Edgar Filing: AUTOINFO INC

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
--------------------------------

(Mark One)

|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2004

|_| 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 001-11497

AUTOINFO, INC.
(Exact name of registrant as specified in its charter)

DELAWARE 13-2867481
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

6413 Congress Avenue - Suite 260
Boca Raton, FL 33487
(Address of principal executive offices)

Registrant's telephone number, including area code: (561) 988-9456

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:
Common Stock,
Par value $.001

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-B is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. |X|

The Registrant's revenues for the year ended December 31, 2004 were $46,492,000.

As of March 7, 2005, 31,367,000 shares of the Registrant's common stock were
outstanding. The aggregate market value of the common stock of the Registrant
held by non-affiliates of the Registrant as of March 7, 2005 (based upon the
closing price on the OTC Bulletin Board of the National Association of
Securities Dealers of $0.66 on that date) was approximately $7,909,000.

Indicate by check mark whether the Registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes |X| No |_|

DOCUMENTS INCORPORATED BY REFERENCE

NONE

AUTOINFO, INC.

Form 10-KSB Annual Report
TABLE OF CONTENTS
Page
----
PART I.........................................................................3
Item 1. Business..........................................................3
Risk Factors......................................................7
Item 2. Properties.......................................................12
Item 3. Legal Proceedings................................................12
Item 4. Submission of Matters to a Vote of Security Holders..............12
PART II.......................................................................13
Item 5. Market for our Common Equity and Related Stockholder Matters.....13
Selected Consolidated Financial Data.............................14
Item 6. Management's Discussion and Analysis of Financial Condition
and Results of Operations........................................15
Item 7. Financial Statements and Supplementary Data......................20
Item 8. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosures........................................20
Item 8A. Controls and Procedures..........................................20
Item 8B. Other Information................................................20

PART III......................................................................21
Item 9. Directors and Executive Officers.................................21
Item 10. Executive Compensation...........................................23
Item 11. Security Ownership of Certain Beneficial Owners and Management...24
Item 12. Certain Relationships and Related Transactions...................25
Item 13. Exhibits.........................................................25
Item 14. Principal Accounting Fees and Services...........................27

FORWARD LOOKING STATEMENT INFORMATION

Certain statements made in this Annual Report on Form 10-KSB are
"forward-looking statements"(within the meaning of the Private Securities
Litigation Reform Act of 1995) regarding the plans and objectives of management
for future operations. Such statements involve known and unknown risks,
uncertainties and other factors that may cause our actual results, performance
or achievements of the Company to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. The forward-looking statements included herein are
based on current expectations that involve numerous risks and uncertainties. Our
plans and objectives are based, in part, on assumptions involving judgments with
respect to, among other things, future economic, competitive and market
conditions and future business decisions, all of which are difficult or
impossible to predict accurately and many of which are beyond our control.
Although we believe that our assumptions underlying the forward-looking
statements are reasonable, any of the assumptions could prove inaccurate and,
therefore, there can be no assurance that the forward-looking statements
included in this report will prove to be accurate. In light of the significant
uncertainties inherent in the forward-looking statements included herein
particularly in view of the current state of our operations, the inclusion of
such information should not be regarded as a statement by us or any other person
that our objectives and plans will be achieved. Factors that could cause actual
results to differ materially from those expressed or implied by such
forward-looking statements include, but are not limited to, the factors set
forth herein under the headings "Business," "Risk Factors" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

PART I

BUSINESS

Overview

Through our wholly-owned subsidiary, Sunteck Transport Co., Inc.
(Sunteck), we are a non-asset based transportation services company, providing
transportation capacity and related transportation services to shippers
throughout the United States, and to a lesser extent, Canada. Our non-asset
based services include ground transportation coast to coast, local pick up and
delivery, air freight and ocean freight. We have strategic alliances with less
than truckload, truckload, air, rail and ocean common carriers to service our
customers' needs. Our business services emphasize safety, information
coordination and customer service and are delivered through a network of
independent commissioned sales agents and third party capacity providers
coordinated by us. The independent commissioned sales agents typically enter
into contractual arrangements with Sunteck and are responsible for locating
freight and coordinating the transportation of the freight with customers and
capacity providers. The third party capacity providers consist of independent
contractors who provide truck capacity to us, including owner-operators who
operate under our contract carrier license, air cargo carriers and railroads.
Through this network of agents and capacity providers, Sunteck operates a
transportation services business with revenue of approximately $46.5 million
during our most recently completed fiscal year.

Our brokerage services are provided though a network of independent sales
agents. As of February 22, 2005, we had 12 regional operating centers providing
brokerage services and representatives in 21 states and Canada. Our services
include arranging for the transport of customers' freight from the shippers
location to the designated destination. We do not own any trucking equipment and
rely on independent carriers for the movement of customers' freight. We seek to
establish long-term relationships with our customers and provide a variety of
logistics services and solutions to eliminate inefficiencies in our customers'
supply chain management.

Our contract carrier services, which commenced in 2003, are also provided
through a network of independent sales agents. We do no own any trucking
equipment and have a network of independent owner-operators who lease onto our
operating authority and transport freight under the Sunteck name. As of February
22, 2005, we had seven regional operating centers providing contract carrier
services, representatives in nine states and 83 independent owner-operators.

Strategy

Our strategy is to continue to expand through affiliations with
independent sales agents and through internal expansion. We intend to seek, on a
selective basis, acquisition of businesses that have product lines or services
which complement and expand our existing services and product lines, and provide
us with strategic distribution locations or attractive customer bases. Our
ability to implement our growth strategy will be dependent on our ability to
identify and affiliate with these agents on desirable economic terms.

The industry

Prior to the mid 1980's, the trucking industry was regulated by the
Interstate Commerce Commission. Deregulation brought new breath and life to the
industry. This also brought with it the problem of how to navigate the
transportation highway. Shippers found it difficult to locate carriers and
carriers found that it was expensive to find freight. Enter the third party
transportation providers-intermediaries (freight brokers, freight forwarders and
logistics providers). The third party intermediary connects the shipper and the
carrier and helps manage the flow of goods.

The present market for freight moved by truck is estimated by management
to exceed $200 billion per year. This is a highly fragmented industry comprised
of common carriers - contract carriers - freight forwarders and freight brokers.

The actual movement of goods is accomplished by trucking (consisting of
local, over the road, truckload, and less than truckload shipments); air freight
(time sensitive in nature); rail freight (non time sensitive in nature and
usually less expensive than truck); and ocean freight (generally in
containerized ships). Other services provided include warehousing and
distribution.

There are several trends which are relevant to the continued dependency
upon and growth of the trucking industry:

o Just in time service With new technology and a premium on cost savings,
businesses are able to maintain smaller
inventories, thereby reducing carrying costs and
warehouse space requirements. The impact on the
freight industry is more shipments of smaller
quantities that are more time sensitive and,
therefore, more costly.

o Outsourcing Companies have found it to be more cost effective
and efficient to eliminate company owned truck
fleets and rely upon others to handle their
trucking and shipping needs.

o Logistics Small to medium size businesses, with less
frequent shipping requirements, utilize logistics
providers (freight brokers, etc.) to manage all
aspects of the transportation, warehousing and
delivery needs.

The market for third party logistics providers is highly fragmented. It is
comprised primarily of full service logistics providers, freight brokers,
independent sales agents and sales representatives. Sales agents often work out
of home based offices or small regional sales offices and affiliate themselves
with full service brokers to provide back office services including load
dispatching, bonding and licensing, billing, collection and other administrative
services. Sales representatives vary from experienced people with years of
freight industry experience and established client relationships to
telemarketing personnel cold calling shippers and dispatchers.

Third party logistics companies provide numerous services to clients on an
outsourced basis, by contract and on demand. The continued growth of this
industry has created secondary market opportunities to provide low-cost delivery
to the endpoint, in addition to supply chain services of warehousing, inventory
management and electronic interface with customers and suppliers. Third party
logistics companies provide customized domestic and international freight
transportation of customers' goods and packages, via truck, rail, airplane and
ship, and provide warehousing and storage of those goods. Many companies utilize
information systems and expertise to reduce inventories, cut transportation
costs, speed delivery and improve customer service. The third-party logistics
services business has been bolstered in recent years by the competitiveness of
the global economy, which causes shippers to focus on reducing handling costs,
operating with lower inventories and shortening inventory transit times. Using a
network of transportation, handling and storage providers in multiple
transportation modes, third-party logistics services companies seek to improve
their customers' operating efficiency by reducing their inventory levels and
related handling costs. Many third-party logistics service providers are
non-asset-based, primarily utilizing physical assets owned by others in multiple
transport modes.

The third-party logistics services business increasingly relies upon
advanced information technology to link the shipper with its inventory and as an
analytical tool to optimize transportation solutions. This trend favors the
larger, more professionally managed companies that have the resources to support
a sophisticated information technology infrastructure. By outsourcing all
non-core business services to third party providers, companies can help to
control costs, eliminate staff and focus on internal business.

Operations and systems

In our brokerage services, we process approximately 3,300 freight orders
per month. Our sales agents in our 12 regional operating centers and
representatives in 21 states and Canada receive customers' freight requirements
daily. All agents make appropriate carrier arrangements for the pick-up and
timely delivery of customers' freight.

In our contract carrier services, we process approximately 1,000 freight
orders per month. Our sales agents in our seven regional operating centers and
representatives in nine states receive customers' freight requirements daily
and, utilizing their respective owner-operators, make appropriate carrier
arrangements for the pick-up and timely delivery of customers' freight. In
addition, utilizing various sources including numerous internet based freight
posting boards, our agents locate additional freight to maximize utilization of
available capacity and minimize deadhead miles, or miles driven generating
little or no revenue. A typical owner-operator will generate $2,500 per week in
revenues.

We rely exclusively on independent third parties for our hauling capacity.
These third party capacity providers consist of our independent owner-operators,
unrelated trucking companies, air cargo carriers and railroads. Our use of
capacity provided by our independent owner-operators, and other third party
capacity providers allows us to maintain a lower level of capital investment,
resulting in lower fixed costs.

We utilize a state-of-the-art proprietary internet based order entry
system. All agents access our web-based platform and orders are entered into a
customized traffic management system, which enables us to monitor the status of
all orders, generate customer billing and provide detailed transactional reports
in our Florida corporate headquarters. We use these reports to monitor customer
logistics and transportation usage, track customer and carrier historical data,
generate detailed financial and accounting data and provide our customers with
details of their supply chain activity. We maintain dual off-site storage and
back up faculties to insure data integrity and safety.

