10-K 1 doc1.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES --- EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED MARCH 31, 2002 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES --- EXCHANGE ACT OF 1934 For the transition period from _____ to _____ Commission file number 1-10569 AUTOLEND GROUP, INC. -------------------- (Exact name of registrant as specified in its charter) Delaware 22-3137244 -------- ---------- (State or other jurisdiction (I.R.S. Employer of incorporation of organization) Identification No.) 600 Central SW, Third Floor, Albuquerque, New Mexico 87102 ---------------------------------------------------------- (Address of principal executive offices) (Zip Code) (505) 768-1000 -------------- (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Name of Each Exchange on Which Registered -------------------- ----------------------------------------- Common Stock, $.002 par value NQB Pink Sheets Securities registered pursuant to Section 12(g) of the Act: None. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes X No. --- --- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [_] The number of shares outstanding of the registrant's Common Stock was 1,095,303 at June 21, 2002. The market value of the voting stock of the registrant held by nonaffiliates of the registrant on June 21, 2002 was not determinable. There are no documents incorporated herein by reference. APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13, or 15(d) of the Securities Exchange Act of 1934 after the distribution of securities under a plan confirmed by a court. Yes X No . --- ---

~~Page~~TABLE ~~----~~OF CONTENTS Part I Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . .~~...............................................~~ 1 Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . .~~..............................................~~ 54 Item 3. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . .~~..........................................~~ 64 Item 4. Submission of Matters to a Vote of Securities Holders. . . . . . .~~........................~~ 74 Part II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters. . . . . . . . . . . . . . . . . . . . . .~~...........................................~~ ~~8 Item 6~~. ~~Selected Financial Data~~.~~............................................................~~ 105 Item 76. Management's Discussion and Analysis of Financial Condition and Results of Operations. . . . . . . . . . . . . . . . . . . . .~~..........................................~~ ~~13 Item 7A~~. ~~Quantitative and Qualitative Disclosures about Market Risk~~.~~.........................~~ 196 Item 87. Financial Statements and Supplementary Data. . . . . . . . . . . .~~.............................~~ 1910 Item 98. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . . . . . . . . . . . . . . . . .~~.......................................~~ 1914 Part III Item 109. Directors and Executive Officers of the Registrant . . . . . . . .~~..........................~~ 2014 Item 1110. Executive Compensation . . . . . . . . . . . . . . . . . . . . . .~~........................................~~ 2114 Item 1211. Security Ownership of Certain Beneficial Owners and Management . . 15 Item 12. Certain Relationships and Related Transactions . . . . . . . . . .~~.........~~ 2217 Item 13. Certain Relationships and Related Transactions . . . . . . . . . .~~............................~~ 2318 ~~Part IV~~ Item 14. Exhibits, Financial Statements, Schedules, and Reports on Form 8-K~~..................~~ 2419 Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .~~............................................................~~ 2620

This report should be read in its entirety. No one section of the report deals with all aspects of the subject matter. ii PART I ITEM 1. BUSINESS. GENERAL AutoLend Group, Inc. (the "Company") is a holding company headquartered in Albuquerque, New Mexico. The Company is currently winding down two businesses. Historically the Company primarily operates through its subsidiaries. 1. AutoLend Corporation maintained a residual portfolio of sub-prime consumer used-car loan contracts purchased from used-car dealers (also referred to as installment contracts receivable, or the "Loans"). AutoLend Corporation ceased purchasing these Loans in December 1995. This portfolio consisted entirely of inactive loans that had been more than six months in arrears and had been written off. On April 1, 2000, AutoLend Corporation adopted a plan to sell the Loan portfolio and has treated this portfolio as a discontinued operation since that date. On April 4, 2001 the Loan portfolio was sold to an unrelated third party for $95,000. 2. American Life Resources Group, Inc., and LBNM, Inc. maintain portfolios of unmatured life insurance policies purchased from persons with life-threatening illnesses, a business generically referred to as viatical settlements (the "Policies"). This subsidiary ceased purchasing Policies in September 1994. The four remaining Policies have an aggregate face value of approximately $356,000 and a net book value of $50,000 on March 31, 2002. NOTE: THE COMPANY IS NOT AFFILIATED WITH THE WEBSITE WWW.AUTOLEND.COM, NOR IS THE COMPANY AFFILIATED WITH THE MIAMI-BASED BUSINESS, AUTOLEND IAP (WHICH IS OWNED BY AUCTION FINANCE GROUP, INC.) BANKRUPTCY The Company sought protection under Chapter 11 of the U.S. Bankruptcy Code on September 22, 1997. Between September 22, 1997 and January 13, 2000, the Company concentrated its efforts on addressing the legal and financial problems that caused the Company to file for protection under Chapter 11. The Bankruptcy Court confirmed the Company's creditor-approved Plan of Reorganization, which became effective March 5, 1999, at which time the Company attained a positive net equity (in conjunction with the adoption of fresh start accounting), and was no longer classified as a "debtor-in-possession." On January 13, 2000, the Bankruptcy Court entered its final decree, thereby closing the Company's Chapter 11 case. On January 13, 2000, in connection with the resolution of the bankruptcy, unsecured creditors received payments for 100 percent of their allowed claims. Likewise, qualified former Debenture holders have received, in aggregate, $2.9 million in cash payments, as well as stock in the reorganized Company, and $609,000 (undiscounted) uncollateralized, non-interest-bearing note obligations. 1 These note obligations are payable in five equal annual installments of $121,800. However, the first, second, and third annual payments of $122,000 scheduled for March 5, 2000, March 5, 2001, and March 5, 2002, respectively have not yet been made. The Company cannot make those payments. GOING CONCERN At March 31, 2002, the Company had cash and cash equivalents of $400, and a negative net equity of $644,000. The equity is exclusive of any remaining amounts due pursuant to the Albuquerque office lease obligation, which approximated $243,000 at March 31, 2002. The Company believes that it presently has insufficient cash necessary to meet its daily operating requirements without regard to its notes payable obligations, through to fiscal year ending March 31, 2003. The Company is exploring various strategic options and financial opportunities including the possibility of a merger with Prinova Capital Group, Inc. ("Prinova Inc."). Prinova Inc. is a New Mexico corporation, which is a private, closely-held financial services company, headquartered in Albuquerque, New Mexico. Prinova Inc. has no past or present ties or affiliations to any shareholder, director, or officer of the Company prior to October 2000. From October 2000 to January 29, 2002, Mr. Vincent Garcia, the majority owner of Prinova Inc., was a member of the Company's Board of Directors. Due to the legal opinion of the Company's former counsel, the first annual $122,000 notes payable payments due in March 2000, were not made as originally scheduled, and as of the date of this filing, have not been made. Additionally, the second and third annual $122,000 payments due in March 2002, and 2001 have also not been made as of the date of the filing. To date, there have been no demands from the debenture holders. The Company cannot make these payments. CHANGE IN CONTROL Effective October 12, 2000, a block of 634,028 shares of the Company's common stock, equal to approximately 58% of the total shares outstanding, changed hands in a private sale between two third parties. The buyer and new majority owner of the Company is Prinova Capital Group LLC ("Prinova LLC"). Prinova LLC is a separate entity from Prinova Inc., though under the same general ownership and control as Prinova Inc. Prinova LLC is a New Mexico limited liability company, which is a private, closely-held company, headquartered in Albuquerque, New Mexico. Effective January 29, 2002, three new directors were appointed to the Company's Board of Directors. They are: Mr. Luther W. Reynolds, Mr. Augustine Chris Baca, and Mr. Werner Gellert. All members of the Company's Board of Directors are from Albuquerque, New Mexico. Mr. Luther W. Reynolds was also appointed President of the Company. Mr. Reynolds has been a business consultant in private practice for fifteen years, and has held executive positions in banking, utility companies, and wholesales companies. Mr. Reynolds is a Certified Public Accountant and holds an MBA from The University of Texas at Austin. In addition Mr. Reynolds has served as a member of the Board of Directors for several profit and non-profit organizations. 2 On January 29, 2002 Mr. Chris Baca was also appointed the Vice President of the Company. Mr. Baca is the President and Chief Executive Officer of two not-for-profit organizations in Central New Mexico. Mr. Baca hold's a Master's Degree in Public Administration from the University of New Mexico. Mr. Baca has also completed certificate programs and fellowship programs from Harvard University, JFK School of Government and Kellogg National Leadership Fellow. Mr. Baca has served on the Board of Directors for several profit and non-profit organizations. Mr. Werner Gellert was appointed as the Secretary of the Company. Mr. Gellert has spent most of his career as an international banker in the United States. He currently is the founder of a museum and study center in Albuquerque, NM. Mr. Gellert was born in Breslau, Germany and educated in Germany, China and the United States. Mr. Gellert holds a Bachelor of Arts degree from National Ching Tung University in Shanghai, China. He has attended additional classes from the University of Denver and Hebrew Union College in Los Angeles, California. After the appointment of Mr. Reynolds, Mr. Baca, and Mr. Gellert to the Board of Directors, Mr. John Emery tendered his resignation as an officer and the Chairman and Secretary of the Board of Directors and acting President of the company. Mr. Vincent Garcia tendered his resignation as a member of the Board of Directors for the Company and in all other capacities, which the Board accepted. EMPLOYEES As of June 21, 2002, the Company and its subsidiaries had no employees. Accounting and management services are being contracted from Prinova Inc. 3 ITEM 2. PROPERTIES. During February 1999, the Company assumed the lease on its offices at 600 Central SW, Albuquerque, New Mexico pursuant to a legal settlement involving the return of funds to the Company. In January 2001, the Company renegotiated its lease. The lease terminates on December 31, 2003, and the lease payments are $7,000 per month for the first year and increase to $12,900 per month for the second year. Each January 1, the lease payments may be adjusted according to any changes in the Consumer Price Index. Additionally, as of February 1, 2001, the Company centered into a month-to-month sublease with Prinova Inc. for $3,250 per month. Rent expense for operating leases was approximately $90,000 for the fiscal year-ended March 31, 2002, as compared to rent expense of $115,000 for the fiscal year ended March 31, 2001. ITEM 3. LEGAL PROCEEDINGS. New Mexico Gaming Lawsuit. On May 16, 2001, the Company was served a summons for ------------------------- moneys owed to the New Mexico Gaming Control Board for reimbursement of $31,286 in expenses associated with the Company's failed attempt to enter the gaming industry ("New Mexico Gaming Lawsuit"). In December 2001 the Company negotiated a settlement for $10,000 with the New Mexico Gaming Control Board. The Company has no additional liability regarding the lawsuit. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None 4 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. On April 18, 2000, the subscription under the Registration Statement concluded, and the new ownership of the Company was established. On or about April 20, 2000, the shares of new common stock were distributed, resulting in new total stock outstanding of 1,088,803 shares. As of March 31, 2002 the number of shares of common stock issued and outstanding were 1,095,303. The Company's stock is presently available for trade via the NQB Pink Sheets. The new ticker symbol is "ALEN," and the new shares have a new Cusip number, 052786 308. The new shares bear the legend "AutoLend Group, Inc.," and are green. Effective October 12, 2000, a block of 634,028 shares of the Company's common stock, equal to approximately 58% of the total shares outstanding, changed hands in a private sale between two third parties. The buyer and new majority owner is Prinova LLC, a closely-held New Mexico limited liability company, headquartered in New Mexico. The following table states for the periods indicated the range of high and low bid prices for the old and new Common Stock and Class A Warrants as reported on the Electronic Bulletin Board. The prices reflect inter-dealer prices without markup, markdown, or commissions and may not necessarily represent actual transactions. Common Stock -------------------- High Low ---- --- Fiscal Year ended March 31, 2001: --------------------------------------- Quarter ended June 30, 2000 (1) n/a n/a Quarter ended September 30, 2000 (1) n/a n/a Quarter ended December 31, 2000 (1) n/a n/a Quarter ended March 31, 2001 (1) n/a n/a Fiscal Year ended March 31, 2002: -------------------------------------- Quarter ended June 30, 2001 (1) n/a n/a Quarter ended September 30, 2001 (1) n/a n/a Quarter ended December 31, 2001 (1) n/a n/a Quarter ended March 31, 2002 (1) n/a n/a (1) There have been no trades of the new stock during the quarter. The Company has paid no dividends on its Common Stock. The Company presently intends to retain any earnings to finance the development of its future business, if any. 5 ITEM 6. SELECTED FINANICAL DATA. The following selected financial data of the Company for the fiscal years ended March 31, 2002, 2001, 2000, 1999, 1998 has been derived from the Company's audited consolidated financial statements and should be read in conjunction with the consolidated financial statements and the notes thereto. The predecessor Company's financial statements (prior to March 6, 1999) are not comparable to the reorganized Company's financial statements (subsequent to March 5, 1999). 6

