<PAGE>   1
                                                    [Draft of June 26, 1997/BDO]


                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                              ----------------

                                   FORM 10-K
(Mark One)
                   [X]    Annual Report Pursuant to Section 13 or 15(d) of the
                          Securities Exchange Act of 1934 For the Fiscal Year
                          Ended March 31, 1997

                   [ ]    Transition Report Pursuant to Section 13 or 15(d) of
                          the Securities Exchange Act of 1934 For the
                          Transition Period from                   to

                           Commission File No. 0-9539

           S E A R C H   F I N A N C I A L   S E R V I C E S   I N C.
                       (F/K/A SEARCH CAPITAL GROUP, INC.)
             (Exact name of registrant as specified in its charter)

                DELAWARE                                41-1356819
      (State or other jurisdiction                    (IRS Employer
   of incorporation or organization)                Identification No.)
      600 NORTH PEARL, SUITE 2500             
         PLAZA OF THE AMERICAS                
             DALLAS, TEXAS                              75201-2899
(Address of principal executive offices)                (Zip Code)


      Registrant's telephone number, including area code:  (214)  965-6000

                              ----------------

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

          Securities registered pursuant to Section 12(g) of the Act:
                          COMMON STOCK, $.01 PAR VALUE
               9%/7% CONVERTIBLE PREFERRED STOCK, $.01 PAR VALUE
                        WARRANTS EXPIRING MARCH 14, 2001
                                (Title of class)

Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or Section 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                     Yes  [X]      No  [ ]


Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ ]

       APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY PROCEEDINGS
                        DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the Registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.

                     Yes  [X]      No  [ ]

The aggregate market value of the voting stock of the Registrant held by
non-affiliates was approximately $12,395,141 as of June 23, 1997.

As of June 23, 1997,  3,016,444 shares of the Registrant's common stock, $.01
par value per share, were outstanding.

                      DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant's Annual Report to Stockholders for the fiscal year
ended March 31, 1997 are incorporated by reference into Parts II and IV of this
Form 10-K.  Portions of the Registrant's Proxy Statement for its Annual Meeting
of Stockholders scheduled to be held on July 28, 1997 are incorporated by
reference into Part III of this Form 10-K.
<PAGE>   2



                                     PART I

ITEM 1.    BUSINESS


OVERVIEW OF THE COMPANY

         Search Financial Services Inc. (herein called "Search" and together
with its consolidated subsidiaries called the "Company") is a financial
services company specializing in the purchase and management of used motor
vehicle receivables, typically those owed by consumer obligors who do not
qualify for traditional financing.  The Company purchases its receivables
either through the purchase of individual receivables from franchise and
independent automobile and light truck dealers ("Dealers") or through bulk
purchases of receivables from Dealers and other finance companies who originate
them in the sale of vehicles.  During the year ended March 31, 1997, the
Company commenced operations in other consumer lending areas by opening several
consumer lending branches.  As of May 31, 1997, 11 consumer lending branches
were operational.

         The automobile finance industry is the second largest consumer finance
market in the United States totaling over $350 billion as of December 1996,
according to the Federal Reserve Board.  Automobile financing is usually
provided by finance companies affiliated with manufacturers, banks, credit
unions and independent finance companies.  The financings are generally
segmented according to the type of car sold (new or used) and the credit
characteristics of the borrower (generally, prime or non-prime).  Non-prime
borrowers are individuals who, due to either incomplete or imperfect credit
histories, are unable to obtain traditional financing through a bank or one of
the finance companies affiliated with manufacturers.  It is generally believed
that non-prime financing currently accounts for approximately 20% of the
automobile finance market.  Through its wholly-owned subsidiary, Automobile
Credit Acceptance Corp., the Company specializes in purchasing receivables
secured by used cars and light trucks and owed by non-prime obligors.

         The Company maintains and monitors standards, both initial and
ongoing, that Dealers have to meet before the Company will consider purchasing
their receivables.  As of March 31, 1997, the Company had approximately 250
Dealers in its dealer network (the "Dealer Network") compared to approximately
50 Dealers in the Dealer Network at March 31, 1996.

         On February 7, 1997, the Company entered into an agreement to acquire
MS Financial, Inc. ("MSF") in a stock- for-stock exchange.  MSF, headquartered
in Jackson, Mississippi, is a specialized consumer finance company that
purchases and services retail installment contracts on new and used cars and
light trucks.  The acquisition is subject to customary conditions, including
approvals of the stockholders of the Company and MSF.  MSF's principal
stockholders, which together own approximately 77% of MSF's outstanding common
stock, have agreed to vote their shares in favor of the acquisition.  The
affirmative vote of a majority of the outstanding shares of MSF's common stock
is required for approval of the acquisition by MSF's stockholders.  As of March
31, 1997, MSF had total assets of $91,015,000, total liabilities of $73,852,000
and stockholders equity of $17,162,000.  The acquisition is expected to close
in late July or early August 1997.


DESCRIPTION OF HISTORICAL OPERATIONS AND REORGANIZATION OF FUND SUBSIDIARIES

         Prior to November 1994, the Company financed the purchase of used
motor vehicle receivables through the private and public sale of
interest-bearing notes (the "Notes") issued by wholly owned subsidiaries
organized specifically for this purpose (the "Fund Subsidiaries") and through
reinvestment of operating cash flow.

         After November 1994, due primarily to higher than expected losses in
the collection of its receivables held by these Fund Subsidiaries, the Company,
directed by then existing management, abandoned its Note offering activities
and sharply reduced all receivables purchasing activities while attempting to
evaluate and, where necessary, modify or remedy purchasing and collection
procedures.  At the same time, the Company's directors began searching for new





<PAGE>   3
management which could further identify problems, stabilize operations, and
develop a financial plan and strategy for turnaround and future growth.

         From late 1994 until March 1996, the Company operated under financial
constraints and had limited ability to raise new operating capital.  The
purchasing of receivables for the Fund Subsidiaries was governed by trust
indentures which restricted management's ability to alter its receivables
purchasing criteria in accordance with stricter standards developed by new
management.  In addition, the Company's inability to access credit sources due
to the historical losses on the Company's receivables portfolio and limitations
on investment of funds repaid on existing portfolios dramatically reduced the
Company's ability to finance the purchase of new receivables.  At the same
time, to improve the quality of the Company's portfolio of receivables,
purchasing procedures were tightened and management significantly reduced the
number of Dealers from whom the Company would purchase receivables.

         On August 14, 1995, in order to consummate a debt-to-equity conversion
plan, each of the Fund Subsidiaries filed for reorganization under Chapter 11
of the U. S. Bankruptcy Code.  On March 4, 1996, the Court entered an order
(the "Confirmation Order") confirming a Third Amended Joint Plan of
Reorganization (the "Joint Plan") for all of the Fund Subsidiaries.  The Joint
Plan became effective on March 15, 1996 (the "Effective Date").

         As a consequence of effectiveness of the Joint Plan, on the Effective
Date, the assets of the Fund Subsidiaries (less funding of a litigation trust
and professional fees) were transferred to Search by operation of law in
exchange for Search Common Stock and 9%/7% Convertible Preferred Stock and cash
to be distributed to the former holders of the Notes and the Notes were deemed
canceled.


AUTOMOBILE FINANCE OPERATIONS SINCE REORGANIZATION OF THE FUND SUBSIDIARIES

         Since confirmation of the Joint Plan, the Company has implemented new
programs intended to expand its receivables purchasing operations into higher
credit quality receivables.  Although these new programs target the Company's
historical market of purchasers with non-standard credit histories, the Company
is focusing more on purchasers with job and residence stability, higher income,
and re-established positive credit.  Receivables purchased under the new
programs typically carry interest rates ranging from approximately 18% to 26%
and are generally secured by automobiles up to six years in age that have been
driven no more than an average of 25,000 miles per year and fewer than 80,000
total miles.  The Company's principal market focus has been in the southern and
southwestern states where "self-help" repossession laws promote efficient
collection efforts with respect to defaulted receivables, and where milder
climates generate higher collateral values for used vehicles. However, the
Company is currently expanding the marketing of its new programs to include
states in other regions of the United States with laws similar to those of the
states in which the Company has focused in the past.

         In connection with the new programs, the Company has established
underwriting guidelines to evaluate the quality of receivables, the most
significant of which are as follows:

   o     The obligor must show one year verifiable residence and three years
         traceable residence 

   o     The Company must be able to verify one year of employment for each 
         obligor 

   o     The obligor must show a positive pay history within the previous two 
         years 

   o     The obligor must show gross income of at least $1,200 per month 

   o     The maximum payment for the purchased vehicle cannot exceed 20% of 
         the obligor's gross income 
 
   o     The debt-to-income gross ratio of the obligor cannot exceed 50% 

   o     The downpayment must be 10% of the retail selling price of the vehicle.

For each receivable purchased pursuant to the new programs, the Company
generally receives an acquisition fee and purchases the receivables at a
discount, ranging from 5% to 10%, depending upon the value of the vehicle and
the





                                      -2-
<PAGE>   4
term of the receivable.  As of June 23, 1997, less than 10% of the receivables
owned by the Company were purchased using the criteria from the Company's old
receivables purchasing programs.

         The Company purchases receivables from a network of Dealers that
originate motor vehicle receivables through the sale of automobiles and light
trucks.  During the reorganization process, because the Company had abandoned
its Note offering activities and sharply reduced all receivables purchasing
activities, it also experienced a significant reduction in the size of its
Dealer Network. The Company is currently marketing its new programs to Dealers
through the efforts of employees and marketing representatives.  The marketing
representatives include both individuals and organizations specializing in the
marketing of financing programs to Dealers.

         The Dealers are unaffiliated with the Company.  Each Dealer enters
into an agreement with the Company and agrees to use Company-approved contract
forms.  Under the dealer agreements, the Company is under no obligation to
purchase any receivables from the Dealer and the Dealer is not obligated to
submit any contracts to the Company.

         It is the Company's goal to market the new programs primarily to
franchise Dealers and qualified independent Dealers.  The Company has set
standards for Dealers to qualify as members of the Dealer Network.  In most
cases, to qualify for membership in the Dealer Network, a Dealer must have been
in business at least two years, be in good standing with regulatory and
auto-association authorities and meet certain credit standards.  The Company
generally verifies that a Dealer meets these standards through credit bureau
reporting services.  Franchise Dealers normally qualify for membership in the
Dealer Network.

