10-Q/A 1 f10q-amd2.txt AMENDMENT NO. 2 TO 12-31-00 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q/A Amendment No. 2 (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2000 TRANSITION REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _________TO____________ Commission File Number: 333-78659 AUTOTRADECENTER.COM INC. (Exact name of registrant as specified in its charter) Arizona 86-0879572 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 15170 NORTH HAYDEN ROAD, SUITE 5, SCOTTSDALE, ARIZONA 85260 (Address of principal executive offices) (Zip Code) (480) 556-6701 (Registrant's telephone number, including area code) 8135 EAST BUTHERUS, SUITE 3, SCOTTSDALE, ARIZONA 85260 (Former name, former address and former fiscal year, if changed since last report) 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. X Yes No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. 34,514,001 SHARES OF COMMON STOCK, NO PAR VALUE, AS OF DECEMBER 31, 2000 AUTOTRADECENTER.COM INC. AND SUBSIDIARIES INDEX PART I - FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Balance Sheets Condensed Consolidated Statements of Operations Condensed Consolidated Statements of Cash Flow Notes to Condensed Consolidated Financial Statements Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Item 3. Quantitative and Qualitative Disclosures About Market Risk PART II - OTHER INFORMATION Item 1. Legal Proceedings Item 2. Changes in Securities and Use of Proceeds Item 3. Defaults Upon Senior Securities Item 4. Submission of Matters to a Vote of Security Holders Item 5. Other Information Item 6. Exhibits and Reports on Form 8-K SIGNATURES 2. PART 1 - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS AUTOTRADECENTER.COM INC. CONDENSED CONSOLIDATED BALANCE SHEETS

See notes to condensed consolidated financial statements. 3. AUTOTRADECENTER.COM INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS UNAUDITED

See notes to condensed consolidated financial statements. 4. AUTOTRADECENTER.COM INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)

See notes to condensed consolidated financial statements. 5. AUTOTRADECENTER.COM INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2000 (UNAUDITED) NOTE A - PRESENTATION OF FINANCIAL STATEMENTS The condensed consolidated financial statements of AutoTradeCenter.com Inc. ("AUTC") or the "Company," which refers to AutoTradeCenter.com Inc. and its subsidiaries have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. These statements reflect all adjustments (including all normal recurring accruals) which, in the opinion of management, are necessary to present fairly the financial position, results of operations, and cash flows of AUTC as of December 31, 2000 and for all of the periods presented. These statements are condensed and do not include all of the information required by generally accepted accounting principles in a full set of financial statements. These statements should be read in conjunction with AUTC's financial statements and notes thereto included in AUTC's Annual Report on Form 10-K for its fiscal year ended March 31, 2000. The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries: Auto Network Group of Arizona, Inc. ("ANET-AZ"), Pinnacle Dealer Services, Inc. ("PDS"), National Dealer Services ("NDSCo"), AutoTradeCenter Remarketing Services Inc. formerly Walden Remarketing Services, Inc. ("Walden Remarketing"), and BusinessTradeCenter.com Inc. ("BTC"). All material intercompany accounts and transactions have been eliminated. As more fully described in these notes the Company sold its interest in three of its land based operations and transferred its operations in Scottsdale, Arizona, to certain independent wholesale automobile brokers in January 2001. NOTE B - EARNINGS (LOSS) PER SHARE Basic earnings (loss) per share have been computed based on the weighted average number of common shares outstanding. The computations exclude 430,465 shares held in escrow pending earn out provisions. Diluted earnings per share reflects the increase in average common shares outstanding that would result from the assumed exercise of outstanding stock options and the assumed conversion of debt and preferred stock. Since the Company operated at a loss for all periods stated the computation of diluted earnings per share would be anti-dilutive. Accordingly basic and diluted earnings (loss) per share are equivalent. NOTE C- INFORMATION REGARDING RECLASSIFICATION OF GOODWILL When the Company acquired NDSCo on March 31, 2000 (as more fully described in Note J. of its Form 10-K for the year ended March 31, 2000), $2,039,123 of the purchase price was allocated to goodwill. The goodwill was assigned a useful life of 10 years. Upon further consideration the Company reclassified this allocation from goodwill to cost of software to more succinctly categorize the nature of the assets purchased. During the quarter ended December 31, 2000, as a result of the changes in its business plan and the disposition of its dealer-to-dealer land based business, the Company further determined that it could no longer estimate the useful life, if any, of this software. Accordingly, the carrying cost of this asset was depreciated in full during the quarter. When the Company acquired the remaining 45% minority interest of BTC on March 23, 2000 (as more fully described in Note J. of its Form 10-K for the year ended March 31, 2000), $9,374,550 of the purchase price was allocated to goodwill with an estimated life of 10 years. Upon further consideration, the Company reclassified this allocation from goodwill to cost of software to more succinctly categorize the nature of the assets purchased. Effective for the quarter ended December 31, 2000, the Company changed its estimate of the useful life of this asset from 10 years to 36 months. The restated consolidated balance sheet at March 31, 2000 among other things reflects both of these reclassifications. 6. AUTOTRADECENTER.COM INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2000 (UNAUDITED) NOTE D - INFORMATION REGARDING DISCONTINUED OPERATIONS: On November 30, 2000, the Company formalized its decision to exit its land-based operations at the end of fiscal year 2001. The disposition of the land-based operations represents the disposal of a business segment under APB Opinion No. 30. Accordingly, results of these operations have been classified as discontinued and prior periods have been restated, including the reallocation of fixed overhead charges to both business segments. As of December 29, 2000, the Company sold its land-based operations in Albuquerque, New Mexico; San Antonio, Texas; and Bend, Oregon to Automotive Disposition Management Services, Inc., an affiliated Arizona corporation, in exchange for a 16% interest in Automotive Disposition. The Company sold substantially all of its land-based operations in Scottsdale Arizona, to its independent contract brokers effective January 31, 2001, thereby discontinuing all land-based operations. The Company has recorded an actual loss of $749,366 on the sale of its land-based operations to Automotive Disposition Management Services, Inc., recorded additional losses of $127,388 related to the earlier closing of its Pennsylvania operation and accrued an estimated loss of $775,300 on disposal related to the Scottsdale operation in these December 31, 2000 interim financial statements. The following schedule of net assets from discontinued operations and financial statements show the effect of discontinued operations to the condensed consolidated balance sheets at December 31, 2000 and March 31, 2000 and to the condensed consolidated statements of operations and cash flow for the three and nine months ended December 31, 2000 and 1999. 1. RESULTS OF OPERATIONS OF DISCONTINUED LAND-BASED SEGMENT: AUTOTRADECENTER.COM INC. AND SUBSIDIARIES