Suppliers

We use the services of various third party transportation companies.
During 2004, no significant third party provider handled more than 10% of our
shipping volume (measured by revenue).

Customers

We strive to establish long-term customer relationships and, by providing
a full range of logistics and supply chain services, we seek to increase our
level of business with each customer. We service customers ranging from Fortune
100 companies to small businesses in a variety of industries. During 2004, no
customer accounted for more than 10% of our revenues. We typically receive
credit applications from all customers, review credit references and perform
credit checks to ensure credit worthiness.

Sunteck has achieved revenue growth through the addition of independent
sales agents, the opening of new operations offices, an increase in the number
of customers serviced, and the expansion of logistics and supply chain services
we provide.

Each operations office markets our full range of supply chain services to
existing customers and pursues new customers within their local markets. We
build new customer relationships by exploiting our range of logistics and supply
chain services, the traffic lanes we commonly service, carrier relationships and
capabilities, our industry specific expertise and our sales agents individual
knowledge and experience.

Our growth model is focused on adding sales agents in strategic markets.
As this agent network is further established and expanded, we believe that
significant other opportunities will emerge. Larger sales agents offices often
have their own equipment (truck space), which presents the opportunity to
maximize

available freight and load capacity thereby increasing gross margins above
historical levels. In addition, sales representatives will be added to regional
operating office sales agent locations to increase market penetration. Since
representatives work on a commission basis, this expansion essentially comes at
no additional overhead outlay.

Significant opportunities for expansion and growth also includes strategic
alliances with other service freight broker groups. This strategy will enable us
to achieve strong regional penetration into new geographical markets and
increase back office capabilities to service the agent network.

Competition

We generally compete on the basis of price and the range of logistics and
supply chain services offered.

Government regulation

Our industry has long been subject to government legislation and
regulation. Over the years, many changes in these laws and regulations have
affected the industry and caused changes in the operating practices and the cost
of providing transportation services. We cannot predict what effect, if any,
legislative and regulatory changes may have on the industry in the future.

We are licensed by the United States Department of Transportation (DOT) as
a broker arranging the movement of materials by motor carrier. In this capacity,
we are required to meet certain qualifications to enable us to conduct business,
which includes the compliance with certain surety bond requirements. We are also
licensed by the DOT as a contract carrier arranging the movement of materials by
motor carrier. In this capacity, we are required to meet certain qualifications
to enable us to conduct business, which includes the maintenance of $1,000,000
of general liability insurance and $100,000 of cargo insurance.

If we fail to comply with, or lose, any required licenses, governmental
regulators could assess penalties or issue a cease and desist order against our
operations that are not in compliance.

Risk and liability

In our brokerage services, we do not assume liability for loss or damage
to freight; we act as the shipper's agent and arrange for a carrier to handle
the freight. Therefore, we do not take possession of the shipper's freight and,
accordingly, we are not liable for the carrier's negligence or failure to
perform. We do assist our customers in the processing and collection of any
claim. The Federal Highway Administration requires us to maintain a surety bond
of $10,000, which is intended to show our financial responsibility and provide
surety for the arrangements with shippers and carriers. In addition, we maintain
$100,000 of contingent cargo liability insurance.

In our contract carrier services business, we are liable for loss or
damage to our customers' freight. We maintain cargo liability insurance coverage
with a policy limit of $100,000 per occurrence.

Company background

AutoInfo, Inc. was organized under the laws of the State of New York in
1976 and reincorporated under the laws of Delaware in 1987. On February 2, 2000,
we filed a disclosure statement and reorganization plan pursuant to Chapter 11
of Title 11 of the United States Bankruptcy Code.

On June 22, 2000, we entered into a Merger Agreement with Sunteck in
exchange for, upon closing, ten million shares of our common stock, which
constituted approximately 37% of our proposed outstanding common stock under our
Chapter 11 reorganization plan.

On June 27, 2000, our Amended Disclosure Statement and Amended Plan of
Reorganization were approved by the Bankruptcy Court.

On August 1, 2000, we announced that the Reorganization Plan had been
confirmed and would become effective, without further action by the Bankruptcy
Court, upon the closing of the Sunteck merger, which occurred in December 2000.

RISK FACTORS

In addition to the other information provided in our reports, you should
carefully consider the following factors in evaluating our business, operations
and financial condition. Additional risks and uncertainties not presently known
to us, that we currently deem immaterial or that are similar to those faced by
other companies in our industry or business in general, such as competitive
conditions, may also impair our business operations. The occurrence of any of
the following risks could have a material adverse effect on our business,
financial condition and results of operations.

Continued expansion of our business operations is uncertain.

For the year ended December 31, 2004, we increased gross revenues from
$27.2 million to $46.5 million and had income before taxes of $986,000 as
compared $546,000 in the prior year. There is no assurance that we will be able
to continue the expansion of our operations.

Factors that could adversely affect our future operating results include:

o the success of Sunteck in continuing the expansion of its
business operations; and

o changes in general economic conditions.

Control of customer accounts; Dependence on independent commission sales agents.

A substantial portion of our business is originated by our network of
independent sales representatives. Most of these sales representatives work with
us on a non-exclusive basis. We do not have non-compete or non-solicitation
agreements with some of these representatives. These contracts are typically
terminable upon 10 to 30 days notice by either party and do not always restrict
the ability of a former agent to compete with Sunteck following termination. As
a result, if sales representatives terminate their affiliation with us or direct
their freight business to other logistics providers, our revenue and results of
operations could be adversely affected.

Dependence on third party capacity providers.

We do not own trucks or other transportation equipment and rely on third
party capacity providers, including independent owner operators, unrelated
trucking companies, railroads and air cargo carriers to transport freight for
our customers. We compete with motor carriers and other third parties for the
services of independent owner operators and other third party capacity
providers. A significant decrease in available

capacity provided by either our independent owner operators or other third party
capacity providers could have a material adverse effect on Sunteck, including
our results of operations and revenue.

Decreased demand for transportation services.

The transportation industry historically has experienced cyclical
financial results as a result of slowdowns in economic activity, the business
cycles of customers, price increases by capacity providers, interest rate
fluctuations, and other economic factors beyond Sunteck's control. Certain of
our third party capacity providers can be expected to charge higher prices to
cover increased operating expenses, and our operating income may decline if we
are unable to pass through to our customers the full amount of these higher
transportation costs. If a slowdown in economic activity or a downturn in our
customers' business cycles causes a reduction in the volume of freight shipped
by those customers, our operating results could be materially adversely
affected.

We have limited marketing and sales capabilities and must make sales in
fragmented markets.

Our future success depends, to a great extent, on our ability to
successfully market our services. We currently have limited sales and marketing
capabilities. Our ability to successfully market our services is further
complicated by the fact that our primary markets are highly fragmented.
Consequently, we will need to identify and successfully target particular market
segments in which we believe we will have the most success. These efforts will
require a substantial, but unknown, amount of effort and resources. We cannot
assure you that any marketing and sales efforts undertaken by us will be
successful or will result in any significant sales.

Our industry is intensely competitive, which may adversely affect our operations
and financial results.

All our markets are intensely competitive and numerous companies offer
services that compete with our services. We anticipate that competition for our
services will continue to increase. Many of our competitors have substantially
greater capital resources, sales and marketing resources and experience. We
cannot assure you that we will be able to effectively compete with our
competitors in effecting our business expansion plans.

We depend on the continued services of our president.

Our future success depends, in part, on the continuing efforts of our
president, Harry Wachtel, who conceived our strategic plan and who is
responsible for executing that plan. The loss of Mr. Wachtel would adversely
affect our business. At this time we do not have any term "key man" insurance on
Mr. Wachtel. If we lose the services of Mr. Wachtel, our business, operations
and financial condition would be materially adversely affected.

We may have difficulties in managing our growth.

Our future growth depends, in part, on our ability to implement and expand
our financial control systems and to expand, train and manage our employee base
and provide support to an expanded customer base. If we cannot manage growth
effectively, it could have a material adverse effect on our results of
operations, business and financial condition. Acquisitions and expansion involve
substantial infrastructure and working capital costs. We cannot assure you that
we will be able to integrate our acquisitions and expansions efficiently.
Similarly, we cannot assure you that we will continue to expand or that any
expansion will enhance our profitability. If we do not achieve sufficient
revenue growth to offset increased expenses associated with our expansion, our
results will be adversely affected.

We must attract and retain qualified personnel.

As we implement our business growth strategy, significant demands will be
placed on our managerial, financial and other resources. One of the keys to our
future success will be our ability to attract and retain

highly qualified marketing, sales and administrative personnel. Competition for
qualified personnel in these areas is intense and we will be competing for their
services with companies that have substantially greater resources than we do. We
cannot assure you that we will be able to identify, attract and retain personnel
with skills and experience necessary and relevant to the future operations of
our business. Our inability to retain or attract qualified personnel in these
areas could have a material adverse effect on our business and results of
operations.

We may require additional financing in the future, which may not be available on
acceptable terms.

Depending on our ability to generate revenues, we may require additional
funds to expand Sunteck's business operations and for working capital and
general corporate purposes. Any additional equity financing may be dilutive to
stockholders, and debt financings may involve restrictive covenants that further
limit our ability to make decisions that we believe will be in our best
interests. In the event we cannot obtain additional financing on terms
acceptable to us when required, our ability to expand Sunteck's operations may
be materially adversely affected.

Our principal stockholders have substantial control over our affairs.

As of March 7, 2005, our president, Harry Wachtel was our largest
stockholder, owning approximately 24% of the issued and outstanding shares of
our common stock. Further, James T. Martin owns approximately 20% of the issued
and outstanding shares of our common stock. As a result, either Mr. Wachtel or
Mr. Martin could assert control over our affairs, including the election of
directors and any proposals regarding a sale of the company or its assets or a
merger. In addition, this concentration of ownership could have the effect of
delaying, deferring or preventing a change in control or impeding a merger or
consolidation, takeover or other business combination which you, as a
stockholder, may otherwise view favorably.

Our stock price is volatile and could be further affected by events not within
our control.