~~Common~~Fiscal ~~Stock~~Years ~~Class~~Ended AMarch ~~Warrants~~31: ~~(1)~~ ------------------- -------------------------- ~~High~~In ~~Low~~Thousands ~~High~~(except ~~Low~~earnings per share) 2002 2001 2000 1999 1998 ------ ------- -------- -------- ~~Old~~-------- ~~Common~~STATEMENT ~~Stock~~OF ~~(cancelled~~OPERATIONS ~~March~~DATA: 5,----------------------------- ~~1999):~~Finance ~~Fiscal~~charges ~~Year~~on ~~ended~~installment ~~March~~contracts ~~31,~~$ ~~2000:~~- ($ - $ 10 $ 117 $ 588 Net revenue from matured insurance policies - - 5) 248 9 ------ ------- -------- -------- -------- ~~Quarter~~Total ~~ended~~net ~~June~~revenues 30$ - $ - $ 15 $ 365 $ 597 ====== ======= ======== ======== ======== Operating (loss), ~~1999~~including ~~0.12~~loan ~~0.02~~loss --provisions and recoveries $(2214) --$ (2834) ~~Quarter~~$(1,190) ~~ended~~$ ~~September~~(998) 30$(1,469) ~~1999~~Net ~~0.44~~interest ~~0.02~~income/(expense) --(221) --56 (2187) ~~Quarter~~(508) ~~ended~~Write-off ~~December~~of 31assets, ~~1999~~and ~~0.34~~accrual ~~0.04~~expenses --related to the consumer loan and viatical businesses (269) --(2132) ~~Quarter~~Insurance ~~ended~~policy ~~March~~write-down 31recapture 16 106 536 Cancellation of Florida tax claim 178 Gain on ITB settlement 10 Miscellaneous other income/(expense), ~~2000~~net ~~0.12~~52 ~~0.03~~8 --45 (240) (101) ------ ------- -------- -------- -------- Results of operations, including interest expense, before debenture conversion charge and discontinued operations (2162) ~~New~~(821) ~~Common~~(805) ~~Stock~~(758) (~~distributed~~2,210) ~~April~~Non-cash ~~20,~~debenture ~~2000):~~conversion ~~Fiscal~~charge ~~Year~~- ~~ended~~- ~~March~~- 31- (6,261) ~~2001:~~ ------ ------- -------- -------- -------- ~~Quarter~~Net ~~ended~~loss ~~June~~before 30reorganization costs, ~~2000~~bankruptcy court settlements, discontinued operations, and extraordinary items (4162) ~~n/a~~(821) ~~n/a~~(805) --(3758) (8,471) Bankruptcy reorganization expenses - - (3190) ~~Quarter~~(492) ~~ended~~(212) ~~September~~Gain ~~30,~~on ~~2000~~adversary claim and (4loss) ~~n/a~~on nsettlement ITB /a NPD - - 451 (31,368) - ------ ------- -------- -------- -------- Net loss before discontinued operations, and extraordinary items (3162) ~~Quarter~~(821) ~~ended~~(544) ~~December~~(2,618) 31(8,683) ~~2000~~Discontinued --operations: Income (6loss) from operations of discontinued subsidiary 95 57 Extraordinary items: Gain as result of reorganization 178 5,342 Net gain on early extinguishment of debt - -~~(6)~~ - -( 3),172 --~~(3)~~---- ~~Quarter~~------- ~~ended~~-------- ~~March~~-------- ~~31,~~-------- ~~2001~~$ (467) ~~n/a~~$ ~~n/a~~(764) --$ (3366) --$ 2,724 $(35,511) ====== ======= ======== ======== ========

Fiscal Years Ended March 31: -----------------------------------------------------------~~----------~~ In2002 ~~Thousands (except earnings per share)~~ 2001 2000 1999 1998 ~~1997~~ ----------- ------------ ----------- -------~~------~~ ------------- ~~Statement~~PER ofSHARE ~~Operations Data~~DATA: ---------------~~-------------~~ ~~Finance~~Loss ~~charges~~per onshare ~~installment~~before ~~contracts~~reorganization $costs, -bankruptcy court settlements, discontinued operations, and extraordinary items $ 10(0.15) $ ~~117~~(0.75) $ ~~588~~(0.77) * $ (1~~,671~~.40) Bankruptcy reorganization expenses (0.18) * (0.04) Gain on adversary claim (loss) on settlement ITB / NP 0.43 * Discontinued operations 0.09 0.05 * Extraordinary items: Net ~~revenue~~gain ~~from~~as ~~matured~~a ~~insurance~~result ~~policies~~of -reorganization 50.17 ~~248~~* 9Gain ~~404~~on early extinguishment of debt - - - * 0.53 ------- ---- ------- ---- ------ ----- ------- ------------ ~~Total~~Net ~~net~~income ~~revenues~~/ (loss) $ -(0.06) $ 15(0.70) $ ~~365~~(0.35) $ ~~597~~- $ ~~2,075~~(0.91) =========== =========== =========== =======~~=====~~ ============ ~~Operating~~Weighted ~~(loss),~~average ~~including~~number ~~loan~~of ~~loss~~common ~~provisions~~ and ~~recoveries~~common $equivalent ~~(834)~~shares $outstanding ~~(1,190)~~and $issuable ~~(998) $ (~~1,~~469) $ (7~~095,~~402)~~303 ~~Net interest income/(expense) (21) 56 (187) (508) (~~1,~~816)~~093,950 ~~Write-off of assets~~1,042,237 ~~and~~* ~~accrual of expenses related to the consumer loan and viatical businesses - - (69) (132) (2~~6,~~109)~~039,391 ~~Insurance~~As ~~policy write-down recapture 16 106 536 - - Cancellation~~ of ~~Florida~~March ~~tax~~31: ~~claim~~ - ~~178~~ - - - ~~Gain on ITB settlement 10~~ - - - - ~~Tax offset to loss~~ - - - - ~~86 Miscellaneous other income/(expense), net 8 45 (40) (101) (461)~~ ---------- ----------- ---------- ------------ ----~~--------~~ ~~Results~~2002 of2001 ~~operations,~~2000 ~~including~~1999 ~~interest~~1998 ~~expense, before debenture conversion charge and discontinued operations (821) (805) (758) (2,210) (11,702) Non~~-~~cash debenture conversion charge~~ - - - ~~(6,261)~~ - ------~~----~~ ----------- ----------- -------~~-----~~ ------------ ~~Net~~BALANCE ~~loss~~SHEET ~~before~~DATA: ~~reorganization~~Total ~~costs,~~Assets ~~bankruptcy~~$ ~~court~~97 ~~settlements,~~$ ~~discontinued~~112 ~~operations,~~$ ~~and~~772 ~~extraordinary~~$5,197 ~~items~~$ ~~(821) (805) (758) (8~~7,~~471)~~640 ~~(11,702)~~Total ~~Bankruptcy~~Liabilities ~~reorganization~~741 ~~expenses~~688 -586 ~~(190) (492) (212) - Gain on adversary claim and (loss) on settlement ITB / NPD - 451 (1~~4,~~368)~~629 ~~- - ---------- ----------- ---------- ------------ ------------ Net loss before discontinued operations~~11,078 ~~and~~Total ~~extraordinary~~Stockholder's ~~items~~Equity (~~821~~644) (~~544~~576) ~~(2,618)~~186 ~~(8,683)~~568 (113,~~702~~438) ~~Discontinued~~* ~~operations:~~The ~~Income~~per ~~(loss)~~share ~~from~~data ~~operations~~for of1999 ~~discontinued~~above ~~subsidiary~~has 57not -been -presented -due ~~(153)~~to ~~Gain~~the oncancellation ~~sale~~ of ~~subsidiary~~all -common -stock -and -common ~~320~~stock ~~Extraordinary~~equivalents ~~items: Gain~~ as ~~result~~ of ~~reorganization~~March ~~- 178~~ 5,~~342~~ -1999. -No ~~Net~~uncancelled ~~gain~~stock onwas ~~early~~outstanding ~~extinguishment~~at ofMarch ~~debt - - - 3~~31,~~172~~ ~~- ---------- ----------- ---------- ------------ ------------ Net income/(loss) $ (764) $ (366) $ 2,724 $ (5,511) $ (11,535) ========== =========== ========== ============ ============~~1999.

The following quarterly selected financial data of the company fro the fiscal years ended March 31, 2002 and 2001, has been derived from the Company's unaudited consolidated fincial statements. 8

~~Fiscal~~QUARTERLY ~~Years~~FINANCIAL ~~Ended~~DATA - UNAUDITED Quarter Quarter Quarter Quarter Quarter Quarter Quarter ended ended ended ended ended ended ended March 31:, December 31, September 31 June 30, March 31, December 31, September 31 2002 2001 2001 2001 2001 2000 2000 ----------- -------------- --------------~~--------------------------------~~ ~~2001 2000 1999 1998 1997~~ ----------~~---~~ ----------~~---~~ ------------- -~~------------~~ -------------- ~~Per~~Gross ~~Share~~revenues ~~Data:~~$ - $ - $ - $ - $ - $ -~~---------~~ ~~Loss~~$ ~~per~~- ~~share~~Total ~~before~~net ~~reorganization~~revenues ~~costs,~~- ~~bankruptcy~~- ~~court~~- ~~settlements,~~- ~~discontinued~~- ~~operations,~~- ~~and~~- ~~extraordinary~~Operating ~~items~~income $/ (~~0.75~~loss) $(38,279) (~~0.77~~52,246) *(49,104) $ (~~1.40~~73,945) $12,378 (~~2.53~~177,146) ~~Bankruptcy reorganization expenses -~~ (~~0.18~~295,151) *Net income/(~~0.04~~loss) -before ~~Gain~~discontinued onoperations ~~adversary~~and ~~claim~~extraordiary items (33,319) (~~loss~~22,355) on(40,777) ~~settlement~~(65,976) ~~ITB~~28,661 /(170,124) ~~NPD~~(301,253) -Income ~~0.43~~from *discontinued ~~- - Discontinued~~ operations ~~0.05~~ - * - ~~0.04 Extraordinary items: Net gain as a result of reorganization~~ - ~~0.17~~94,700 *14,911 -15,567 -21,351 ~~Gain~~Net onincome/(loss) ~~early~~(33,319) ~~extinguishment~~(22,355) of(40,777) ~~debt~~28,724 -43,572 -(154,557) *(279,902) ~~0.53~~Earnings -Per ~~------------~~Share ~~------------~~Data: ------------ ----------- -~~------------~~ Net income/(loss) $before extraordinary items (0.7003) $(0.02) (0.3503) *(0.06) $0.04 (0.9114) $(0.25) Net income/(2loss) (0.4903) ~~============~~(0.02) ~~============~~(0.03) ~~============~~0.03 ~~===========~~0.04 ~~=============~~(0.14) ~~Weighted~~(0.25) ~~average~~Quarter ~~number~~ended ofJune ~~common~~30, ~~and~~2000 ~~common~~---------- ~~equivalent~~Gross ~~shares~~revenues ~~outstanding~~$ ~~1,089,345~~- ~~45,367~~Total *net ~~6,039,391~~revenues 4- Operating income / (loss) (373,~~634,530~~736) ~~Weighted~~Net ~~average~~income/(loss) ~~number~~before ofdiscontinued ~~common~~operations and ~~common~~extraordiary ~~equivalent~~items ~~shares~~(377,770) ~~issuable~~Income ~~and~~from ~~outstanding~~discontinued 1operations 5,~~093,950~~065 1Net income/(loss) (372,~~042,237~~705) *Earnings -Per Share Data: ------------------------ Net income/(loss) before extraordinary items (0.34) Net income/(loss) (0.34)