7. AUTOTRADECENTER.COM INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2000 (UNAUDITED) 2. COMPUTATION OF LOSS RESULTING FROM DISCONTINUING LAND-BASED SEGMENT

3. NET ASSETS OF DISCONTINUED OPERATIONS

8. AUTOTRADECENTER.COM INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2000 (UNAUDITED) NOTE E - INTANGIBLE ASSETS

NOTE F - STOCKHOLDERS' EQUITY During the first nine months of our fiscal year ended March 31, 2001, holders of $836,400 and $1,479,000 of our Series C and Series D convertible preferred shares (8,364 and 14,790 shares respectively) elected to convert such shares to 2,363,563 common shares based on the formulae contained in the terms of the preferred shares. These shares will become registered and available for resale (subject to certain lock-up provisions) upon the effectiveness of a registration statement on Form S-1 filed with the Securities and Exchange Commission. We also issued 218,875 common shares for $161,667 upon the exercise of stock options during the nine months ended December 31, 2000. 9. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion contains trend information and other forward-looking statements that involve a number of risks and uncertainties. Our actual future results could differ materially from our historical results of operations and those discussed in the forward-looking statements. All period references are for the respective three and nine-month periods ending December 31, 1999 and 2000. GENERAL The presentation includes a discussion of us with our wholly owned subsidiaries, National Dealer Services ("NDSCo"), AutoTradeCenter Remarketing Services Inc. formerly Walden Remarketing Services, Inc. ("Walden Remarketing"), and BusinessTradeCenter.com Inc. ("BTC"), as well as subsidiaries in which we formerly carried out our land-based operations. These subsidiaries are; Auto Network Group of Arizona, Inc. ("ANET-AZ"), Auto Network Group of New Mexico, Inc. ("ANET-NM"), Auto Network Group Northwest, Inc. ("ANET-NW"), Auto Network Group of Pennsylvania, Inc. ("ANET-PA") Auto Group of San Antonio Ltd. ("ANET-SA"). Auto Network Group of Denver Inc., ("ANET-D"), and Pinnacle Dealer Services, ("PDS") Inc. As of December 29, 2000, we sold our interest in our land-based operations in Albuquerque, New Mexico; San Antonio, Texas; and Bend, Oregon to Automotive Disposition Management Services, Inc., an affiliated Arizona corporation, in exchange for a 16% interest in Automotive Disposition. Automotive Disposition is a private company owned by Jules Gollins, the former manager of the New Mexico land-based operation, and by Mark Moldenhauer, one of our founders, principal shareholders, and former officer and director. We disposed of our land-based operations in Scottsdale, Arizona, in January 2001, thereby discontinuing all land-based operations and allowing us to focus on providing automotive remarketing services via the Internet. As a result of the disposition of our land-based operations, as further described in the following paragraphs, the trend information should be carefully read and evaluated. See "Anticipated Trends and Plan of Operations" below. OVERVIEW We began operations on September 22, 1997 and completed our first fiscal year on March 31, 1998. On June 1, 1998, we opened the office and warehouse facility in Albuquerque, New Mexico. We acquired Pinnacle Dealer Services, Inc. in August 1998 to provide financing for the purchase of vehicles. On July 20, 1999, we opened our office and warehouse facility in Bend, Oregon. On April 1, 2000, we began operations in the Philadelphia, Pennsylvania area, with the incorporation of Auto Network Group of Eastern Pa., Inc. At the same time, we began operations in San Antonio, Texas, with the establishment of Auto Group of San Antonio Ltd., a Texas limited partnership. In each of these transactions, we entered into a management consulting agreement with the individual or entity responsible for managing each respective operation. Under these agreements, certain of our common shares were issued to such managers, subject to forfeiture based on both future earnings levels and continuity of management. In addition, we made stock options available to these managers, which could be earned based on future performance. On August 2, 2000, we formed a new wholly owned subsidiary, Auto Network Group of Denver, Inc., and leased a facility in Denver, Colorado. In