U.S. SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

[X]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
        FOR THE QUARTERLY PERIOD ENDED       JUNE 30, 1998
                                        ------------------------

                                       OR

[  ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
        FOR THE TRANSITION PERIOD FROM ____________  TO ________________

        COMMISSION FILE NUMBER     1-14082
                                   -------

                       SMART CHOICE AUTOMOTIVE GROUP, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


                               FLORIDA 59-1469577
                (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
                               IDENTIFICATION NO.)
                         INCORPORATION OR ORGANIZATION)

              5200 S. WASHINGTON AVENUE, TITUSVILLE, FLORIDA 32780
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
                                   (ZIP CODE)

                                 (407) 269-9680
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

                              _____________________
              (FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR,
                         IF CHANGED SINCE LAST REPORT)


INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE  PRECEDING 12 MONTHS (OR FOR SUCH  SHORTER  PERIOD THAT THE  REGISTRANT  WAS
REQUIRED  TO FILE  SUCH  REPORT(S),  AND (2) HAS  BEEN  SUBJECT  TO SUCH  FILING
REQUIREMENTS FOR THE PAST 90 DAYS.

YES    X__    NO ______

     INDICATE  NUMBER OR SHARES  OUTSTANDING OF EACH OF THE ISSUER'S  CLASSES OF
COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE:

        AS OF AUGUST 19, 1998, 6,576,254 SHARES OF THE REGISTRANT'S COMMON STOCK
WERE ISSUED AND OUTSTANDING.


<PAGE>

                       SMART CHOICE AUTOMOTIVE GROUP, INC.

                                    FORM 10-Q




                                TABLE OF CONTENTS


                                                                      PAGE
                                                                      ----

PART I  -  FINANCIAL STATEMENTS

        Item 1.Financial Statements.                                     3

               Condensed Consolidated Balance sheets      -              4
               June 30, 1998 and December 31, 1997

               Condensed Consolidated Statements of Operations  -        6
               Three and Six Months Ended June 30, 1998 and 1997

               Condensed Consolidated Statements of Cash Flow  -         7
               Six Months ended June 30, 1998 and June 30, 1997

               Notes to Condensed Consolidated Financial Statements      9

        Item 2.Management's Discussion and Analysis of Financial 
               Condition and Results of Operations                      11

Part II OTHER INFORMATION                                               24

        Item 2.Changes in Securities                                    24

        Item 4.Submission of Matters to Vote of Security Holders        25

        Item 5.Other Information                                        25

        Item 6.Exhibits and Reports on Form 8-K                         26

<PAGE>


                                     PART I
                       SMART CHOICE AUTOMOTIVE GROUP, INC.

                              FINANCIAL STATEMENTS


        ITEM 1.  FINANCIAL STATEMENTS.

<PAGE>



                                             SMART CHOICE AUTOMOTIVE GROUP, INC.
                                           CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                    As of June 30, 1998      As of December 31, 1997
                                                       (Unaudited)              (Audited)
<S>                                                       <C>                     <C>
 ASSETS
   Cash and cash equivalents                      $      3,839,650           $  1,066,949
   Accounts receivable                                   3,821,521              1,773,124
   Finance receivables
     Principal balances, net                            63,156,265             40,084,412
     Less: allowance for credit losses                  (9,336,911)            (6,857,265)
-------------------------------------------------------------------------------------------
            Finance receivables, net                    53,819,354             33,227,147

   Inventories, at cost                                 17,949,707             15,516,084
   Land held for resale                                         --              1,050,000
   Property and equipment, net                           9,181,974              9,214,207
   Notes receivable                                             --                 46,280
   Deferred debt costs, net                                308,521                426,823
   Goodwill, net                                        25,236,774             25,562,162
   Prepaid expenses                                      1,799,646              1,008,229
   Deposits and other assets                               261,081                213,986

------------------------------------------------------------------------------------------
                                                  $    116,218,228        $    89,104 991

------------------------------------------------------------------------------------------
</TABLE>

      SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


<PAGE>
<TABLE>
<CAPTION>

                                                                 SMART CHOICE AUTOMOTIVE GROUP, INC.
                                                               CONDENSED CONSOLIDATED BALANCE SHEETS

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

                                                          As of June 30, 1998    As of  December 31,1997
---------------------------------------------------------------------------------------------------------
                                                                  (Unaudited)            (Audited)

