<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB


    (Mark One)

         [ x ]    Annual report pursuant to Section 13 or 15(d) of the
                  Securities Exchange Act of 1934 for the fiscal year ended
                  December 31, 1998

         [   ]    Transition report pursuant to Section 13 or 15(d) of the 
                  Securities Exchange Act of 1934

                        Commission File Number 33-88928-D

                     U.S. AUTOMOBILE ACCEPTANCE 1995-1, INC.
             (Exact name of registrant as specified in its charter)

            TEXAS                                          75-2578376
  (State or jurisdiction of                            (I.R.S. Employer
incorporation or organization)                        Identification No.)

     1120 N.W. 63RD , SUITE G-108
       OKLAHOMA CITY, OKLAHOMA                                73116
(Address of principal executive offices)                    (Zip Code)

       Registrant's telephone number, including area code: (405) 843-3135

           SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
                                      NONE

           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
                                      NONE

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or 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[ ]

         At December 31, 1998, an aggregate of 1,000 shares of the registrant's
Common Stock, par value $1.00 each (being the registrant's only class of common
stock), were outstanding.

                      DOCUMENTS INCORPORATED BY REFERENCE:
                                      NONE






                                        1

<PAGE>   2




                                     PART I

ITEM 1. BUSINESS

GENERAL

         U.S. Automobile Acceptance 1995-1, Inc. (the "Company") was
incorporated under Texas law in January, 1995. The Company is a limited purpose
corporation engaged in the financial services business specializing in the
purchase, management and collection of used motor vehicle sub-prime credit
receivables (the "Contracts"). The Company purchases Contracts, at a discount,
created by the sale of used automobiles and light trucks. The Company has
financed its business through the securitization of the Contracts that it
purchases. A public offering, began in 1995, was completed in August, 1996, when
the maximum of $9,900,000 was reached.

         The Company's offices are located at 1120 N.W. 63rd, Suite G-108,
Oklahoma City, Oklahoma 73116.

PROPOSED PLAN OF ORDERLY LIQUIDATION

         The Company has incurred in 1998 much higher than anticipated borrower
payment defaults which ultimately has resulted in many automobile dealers
defaulting in their recourse obligations to the Company. Accordingly, the
Company's collection costs, repossession costs, collateral disposition costs,
losses from collateral disposition and legal costs to enforce dealer recourse
agreements have been much higher than anticipated. Additionally, the decreased
size of the performing Contract portfolio resulted in substantially decreased
interest revenues.

Accordingly, in addition to its currently required note redemption plan as
provided for in its indenture agreement, the Company believes that adopting an
accelerated plan of orderly liquidation is appropriate. The Company plans to
immediately begin discussion with note holders and Chase Bank of Texas to begin
the process necessary to implement procedures to allow for early orderly
liquidation of the assets of the Company and early liquidating cash
distributions to the note holders. The Company plans to use best efforts to
implement and complete the orderly liquidation plan (if approved by note
holders) during 1999.

Presently it cannot be determined whether the amounts realizable from the
disposition of the remaining assets or the amounts that creditors may agree to
accept in settlement of the obligations due them will differ materially from the
amounts shown in the accompanying financial statements.

SECURITIZATION ACTIVITIES

         Pursuant to an Indenture Agreement between the Company and Chase Bank
of Texas, formerly Texas Commerce Bank National Association, located in Dallas,
Texas, the Company has issued and outstanding an aggregate of $9,900,000 in
principal amount of its Automobile Contract Notes Due December 31, 1999 (the
"Notes"). The Notes require monthly interest payments at a rate of 14% per
annum.

                                        2

<PAGE>   3



         The Notes are secured by the Contracts (and the related motor vehicle
collateral and by additional collateral support agreements provided by
automobile dealerships) purchased by the Company. In addition, the net proceeds
of the offering and the Company's excess cash flow after payment of interest and
allowed expenses secures the Notes. The Indenture Agreement requires that all of
the Company's excess cash flow must be deposited after January 1, 1999 into a
note redemption bank account. The Company may redeem the Notes in whole or in
part at any time. At January 1, 1999 the Company has begun accumulating cash in
the note redemption bank account.