January 1999, we announced the development of our Internet site www.autotradecenter.com. No revenues have been generated from the operations of this site, which is now used for informational purposes only. However, effective February 1, 2000, a new web site developed for American Honda Finance Corporation, powered by our technology, began generating revenue. Our existing remarketing agreement with American Honda Finance Corporation gives us an exclusive contract to remarket, over the Internet through January 31, 2004, all of the vehicles returned to Honda and Acura after termination of a lease. These are referred to in the industry as "off-lease" vehicles. The Honda web site, www.hfcarsales.com, became operational in all Honda and Acura dealerships 10. by June 15, 2000 upon completion of a phase-in period beginning April 2000. We developed a pilot program for Suzuki, similar to the program developed for Honda, utilizing our Internet technology systems and procedures to remarket their program vehicles to dealers. The Suzuki pilot program began in September 2000 (www.suzukiproline.com) and we signed an agreement with Suzuki in January 2001 to remarket their program cars over the Internet for a one-year period. Due to the discontinuance of our land-based operations, we now focus all of our efforts on remarketing vehicles over the Internet. RESULTS OF OPERATIONS OVERVIEW Net loss from continuing (Internet) operations was $4,968,242 or $0.15 per share for the three months ended December 31, 2000 as compared to a net loss from continuing operations of $220,940 or $0.01 per share for the three months ended December 31, 1999. Net loss from continuing operations was $7,059,097 or $0.22 per share for the nine months ended December 31, 2000, as compared to a net loss from continuing operations of $522,448 or $0.03 per share for the nine months ended December 31, 1999. For the three and nine months ended December 31, 2000 we reported net losses of $6,711,441 or $0.20 per share and $9,034,989 or $0.28 per share, respectively, as compared to net losses of $306,194 or $0.02 per share and $509,935 or $0.04 per share for the comparable periods in 1999. THREE MONTHS ENDED DECEMBER 31, 2000 COMPARED TO THREE MONTHS ENDED DECEMBER 31, 1999 FOR CONTINUING OPERATIONS Net sales from our continuing operations were $200,868 for the three months ended December 31, 2000 compared to no Internet revenue for the same period of the prior year. Substantially all of this revenue was earned from our contract with American Honda Finance Corporation. We remarketed 3,819 vehicles during the three months ended December 31, 2000. Cost of revenues was $230,852 for the three months ending December 31, 2000 resulting in a negative gross profit of $29,984. Sales and marketing expenses, including travel, promotional, advertising and trade show expense was $376,763 for the three months ending December 31, 2000 compared to $45,093 for the same period of the prior year. The significant increase was attributable to the major expansion of our sales and marketing efforts as we continued to make the vehicle remarketing community aware of our new product. Our product and development costs were $125,402 compared to zero for the three months ending December 31, 2000 and 1999, respectively. The increased expenditures were attributable to the design of our new technology. General and administrative expenses increased $363,175 from $106,395 to $469,570 reflecting the increased cost we experienced in adding personnel, additional office lease expense, telephone, and other administrative expenses attributable to the development of our Internet based remarketing program. During the quarter ended December 31, 2000, depreciation and amortization charges included $1,869,531 respecting NDSCo and $1,622,867 respecting BTC. Amortization of goodwill from Walden was $49,635 for the quarter. For the three-month prior period amortization of goodwill from Walden was again $49,635 with depreciation of office equipment, furniture and fixtures adding an additional $7,919 for a total of $57,554. Interest expense of $11,898 was the same for both three-month periods. 