     <S>                                                              <C>                 <C>
 LIABILITIES AND STOCKHOLDERS' EQUITY
   Liabilities:
       Accounts payable                                         $  5,925,730          $    5,259,903
       Accrued expenses                                            3,103,886               4,633,841
       Line of credit, net of discount                            45,771,017              31,229,600
       Floorplans payable                                          8,482,492               8,287,092
       Capital lease obligations                                     900,809                 940,280
       Notes payable                                              31,090,052              29,197,458
       Other liabilities                                               1,028                  94,913
-----------------------------------------------------------------------------------------------------
   Total liabilities                                              95,275,014              79,643,087
-----------------------------------------------------------------------------------------------------

     Redeemable convertible preferred Stock                           10,000               4,941,834

     Stockholders' equity:
     Preferred stock                                               5,891,410                  ---
     Common stock                                                    131,075                  97,340
     Additional paid in capital                                   30,652,534              24,108,456
     Accumulated deficit                                         (15,741,805)            (19,685,726)
-----------------------------------------------------------------------------------------------------
   Total stockholders' equity                                     20,933,214               4,520,070
-----------------------------------------------------------------------------------------------------
                                                            $    116,218,228        $     89,104,991
-----------------------------------------------------------------------------------------------------
</TABLE>
      SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

<PAGE>


                                             SMART CHOICE AUTOMOTIVE GROUP, INC.
                                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                                                     (UNAUDITED)
<TABLE>
<CAPTION>

---------------------------------------------------------------------------------------------------
                                                Three Months Ended           Six Months Ended
                                                     June 30                     June 30
                                                  1998          1997         1998         1997
---------------------------------------------------------------------------------------------------
 
<S>                                              <C>              <C>          <C>         <C>

VEHICLE AND RELATED REVENUES:
    Sales of used vehicles                   $ 18,756,972   $ 7,003,702  $40,602,531   $11,788,779
    Income on finance receivables               4,059,041     1,927,736    6,942,139     1,722,865
    Sales of new vehicles                       6,225,769            --   14,349,193            --
    Income from parts and accessories           6,047,504     5,473,447   10,411,541     7,972,200
    Income from insurance and training            245,810       388,976      426,032       651,256

---------------------------------------------------------------------------------------------------
                                               35,335,096    14,793,861   72,731,436    22,135,100
---------------------------------------------------------------------------------------------------
 COST AND EXPENSES:
    Cost of used vehicles sold                 12,551,074     5,304,253   26,376,231     7,966,735
    Provision for credit losses                 2,097,221       499,131    4,418,885     1,548,811
    Cost of new vehicles sold                   5,400,004            --   12,587,089            --
    Cost of parts and accessories sold          3,879,897     3,347,344    6,676,788     4,909,266
    Cost of insurance and training                 28,838        23,149       59,595        36,714
---------------------------------------------------------------------------------------------------
     Selling, general and administrative                      
      expenses                                  7,102,453     4,938,188   15,082,265    10,019,848
    Expenses:
    Compensation expenses related to
    Employee stock options                             --        88,890           --     3,214,767
----------------------------------------------------------------------------------------------------
 TOTAL COSTS AND EXPENSES                      31,059,487    14,200,955   66,230,980     27,696,141
----------------------------------------------------------------------------------------------------
 INCOME (LOSS) FROM OPERATIONS                  4,275,609       592,906    7,530,583     (5,561,041)
----------------------------------------------------------------------------------------------------
    Other expense (income): 
    Interest expense                            2,122,612     1,055,996    4,032,283     1,748,613
    Other income                                 (293,513)     (104,576)    (630,462)     (113,749)
    Miscellaneous expense                           5,340         5,274       21,002        70,218
---------------------------------------------------------------------------------------------------
                                                1,834,439       956,694    3,422,823     1,705,082
---------------------------------------------------------------------------------------------------
NET INCOME (LOSS)                               2,441,170      (363,788)   4,107,760    (7,266,123)
PREFERRED STOCK DIVIDENDS                          85,964            --     (163,839)           --    
---------------------------------------------------------------------------------------------------
NET INCOME AVAILABLE TO COMMON STOCK HOLDERS $  2,355,206   $  (363,788) $ 3,943,921   $(7,266,123)
---------------------------------------------------------------------------------------------------
NET INCOME (LOSS) PER SHARE