9 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. GENERAL The Company has been winding down its two businesses, one of which is classified as a discontinued operation (see below). During the fiscal year ended March 31, 2002 the Company sold the residual Loan portfolio. The Company continues to collect amounts due from the residual Policy portfolio. At March 31, 2002, the Company had cash and cash equivalents of $400, and a negative net equity of $644,000. The equity is exclusive of any remaining amounts due pursuant to the Albuquerque office lease obligation, which approximated $243,000 at March 31, 2002. The Company believes that it presently has insufficient cash necessary to meet its daily operating requirements without regard to obligations currently due the debenture holders, through the fiscal year ending March 31, 2003. The Company is exploring various strategic options and financial opportunities including the possibility of a merger with Prinova Inc. RESULTS OF OPERATIONS Fiscal year ended March 31, 2002, compared to fiscal year ended March 31, 2001 The Company recorded a net loss of approximately $67,000 for the year ended March 31, 2002. Contributing to the net loss were general and administrative expenses of $222,000. Net revenues realized from viatical insurance Policies for the years ended March 31, 2002 and March 31, 2001 were $8,000 and zero, respectfully. The Company generally ceased purchasing Policies after September 1994. Future net revenues from the remaining portfolio of five Policies will be irregular, depending primarily upon the timing of mortality of the insured. Net viatical revenues from the Policies are determined by subtracting the Policy cost from the relevant face value after a Policy "matures" (becomes payable by the insurance company). As of April 1, 2000, the used car loan portion of the Company's business (the "Loans") had been classified as a discontinued operation. Since that date, Loan collections are no longer recorded as Loan revenues or Loan loss recoveries, and likewise, collection expenses are no longer recorded as part of general and administrative expenses; instead, the total net result of any remaining Loan activity were recorded as either a net income or loss from discontinued operations. During the fiscal year ended March 31, 2002 these loans ere sold resulting in a gain of $95,000. During the year ended March 31, 2001, the Company recognized $57,000 of revenues from this discontinued operation. General and administrative expenses were $222,000 during the year ended March 31, 2002, which represented a reduction of $494,000, compared to the $716,000 expended during the year ended March 31, 2001. This decrease resulted from a combination of offsetting factors, a $237,000 reduction in salary expense and related payroll expenses approximately $107,000 reduction in general administrative expenses (insurance, supplies, licenses, taxes, rent and supplies), and a $150,000 reduction in legal and accounting fees. The $222,000 expended during the year-ended March 31, 2002 consisted primarily of $21,000 in salaries, payroll taxes, and benefits, $77,000 in legal and accounting fees and $90,000 in rent. 10 Operating losses for the year ended March 31, 2002, were $214,000, compared to operating losses of $834,000 for the year ended March 31, 2001. In total, the $620,000 decrease in operating losses were primarily due to a reduction in general and administrative expenses (as noted above), offset by the loss on the termination agreement with Nunzio P. DeSantis, the Company's former CEO, of approximately $117,000, which was primarily due to the cancellation of an outstanding receivable due under the adversary settlement which was offset in the termination agreement with a cancellation of DeSantis' claim for reimbursement of legal expenses. The impact of non-operating income for the year ended March 31, 2002, was a net $51,000, compared to $13,000 for the year ended March 31, 2001. This results in a net increase in non- operating income of approximately $38,000, which difference is due to a confluence of one-time events, as follows. The $51,000 of non-operating income for the current period was primarily due to $42,000 of rental income related to subleasing the Company's office space, $21,000 gain from the settlement of the lawsuit with the New Mexico Gaming Control Board, and $6,000 gain from investment income. This income was offset by $20,000 from the amortization of the discount on the notes payable. The $13,000 non-operating income for the year ended March 31, 2001 was primarily due to the recapture of $16,000 related to a purchased viatical insurance policy written off in the prior year, $6,000 in rental income related to subleasing the Company's office space, $5,000 of interest income, and a $10,000 gain related to the receipt of rights to a security deposit related to the ITB settlement, offset by the amortization of the discount on the notes payable of $26,000. Fiscal year ended March 31, 2001, compared to fiscal year ended March 31, 2000 The Company recorded a net loss of $764,000 for the year ended March 31, 2001. Contributing to the net loss were general and administrative expenses of $716,000 and a $117,000 loss on the termination agreement with Nunzio P. DeSantis, the Company's former CEO. Net revenues realized from viatical insurance Policies in the year ended March 31, 2001, was zero, as compared to $5,000 in net viatical revenues in the year ended March 31, 2000. The Company generally ceased purchasing Policies after September 1994, and in May and July 1995, sold the majority of its portfolio. Future net revenues from the remaining portfolio of five Policies as of March 31, 2001 will be irregular, depending primarily upon the timing of mortality of the insured. Net viatical revenues from the Policies are determined by subtracting the Policy cost from the relevant face value after a Policy "matures" (becomes payable by the insurance company). As of April 1, 2000, the used car loan portion of the Company's business (the "Loans") has been classified as a discontinued operation. Since that date, Loan collections are no longer recorded as Loan revenues or Loan loss recoveries, and likewise, collection expenses are no longer recorded as part of general and administrative expenses; instead, the total net result of any remaining Loan activity are recorded as either a net income or loss from discontinued operations. Thus, there were no revenues from Loans recognized during the fiscal year ended March 31, 2001, compared to the $10,000 realized during the fiscal year ended March 31, 2000. Similarly, there was no Loan loss recovery recognized for the fiscal year ended March 31, 2001, compared to a recovery of $274,000 for the fiscal year ended March 31, 2000 related to previously charged-off Loans. (The recoveries were the result of collections on old Loans, which had, in the past, been more than six months in arrears and had therefore been written off, in accordance with the Company's long-standing procedures.) The net result of discontinued (Loan) operations for the fiscal year ended March 31, 2001, was a net income of $57,000. 11 General and administrative expenses were $716,000 during the year ended March 31, 2001, which represented a reduction of $656,000, compared to the $1,372,000 expended during the year ended March 31, 2000. This decrease resulted from a combination of offsetting factors, a $420,000 reduction in salary expense and related payroll expenses approximately $300,000 reduction in general administrative expenses (insurance, supplies, licenses, taxes, rent and supplies), and approximately $100,000 reduction in legal and accounting fees. The $716,000 expended during the year-ended March 31, 2001 consisted primarily of $300,000 in salaries, payroll taxes, and benefits, $237,000 in legal and accounting fees and $115,000 in rent. Operating losses for the year ended March 31, 2001, were $833,000, compared to operating losses of $1,367,000 for the year ended March 31, 2000. In total, the $534,000 decrease in operating losses were primarily due to a reduction in general and administrative expenses (as noted above), offset by the absence of any operating revenue sources for the fiscal year ended March 31, 2001, and a loss on the termination agreement with Nunzio P. DeSantis, the Company's former CEO, of approximately $117,000, which was primarily due to the cancellation of an outstanding receivable due under the adversary settlement which was offset in the termination agreement with a cancellation of DeSantis' claim for reimbursement of legal expenses. The impact of non-operating income, court settlements and extraordinary items for the year ended March 31, 2001, was a net $13,000, compared to approximately $1.0 million for the year ended March 31, 2000. This results in a net decrease in non- operating income of $987,000, which difference is due to a confluence of one-time events, as follows. The $13,000 non-operating income for the current period was primarily due to the recapture of $16,000 related to a purchased viatical insurance policy written off in the prior year, $6,000 in rental income related to subleasing the Company's office space, $5,000 of interest income, and a $10,000 gain related to the receipt of rights to a security deposit related to the ITB settlement, offset by the amortization of the discount on the notes payable of $26,000. The $374,000 non-operating income for the prior period was primarily due to the $451,000 gain as a result of the settlement with Nunzio DeSantis, a cancellation of a $178,000 Florida tax claim, a $178,000 gain on a Debenture settlement, a viatical policy write-down recapture of $106,000, and interest income of $87,000. In addition to the above, for the year ended March 31, 2001, the Company incurred no reorganization costs related to the bankruptcy proceedings, compared to $190,000 in the prior year. The net effect of the foregoing was a net loss of $763,000 for the year ended March 31, 2001. The net loss for the same period last year was $366,000. The $763,000 loss for the year ended March 31, 2001 is due to a $117,000 loss on the termination agreement with Nunzio P. DeSantis, the Company's former CEO, and general and administrative expenses of $716,000. The $366,000 loss for the year ended March 31, 2000 was due primarily to an operating loss of $1,367,000 and reorganization costs of $189,000, partially offset by non-operating income of approximately $1.0 million. The net decrease in income of $398,000, as compared to the prior fiscal year, was attributable primarily to one-time events occurring in the current year as previously noted, and a reduction in general and administrative expenses. The net decrease in income was also due to one-time events occurring in the prior year including the $451,000 gain on settlement of adversary agreement and the cancellation of a $178,000 tax claim which was partially offset that year by a $189,000 spent on reorganization costs. 12 LIQUIDITY AND CAPITAL RESOURCES The Company's immediate viability as a going concern depends upon the successful installation of a new line of business and the attainment of profitability. Cash flow was a negative $12,000 for the fiscal year ended March 31, 2002 as compared to a negative $360,000 and a negative $4,565,000 for the fiscal years ended March 31, 2001 and 2000, respectively. At March 31, 2002, the Company had cash and cash equivalents of $400, and a negative net equity of $644,000. In comparison the Company had cash and cash equivalents or $13,000, and a negative net equity of $576,000 at March 31, 2001. The equity is exclusive of any remaining amounts due pursuant to the Albuquerque office lease obligation, which approximated $243,000 at March 31, 2002. The Company believes that it presently has insufficient cash necessary to meet its daily operating requirements without regard to obligations currently due the debenture holders, through the fiscal year ending March 31, 2003. The Company is not likely to be able to secure and install a new, profitable line of business in this time frame. Thus, the Company will likely have to either be acquired, merge, or liquidate. Without either an infusion of capital, and / or the sale or realization of assets for cash at greater than net book value, the Company may not be able to meet all its present obligations. The Company's portfolio of unmatured viatical insurance Policies totaled five at March 31, 2002, having a combined face value of $356,000 and a net book value of $50,000. The Company ceased purchasing Policies in September 1994. For the fiscal year ended March 31, 2002, cash provided by investing activities was $95,000, which was primarily the result of the receipt of funds related to the gain from the sale of the loan portfolio. There was $28,000 cash provided by investing activities for the fiscal year ended March 31, 2001 which was primarily the result of the receipt of funds related to the termination agreement of Nunzio P. Desantis, the Company's former CEO. There was no cash provided by financing activities for the fiscal year ended March 31, 2002. Cash provided by financing activities for the fiscal year ended March 31, 2001 was $80,000, which was primarily due to the proceeds received in conjunction with the stock issuance. In summary, the Company decreased its cash and cash equivalents by $12,000 during the fiscal year ended March 31, 2002, to a total of $400. The decrease was largely due to the net use of cash for operating activities and other business expenses. During the current fiscal year, the Company's net equity decreased, from a negative $576,000 at March 31, 2001, to a negative $644,000 at March 31, 2002, a decrease of approximately $68,000. During the fiscal years ended March 31, 2002 and March 31, 2001, the Company suffered recurring losses from operations that has raised substantial doubt about its ability to continue as a going concern. As a result of the Company's economic condition and the legal opinion of the Company's former counsel, the first $121,000 notes payable payments were not made as originally scheduled, and as of the date of this filing, have not been made. Additionally, the second and third $121,000 notes payable payments were also not made as originally scheduled, and as of the date of this filing, have not been made. 13 ITEM 8. FINANCIAL STATEMENTS The responses to this Item are submitted in a separate section of this Annual Report on Form 10-K. See Index to Consolidated Financial Statements on page F-1. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. Effective January 8, 2002, the Certified Public Accounting firm of Meyners + Company LLC resigned as the accountants for the Company. The accountants reports issued by Meyners + Company, LLC for the past two years have been unqualified reports and there have been no modifications as to uncertainty, audit scope, or accounting principles for that two-year period. There have been no disagreements with Meyners + Company, LLC on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures during the two most recent fiscal years. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. The following table gives certain information regarding the Company's directors and executive officers. Directors serve until the next annual meeting of stockholders and until their successors are duly elected and qualified. Officers serve at the pleasure of the Board of Directors. Year First Elected Name Age Director Position Luther W. Reynolds 66 2002 President, Chairman of the Board and Directors Augustine Chris Baca 53 2002 Director and Vice President Werner Gellert 76 2002 Director and Secretary Effective January 29, 2002, three new directors were appointed to the Company's Board. They are: Mr. Luther W. Reynolds of Albuquerque, New Mexico; Mr. Augustine Chris Baca of Albuquerque, New Mexico, and Mr. Werner Gellert, also of Albuquerque, New Mexico. 14 Mr. Luther W. Reynolds was appointed as President and Chairman of the Board of Directors on January 29, 2002. Mr. Reynolds has been a business consultant in private practice for fifteen years, and has held executive positions in banking; utility companies, and wholesales companies. Mr. Reynolds is a Certified Public Accountant and holds an MBA from The University of Texas at Austin. In addition Mr. Reynolds has served as a member of the Board of Directors for several profit and non-profit organizations. Mr. Reynolds served as Acting President for the Company from January 8 to January 28, 2002 when he was officially appointed as the President and Chairman of the Board of Directors. On January 29, 2002 Mr. Chris Baca was also appointed the Vice President of the Company. Mr. Baca is the President and Chief Executive Officer of two not-for-profit organizations in Central New Mexico. Mr. Baca hold's a Master's Degree in Public Administration from the University of New Mexico. Mr. Baca has also completed certificate programs and fellowship programs from Harvard University, JFK School of Government and Kellogg National Leadership Fellow. Mr. Baca has served on the Board of Directors for several profit and non-profit organizations. On January 29, 2002 Mr. Werner Gellert was appointed as the Secretary of the Company. Mr. Gellert has spent most of his career as an international banker in the United States. He currently is the founder of a museum and study center in Albuquerque, NM. Mr. Gellert was born in Breslau, Germany and educated in Germany, China and the United States. Mr. Gellert holds a Bachelor of Arts degree from National Ching Tung University in Shanghai, China. He has attended additional classes from the University of Denver and Hebrew Union College in Los Angeles, California. Effective January 8, 2002 Mr. John D. Emery resigned as the Acting President and Chairman of the Board of Directors for the Company. Mr. Emery resigned for personal reasons. Mr. Emery served in the capacity of the Acting President, Secretary of the Company, and Chairman of the Board of Directors since October 2000. In addition Mr. Vincent J. Garcia resigned as a member of the Board of Directors as of January 29, 2002. Mr. Garcia resigned for personal reasons. ITEM 11. EXECUTIVE COMPENSATION. SUMMARY COMPENSATION TABLE The following table provides information concerning the compensation paid for fiscal years ended March 31, 2002, 2001 and 2000 to persons who served as Chairman of the Board, President, Chief Executive Officer, Executive Vice President, and Treasurer. Mr. John Emery was the only executive officer of the Company for the fiscal year 2001 and served until January 8, 2002. Effective January 22, 2002 the executive officers of the company included Mr. Luther W. Reynolds, President, Mr. Augustine Chris Baca, Vice President, and Mr. Werner Gellert, Secretary. There was no compensation for the executive officers since January 29, 2002. 15

As------------------------------------------------------------------------------------------------------------------ ofSUMMARY ~~March~~COMPENSATION ~~31:~~TABLE ------------------------------------------------------------------------------------------------------------------ ~~2001~~Name ~~2000~~and ~~1999~~Principal ~~1998~~Position ~~1997~~Annual Compensation Long Term Compensation All other Compen -sation ($)(1) ------------ ------------- ------------- ------------- --------------------------------------------------------------- ~~Balance~~Awards ~~Sheet~~Payout ~~Data:~~ ------------------------------------------------------------------------------------------------------------------ ~~Total~~Other ~~Assets~~Restricted Securities Annual Stock Underlying LTIP Year Salary ($) ~~112~~Bonus Compen- Award(s) Options/ Payout ($) ~~772~~sation ($) 5$ SARS (#) ($) (1) ------------------------------------------------------------------------------------------------------------------ John D. Emery - - - - - Former Acting President,~~197~~ Former 2002 $ 714,~~640~~769 - Acting Chairman of the Board Corporate Secretary 2001 $ 1610,~~276~~708 ~~Total~~------------------------------------------------------------------------------------------------------------------ ~~Liabilities~~Jeffery ~~688~~Ovington ~~586~~2001 4$ 86,~~629~~776 11- - - - - - Former Executive Vice President And Former Treasurer 2000 $ 122,~~078~~200 28------------------------------------------------------------------------------------------------------------------ Nunzio P. DeSantis 2001 $ 45,~~128~~673 ~~Total~~- ~~Stockholders'~~- ~~Equity~~- - - - Former President and Former Chief Executive Officer 2000 $ 237,500 ------------------------------------------------------------------------------------------------------------------ (~~576~~1) ~~186~~Except ~~568~~as (3indicated,~~438)~~ ~~(11~~the aggregate amount of perquisites and other personal benefits paid to the named persons did not exceed the lesser of 10 percent of each officer's total annual salary and bonus for the fiscal years and $100,~~852)~~000.