11. NINE MONTHS ENDED DECEMBER 31, 2000 COMPARED TO NINE MONTHS ENDED DECEMBER 31, 1999 FOR CONTINUING OPERATIONS Revenues for the nine months ended December 31, 2000 from continuing operations was $623,668. During this period we marketed 15,722 vehicles for American Honda Finance. For the nine months ended December 31, 1999 revenue was $291,587. All of the revenue for this nine month period was earned during the first part of the year by AutoTradeCenter Remarketing Services Inc. from contracts entered into by Walden Remarketing Services prior to our acquisition of the company. These contracts were with American Honda Financial Services and others. The revenue derived from these contracts resulted from services provided by us to encourage dealers to attend and purchase off-lease and other vehicles at auctions. None of this revenue resulted from Internet activities, and it ceased upon expiration of the contracts. Cost of revenues was $542,595 for the nine months ending December 31, 2000 resulting in a gross profit of $81,073. There was no comparable cost of revenue for the prior period ended December 31, 1999 as the remarketing services performed by AutoTradeCenter Remarketing Services Inc. were significantly different and therefore no costs were charged to this category. Sales and marketing expenses increased to $817,914 from $260,464 for the respective nine months ended December 31, 2000 and 1999. Significant travel, promotional, advertising and trade show expense contributed to this increase. Product development cost were $335,550 for the December 31, 2000 nine month period and nil for the prior comparable period once again reflecting the change of the business model to focus on the Internet and technology. General and administrative expenses were $1,079,466 for the nine months ended December 31, 2000 and $334,893 for the nine months ended December 31, 1999. Included in the general and administrative costs are all of our corporate overhead costs, including but not limited to, executive salaries, executive travel, and professional fees. Professional fees include, among other charges, legal fees and audit fees, and other professional services related to public relations and capital accumulation. The general and administrative expenses also include rent and other normal office supplies, telephone and other operational expenses. Depreciation primarily is from capitalized software costs resulting from the acquisitions of the minority interest in BTC and the acquisition of NDSCo, as well as from computers and equipment required to run our Internet sites and office furniture and equipment. Depreciation and amortization related to continuing operations increased to $4,859,648 for the nine months ended December 31, 2000. Included in depreciation and amortization for the nine months ended December 31, 2000 are (1) $2,022,465 to fully depreciate all of the undepreciated costs allocated to software at the time of our acquisition of NDSCo, and (2) $2,343,638 for depreciation on the value of software acquired when we purchased the minority interest in BTC. Amortization was $148,904 and primarily is due to goodwill resulting from our acquisitions during our fiscal year ended March 31, 2000 of Walden Remarketing. For the nine months ended December 31, 1999 amortization related to the Walden transaction was again $148,904 plus depreciation of $22,129 was recorded for furniture, fixtures and equipment for a total of $171,033. DISCONTINUED OPERATIONS Our financial statements since our inception in 1997 reflect Internet operations as continuing operations and land-based operations as discontinued operations, even though we did not generate any revenue from our Internet remarketing operations until April 2000. On November 30, 2000, our management and Board of Directors decided to discontinue all of our land-based operations. We believe that our best opportunity to maximize profitability and shareholder value is to concentrate all of our efforts on remarketing used vehicles utilizing the Internet as the backbone of our operations. We sold our land-based subsidiaries in New Mexico, Oregon, and San Antonio on December 29, 2000, and closed our operations in Pennsylvania and Colorado by the end of the year. We 12. began to down size our Scottsdale Arizona operations in December 2000, and transferred these operations to certain of the independent-contractor brokers who formerly purchased and sold vehicles for us primarily in Scottsdale Arizona, in January 2001. The following statement of operations for the discontinued land-based operations reflects the details of these operations for the periods herein presented:

The following table reflects the loss incurred from discontinuing our land-based operations:

FINANCIAL CONDITION As a result of our decision to discontinue our land-based operations, our total assets decreased to $12,266,256 at December 31, 2000, from $20,102,747 at March 31, 2000. This decrease primarily results from the sale of our subsidiaries and the reporting of our remaining land-based operations as discontinued operations. 13. The following table reflects the detail of our net assets from discontinued operations:

Total liabilities at December 31, 2000 increased to $1,959,829 from $1,647,349 at March 31, 2000, primarily due to the increased amount due to Wells Fargo Business Credit. At February 16, 2001 we have repaid Wells Fargo Business Credit in full. We also owed $528,807 to a related party at December 31, 2000. This debt increased to $738,200 at April 16, 2001 and we have agreed to new notes for this amount, which are due April 1, 2002. During the first nine months of our fiscal year ended March 31, 2001, holders of $836,400 and $1,479,000 of our series C and series D convertible preferred shares (8,364 and 14,790 shares respectively) elected to convert such shares to 2,363,563 common shares based on the formulae contained in the terms of the preferred shares. These shares will become registered and available for resale (subject to certain lock-up provisions) upon the effectiveness of a registration statement. LIQUIDITY AND CAPITAL RESOURCES Working capital (current assets minus current liabilities) decreased during the nine months ended December 31, 2000 by $4,382,961. At December 31, 2000 we had a working capital deficiency of $12,327, as compared to positive working capital of $4,370,634 at March 31, 2000. The decrease substantially is due to the decrease in cash of $4,216,126, offset by the increases in receivables and in net assets of discontinued operations. Cash of $4,757,768 was used in our operating activities for the nine months ended December 31, 2000, as compared to using $190,205 for the nine months ended December 31, 1999. The major components contributing to the cash used in operations for the nine months ended December 31, 2000 were our net losses for the period from continuing operations of $7,059,097, discontinued operations of $323,839, and discontinuance of land-based operations of $1,652,053. Cash was primarily provided by the non-cash charge for depreciation and amortization of $4,859,648. In contrast, for the nine months ended December 31, 1999, our loss from continuing and discontinued operations of $509,935 contributed to our cash used in operations. In addition, $205,249 was used to increase our prepaid expenses and other current assets, with cash primarily provided by the non-cash charge for depreciation and amortization of $171,033 and the decrease in the carrying value of net assets of discontinued operations of $330,771. 14. Our investing activities for the nine months ended December 31, 2000 and 1999 used cash of $511,499 and $47,046, respectively, and consisted primarily of computer hardware and software required for business expansion and our e-commerce and Internet operations. Financing activities provided cash of $1,053,141 for the first nine months of our fiscal year ended March 31, 2000, as compared to $495,000 during the previous period. We increased cash from the net proceeds of borrowings $573,891 and the sale of common shares primarily related to the exercise of previously issued stock options. Proceeds from such issuances were $479,250 during the current period and $514,475 last year. On March 26, 1999, we obtained a $3,000,000 revolving line of credit with Wells Fargo Business Credit, Inc. that provided sufficient short-term liquidity and capital to implement our business plan, including providing for the expansion into other markets. The note that evidenced this obligation to Wells Fargo Business Credit bore interest at 1.5% over prime and was extended from its original due date of March 31, 2000 to January 31, 2001. The amount outstanding on our revolving line of credit at December 31, 2000 was $1,386,309. At March 31, 2000 our bank line of credit was $1,112,418. On February 16, 2001 we repaid Wells Fargo Business Credit in full. We also owed $528,807 to a related party at December 31, 2000, which bears interest at 12% per annum. This debt subsequently increased to $738,200 at April 16, 2001 and is now due April 1, 2002. At March 31, 2000, total long and short-term debt was $1,647,349. ANTICIPATED TRENDS For the remainder of the current fiscal year, we intend to continue the development of our Internet sites. We believe that focusing on providing automotive remarketing services via the Internet will improve our long-term prospects for profitability. While the land-based operations generated a substantial amount of revenue, the gross profit margins were low and insufficient to cover operating expenses relating to the land-based operations. These operating expenses consisted primarily of selling commissions, interest expenses (for financing inventory and accounts receivable), bad debt expense, and office overhead. In addition, the land-based operations were capital-intensive. In contrast, the Internet operations generate