BASIC                                             $   .18   $      (.04) $       .34    $      (.87)
DILUTED                                           $   .18          (.04) $       .33           (.87)  
WEIGHTED AVERAGE NUMBER OF SHARES
AND SHARE EQUIVALENTS OUTSTANDING:
BASIC                                          12,775,914     8,936,308   11,581,852      8,397,713
DILUTED                                        14,959,064     8,936,308   13,681,830      8,397,713
---------------------------------------------------------------------------------------------------
</TABLE>
      SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


<PAGE>


                                             SMART CHOICE AUTOMOTIVE GROUP, INC.
                                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                     (UNAUDITED)
<TABLE>

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

                                                                      Six Months Ended
                                                                 June 30, 1998     June 30, 1997
                                                             ------------------------------------
<S>                                                                     <C>                 <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)                                                 $  4,107,760     $  (7,266,123)
   Adjustments to reconcile net loss to
   Net cash provided by operating activities:
          Provision for credit losses                                4,418,884         1,222,230
          Common stock and options issued for consulting fees           36,376           150,000
          (Gain) loss on disposal of fixed assets                      (43,381)            2,176
          Stock option compensation                                         --         3,214,767
          Depreciation and amortization                              1,292,302           750,846
          Cash provided by (used for):
          Accounts receivable                                       (2,442,297)         (186,743)
          Inventory                                                 (2,433,623)       (2,368,124)
          Prepaid expenses                                            (791,417)          189,081
          Accounts payable                                             665,827          (395,807)
          Accrued expenses and other liabilities                    (1,616,129)        2,689,962
---------------------------------------------------------------------------------------------------
Net cash provided by operating activities                            3,194,302        (1,997,735)
---------------------------------------------------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
           Increase in finance receivables                         (25,011,091)       (3,631,742)
           Cash for acquisitions, net of cash acquired                     --         (8,100,020)
           Advances to acquired companies prior to acquisition             --         (2,744,093)
           Increase in deposits                                        (14,608)         (822,200)
           Increase in deferred acquisition costs                                        (51,717)
           Payment of notes receivable                                   46,280          400,420
           Purchase of property and equipment                          (435,239)        (250,192)
           Proceeds from disposal of property & equipment             1,093,381           28,475
           Other                                                        (33,932)         (12,471)
---------------------------------------------------------------------------------------------------
Net cash used in investing activities                               (24,355,209)     (15,183,540)
---------------------------------------------------------------------------------------------------
</TABLE>
                             CONTINUED ON NEXT PAGE


<PAGE>


                                                   SMART CHOICE AUTOMOTIVE GROUP
                                                                     (CONTINUED)
                                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                     (UNAUDITED)
<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------
                                                                            Six Months Ended
                                                                 June 30, 1998         June 30, 1997

<S>                                                                   <C>                      <C>
 CASH FLOWS FROM FINANCING ACTIVITIES:
    Principal payments on notes payable                             (3,770,636)           (2,408,441)
    Proceeds from issuance of notes payable                          7,000,000             8,652,812
    Increase in deferred debt costs                                         --              (533,322)
    Proceeds from issuance of preferred stock                        5,891,410               590,000
    Purchase of treasury stock                                              --               (13,590)
    Proceeds from issuance of convertible debentures                        --               300,000
    Bank overdraft                                                          --               (82,884)
    Proceeds from issuance of common stock                             245,400                    --
    Proceeds from line of credit borrowings                         14,500,000             9,562,090
    Proceeds from floor plan notes payable                             195,400             2,105,804
    Payment of dividends                                               (39,618)                  --
    Deferred financing costs                                           (33,640)                  --
    Payments on capital lease obligations                              (54,708)                  --
-----------------------------------------------------------------------------------------------------
    Net cash provided by financing activities                       23,933,608            18,172,469
-----------------------------------------------------------------------------------------------------
 NET INCREASE IN CASH AND CASH EQUIVALENTS                           2,772,701               991,194


 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                    1,066,949                   --
-----------------------------------------------------------------------------------------------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                       $   3,839,650        $      991,194
-----------------------------------------------------------------------------------------------------
</TABLE>
      SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