COMPENSATION OF DIRECTORS The Directors do not receive any compensation for their services. 16 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDERS MATTERS. The Company does not have any securities authorized for issuance under an equity compensation plan. Effective October 12, 2000, a block of 634,028 shares of the Company's common stock, equal to approximately 58% of the total shares outstanding, traded in a private sale between two third parties. The buyer and new majority owner is Prinova LLC, a New Mexico limited liability company, which is a private, closely-held company, headquartered in New Mexico. Prinova LLC has no past or present ties or affiliations to any shareholder, director, or officer of the Company prior to October 2000. From October 2000 to January 29, 2002, Mr. Vincent Garcia, the majority owner of Prinova LLC, was a member of the Company's Board of Directors. The following table states certain information concerning stock ownership of all persons known by the Company to beneficially own five percent or more of the Company's outstanding Common Stock, as well as holdings of each current director, and all current directors and executive officers of the Company as a group, as of June 21, 2002, when the Company had outstanding 1,095,303 issued. Amount and Name and address nature of of beneficial owner, beneficial Percent of or identity of group ownership class owned ----------------------------------- ---------- ------------ Prinova Capital Group, LLC 634,028 57.88% 600 Central Ave SW Albuquerque, NM Vorarlberger Volksbank Reg. Gen. 262,500 24.0% Bahnhofstrasse12 6900 Bregenz Austria Entities associated with Smith Management, LLC 53,472 4.9% 885 Third Ave., 34/th/ Floor New York, NY 10022 All current directors and executive officers as a group - 0% 17 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. For the fiscal year ended March 2002 the parties having a material interest in the Company include Vincent Garcia and Patsy Garcia (husband and wife) who collectively own 100% of Prinova LLC, and 95% of Prinova Inc. Prinova LLC is a New Mexico limited liability company, which is a private, closely-held company, headquartered in New Mexico. Prinova LLC has no past or present ties or affiliations to any shareholder, director, or officer of the Company prior to October 2000. From October 2000 to January 29, 2002, Mr. Vincent Garcia, the majority owner of Prinova LLC, was a member of the Board of Directors. Effective October 12, 2000, a block of 634,028 shares of the Company's common stock, equal to approximately 58% of the total shares outstanding, changed hands in a private sale between two third parties. Prinova LLC has also acquired a majority of the seller's rights under the 5-year, uncollateralized, non-interest bearing debt obligations of the Company having a face value of $412,500. Prinova Inc. is a New Mexico private, closely-held corporation, headquartered in New Mexico. Prinova Inc. has no past or present ties or affiliations to any shareholder, director, or officer of the Company prior to October 2000. From October 2000 to January 29, 2002, Mr. Vincent Garcia, the majority owner of Prinova LLC, was a member of the Board of Directors. Prinova Inc. subleases office space from the Company on a month-to-month basis for $3,250 per month. In November 2001 the Company entered into a debt arrangement with Prinova Inc. for a total of $75,000 that may be drawn on an as needed basis. The term of the note includes interest at 12% and is due on or before December 31, 2003. The note is secured by the first proceeds from the potential sale of the viatical settlements and the property and equipment of the company. During the year the Company purchased several fractional assignments of interest held by Prinova Investments, Ltd., a whole-owned subsidiary of Prinova Inc., and two other unrelated companies. The company acquired assignments of interest for a total $65,000. The Company received the entire investment balance of $65,000 plus a profit of $6,500. The Company and its subsidiaries had no employees. Accounting and management services are being contracted from Prinova Inc. 18 ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES, AND REPORTS ON FORM 8-K. The following financial statements have been filed with and are included in this report: (a) (1) Financial Statements Independent Auditors' Report Consolidated Balance Sheets - March 31, 2002 and 2001 Consolidated Statements of Operations - Year ended March 31, 2002; Year ended March 31, 2001. Consolidated Statements of Stockholders' Equity / (Deficit) -Year ended March 31, 2002; Year ended March 31, 2001. Consolidated Statements of Cash Flows - Year ended March 31, 2002; Year ended March 31, 2001. Notes to Consolidated Financial Statements (b) Reports on Form 8-K Form 8-K filed January 8, 2002** Form 8-K filed February 16, 2002** Form 8-K A filed February 21, 2002** 10.1 Lease Agreement for Registrant's Offices at 600 Central SW, Third Floor, Albuquerque, New Mexico* 10.2 Assignment to, and Assumption by, Registrant of Lease Agreement for Offices at 600 Central SW, Third Floor, Albuquerque, New Mexico* 21 Subsidiaries of the Registrant* * Filed as a corresponding exhibit to Registrant's Annual Report on Form 10-K for the year ended March 31, 1999. ** Filed as a separate 8-K filing on date indicated. 19 SIGNATURES Pursuant to the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereto duly authorized on June 21, 2002. AUTOLEND GROUP, INC. By: /s/ Luther W. Reynolds ----------------------- Luther W. Reynolds President Pursuant to the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated. SIGNATURE TITLE DATE --------- ----- ---- /s/ Luther W. Reynolds Chairman of the Board June 21, 2002 ------------------------- of Directors and President Luther W. Reynolds /s/ Augustine Chris Baca Director and Vice President June 21, 2002 ------------------------- Augustine Chris Baca /s/ Werner Gellert Director and Secretary June 21, 2002 ------------------------- Werner Gellert 20 AUTOLEND GROUP, INC. AND SUBSIDIARIES INDEPENDENT AUDITORS' REPORT AND FINANCIAL STATEMENTS March 31, 2002 and 2001

~~Quarter~~AUTOLEND ~~Quarter Quarter Quarter Quarter Quarter Quarter Quarter ended ended ended ended ended ended ended ended March 31~~GROUP, ~~December~~INC. ~~31,~~AND ~~September~~SUBSIDIARIES ~~30,~~INDEX ~~June~~TO ~~30,~~FINANCIAL ~~March~~STATEMENTS ~~31,~~Annual ~~December~~Financial ~~31,~~Statements: ~~September~~PAGE ~~30,~~---- ~~June~~Independent ~~30,~~Auditors' ~~2001~~Reports. ~~2000~~. ~~2000~~. ~~2000~~. ~~2000~~. ~~1999~~. ~~1999~~. ~~1999~~. ~~-------------~~. ~~------------~~. ~~-------------~~. ~~-----------~~. ~~-------------~~. ~~-----------~~. ~~--------------~~. ~~-----------~~. ~~Gross~~. ~~revenues~~. $. -. $. F-2 $Consolidated -Balance $Sheets -as $of ~~(155,497)~~March ~~$ 9~~31,~~949~~ $2002 ~~100,382~~and $March 9231,~~338~~ ~~Total~~2001. ~~net~~. ~~revenues~~ F-4 -Consolidated -Statements -of ~~(116,534)~~Operations ~~9,949~~for ~~60,774~~the ~~60,358~~Years ~~Operating~~ended ~~income/(loss)~~March 1231,~~378~~ ~~(177~~2002,~~146)~~ ~~(295,151)~~March ~~(373~~31,~~736)~~ ~~(395~~2001,~~357)~~ ~~(239,040)~~and ~~(238,434)~~March ~~(317~~31,~~491)~~ ~~Income/(loss)~~2000. ~~before~~. ~~reorganization~~. ~~costs,~~. ~~bankruptcy~~. ~~court~~. ~~settlements,~~. ~~discontinued~~. ~~operations~~. ~~and~~. ~~extraordinary~~. ~~items~~. ~~28,661~~. ~~(170,124)~~F-5 ~~(301,253)~~Consolidated ~~(377,770)~~Statement ~~(708,628)~~of ~~(234,153)~~Stockholders' ~~386,021 (248,889) Net income~~Equity/(~~loss~~Deficit) ~~before~~for ~~discontinued~~the ~~operations~~Years ~~and~~ended ~~extraordinary~~March ~~items 28~~31,~~661~~ ~~(170~~2002,~~124)~~ ~~(301,253)~~March ~~(377~~31,~~770)~~ ~~(270,681)~~2001 ~~(280,152)~~and ~~344,279~~March ~~(337~~31,~~896)~~ ~~Income~~2000. ~~from~~. ~~discontinued~~. ~~operations~~. ~~14,911~~. ~~15,567 21,351 5,065~~ F-7 -Consolidated -Statements -of ~~Net~~Cash ~~income/(loss)~~Flows ~~before~~for ~~extraordinary~~the ~~items~~Years ~~43,572~~ended ~~(154,557)~~March ~~(279~~31,~~902)~~ ~~(372~~2002,~~705)~~ ~~(270,681)~~March ~~(280~~31,~~152)~~ ~~344~~2001,~~279~~ ~~(337,896)~~and ~~Gain~~March ~~as a result of reorganization debentures - - - - 178~~31,~~454~~ -2000. -. -. ~~Net~~. ~~income/(loss)~~. ~~43,572~~. ~~(154,557)~~. ~~(279,902)~~. ~~(372,705)~~. ~~(92,227)~~. ~~(280,152)~~. ~~344,279~~. ~~(337,896)~~. ~~Earnings Per Share Data:~~ F-~~----------------------~~8 ~~Net~~Notes ~~income/(loss)~~to ~~before~~Consolidated ~~extraordinary~~Financial ~~items~~Statements 0.04 (0.~~14)~~ (0.~~25)~~ (0.~~34)~~ (0.~~26)~~ (0.~~26)~~ 0.33 (0.~~32)~~ ~~Net income/(loss) 0~~.04 (0.~~14)~~ (0.~~25)~~ (0.~~34)~~ (0.~~09)~~ (0.~~26)~~ ~~0.33 (0.32)~~F-10

F-1 ENDERSON, BLACK & COMPANY, P.C. ----------------------------------------------------- CERTIFIED PUBLIC ACCOUNTANTS & MANAGEMENT CONSULTANTS 6605 Uptown Blvd. NE, Suite 370 Albuquerque, New Mexico 87110 Phone: (505) 830-2500 FAX: (505) 830-2600 Email: cblack@cpa-hb.com INDEPENDENT AUDITORS' REPORT To the Board of Directors and Stockholders of AutoLend Group, Inc. and Subsidiaries Albuquerque, New Mexico We have audited the accompanying consolidated balance sheet of AutoLend Group, Inc. (a Delaware corporation) as of March 31, 2002, and the related statements of operations, stockholders' equity/(deficit), and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of AutoLend Group, Inc. as of March 31, 2001 were audited by other auditors whose report dated May 31, 2001, expressed an unqualified opinion on these statements. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits 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 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 audit provides 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 AutoLend Group, Inc. as of March 31, 2002 and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company has suffered recurring losses from operations and as a result, its liquidity has been impaired. This raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are described in Note 2. Albuquerque, New Mexico June 14, 2002 F-2 INDEPENDENT AUDITORS' REPORT Board of Directors and Stockholders of AutoLend Group, Inc. and Subsidiaries We have audited the accompanying consolidated balance sheets of AutoLend Group, Inc. (a Delaware corporation) and subsidiaries (the "Company"), as of March 31, 2001 and 2000, and the related consolidated statements of operations, stockholders' equity/(deficit), and cash flows for the years ended March 31, 2001 and March 31, 2000, and for the twenty-six days ended March 31, 1999, and the eleven months and five days ended March 5,1999. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted audition standards in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of March 31, 2001 and 2000, and the results of its operations and its cash flows for the years ended March 31, 2001 and March 31, 2000, and for the twenty-six days ended March 31, 1999, and the eleven months and five days ended March 5, 1999, in conformity with generally accepted accounting principles in the United States of America. Our audits were conducted for the purpose of forming an opinion on the basic consolidated financial statements taken as a whole. The related 2001, 2000, and 1999 financial schedule on page S-1 is presented for purposes of additional analysis and is not required part of the basic consolidated financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic consolidated financial statements, and in our opinion, is fairly stated in all material respects in relation to the basic consolidated financial statements taken as a whole. The accompanying consolidated financial statements and related financial statement schedule have been prepared assuming that the Company will continue as a going concern. The Company has suffered recurring losses from operation and as a result, its liquidity has been impaired. This raises substantial doubt about its ability to continue as a going concern. Managements' plans in regard to these matters are described in Note 3. The consolidated financial statements and related financial statement schedule do not include any adjustments that might result from the outcome of this uncertainty. /s/ Meyners + Company, LLC Meyners + Company, LLC Albuquerque, New Mexico May 31, 2001 F-3

~~Name~~AUTOLEND ~~and~~GROUP, ~~Principal~~INC. ~~Position~~AND ~~Annual~~SUBSIDIARIES ~~Compensation~~CONSOLIDATED ~~Long~~BALANCE ~~Term~~SHEETS ~~Compensation~~MARCH ~~All~~31, ~~other~~2002 ~~Compen-~~AND ~~sation~~2001 ~~($)~~March ~~(1)~~31, ~~------------------------------------------------------------------------------------------------------------------------------------~~March ~~Awards~~31, ~~Payout~~2002 2001 ------------ ------------~~------------------------------------------------------------------------------------------------------------~~ ~~Other~~ASSETS: ~~Annual~~Cash ~~Restricted~~$ ~~Securities~~368 ~~Compen-~~$ ~~Stock~~12,912 ~~Underlying~~Accounts ~~sation~~receivable ~~Award(s)~~10,000 ~~Options/~~- ~~LTIP~~Prepaid ~~Year~~expenses ~~Salary~~- ~~($)~~151 ~~Bonus~~Prepaid ~~($)~~franchise ~~($)~~tax ~~(1)~~4,388 ~~($)~~4,788 ~~SARs (#) Payout($)~~ ------------ ------------~~------------------------------------------------------------------------------------------------------------~~ ~~John~~TOTAL D.CURRENT ~~Emery~~ASSETS ~~Acting~~14,756 ~~President~~17,851 ~~Acting~~Deposit ~~2001~~10,000 $ 10,~~708~~000 $Purchased -insurance $policies, -net $50,459 -52,037 -Fixed $assets, -net ~~$ - Chairman of the Board~~22,315 ~~$ 2~~31,~~000/mo.~~815 ~~Corporate Secretary~~ ------------ ------------~~------------------------------------------------------------------------------------------------------------~~ ~~Nunzio~~TOTAL P.ASSETS ~~DeSantis~~$ ~~2001~~97,530 $ 45111,~~673~~703 $============ -============ $LIABILITIES: -Accounts $payable - -other $9,661 -17,364 $Accrued -payroll ~~Former~~33,225 ~~President~~33,225 ~~and~~Accrued ~~former~~liabilities ~~2000~~37,642 ~~237~~68,~~500~~930 -Note -payable -to -related -party 72,526 - ~~Chief~~Current ~~Executive~~portion ~~Officer~~of ~~1999~~notes 18payable to stockholders 396,~~269~~009 ~~(2)~~287,949 -Accrued -interest - -notes -payable -to stockholders 77,451 57,432 ------------ ------------ Total current liabilities 626,514 464,900 Long-term portion of notes payable to stockholders 114,724 222,784 ------------ ------------ TOTAL LIABILITIES 741,238 687,684 ------------ ------------~~-----------------------------------------------------------~~ ~~Jeffrey~~STOCKHOLDERS' ~~Ovington~~EQUITY ~~2001~~(DEFICIT) $Preferred 86stock,~~776~~ $.002 -par $value. -Authorized $5,000,000 shares - - $No -shares $issued -and ~~Former~~outstanding ~~Executive~~at ~~Vice~~March ~~2000~~31, ~~122~~2002 and March 31,~~200~~ ~~(3)~~2001 - - -Common -stock, -$.002 -par ~~President~~value. Authorized 40,000,000 shares Issued and ~~former~~outstanding ~~Treasurer~~1,095,303 ~~1999~~shares ~~156~~at March 31,~~478~~ ~~(3)~~2002 ~~100~~and March 31,~~000~~ ~~(3)~~2001. -2,190 -2,190 -Additional paid-in -capital 675,068 675,068 Accumulated deficit (1,320,966) (1,253,239) ------------ ------------ TOTAL STOCKHOLDERS' EQUITY (643,708) (575,981) ------------ ------------~~------------------------------------------------------------------------------------~~ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 97,530 $ 111,703 ============ ============