CONTRACT PURCHASING AND COLLECTING ACTIVITIES

         The Company's Contracts were purchased, at a discount, from used
automobile dealerships and used car divisions of new car dealerships. The
Company's Contract collecting activities are conducted through services provided
by the Servicer pursuant to an agreement with the Company. The Contracts
generally consist of retail installment sales contracts that are secured by
liens on the related motor vehicles. As of December 31, 1998, discontinued
purchasing Contracts.

         The Contracts were generally purchased at discounts ranging from 5% to
25% below the total future net principal balance owed on such Contracts. The
typical discount for Contracts purchased to date has been in excess of 10% of
the net principal balance of the Contracts purchased.

         The purchase discount varied depending on the credit worthiness of the
borrower and on the availability and financial strength added by additional
recourse or credit support agreements provided by the automobile dealer. These
dealer credit support agreements when obtained were in the form of contract
replacement guarantees, direct dealer recourse, limited guaranty agreements or
some other form of cash hold-back arrangement.

         The Company did not participate in the retail sales by the automobile
dealers of the financed vehicles from which the Contracts arise.

         The Contracts were purchased by the Company and serviced on behalf of
the Company under a Contract Servicing Agreement. The Servicing Agreement allows
the Servicer to subcontract with industry-qualified third parties to perform its
obligations thereunder. The Company has granted a security interest in the
Servicing Agreement to the Trustee as additional security for the Notes of the
Company.

         Under the Servicing Agreement, the Servicer is obligated to exercise
discretionary powers involved in the management, administration and collection
of the Contracts. The Servicer presently subcontracts certain of its collecting
functions to automobile dealers and other third party subcontractors (the
"Subcontracting Servicer"). Funds collected from the Subcontracting Servicers
are required to be deposited directly into the Company's master collection
accounts.

           The Servicer or Subcontracting Servicer must contact any obligor on a
past due Contract within fifteen (15) days after the payment due date to pursue
collections. Any material extensions, modifications, or acceptances of partial
payments by obligers, and any related necessary Contract amendments or default
waivers by the Servicer, must be approved by the chief credit officer or

                                        3

<PAGE>   4




president of the Company. When a contract becomes over 30 days past due, the
Servicer and the Company will take immediate appropriate action to enforce
dealer contract replacement guarantees and other dealer recourse agreements on
behalf of the Company. The Servicer will, if necessary, pursue repossession,
subject to compliance with all state and federal laws relating thereto.

         The Servicer is entitled under the Servicing Agreement to receive a
monthly fee (the "Servicing Fee"). The Servicing Fee is intended to compensate
and reimburse the Servicer for administering the collection of the Contracts,
including collecting and posting all payments, responding to inquiries of
obligers on the Contracts, investigating delinquencies, sending payment coupons
to obligers, and reporting any required tax information to obligers. The
Servicing Fee also compensates the Servicer for furnishing monthly and annual
statements to the Company with respect to collections and proceeds, and
generating information necessary for the Company to prepare all required federal
and state tax returns. The Servicer is entitled to reimbursement of its costs
and expenses incurred in repossession, preparation for sale and resale of any
financed vehicle and reimbursement of costs of enforcement of dealer recourse
agreements.

ITEM 2.  PROPERTIES

         The Company has no material physical properties.

ITEM 3.  LEGAL PROCEEDINGS

         There are no legal proceedings pending against the Company or its
assets. The Company has in the ordinary course of business filed numerous legal
proceedings against various automobile dealers for breech of contract and
failure to honor dealer recourse agreements.

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

           Not Applicable.

                                     PART II

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

         There is no established public trading market for the Company's common
equity.





                                        4

<PAGE>   5




ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

GENERAL

         During 1998 the Company has incurred substantial operating losses
resulting principally from poor performance of its contract receivable portfolio
additionally resulting in the write-off of approximately $4,300,000 of contract
receivable, increased operating, legal, administrative and collateral
disposition costs and decreased interest revenues related to the defaulted
contracts. Many automobile dealers have failed to honor dealer recourse
agreement resulting in legal actions against many dealers.