<PAGE>



                                             SMART CHOICE AUTOMOTIVE GROUP, INC.
                           NOTES TO CONDENSED CONSOLIDATED  FINANCIAL STATEMENTS
                                                                     (UNAUDITED)
-------------------------------------------------------------------------------

NOTE 1  -  BASIS OF PRESENTATION

In the opinion of management,  the accompanying unaudited condensed consolidated
financial  statements of Smart Choice  Automotive  Group,  Inc. (the "Company"),
reflect  all  adjustments,  consisting  only of  normal  recurring  adjustments,
necessary to present the Company's  financial position and results of operations
for the periods presented. The results of operations for interim periods are not
necessarily indicative of the results to be expected for a full fiscal year. The
Condensed  Consolidated  Balance  Sheet as of December 31, 1997 was derived from
audited  consolidated  financial statements as of that date but does not include
all  the  information  and  notes  required  by  generally  accepted  accounting
principles.   It  is  suggested  that  these  condensed  consolidated  financial
statements  be read in  conjunction  with  the  company's  audited  consolidated
financial  statements  included in the Company's  Annual Report on Form 10-K for
the year ended December 31, 1997.

NOTE 2 - FINANCE RECEIVABLES

The Company's finance receivables ("Finance Receivables" or "Finance Contracts")
are automobile retail  installment sales contracts  originated by the Company on
sales of used  cars at its  automobile  dealerships.  The  following  shows  the
principal balances of the Company's Finance Receivables as of June 30, 1998:

                                                       JUNE 30, 1998
-----------------------------------------------------------------------------

        Contractually scheduled payments               $  90,036,501
        Less: unearned finance charges                   (27,831,899)
-----------------------------------------------------------------------------

        Principal balances                             $  62,204,602
        Add:  loan origination costs                   $     951,663

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

        Principal balances, net                        $  63,156,265
        Less:  allowance for credit losses                (9,336,911)

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

        Finance receivables, net                       $  53,819,354
-----------------------------------------------------------------------------

NOTE 3 - PRESENTATION OF DEALERSHIP REVENUES AND COST OF REVENUES

The Company  generates  revenue from sales at used car stores,  sales at new car
dealerships,  income  on  finance  receivables,  sales  of  Corvette  parts  and
accessories  and income from  insurance and training.  Cost of revenues  include
cost of sales at used cars stores,  the  provision  for credit  losses,  cost of
sales at new car dealerships,  cost of Corvette parts and accessories, and costs
of insurance and training.

The prices at which the  Company  sells its cars and the  interest  rate that it
charges  to  finance  these  sales take into  consideration  that the  Company's
primary customers are high-risk borrowers, some of whom ultimately default.

NOTE 4 - EARNINGS PER SHARE

Net earnings per common share amounts are based on the weighted  average  number
of common shares and potential common shares outstanding as reflected on Exhibit
11 to this Quarterly Report on Form
10-Q.

NOTE 5 - SEGMENT INFORMATION

The FASB issued Statement of Financial  Accounting  Standards No. 131(SFAS 131),
"Disclosures about Segments of an Enterprise and Related  Information." SFAS 131
is effective  for fiscal years  beginning  after  December 15, 1997.  Management
elected the early  adoption of this  pronouncement  during the first  quarter of
1998. SFAS 131 requires that public enterprises report certain information about
reporting segments in financial  statements.  If also requires the disclosure of
certain information  regarding services provided,  geographic areas of operation
and major customers.

The Company's operations are classified into four reportable segments.  The used
car stores  segment  operates a network  of 24 used car stores in  Florida.  The
Company primarily sells used vehicles to payment sensitive  non-prime  customers
who,  most  likely,  would be unable to  purchase  a vehicle  without  financing
through  the  Company's  financing  services  segment.  The new car  dealerships
segment  operates two new car  dealerships  in Florida.  The financing  services
segment finances consumer  purchases of used vehicles sold in the Company's used
car stores and new car dealerships.  The Corvette parts and accessories  segment
sells and  distributes  Corvette  parts and  accessories  throughout  the United
States, primarily through its extensive catalog.