         Membership in the Dealer Network can be terminated at the Company's
discretion.  Company personnel review the receivables submitted by and
purchased from each Dealer.  Decisions to terminate a Dealer from the Dealer
Network are made on a case-by-case basis depending on the past performance of
the Dealer and performance of the receivables purchased from the Dealer.

         Dealers initiate receivable sales transactions directly with the
Company's centralized purchasing personnel by faxing a consumer application to
the Company.  The Company's decision whether to purchase a receivable is
typically communicated to the Dealer within approximately one hour, and, if the
application is approved, documentation is completed generally within one week.
The Company pays the Dealer for the receivable after receipt and review of the
original receivable contract and other required documents and after
verification procedures are completed.

         The Company's receivables purchasing personnel review each receivable
for compliance with the Company's underwriting criteria, utilizing standard and
supporting documentation provided by the selling Dealer and national
computerized databases that automatically interact with the Company's
proprietary Auto Note Management System Software ("ANMS").  The Company
verifies, by reference to published wholesale vehicle value guides, the average
wholesale prices of the underlying vehicles.  In most instances, the Company
performs this pre-purchase receivable evaluation within one hour, thereby
assisting the Dealer in the timely sale of the underlying vehicle.  This
one-hour turnaround time is considered by the Company to be an important
competitive factor, and the Company monitors its turnaround time through the
ANMS.  Once a receivable is purchased, the Company services the receivable out
of one of its branch offices.  The Company considers its branch office network
to be a competitive factor as it facilitates collection and servicing efforts.

         The Company's underwriting strategy differs from many of its
competitors.  Many of the Company's competitors make only bulk purchases of
receivables and/or retain recourse against the selling Dealer for non-payment
of the receivable through quasi-loan arrangements, dealer holdbacks, reserve
accounts or other collection collateral or guaranties. Other competitors will
only purchase receivables that have existed and performed in an acceptable
manner for a period of time.  Purchase and credit criteria and verification
procedures also differ from competitor to competitor.

         In addition to the purchases of individually selected receivables, the
Company seeks to acquire pools of non-prime automobile receivables ("Bulk
Purchases") from Dealers or other finance companies.  A Bulk Purchase





                                      -3-
<PAGE>   5
is analyzed on both an individual receivable and a pooled basis using criteria
similar to those used to evaluate individual receivable purchases from Dealers.
During the fiscal year ended March 31, 1997, the Company completed Bulk
Purchases of approximately $34,518,000 of gross receivables and acquired
$27,490,000 of gross receivables in other acquisitions.

         Following the purchase of each receivable, the Company mails a
statement to the obligor a minimum of seven days before each payment becomes
due.  These statements instruct the obligor to remit payments directly to the
Company's post office box or lockbox.  Payments may also be made in person at
the Company's offices or via Western Union Quick Collect(TM) service or through
Ace Cash Express(TM).  The Company's principal collection operation is based in
Dallas, Texas.

         The Company has a staff of collection personnel that monitor payments
on the Company's receivables and contact obligors via telephone when payments
are delinquent.  Collections personnel generally have (i) a minimum of one year
collection experience, (ii) proven ability to obtain corrective action on
delinquent accounts and (iii) knowledge of, and ability to comply with, state
and federal debt collection laws.  Generally, if a receivable shows any
indication of default, the receivable is subjected to enhanced collection
efforts, including intensified telephone and written contacts aimed at
identifying the likelihood and expected amount of payment on the receivable.
At any time after default, the Company may (i) contract with an independent
third party repossession firm to locate and peacefully repossess the motor
vehicle securing the receivable or (ii) seek and obtain an order of a court of
competent jurisdiction for recovery of the motor vehicle.  The decision to
repossess a motor vehicle is made on a case-by-case basis by a collections unit
manager.  Factors considered by these unit managers include recent payments and
willingness of the obligor to commit to payment by a date certain. Any delays
in repossession expose the Company to the risk of reduced resale value for the
vehicle due to additional mileage and the possibility of damage or lack of
necessary maintenance or repairs to the vehicle.  Current Company policy
permits deferment of payments only in very limited instances and only with
senior management approval.  Following repossession of a vehicle, the Company
sells the vehicle on a wholesale basis at the highest available bid at an
unaffiliated motor vehicle auction.

         The Company's collection and repossession activities are administered
with use of a data processing and communications system developed by the
Norwest Financial Information Services Group (the "Norwest System").  The
Company's ability through the ANMS and the Norwest System to relationally
cross-reference receivable collection statistics to a vehicle, Dealer, customer
and geographic location assists the Company in monitoring receivables and
adjusting purchasing procedures and prices.





                                      -4-
<PAGE>   6

AVERAGE RECEIVABLES CHARACTERISTICS

         General.  Set forth below is a summary of pertinent statistics
regarding the average active receivable in the Company's portfolio of motor
vehicle receivables, as of March 31, 1997 and March 31, 1996.

AVERAGE RECEIVABLE CHARACTERISTICS

<TABLE>
<CAPTION>
                                                             AS OF                            AS OF
                                                         MARCH 31, 1997                   MARCH 31, 1996
                                                         --------------                   --------------
<S>                                                       <C>                              <C>
Average Original Term                                       38.56 mos.                       31.72 mos.
Average Remaining Term                                      22.08 mos.                       30.44 mos.
Average APR                                                     24.14%                           23.94%
Average Monthly Payment Amount                             $    304.90                      $    299.40
Average Original Balance                                   $ 12,202.36                      $  9,568.99
Average Gross Balance                                      $  6,602.18                      $  4,638.09
Average Net Receivable                                     $  5,473.19                      $  3,833.35

Weighted Average APR                                            22.92%                           23.81%
</TABLE>

         At March 31, 1997, the Company had an aggregate of 9,421 receivables
in its portfolio with an aggregate total unpaid balance of $62,325,000,
including $10,636,000 in unearned interest and $5,854,000 in credit loss
allowance.  Additionally, the Company had a total of 458 vehicles held for
resale having an estimated value of approximately $1,196,000.

         Seasonality.  The Company's operations are impacted by higher
delinquency rates during certain holiday periods.

         Delinquency.  Generally, the Company considers a receivable to be
impaired if the contractual delinquency is greater than 60 days or the
collateral has been repossessed.  Once impaired, the Company places the
receivable on nonaccrual status, which stops the recognition of interest
income.  The following table breaks out the receivables that the Company
considers unimpaired or accrual status and impaired or nonaccrual status as of
March 31, 1997 and March 31, 1996.

<TABLE>
<CAPTION>
                                                  MOTOR VEHICLE RECEIVABLES - AGING AND DELINQUENCIES
                                                                (Dollars in thousands)

                                           AS OF MARCH 31, 1997                             AS OF MARCH 31, 1996                    
                                  -----------------------------------------       ------------------------------------------
                                                  Total (1)     % of Total                        Total (1)      % of Total     
                                  Number of        Unpaid         Unpaid           Number of        Unpaid         Unpaid       
Contractual Delinquency           Receivables   Installments   Installments       Receivables    Installments   Installments    
-----------------------           -----------   ------------   ------------       -----------    ------------   ------------    

<S>                                 <C>           <C>                <C>                <C>         <C>            <C>          
Accrual Receivables                                                                                                             
  0 to 30 days past due             8,254          $56,074            90%               6,871         $31,816        86%        
  31-60 days past due                 702            3,982             6%                 704           3,179         9%         
                                  ------------------------------------------------------------------------------------------
   Subtotal                         8,956           60,056            96%               7,575          34,995        95%        
                                  ------------------------------------------------------------------------------------------
Nonaccrual Receivables                                                                                                          
  61-180 days past due                461            2,255             4%                 420           2,091         5%         
  181+ days past due                    4               14             0%                   1               -         -          
                                  ------------------------------------------------------------------------------------------
  Subtotal                            465            2,269             4%                 421           2,091         5%         
                                  ------------------------------------------------------------------------------------------
All Receivables (2)                 9,421          $62,325           100%               7,996         $37,086     100.0%     
                                  ==========================================================================================
 Vehicles held for resale
   @ collateral value                 458          $ 1,196                                333         $   566         -          
                                  ==========================================================================================
</TABLE>

(1)      Includes unearned income.
(2)      Active receivables shown on the face of the Company's balance sheet
         exclude 452 and 333 accounts that have been reclassified to vehicles
         held for resale at  March 31, 1997 and March 31, 1996, respectively.





                                                           -5-
<PAGE>   7
         Receivables will become nonaccrual status due to their contractual
delinquency exceeding 60 days or due to repossession of underlying collateral.
The Company also considers certain delinquent receivables that are in the
contractual status of less than 60 days past due to be potential problem
receivables. Uncertainty as to overall economic conditions, regional
considerations, and current trends in portfolio growth cause the Company to
review these receivables for potential problems.

         The percentage of contractually delinquent accounts has decreased from
March 31, 1996 to March 31, 1997.  At the end of March 31, 1996, 5% of the
Company's active contracts were greater than 60 days contractually delinquent
compared to 4% at March 31, 1997.  The decrease in the percentage of
contractually delinquent accounts is due primarily to the shift in composition
of the receivable portfolio from March 31, 1996 to March 31, 1997 from a lower
credit quality customer and lower collateral value to a higher credit quality
customer and generally higher collateral value.  This was accomplished by
tightened purchasing procedures and enhanced collection/repossession efforts.


NON-AUTO CONSUMER FINANCE OPERATIONS

         The Company initiated its activities in non-auto consumer lending with
the purchase of consumer loans with gross balances of $432,000 in August 1996.
The Company opened its first consumer loan office in November 1996 in Baton
Rouge, Louisiana, and as of May 31, 1997, it had established 11 consumer loan
offices in Georgia, Louisiana, Oklahoma, Puerto Rico, Tennessee and Texas.
Gross non-auto consumer loans exceeded $1.3 million at March 31, 1997 and
totaled approximately $2.9 million at May 31, 1997.  The Company plans to have
opened approximately 20 consumer loan branches by the end of fiscal 1998.

         The Company's consumer finance offices provide direct personal loans
and retail sales finance, home equity and second-mortgage lending services to
their customers.  Sales finance loans are available to facilitate the purchase
of household appliances and furnishings, to make home improvements, to pay for
education, vacation and other personal expenses and to consolidate previously
incurred indebtedness.  Consumer loan customers are developed through the
Company's non-prime automobile lending activities, through the acquisition of
retail sales finance contracts from retailers and through existing
relationships of the Company's branch office personnel.  The Company believes
that its non-prime automobile lending and retail sales finance contract
purchasing activities can be an important source of new direct consumer loan
customers and can lead to development of long-term customer relationships.
Consumer loans may be secured or unsecured.