See accompanying notes to consolidated financial statements. F-4

~~Amount~~AUTOLEND ~~and~~GROUP, ~~Name~~INC. ~~and~~AND ~~address~~SUBSIDIARIES ~~nature~~CONSOLIDATED ofSTATEMENTS ofOF ~~beneficial~~OPERATIONS ~~owner~~FOR YEARS ENDED MARCH 31, ~~beneficial~~2002, ~~Percent~~2001 AND 2000 2002 2001 2000 ---------- ---------- ------------ REVENUES: Revenues from matured insurance policies $ 10,000 $ - $ 37,500 ---------- ---------- ------------ Gross revenues 10,000 37,500 Cost of ormatured ~~identity~~insurance policies (1,578) - (32,625) ---------- ---------- ------------ TOTAL NET REVENUES 8,422 4,875 General and administrative expenses (221,996) (716,155) (1,372,402) Loss on termination agreement - (117,500) - ---------- ---------- ------------ OPERATING LOSS (213,574) (833,655) (1,367,527) ---------- ---------- ------------ OTHER INCOME / (EXPENSES) Interest income 322 4,862 75,858 Investment income 6,500 - - Gain on ITB Settlement - 10,000 - Gain on State Assessment Settlement 21,286 - - Rental income 42,250 6,500 - Notes payable, discount amortization (20,018) (25,931) (31,501) Interest expense - (40) - Cancellation of ~~group~~Florida ~~ownership~~tax ~~class~~claim ~~owned~~- - 177,876 Recapture - purchase insurance policies 15,649 106,213 Other income 807 2,129 45,268 ---------- ---------- ------------ TOTAL NET OTHER INCOME / (EXPENSE) 51,147 13,169 373,714 ---------- ---------- ~~Prinova~~------------ ~~Capital~~Loss ~~Group~~from continuing operations (162,427) ~~LLC~~(820,486) ~~634~~(993,~~028~~813) ~~57.88%~~Reorganization ~~2400~~cost ~~Louisiana~~incurred ~~Blvd.~~after NEChapter ~~Albuquerque~~11 proceedings - - (189,841) NMGain on Advesary claim and (loss) on settlement ITB/NPD - - 451,040 ---------- ---------- ------------ Loss before discontinued operations and extraordinary items (162,427) (820,486) (732,614) Discontinued operations: Income from discontinued operations (net) 94,700 56,894 188,164 Extraordinary item: Gain as result of reorganization-debentures - - 178,454 ---------- ---------- ------------ NET LOSS $ (67,727) $(763,592) $ (365,996) ========== ========== ============

See accompanying notes to consolidated financial statements. F-5

~~Annual~~AUTOLEND ~~Financial~~GROUP, ~~Statements:~~INC. ~~Page~~AND ~~----~~SUBSIDIARIES ~~Independent~~CONSOLIDATED ~~Auditors'~~STATEMENTS ~~Report...........................................................................~~OF FOPERATIONS -2 ~~Consolidated~~CONTINUED ~~Balance~~FOR ~~Sheets~~YEARS asENDED ofMARCH ~~March~~ 31, 2002, 2001 ~~and~~AND ~~March 31,~~ 2000~~....................................~~ ~~F-3~~2002 ~~Consolidated Statements of Operations for the Years ended March 31,~~ 2001 ~~and March 31,~~ 2000; ~~Twenty~~-~~six~~---------- ~~days~~----------- ~~ended~~----------- ~~March~~Loss ~~31,~~before ~~1999;~~discontinued ~~and~~operations ~~Eleven-months-~~and~~-five~~ ~~days~~extraordinary ~~ended~~items ~~March~~$ 5,(0.15) ~~1999~~$ (0.75) $ (0.~~.....................................~~70) ~~F-4~~Discontinued ~~Consolidated~~operations: ~~Statements~~Income offrom ~~Stockholders'~~discontinued ~~Equity/~~operations (~~Deficit~~net) ~~for~~0.09 ~~the~~0.05 ~~Years~~0.18 ~~ended~~Extraordinary ~~March~~item: ~~31,~~Gain ~~2001~~as ~~and~~result ~~March~~of ~~31,~~reorganization-debentures ~~2000;~~- ~~Twenty~~-~~six~~ ~~days~~0.17 ~~ended~~----------- ~~March~~----------- ~~31, 1999; and Eleven~~-~~months~~-~~and~~-~~five~~-------- ~~days~~Net ~~ended~~loss ~~March~~per 5,share ~~1999~~$ (0.06) $ (0.70) $ (0.~~..........................~~35) ~~F-6~~=========== ~~Consolidated~~=========== ~~Statements~~=========== ofWeighted ~~Cash~~average ~~Flows~~number ~~for~~of ~~the~~common ~~Years~~and ~~ended~~common ~~March~~equivalent ~~31,~~shares ~~2001~~issued and ~~March~~outstanding 311,095,303 ~~2000;~~1,089,345 ~~Twenty-six~~45,367 ~~days~~Weighted ~~ended~~average ~~March~~number ~~31,~~of ~~1999;~~common and ~~Eleven-months-and-five~~common ~~days~~equivalent ~~ended~~shares ~~March~~issuable 5- 4,605 ~~1999.............................................~~996,870 F-7---------- ~~Notes~~----------- to----------- ~~Consolidated~~Total ~~Financial~~weighted ~~Statements.............................................................~~average ~~F-10~~number ~~Financial~~of ~~Statement~~common ~~Schedule:~~and ~~Schedule~~common IIequivalent -shares ~~Valuation~~issued and ~~Qualifying~~outstanding, ~~Accounts~~and atissuable ~~March~~$1,095,303 31$1,093,950 ~~2001~~$1,042,237 ~~2000~~=========== ~~and~~=========== ~~1999....................... S-1~~===========

See accompanying notes to consolidated financial statements. F-6

~~Registrant~~AUTOLEND ~~Registrant~~GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY/(DEFICIT) FOR YEARS ENDED MARCH 31, 2002, 2001 AND 2000 Preferred Stock Common Stock ---------------~~---~~ -----------~~------~~ ~~Assets:~~Additional ~~Cash~~# $of ~~12,912~~ $ ~~373,184~~# ~~Receivable~~of ~~from~~$ ~~officer~~ Paid-in ~~150,000~~Accumulated ~~Stock~~Shares ~~issuance~~Amount ~~proceeds~~Shares ~~receivable~~Amount -Capital ~~78,678~~Deficit ~~Installment~~Total ~~contracts (Loans)/recoveries receivable~~ - ~~35,390 Other receivables~~ - ~~40,955 Prepaid expenses 151 21,456 Prepaid franchise tax 4,788~~ ---- ------- ----------- -------- --------- ~~Total current assets 17,851 699,663 Deposits 10,000~~ - ~~Purchased insurance Policies, net 52,037 35,678 Fixed assets, net 31,815 36,840~~ ------------~~------~~ ---------- Balance at March 31, 1999 - -~~-----~~ ~~Total~~1,040,000 ~~assets~~$ 2,080 $690,033 ~~111~~$ (123,~~703~~651) $ ~~772~~568,~~181~~462 ~~==================~~Issuable ~~=================~~common ~~Liabilities:~~stock ~~Accounts~~not ~~payable~~issued - ~~other~~- 17(25,~~364~~000) 12(50) (16,~~073~~587) ~~Accrued~~- ~~contingent~~(16,637) ~~payroll~~Issuance 33of 78,~~225~~678 -shares ~~Accrued~~of ~~contingent~~new ~~liabilities~~common ~~68,930~~stock ~~31,888~~at ~~Current~~$1.00 ~~portion~~per ofshare ~~notes~~net ~~payable~~of tocost ~~stockholders~~- ~~287,949~~- ~~186~~78,~~168~~678 ~~Accrued~~157 ~~interest~~- - ~~Note~~157 ~~payable~~Net toloss ~~stockholders~~for ~~57,432~~fiscal year ended March 31,~~501~~ 2000 - - - - - (365,996) (365,996) ------ ------- ----------- ------ ~~Total current liabilities 464,900 261,630 Long~~-~~term~~- ~~portion of notes payable to stockholders 222,784 324,565~~ --------- --------- ---- ----------~~---~~ ~~Total~~Balance ~~liabilities~~at ~~687,684~~March ~~586~~31,~~195~~ ~~Stockholders'~~2000 ~~Equity/(Deficit)~~- ~~Common~~- ~~stock~~1,093,678 ~~$.002~~2,187 ~~par~~673,446 ~~value.~~(489,647) ~~Authorized 40~~185,~~000,000~~986 ~~shares;~~Issuance ~~issued~~of ~~and outstanding~~ 1,~~092,053~~625 shares atof ~~March~~new ~~31,~~common ~~2001;~~stock at $1~~,088,803~~.00 ~~shares~~per atshare ~~March~~- ~~31,~~- ~~2000 2~~1,~~184~~625 ~~2,177 issuable~~ 3 1,~~250~~622 ~~shares~~- ~~at March 31~~1,625 ~~2001,~~Net ~~and~~loss ~~4,875~~for ~~shares~~fiscal atyear ended March 31, ~~2000~~2001 6- 10- ~~Additional~~- ~~paid~~-in ~~capital~~- ~~675,068 673,446 Accumulated deficit~~ (1763,~~253,239~~592) (~~489~~763,~~647~~592) ------ ------- ----------- -------- --------- ~~Total~~------------- ~~stockholders'~~---------- ~~equity/~~Balance at March 31, 2001 - - 1,095,303 2,190 675,068 (~~deficit~~1,253,239) $ (575,981) $Net ~~185~~loss for fiscal year ended March 31,~~986~~ 2002 - - - - - (67,727) (67,727) ------ ------- ----------- -------- ~~Total~~--------- ~~liabilities~~------------- ~~and~~---------- ~~stockholders'~~Balance ~~equity/(deficit)~~at March 31, 2002 - - $1,095,303 ~~111~~$ 2,~~703~~190 $675,068 ~~772~~$ (1,~~181~~320,966) $(643,708) ====== ======= =========== ======== ========= ============= ==========

