSEQUENT EVENTS                                                      

COMMITMENTS                                                                     

         Effective  May 15, 2002 the Company  entered  into a sub-lease  with an
independent  third party through March 30, 2004 for  approximately  7,000 square
feet of office space loacted in Mesa, Arizona.  The monthly payments are $10,886
per month for a total  commitment  of $114,303 and $130,632 for the years ending
March 31, 2003 and 2004, respectively. In addition, the Company leased furniture
from the  sub-lessor  of the office space for $380 per month  expiring  with the
termination of the sub-lease.  The total  commitment of this furniture  lease is
$3,990 and $4,560 for the years ending March 31, 2003 and 2004, respectively.   

PREFERRED STOCK SERIES C, D AND E                                               

         On May 29, 2002 and May 31, 2002,  investors  holding  11,016 shares of
the Company's  Preferred  Series C stock  exercised their right to convert their
preferred  stock holdings into 1,668,639  shares of common stock. As a result of
this transaction,  the Company no longer has any outstanding  Preferred Series C
shares.                                                                         

         Also on May 31, 2002, an investor holding 3,000 shares of the Company's
Preferred  Series D stock exercised their right to convert their preferred stock
holdings  into  4,807,692  shares of common  stock.  On June 26,  2002,  another
investor holding 846 shares of the Company's Preferred Series D shares exercised
their right to convert their  preferred  stock holding into 1,668,639  shares of
common  stock.                                                                  

         Also  on  June 26, 2002,  a  third  investor  of  7,894  shares  of the
Company's  Preferred  Series D stock,  representing  the  remaining  outstanding
balance of the  Preferred  Series D stock,  entered into an  agreement  with the
Company  whereby  the Company  agreed to redeem  1,429  shares of the  Preferred
Series D stock and agreed to use its best efforts to redeem the remaining  6,465
shares of Preferred  Series D stock up until the closing date of the merger with
Autodaq  Corporation.  The investor  agreed to exercise his right to convert any
remaining  Preferred  Series D stock into common  stock  immediately  before the
closing of the merger  between the Company and  Autodaq.  The maximum  number of
common  shares that would be issued  pursuant  to the  agreement  is  16,961,753
shares.                                                                         

         On June 28, 2002, in conjunction with the payoff of the credit facility
with Eagle Capital Group, LLC (see below), the Company redeemed the 1,300 shares
of Preferred Series E stock and cancelled a warrant that gave Eagle the right to
purchase up to 13,000,000 shares of the Company's common stock.                 

NOTES PAYABLE                                                                   

         On June 28, 2002, the Company  amended and restated its note payable to
a former officer and director of the Company that was due June 30, 2002. The new
note in the amount of $814,253  (including  accrued  interest) earns interest at
12% per annum,  and provides for interest  only  payments  through  December 31,
2002.  Beginning  January 31, 2003 and continuing each month thereafter  through
September 30, 2003 the note is payable $25,000 per month plus interest. The note
is due September 30, 2003 and is secured by all assets of the Company;  however,
the note is subordinated to the note payable to Autodaq Corporation. As a result
of the amended and  restated  note,  all but  $75,000 has been  reclassified  to
long-term.                                                                      

F-23

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 AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2002

NOTE Q - SUBSEQUENT EVENTS (CONTINUED):                                         

         On June 28, 2002,  the Company,  in  conjunction  with the signing of a
definitive merger agreement with Autodaq Corporation (see below), obtained a 12%
loan from Autodaq of approximately $1 million, which AutoTradeCenter.com used to
retire its indebtedness  under a credit facility due to Eagle Capital Group, LLC
on June 30, 2002 and to  terminate a services  agreement  related to such credit
facility. The Company is not required to make payments to Autodaq under the loan
prior to the closing of the merger. The loan is due in full on November 30, 2002
and is  collateralized by a security interest in substantially all assets of the
Company.  As  partial  consideration  for such loan,  the  Company  provided  an
affiliate of Autodaq with a warrant to purchase shares equal to approximately 5%
of the  Company's  common stock on a  fully-diluted  basis at an exercise  price
equal to the fair market value of the Company's common stock.                   

MERGER                                                                          

         On June 28, 2002 the Company  signed a  definitive  agreement  to merge
with Autodaq Corporation.                                                       

         Under the  terms of the  agreement,  the  Company's  shareholders  will
receive shares of common stock and preferred  stock in a  newly-formed  Delaware
company,  AutoTradeCenter,  Inc.  Autodaq  shareholders  will receive  shares of
common stock and various classes of preferred stock in AutoTradeCenter, Inc.    