a lower amount of revenue, but result in higher profit margins. Our agreement with American Honda Finance Corporation will generate revenues for the next three years. We anticipate a greater number of car sales on our Honda website resulting in increased revenues in the months to come as a larger number of vehicles are being returned upon termination of leases and will be available to all Honda and Acura dealers in the United States. In addition our amended contract with American Honda Finance Corporation will provide additional revenue for each car sold on our website. With a definitive agreement having been signed with American Suzuki Motor Corporation in January 2001, we expect to generate added revenue from the Suzuki site. We anticipate entering into similar contracts with other manufacturers and financial institutions to assist them in remarketing their inventories of used vehicles; however, no such other contracts exist at this time. Our programs with Autobytel and other Internet new car retailers are currently under development and accordingly, we cannot estimate a start date for earning revenue from this or similar programs. Initially, revenues from Internet operations will not cover operating expenses, and we will operate at a cash flow deficit. We plan to finance this deficit from additional capital in the form of equity or debt or both raised in a private placement. In the event this capital is not raised, our Internet operations will be severely limited and meeting our existing overhead will be difficult. This limitation may adversely affect shareholder value. To address the above-mentioned needs, we have raised, through April 20, 2001, approximately $1,700,000 from a private placement of common stock and warrants. This offering is still in process. In addition we are in discussion with investment bankers regarding an additional capital raise of up to $3,000,000 through the issuance of common shares. We are also attempting to raise up to an additional $10,000,000 in new capital. We estimate that the following funding will be needed: 15. o Approximately $5 million will be required to fund our e-commerce operations including our negative cash flow from operations. These funds will be used both to augment our current operations and to expand into new markets. o $2 million will be needed for marketing programs o $3 million for Internet development including capital expenditures. We cannot assure you that we will be able to raise this additional capital OTHER FORWARD-LOOKING STATEMENTS Certain statements in this Quarterly Report on Form 10-Q, the Company's Annual Report on Form 10-K for its fiscal year ended March 31, 2000, the Company's Annual Report to Shareholders, as well as statements made by the Company in periodic press releases, oral statements made by the Company's officials to analysts and shareholders in the course of presentations about the Company, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward looking statements. Such factors include, among other things, (1) general economic and business conditions; (2) interest rate changes; (3) the relative stability of the debt and equity markets; (4) competition; (5) demographic changes; (6) government regulations particularly those related to Internet commerce; (7) required accounting changes; (8) equipment failures, power outages, or other events that may interrupt Internet communications; (9) disputes or claims regarding the Company's proprietary rights to its software and intellectual property; and (10) other factors over which the Company has little or no control. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Not Applicable. 16. PART II - - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The Company and certain of its subsidiaries have been named as defendants in various claims, complaints and other legal actions arising in the normal course of business. In the opinion of management, the outcome of these matters will not have a material adverse affect upon the financial condition, results of operations or cash flows of the Company. See "Forward-Looking Statements" above. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS During the quarter ended December 31, 2000, 30,000 shares of common stock were issued as compensation to deJong & Associates for services values at $67,500. No underwriters were used in the above transactions. The Company relied upon the exemption from registration contained in Section 4(2) as to all of the transactions. All of the purchasers were deemed to be sophisticated with respect to the investment in the securities due to their financial condition and involvement in the registrant's business. Restrictive legends were placed on the stock certificates evidencing the shares. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. ITEM 5. OTHER INFORMATION None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) The following exhibits are filed with this report:

b) Reports on Form 8-K: NONE. 18. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. AUTOTRADECENTER.COM INC. Date: December 5, 2001 By: /s/ ROGER L. BUTTERWICK ------------------------------------- Roger L. Butterwick, President (Principal Financial and Accounting Officer) 19.

AUTOTRADECENTER COM INC 10-Q/A