The following table shows certain financial information by reportable segment as
of and for the six months ended June 30, 1998:
<TABLE>
<CAPTION>

                          USED CAR     FINANCING      NEW CAR      CORVETTE    CORPORATE   CONSOLIDATED
                           STORES       SERVICES    DEALERSHIPS   PARTS AND    AND OTHER
                                                                 ACCESSORIES
 ---------------------- ------------- ------------- ------------ ------------- ----------- -----------
    (UNAUDITED)

<S>                           <C>            <C>         <C>          <C>          <C>         <C>
 Sales                  $ 40,602,531  $  6,942,139  $ 14,349,193  $ 10,411,541 $  426,032  $ 72,731,436
 Operating income (loss)   7,077,817     1,122,052      (241,522)    1,627,114  (2,054,877)   7,530,584
 Depreciation and            
 amortization                241,541        47,415        23,048        83,504     896,794    1,292,302
 Identifiable assets      14,402,881    54,408,783     8,207,635     5,937,558  33,077,771  116,034,628
 Capital expenditures        173,796        46,867        30,635        57,968     125,973      435,239
 Interest expense            177,017     2,374,407       178,248        13,587   1,289,024    4,032,283
</TABLE>

ITEM NO. 2.  MANAGEMENT'S  DISCUSSION  AND ANALYSIS OF FINANCIAL  CONDITION  AND
RESULTS OF OPERATIONS.

        THE FOLLOWING DISCUSSION CONTAINS CERTAIN  "FORWARD-LOOKING  STATEMENTS"
WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES  ACT"),  AND SECTION 21E OF THE SECURITIES  EXCHANGE ACT OF 1934, AS
AMENDED (THE  "EXCHANGE  ACT").  THE WORDS  "BELIEVE",  "EXPECT",  "ANTICIPATE",
"ESTIMATE", "PROJECT", "INTEND" AND SIMILAR EXPRESSIONS IDENTIFY FORWARD-LOOKING
STATEMENTS,   WHICH  SPEAK  ONLY  AS  OF  THE  DATE  SUCH  STATEMENT  WAS  MADE.
FORWARD-LOOKING  STATEMENTS MAY INCLUDE,  BUT NOT BE LIMITED TO,  PROJECTIONS OF
REVENUES,  INCOME OR LOSS, PLANS FOR ACQUISITIONS AND EXPANSION,  INTEGRATION OF
NEW OPERATIONS,  FINANCING NEEDS, INDUSTRY TRENDS, CONSUMER DEMAND AND LEVELS OF
COMPETITION.  THESE  STATEMENTS BY THEIR NATURE  INVOLVE  SUBSTANTIAL  RISKS AND
UNCERTAINTIES,  SOME OF WHICH CANNOT BE PREDICTED OR  QUANTIFIED.  FUTURE EVENTS
AND ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE EXPRESSED IN, CONTEMPLATED
BY OR UNDERLYING ANY SUCH  FORWARD-LOOKING  STATEMENTS.  STATEMENTS CONTAINED IN
THIS "MANAGEMENT'S  DISCUSSIONS AND ANALYSIS OF FINANCIAL  CONDITION AND RESULTS
OF  OPERATIONS,  IN THE NOTES TO THE FINANCIAL  STATEMENTS AND ELSEWHERE IN THIS
REPORT DESCRIBE  FACTORS,  AMONG OTHERS,  THAT COULD CONTRIBUTE TO OR CAUSE SUCH
DIFFERENCES.

        The   following   discussion   and  analysis   regarding  the  Company's
consolidated financial position and consolidated results of operations should be
read in  conjunction  with the  financial  statements  and related notes thereto
included elsewhere.

OVERVIEW

        Smart Choice  Automotive Group,  Inc.,  operates 20 locations in Florida
that sell used cars under the "First  Choice" brand name.  The  Company's  First
Choice  cars are three to six years old,  have less than  80,000  miles and have
undergone thorough  inspection,  reconditioning  and, as necessary,  repair. The
Company also sells used cars that may not meet the First Choice criteria through
four additional  stores in Florida that operated under the "Team" name.  Through
its finance company subsidiary, the Company provides financing for its customers
by originating retail automobile installment sales contracts secured by the cars
it sells. The Company's customers  typically have limited credit histories,  low
incomes and/or past credit problems.

        The Company also owns two new car  dealerships in Florida,  manufactures
and sells Corvette parts and accessories through its subsidiary "Eckler's, sells
insurance and provides dealership training services.