         The contract receivables of the Company have not performed as expected,
accordingly, the Company is presently reviewing future alternatives including
proposing an orderly liquidation and early payment of the Company's secured
notes. Currently, terms of the Company's indenture agreement provide that as of
January 1, 1999, all collections from the Contracts after deduction of allowed
expenses will be transferred periodically to a note redemption bank account. In
addition the Company plans to seek approval of an accelerated plan of orderly
liquidation, as indicated above. Accordingly, the Company has adopted the
liquidation basis of accounting in which the assets and liabilities are
presented on a net realizable basis. Assets are reflected at estimated current
value less allowance for realization costs. Liabilities are reduced to the net
assets available for their payment. This change in accounting resulted in an
additional write-off asset carrying value of $1,039,547, which is principally
the write-off of previously capitalized offering and organization costs.

LIQUIDITY AND CAPITAL RESOURCES

         Beginning January 1, 1999, the net cash from Contracts less allowed
expenses will be deposited into a note redemption bank account and no additional
Contracts will be purchased.

ITEM 7.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         See index at page F-1.

ITEM. 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

         None

                                    PART III

ITEM 9.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The name, age, background and principal occupation of the sole director
and executive officer of the Company is set forth below:

                                        5

<PAGE>   6


           Mr. Michael R. Marshall, age 49, is the sole officer and director of
the Company. Mr. Marshall has spent full time in the automobile sub-prime credit
finance business for the last four years. Mr. Marshall holds a Bachelor of
Business Administration Degree in Accounting which he obtained in 1971 from
Texas A & M University. From 1971 through 1977 Mr. Marshall was employed at
Coopers & Lybrand, Certified Public Accountants, where he served in various
positions including general practice manager of its Oklahoma City office. Mr.
Marshall was self-employed from 1977 to 1982 as a practicing Certified Public
Accountant and as a corporate financial consultant and since 1982 has assisted
companies in the placement, collection and liquidation of debt finance
transactions. Additionally, from 1981 through 1988, Mr. Marshall was the
President of Settlers Energy Corporation, an independent oil and gas company
located in Oklahoma, which specialized in purchasing, managing and liquidation
of secured oil and gas loans of distressed financial institutions.

 ITEM 10.  EXECUTIVE COMPENSATION

         None

 ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         At December 31, 1998, the ownership of the Company's common stock is as
follows:

<TABLE>
<CAPTION>

                NAME OF DIRECTOR OR                                                        AMOUNT AND NATURE OF
                NAME AND ADDRESS OF                            NUMBER                 BENEFICIAL OWNERSHIP PERCENTAGE
                 BENEFICIAL OWNER                             OF SHARES                    OF CLASS OUTSTANDING
                -------------------                           ---------               -------------------------------
<S>                                                          <C>                      <C>
U.S. Automobile Acceptance Corporation
1120 N.W. 63rd, Suite G-108
Oklahoma City, OK  73116                                        1,000                              100%

</TABLE>


ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         U.S. Automobile Acceptance Corporation is the owner 100% of the issued
and outstanding common stock of the Company. The Company's contracts will be
administrated, serviced and collected on behalf of the Company by U.S.
Automobile Acceptance Corporation, an affiliate. The Servicer subcontracts a
portion of the servicing of the contracts to qualified automobile dealers and
other qualified subcontractors. The Servicer is paid a servicing fee of $21.50
per month, per contract. In addition, the Company's Parent will be paid a
purchase administration fee of $125 per Contract purchased, paid monthly, and
will be paid a monthly investor administration fee of 1/12th of 1% of the
aggregate principal amount of the Notes outstanding, and 1/12th of 1% of
aggregate funds held in investment accounts. All other general and
administrative expenses of the Company are paid by 1995-1 or reimbursed to
USAAC.




                                        6

<PAGE>   7






ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

         (a)      Financial Statements and Schedules:

                           The financial statements listed in the Index to
                           Financial Statements are filed as part of this annual
                           report. No financial statement schedules are required
                           to be filed as part of this annual report because all
                           information otherwise included in schedules has been
                           incorporated into the Notes to Financial Statements.


         (b)      Reports on Form 8-K:

                           No reports on Form 8-K were filed in the three month
                           period ended December 31, 1998.