FINANCING

         Hibernia Line of Credit.  In September 1996, Search Funding II, Inc.
("SFII"), a wholly-owned subsidiary of Search, entered into a revolving credit
agreement (the "Line") with Hibernia National Bank.  The Line bears interest at
the prime rate plus one percentage point, or 9.50% as of June 20, 1997.  The
Line has a maximum commitment of $25,000,000 and is limited to a percentage of
eligible contracts held by SFII.  The Line is secured by all SFII assets and
expires on September 11, 1999.  Search has guaranteed the Line.  Search and
SFII must comply with covenants under the Line that require the maintenance of
certain financial ratios and other financial conditions.

         Note payable to La Salle Bank, bears interest at prime rate plus 1%
(9.50% at March 31, 1997), due monthly, requiring monthly principal payments
equal to the positive difference between all cash proceeds received by Search
Funding IV ("SFIV") during the month and the sum of all operating expenses 
incurred by SFIV during the month, with remaining principal due August 2, 1997,
collateralized by all assets of SFIV totaling $14,479,000 at March 31, 1997.
This debt was assumed by the SFIV in connection with the acquisition of assets
from DACC.

         Subordinated Debt and Warehouse Line.  The Company has commenced a
private placement of $35,000,000 of senior subordinated notes with warrants to
purchase common stock and has signed a letter of intent with respect to a $100
million, two-year revolving warehouse line of credit facility.  See "Risk
Factors - Availability of Funding" below.

         Financing with Hall Financial Group, Inc. and Affiliates.  In November
1995, Search entered into a Funding Agreement (the "Funding Agreement") with
Hall Financial Group, Inc. ("HFG").  Pursuant to the Funding Agreement, HFG
made loans totaling $2,283,000 (the "HFG Notes") to Search.  The HFG Notes
could, at the election of HFG or its assignee, be converted into a maximum of
312,500 shares of Search common stock.  Effective April 2, 1996, Hall/Phoenix
Inwood Ltd. ("HPIL"), as assignee of the HFG Notes, converted the HFG Notes
into 312,500 shares of Search common stock.  Because the conversion price
specified in the HFG Notes for these shares was less than the full amount due
under the HFG Notes, Search paid to HPIL the remaining portion of the debt
evidenced by the HFG Notes ($567,000) in cash.





                                      -6-
<PAGE>   8
         The Funding Agreement also provided to HFG the option to purchase
common stock, 9%/7% convertible preferred stock and Warrants.  Effective April
2, 1996, PHIL, as assignee of HFG, fully exercised this purchase option by
paying $4,346,000 to Search for 204,800 shares of common stock, 254,100 shares
of 9%/7% convertible preferred stock and warrants to purchase 484,522 shares of
common stock.

         In November 1996, the Company repurchased all of its securities owned
by HPIL and its affiliates for $4 million in cash and a $5 million subordinated
note.

         Effect of Joint Plan.  As a result of the confirmation and
effectiveness of the Joint Plan, approximately $69,300,000 of debt owed by the
Fund Subsidiaries was canceled.  The assets of the Fund Subsidiaries (net of a
$350,000 deposit to a litigation trust and $2,000,000 escrowed for payment for
professional fees), consisting primarily of approximately $29,000,000 of net
receivables and $16,345,000 of cash, were deemed transferred to Search.
Following the effectiveness of the Joint Plan, consummation of the transactions
with HPIL in April 1996 and repayment of the GECC line of credit, the Company
had no borrowed debt, approximately $31,000,000 in net receivables and
approximately $21,600,000 in cash.  See "Item 8.  Financial Statements and
Supplementary Data" and "Liquidity and Capital Resources."

         Future Financings.  The Company presently intends to continue
purchasing receivables and expand its operations into other consumer lending
areas, both of which will require future financing.  The Company is currently
pursuing several alternatives to meet its needs for liquidity.  These financing
alternatives include subordinated debt financing, securitizations and bank
lines of credit.

COMPETITION

         The Company has numerous competitors engaged in the business of buying
non-prime, used motor vehicle receivables and in making consumer loans.  The
Company in the past had few competitors that purchased receivables from high
credit risk individuals who purchased medium-priced, used motor vehicles in the
Company's then primary geographic markets consisting generally of the
metropolitan areas of Arizona, Georgia, Florida, South Carolina, Oklahoma,
Tennessee and Texas.  The Company's new programs target receivables whose
obligors have somewhat lower credit risk than obligors of receivables
previously purchased by the Company.  Though the Company expects to market the
new programs in a more diverse geographic region, the Company expects to
encounter more competition in the purchase of such lower risk receivables.  The
Company competes to some extent with providers of alternative financing
services, such as floor plan lines of credit from financial institutions, lease
financing and dealer self-financing, and certain purchasers of receivables for
higher-priced, used motor vehicles.  National or regional rental car companies,
finance companies, used car companies, auction houses, dealer groups or other
firms with equal or greater financial resources than the Company could elect to
compete with the Company in its market.  These competitive factors could have a
material adverse effect upon the operations of the Company.

         The Company believes that the primary methods of competition in the
non-prime, used motor vehicle finance industry are establishment of Dealer
relationships, receivables purchasing criteria, marketing, receivables purchase
response time and purchase agreement provisions, including dealer recourse,
reserves or commissions.

         The Company commenced its non-auto consumer finance business in
November 1996.  In that business the Company faces intense competition from
numerous competitors, many of which have been in business for substantial
periods of time and have significantly greater resources than the Company.  The
Company believes that the primary methods of competition in the consumer
finance business are the establishment of relationships with independent
dealers and potential borrowers and loan terms.  The Company intends to hire
experienced individuals with strong customer relationships to manage its
consumer lending branches.





                                      -7-
<PAGE>   9

REGULATION

         Numerous federal and state consumer protection laws impose
requirements upon the origination and collection of consumer receivables.
These federal laws and regulations include, among others, the Truth-in-Lending
Act, the Equal Credit Opportunity Act, the Federal Trade Commission Act, the
Fair Credit Reporting Act, the Fair Indebtedness Collection Practices Act, the
Magnuson-Moss Warranty Act and the Federal Reserve Board's Regulation Z.
Search believes that it maintains all licenses and permits required for its
current operations and is in substantial compliance with all applicable
federal, state and local laws.  There can be no assurance, however, that Search
will be able to maintain all requisite licenses and permits.

         State laws regulate, among other things, the interest rate chargeable
on, and terms and conditions of, motor vehicle retail installment loans.  These
laws also impose restrictions on consumer transactions and require loan
disclosures in addition to those required under federal law.  These
requirements impose specific statutory liabilities upon creditors who fail to
comply with their provisions.  As consumer finance companies, Search and MSF
are subject to various consumer claims and litigation seeking damages and
statutory penalties based upon, among other theories of liability, usury,
wrongful repossession, fraud and discriminatory treatment of credit applicants.

         The Federal Trade Commission ("FTC") has adopted a holder-in-due
course rule which has the effect of subjecting persons who finance consumer
credit transactions (and certain related lenders and their assignees) to all
claims and defenses which the purchaser could assert against the seller of the
goods and services.  Another FTC rule requires that all sellers of used
vehicles prepare, complete and display a "Buyer's Guide" which explains the
warranty coverage (if any) for such vehicles.  Failure of the Dealers to comply
with state and federal credit and trade practice laws and regulations could
result in consumers having rights of recission and other remedies that could
have an adverse effect on Search and MSF.

         In the event of default by an obligor on a motor vehicle receivable or
consumer loan that is secured, the Company has the remedies of a secured party
under the Uniform Commercial Code ("UCC").  The UCC remedies of a secured party
include the right to repossession by self-help means, unless such means would
constitute a breach of the peace.  Unless the obligor voluntarily surrenders a
vehicle, self-help repossession, by an independent third-party repossession
entity engaged by the Company, is the method usually employed by the Company
when an obligor defaults.  If a breach of the peace is likely to occur, or if
applicable state law so requires, the Company must obtain a court order from
the appropriate state court and repossess the vehicle in accordance with that
order.

         In most jurisdictions, including those states in which the Company
presently does or intends to do business, the UCC and other state laws require
a secured party to provide an obligor with reasonable notice of the date, time
and place of any public sale or the date after which any private sale of the
collateral may be held.  Unless waived after default, an obligor has the right
to redeem the collateral prior to actual sale by paying the secured party the
unpaid installments (less any required discount for prepayment) of the
receivable plus reasonable expenses for repossessing, holding, and preparing
the collateral for disposition and arranging for its sale, plus, in some
jurisdictions, reasonable attorneys' fees, or, in some states, by payment of
delinquent installments.


EMPLOYEES

         As of May 31, 1997 the Company had 175 employees, of which 131 were
engaged in receivables purchasing/collections/origination, 30 in
administration, seven in asset remarketing and seven in senior management.


RISK FACTORS

         The Company faces certain risks associated with the operation of it
business that in some cases have affected, and in the future could affect, the
Company's actual results of operations.  These risk factors include, but are
not limited to, the following matters.





                                      -8-
<PAGE>   10
         Results of Operations.  The Company does not have a history of
profitable operations.  Although the Company had net income before dividends of
$1,283,000 for the fiscal year ended March 31, 1997, it had a net loss before
dividends of $2,671,000 for the six months ended March 31, 1996 and a net loss
after dividends of $4,871,000 for the fiscal year ended March 31, 1997.  The
lower net loss before dividends for the fiscal year ended March 31, 1997, as
compared to prior periods, was due primarily to a net reduction of prior credit
losses of approximately $7,000,000 and significant general and administrative
expenses incurred during the prior periods related to the reorganization of the
Fund Subsidiaries.  The reduction in credit losses is not expected to continue
at the same level in future periods.  The Company's future profitability will be
dependent upon the results of operations from its receivables purchasing and
management business and other businesses.  There can be no assurance that the
Company's businesses will be profitable in the future.