See accompanying notes to consolidated financial statements. F-7

~~Registrant~~AUTOLEND ~~--------------------------------------~~GROUP, ~~Year~~INC. ~~ended~~AND ~~Year~~SUBSIDIARIES ~~ended~~CONSOLIDATED ~~March~~STATEMENTS ~~31,~~OF ~~March~~CASH ~~31,~~FLOWS ~~2001~~FOR ~~2000~~YEARS ~~-----------------~~ENDED ~~------------------~~MARCH ~~Revenues:~~31, ~~Revenues~~2002, ~~from~~2001 ~~matured~~AND ~~insurance~~2000 ~~policies~~2002 $2001 -2000 ~~$ 37,500~~ ------------ ----- ----- ------------- ~~Gross~~CASH ~~revenues~~FLOW -FROM ~~37,500~~OPERATING ~~Cost~~ACTIVITIES: ofNet ~~matured~~loss ~~insurance~~$ ~~policies~~(67,727) -$(763,592) $ (32365,~~625~~996) ~~-----------------~~Adjustments ~~------------------~~to ~~Total~~reconcile net ~~revenues~~income/(loss) $to -net $cash ~~4,875~~flow ~~General~~from ~~and~~operating ~~administrative~~activities: ~~expenses~~Depreciation ~~(716~~expense 9,~~155)~~500 (110,~~372~~562 19,~~402)~~454 ~~(Loss)~~Gain on ~~termination~~adversary ~~agreement (117~~claim,~~500)~~ -loss ~~-----------------~~on ~~------------------~~ITB/NPD ~~Operating~~settlement ~~loss $~~ (~~833~~451,~~655~~040) $Gain ~~(1,367,527)~~as ~~-----------------~~a ~~------------------~~result ~~Other~~of ~~income/~~reorganization-debentures (~~expense~~178,454): ~~Interest~~Gain ~~income: Interest income~~ on ~~cash~~cancellation ~~and~~of ~~cash~~Florida ~~equivalents~~tax ~~4,862~~claim 75(177,~~858~~876) ~~Interest~~Gain on ~~escrow~~sale -of -installment ~~NPD,~~loan ~~Inc.,~~portfolio ~~note receivable interest income accrued - - Other income/~~(~~expense~~95,000) ~~2,129~~Loan ~~45,268~~loss ~~Rental income 6~~recovery,~~500~~ -net ~~Realized~~ (~~loss~~273,954) Loss on ~~sale~~termination ofagreement ~~securities~~with -former -officer ~~Interest~~117,500 ~~expense:~~Amortization ~~Notes~~of ~~payable~~note discount ~~amortization~~20,019 (25,931) (31,501) ~~Debentures~~ S-1 -Registration ~~NPD,~~costs ~~Inc.~~currently expensed 78,141 ~~note~~Gain ~~payable~~on -relief -of ~~Other~~liability (4027,950) Write-down ~~Cancellation~~/ of(recapture) ~~Florida tax claim~~ - ~~177,876 Recapture -~~ purchased insurance policies ~~15,649~~ (106,213) ~~Lease termination expense - -~~ (Gain) on ~~ITB~~sale ~~Settlement~~of 10assets (1,~~000~~051) -Changes ~~Write-off~~in ~~fixed~~ assets -and -liabilities: ~~-----------------~~Accounts ~~------------------~~Receivable ~~Total net other income/~~(~~expense~~10,000) $Prepaid ~~13,169~~expenses $151 ~~373~~21,~~714~~305 ~~-----------------~~(4,787) ~~------------------~~Prepaid ~~Loss~~franchise ~~before~~tax ~~reorganization~~400 ~~costs~~(4,788) ~~bankruptcy~~Installment ~~court~~contracts ~~settlements,~~/ ~~discontinued~~recoveries ~~operations~~receivable ~~and~~(car ~~extraordinary~~loans) ~~items (820~~35,~~486)~~390 ~~(993~~292,~~813)~~359 ~~Reorganization~~Other ~~costs~~receivables ~~incurred~~40,955 ~~after~~3,786 ~~Chapter~~Deposit ~~11 proceedings -~~ (~~189~~10,~~841~~000) ~~Gain~~Purchased oninsurance ~~Adversary~~policies ~~claim~~1,578 ~~and~~ (~~loss~~16,359) ~~on settlement ITB / NPD - 451~~197,~~040~~185 ~~-----------------~~Accounts ~~------------------~~payable ~~Loss before discontinued operations,~~ and ~~extraordinary~~accrued ~~items~~liabilities (~~820~~7,~~486~~703) 75,558 (~~732~~549,~~614~~192) ~~Discontinued~~Notes ~~operations:~~payable ~~Income~~- ~~from~~related ~~discontinued~~party ~~operations~~72,526 ~~net~~Other ~~56,894~~liabilities ~~188,164~~- ~~Extraordinary~~contingent ~~items:~~(31,288) ~~Gain as result of reorganization~~-~~debentures~~ - ~~178,454~~ ------------ ----- ----- ------------- ~~Net~~Cash ~~income/~~used by operating activities (~~loss~~107,544) $ (~~763~~468,~~592~~589) $ (~~365~~1,~~996~~513,036) ~~================= ================== | Predecessor~~ ------------~~-----~~ | ----------~~--------~~ ~~Twenty~~-~~six days | 11 months & ended | 5 days ended March 31, 1999 | March 5, 1999~~ -----------~~------~~ |CASH ~~------------------~~FLOW |FROM ~~Revenues~~INVESTING ACTIVITIES: |Proceeds ~~Revenues~~ from ~~matured~~officer ~~insurance policies $ - | $ 940~~27,~~228~~500 ~~-----------------~~Proceeds |from ~~------------------~~sale ~~Gross~~of ~~revenues~~installment -loan |portfolio ~~940~~95,~~228~~000 ~~Cost~~Purchase of ~~matured~~investments ~~insurance policies - |~~ (~~692~~65,~~400~~000) ~~-----------------~~Proceeds |received ~~------------------~~from ~~Total~~investments ~~net~~65,000 ~~revenues~~Proceeds $from -sale |of $fixed ~~247~~assets 1,~~828~~793 |Purchase ~~General~~of ~~and~~fixed ~~administrative~~assets ~~expenses~~- (661,~~579~~279)| (1,~~532,486~~053) ~~(Loss) on termination agreement~~ - | - ---------- ------- | --- ------------~~---~~ ~~Operating~~Cash ~~loss~~provided $ (~~66,579~~used)| $by investing activities 95,000 28,014 (1,~~284,658~~053) ------------~~-----~~ | ---------- -------- ~~Other income/(expense): | Interest income: | Interest income on cash and cash equivalents 17,810 | 88,134 Interest on escrow~~ - ~~| 84,712 NPD, Inc., note receivable interest income accrued~~ - ~~| 278,235 Other income/(expense) 37,200 | (51,766) Rental income~~ - | - ~~Realized~~CASH ~~(loss)~~FLOW onFROM ~~sale~~FINANCING ~~of securities - | (25,440) Interest expense~~ACTIVITIES: |Payment ~~Notes~~to ~~payable~~debenture ~~discount~~holders ~~amortization - | - Debentures - |~~ (~~638~~2,~~710) NPD~~894, ~~Inc., note payable - | (38,958~~000) ~~Other~~ S-1 |Registration -costs ~~Cancellation of Florida tax claim - | - Recapture - purchased insurance policies - | 536,390 Lease termination expense - |~~ (64156,~~725~~664) ~~Gain~~Proceeds onfrom ~~ITB~~stock ~~Settlement~~issuance - ~~| - Write-off fixed assets - | (4~~80,~~570)~~303 -~~----------------~~ | ------------~~------~~ ~~Total net other income/(expense) $ 55,010 | $ 163,302~~ ----------~~-------~~ | ------------~~------~~ ~~Loss~~Cash ~~before~~provided ~~reorganization costs, bankruptcy court | settlements, discontinued operations and | extraordinary items~~ (~~11,569~~used)| ~~(1,121,356)~~by ~~Reorganization~~financing ~~costs~~activities ~~incurred~~- ~~after Chapter 11 proceedings (150~~80,~~738)|~~303 (~~340~~3,~~829) Gain on Adversary claim and (loss) on settlement ITB / NPD - | (1~~050,~~368,117~~664) ------------ ----- | ----- ------------- ~~Loss~~NET ~~before~~INCREASE ~~discontinued~~(DECREASE) ~~operations,~~IN ~~and~~CASH ~~extraordinary~~FLOWS ~~items~~(12,544) (~~162~~360,~~307~~272)| (24,~~830~~564,~~302~~753) |CASH ~~Discontinued~~AT ~~operations:~~BEGINNING |OF ~~Income~~PERIOD ~~from discontinued operations~~12,912 ~~net 38~~373,~~656~~184 ~~| 336~~4,~~243 | Extraordinary items: | Gain as result of reorganization-debentures - | 5~~937,~~342,026~~937 ------------ ----- | ----- ------------- ~~Net~~CASH ~~income/(loss)~~AT END OF PERIOD $ ~~(123~~368 $ 12,~~651)|~~912 $ 2373,~~847,967~~184 ============ ===== | ===== =============

See accompanying notes to consolidated financial statements. F-8 SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: There were no non-cash investing or financing activities during the year ended March 31, 2002. During the year ended March 31, 2001, the following non-cash investing and financing activities occurred: The Company received furniture and fixtures with an estimated market value of $5,000, $27,500 in cash and recognized a $117,500 loss related to the cancellation of outstanding amounts due from a former officer as a result of the termination agreement with Nunzio P. DeSantis dated September 28, 2000. During the year ended March 31, 2000, the following non-cash investing and financing activities occurred: As the result of the settlement of the adversary claim against Nunzio DeSantis, the Company cancelled accrued payroll and expenses owed by the Company to Mr. DeSantis in the amount of $256,230 and cancelled $7,058 in accrued payroll taxes. The Company also acquired from Mr. DeSantis furniture and fixtures with an estimated market value of $37,752. Additionally, a receivable in the amount of $150,000 was recorded to account for the outstanding value of equity securities due to the Company by Mr. DeSantis; the transfer of these securities is to be completed by July 11, 2000. The net total of the above resulted in a gain on the adversary settlement of $451,040. At March 31, 2000, the Company had 78,678 shares of Common Stock issued or issuable, for which a related receivable of $78,678 was due from the transfer agent. The Company's former counsel determined that certain debenture claims reported at March 31, 1999 were unable to be substantiated by the respective claimants. As a result of the Company's relief from this obligation, the Company's accounts payable to debenture holders was reduced by $149,250, the notes payable to debenture holders was reduced by $12,567, and a corresponding extraordinary gain of $178,454 was recognized. Additionally, Common Stock and paid-in capital were reduced by $50 and $16,587 respectively. F-9 AUTOLEND GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2002, 2001, AND 2000 The accompanying consolidated financial statements include the accounts of AutoLend Group, Inc. and its wholly owned subsidiaries, Autolend Corporation, American Life Resources Group, Inc., and LB NM, Inc. (collectively, the "Company"). AutoLend Group, Inc. maintained a residual portfolio of sub-prime, consumer used-car loans (also referred to as installment contract receivables, or the "Loans") through its wholly owned subsidiary, AutoLend Corporation. On April 4, 2001 the loan portfolio was sold to an unrelated third party for $95,000. This activity had been accounted for as a discontinued operation since April 1, 2000. LB NM, Inc. and American Life Resources Group, Inc., maintain a residual portfolio of life insurance policies purchased from persons with life-threatening illnesses, a business generically referred to as viatical settlements (the "Policies"). Policies were no longer purchased after September 1994. For over three years, the Company's activities have been concentrated on resolving the recently concluded bankruptcy, which among other things, included the filing of a Registration Statement, which was made effective by the SEC on January 19, 2000. During the fiscal year ended 2001, the Company terminated its efforts to develop and obtain licensure as a distributor for a new gaming business as outlined in its Plan of Reorganization. (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Basis of Presentation The accompanying consolidated financial statements of the Company have been prepared on a going-concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business (see Note 2). (b) Basis of Accounting and Consolidation Policy The Company's consolidated financial statements have been prepared on the accrual basis of accounting. Intercompany transactions and balances have been eliminated in consolidation. F-10 (c) Revenue Recognition Purchased Insurance Policies - Revenue and cost of revenue are recognized upon the maturity of a policy (death of the insured). Unmatured Policies are carried, at estimated market value, as an investment asset. The cost of a Policy includes the initial purchase price, insurance premiums, and other direct expenditures paid by the Company for the purchase and maintenance of the Policy. Revenues are accounted for as "Gross Revenues" (i.e., before deduction of costs) and as "Net Revenues" (after deduction of costs). Net Revenues are combined with revenues from other business operations in calculating the Company's "Total Net Revenues." The ability to recognize matured policy revenue during the period in which a Policy matures depends on the Company's receiving notification of its maturity from a representative of the insured. In some instances, notification may not occur until significantly after the insured's death and after the consolidated financial statements have been finalized for the period in which the Policy matured. To the extent Policy maturities cannot be recorded in the period the Policy matures, the revenue and cost related to the maturity are recognized in the consolidated statement of operations after the maturity of the Policy. Allowance for Credit Losses - As of March 31, 2002 and 2001, management believes that the value reflected for the outstanding Policies is fully collectable, and has, accordingly, not provided for an allowance against these amounts. (d) Income Taxes The Company calculates income taxes using the asset and liability method prescribed by Financial Accounting Standards Board Statement No. 109 - Accounting for Income Taxes. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Company, based on the weight of the available evidence, provides an offsetting valuation allowance against deferred tax assets to the extent it determines that it is more likely than not that some portion of the deferred tax assets will not be realizable. (e) Fair Value of Financial Instruments The Company's financial instruments include cash, purchased Policies, accounts payable, accrued liabilities, and notes payable. The fair values of these financial instruments have been determined using available market information and interest rates as of March 31, 2002. All of the Company's financial instruments are held for non-trading purposes. F-11 (f) Earnings per Share Primary earnings per share amounts are computed based on: the weighted average number of shares issuable and outstanding for the fiscal year ended March 31, 2002, which were 1,095,303; on the weighted average number of shares issuable and outstanding March 31, 2001, which were 1,093,950; on the weighted average number of shares issuable and outstanding March 31, 2000, which were 1,042,237. There were no Options or Warrants outstanding at March 31, 2002 and 2001. Fully diluted earnings per share amounts computed based on the weighted average number of shares issuable, subscribed for, and outstanding for 2002 and 2001 are not presented because they do not differ significantly from primary earnings per share, and they would be anti-dilutive. (g) Use of Estimates The preparation of the Company's consolidated financial statements conforms with generally accepted accounting principles, and requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. (2) GOING CONCERN The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles, which contemplates continuation of the Company as a going concern. Realization of a major portion of the assets is dependent upon the Company's ability to meet its future capital and financing requirements and the success of future operations. During the fiscal year ended March 31, 2002, the Company suffered recurring losses from operations that has raised substantial doubt about its ability to continue as a going concern. As a result of the Company's economic condition and the legal opinion of the Company's former counsel, the first $0.1 million notes payable payments were not made as originally scheduled have not been made. Additionally, subsequent notes payable payments were not made as originally scheduled have not been made. The Company's immediate viability as a going concern depends upon the successful installation of a new line of business and the attainment of profitability. At March 31, 2002, the Company had cash and cash equivalents of $400 and a negative net equity of $644,000. The equity is exclusive of any remaining amounts due pursuant to the Albuquerque office lease obligation, which approximated $243,000 at March 31, 2002. The Company believes that it presently has insufficient cash necessary to meet its daily operating requirements without regard to its notes payable obligations, through the fiscal year ending March 31, 2003. The Company is not likely to be able to secure and install a new, profitable line of business before it runs out of cash. Thus, the Company will likely have to be acquired, merge, or liquidate. Without either an infusion of capital, and / or the sale or realization of assets for cash at greater than net book value, the Company may not be able to meet all its present obligations. These factors raise substantial doubt about the Company's ability to continue as a going concern. F-12 The Company is exploring various strategic options and financial opportunities including the purchase of certain operating assets of Prinova Capital Group, Inc. Prinova Capital Group Inc. is a private, closely-held financial services company, headquartered in Albuquerque, New Mexico and has no past or present ties or affiliations to any recent or former shareholder, director, or officer of the Company. (3) RELATED PARTY TRANSACTIONS Transactions with Prinova Capital Group, LLC - Prinova Capital Group LLC ("Prinova LLC") is a New Mexico limited liability company which is a private, closely-held company, headquartered in New Mexico. Prinova LLC has no past or present ties or affiliations to any shareholder, director, or officer of the Company prior to October 2000. From October 2000 to January 29, 2002, Mr. Vincent Garcia, the majority owner of Prinova LLC, was a member of the Company's Board of Directors. Effective October 12, 2000, a block of 634,028 shares of the Company's common stock, equal to approximately 58% of the total shares outstanding, changed hands in a private sale between two third parties. Prinova LLC has also acquired a majority of the seller's rights under the 5-year, uncollateralized, non-interest bearing debt obligations of the Company having a face value of $412,500. Transactions with Prinova Capital Group, Inc. - Prinova Capital Group, Inc. ("Prinova Inc.") is a New Mexico private, closely-held corporation, headquartered in New Mexico. Prinova Inc. is a separate entity form Prinova LLC, though under the same general ownership and control as Prinova LLC. Prinova Inc. has no past or present ties or affiliations to any shareholder, director, or officer of the Company prior to October 2000. From October 2000 to January 29, 2002, Mr. Vincent Garcia, the majority owner of Prinova Inc, was a member of the Company's Board of Directors. Prinova Inc. subleases office space from the Company on a month-to-month basis for $3,250 per month. In November 2001 the Company entered into a debt arrangement with Prinova Inc. for a total of $75,000 that may be drawn on an as needed basis. The term of the note includes interest at 12% and is due on or before December 31, 2003. The note is secured by the first proceeds from the potential sale of the viatical settlements and the property and equipment of the company. During the year the Company purchased several fractional assignments of interest held by Prinova Investments, Ltd., a whole-owned subsidiary of Prinova Inc., and two other unrelated companies. The company acquired assignments of interest for a total $65,000. The Company received the entire investment balance of $65,000 plus a profit of $6,500. (4) PURCHASED INSURANCE POLICIES At March 31, 2002 and 2001, the face values of the policies held were $356,044 and $366,044, respectively. The book value of these policies at March 31, 2002 and 2001 was the same at $50,459 and $52,037, respectively. F-13 (5) FIXED ASSETS Depreciation is computed by using the straight-line method over five years, the estimated useful life of the asset(s). A summary of fixed assets and accumulated depreciation recorded for the fiscal years ended March 31, 2002 and 2001 is as follows: 2002 2001 --------- --------- Furniture and fixtures $ 46,705 $ 46,705 Computers and software 9,486 9,486 --------- --------- Gross book value. 56,191 56,191 Less: accumulated depreciation (33,876) (24,376) --------- --------- Total net book value $ 22,315 $ 31,815 ========= ========= (6) INCOME TAXES A reconciliation of the Company's actual income tax (benefit) / expense to that computed using the United States federal statutory rate of 34% is as follows:

~~Registrant~~Year |Ended ~~Predecessor ---------------------------------------------------------| -----------------~~ Year ~~ended~~Ended Year ~~ended~~Ended ~~Twenty-six days | 11 months &~~ March 31, 2002 March 31, ~~ended | 5 days ended~~ 2001 ~~2000~~ March 31, ~~1999~~2000 ~~| March 5, 1999~~ --------------- -~~----------------~~ ------------------ | ---------------- |Computed ~~Loss~~"expected" ~~per~~tax ~~share~~(benefit ~~before~~expense ~~discontinued~~$ ~~operations and | extraordinary items~~ (~~$0.75~~25,890) ($~~0.70)~~ (~~$0.16~~259,621)| ($~~0.47)~~ |124,439 ~~Discontinued~~Increase ~~operations:~~(decrease0 |in ~~Income~~income ~~from~~taxes ~~discontinued~~resulting ~~operations 0.05 0.18 0.04 | 0.06 | Extraordinary items~~from: |Change ~~Gain~~in asvaluation aallowances ~~result~~3,450,928 ~~of reorganization-debentures - 0.17 - | 0.88 --------------- ----------------- ------------------ | ---------------- | Net income /~~ (~~loss~~200,593) ~~per~~Other ~~share~~ (~~$0.70~~55) (~~$0.35~~51,978) ~~($0.12)|~~Net ~~$0.47~~operating ~~===============~~loss ~~=================~~carryforward ~~================== | ================ | | | | Weighted average number of common and common | equivalent shares issued and outstanding 1~~25,~~089,345~~890 45(3,~~367 - | 6~~191,~~079,530~~252) ~~| | Weighted average number of common and | common equivalent shares issuable 4~~128,~~605~~132 ~~996,870 1,040,000 |~~ - --------------- ----------------- ---------------~~---~~ ~~| ---------------- |~~ Total ~~weighted~~income ~~average~~tax ~~number~~expense of$ ~~common~~- ~~and~~$ |- ~~common~~$ ~~equivalent~~- ~~shares issued and | outstanding, and issuable 1,093,950 1,042,237 1,040,000 | 6,079,530~~ =============== =~~================~~ ================== | ================

F-14 The tax effects of temporary differences that give rise to deferred tax liabilities at March 31, 2002 and 2001 are presented as follows:

~~Preferred~~2002 ~~Stock~~2001 ~~Common Stock Accumulated~~ ----------~~--------~~ ----------~~-------------~~ ~~Additional~~Deferred ~~Other~~tax #assets: ~~of $ # of $ Paid-in Comprehensive Shares Amount Shares Amount~~ Capital ~~Income~~loss ~~--------~~carryover ~~-------- ----------- ---------- -------------- ------------- Balance at March 31, 1998 57,800~~ $ ~~116 6~~515,~~079,530~~076 $ 12515,~~158~~076 ~~$ 20,459,946 $ (590,000) Comprehensive income:~~ Net ~~income~~operating ~~eleven months and five days ended March 5, 1999 - - - - - - Other comprehensive income; Unrealized~~ loss ~~on marketable securities net of reclassification adjustment - - - - - 590~~191,~~000~~137 ~~-------- -------- ----------- ---------- -------------- ------------- Total Comprehensive income - - - - - 590~~191,~~000~~137 ~~Retirement~~Other ~~of old common and preferred stock according to the Plan of Reorganization (57~~1,~~800)~~182 ~~(116) (6,079,530) (12,158) (20,459,946) - Application of fresh-start - - - - - - Issuable new common stock according to the Plan of Reorganization - -~~ 1,~~040,000~~182 ~~2,080 690,033~~ - -------- -~~-------~~ ----------- ~~----------~~Subtotal: ~~--------------~~Gross ~~-------------~~deferred ~~Balance~~tax atassets ~~March 5, 1999 -~~ $ ~~- 1~~707,~~040,000~~395 $ 2707,~~080~~395 ~~$ 690,033 $~~ - ~~Comprehensive income: Net loss for the twenty~~-~~six days ended March 31, 1999~~ - - - - - - --~~------~~ -------- --~~---------~~ ~~----------~~Deferred ~~--------------~~tax ------------- Balance at March 31, 1999 - $ - 1,040,000 $ 2,080 $ 690,033 $ - Issuable common stock not issued - - (25,000) (50) (16,587) - Issuance of 78,678 shares of new common stock at $1.00 per share, net of costs - - 78,678 157 - - Comprehensive incomeliabilities: ~~Net~~Other loss for fiscal year ended March 31, 2000 - - - - - - -------- -------- ----------- ---------- -------------- ------------- Balance at March 31, 2000 - $ - 1,093,678 $ 2,187 $ 673,446 $ - Issuance of 1,625 shares of new common stock at $1.00 per share - - 1,625 3 1,622 - Comprehensive incomeSubtotal: ~~Net~~Gross ~~loss~~deferred ~~for~~tax ~~fiscal~~liabilities ~~year ended March 31, 2001 - - - - - - -------- -------- ----------- ---------- -------------- ------------- Balance at March 31, 2001 -~~ $ - ~~1,095,303~~ $ ~~2,190 $ 675,068 $~~ - ~~======== ======== =========== ========== ============== ============= Accumulated Equity/(Deficit) Total~~ ----------~~----~~ ----------~~-----~~ ~~Balance at March 31, 1998 $ (23,320,187) $ (3,437,967) Comprehensive income:~~ Net ~~income~~deferred ~~eleven~~tax ~~months and five days ended March 5~~asset, ~~1999~~before ~~2,847,967~~valuation ~~2,847,967~~allowance ~~Other comprehensive income; Unrealized loss on marketable securities net of reclassification adjustment - 590~~707,~~000~~395 ~~-------------- --------------- Total Comprehensive income 2~~707,~~847,967~~395 ~~3,437,967~~Valuation ~~Retirement~~allowance of old common and preferred stock according to the Plan of Reorganization - (20,472,220) Application of fresh-start 20,472,220 20,472,220 Issuable new common stock according to the Plan of Reorganization - 692,113 -------------- --------------- Balance at March 5, 1999 $ - $ 692,113 Comprehensive income: Net loss for ~~the~~deferred ~~twenty-six~~tax ~~days~~assets ~~ended March 31, 1999~~ (~~123~~707,~~651~~395) (~~123~~707,~~651~~395) ----------~~----~~ ----------~~-----~~ ~~Balance~~Total atdeferred ~~March~~tax ~~31,~~asset ~~1999~~ $ ~~(123,651) $ 568,462 Issuable common stock not issued~~ - ~~(16,637) Issuance of 78,678 shares of new common stock at~~ $~~1.00~~ ~~per share, net of costs~~ - 157 Comprehensive income: Net loss for fiscal year ended March 31, 2000 (365,996) (365,996) -------------- --------------- Balance at March 31, 2000 $ (489,647) $ 185,986 Issuance of 1,625 shares of new common stock at $1.00 per share - 1,625 Comprehensive income: Net loss for fiscal year ended March 31, 2001 (763,592) (763,592) -------------- --------------- Balance at March 31, 2001 $ (1,253,239) $ (575,981) ==========~~====~~ ==========~~=====~~

It was determined that it is more likely than not that the deferred tax asset will not be realized, therefore, the net deferred tax asset was fully allowed for as of March 31, 2002 and 2001. F-15 (7) NET OPERATING LOSS CARRYFORWARDS As of March 31, 2002, the Company had available unused capital loss carryforwards and operating loss carryforwards that may provide future tax benefits, which expire as follows: Unused Capital Federal Unused Net State Unused Net Year of Loss Operating Loss Operating Loss Expiration Carryforwards Carryforwards Carryforwards 2003 $ - $ - $ 7,000 2004 186,000 10,000 2005 126,000 12,000 2006 321,000 2007 26,000 2012 35,000 2013 39,000 2019 58,000 2020 61,000 2021 321,000 2022 26,000 --------------------------------------------------------- Total $ 312,000 $ 540,000 $ 376,000 ========================================================= Capital loss carryforwards arise due to losses incurred on the disposal of capital assets and may be used to offset future capital gains associated with the disposal of capital assets (but may not be used to offset ordinary income). Net operating loss carryforwards are the result of prior (and current) years' operations, which had recorded a net loss in terms of income tax computations. In general, operating loss carryforwards can be used to offset future operating profits, thus negating the necessity to pay corresponding future income taxes (until the loss carryforwards become used up or expire). Any such future operating profits (which might realize these tax benefits) could be derived internally, or could be derived from acquiring additional assets, or from the purchase of another qualified business entity through the acquisition of its stock. During fiscal year ended March 31, 2001, a substantial change in ownership occurred that resulted in a reduction of net operating loss tax benefit. The federal net operating loss was reduced by $10,828,000 and the state net operating loss was reduced by $11,835,000. Other limiting factors may also apply. At a combined federal and state corporate statutory tax rate of 38.8%, the remaining losses can, in a valid situation, result in the cancellation of a requirement to pay approximately $200,000 in federal and state income taxes, either immediately in one year or spread out until their expiration dates. The requirements to utilize such loss carry forwards are strict and the possibilities for usage are limited. F-16 (8) STOCKHOLDERS' EQUITY As of March 31, 2002 and 2001, 1,095,303 shares were issued and outstanding. The Company has paid no dividends on its Common Stock. The Company presently intends to retain any earnings to finance the development of its future business. The Company has had a stock option plan under which both incentive and non-qualified stock Options may be granted to purchase up to 4,500,000 shares of Common Stock. For Options granted as incentive stock options under the Plan, the exercise price must be at least equal to the fair market value on the date of the grant. The exercise price for non-qualified Options may be less than fair market value. All presently outstanding Options expired as of March 4, 2000. (9) COMMITMENTS AND CONTINGENCIES Notes Payable. As a result of the Debenture debt forgiveness, uncollateralized, non-interest-bearing notes aggregating $609,000 (undiscounted) were received by former Debenture holders who elected Option A under the Plan. For financial statement presentation, these notes have been discounted based on an imputed interest rate of 6%, resulting in an unamortized discount of $98,267; thus, these notes have been recorded at their discounted value of $510,733. During the year ended March 31, 2002 and 2001, $20,018 and $25,931, respectively, of the discount has been amortized. These notes are payable in five equal annual payments of $121,800. The first annual payment was originally scheduled for March 5, 2000; however, on advice of the then corporate counsel, a payment was not made according to that original schedule. The scheduled payments due March 5, 2002 and March 5, 2001 were also not made. The payments that are due are, at this point, due primarily to shareholders. Management is seeking appropriate guidance with respect to this issue. Albuquerque Office Lease. In January 2001, the Company entered into a lease, which resulted in scheduled lease payments of approximately $101,700, $156,540, and $121,320 for the fiscal years ending 2002, 2003, and 2004, respectively. The lease terminates on December 31, 2003, and the lease payments are $7,000 per month for the first year and increase to $12,900 per month for the second year. Each April 1, the lease payments may be adjusted according to any changes in the Consumer Price Index (which estimated adjustments are included above). At March 31, 2002, the remaining obligation under the lease totaled approximately $114,000. The lease grants two options to extend the term of the lease for five years each. Effective February 1, 2001, the Company subleases a portion of its space on a month-to-month basis to Prinova Capital Group, LLC, the controlling shareholder of the Company. The amount paid to the Company from Prinova during the fiscal year ended March 31, 2001 was $6,500. F-17