         (c)      Exhibits:


   EXHIBIT
    NUMBER              EXHIBIT

     3.1       -        Articles of Incorporation of U.S. Automobile Acceptance
                        1995-1, Inc.(1)

     3.2       -        Bylaws of U.S. Automobile Acceptance 1995-1, Inc.(1)

     4.1       -        Indenture Agreement between U.S. Automobile Acceptance
                        1995-1, Inc. and Texas Commerce Bank National 
                        Association, as Trustee, with respect to the 14% Notes 
                        due December 31, 1999.(1)

     4.2       -        Form of 14% Note due December 31, 1999.(1)

     27        -        Financial Data Schedule.

(d)      Financial Statements excluded by Rule 14a-3(b):  None.




--------------------------------------------------------------------------------
(1) Incorporated by reference to the Company's Registration Statement
--------------------------------------------------------------------------------




                                        7

<PAGE>   8



                                   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.

         Dated: April 14, 1999

                                    U.S. AUTOMOBILE ACCEPTANCE 1995-1, INC.



                                    By:   /s/ Michael R. Marshall
                                          --------------------------------------
                                          Michael R. Marshall, President


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


<TABLE>
<CAPTION>


         Signature                                      Title                                 Date
         ---------                                      -----                                 ----
<S>                                          <C>                                          <C>
By: /s/ Michael R. Marshall                  President and Director                       April 14, 1999
    ------------------------------------     (Principal Executive Officer
    Michael R. Marshall                      and Principal Financial Officer)
                                             
</TABLE>





SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO
SECTION 12 OF THE ACT.




                                       8

<PAGE>   9


                     U.S. AUTOMOBILE ACCEPTANCE 1995-1, INC.
                         (a limited purpose corporation)

                              FINANCIAL STATEMENTS



                          INDEX TO FINANCIAL STATEMENTS


<TABLE>
<CAPTION>


                                                                                               PAGE
                                                                                               ----

<S>                                                                                            <C>
Independent Auditor's Report                                                                    F-2

Statement of Net Assets and
  Liabilities in Liquidation as
  of December 31, 1998                                                                          F-3

Statement of Operations in
  Liquidation for the year
  ended December 31, 1998                                                                       F-4

Statement of Stockholders' Equity
  (Deficit)for the year ended
  December 31, 1998                                                                             F-5

Statement of Cash Flows for the
  year ended December 31, 1998                                                                  F-6

Notes to Financial Statements                                                                   F-7
</TABLE>



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.








                                       F-1


<PAGE>   10



                           [TYSON HOPKINS LETTERHEAD]




                          INDEPENDENT AUDITOR'S REPORT




Board of Directors
U.S. Automobile Acceptance 1995-1, Inc.

I have audited the statement of net assets (liabilities) in liquidation of U.S.
Automobile Acceptance 1995-1, Inc. (a Texas Corporation) as of December 31,
1998. In addition, I have audited the statements of operations, stockholders'
equity and cash flows for the year ended December 31, 1998. These financial
statements are the responsibility of the Company's management. My responsibility
is to express an opinion on these financial statements based on my audit.

I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.

The Company plans to seek approval of an orderly liquidation plan (see Note 1).
As a result the Company changed its basis of accounting from the going concern
basis to the liquidation basis as of December 31, 1998.

In my opinion, the financial statements referred to above present fairly, in all
material respects, the net assets (liabilities) in liquidation of U.S.
Automobile Acceptance 1995-1, Inc. as of December 31, 1998, and the results of
its operations, changes in stockholders' equity and cash flows for the year then
ended, in conformity with generally accepted accounting principles applied on
the basis of accounting described in the preceding paragraph.




TYSON HOPKINS
Oklahoma City, Oklahoma
April 7, 1999


                                       F-2


<PAGE>   11




                     U.S. AUTOMOBILE ACCEPTANCE 1995-1, INC.
                         (a limited purpose corporation)

              STATEMENT OF NET ASSETS (LIABILITIES) IN LIQUIDATION
                             As of December 31, 1998





<TABLE>
<CAPTION>
                                            ASSETS

                                                                                 December 31,
                                                                                    1998
                                                                                -------------

<S>                                                                             <C>         
Cash and cash equivalents                                                       $  1,441,162

Contracts receivable, at estimated realizable
  value, less allowance for future losses and
  liquidation costs of $348,867                                                    2,423,707
                                                                                ------------ 

                  TOTAL NET ASSETS IN LIQUIDATION                               $  3,864,869
                                                                                ============



                             LIABILITIES AND STOCKHOLDERS' (DEFICIT)