         Availability of Funding.  The purchase of receivables and the making
of consumer loans requires the Company to raise significant amounts of funds
from various sources, including banks, finance companies and other lenders.
There can be no assurance that lenders will provide sufficient credit on terms
the Company will find acceptable to supplement the Line.  The Company has,
however, signed a letter of intent with an affiliate of a large Wall Street
investment firm with respect to a $100 million, two-year revolving warehouse
line of credit facility.  The letter of intent is subject to certain
conditions, including negotiation and execution of mutually acceptable
definitive facility documents and completion of due diligence.  The Company's
planned financing sources also include (i) a private placement of $35,000,000
of senior subordinated notes with warrants to purchase Common Stock and (ii)
securitization of its receivables.  The Company will be required to provide
adequate collateral in order to securitize its receivables.  This collateral
may be in one or more of several forms, including third party insurance, cash
collateral accounts, over- collateralization and subordinated investment funds.
The costs of providing collateral for a securitization may outweigh the
benefits that can be obtained from the securitization.  The Company's prior
securitizations through the Fund Subsidiaries were not successful due to lower
than expected collection rates on receivables and lower than expected
recoveries on the sale of repossessed vehicles.  There can be no assurance that
funding will be available to the Company through borrowings, subordinated note
offerings or securitizations or, if available, that such funding will be on
terms acceptable to the Company.  Even if available, there can be no assurance
that the future borrowing or securitization activities of the Company will be
profitable.

         Risks in Motor Vehicle Receivables Purchasing and Consumer Finance
Businesses.  The Company faces all of the risks inherent in the motor vehicle
receivables purchasing business and in the consumer finance business.  There
also can be no assurance that the Company will properly evaluate the
receivables that it purchases or the borrowers to whom it makes consumer loans.
There can be no assurance that the Company will be able to purchase sufficient
receivables and make a sufficient number of consumer loans to profitably employ
its capital and borrowed funds.  The Company purchases receivables whose
obligors, and makes loans to consumers who, do not typically qualify for
traditional financing as a result, among other things, of poor credit history,
lack of steady employment and/or low income.  These individuals generally have
higher percentage default rates than individuals with better credit histories.
In addition, the vehicles securing the Company's receivables are subject to
deterioration in value due to the passage of time or usage by the obligor, and
the Company's loans to consumers may be unsecured.  The Company has limited
historical information related to the quality of receivables it is purchasing
under its new receivables purchasing program.  There can be no assurance that
the Company's efforts to purchase higher credit quality receivables will be
successful or profitable.  In addition, the Company has little history in the
consumer loan business.  A general economic downturn could adversely affect the
ability of obligors and borrowers to make payments to the Company on its
receivables and loans.  Substantial unexpected delinquencies or charge-offs on
its receivables or loans could have a material adverse effect on the Company's
results of operations.  As of March 31, 1997, the Company had an allowance for
credit losses of $5,854,000, which was approximately 11% of its net
receivables, as compared to $13,353,000, or 44% of net receivables, as of March
31, 1996.  The decrease is primarily attributable to the significant change in
the Company's receivables portfolio from March 31, 1996 to March 31, 1997.  All
the Company's receivables as of March 31, 1996 were purchased under its prior
purchasing program for lower credit quality receivables.  Currently, less than
10% of the Company's portfolio is represented by those receivables.  The
remainder of the portfolio was compiled of new originations under the Company's
new receivables purchasing program and receivables acquired in bulk purchases
and other acquisitions.  There can be no assurance that the provision for
credit losses is sufficient to cover all losses that the Company may incur.





                                      -9-
<PAGE>   11
         Acquisition Strategy.  The Company intends to continue to pursue its
current growth strategy, which includes acquiring portfolios of non-prime used
motor vehicle receivables and other non-prime used motor vehicle finance
companies.  There can be no assurance that the Company will be able to make
profitable acquisitions or successfully integrate any businesses that it
acquires into its operations without substantial costs, delays or other
problems.  In addition, there can be no assurance that any acquired businesses
will be profitable at the time of their acquisition or will achieve
profitability that justifies the investment therein or that the Company will be
able to realize expected operating and economic efficiencies following such
acquisitions.  Acquisitions may involve a number of special risks, including
adverse effects on the Company's reported operating results, devotion of
management's attention, increased burdens on the Company's management resources
and financial controls, dependence on retention and hiring of key personnel,
unanticipated problems or legal liabilities and amortization of acquired
intangible assets, some or all of which could have a material adverse effect on
the Company's results of operations.

         Leverage.  The Company intends to borrow substantial funds to finance
its operations.  As the Company's debt leverage increases, its vulnerability to
adverse general economic conditions and to increased competitive pressures will
also increase.

         Increases in Interest Rates.  While the automobile receivables
purchased by the Company and the loans it makes in most cases bear interest at
a fixed rate, often near the maximum rates permitted by law, the Company will
finance a substantial portion of its loans and receivables purchases by
incurring indebtedness with floating interest rates.  The Company's interest
costs will increase during periods of rising interest rates.  Such increases
may decrease the Company's net interest margins and thereby adversely affect
the Company's profitability.

         Dealers.  The Company plans to expand its receivables purchasing
activities by re-establishing relationships and establishing new relationships
with Dealers.  Dealers often already have favorable secondary financing
sources, which may restrict the Company's ability to develop Dealer
relationships and delay the Company's growth.  Competitive conditions in the
Company's markets may result in a reduction in the price discounts available
from or fees paid by Dealers and a lack of available receivables, which could
adversely affect the Company's profitability and its growth plans.

         Reliance on Information Processing Systems.  The Company's business
depends upon its ability to store, retrieve, process and manage significant
amounts of information.  Impairment of data integrity, loss of stored data,
interruption, breakdown or malfunction of the Company's information processing
systems caused by telecommunications failure, conversion difficulties,
undetected data input and transfer errors, unauthorized access, viruses,
natural disasters, electrical power outage or disruption or other events could
have a material adverse effect on the Company's business, financial condition
and results of operations.

         Geographic Concentration.  Currently, the Company is purchasing
receivables whose obligors, and making loans to customers who, are located
primarily in Texas and certain southeastern states.  Although the Company has
expanded, and expects to continue to expand, its operations to other geographic
areas, the Company's performance may be adversely affected by regional or local
economic conditions.  The Company may from time to time make acquisitions in
regions outside of its current operating areas.  There can be no assurance that
the Company's expansion into new geographic areas will generate operating
profits.

         Key Officer.  The Company's future success depends in some measure
upon its Chief Executive Officer, who has significant experience in the
consumer finance business.  An unexpected loss of services of this officer
could have a material adverse effect upon the Company.  The Company does not
currently maintain key person life insurance on the Chief Executive Officer but
intends to seek such coverage.

         Competition.  The Company has numerous competitors engaged in the
business of buying non-prime motor vehicle receivables and in making consumer
loans.  Many of these competitors have significantly greater financial
resources and staff than the Company.  Some of these competitors may generally
be able or willing to accept more risk in their activities than the Company.
Competition may reduce the number of suitable receivables offered for





                                      -10-
<PAGE>   12
sale to the Company and increase the bargaining power of Dealers with which the
Company seeks to do business.  These competitive factors could have a material
adverse effect upon the operations of the Company.

         Regulation.  Numerous federal and state consumer protection laws
impose requirements upon the origination and collection of consumer
receivables.  Federal laws and regulations include, among others, the
Truth-in-Lending Act, the Equal Credit Opportunity Act, the Federal Trade
Commission Act, the Fair Credit Reporting Act, the Fair Indebtedness Collection
Practices Act, the Magnuson-Moss Warranty Act and the Federal Reserve Board's
Regulation Z.  The Company believes that it maintains all licenses and permits
required for its current operations and is in substantial compliance with all
applicable federal, state and local laws.  There can be no assurance, however,
that the Company will be able to maintain all requisite licenses and permits.

         State laws regulate, among other things, the interest rates chargeable
on, and terms and conditions of, motor vehicle retail installment loans.  These
laws also impose restrictions on consumer loan transactions and require loan
disclosures in addition to those required under federal law.  These
requirements impose specific statutory liabilities upon creditors who fail to
comply with their provisions.  As a consumer finance company, the Company from
time to time may be subject to various consumer claims and litigation seeking
damages and statutory penalties based upon, among other theories of liability,
usury, wrongful repossession, fraud and discriminatory treatment of credit
applicants.

         The FTC has adopted a holder-in-due-course rule which has the effect
of subjecting persons who finance consumer credit transactions (and certain
related lenders and their assignees) to all claims and defenses which the
purchaser could assert against the seller of the goods and services.  Another
FTC rule requires that all sellers of used vehicles prepare, complete and
display a "Buyer's Guide" which explains the warranty coverage (if any) for
such vehicles.  Failure of the Dealers to comply with state and federal credit
and trade practice laws and regulations could result in consumers having rights
of rescission and other remedies that could have an adverse effect on the
Company.

         The failure to comply with legal requirements applicable to its
business could have a material adverse effect on the Company's results of
operations.  Further, the adoption of additional, or the revision of existing,
laws and regulations could have a material adverse effect on the Company's
business.

         Industry Considerations.  In recent periods, several major used car
finance companies have announced major downward adjustments to their financial
statements, violations of loan covenants, related litigation and other events.
In addition, one of these companies has filed for bankruptcy protection.  These
announcements have had, and may continue to have, a disruptive effect on the
market for securities of non-prime automobile finance companies, are expected
to result in a tightening of credit to the non-prime markets and could lead to
enhanced regulatory oversight.  Furthermore, companies in the used car
financing market have been subject to an increasing number of lawsuits brought
by customers alleging violations of various federal and state consumer credit
and similar laws and regulations.  There can be no assurance that similar
claims will not be asserted against the Company in the future or that its
operations will not be subject to enhanced regulatory oversight.

         Potential Adverse Effects of Litigation.  The Company is a party to
two pending lawsuits.  Although the Company believes the allegations in these
suits are without merit, there can be no assurance a settlement of, or judgment
in, these lawsuits will not adversely affect the Company.  See Item 3 - Legal
Proceedings.


                          -------------------------

                        SAFE HARBOR STATEMENT UNDER THE
                PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

         This Report contains certain forward-looking statements, as defined in
the Private Securities Litigation Reform Act of 1995, which may be identified
by the use of forward-looking terminology such as "may," "will," "expect,"
"anticipate," "estimate," "project," "goal," "continue," or comparable
terminology.  Such statements





                                      -11-
<PAGE>   13
involve risks or uncertainties and are qualified in their entirety by the
cautions and risk factors set forth above under "Risk Factors" and contained in
other Company documents filed with the Securities and Exchange Commission.