The market price of our common stock has historically experienced and may
continue to experience significant volatility. For the 52-week period ended
March 7, 2005, our closing stock price has ranged from $0.30 to $0.76. On March
7, 2005, our closing stock price was $0.66.

The trading price of our common stock has been volatile and will continue
to be subject to:

o volatility in the trading markets generally;

o significant fluctuations in our quarterly operating results; and

o announcements regarding our business or the business of our
competitors.

Statements or changes in opinions, ratings or earnings estimates made by
brokerage firms or industry analysts relating to the markets in which we operate
or expect to operate could also have an adverse effect on the market price of
our common stock. In addition, the stock market as a whole has from time to time
experienced extreme price and volume fluctuations which have particularly
affected the market price for the securities of many small cap companies and
which often have been unrelated to the operating performance of these companies.

The price of our common stock may be adversely affected by the possible issuance
of shares of our common stock as a result of the exercise of outstanding
options.

We have granted options covering approximately 5.6 million shares of our
common stock. As a result of the actual or potential sale of these shares into
the market, our common stock price may decrease.

Future sales of our common stock may adversely affect our common stock price.

If our stockholders sell a large number of shares of common stock or if we
issue a large number of shares in connection with future acquisitions or
financings, the market price of our common stock could decline significantly. In
addition, the perception in the public market that our stockholders might sell a
large number of shares of common stock could cause a decline in the market price
of our common stock.

Some provisions in our charter documents and bylaws may have anti-takeover
effects.

Our certificate of incorporation and bylaws contain provisions that may
make it more difficult for a third party to acquire us, with the result that it
may deter potential suitors. For example, our board of directors is authorized,
without action of the stockholders, to issue authorized but unissued common and
preferred stock. The existence of authorized but unissued common and preferred
stock enables us to discourage or to make it more difficult to obtain control of
us by means of a merger, tender offer, proxy contest or otherwise.

We have agreed to limitations on the potential liability of our directors.

Our certificate of incorporation provides that, in general, directors will
not be personally liable for monetary damages to the company or our stockholders
for a breach of fiduciary duty. Although this limitation of liability does not
affect the availability of equitable remedies such as injunctive relief or
rescission, the presence of these provisions in the certificate of incorporation
could prevent us from recovering monetary damages.

Liquidity on the otc bulletin board is limited, and we may be unable to obtain
listing of our common stock on a more liquid market.

Our common stock is quoted on the OTC Bulletin Board, which provides
significantly less liquidity than a securities exchange (such as the American or
New York Stock Exchange) or an automated quotation system (such as the Nasdaq
National or SmallCap Market). There is uncertainty that we will ever be accepted
for a listing on an automated quotation system or securities exchange.

Our common stock has been thinly traded, and the public market may provide
little or no liquidity for holders of our common stock.

Purchasers of shares of our common stock may find it difficult to resell
their shares at prices quoted in the market or at all. There is currently a
limited volume of trading in our common stock, and on many days there has been
no trading activity at all. Due to the historically low trading price of our
common stock, many brokerage firms may be unwilling to effect transactions in
our common stock, particularly because low-priced securities are subject to an
SEC rule that imposes additional sales practice requirements on broker-dealers
who sell low-priced securities (generally those below $5.00 per share). We
cannot predict when or whether investor interest in our common stock might lead
to an increase in its market price or the development of a more active trading
market or how liquid that market might become.

The application of the "penny stock" rules could adversely effect the market
price of our common stock.

As long as the trading price of our common stock is below $5.00 per share,
the open-market trading of our common stock will be subject to the "penny stock"
rules. The "penny stock" rules impose additional sales practice requirements on
broker-dealers who sell securities to persons other than established customers
and accredited investors (generally those with assets in excess of $1,000,000 or
annual income exceeding $200,000 or $300,000 together with their spouse). For
transactions covered by these rules, the broker-dealer must make a special
suitability determination for the purchase of securities and have received the
purchaser's written consent to the transaction before the purchase.
Additionally, for any transaction involving a penny stock, unless exempt, the
broker-dealer must deliver, before the transaction, a disclosure schedule
prescribed by the Securities and Exchange Commission relating to the penny stock
market. The broker-dealer also must disclose the

commissions payable to both the broker-dealer and the registered representative
and current quotations for the securities. Finally, monthly statements must be
sent disclosing recent price information on the limited market in penny stocks.
These additional burdens imposed on broker-dealers may restrict the ability of
broker-dealers to sell the common stock and may affect a stockholder's ability
to resell the common stock.

Stockholders should be aware that, according to Securities and Exchange
Commission Release No. 34-29093, the market for penny stocks has suffered in
recent years from patterns of fraud and abuse. Such patterns include (i) control
of the market for the security by one or a few broker-dealers that are often
related to the promoter or issuer; (ii) manipulation of prices through
prearranged matching of purchases and sales and false and misleading press
releases; (iii) boiler room practices involving high-pressure sales tactics and
unrealistic price projections by inexperienced sales persons; (iv) excessive and
undisclosed bid-ask differential and markups by selling broker-dealers; and (v)
the wholesale dumping of the same securities by promoters and broker-dealers
after prices have been manipulated to a desired level, along with the resulting
inevitable collapse of those prices and with consequent investor losses. Our
management is aware of the abuses that have occurred historically in the penny
stock market. Although we do not expect to be in a position to dictate the
behavior of the market or of broker-dealers who participate in the market,
management will strive within the confines of practical limitations to prevent
the described patterns from being established with respect to our securities.

Patents, trademarks and copyrights

"AUTOINFO" is our registered trademark and service mark.

Employees

As of February 22, 2005, we had 196 full-time employees, independent sales
agents and owner-operators. None of our employees are represented by a labor
union and we believe that our relationship with our employees, agents and
owner-operators is good.

Available Information

Our website address is www.suntecktransport.com. We are not including the
information contained on our website as part of, or incorporating it by
reference into, this annual report on Form 10-KSB. We make available free of
charge through our website our annual report on Form 10-KSB, quarterly reports
on Form 10-QSB, current reports on Form 8-K, Forms 3, 4 and 5, and all
amendments to those reports as soon as reasonably practicable after such
material is electronically filed with or furnished to the Securities and
Exchange Commission.

The public may read and copy any materials we file with the SEC at the
SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549.
The public may obtain information on the operation of the Public Reference Room
by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that
contains reports, proxy and information statements, and other information
regarding issuers such as us that file electronically with the SEC. The website
address is www.sec.gov.

PROPERTIES

We lease approximately 5,300 square feet of space for our executive
offices and the headquarters of Sunteck at 6413 Congress Avenue, Boca Raton,
Florida. This lease runs through April 2010 and provides for aggregate rent
payments of $57,000 for the thirteen months ending February 2006, $61,000 for
the thirteen months ending March 2007, $65,000 for the thirteen months ending
April 2008, $68,000 for the twelve months ended April 2009 and $71,000 for the
twelve months ended April 2010. We lease 1,100 square feet for our operating
office at 315 Main Street, Pineville, North Carolina. The lease runs through
February 2008 and provides for an annual rental of $13,000.

LEGAL PROCEEDINGS

We are not a party to any material legal proceedings.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

PART II

MARKET FOR OUR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Our common stock is not listed on any stock exchange. Our common stock is
traded over-the-counter on the Over-the-Counter Electronic Bulletin Board under
the symbol "Auto." The following table sets forth the high and low bid
information for the common stock for each quarter within the last two fiscal
years, as reported by the Over-the-Counter Electronic Bulletin Board. The bid
information reflects inter-dealer prices, without retail mark-up, mark-down or
commission, and may not represent actual transactions.

Year Ended December 31, 2004 High Low
-------------------------------- --------- ----------

First quarter $0.70 $0.28
Second quarter 0.67 0.41
Third quarter 0.51 0.32
Fourth quarter 0.61 0.32

Year Ended December 31, 2003 High Low
-------------------------------- --------- ----------

First quarter $0.22 $0.14
Second quarter 0.23 0.11
Third quarter 0.37 0.17
Fourth quarter 0.39 0.23

As of March 7, 2005, the closing bid price per share for our common stock,
as reported on the OTC Bulletin Board of the National Association of Securities
Dealers, Inc. was $0.66. As of March 7, 2005, we had approximately 1,000
beneficial stockholders.

Dividend policy

We have never declared or paid a cash dividend on our common stock. It has
been the policy of our board of directors to retain all available funds to
finance the development and growth of our business. The payment of cash
dividends in the future will be dependent upon our earnings and financial
requirements and other factors deemed relevant by our board of directors.

SELECTED CONSOLIDATED FINANCIAL DATA

The following is a summary of our selected consolidated financial data for
the years ended December 31, 2004, 2003, 2002, 2001 and 2000. The financial data
has been derived from our audited consolidated financial statements and
accompanying notes. This financial data reflects our acquisition of Sunteck in
December 2000, which was accounted for as a pooling of interest. Accordingly,
all periods presented below have been restated to include the accounts and
operations of Sunteck under continuing operations.

The selected financial data set forth below should be read together with,
and are qualified by reference to, the "Management's Discussion and Analysis of
Financial condition and Results of Operations" section of this report and our
audited consolidated financial statements and accompanying notes included
elsewhere in this report.

000's omitted, except for per share data Year ended December 31,
---------------------------------------------------------------------------
2004 2003 2002 2001 2000
---------- ---------- ---------- ---------- ----------

Statement of Operations Data:

Gross revenues $ 46,492 $ 27,171 $ 18,863 $ 8,029 $ 3,389

Net revenues (1) 8,734 5,076 3,368 1,567 835

Income (loss) from continuing operations 1,466 1,300 340 (15) (81)

Income from discontinued operations -- -- -- -- 9,471

Net income (loss) $ 1,466 $ 1,300 $ 340 $ (15) $ 9,390

Basic net income (loss) per share (2) (3)
From continuing operations $ .05 $ .05 $ .01 $ (.00) $ .00
From discontinued operations -- -- -- -- .51
---------- ---------- ---------- ---------- ----------
Net income (loss) per share, basic $ .05 $ .05 $ .01 $ (.00) $ .51
---------- ---------- ---------- ---------- ----------

Diluted net income (loss) per share (2) (3)
From continuing operations $ .04 $ .05 $ .01 $ (.00) $ .00
From discontinued operations -- -- -- -- .48
---------- ---------- ---------- ---------- ----------
Net income (loss) per share, diluted $ .04 $ .05 $ .01 $ (.00) $ .48
---------- ---------- ---------- ---------- ----------

(1) Net revenues are determined by deducting cost of transportation from gross
revenues. See Management's Discussion and Analysis of Financial Condition
and Results of Operations.