Notes payable, includes amounts not ultimately
  recoverable by noteholders                                                    $  9,900,000

Accrued interest payable                                                             115,500
                                                                                ------------ 


                  TOTAL LIABILITIES                                               10,015,500
                                                                                ------------ 

Common Stock                                                                           1,000

Paid in Capital                                                                       49,000

Accumulated Deficit                                                               (6,200,631)
                                                                                ------------ 


                  TOTAL STOCKHOLDERS (DEFICIT)                                    (6,150,631)
                                                                                ------------ 


                  TOTAL NET LIABILITIES IN LIQUIDATION                          $  3,864,869
                                                                                ============
</TABLE>










                 See accompanying notes to financial statements
                                       F-3


<PAGE>   12


                     U.S. AUTOMOBILE ACCEPTANCE 1995-1, INC.
                         (a limited purpose corporation)

                    STATEMENT OF OPERATIONS (IN LIQUIDATION)
                      For the year ended December 31, 1998



<TABLE>
<CAPTION>

                                                              1998
                                                         -------------

<S>                                                      <C>          
Interest income                                          $   1,240,971
Interest expense                                             1,386,000
                                                         -------------
Net interest expense                                          (145,029)

General and administrative expenses                            696,051
Write-off of contracts receivable                            4,273,269
Write-off of asset carrying value necessary
  to reflect change to liquidation basis
  accounting, includes principally
  write-off of capitilized offering and
  organization cost                                          1,039,547
                                                         -------------
Total write-down of assets                                   5,312,816
                                                         -------------
                  Net (loss) from operations and
                    write-down of assets                 $  (6,153,896)
                                                         =============

                  Net loss per share                     $   (6,153.90)
                                                         =============
</TABLE>




                 See accompanying notes to financial statements
                                       F-4


<PAGE>   13


                     U.S. AUTOMOBILE ACCEPTANCE 1995-1, INC.
                         (a limited purpose corporation)

                   STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
                      For the year ended December 31, 1998


<TABLE>
<CAPTION>


                              Common Stock             Paid-In     Accumulated

                            Shares       Amount        Capital       Deficit         Total
                         -----------   -----------   -----------   ------------   -----------
<S>                      <C>           <C>           <C>           <C>            <C>
Balances, December 31,
   1997                        1,000   $     1,000   $    49,000   $   (46,735)   $     3,265

Net (loss) 1998                  -0-           -0-           -0-    (6,153,896)    (6,153,896)
                         -----------   -----------   -----------   -----------    -----------
Balances, December 31,
   1998                        1,000   $     1,000   $    49,000   $(6,200,631)   $(6,150,631)
                         ===========   ===========   ===========   ===========    ===========
</TABLE>







                 See accompanying notes to financial statements
                                       F-5


<PAGE>   14



                     U.S. AUTOMOBILE ACCEPTANCE 1995-1, INC.
                         (a limited purpose corporation)

                             STATEMENT OF CASH FLOWS
                      For the year ended December 31, 1998


<TABLE>
<CAPTION>

                                                             Dec. 31,
                                                               1998
                                                          --------------

<S>                                                       <C>            
Cash flows used by operating activities:
         Net (loss)                                       $   (6,153,896)
         Write - down of assets                                5,312,816
         Other                                                   (19,010)
                                                          --------------
                  Net cash (used) by
                    operating activities                        (860,090)
                                                          --------------
Cash flows provided (used) by investing activities:
         Purchase of contracts receivable                       (421,867)
         Principal collections on contracts
           receivable, dispositions of collateral,
           collections from enforcement of recourse
           agreements and other                                1,720,718
                                                          --------------
                  Net cash provided by investing
                    activities                                 1,298,851
                                                          --------------
                  Net increase in cash
                    and cash equivalents                         438,761

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD               1,002,401
                                                          --------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                $    1,441,162
                                                          ==============
</TABLE>


                 See accompanying notes to financial statements
                                       F-6


<PAGE>   15


                     U.S. AUTOMOBILE ACCEPTANCE 1995-1, INC.
                         (a limited purpose corporation)


                          NOTES TO FINANCIAL STATEMENTS


1. DESCRIPTION OF BUSINESS

GENERAL - U.S. Automobile Acceptance 1995-1, Inc. (herein referred to as
"Company" or "1995-1") was incorporated on January 12, 1995 as a Texas
Corporation. The Company was formed to conduct an asset backed note offering and
to use the proceeds to purchase, collect and service retail automobile and light
truck financing contracts ("Contracts"). It is limited to that purpose.