ITEM 2.    PROPERTIES

         The Company's principal executive offices are located at 600 North
Pearl Street, Dallas, Texas 75201.  The Company leases approximately 25,000
square feet of space at this facility under a lease expiring in 2002.  The
Company leases an additional approximately 6,000 square feet of space in
Dallas, Texas that is utilized as the Company's principal collection center
under a lease expiring in 2001.

         The Company also leases 11 consumer lending offices, some of which
also serve as remote collection facilities.  Generally, these facilities are
leased for a period of three to five years and provide for cancellation rights
after a prescribed period of time.

         The Company believes that all of its facilities are suitable and
adequate for the Company's purposes.


ITEM 3.    LEGAL PROCEEDINGS

         The Company and certain of its former officers and directors are
defendants in a case styled Janice and Warren Bowe, et al. v. Search Capital
Group, Inc., et al., Cause No. 1:95CSV649BR, filed in the Federal District
Court for the Southern District of Mississippi (the "Bowe Action").  The
plaintiffs, who are former holders of notes issued by three of the Company's
former subsidiaries, allege that the registration statements pursuant to which
the notes were sold contained material misrepresentations and omissions of fact
with respect to collection rates on contracts, expected repossession rates, the
Company's accounting controls and computer systems, the operating results and
financial condition of the Company and its subsidiaries and the ability of the
subsidiaries to pay the notes at the projected rates of return, and were,
therefore, materially false and misleading in violation of the securities laws.
The plaintiffs seek unspecified damages, rescission, punitive damages and other
relief.  The plaintiffs also seek establishment of a class of plaintiffs
consisting of all persons who purchased notes issued by the three subsidiaries.
While the Company believes the suit is without merit and has been vigorously
defending itself, it has also sought to reach a negotiated settlement of all
claims of all potential class members in the Bowe Action that would also
include a settlement of all claims of the litigation trust (the "Litigation
Trust") established under the plan of reorganization of eight of the Company's
subsidiaries for the purpose, among other things, of pursuing causes of action
of the former holders of notes issued by those subsidiaries who assigned their
claims related to the Bowe Action to the Litigation Trust.

         While a settlement agreement in principle subject to a number of
conditions was reached in March 1997 that would have required the Company to
pay $350,000 in cash and issue shares of its Common Stock having a value of
$1,375,000, the Company suspended further negotiations because of the decline
in the market price of the Common Stock during the first half of May.  The
Company intends to resume negotiations when the market price of the Common
Stock recovers to its pre-May trading range, but there can be no assurance that
the other parties will be willing to resume negotiations or that a settlement
on terms acceptable to the Company will be concluded.  The court had dismissed
the plaintiffs' motion for class certification, without prejudice and subject
to renewal and final disposition, pending the outcome of settlement
discussions.  The Company has a reserve of $500,000 related to the Bowe Action.
A settlement or judgment in excess of this reserve could adversely effect the
Company.

         The Company and its wholly-owned subsidiary, Automobile Credit
Acceptance Corp. ("ACAC"), are defendants in a pending civil action filed in
the 153rd Judicial District Court, Tarrant County, Texas, styled Autostar
Solutions, Inc.  v. Tim Clothier and Automobile Credit Acceptance Corp., Cause
No. 153-144940.  The plaintiff alleges the existence of a partnership between
the plaintiff and another defendant and seeks damages, actual and exemplary,
and an injunction for alleged conversion and misappropriation of certain
property, including computer programs, allegedly owned by the plaintiff.  In
this action, the plaintiff alleges that ACAC wrongfully assisted its
co-defendant and tortiously interfered with the plaintiff's contracts and
business and has claimed, as actual damages,





                                      -12-
<PAGE>   14
$680,000.  The Company believes that these allegations are without merit.  The
case has been set for trial in July 1997.  The Company intends to vigorously
defend itself at the trial.

         The Company is from time to time involved in litigation that is
incidental to its business.  There are, however, no other legal proceedings
presently threatened or pending relating to the Company which would, in the
opinion of management, have a material impact on the financial condition or
results of operations of the Company.


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

         None


ITEM 4 X.    BUSINESS HISTORIES OF EXECUTIVE OFFICERS

         GEORGE C. EVANS, 62, joined the Company as President, Chief Executive
Officer and director in January 1995.  In May 1995, Mr. Evans became Chairman
of the Board of Directors and Chairman of the Executive Committee of the Board
of Directors.  He relinquished the President's title in May 1997.  Mr. Evans
has over 30 years' experience in the consumer lending and financial services
industry.  During 1992 and 1993, Mr. Evans was President and Chief Executive
Officer of Century Acceptance Corporation, a 32-state operation engaged in
consumer and automobile financing.  Previously, he served as President and
Chief Operating Officer of Associates Financial Services Company, Inc., Vice
Chairman of Associates Corporation of North America and Chairman of Associates'
International subsidiaries, where his responsibilities included 6,000 employees
and $3.5 billion in receivables, with 1,100 branches and annual earnings in the
$100 million range.

         ANTHONY J. DELLAVECHIA, 61, became associated with the Company as an
independent consultant in August 1995.  He was elected Senior Executive Vice
President, Operations Director in January 1996, President and Chief Operating
Officer in May 1997 and a director in June 1997.  Mr. Dellavechia has over 30
years' experience in the consumer lending and financial services industry.
Prior to his becoming associated with the Company, Mr. Dellavechia was an
independent financial services consultant.  Mr. Dellavechia served in several
executive capacities, including Senior Executive Vice President, Operations
Director, with Associates Financial Services Company, Inc. from 1979 until his
retirement in 1985.  He was named President of U.S. Consumer Operations in 1983.

         JAMES F. LEARY, 67, became a director of the Company in May 1995 and
Vice Chairman-Finance in September 1995.  Mr. Leary was a founder and general
partner of Sunwestern Investment Group, an investment advisory and venture
capital management firm.  He previously served as director, Chief Financial
Officer and Senior Executive Vice President for Associates Corporation of North
America.  He also founded, and was responsible for, the Venture Capital
Department of CIT Financial Corporation.

         ROBERT D. IDZI, 52, joined the Company as Chief Financial Officer in
October 1994.  He was elected Senior Vice President in November 1994, Treasurer
in December 1994, Executive Vice President in February 1996 and Senior
Executive Vice President, Administration in August 1996.  Mr. Idzi served as
Vice President, Treasurer, Chief Financial Officer and director of Unilease
Computer Corporation, which engaged in the leasing of mainframe computers and
peripheral equipment, from 1986 until 1987.  From 1987 until 1992, Mr. Idzi was
Senior Vice President and Chief Financial Officer of Equator Holdings, Ltd., a
U.S.-based merchant bank subsidiary of the Hongkong Shanghai Banking Group.

         ELLIS A. REGENBOGEN, 50, joined Search as Senior Vice President,
General Counsel and Secretary in August 1996.  He was elected Executive Vice
President in January 1997.  Mr. Regenbogen has more than 25 years' experience
as a corporate securities, finance and mergers and acquisitions attorney with
major law firms and corporations.  Prior to joining Search, he was Vice
President/Law & Administration, General Counsel and Secretary





                                      -13-
<PAGE>   15
of Orthofix, Inc., a manufacturer of advanced medical devices.  Prior thereto,
he was a Partner in Jones, Day, Reavis & Pogue, an international law firm.

         ANDREW L. TENNEY, 66, joined Search as Operations Director in January
1995.  In March 1995, he was elected Executive Vice President.  Mr. Tenney has
over 30 years' experience in the consumer lending and financial services
industry.  Prior to joining Search, he was Executive Vice President of Century
Acceptance Corporation.  Previously, he was employed at Associates Financial
Services Company, Inc. as Senior Vice President, Marketing, and Executive Vice
President in Consumer Operations.

         TIMOTHY G. VORBECK, 46, joined Search as Executive Vice President,
Operations in July 1996.  Mr. Vorbeck has 25 years' experience in the consumer
lending and financial services industry.  He was Vice President, Operations of
Fidelity Acceptance Corp. from November 1993 until he joined Search and was
Director of Operations of American General Finance Company prior thereto.

         CAROLYN MALONE, 54, was among the Company's original management staff.
As director of human resources, Ms.  Malone was promoted to Vice President in
November 1994 and to Senior Vice President in February 1997.  Prior to her
affiliation with the Company, she spent 15 years with an oil and gas
exploration entrepreneur and seven years with McCommons Oil Company.  For the
past 30 years, her business career has involved human resources, office
management and administration.

         ANDREW D. PLAGENS, 29, joined the Company in May 1994 as Accounting
Manager.  He was promoted to Assistant Controller and Analyst in March 1995,
became Controller in July 1995, was elected Vice President in January 1996 and
was elected Senior Vice President in May 1997.  Prior to joining the Company,
Mr. Plagens was employed by Hein + Associates and Baird, Kurtz & Dobson,
independent certified public accountants.


                                    PART II

ITEM 5.    MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER
           MATTERS

         The information appearing under the heading "Stock Market Information"
on page 40 of the Company's 1997 Annual Report to Stockholders (the "Annual
Report") is incorporated herein by reference.

         On February 13, 1997, the Company issued warrants to purchase an
aggregate of 122,500 shares of its Common Stock to the Company's non-employee
directors in connection with their services as directors.  The warrants will
expire on February 13, 2007 and are exercisable at $6.125 per share.  The
issuance of these warrants was exempt from registration pursuant to Section
4(2) of the Securities Act of 1933, as amended.

ITEM 6.    SELECTED FINANCIAL DATA

         The information appearing under the heading "Selected Consolidated
Financial Information" on page 34 of the Annual Report is incorporated herein
by reference.


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

         Management's Discussion and Analysis of Financial Condition and
Results of Operations on pages 35 through 40 of the Annual Report is
incorporated herein by reference.





                                      -14-
<PAGE>   16
ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The Report of Independent Certified Public Accountants, the
Consolidated Financial Statements and the Notes to Consolidated Financial
Statements on pages 14 through 33 of the Annual Report are incorporated herein
by reference.


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

         None


                                    PART III

ITEM 10.     DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

         The information under the headings "Election of Directors" and
"Section 16(a) Beneficial Ownership Reporting Compliance" on pages 3 through 6
and 15 to 16, respectively, of the Proxy Statement for the Annual Meeting of
Stockholders of the Company scheduled to be held on July 28, 1997 (the "Proxy
Statement") is incorporated herein by reference.