(2) The common stock equivalents for the year ended December 31, 2004, 2003
and 2002 were 2,523,000, 1,434,000 and 635,000 and for the year ended
December 31, 2000 were 1,304,000.

(3) The common stock equivalents for the years ended December 31, 2001 was
30,000. The common stock equivalents for these shares were not included in
the calculation of diluted income (loss) per common share because the
effect would have been antidilutive.

000's omitted As at December 31,
---------------------------------------------------------------------
2004 2003 2002 2001 2000
---------- ---------- ---------- ---------- ----------

Balance Sheet Data:

Cash and short term investments $ 38 $ 133 $ 684 $ 898 $ 941
Accounts receivable 9,658 4,881 2,996 1,358 720
Total assets 11,795 6,286 3,944 2,458 1,740
Total liabilities 7,383 4,394 3,356 2,215 1,481
Deficit (14,692) (16,158) (17,458) (17,798) (17,784)
Stockholders' equity 4,412 1,892 588 243 258

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

Cautionary statement identifying important factors that could cause our actual
results to differ from those projected in forward looking statements.

Pursuant to the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, readers of this report are advised that this
document contains both statements of historical facts and forward looking
statements. Forward looking statements are subject to certain risks and
uncertainties, which could cause actual results to differ materially from those
indicated by the forward looking statements. Examples of forward looking
statements include, but are not limited to (i) projections of revenues, income
or loss, earnings per share, capital expenditures, dividends, capital structure
and other financial items, (ii) statements of our plans and objectives with
respect to business transactions and enhancement of shareholder value, (iii)
statements of future economic performance, and (iv) statements of assumptions
underlying other statements and statements about our business prospects.

This report also identifies important factors, which could cause actual
results to differ materially from those indicated by the forward looking
statements. These risks and uncertainties include the factors discussed under
the heading "Risk Factors" beginning at page 7 of this report.

The following Management's Discussion and Analysis of Financial Condition
and Results of Operations should be read in conjunction with our financial
statements and the notes thereto appearing elsewhere in this report.

Overview

Our brokerage services are provided through a network of independent sales
agents. As of February 22, 2005, we had 12 regional operating centers providing
brokerage services and representatives in 21 states and Canada. Our services
include arranging for the transport of customers' freight from the shippers
location to the designated destination. We do not own any trucking equipment and
rely on independent carriers for the movement of customers' freight. We seek to
establish long-term relationships with our customers and provide a variety of
logistics services and solutions to eliminate inefficiencies in our customers'
supply chain management.

The most significant factor in our growth during the past two years has
been the expansion of our brokerage services agent network and, in 2003, the
introduction and expansion of our contract carrier services agent and
owner-operator network. This growth is readily measured by the number of
transactions we have processed, which increased from 30,800 in 2003 to 43,300 is
2004, an increase of 41%. The average revenue dollar per load in our broker
division also increased in 2004 as compared to 2003. This is the result of
several factors including an increase in truckload business versus less than
truckload at higher per load revenues, the addition of sales agents hauling
heavy equipment at higher per load revenues and, to a lesser degree, a general
increase in prices.

Results of operations

For the year ended December 31, 2004

During the year ended December 31, 2004, we continued to implement our
strategic growth business plan consisting primarily of the expansion of client
services, the opening of regional operations centers in key geographical
markets, the addition of independent sales agents providing brokerage and
contract carrier services. Our net revenues (gross revenues less cost of
transportation) are the primary indicator of our ability to source, add value
and resell services that are provided by third parties and are considered to be
the primary measurement of growth. Therefore, the discussion of the results of
operations below focuses on the changes in our net revenues. The increases in
net revenues and all related cost and expense categories are the direct result
of our business expansion.

The following table represents certain statement of operation data as a
percentage of net revenues:

2004 2003
------------- -------------

Net revenues 100.0% 100.0%

Commissions 59.3% 58.2%
Operating expenses 28.0% 28.6%
Other charges 1.4% 2.5%
Income taxes (benefit) (5.5)% (14.9)%

Net income 16.8% 25.6%

Revenues

Gross revenues, consisting of freight fees and other related services
revenue, totaled $46,492,000 for the year ended December 31, 2004, as compared
with $27,171,000 in the prior year, an increase of 71%. Net revenues were
$8,734,000 for the year ended December 31, 2004, as compared with $5,076,000 in
the prior year, an increase of 72%. Gross revenues from brokerage services
increased to $36,931,000 from $25,106,000 and net revenues increased to
$7,032,000 from $4,685,000 in the prior year. This increase is the direct result
of the continued expansion of our agent network and customer base. Gross
revenues from contract carrier services, which we began offering in 2003,
increased to $9,561,000 from $2,065,000 and net revenues increased to $1,702,000
from $391,000 in the prior year.

Costs and expenses

Commissions totaled $5,179,000 for the year ended December 31, 2004, as
compared with $2,955,000 in the prior year, an increase of 75%. This increase is
the direct result of the continued expansion of our agent network and customer
base. As a percentage of net revenues, commissions were 59% for the year ended
December 31, 2004 as compared with 58% in the prior year.

Operating expenses totaled $2,449,000 for the year ended December 31,
2004, as compared with $1,450,000 in the prior year. As a percentage of net
revenues, operating expenses were 28% for the year ended December 31, 2004 as
compared with 29% in the prior year. This decrease is the direct result of
management's ability to leverage selling, general and administrative expenses in
connection with business expansion. We have increased administrative staff
commensurate with the increase in transaction volume. In February 2005, we moved
our headquarters increasing our space to 5,300 square feet. We presently have
adequate facilities and management to handle the present and anticipated
transaction volume in 2005 without a significant increase in overhead.

Interest expense was $120,000 for the year ended December 31, 2004 as
compared with $131,000 in the prior year. This decrease is primarily the result
of borrowings pursuant to our line of credit, secured in May 2004 at a interest
rate of prime + 1/2% and the corresponding repayment in May 2003 of the $500,000
loan at an interest rate of 17%, originated in August 2001.

Income tax

The income tax benefit of $480,000 for the year ended December 31, 2004
consisted of a benefit of $873,000 resulting from the anticipated future
utilization of an available federal tax loss carryforward, net of income taxes
of $393,000. The income tax benefit of $754,000 for the year ended December 31,
2003 consisted of $784,000 resulting from the anticipated future utilization of
an available federal tax loss carryforward, net of state income taxes of
$30,000. Based upon available objective evidence, including our post-merger
history of profitability, we believe that it is more likely than not that
forecasted taxable income will be sufficient to utilize a portion of the net
operating loss carryforward before its expiration in 2014. Accordingly, in 2004
the valuation allowance was reduced by $873,000.

Net income

Net income totaled $1,466,000 for the year ended December 31, 2004, as
compared with $1,300,000 in the prior year. This increase is the direct result
of the increase in revenues due the continuing expansion of our operations
resulting in an increase in income before income taxes of $440,000 offset by the
net decrease in the recognition on the deferred tax asset of $247,000 and the
increase in state income taxes of $27,000.

Trends and uncertainties

The transportation industry is highly competitive and highly fragmented.
In our brokerage services, our primary competitors are other non-asset based as
well as asset based third party logistics companies, freight brokers, carriers
offering logistics services and freight forwarders. In our contract carrier
services, our competitors are other contract carriers and common carriers. We
also compete with customers' and shippers' internal traffic and transportation
departments as well as carriers internal sales and marketing departments
directly seeking shippers' freight. We anticipate that competition for our
services will continue to increase. Many of our competitors have substantially
greater capital resources, sales and marketing resources and experience. We
cannot assure you that we will be able to effectively compete with our
competitors in effecting our business expansion plans. The most significant
trend contributing to our growth during the past two years has been the
expansion of our brokerage services agent network and, in 2003, the introduction
and expansion of our contract carrier agent and owner operator network. Sales
agents are independent contractors and, as such, there are no assurances that we
can either maintain our existing agent network or continue to expand this
network.

For the year ended December 31, 2004, we increased gross revenues from
$27.2 million to $46.5 million and had net income of $1,466,000 as compared with
$1,300,000 in the prior year. As of December 31,

2004, we had an accumulated deficit of $14.7 million. Factors that could
adversely affect our operating results include:

o the success of Sunteck in expanding its business operations;
and

o changes in general economic conditions.

Liquidity and capital resources

During the past two years, our sources for cash have been the cash flow
generated from operations and available borrowings under lines of credit.

At December 31, 2004, we had outstanding $1,998,000 pursuant to our
$2,500,000 line of credit. The line of credit, obtained from a bank in May 2003,
is subject to the maintenance of certain financial covenants, is secured by
accounts receivable and other operating assets, and matures in June 2005. We
believe that we have sufficient working capital to meet our short-term operating
needs and that we will be able to increase, extend or replace the line of credit
on terms acceptable to us.

At December 31, 2004, we had liquid assets of approximately $38,000.
Available cash is used to reduce borrowings on our line of credit.

The total amount of debt outstanding as of December 31, 2004 and 2003 was
$1,998,000 and $1,621,000, respectively. The following table presents our debt
instruments and their weighted average interest rates as of December 31, 2004
and 2003, respectively:

Weighted Weighted
Balance Average Rate Balance Average Rate
---------------------------------------------------
2004 2003
---------------------------------------------------
Subordinated Debt -- -- $ 575,000 12.0%
Line of Credit $1,998,000 5.2% $1,046,000 4.5%

Inflation and changing prices had no material impact on our revenues or
the results of operations for the year ended December 31, 2004.

In January 2004, we sold 1,333,333 shares of our common stock for cash
proceeds of $417,000. Simultaneously, in a related transaction, our 12%
convertible debentures were converted into 2,300,000 shares of common stock. The
result of these transactions was an increase in cash of $417,000, a decrease in
debt of $575,000 and an increase in equity of $1,017,000. The cash proceeds of
$417,000 were used to reduce the outstanding balance under our line of credit.