ASSET-BACKED NOTE OFFERING - The Company filed a Registration Statement in 1995
with the Securities and Exchange Commission and various state security boards
with respect to its offering of up to $9,900,000 of 14% Promissory Notes due
December 31, 1999. The $500,000 minimum required subscription amount was reached
in September 1995 and the offering became effective. The offering was fully
subscribed in August 1996. The Company became fully operational in February
1997.

The Notes were issued under the terms of an Indenture Agreement between the
Company and Chase Bank of Texas, formerly Texas Commerce Bank National
Association, as Trustee. The Notes are secured by the contracts and proceeds
thereof.

PROPOSED PLAN OF ORDERLY LIQUIDATION - The Company has incurred in 1998 much
higher than anticipated borrower payment defaults which ultimately has resulted
in many automobile dealers defaulting in their recourse obligations to the
Company. Accordingly, the Company's collection costs, repossession costs,
collateral disposition costs, losses from collateral disposition and legal costs
to enforce dealer recourse agreements have been much higher than anticipated.
Additionally, the decreased size of the performing Contract portfolio resulted
in substantially decreased interest revenues.

Accordingly, in addition to its currently required note redemption plan as
provided for in the indenture agreement, the Company believes that adopting an
accelerated plan of orderly liquidation is appropriate. The Company plans to
immediately begin discussion with note holders and Chase Bank of Texas to begin
the process necessary to implement procedures to allow for early orderly
liquidation of the assets of the Company and early liquidating cash
distributions to the note holders. The Company plans to use best efforts to
implement and complete the orderly liquidation plan (if approved by note
holders) during 1999.

Presently it cannot be determined whether the amounts realizable from the
disposition of the remaining assets or the amounts that creditors may agree to
accept in settlement of the obligations due them will differ materially from the
amounts shown in the accompanying financial statements.



                                       F-7


<PAGE>   16


                     U.S. AUTOMOBILE ACCEPTANCE 1995-1, INC.
                         (a limited purpose corporation)


                          NOTES TO FINANCIAL STATEMENTS



2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION - Terms of the Company's indenture agreement provide that
as of January 1, 1999, all collections from the Contracts after deduction of
allowed expenses will be transferred periodically to a note redemption bank
account. In addition the Company plans to seek approval of an accelerated plan
of orderly liquidation, as indicated above. Accordingly, the Company has adopted
the liquidation basis of accounting in which the assets and liabilities are
presented on a net realizable basis. Assets are reflected at estimated current
value less allowance for realization costs. Liabilities are reduced to the net
assets available for their payment.

USE OF ESTIMATES - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities, the
disclosures regarding contingent assets and liabilities at the date of the
financial statements, and the amounts of revenues and expenses reported during
the period. Actual results could differ from those estimates.

CASH AND CASH EQUIVALENTS - The Company considers all investments with a
maturity of three months or less, when purchased, to be cash equivalents.

RESTRICTED CASH - The use of cash of the Company is restricted by the terms of
an indenture agreement between the Company and Chase Bank of Texas, as Indenture
Trustee, to initially purchase Contracts and for payment of allowed expenses,
trustee's fees and expenses, interest paid by transfers to Note Redemption
Account for payment to Noteholders and before Note Redemption Date (January 1,
1999), any remaining proceeds used to purchase additional eligible Contracts,
and after Note Redemption Trigger Date, any remaining proceeds deposited into
Note Redemption Account for payment of Notes.

FINANCE CONTRACTS - Income from Contracts is recognized using the effective
interest method. Finance Contracts are stated at Contract balance less an
allowance for collection cost and estimated future losses.

CREDIT LOSSES - The Company had credit losses of approximately $4,300,000 in
1998. The Company advises that these resulted principally from higher than
anticipated repossession rates and failure of automobile dealers to honor their
recourse and contract replacement agreements. The Company has taken legal action
against defaulting dealers which is their policy, but does not expect any
significant future recovery. The Company charges off contracts receivable as an
individual contract is determined to be uncollectible.