ITEM 11.     EXECUTIVE COMPENSATION

COMPENSATION OF EXECUTIVE OFFICERS

         The information under the heading "Compensation of Directors" on pages
5 and 6, and the information under the headings "Executive Compensation --
Summary Compensation Table," "-- Stock Options and Warrants," "-- Agreements
with Executive Officers" and "-- Compensation Committee Interlocks and Insider
Participation" on pages 7 through 9, of the Proxy Statement is incorporated
herein by reference.


ITEM 12.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The information under the heading "Principal Holders of Capital Stock"
on page 2 of the Proxy Statement is incorporated herein by reference.

ITEM 13.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The information under the heading "Election of Directors - Certain
Relationships and Transactions" on page 6 of the Proxy Statement is
incorporated herein by reference.





                                      -15-
<PAGE>   17
                                    PART IV

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

(a) (1)  Financial Statements

         The following report and financial statements are included in the
Annual Report and incorporated by reference in this Report:

         Report of Independent Certified Public Accountants
         Consolidated Balance Sheets as of March 31, 1997 and March 31, 1996
         Consolidated Statements of Operations for the year ended March 31,
                 1997, the six months ended March 31, 1996 and the year ended
                 September 30, 1995
         Consolidated Statements of Changes in Stockholders' Equity (Capital
                 Deficit) for the period from October 1, 1994 through March 31,
                 1997
         Consolidated Statements of Cash Flows for the year ended March 31,
                 1997, the six months ended March 1996 and the year ended
                 September 30, 1995
         Notes to Consolidated Financial Statements

    (2)  Financial Statement Schedules

         All financial statement schedules are omitted because they are not
applicable, not required or the information required to be set forth therein is
included in the financial statements or the notes thereto.

    (3)  Exhibits

  Exhibit
  Number                     Description
  -------                    -----------

    2.1        Third Amended Joint Plan  of Reorganization  (incorporated
               herein by reference to Exhibit  2.1 to the Company's Current
               Report on Form 8-K dated April 17, 1996 (the "April 8-K"))

    2.2        Modification  to Third Amended Joint  Plan of Reorganization
               (incorporated  herein by reference to Exhibit 2.2 to the April
               8-K)

    2.3        Order  Confirming Third  Amended and  Supplemented Joint  Plan,
               Pursuant  to 11  U.S.C. Section 1129 (incorporated herein  by
               reference to Exhibit 2.3 to the April 8-K)

    2.4        Chapter 11 Post-Confirmation Order (incorporated by reference to
               Exhibit 2.4 to the April 8-K)

    2.5        Order  Regarding Entry  Date of  Order Confirming  Third Amended
               and  Supplemented Joint  Plan Pursuant  to 11 U.S.C. Section
               1129 (incorporated  by reference to Exhibit 2.5 to the April 8-
               K)

    2.6        Order Granting Second Motion for  Technical, Non-Material
               Modification to the Third Amended and Supplemented Joint  Plan
               of  Reorganization (incorporated by  reference to Exhibit  2.6
               to  the April 8-K)

    3.2        Restated Certificate  of  Incorporation of  the Company
               (incorporated herein  by reference  to Exhibit 3.1 to  the
               Company's Transition Report  on Form 10-K  for the transition
               period  ended March 31, 1996)





                                      -16-
<PAGE>   18
  Exhibit
  Number                          Description
  -------                         -----------


    3.3        Certificate  of Amendment of  Certificate of  Designation of
               9%/7% Convertible  Preferred Stock (incorporated herein by
               reference to Exhibit 3.1 to the Company's Quarterly Report on
               Form  10- Q for the quarter ended September 30, 1996 (the
               "September 10-Q")

    3.4        Certificate  of  Correction to  the  Restated  Certificate  of
               Incorporation  of  the  Company (incorporated herein by
               reference to Exhibit 3.3 to the September 10-Q)

    3.5        Certificate of  Amendment of  Certificate of Designation  of
               9%/7%  Convertible Preferred Stock (incorporated herein by
               reference to Exhibit 3.4 to the September 10-Q)

    3.6        Certificate of Amendment of Restated Certificate of
               Incorporation of the Company  (incorporated herein by  reference
               to   Exhibit 4.7  to the  Company's Registration  Statement  on
               Form  S-3 (Registration No. 333-20551) (the "Form S-3"))

    3.7        Certificate of Elimination of Series B  9%/7% Convertible
               Preferred Stock  (incorporated herein by reference to Exhibit
               4.8 to the Form S-3)

    3.8        Certificate  of  Ownership  and Merger  Merging  ELIR Corp.
               into  Search  Capital Group,  Inc.  

    3.9        Bylaws of the Company

    4.1        Warrant  Agreement dated  as of  March 27,  1996 between  the
               Company  and American  Securities Transfer & Trust, Inc., as
               Warrant Agent (incorporated herein  by reference to Exhibit  4.2
               to the Company's Current Report on Form 8-K dated March 15,
               1996)

    4.2        First  Amendment to  Warrant  Agreement dated  as  of July  18,
               1996 between  the  Company and American  Securities Transfer &
               Trust,  Inc. and Hall Phoenix/Inwood, Ltd. (incorporated herein
               by reference to Exhibit 4.10 to the Form S-3)

    4.3        Second Amendment to Warrant  Agreement dated as  of November 22,
               1996  between the Company  and American  Securities Transfer &
               Trust, Inc.  (incorporated herein by reference  to Exhibit 4.11
               to the Form S-3)

    4.4        Loan Agreement dated September  11, 1996 between Search Funding
               II,  Inc. and Hibernia National Bank (incorporated herein by
               reference to Exhibit 4.7 to the Form S-4)

    4.5        Commercial Security Agreement  dated September 11,  1996 between
               Search Funding  II, Inc.  and Hibernia National Bank
               (incorporated herein by reference to Exhibit 4.8 to the Form
               S-4)

    4.6        Commercial Guaranty  dated September 11, 1996  between the
               Company  and Hibernia  National Bank (incorporated herein by
               reference to Exhibit 4.9 to the Form S-4)

    4.7        Promissory  Note dated  September 11,  1996 in the principal
               amount of  $25,000,000 payable to Hibernia National Bank
               (incorporated herein by reference to Exhibit 4.10 to the Form
               S-4)





                                     -17-
<PAGE>   19
  Exhibit
  Number                          Description
  -------                         -----------

    4.8        Other than the  indebtedness evidenced by the  agreements listed
               in  Exhibit 4.4 and 4.7  above and Exhibit  10.25   below, none
               of  the outstanding  long-term debt  of the  Company and  its
               consolidated subsidiaries exceeds ten percent (10%) of the total
               assets of the  Company and its consolidated  subsidiaries,  and,
               except  for   Exhibit  10.17,  copies  of   the  constituent
               instruments defining the  rights of the  holders of such debt
               are not included as  exhibits to this Report.  The Company
               agrees  to furnish copies of such instruments  to the Commission
               upon request.

   10.1        Agreement and Plan of  Merger dated as of  February 7, 1997
               among the Company, Search  Capital Acquisition Corp. and MS
               Financial, Inc. ("MSF")  (incorporated herein by reference to
               Exhibit 2.1 to the Company's Current Report on Form 8-K dated
               February 7, 1997 (the "February 8-K"))

   10.2        Stockholders  Agreement dated  as  of  February  7,  1997,
               between  the  Company  and  certain stockholders of MSF
               (incorporated by reference to Exhibit 2.2 to the February 8-K)

   10.3        Form of Escrow Agreement between  the Company, MSF, certain
               stockholders of  MSF and U.S. Trust Company of Texas,  N.A., as
               escrow agent (incorporated herein  by reference to Exhibit  10.2
               to the Form S-4)

   10.4        Form  of  Warrant  to purchase  shares of  Common  Stock  of the
               Company  issued  to directors containing  a cashless  exercise
               feature (incorporated  herein by reference to  Exhibit 10.9 to
               the Form S-4)

   10.5        1994 Employee Stock Option Plan, as  amended and adjusted
               (incorporated herein by  reference to Exhibit 4.1 of the
               Company's Registration Statement on Form S-8 (Registration No.
               333-22315))

   10.6        Letter Agreement  dated May 16, 1996  between the Company  and
               Alex. Brown &  Sons Incorporated and Addenda A,  D and E thereto
               (incorporated herein by reference to  Exhibit 10.14 to the Form
               S-4)

   10.7        Employment Letter  Agreement between  George C. Evans  and the
               Company dated  January 20, 1995 (incorporated herein  by
               reference to Exhibit 10.21 to the Company's Annual Report on
               Form 10-K for the year ended September 30, 1995 (the "1995
               10-K"))

   10.8        Amendment to Employment  Letter Agreement of George c.  Evans
               dated May 10,  1995 (incorporated herein by reference to Exhibit
               10.22 to the 1995 10-K)

   10.9        Amendment to Employment Letter Agreement of George C. Evans
               dated March 20, 1996  (incorporated herein by reference to
               Exhibit 10.17 to the Form S-4)

   10.10       Amendment  to  Employment  Letter  Agreement  of  George  C.
               Evans  dated  February  13,  1997 (incorporated herein by
               reference to Exhibit 10.18 to the Form S-4)

   10.11       Employment  Letter  Agreement  between the  Company  and  James
               F.  Leary  dated  May 1,  1996 (incorporated herein by reference
               to Exhibit 10.21  to the Company's Transition Report on  Form
               10-K for the transition period ended March 31, 1996)

   10.12       Letter  agreement between the Company and Inter-Atlantic
               Securities Corp. dated August 23, 1996 (incorporated herein by
               reference to Exhibit 10.20 to the Form S-4)

   10.13       Letter agreement between the  Company and  Inter-Atlantic
               Securities Corp.  dated September  6, 1996 (incorporated herein
               by reference to Exhibit 10.21 to the Form S-4)





                                     -18-
<PAGE>   20
  Exhibit
  Number                          Description
  -------                         -----------

   10.14       Compromise  and  Settlement Agreement  by  and among  Craig
               Hall,  Larry Levey,  Hall Financial Group,  Inc., Phoenix/Inwood
               Corp. and Hall  Phoenix/Inwood, Ltd. and the  Company effective
               as of  November  21, 1996  (incorporated herein  by  reference
               to  Exhibit 10.1  to  the Company's Current Report on Form 8-K
               dated November 21, 1996 (the "November 8-K"))