         As a result of the  foregoing  transactions,  following  the merger the
current shareholders of  AutoTradeCenter.com  Inc. will own approximately 27.15%
of the new company's  fully-diluted  capital stock  (including,  for purposes of
this  calculation,  shares of common stock reserved for issuance pursuant to the
company's stock option plan),  and the current  shareholders of Autodaq will own
approximately  63.35% of the new company's  capital stock.  Senior management of
AutoTradeCenter.com  will receive options to purchase up to an aggregate of 4.5%
of the new entity's  common stock.  Shares of common stock reserved for issuance
pursuant to the  company's  stock plan will  constitute  the remaining 5% of the
company's capital stock. The transaction will be accounted for as a purchase and
is intended to qualify as tax-free to the  shareholders  of  AutoTradeCenter.com
and Autodaq.  The  transaction  is expected to close in the second half of 2002.
The merger is subject to approval of the shareholders of AutoTradeCenter.com and
Autodaq,   as  well  as  other  customary   closing   conditions.   Autodaq  and
AutoTradeCenter  shareholders  holding  shares  sufficient to approve the merger
delivered to the respective counter party voting agreements and proxies in which
they  agreed to vote their  shares in favor of the merger.  Concurrent  with the
signing of the merger  document,  the Company signed a continuing  guarantee for
the new financing  (convertible note) obtained by Autodaq for $1,500,000,  which
was partially used for the loan to the Company mentioned above.                 

         In addition to the interim  financing as described  above,  the Company
has determined that following the closing of the merger,  it will be in the best
interest  of the  combined  company to raise  additional  equity to provide  the
company with  additional  capital  resources.  Therefore,  the merger  agreement
contemplates  that following the closing of the merger,  certain  investors will
purchase  additional  shares  and  warrants  of  the  new  parent  company  (ATC
Delaware).  Such financing would consist of (i) shares of senior preferred stock
of ATC Delaware,  for a purchase price of $3.0 - $4.0 million, and (ii) warrants
to purchase  additional shares of ATC Delaware Common Stock equal to 200% of the
number of shares of senior  preferred  stock  purchased.  The exercise price for
these  warrants  will equal the fair market  value of  AutoTradeCenter's  Common
Stock at the time the senior preferred  financing  closes,  as determined by the
board of directors of the new company at the time the senior preferred financing
closes.  In the event  that the  financing  does  close and the  maximum  senior
preferred  shares  and  warrants  which may be  offered  in such  financing  are
purchased,  such shares and warrants  would  represent  approximately  9.52% and
19.05%, respectively,  of ATC Delaware's fully-diluted capital stock. In such an
event,  the  ownership of the current  shareholders  of  AutoTradeCenter  in ATC
Delaware would be reduced from 27.15% to approximately  19.39% upon consummation
of such financing.                                                              

F-24

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 AUTOTRADECENTER.COM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2002

NOTE R - LIQUIDITY ISSUES                                                       

         The Company has sustained operating losses and negative cash flow since
its inception, resulting in no tangible net worth at March 31, 2002. Without the
pending merger and new financings,  as discussed in Note Q, the Company may have
difficulty funding its day-to-day  operations or servicing its debt. There is no
assurance  that all the  conditions  required for the merger will be realized or
that future required funding will take place.                                   

F-25

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘10KSB’ Filing		Date		First		Last			Other Filings
		4/20/09		45
		3/31/06		46
		3/31/04		7		51
		3/30/04		51
		1/31/04		3		10
		9/30/03		16		51
		3/31/03		43		51
		1/31/03		16		51
		12/31/02		25		51
		11/30/02		52
		9/30/02		7		44			10QSB,  NT 10-Q
Filed on:		8/16/02
		8/13/02		28
		7/31/02		16
		7/25/02		27					8-K
		7/19/02		16		29
		6/30/02		16		52			10QSB,  10QSB/A,  NT 10-Q
		6/28/02		1		52			8-K
		6/26/02		47		51			NT 10-K
		5/31/02		46		51
		5/29/02		51
		5/15/02		7		51
		4/24/02		29
		4/20/02		45
		4/1/02		15		47
For Period End:		3/31/02		1		53			NT 10-K
		12/31/01		8		41			10-Q
		12/13/01		4		10
		11/14/01		20		22			10-Q
		10/29/01		4		10
		9/30/01		8		41			10-Q
		8/29/01		25		41
		8/1/01		18
		7/26/01		41
		7/19/01		25		27
		7/16/01		27		40
		6/30/01		8					10-Q
		6/29/01		25
		5/31/01		25		40
		5/16/01		40
		4/1/01		47
		3/31/01		3		50			10-K,  NT 10-K
		2/28/01		3		36
		2/16/01		15		26
		1/31/01		15					S-1/A
		1/30/01		26
		1/10/01		27
		12/31/00		8		38			10-Q,  10-Q/A,  10QSB/A,  NT 10-Q
		12/29/00		2		36			8-K
		11/30/00		11		39
		11/29/00		22		48
		10/11/00		27
		9/30/00		8					10-Q
		6/30/00		8					10-Q
		6/15/00		3		10
		5/17/00		14
		5/15/00		21					S-1,  S-8
		4/1/00		47
		3/31/00		9		50			10-K,  NT 10-K
		3/23/00		38		45			8-K
		3/1/00		44					8-K
		2/1/00		10
		12/8/99		18
		12/1/99		45
		11/8/99		8
		11/5/99		8
		8/3/99		8
		8/2/99		8
		5/1/99		45
		4/20/99		45
		4/2/99		18
		3/31/99		22		45
		2/1/99		3
		1/7/99		45
		8/20/98		44
		3/31/98		10
		1/29/98		8
		9/22/97		2		36
		8/5/97		21		47
		7/24/97		24
		7/10/97		2		46
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