                                       F-8


<PAGE>   17


                     U.S. AUTOMOBILE ACCEPTANCE 1995-1, INC.
                         (a limited purpose corporation)


                          NOTES TO FINANCIAL STATEMENTS

The Company believes that amounts included allowance for losses are sufficient
to cover loan losses that will be incurred in the future. If management
determines that additional loss reserves are necessary in the future they will
be established at that time.

CAPITALIZED NOTE OFFERING COSTS - Note offering cost which were previously
capitalized have been written off in 1998.

INCOME TAXES - The Company has adopted SFAS No. 109, Accounting for Income
Taxes, whereby deferred income taxes reflect the net tax effects of (a)
temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax reporting
purposes, and (b) net operating loss carry forwards. The Company has incurred an
aggregate tax and financial reporting loss from incorporation through year end
1998 and accordingly has no income tax liability as of December 31, 1998.


3. CONTRACTS RECEIVABLE

At December 31, 1998 aggregate Contracts receivable totaled approximately
$2,800,000. Write-off of uncollectible receivables during 1998 was approximately
$4,300,000. Reserve for future loan losses and liquidation costs at December 31,
1997 is approximately $350,000. Dealer recourse agreements have generally not
performed as expected during 1998 resulting in substantially higher than
anticipated loan losses.


4. NOTES PAYABLE

At December 31, 1998 the Company had outstanding notes payable of $9,900,000.
The Notes bear interest at 14% payable monthly, and the principal is due
December 31, 1999.

The Notes have been issued under the terms of an Indenture Agreement between the
Company and Chase Bank of Texas, as trustee. The Notes are collateralized by the
Contracts and proceeds thereof. 1995-1 holds vehicle titles and/or liens on the
vehicles as collateral for Contracts until they are paid in full. Use of
proceeds of contract collections of 1995-1 is restricted to payments on the
Notes, payment of certain allowed expenses of 1995-1 and the purchase of
additional Contracts prior to January 1, 1999.

Under the terms of the various agreements Chase holds a security agreement for
the benefit of the noteholders, serves as paying agent, note registrar, controls
the note redemption bank account and serves as escrow agent.


                                       F-9


<PAGE>   18


                     U.S. AUTOMOBILE ACCEPTANCE 1995-1, INC.
                         (a limited purpose corporation)


                          NOTES TO FINANCIAL STATEMENTS

5. RELATED PARTY TRANSACTIONS

U.S. Automobile Acceptance Corporation ("USAAC") contractually administers,
services and collects Contracts on behalf of 1995-1 and subcontracts a portion
of the servicing and collection functions to certain automobile dealers and
other subcontractors.

Six percent (6%) of the proceeds of the Asset-Backed Note offering were paid to
USAAC as reimbursement of registration, legal, accounting, printing, trustee,
marketing, and other out of pocket fees and expenses and allocated general and
administrative and overhead expenses related to the offering and organization of
the Company.

The Servicer is paid a servicing fee of $21.50 per month, per Contract, limited
to maximum of $35,000 per month. In addition, USAAC is paid a purchase
administration fee of $125 per Contract purchased, paid monthly, and is paid a
monthly investor administration fee of 1/12th of 1% of the aggregate principal
amount of the Notes outstanding, and 1/12th of 1% of aggregate funds held in
investment accounts. All other general and administrative expenses are paid by
1995-1 or reimbursed to USAAC.



                                      F-10


<PAGE>   19
                               INDEX TO EXHIBITS


<TABLE>
<CAPTION>


   Exhibit
    Number              Description
   -------              -----------
<S>           <C>       <C>
     3.1       -        Articles of Incorporation of U.S. Automobile Acceptance
                        1995-1, Inc.(1)

     3.2       -        Bylaws of U.S. Automobile Acceptance 1995-1, Inc.(1)

     4.1       -        Indenture Agreement between U.S. Automobile Acceptance
                        1995-1, Inc. and Texas Commerce Bank National 
                        Association, as Trustee, with respect to the 14% Notes 
                        due December 31, 1999.(1)

     4.2       -        Form of 14% Note due December 31, 1999.(1)

     27        -        Financial Data Schedule.
</TABLE>

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(1) Incorporated by reference to the Company's Registration Statement
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