Registrant ---------------------------------------------------------- Year ended Year ended Twenty-six days March 31, March 31, ended 2001 2000 March 31, 1999 ------------------ ------------------ ------------------ Cash flow from operating activities: Net income/(loss) $ (763,592) $ (365,996) $ (123,651) Adjustments to reconcile net income / (loss) to net cash flow from operating activities: Depreciation expense 10,562 19,454 1,603 (Gain) on adversary claim, loss on ITB / NPD settlement - (451,040) - (Gain) as a result of reorganization-debentures - (178,454) - (Gain) on cancellation of Florida tax claim - (177,876) - Loan loss recovery, net - (273,954) (24,000) Loss on termination agreement with former officer 117,500 - - Amortization of note discount 25,931 31,501 - S-1 Registration costs currently expensed - 78,141 - (Gain) on relief of liability - (27,950) - Loss on disposal of assets - - - Write-down / (recapture) - purchased insurance policies - (106,213) - Realized loss on sale of IAP, Inc. securities - - - (Gain) on sale of assets (1,051) - - Changes in assets and liabilities: Prepaid expenses 21,305 (4,787) - Prepaid franchise tax (4,788) - - Accounts receivable-matured insurance policies - - (203) Installment contracts/recoveries receivable (car loans) 35,390 292,359 29,376 Other receivables 40,955 3,786 - Deposits (10,000) - - Interest receivable on note receivable - NPD, Inc. - - - Purchased insurance policies (16,359) 197,185 - Other assets - - (38,430) Accounts payable and accrued liabilities 75,558 (549,192) (1,567,500) Accrued interest expense - - - ------------------ ------------------ ------------------ Cash provided (used) by operating activities $ (468,589) $ (1,513,036) $ (1,722,805) ------------------ ------------------ ------------------ Cash flow from investing activities: IAP, Inc. securities $ - $ - $ - Proceeds from former officer 27,500 - - Proceeds from escrow - - - Proceeds from ITB/NPD settlement - - - Proceeds from sale of fixed assets 1,793 - - Purchase of fixed assets (1,279) (1,053) - ------------------ ------------------ ------------------ Cash provided (used) by investing activities $ 28,014 $ (1,053) $ - ------------------ ------------------ ------------------ Cash flow from financing activities: Payments to Debenture holders $ - $ (2,894,000) $ - S-1 Registration costs - (156,664) - Proceeds received from stock issuance 80,303 - - ------------------ ------------------ ------------------ Cash provided (used) by financing activities $ 80,303 $ (3,050,664) $ - ------------------ ------------------ ------------------ Net increase (decrease) in cash and cash equivalents $ (360,272) $ (4,564,753) $ (1,722,805) Cash at beginning of period 373,184 4,937,937 6,660,742 ------------------ ------------------ ------------------ Cash at end of period $ 12,912 $ 373,184 $ 4,937,937 ================== ================== ==================

| Predecessor | ------------------ | 11 months & | 5 days ended | March 5, 1999 | ------------------ Cash flow from operating activities: | Net income/(loss) | $ 2,847,967 Adjustments to reconcile net income / (loss) to net cash | flow from operating activities: | Depreciation expense | 18,449 (Gain) on adversary claim, loss on ITB / NPD settlement | 1,368,117 (Gain) as a result of reorganization-debentures | (5,342,026) (Gain) on cancellation of Florida tax claim | - Loan loss recovery, net | (375,000) Loss on termination agreement with former officer | - Amortization of note discount | - S-1 Registration costs currently expensed | - (Gain) on relief of liability | - Loss on disposal of assets | 4,570 Write-down / (recapture) - purchased insurance policies | (536,390) Realized loss on sale of IAP, Inc. securities | 25,440 (Gain) on sale of assets | - Changes in assets and liabilities: | Prepaid expenses | 150,712 Prepaid franchise tax | - Accounts receivable-matured insurance policies | 739,136 Installment contracts/recoveries receivable (car loans) | 612,038 Other receivables | - Deposits | - Interest receivable on note receivable - NPD, Inc. | (216,175) Purchased insurance policies | - Other assets | 39,700 Accounts payable and accrued liabilities | 964,740 Accrued interest expense | 677,668 | ------------------ Cash provided (used) by operating activities | $ 978,946 | ------------------ | Cash flow from investing activities: | IAP, Inc. securities | $ 614,560 Proceeds from former officer | - Proceeds from escrow | 2,000,000 Proceeds from ITB/NPD settlement | 2,300,000 Proceeds from sale of fixed assets | - Purchase of fixed assets | (2,500) | ------------------ Cash provided (used) by investing activities | $ 4,912,060 | ------------------ | Cash flow from financing activities: | Payments to Debenture holders | $ - S-1 Registration costs | - Proceeds received from stock issuance | - | ------------------ Cash provided (used) by financing activities | $ - | ------------------ | Net increase (decrease) in cash and cash equivalents | $ 5,891,006 Cash at beginning of period | 769,736 | ------------------ Cash at end of period | $ 6,660,742 | ==================

Debit Credit ----- ------ a) Entry to record ITB and NPD settlement: Cash and cash equivalents $ 4,446,771 $ - Escrow deposit - 2,000,000 Interest on escrow deposit - 146,771 Note receivable-NPD, Inc. - 3,035,292 Interest receivable on note receivable-NPD, Inc. - 497,450 ITB Option - 425,000 NPD note 425,000 - Accrued interest-NPD, Inc. 64,625 - Unrealized holding loss - 200,000 Loss on settlement ITB/NPD, Inc. 1,368,117 - b) Entry to record debt forgiveness: Convertible subordinated debentures 7,225,000 - Accrued interest expense on debentures (pre-petition) 1,372,819 - Accrued interest expense on debentures (post-petition) 1,002,870 - Accounts payable-debenture holders - 3,043,250 Note to debenture holders - 523,300 Common stock (.002) par 1,040,000 shares issuable - 2,080 Additional paid-in capital - 690,033 Gain as result of reorganization-debentures - 5,342,026 c) Entry to record fresh-start accounting: Common stock (.002) par 6,079,500 shares 12,158 - Preferred stock (.002) par 57,800 shares 116 - Additional paid-in capital 20,459,946 - Accumulated deficit - 20,472,220 d) Reclassification of confirmed liabilities: Accrued liabilities subject to compromise 162,876 - Accrued liabilities not subject to compromise - 162,876

Reorganization Fresh Reorganized Preconfirmation Adjustments Start Company --------------- ------------- ------------- ------------ Assets: Cash and cash equivalents $ 2,213,971 $ 4,446,771 (a) $ - $ 6,660,742 Prepaid expenses 16,669 - - 16,669 Installment contracts receivable (Loans) 59,171 - - 59,171 ITB Option, net 425,000 (425,000) (a) - - Escrow deposit 2,000,000 (2,000,000) (a) - - Interest on escrow deposit 146,771 (146,771) (a) - - Note receivable - NPD, Inc. 3,035,292 (3,035,292) (a) - - Interest receivable on note receivable - NPD, Inc. 497,450 (497,450) (a) - - Purchased insurance policies, net 126,447 - - 126,447 Fixed assets, net 19,092 - - 19,092 Other receivables 6,311 - - 6,311 -------------- ------------- ------------- ------------ Total assets $ 8,546,174 $ (1,657,742) $ - $ 6,888,432 ============== ============= ============= ============ Liabilities: Liabilities subject to compromise: Accounts payable $ 97,079 $ - $ - $ 97,079 Accrued liabilities 162,876 (162,876) (d) - - Accrued interest expensed on debentures (pre-petition) 1,372,819 (1,372,819) (b) - - Convertible subordinated debentures at face value 7,225,000 (7,225,000) (b) - - Allowance for estimated legal fees and settlement costs 1,525,000 - - 1,525,000 -------------- ------------- ------------- ------------ Total liabilities subject to compromise 10,382,774 (8,760,695) - 1,622,079 -------------- ------------- ------------- ------------ Liabilities not subject to compromise: Accounts payable 159,685 - - 159,685 Accounts payable - debenture holders - 3,043,250 (b) - 3,043,250 Contingent liabilities - reorganization 205,304 - - 205,304 Accrued liabilities 479,825 162,876 (d) - 642,701 Accrued interest expense on debentures (post-petition) 1,002,870 (1,002,870) (b) - - Note to debenture holders - 523,300 (b) - 523,300 NPD, Inc. note 425,000 (425,000) (a) - - Accrued interest - NPD, Inc. 64,625 (64,625) (a) - - -------------- ------------- ------------- ------------ Total liabilities not subject to compromise 2,337,309 2,236,931 - 4,574,240 -------------- ------------- ------------- ------------ Total liabilities $ 12,720,083 $ (6,523,764) $ - $ 6,196,319 ============== ============= ============= ============ Stockholders' Equity/(Deficit): Preferred stock, $.002 par value. Authorized 5,000,000 shares; 57,800 issued and outstanding $ 116 $ - $ (116) $ - Common stock, $.002 par value. Authorized 40,000,000 shares; 6,079,530 issued 12,158 - (12,158) - Common stock $.002 par value. Authorized 40,000,000 shares; 1,040,000 issuable - 2,080 (b) - 2,080 Additional paid-in capital 20,459,946 690,033 (b) (20,459,946) 690,033 Unrealized holding loss (200,000) 200,000 (a) - - Accumulated deficit (24,446,129) 3,973,909 (a)(b) 20,472,220 - -------------- ------------- ------------- ------------ Total stockholders' equity/(deficit) $ (4,173,909) $ 4,866,022 $ - $ 692,113 -------------- ------------- ------------- ------------ Total liabilities and stockholders' equity/(deficit) $ 8,546,174 $ (1,657,742) $ - $ 6,888,432 ============== ============= ============= ============

| 11 months & Year ended Year ended Twenty-six days | 5 days ended March 31, March 31, ended | March 5, 2001 2000 March 31, 1999 | 1999 --------------- --------------- ------------------ | --------------- Balance - beginning of period $ - $ - $ - | $ 187,669 Provision for losses, net of recoveries (109,117) (273,954) (24,000) | (375,000) Charge offs and adjustments 109,117 273,954 24,000 | 264,748 --------------- --------------- ------------------ | --------------- Balance - end of period $ - $ - $ - | $ 77,417 =============== =============== ================== | ===============

Allowance for credit losses | 11 months & on purchased insurance policies Year ended Year ended Twenty-six days | 5 days ended -------------------------------- | March 31, March 31, ended | March 5, 2001 2000 March 31, 1999 | 1999 --------------- --------------- ------------------ |---------------- | Balance - beginning of period $ - $ - $ - | $ 1,057,072 Provision for recoveries, write-downs | and valuation allowance - - - | (544,511) --------------- --------------- ------------------ |---------------- Balance - end of period $ - $ - $ - | $ 512,561 =============== =============== ================== |================

Year ended Year ended Twenty-six days | 11 months & March 31, March 31, ended | 5 days ended 2001 2000 March 31, 1999 | March 5, 1999 ------------- ---------------- --------------- |--------------- Unrealized loss on securities: | Loss arising during year $ - $ - $ - | $ - Less reclassification adjustment for | losses included in net income - - - | 590,000 ------------- ---------------- --------------- | ------------ Net loss recognized in other | comprehensive income - - - | 590,000 ------------- ---------------- --------------- | ------------ Other comprehensive income $ - $ - $ - | $ 590,000 ============= ================ =============== | ============

2001 2000 -------------- -------------- Furniture and fixtures $ 46,705 $ 41,406 Computers and software 9,486 16,491 -------------- -------------- Gross book value 56,191 57,897 Less: accumulated depreciation (24,376) (21,057) -------------- -------------- Total net book value $ 31,815 $ 36,840 ============== ==============

Year ended Year ended Twenty-six days | 11 months and March 31, March 31, ended | 5 days ended 2001 2000 March 31, 1999 | March 5, 1999 --------------- --------------- --------------- | -------------- Computed "expected" tax (benefit) expense $ (259,621) $ 124,439 $ (42,042) | $ 1,023,687 Increase (decrease) in income taxes resulting | from: | Non-deductible (includable) debt to stock | conversion - - - | (1,816,289) Change in valulation allowances 3,450,928 (200,593) (15,500) | (207,119) Other (55) (51,978) 4,035 | 53,615 Net operating loss carryforward (3,191,252) 128,132 53,507 | 946,106 --------------- --------------- --------------- | -------------- Total income tax expense $ - $ - $ - | $ - =============== =============== =============== | ==============

2001 2000 ---------------- ----------------- Deferred tax assets: Capital loss carryover $ 515,076 $ 395,211 Net operating loss 191,137 3,761,911 Other 1,182 1,200 ---------------- ----------------- Subtotal: gross deferred tax assets $ 707,395 $ 4,158,322 ---------------- ----------------- Deferred tax liabilities: Other - - ---------------- ----------------- Subtotal: gross deferred tax liabilities $ - $ - ---------------- ----------------- Net deferred tax asset, before valuation allowance $ 707,395 $ 4,158,322 Valuation allowance for deferred tax assets (707,395) (4,158,322) ---------------- ----------------- Total net deferred tax asset $ - $ - ================ =================

Unused Capital Federal Unused Net State Unused Net Year of Loss Operating Loss Operating Loss Expiration Carryforwards Carryforwards Carryforwards ---------------------- --------------------- ------------------------ -------------------- 2002 $ 1,023,000 $ - $ 3,000 2003 - - 7,000 2004 186,000 - 10,000 2005 126,000 - 12,000 2006 - - 321,000 2012 - 35,000 - 2013 - 39,000 - 2019 - 58,000 - 2020 - 61,000 - 2021 - 321,000 - ----------------- -------------------- -------------------- Total $ 1,335,000 $ 514,000 $ 353,000 ================= ==================== ====================

2001 2000 1999 ----------------------------- ------------------------------- -------------------------------- Weighted- Weighted- Weighted- # of Average # of Average # of Average Shares Exercise Price Shares Exercise Price Shares Exercise Price -------------- -------------- --------------- --------------- --------------- ---------------- Outstanding at beginning of year - - - - 3,660,000 $ 0.74 Granted - - - - - - Plan of reorganization (1) - - - - (3,660,000) (0.74) Forfeited - - - - - - ------------ ------------- --------------- --------------- ---------------- -------------- Outstanding at end of year - - - - - - Options exercisable at year end - - - - - -

Balance at Charged to Amount on Beginning Costs and Fresh-start Balance of Period Expenses Adjustment Sheet --------------- -------------- -------------- --------------- Description: Year ended March 31, 2001: -------------------------- Intangible assets - accumulated amortization $ - $ - $ - $ - Goodwill - accumulated amortization - - - - Debt issuance costs - accumulated amortization - - - - Year ended March 31, 2000: -------------------------- Intangible assets - accumulated amortization $ - $ - $ - $ - Goodwill - accumulated amortization - - - - Debt issuance costs - accumulated amortization - - - - Year ended March 31, 1999: -------------------------- Intangible assets - accumulated amortization $ 600,000 $ - $ (600,000) $ - Goodwill - accumulated amortization 2,708,278 - (2,708,278) - Debt issuance costs - accumulated amortization 3,575,944 - (3,575,944) -

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