Critical Accounting Policies

Preparation of our financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date

of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Note 1 of the Notes to Financial Statements
includes a summary of the significant accounting policies and methods used in
the preparation of our financial statements. The most significant areas
involving management estimates and assumptions are described below. Actual
results could differ materially from management's estimates under different
assumptions or conditions.

Revenue Recognition

As a third party transportation logistics provider, we act as the
shippers' agent and arrange for a carrier to handle the freight. Gross revenues
consist of the total dollar value of services purchased by shippers. Revenue is
recognized upon the delivery of freight, at which time the related
transportation cost, including commission, is also recognized. At that time, our
obligations are completed and collection of receivables is reasonably assured.

Emerging Issues Task Force No. 99-19, "Reporting Revenues Gross as a
Principal Versus Net as an Agent" (EITF 99-19), establishes criteria for
recognizing revenues on a gross or net basis. We are the primary obligor in our
transactions, have all credit risk, maintain substantially all risk and rewards,
have discretion in selecting the supplier, and latitude in pricing decisions.
Accordingly, we record all transactions at the gross amount, consistent with the
provisions of EITF 99-19.

Income Taxes

The deferred tax asset represents expected future tax savings resulting
from our net operating loss carryforward. As of December 31, 2004, we had a net
operating loss carryforward of approximately $16.5 million for federal income
tax purposes which expire through 2014. Utilization of this benefit is primarily
subject to the extent of our future earnings, and may be limited by, among other
things, shareholder changes, including the possible issuance by the of
additional shares in one or more financing or acquisition transactions. We have
established a valuation allowance for the portion of possible tax savings not
likely to be realized by the end of the carryforward period.

Provision For Doubtful Accounts

We continuously monitor the creditworthiness of our customers and have
established an allowance for amounts that may become uncollectible in the future
based on current economic trends, our historical payment and bad debt write-off
experience, and any specific customer related collection issues.

Recently Issued Accounting Pronouncements

In December 2004, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 123R, "Share-Based Payment"
(SFAS 123R), replacing SFAS 123 and superseding Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25). SFAS 123R
requires public companies to recognize compensation expense for the cost of
awards of equity compensation effective July 1, 2005. This compensation cost
will be measured as the fair value of the award estimated using an
option-pricing model on the grant date. The Company is currently evaluating the
various transition provisions under SFAS 123R and will adopt SFAS 123R effective
July 1, 2005, which is expected to result in increased compensation expense in
future periods.

In December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary
Assets - an Amendment of APB No. 29" (SFAS 153). The amendments made by SFAS 153
are based on the principle that exchanges of nonmonetary assets should be
measured based on the fair value of the assets exchanged. Further, the
amendments eliminate the narrow exception for nonmonetary exchanges of similar
productive assets and replace it with a broader exception for exchanges of
nonmonetary assets that do not have "commercial

substance." This standard is effective for nonmonetary asset exchanges occurring
after July 1, 2005. The adoption of this standard is not expected to impact the
Company's consolidated financial statements.

Off-balance sheet arrangements

We do not have any off-balance sheet arrangements.

FINANCIAL STATEMENTS

The response to this item is submitted as a separate section of this
report beginning on page F-1.

CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES

None.

CONTROLS AND PROCEDURES

Our management, with the participation of our chief executive officer and
chief financial officer, has evaluated the effectiveness of our disclosure
controls and procedures (as such term is defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) as of the end of the period covered by this report. Based on that
evaluation, our chief executive officer and chief financial officer have
concluded that, as of the end of such period, our disclosure controls and
procedures are effective.

There have not been any changes in our internal control over financial
reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act) our fiscal fourth quarter that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.

OTHER INFORMATION

None.

PART III

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth the names, ages and positions of our
directors, executive officers and key employees:

Name Age Position
---- --- --------

Peter C. Einselen 65 Director
Thomas C. Robertson 59 Director
Harry Wachtel 46 President, chief executive officer and director
Mark Weiss 45 National account executive and director
William Wunderlich 57 Chief financial officer

PETER C. EINSELEN has been a director since January 1999. Mr. Einselen has
been an account executive since 1990 and served as senior vice president from
1990 to 2001 of Anderson & Strudwick, a brokerage firm,. From 1983 to 1990, Mr.
Einselen was employed by Scott and Stringfellow, Incorporated, a brokerage firm.

THOMAS C. ROBERTSON has been a director since January 1999. Mr. Robertson
has been senior vice president since 2004 and was president, chief financial
officer and a director from 1988 to 2004 of Anderson & Strudwick, a brokerage
firm. Mr. Robertson has been president of Gardner & Robertson, a money
management firm, since 1997.

HARRY WACHTEL joined us in conjunction with the acquisition of Sunteck and
has been a director, and our president and chief executive officer since
December 7, 2000. Since 1997, he has been president of Sunteck. From 1992 to
1997, he served as vice president of sales and marketing for Pioneer Services,
Inc., a third party, non-asset based transportation logistics provider. From
1990 to 1991 he served as president of Guaranteed Federal Financial, a mortgage
origination company.

MARK WEISS joined us in conjunction with the acquisition of Sunteck and
has been a director since December 7, 2000. Since 1997, he has been employed by
Sunteck as a national account executive. From 1994 to 1997 he served as a
national account executive for Pioneer Services, Inc., a third party, non-asset
based transportation logistics provider. From 1982 to 1994 he was president of
The Picture Place Ltd. Inc., a retailer and wholesaler of photographic, video
and art equipment and supplies. Mr. Weiss is the brother-in-law of Mr.
Wunderlich, our executive vice president and chief financial officer.

WILLIAM WUNDERLICH joined us in October 1992 as our vice president -
finance, became chief financial officer in January 1993, president in January
1999 and, in conjunction with the acquisition of Sunteck, became executive vice
president in December 2000. From 1990 to 1992, he served as vice president of
Goldstein Affiliates, Inc., a public adjusting company. From 1981 to 1990, he
served as executive vice president, chief financial officer and a director of
Novo Corporation, a manufacturer of consumer products. Mr. Wunderlich is a
Certified Public Accountant with a B.A. degree in Accounting and Economics from
the City University of New York at Queens College. Mr. Wunderlich is the
brother-in-law of Mr. Weiss, one of our directors.

Director Compensation

We do not pay any directors' fees. Directors are reimbursed for the costs
relating to attending board and committee meetings. During 2004, Peter C.
Einselen and Thomas C. Robertson, our non-employee directors,

each were granted options to purchase 62,500 shares of our common stock at
prices ranging from $0.29 to $0.60 per share, the fair market value on the date
of grant.

Committees of the Board of Directors

Our board of directors has an audit committee and a compensation
committee. The audit committee reviews the scope and results of the audit and
other services provided by our independent accountants and our internal
controls. The compensation committee is responsible for the approval of
compensation arrangements for our officers and the review of our compensation
plans and policies. Each committee is comprised of Messrs. Einselen and
Robertson, our non-employee independent outside directors.

Audit Committee Matters

Under its charter, the audit committee must pre-approve all engagements of
our independent auditor unless an exception to such pre-approval exists under
the Securities Exchange Act of 1934 or the rules of the Securities and Exchange
Commission (SEC). Each year, the independent auditor's retention to audit our
financial statements, including the associated fee, is approved by the committee
before the filing of the preceding year's annual report on Form 10-KSB. At the
beginning of the fiscal year, the audit committee will evaluate other known
potential engagements of the independent auditor, including the scope of the
work proposed to be performed and the proposed fees, and approve or reject each
service, taking into account whether the services are permissible under
applicable law and the possible impact of each non-audit service on the
independent auditor's independence from management. At each subsequent committee
meeting, the committee will receive updates on the services actually provided by
the independent auditor, and management may present additional services for
approval. Typically, these would be services such as due diligence for an
acquisition, that would not have been known at the beginning of the year

Since the May 6, 2003 effective date of the SEC rules stating that an
auditor is not independent of an audit client if the services it provides to the
client are not appropriately approved, each new engagement of Dworken, Hillman,
LaMorte & Sterczala, P.C. was approved in advance by the Audit Committee, and
none of those engagements made use of the de minimus exception to pre-approval
contained in the SEC's rules.

Our board has determined that the chairman of the audit committee, Mr.
Robertson, is an "audit committee financial expert," as that term is defined in
Item 401(e) of Regulation B, and "independent" for purposes of current and
recently-adopted Nasdaq listing standards and Section 10A(m)(3) of the
Securities Exchange Act of 1934.

Code of Ethics

We have adopted a code of ethics that applies to our principal executive
officer, principal financial officer and other persons performing similar
functions. This code of ethics is posted on our website at
www.suntecktransport.com.

Section 16(a) beneficial ownership reporting compliance

Section 16(a) of the Securities Exchange Act of 1934 requires our officers
and directors, and persons who own more than ten percent of a registered class
of our equity securities, to file reports of ownership and changes in ownership
with the SEC. Officers, directors and greater than ten-percent stockholders are
required by SEC regulation to furnish us with copies of all Section 16(a) forms
they file. Based solely on review of the copies of such forms furnished to us,
or written representations that no Forms 5 were required, we believe that all
Section 16(a) filing requirements applicable to our officers and directors were
complied with.

EXECUTIVE COMPENSATION

Summary compensation. The following table sets forth certain information
concerning compensation paid for services in all capacities awarded to, earned
by or paid to our chief executive officer and the other most highly compensated
executive officers during 2004, 2003 and 2002 whose aggregate compensation
exceeded $100,000 (Named Executive Officers).

All other
Name and principal position Salary Bonus compensation
------------------------------------------------ ---------- --------- --------------

Harry Wachtel
President and chief executive officer
2004 ....................................... $205,000 $125,000 --
2003 ....................................... $175,000 $ 51,531 --
2002 ....................................... $175,000 $ 13,035 --

William Wunderlich
Executive vice president and chief financial
officer
2004 ....................................... $100,000 $125,000 --
2003 ....................................... $ 93,750 $ 55,281 --
2002 ....................................... $ 75,000 $ 28,035 --

Mark Weiss
National account executive
2004 ....................................... $107,503 -- --
2003 ....................................... $118,592 -- --
2002 ....................................... $127,836 -- --

Option grants during the year ended December 31, 2004

Our compensation committee did not grant any options to the named
executives during the year ended December 31, 2004.

Option exercises and year-end option values. The following table provides
information with respect to options exercised by the Named Executive Officers
during 2004 and the number and value of unexercised options held by the Named
Executive Officers as of December 31, 2004.