   10.15       Mutual Release Agreement  effective as of November 21, 1996 by
               and among the Company, George C.  Evans,  Craig Hall,  Larry
               Levey,  Hall Financial  Group, Inc.,  Phoenix/Inwood Corp.  and
               Hall Phoenix/Inwood, Ltd. (incorporated herein by reference to
               Exhibit 10.2 to the November 8-K)

   10.16       Standstill  Agreement effective as of November 21,  1996 by and
               among  the Company, Craig Hall, Larry Levey, Hall Financial
               Group, Inc.,  Phoenix/Inwood Corp. and  Hall Phoenix/Inwood,
               Ltd.  (incorporated herein by reference to Exhibit 10.3 to the
               November 8-K)

   10.17       Subordinated Note of the Company dated November 21, 1996 in the
               principal  amount of $5,000,000 (incorporated herein by
               reference to Exhibit 10.4 to the November 8-K)

   10.18       Asset  Purchase Agreement (the "Asset  Purchase Agreement")
               among  U.S. Lending Corporation, as Debtor-In-Possession,   the
               Company  and  Search  Funding  III,  Inc.   dated  July  17,
               1996 (incorporated herein  by reference to  Exhibit 10.1 to  the
               Company's Quarterly Report  on Form 10-Q for the quarter ended
               June 30, 1996)

   10.19       Second Amendment  dated November 5,  1996 to the Asset Purchase
               Agreement (incorporated herein by  reference to Exhibit 10.1  to
               the Company's Quarterly  Report on Form 10-Q  for the quarter
               ended September 30, 1996)

   10.20       Asset Acquisition  Agreement among the Company,  Search Funding
               IV,  Inc. and  Dealers Alliance Credit Corp. dated  as of August
               2, 1996 (incorporated herein  by reference to Exhibit  2.1 to
               the Company's Current Report on Form 8-K dated August 6, 1996
               (the "August 8-K"))

   10.21       Sub-Debt  Acquisition  Agreement  among  the  Company,  Search
               Funding  IV,  Inc.,  R-H Capital Partners, L.P.  and Kellett
               Investment Corporation dated  as of August  6, 1996
               (incorporated herein by reference to Exhibit 2.2 to the August
               8-K)

   10.22       Escrow Agreement among the Company, Dealers Alliance Credit
               Corp., Search Funding IV,  Inc., R- H Capital Partners, L.P.,
               Kellett  Investment Corporation and U.S. Trust Company of Texas,
               N.A.  dated as of August 6, 1996 (incorporated herein by
               reference to Exhibit 2.3 to the August 8-K)

   10.23       Search-DACC Shareholders Agreement dated  as of August 2, 1996
               between  the Company and Dealers Alliance Credit Corp.
               (incorporated herein by reference to Exhibit 2.4 to the August
               8-K)

   10.24       Sub-Debt Shareholders  Agreement dated as  of August  2, 1996
               among the  Company, R-H  Capital Partners, L.P. and  Kellett
               Investment Corporation (incorporated herein by reference to
               Exhibit 2.5 to the August 8-K)

   10.25       Debt Assumption  Agreement dated as of  August 2,  1996 among
               the  Company, Search Funding  IV, Inc., LaSalle National Bank,
               as Agent, Bank  One Chicago, N.A.  and Fleet Capital
               Corporation (incorporated herein by reference to Exhibit 2.6 to
               the August 8-K)





                                     -19-
<PAGE>   21
  Exhibit
  Number                          Description
  -------                         -----------

   10.26       Motor Vehicle  Installment Sales Contract Assignment and
               Purchase Agreement dated September 27, 1996 between Eagle
               Finance Corp.  and Search Funding Corp. (incorporated herein by
               reference to Exhibit 2 to the Company's Current Report on Form
               8-K dated September 27, 1996)

   10.27       Motor  Vehicle  Installment  Sales  Contract Assignment  and
               Purchase  Agreement dated  as  of November  1, 1996  between MSF
               and Search Funding Corp.  (incorporated herein  by reference to
               Exhibit 2.1 to  the Company's Quarterly Report on Form 10-Q for
               the quarter ended September 30, 1996)

   10.28       Letter agreement between  the Company and  MSF dated November
               4, 1996 (incorporated  herein by reference to Exhibit 2.2 to the
               Company's Quarterly Report on Form 10-Q  for the quarter ended
               September 30, 1996)

    11         Statement re computation of per share earnings

    13         Portions of the Company's Annual Report to Stockholders for the
               year ended March 31, 1997

    22         Subsidiaries of the Company

    23         Consent of BDO Seidman, LLP

    24         Power of Attorney (included on signature page)

    27         Financial Data Schedule

(b)      REPORTS ON FORM 8-K

         During the quarter ended March 31, 1997, the Company filed a Current
Report on Form 8-K dated February 7, 1997 reporting pursuant to Item 5 that it
had entered into an Agreement and Plan of Merger pursuant to which it would
acquire MS Financial, Inc.





                                      -20-
<PAGE>   22



                                  SIGNATURES

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

                                        SEARCH FINANCIAL SERVICES INC.



                                        By:     /s/ George C. Evans  
                                                ------------------------------
                                                Chairman of the Board
                                                and Chief Executive Officer


Date:    June 30, 1997

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

                             (POWER OF ATTORNEY)

         Each person whose signature appears below constitutes and appoints
George C. Evans, Robert D. Idzi and Ellis A.  Regenbogen as his true and lawful
attorneys-in-fact and agents, each acting alone, with full power of
substitution and resubstitution, for him and his name, place and stead, in any
and all capacities, to sign any or all amendments to this Annual Report on Form
10-K and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission.


<TABLE>
<S>                                  <C>                                           <C>  
/s/ George C. Evans                  Chairman of the Board, Chief Executive        June 30, 1997
-------------------------            Officer and Director   
George C. Evans                                                                    
                                                                                   
                                                                                   
/s/ Richard F. Bonini                Director                                      June 30, 1997
-------------------------   
Richard F. Bonini                                                                  
                                                                                   
                                                                                   
/s/ William H. T. Bush               Director                                      June 30, 1997
-------------------------   
William H. T. Bush                                                                 
                                                                                   
                                                                                   
/s/ Frederick S. Hammer              Director                                      June 30, 1997
-------------------------   
Frederick S. Hammer                                                                
                                                                                   
                                                                                   
/s/ Luther H. Hodges, Jr.            Director                                      June 30, 1997
-------------------------   
Luther H. Hodges, Jr.                                                              
                                                                                   
                                                                                   
/s/ James F. Leary                   Director                                      
-------------------------   
James F. Leary                                                                     June 30, 1997
                                                                                   
                                                                                   
/s/ A. Brean Murray                  Director                                      June 30, 1997
-------------------------   
A. Brean Murray                                                                    
</TABLE>





                                     -21-
<PAGE>   23


<TABLE>
<S>                           <C>                                               <C>
/s/ Douglas W. Powell         Director                                           June 30, 1997
-------------------------   
Douglas W. Powell                                                              
                                                                               
                                                                               
/s/ Barry W. Ridings          Director                                           June 30, 1997
-------------------------   
Barry W. Ridings                                                               
                                                                               
                                                                               
/s/ Robert D. Idzi            Senior Executive Vice President, Chief             June 30, 1997
-------------------------     Financial Officer and Treasurer  
Robert D. Idzi                                                                 
                                                                               
                                                                               
/s/ Andrew D. Plagens         Senior Vice President, Controller and              June 30, 1997
-------------------------     Chief Accounting Officer                    
Andrew D. Plagens                                                              
                                                                               
</TABLE>                                                                       
                                                                               
                                                                               


                                     -22-



<PAGE>   24

                              INDEX TO EXHIBITS


  Exhibit
  Number                        Description
  -------                       -----------

    2.1        Third Amended Joint Plan  of Reorganization  (incorporated
               herein by reference to Exhibit  2.1 to the Company's Current
               Report on Form 8-K dated April 17, 1996 (the "April 8-K"))

    2.2        Modification  to Third Amended Joint  Plan of Reorganization
               (incorporated  herein by reference to Exhibit 2.2 to the April
               8-K)

    2.3        Order  Confirming Third  Amended and  Supplemented Joint  Plan,
               Pursuant  to 11  U.S.C. Section 1129 (incorporated herein  by
               reference to Exhibit 2.3 to the April 8-K)

    2.4        Chapter 11 Post-Confirmation Order (incorporated by reference to
               Exhibit 2.4 to the April 8-K)

    2.5        Order  Regarding Entry  Date of  Order Confirming  Third Amended
               and  Supplemented Joint  Plan Pursuant  to 11 U.S.C. Section
               1129 (incorporated  by reference to Exhibit 2.5 to the April 8-
               K)

    2.6        Order Granting Second Motion for  Technical, Non-Material
               Modification to the Third Amended and Supplemented Joint  Plan
               of  Reorganization (incorporated by  reference to Exhibit  2.6
               to  the April 8-K)

    3.2        Restated Certificate  of  Incorporation of  the Company
               (incorporated herein  by reference  to Exhibit 3.1 to  the
               Company's Transition Report  on Form 10-K  for the transition
               period  ended March 31, 1996)

<PAGE>   25
  Exhibit
  Number                          Description
  -------                         -----------


    3.3        Certificate  of Amendment of  Certificate of  Designation of
               9%/7% Convertible  Preferred Stock (incorporated herein by
               reference to Exhibit 3.1 to the Company's Quarterly Report on
               Form  10- Q for the quarter ended September 30, 1996 (the
               "September 10-Q")

    3.4        Certificate  of  Correction to  the  Restated  Certificate  of
               Incorporation  of  the  Company (incorporated herein by
               reference to Exhibit 3.3 to the September 10-Q)

    3.5        Certificate of  Amendment of  Certificate of Designation  of
               9%/7%  Convertible Preferred Stock (incorporated herein by
               reference to Exhibit 3.4 to the September 10-Q)

    3.6        Certificate of Amendment of Restated Certificate of
               Incorporation of the Company  (incorporated herein by  reference
               to   Exhibit 4.7  to the  Company's Registration  Statement  on
               Form  S-3 (Registration No. 333-20551) (the "Form S-3"))

    3.7        Certificate of Elimination of Series B  9%/7% Convertible
               Preferred Stock  (incorporated herein by reference to Exhibit
               4.8 to the Form S-3)

