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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    Form 8-K

                                 CURRENT REPORT

                     Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934


Date of Report (Date of earliest event reported): August 31, 1998

                          Cygnet Financial Corporation
             (Exact name of registrant as specified in its charter)

           Delaware                000-24747                   86-0917503   
       (State or other             Commission                (IRS Employer
jurisdiction of incorporation)    File Number)            Identification Number)

             2525 East Camelback Road, Suite 1150, Phoenix, AZ 85016
                    (Address of principal executive offices)

       Registrant's telephone number, including area code: (602) 852-6600


                                      NONE
          (Former name or former address, if changed since last report)
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Item 5. Other Events

         On August 31, 1998, at the annual meeting of stockholders of Ugly
Duckling Corporation ("UDC"), a proposal was approved to allow UDC to proceed
with a plan to split its dealership and non-dealership operations into two
separately held public corporations (the "Split-up"). If the Split-up is
effected, Cygnet Financial Corporation ("Cygnet"), a wholly-owned subsidiary of
UDC, will acquire UDC's bulk purchasing and certain servicing operations, its
third-party dealer financing operations (excluding the branch office network
operations that UDC closed in the first quarter of 1998) and substantially all
of the assets and certain liabilities acquired by UDC pursuant to its
transactions with First Merchants Acceptance Corporation and Reliance Acceptance
Group, Inc. in exchange for preferred stock and cash. As part of the Split-up,
Cygnet would be further capitalized through an offering of rights (the "Rights")
to purchase common stock, $.001 par value ("Cygnet Common Stock"), of Cygnet
(the "Rights Offering") and would become a separately-held public company. The
Rights Offering commenced on September 1, 1998.

         Pursuant to the Rights Offering, each holder of record of UDC common
stock, $.001 par value, on August 17, 1998 (the "Record Date"), will receive one
Right for every four shares of UDC common stock held on the Record Date. Each
Right represents the right to subscribe for one share of Cygnet Common Stock at
an exercise price of $7.00 and includes certain over-subscription privileges.
The Rights are exercisable only for a limited period ending at 5:00 p.m.
(Minnesota time) on September 21, 1998, or such later date to which the Rights
Offering is extended. The Rights are listed on the Nasdaq National Market under
the symbol "CGNTR."

         The issuance of Cygnet Common Stock pursuant to the Rights and the
effectuation of the Split-up are contingent on certain conditions. There can be
no assurance that the Split-up will be effected. The Rights Offering and/or the
Split-up may be abandoned or postponed at any time for any reason in the sole
discretion of UDC's board of directors.

         This Form 8-K may include statements that may constitute
forward-looking statements, usually containing the words "believe," "estimate,"
"project," "expect" or similar expressions. By making these forward-looking
statements, Cygnet undertakes no obligation to update these statements for
revisions or changes after the date of this Form 8-K. Forward-looking statements
inherently involve risks and uncertainties that could cause actual results to
differ materially from the forward-looking statements. Investors should also
consider factors that would cause or contribute to such differences, which
include, but are not limited to, factors detailed in this Form 8-K and in the
sections entitled "Management's Discussion and Analysis of Financial Condition
and Results of Operation," "Risk Factors" and elsewhere in Cygnet's
Registration Statement on Form S-1 (No. 333-57323) with respect to the Rights.

         A registration statement relating to the Cygnet securities (Rights and
Cygnet Common Stock) has been filed with and declared effective by the
Securities and Exchange Commission. This discussion of the Split-up and the
related Rights Offering shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.
The securities sold in the Rights Offering will be offered only by means of a
Cygnet prospectus. Copies of the prospectus of Cygnet relating to the Rights
Offering may be obtained by contacting Steven P. Johnson, General Counsel of
Cygnet, 2525 E. Camelback Road, Phoenix, AZ 85016, telephone (602) 852-6600. For
more complete information about the Split-up and the related Rights Offering and
their impact on Cygnet, obtain a prospectus as indicated above.



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                                   SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

                                    CYGNET FINANCIAL CORPORATION
                                            (Registrant)

Dated: September 1, 1998            By: /s/ Steven P. Johnson
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                                       Steven P. Johnson, Senior Vice President
                                       and General Counsel


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