Aggregated Option Exercise in Last Fiscal Year and Year-End Option Values

Number of Shares Underlying Value of Unexercised In-the-
Unexercised Options at Fiscal Money Options At Fiscal
Year-End Year-End (2)
----------------------------- ----------------------------
Shares Acquired
Name on Exercise (#) Value Realized (1) Exercisable Unexercisable Exercisable Unexercisable
---- --------------- ------------------ ----------- ------------- ----------- -------------

Harry Wachtel -- -- -- -- -- --
Mark Weiss -- -- -- -- -- --
William Wunderlich -- -- 810,000 -- $413,000 --

----------
(1) For the purposes of this calculation, value is based upon the difference
between the exercise price of the options and the stock price at date of
exercise.

(2) For the purposes of this calculation, value is based upon the difference
between the exercise price of the exercisable and unexercisable options
and the stock price at December 31, 2004 of $0.61 per share.

Equity Compensation Plan Information
Year Ended December 31, 2004

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

Equity compensation plans
approved by security holders
(1985, 1986, 1989, 1992,
1997, 1999 and 2003 Stock
Option Plans)................. 5,594,000 $0.28 450,000
Equity compensation plans not
approved by security
holders(1).................... -- -- --
========= ===== =======

Total............................ 5,594,000 $0.28 450,000
========= ===== =======

(1) We do not have any equity compensation plans which have not been approved
by security holders.

Employment Agreements

In December 2000, we entered into employment agreements (which were
subsequently amended and modified during 2003 and 2004) with Messrs. Wachtel and
Wunderlich providing for their employment, as our chief executive officer and
chief financial officer, respectively, for terms expiring on March 31, 2006,
subject to automatic one-year renewals unless either party gives written notice
ninety days prior to the end of the then current term of the agreement. The
agreements provide for annual base salaries of $205,000 and $100,000,
respectively, and for participation in all executive benefit plans. Each of Mr.
Wachtel's and Mr. Wunderlich's agreements provide that they will each be
entitled to a bonus equal to 10% of our consolidated pre-tax profit (as defined)
up to $1,250,000. Further, Mr. Wachtel's agreement provides, among other things,
that, if employment is terminated without cause (as defined) or if he terminates
his employment for good reason (as defined) or within six months after a change
of control (as defined), we will pay him an amount equal to his respective
current base salary plus the average incentive compensation due to him during
the remaining term of the agreement.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table, together with the accompanying footnotes, sets forth
information, as of March 10, 2005, regarding stock ownership of all persons
known by us to own beneficially 5% or more of our outstanding common stock, all
directors, Named Executive Officers and all directors and executive officers as
a group.

We determined beneficial ownership in accordance with rules promulgated by
the SEC, and the information is not necessarily indicative of beneficial
ownership for any other purpose. Except as otherwise indicated, we believe that
the persons or entities named in the following table have sole voting and
investment power with respect to all shares of common stock as beneficially
owned by them, subject to community property laws where applicable.

Name of Shares of Common Stock Percentage
Beneficial Owner (1) Beneficially Owned Of Ownership
-------------------- ------------------ ------------

(i) Directors and Executive Officers
Harry Wachtel 7,560,000 (2) 24.1%
Thomas C. Robertson 240,000 (3) *
Peter C. Einselen 410,000 (3) 1.3%
Mark Weiss 950,000 (5) 3.0%
William I. Wunderlich 1,525,000 (4)(6) 4.7%
All executive officers and directors
as a group (5 persons) 9,125,000 (7) 28.0%

(ii) 5% Stockholders
James T. Martin 6,270,000 20.0%
Kinderhook Partners 5,159,000 16.4%

----------
* Less than 1%

(1) Unless otherwise indicated below, each director, executive officer and
each 5% stockholder has sole voting and investment power with respect to
all shares beneficially owned. The address for Mr. Wachtel and Mr.
Wunderlich is c/o AutoInfo, Inc., 6413 Congress Avenue, Suite 260, Boca
Raton, FL 33487. The address for Mr. Martin is c/o Bermuda Trust Company,
Compass Point Road, 9 Bermudian Road, Hamilton HM11, Bermuda. The address
for Kinderhook Partners is One Executive Drive, Suite 160, Fort Lee, NJ
07024.

(2) Includes 1,560,000 shares with respect to which Mr. Wachtel has been
granted voting rights pursuant to voting proxy agreements.

(3) Includes 180,000 shares issuable upon the exercise of stock options.

(4) Includes 810,000 shares issuable upon the exercise of stock options.

(5) Includes 950,000 with respect to which Mr. Weiss has granted voting rights
to Mr. Wachtel pursuant to a voting proxy agreement. Mr. Weiss retains
full control over the disposition of these shares.

(6) Includes 610,000 with respect to which Mr. Wunderlich has granted voting
rights to Mr. Wachtel pursuant to a voting proxy agreement. Mr. Wunderlich
retains full control over the disposition of these shares.

(7) Assumes that all currently exercisable options or warrants owned by
members of this group have been exercised.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In August 2001, we entered into a $500,000 line of credit agreement with
James T. Martin, a significant stockholder, secured by our accounts receivable.
Interest on the outstanding borrowings was 17% per annum, payable quarterly in
arrears. This line of credit was repaid in full in May 2003. Interest of $35,000
was charged to operations in 2003.

In December 2001, we lent $100,000 to the father-in-law of Harry Wachtel,
our president. This loan bore interest at 4% per annum and was due in December
2006. This loan was repaid in March 2004.

In December 2000, we obtained financing totaling $575,000 from certain
related parties in the form of ten year 12% subordinated convertible debentures.
Interest of $4,000 and $69,000 was charged to operations in each of 2004 and
2003, respectively. In January 2004, these debentures were converted into
2,300,000 shares of common stock.

EXHIBITS

Exhibits
--------

No. 3A Certificate of Incorporation of the Company, as amended. (9)

No. 3B Amended and Restated By-Laws of the Company. (5)

No. 4A Specimen Stock Certificate. (2)

No. 10A 1986 Stock Option Plan. (1)

No. 10B 1989 Stock Option Plan. (3)

No. 10C 1992 Stock Option Plan. (4)

No. 10D 1997 Stock Option Plan. (6)

No. 10E 1997 Non-Employee Stock Option Plan. (6)

No. 10F 1999 Stock Option Plan. (8)

No. 10G Form of Agreement and Plan of Reorganization among AutoInfo,
Inc. on the one hand, and Sunteck Transport Co., Inc., et al.,
on the other hand, dated June 22, 2000. (7)

No. 10H Form of Debenture dated December 6, 2000. (7)

No. 10I Employment Agreement between AutoInfo, Inc. and Harry M.
Wachtel dated as of December 7, 2000. (9)

No. 10J Employment Agreement between AutoInfo, Inc. and William
Wunderlich dated December 7, 2000. (9)

No. 10K Amendment to Employment Agreement between AutoInfo, Inc. and
Harry M. Wachtel dated as of May 7, 2004.*

No. 10L Amendment to Employment Agreement between AutoInfo, Inc. and
William Wunderlich dated May 7, 2004.*

No. 10M Stock Purchase Agreement between AutoInfo, Inc and Kinderhook
Partners, LP dated January 21, 2004.(10)

No. 10N Registration Rights Agreement between AutoInfo, Inc. and
Kinderhook Partners, LP, et al, dated October 4, 2004.*

No. 10O First Amendment to Revolving Credit and Security Agreement
between Wachovia Bank and AutoInfo, Inc., et al *

No. 14A Code of Ethics.(10)

No. 21A Subsidiaries of the Registrant. *

No. 23A Consent of Dworken, Hillman, LaMorte & Sterczala, P.C.,
independent registered public accounting firm.*

31A Certification of Chief Executive Officer Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.*

31B Certification of Chief Financial Officer Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.*

32A Certification of Chief Executive Officer Pursuant to 18 U.S.C.
Section 1350, as adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.*

32B Certification of Chief Financial Officer Pursuant to 18 U.S.C.
Section 1350, as adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.*

----------
* Filed as an exhibit hereto.

(1) This Exhibit was filed as an Exhibit to our definitive proxy statement
dated October 20, 1986 and is incorporated herein by reference.

(2) This Exhibit was filed as Exhibit to our Registration Statement on Form
S-1 (File No. 33-15465) and is incorporated herein by reference.

(3) This Exhibit was filed as an Exhibit to our definitive proxy statement
dated September 25, 1989 and is incorporated herein by reference.

(4) This Exhibit was filed as an Exhibit our definitive proxy statement dated
October 2, 1992 and is incorporated herein by reference.

(5) This Exhibit was filed as an Exhibit to our Current Report on Form 8-K
dated March 30, 1995 and is incorporated herein by reference.

(6) This Exhibit was filed as an Exhibit to our Annual Report on Form 10-K for
the year ended December 31, 1997 and is incorporated herein by reference.

(7) This Exhibit was filed as an Exhibit to our Current Report on Form 8-K
dated December 6, 2000 and is incorporated herein by reference.

(8) This Exhibit was filed as an Exhibit to our Annual Report on Form 10-K for
the year ended December 31, 1999 and is incorporated herein by reference.

(9) This Exhibit was filed as an Exhibit to our Annual Report on Form 10-KSB
for the year ended December 31, 2000 and is incorporated herein by
reference.

(10) This Exhibit was filed as an Exhibit to our Annual Report on Form 10-KSB
for the year ended December 31, 2003 and is incorporated herein by
reference.

PRINCIPAL ACCOUNTING FEES AND SERVICES

2004 2003
------- -------
Audit fees $48,480 $46,570
Audit related fees -- --
Tax fees -- --
All other fees -- --
Total fees $48,480 $46,570
------- -------

Audit Committee Pre-Approval Policies and Procedures

Our audit committee charter provides that the audit committee will
pre-approve audit services and non-audit services to be provided by our
independent auditors before the accountant is engaged to render these services.
The audit committee may consult with management in the decision-making process,
but may not delegate this authority to management. The audit committee may
delegate its authority to pre-approve services to one or more committee members,
provided that the designees present the pre-approvals to the full committee at
the next committee meeting.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d), the Securities
Exchange Act of 1934, the registrant has duly caused this Report to be signed on
March 15, 2005 on its behalf by the undersigned, thereunto duly authorized.

AutoInfo, Inc.