    3.8        Certificate  of  Ownership  and Merger  Merging  ELIR Corp.
               into  Search  Capital Group,  Inc.  

    3.9        Bylaws of the Company

    4.1        Warrant  Agreement dated  as of  March 27,  1996 between  the
               Company  and American  Securities Transfer & Trust, Inc., as
               Warrant Agent (incorporated herein  by reference to Exhibit  4.2
               to the Company's Current Report on Form 8-K dated March 15,
               1996)

    4.2        First  Amendment to  Warrant  Agreement dated  as  of July  18,
               1996 between  the  Company and American  Securities Transfer &
               Trust,  Inc. and Hall Phoenix/Inwood, Ltd. (incorporated herein
               by reference to Exhibit 4.10 to the Form S-3)

    4.3        Second Amendment to Warrant  Agreement dated as  of November 22,
               1996  between the Company  and American  Securities Transfer &
               Trust, Inc.  (incorporated herein by reference  to Exhibit 4.11
               to the Form S-3)

    4.4        Loan Agreement dated September  11, 1996 between Search Funding
               II,  Inc. and Hibernia National Bank (incorporated herein by
               reference to Exhibit 4.7 to the Form S-4)

    4.5        Commercial Security Agreement  dated September 11,  1996 between
               Search Funding  II, Inc.  and Hibernia National Bank
               (incorporated herein by reference to Exhibit 4.8 to the Form
               S-4)

    4.6        Commercial Guaranty  dated September 11, 1996  between the
               Company  and Hibernia  National Bank (incorporated herein by
               reference to Exhibit 4.9 to the Form S-4)

    4.7        Promissory  Note dated  September 11,  1996 in the principal
               amount of  $25,000,000 payable to Hibernia National Bank
               (incorporated herein by reference to Exhibit 4.10 to the Form
               S-4)



<PAGE>   26
  Exhibit
  Number                          Description
  -------                         -----------

    4.8        Other than the  indebtedness evidenced by the  agreements listed
               in  Exhibit 4.4 and 4.7  above and Exhibit  10.25   below, none
               of  the outstanding  long-term debt  of the  Company and  its
               consolidated subsidiaries exceeds ten percent (10%) of the total
               assets of the  Company and its consolidated  subsidiaries,  and,
               except  for   Exhibit  10.17,  copies  of   the  constituent
               instruments defining the  rights of the  holders of such debt
               are not included as  exhibits to this Report.  The Company
               agrees  to furnish copies of such instruments  to the Commission
               upon request.

   10.1        Agreement and Plan of  Merger dated as of  February 7, 1997
               among the Company, Search  Capital Acquisition Corp. and MS
               Financial, Inc. ("MSF")  (incorporated herein by reference to
               Exhibit 2.1 to the Company's Current Report on Form 8-K dated
               February 7, 1997 (the "February 8-K"))

   10.2        Stockholders  Agreement dated  as  of  February  7,  1997,
               between  the  Company  and  certain stockholders of MSF
               (incorporated by reference to Exhibit 2.2 to the February 8-K)

   10.3        Form of Escrow Agreement between  the Company, MSF, certain
               stockholders of  MSF and U.S. Trust Company of Texas,  N.A., as
               escrow agent (incorporated herein  by reference to Exhibit  10.2
               to the Form S-4)

   10.4        Form  of  Warrant  to purchase  shares of  Common  Stock  of the
               Company  issued  to directors containing  a cashless  exercise
               feature (incorporated  herein by reference to  Exhibit 10.9 to
               the Form S-4)

   10.5        1994 Employee Stock Option Plan, as  amended and adjusted
               (incorporated herein by  reference to Exhibit 4.1 of the
               Company's Registration Statement on Form S-8 (Registration No.
               333-22315))

   10.6        Letter Agreement  dated May 16, 1996  between the Company  and
               Alex. Brown &  Sons Incorporated and Addenda A,  D and E thereto
               (incorporated herein by reference to  Exhibit 10.14 to the Form
               S-4)

   10.7        Employment Letter  Agreement between  George C. Evans  and the
               Company dated  January 20, 1995 (incorporated herein  by
               reference to Exhibit 10.21 to the Company's Annual Report on
               Form 10-K for the year ended September 30, 1995 (the "1995
               10-K"))

   10.8        Amendment to Employment  Letter Agreement of George c.  Evans
               dated May 10,  1995 (incorporated herein by reference to Exhibit
               10.22 to the 1995 10-K)

   10.9        Amendment to Employment Letter Agreement of George C. Evans
               dated March 20, 1996  (incorporated herein by reference to
               Exhibit 10.17 to the Form S-4)

   10.10       Amendment  to  Employment  Letter  Agreement  of  George  C.
               Evans  dated  February  13,  1997 (incorporated herein by
               reference to Exhibit 10.18 to the Form S-4)

   10.11       Employment  Letter  Agreement  between the  Company  and  James
               F.  Leary  dated  May 1,  1996 (incorporated herein by reference
               to Exhibit 10.21  to the Company's Transition Report on  Form
               10-K for the transition period ended March 31, 1996)

   10.12       Letter  agreement between the Company and Inter-Atlantic
               Securities Corp. dated August 23, 1996 (incorporated herein by
               reference to Exhibit 10.20 to the Form S-4)

   10.13       Letter agreement between the  Company and  Inter-Atlantic
               Securities Corp.  dated September  6, 1996 (incorporated herein
               by reference to Exhibit 10.21 to the Form S-4)



<PAGE>   27
  Exhibit
  Number                          Description
  -------                         -----------

   10.14       Compromise  and  Settlement Agreement  by  and among  Craig
               Hall,  Larry Levey,  Hall Financial Group,  Inc., Phoenix/Inwood
               Corp. and Hall  Phoenix/Inwood, Ltd. and the  Company effective
               as of  November  21, 1996  (incorporated herein  by  reference
               to  Exhibit 10.1  to  the Company's Current Report on Form 8-K
               dated November 21, 1996 (the "November 8-K"))

   10.15       Mutual Release Agreement  effective as of November 21, 1996 by
               and among the Company, George C.  Evans,  Craig Hall,  Larry
               Levey,  Hall Financial  Group, Inc.,  Phoenix/Inwood Corp.  and
               Hall Phoenix/Inwood, Ltd. (incorporated herein by reference to
               Exhibit 10.2 to the November 8-K)

   10.16       Standstill  Agreement effective as of November 21,  1996 by and
               among  the Company, Craig Hall, Larry Levey, Hall Financial
               Group, Inc.,  Phoenix/Inwood Corp. and  Hall Phoenix/Inwood,
               Ltd.  (incorporated herein by reference to Exhibit 10.3 to the
               November 8-K)

   10.17       Subordinated Note of the Company dated November 21, 1996 in the
               principal  amount of $5,000,000 (incorporated herein by
               reference to Exhibit 10.4 to the November 8-K)

   10.18       Asset  Purchase Agreement (the "Asset  Purchase Agreement")
               among  U.S. Lending Corporation, as Debtor-In-Possession,   the
               Company  and  Search  Funding  III,  Inc.   dated  July  17,
               1996 (incorporated herein  by reference to  Exhibit 10.1 to  the
               Company's Quarterly Report  on Form 10-Q for the quarter ended
               June 30, 1996)

   10.19       Second Amendment  dated November 5,  1996 to the Asset Purchase
               Agreement (incorporated herein by  reference to Exhibit 10.1  to
               the Company's Quarterly  Report on Form 10-Q  for the quarter
               ended September 30, 1996)

   10.20       Asset Acquisition  Agreement among the Company,  Search Funding
               IV,  Inc. and  Dealers Alliance Credit Corp. dated  as of August
               2, 1996 (incorporated herein  by reference to Exhibit  2.1 to
               the Company's Current Report on Form 8-K dated August 6, 1996
               (the "August 8-K"))

   10.21       Sub-Debt  Acquisition  Agreement  among  the  Company,  Search
               Funding  IV,  Inc.,  R-H Capital Partners, L.P.  and Kellett
               Investment Corporation dated  as of August  6, 1996
               (incorporated herein by reference to Exhibit 2.2 to the August
               8-K)

   10.22       Escrow Agreement among the Company, Dealers Alliance Credit
               Corp., Search Funding IV,  Inc., R- H Capital Partners, L.P.,
               Kellett  Investment Corporation and U.S. Trust Company of Texas,
               N.A.  dated as of August 6, 1996 (incorporated herein by
               reference to Exhibit 2.3 to the August 8-K)

   10.23       Search-DACC Shareholders Agreement dated  as of August 2, 1996
               between  the Company and Dealers Alliance Credit Corp.
               (incorporated herein by reference to Exhibit 2.4 to the August
               8-K)

   10.24       Sub-Debt Shareholders  Agreement dated as  of August  2, 1996
               among the  Company, R-H  Capital Partners, L.P. and  Kellett
               Investment Corporation (incorporated herein by reference to
               Exhibit 2.5 to the August 8-K)

   10.25       Debt Assumption  Agreement dated as of  August 2,  1996 among
               the  Company, Search Funding  IV, Inc., LaSalle National Bank,
               as Agent, Bank  One Chicago, N.A.  and Fleet Capital
               Corporation (incorporated herein by reference to Exhibit 2.6 to
               the August 8-K)



<PAGE>   28
  Exhibit
  Number                          Description
  -------                         -----------

   10.26       Motor Vehicle  Installment Sales Contract Assignment and
               Purchase Agreement dated September 27, 1996 between Eagle
               Finance Corp.  and Search Funding Corp. (incorporated herein by
               reference to Exhibit 2 to the Company's Current Report on Form
               8-K dated September 27, 1996)

   10.27       Motor  Vehicle  Installment  Sales  Contract Assignment  and
               Purchase  Agreement dated  as  of November  1, 1996  between MSF
               and Search Funding Corp.  (incorporated herein  by reference to
               Exhibit 2.1 to  the Company's Quarterly Report on Form 10-Q for
               the quarter ended September 30, 1996)

   10.28       Letter agreement between  the Company and  MSF dated November
               4, 1996 (incorporated  herein by reference to Exhibit 2.2 to the
               Company's Quarterly Report on Form 10-Q  for the quarter ended
               September 30, 1996)

    11         Statement re computation of per share earnings

    13         Portions of the Company's Annual Report to Stockholders for the
               year ended March 31, 1997

    22         Subsidiaries of the Company

    23         Consent of BDO Seidman, LLP

    24         Power of Attorney (included on signature page)

    27         Financial Data Schedule