By: /s/ Harry M. Wachtel
-------------------------------
Harry M. Wachtel, President and
Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1934, this Report
has been signed below by the following persons on behalf of the registrant and
in the capacities indicated.

/s/ Harry M. Wachtel
-----------------------------
Harry M. Wachtel President, Chief Executive Officer and March 15, 2005
Chairman of the Board
(Principal Executive Officer)

/s/ William I. Wunderlich
-----------------------------
William I. Wunderlich Chief Financial Officer March 15, 2005
(Principal Accounting Officer)

/s/ Mark Weiss
-----------------------------
Mark Weiss Director March 15, 2005

/s/ Peter C. Einselen
-----------------------------
Peter C. Einselen Director March 15, 2005

/s/ Thomas C. Robertson
-----------------------------
Thomas C. Robertson Director March 15, 2005

AUTOINFO, INC. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm F-2

Consolidated Balance Sheets as of December 31, 2004 and 2003 F-3

Consolidated Statements of Income for the Years Ended
December 31, 2004 and 2003 F-4

Consolidated Statements of Stockholders' Equity for the Years Ended
December 31, 2004 and 2003 F-5

Consolidated Statements of Cash Flows
for the Years Ended December 31, 2004 and 2003 F-6

Notes to Consolidated Financial Statements F-7

Information required by schedules called for under Regulation S-X is either not
applicable or is included in the Consolidated Financial Statements or Notes
thereto.

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of
AutoInfo, Inc.

We have audited the accompanying consolidated balance sheets of AutoInfo, Inc.
and subsidiaries as of December 31, 2004 and 2003, and the related consolidated
statements of income, stockholders' equity, and cash flows for the years 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 audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of AutoInfo, Inc. and subsidiaries
as of December 31, 2004 and 2003 and the results of their operations and their
cash flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America.

February 11, 2005
Shelton, Connecticut

/s/ Dworken, Hillman, LaMorte & Sterczala, P.C.
-----------------------------------------------
Dworken, Hillman, LaMorte & Sterczala, P.C.

AUTOINFO, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

ASSETS (Note 2)

December 31
-------------------------------
2004 2003
------------ ------------

Current assets:
Cash and cash equivalents $ 38,000 $ 133,000
Accounts receivable, net of allowance for doubtful accounts
of $60,000 9,658,000 4,881,000
Loan receivable (Note 3) -- 100,000
Deferred income taxes (Note 4) 369,000 248,000
Other current assets 679,000 292,000
------------ ------------

Total current assets 10,744,000 5,654,000

Fixed assets, net of depreciation 69,000 71,000

Deferred income taxes (Note 4) 952,000 536,000

Other assets 30,000 25,000
------------ ------------

$ 11,795,000 $ 6,286,000
============ ============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Loan payable (Note 2) $ 1,998,000 $ 1,046,000
Convertible subordinated debentures (Note 2) -- 575,000
Accounts payable and accrued liabilities 5,385,000 2,773,000
------------ ------------

Total current liabilities 7,383,000 4,394,000
------------ ------------

Commitments and contingencies (Note 5)

Stockholders' equity : (Note 6)
Common stock - authorized 100,000,000 shares, $.001 par
value; issue and outstanding 31,218,000 and 27,383,000 as
of December 31, 2004 and 2003, respectively 31,000 27,000
Other capital 324,000 --
Deferred compensation (277,000) --
Additional paid-in capital 19,026,000 18,023,000
Deficit (14,692,000) (16,158,000)
------------ ------------

Total stockholders' equity 4,412,000 1,892,000
------------ ------------

$ 11,795,000 $ 6,286,000
============ ============

The accompanying notes are an integral part of these
consolidated financial statements.

AUTOINFO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME

For The Years Ended December 31,
----------------------------------
2004 2003
------------ ------------

Gross revenues $ 46,492,000 $ 27,171,000
Cost of transportation 37,758,000 22,095,000
------------ ------------

Net revenues 8,734,000 5,076,000
------------ ------------

Commissions 5,179,000 2,955,000
Operating expenses 2,449,000 1,450,000
------------ ------------
7,628,000 4,405,000
------------ ------------

Income from operations 1,106,000 671,000
------------ ------------

Other charges (credits):
Investment income -- (6,000)
Interest expense 120,000 131,000
------------ ------------
120,000 125,000
------------ ------------

Income before income taxes (benefit) 986,000 546,000
Income taxes (benefit) (Note 4) (480,000) (754,000)
------------ ------------

Net income 1,466,000 1,300,000
============ ============

Net income per share (basic) $ .05 $ .05
Net income per share (diluted) $ .04 $ .05

Weighted average number of common shares (basic) 30,915,000 27,355,000
Weighted average number of common shares (diluted) 33,438,000 28,789,000

The accompanying notes are an integral part of these
consolidated financial statements.

AUTOINFO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

Shares of
Common Additional
Stock Common Other Deferred Paid - In
Outstanding Stock Capital Compensation Capital Deficit
----------- ----- ------- ------------ ------- -------

Balance, January 1, 2003 27,348,000 $ 27,000 $ -- $ -- $18,019,000 $(17,458,000)

Exercise of stock options 35,000 -- 4,000

Net income 1,300,000
----------- ----------- -------- --------- ----------- ------------

Balance, December 31, 2003 27,383,000 27,000 -- -- 18,023,000 (16,158,000)

Sale of common shares 1,333,000 2,000 415,000

Conversion of subordinated
debentures (Note 2) 2,300,000 2,000 573,000

Exercise of stock options 202,000 -- 15,000

Shares granted under stock
option plans to non-employees 324,000 (324,000)

Compensation expense 47,000

Net income 1,466,000
----------- ----------- -------- --------- ----------- ------------

Balance, December 31, 2004 31,218,000 $ 31,000 $324,000 $(277,000) $19,026,000 $(14,692,000)
=========== =========== ======== ========= =========== ============

The accompanying notes are an integral part of these
consolidated financial statements.

AUTOINFO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

For The Years Ended December 31,
--------------------------------
2004 2003
----------- -----------

Cash flows from operating activities:
Net income $ 1,466,000 $ 1,300,000
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation and amortization expenses 40,000 38,000
Deferred compensation expense 47,000
Deferred income taxes (537,000) (784,000)

Changes in assets and liabilities:
Accounts receivable, net (4,777,000) (1,885,000)
Other current assets (398,000) (218,000)
Other assets 105,000 (2,000)
Accounts payable and accrued liabilities 2,612,000 492,000
----------- -----------

Net cash used in operating activities (1,442,000) (1,059,000)
----------- -----------

Cash flows from investing activities:
Capital expenditures (37,000) (42,000)
----------- -----------

Net cash used in investing activities (37,000) (42,000)
----------- -----------

Cash flows from financing activities:
Sale of common shares 417,000
Conversion of subordinated debentures 575,000
Exercise of stock options 15,000 4,000
Increase in borrowings, net 377,000 546,000
----------- -----------

Net cash provided by financing activities 1,384,000 550,000
----------- -----------

Net change in cash and cash equivalents (95,000) (551,000)
Cash and cash equivalents, beginning of year 133,000 684,000
----------- -----------

Cash and cash equivalents, end of year $ 38,000 $ 133,000
=========== ===========

The accompanying notes are an integral part of these
consolidated financial statements.

AUTOINFO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2004 and 2003

Note 1 - Business and Summary of Significant Accounting Policies

Business

Through our wholly-owned subsidiary, Sunteck Transport Co., Inc.
(Sunteck), we are a non-asset based transportation services company, providing
transportation capacity and related transportation services to shippers
throughout the United States, and to a lesser extent, Canada. Our non-asset
based services include ground transportation coast to coast, local pick up and
delivery, air freight and ocean freight. We have strategic alliances with less
than truckload, truckload, air, rail and ocean common carriers to service our
customers' needs. Our business services emphasize safety, information
coordination and customer service and are delivered through a network of
independent commissioned sales agents and third party capacity providers
coordinated by us. The independent commissioned sales agents typically enter
into contractual arrangements with Sunteck and are responsible for locating
freight and coordinating the transportation of the freight with customers and
capacity providers. The third party capacity providers consist of independent
contractors who provide truck capacity to us, including owner-operators who
operate under our contract carrier license, air cargo carriers and railroads.
Through this network of agents and capacity providers, Sunteck operates a
transportation services business with revenue of approximately $47 million
during our most recently completed fiscal year.

Summary of Significant Accounting Policies

Basis of Presentation

The financial statements of the Company have been prepared using the
accrual basis of accounting under accounting principles generally accepted in
the United States of America (GAAP).

Principles of Consolidation

The consolidated financial statements include the accounts of the
AutoInfo, Inc. (the Company), its wholly-owned subsidiary Sunteck Transport Co.,
Inc. and its wholly-owned subsidiary Sunteck

Transport & Logistics, Inc., collectively (Sunteck). All significant
intercompany balances and transactions have been eliminated in consolidation.

Revenue Recognition

As a third party transportation logistics provider, the Company acts as
the shippers' agent and arranges for a carrier to handle the freight. Gross
revenues consist of the total dollar value of services purchased by shippers.
Revenue is recognized upon the delivery of freight, at which time the related
transportation cost, including commission, is also recognized. At that time, the
Company's obligations are completed and collection of receivables is reasonably
assured.

Emerging Issues Task Force No. 99-19, "Reporting Revenues Gross as a
Principal Versus Net as an Agent" (EITF 99-19), establishes criteria for
recognizing revenues on a gross or net basis. The Company is the primary obligor
in its transactions, has all credit risk, maintains substantially all risk and
rewards, has discretion in selecting the supplier, and has latitude in pricing
decisions. Accordingly, the Company records all transactions at the gross
amount, consistent with the provisions of EITF 99-19.

Provision For Doubtful Accounts

The Company continuously monitors the creditworthiness of its customers
and has established an allowance for amounts that may become uncollectible in
the future based on current economic trends, its historical payment and bad debt
write-off experience, and any specific customer related collection issues.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash in banks.

Fixed Assets

Fixed assets as of December 31, 2004 and 2003, consisting predominantly of
furniture, fixtures and equipment, were carried at cost net of accumulated
depreciation. Depreciation of fixed assets was provided on the straight-line
method over the estimated useful lives of the related assets which range from
three to five years.

Income Per Share

Basic income per share is based on net income divided by the weighted
average number of common shares outstanding. Common stock equivalents
outstanding were 2,523,000 and 1,434,000 for the year ended December 31, 2004
and 2003, respectively.

Use of Estimates

The preparation of these financial statements in conformity with GAAP
requires management to make certain estimates and assumptions. These estimates
and assumptions affect the reported amounts of assets, liabilities and
contingent liabilities at the date of the financial statements and the reported
amounts of revenue and expenses during the periods presented. The Company
believes that all such assumptions are reasonable and that all estimates are
adequate, however, actual results could differ from those estimates.

Income Taxes

The Company utilizes the asset and liability method for 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 and future benefits to be
recognized upon the utilization of certain operating loss carryforwards.
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 effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.

Stock-Based Compensation

The Company applies Statement of Financial Accounting Standards No. 123,
"Accounting for Stock Based Compensation" (SFAS 123). As permitted by SFAS 123,
the Company has chosen to continue to apply Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees" (APB 25) and, accordingly, no
compensation cost has been recognized for stock options issued to employees in
the financial statements.

The pro-forma effect of options issued to employees on net income and
earnings per share, utilizing the Black-Scholes option-pricing model, consistent
with the method stipulated by SFAS 123, was not material to the Company's
results of operations.

The Company accounts for stock options issued to non-employees using the
fair value method in accordance with SFAS 123. Deferred compensation,
representing the fair market value of the options issued utilizing the
Black-Scholes option-pricing model, is charged to earnings over the vesting
period.

New Accounting Pronouncements

Segment Information

The Company provides transportation capacity and related logistics
services through its integrated network of independent agents and third party
capacity providers. For the purpose of applying Statement of Financial
Accounting Standards No. 131, "Disclosures About Segments of an Enterprise and
Related Information", management has determined that it operates in a single
business segment.

Note 2 - Debt

Loan Payable

In May 2003, the Company entered into a $1.5 million Line of Credit,
expiring in May 2004, with a commercial lending institution, secured by
substantially all assets of the Company. In 2004, this Line of Credit was
increased to $2.5 million, expiring in June 2005. The line provides for interest
at the prime rate plus 1/2% and the maintenance of certain financial covenants.
Interest of $59,000 and $27,000 was charged to operations in 2004 and 2003,
respectively.

In August 2001, the Company entered into a $500,000 Line of Credit
Agreement with James T. Martin, a significant stockholder of the Company,
secured by the Company's accounts receivable. Interest on the outstanding
borrowings was 17% per annum, payable quarterly in arrears. This credit facility
was repaid in full in May 2003. Interest of $35,000 was charged to operations in
2003.

Convertible Subordinated Debentures

In December 2000, the Company obtained financing totaling $575,000 from
certain related parties in the form of ten year 12% Subordinated Convertible
Debentures (Debentures). In January 2004, these Debentures were converted into
2,300,000 shares of common stock. Interest of $4,000 and $69,000 was charged to
operations in each of 2004 and 2003, respectively.

Note 3 - Loan Receivable

In December 2001, the Company made a loan of $100,000 to the father-in-law
of Harry Wachtel, the president of the Company. This loan bore interest at 4%
per annum and was repaid in full in March 2004.

Note 4- Income Taxes

For the years ended December 31, 2004 and 2003, the provision for income
taxes consisted of the following:

2004 2003
------------------------- -------------------------
Current Deferred Current Deferred
--------- --------- --------- ---------

Income tax expense before application of
operating loss carryforwards $ 393,000 $ -- $ 205,000 $ --
Income tax expense (benefit) of
operating loss carryforwards (336,000) 336,000 (175,000) --
Change in valuation allowance -- (873,000) -- (784,000)
------------------------- -------------------------

Income tax expense (benefit) $ 57,000 $(537,000) $ 30,000 $(784,000)
========================= =========================

The following table reconciles the Company's effective income tax rate on
income from operations to the Federal Statutory Rate for the years ended
December 31, 2004 and 2003.

2004 2003
-------- --------

Federal Statutory Rate 34.0% 34.0%

State income taxes, net of federal benefit 5.7 3.6

Effect of:
Utilization of operating loss carryforward (34.0) (34.0)
Change in valuation allowance (88.4) (141.6)
-------- --------
(48.7)% (138.0)%
======== ========

Deferred taxes are comprised of the following at December 31, 2004 and
2003:

December 31, December 31,
2004 2003
------------ ------------

Deferred tax asset:
Net operating loss carryforward $ 5,590,000 $ 5,926,000
----------- -----------

Gross deferred tax asset 5,590,000 5,926,000
Less: valuation allowance (4,269,000) (5,142,000)
----------- -----------

Deferred tax asset $ 1,321,000 $ 784,000
=========== ===========

The deferred tax asset represents expected future tax savings resulting
from the Company's net operating loss carryforward. As of December 31, 2004, the
Company has a net operating loss carryforward of approximately $16.5 million for
federal income tax purposes which expire through 2014. Utilization of this
benefit is primarily subject to the extent of future earning of the Company, and
may be limited by, among other things, shareholder changes, including the
possible issuance by the Company of additional shares in one or more financing
or acquisition transactions. The Company has established a valuation allowance
for the portion of the possible tax savings not likely to be realized by the end
of the carryforward period.

Based upon available objective evidence, including the Company's
post-merger history of profitability, management believes it is more likely than
not that forecasted taxable income will be sufficient to utilize a portion of
the net operating loss carryforward before its expiration in 2014. Accordingly,
in 2004 and 2003 the valuation allowance was reduced by $873,000 and $784,000,
respectively. However, there can be no assurance that the Company will meet its
expectations of future income.

Note 5 - Commitments and Contingencies

Leases

The Company is obligated under non-cancelable operating leases for
premises expiring at various dates through April 2010. Future minimum lease
payments are $62,000, $68,000, $73,000, $67,000 and $70,000 for the years ended
December 31, 2005, 2006, 2007, 2008 and 2009, respectively. Rent expense for the
years ended December 31, 2004 and 2003 was $77,000 and $53,000, respectively.

Other Agreements

The Company has employment agreements with Messrs. Wachtel, the president,
and Wunderlich, the executive vice president and chief financial officer of the
Company, who are also stockholders. The agreements expire in March 2006 and
provide for minimum annual compensation of $205,000 and $100,000, and bonuses
equal to 10% of the Company's consolidated pre-tax profit (as defined) up to
$1,250,000, respectively. Bonus payments to each of Messrs. Wachtel and
Wunderlich were $125,000 for the year ended December 31, 2004 and $51,531 and
$55,281 for the year ended December 31, 2003, respectively.

Litigation

The Company is involved in certain litigation arising in the ordinary
course of its business. In the opinion of management, these matters will not
have a material adverse effect on the Company's financial position or liquidity.

Note 6 - Stockholders' Equity

Stock Option Plans

The Company has seven stock option plans, its 1985, 1986, 1989, 1992,
1997, 1999 and 2003 Plan (collectively, the Plans). Pursuant to the Plans, a
total of 7,842,500 shares of Common Stock were made available for grant of stock
options. Under the Plans, options have been granted to key personnel for terms
of up to ten years at not less than fair value of the shares at the dates of
grant and are exercisable in whole or in part at stated times commencing one
year after the date of grant. No further grants will be made under the 1985,
1986, 1989 or 1992 Plans. At December 31, 2004, options to purchase 5,594,000
shares of common stock were outstanding under the Plans.

Option activity for the years ended December 31, 2004 and 2003 was as
follows:

Granted Exercisable
------------------------------- ------------------------------
Weighted Weighted
Number of Average Number of Average
Shares Exercise Price Shares Exercise Price
--------- -------------- --------- --------------

Outstanding at January 1, 2003 2,583,000 .11
Forfeited during the year (222,000) .10
Exercised during the year (35,000) .10
Granted during the year 1,769,000 .20
--------- ----

Outstanding at December 31, 2003 4,095,000 $.15 1,802,000 $.10
--------- ----
Forfeited during the year (736,000) .16
Exercised during the year (202,000) .07
Granted during the year 2,437,000 .44
--------- ----

Outstanding December 31, 2004 5,594,000 $.28 2,332,000 $.14
--------- ---- --------- ----

Weighted average fair value of options granted:

2004 $ .42
2003 $ .20

Note 7 - Fair Value of Financial Instruments

The following disclosures of fair value were determined by management
using available market information and appropriate valuation methodologies.
Considerable judgment is necessary to interpret market data and develop
estimated fair value. Accordingly, the estimates presented herein are not
necessarily indicative of the amounts the Company could realize on disposition
of the financial instruments. The use of different market assumptions and/or
estimation methodologies may have a material effect on the estimated fair value
amounts.

Cash, accounts receivable, loans receivable, accounts payable and accrued
liabilities, loans payable and convertible subordinated debentures are carried
at amounts which reasonably approximate fair value.

Note 8 - Quarterly Results of Operations (Unaudited)

Year Ended December 31, 2004
Quarter Ended
------------------------------------------------------------------
Mar 31 June 30 Sep 30 Dec 31
------------ ------------ ------------ ------------

Gross revenues $ 8,159,000 $ 10,960,000 $ 12,938,000 $ 14,435,000
------------ ------------ ------------ ------------

------------ ------------ ------------ ------------
Net income $ 176,000 $ 271,000 $ 278,000 $ 741,000
============ ============ ============ ============

Basic net income per share $ .006 $ .009 $ .009 $ .023
------------ ------------ ------------ ------------
Diluted net income per share $ .005 $ .008 $ .008 $ .022
============ ============ ============ ============

Year Ended December 31, 2003
Quarter Ended
--------------------------------------------------------------
Mar 31 June 30 Sep 30 Dec 31
----------- ----------- ----------- -----------

Gross revenues $ 5,141,000 $ 6,102,000 $ 7,552,000 $ 8,376,000
----------- ----------- ----------- -----------

----------- ----------- ----------- -----------
Net income $ 79,000 $ 108,000 $ 172,000 $ 941,000
=========== =========== =========== ===========

Basic and diluted net income per
share $ .003 $ .004 $ .006 $ .032
=========== =========== =========== ===========

Note 9 - Supplemental Disclosure of Cash Flow Information

Cash paid for interest in 2004 and 2003 was $59,000 and $131,000, respectively.

The Company paid no income taxes in 2004 and 2003.