        THE PREDECESSOR ACQUISITION. On January 28, 1997, the Company, which was
then  named  Eckler  Industries,  Inc.,  and was  operating  exclusively  in the
Corvette parts and accessories business,  acquired Smart Choice Holdings,  Inc.,
("SCHI") the  ("Predecessor  Acquisition")  through a merger between SCHI and an
acquisition  subsidiary  of  Eckler's.  SCHI  was  engaged  in the  business  of
acquiring various automobile sales and finance companies.  After the Predecessor
Acquisition,  the Company's name was changed to Smart Choice  Automotive  Group,
Inc.

        In the Predecessor Acquisition,  shareholders of SCHI were issued Common
Stock  having a majority of the voting  rights of the  Company.  Therefore,  the
Predecessor  Acquisition  was accounted for as a purchase of Eckler's by SCHI (a
reverse  acquisition  in which SCHI was  considered  the acquirer for accounting
purposes).

RESULTS OF OPERATIONS

COMPARISON  OF THREE  MONTHS  ENDED JUNE 30, 1998 TO THREE MONTHS ENDED JUNE 30,
1997

        REVENUES. The Company's revenues were $35.3 million for the three months
ended June 30, 1998 compared to $14.8  million for the same period in 1997.  The
increase for the second  quarter of 1998  reflects  primarily the increase to 24
used car stores at June 30,  1998 as  compared to 10 used car stores at June 30,
1997.

        COSTS AND  EXPENSES.  Cost of sales  increased to $24.0  million for the
three months ended June 30, 1998 compared to $9.2 million for the same period in
1997.  The increase in cost of sales at the used car stores  primarily  reflects
the opening of  additional  used car store  locations as discussed  above.  As a
percent  of sales,  the cost of sales at the used car stores  declined  to 66.9%
from 75.7% in 1997, reflecting management's focus on increasing gross margins as
well as an increase in average sales volume per store. The cost of sales for the
Corvette  parts  and  accessories  increased  to  64.2%  from  61.7%  of  sales,
reflecting an increase in sales of lower margin items.

        The Company's selling,  general and administrative expenses increased to
$7.1  million for the three months ended June 30, 1998 from $4.9 million for the
same period in 1997.

        INTEREST EXPENSE AND OTHER INCOME. Interest expense totaled $2.1 million
for the three months  ended June 30, 1998  compared to $1.1 million for the same
period in 1997, an increase of 91%. The increase resulted  primarily from higher
outstanding  indebtedness needed to finance higher levels of finance receivables
and inventory as the Company expanded its operations.

        Other  income  totaled $.3 million for the three  months  ended June 30,
1998  compared  to  $105,000  for the same  period in 1997.  The 1998  amount is
comprised  primarily of commissions on insurance sales ($117,457) and additional
fees generated at the new car dealerships ($120,000).

        NET INCOME.  Net income  totaled $2.4 million for the three months ended
June 30,  1998 as  compared  to a net loss of $.4 million for the same period in
1997. The  improvement  resulted  primarily from the refocusing of the Company's
strategy  and the  restructuring  of its  operations  during the last quarter of
1997.

SEGMENT INFORMATION

        The Company is comprised of four segments: used car stores, financing of
used car sales,  new car  dealerships  and Corvette parts and  accessories.  The
Company's  results of operations are most meaningful when analyzed and discussed
by segment.

USED CAR STORES
<TABLE>
<CAPTION>

                                                  THREE MONTHS ENDED        THREE MONTHS ENDED
                                                    JUNE 30, 1998             JUNE 30, 1997
                                               ------------------------- -------------------------
                                                             (DOLLARS IN THOUSANDS)

<S>                                               <C>             <C>         <C>          <C>    
Sales at used car stores...................     $  18,757        100.0%   $  7,004        100.0%
Cost of sales at used car stores...........        12,551         66.9       5,304         75.7
                                                   ------         ----       -----         ----
         Gross profits.....................         6,206         33.1       1,700         24.3
Operating expenses.........................         3,701         19.7       1,356         19.4
                                                    -----         ----       -----         ----
          Operating income.................     $   2,505         13.4%   $    344          4.9%
</TABLE>


        Sales at used car stores increased to $18.8 million for the three months
ended June 30, 1998  compared to $7.0  million for the same period in 1997.  The
increase in sales reflects the sale of 2,119 cars at the 24 used car stores that
were open  during the 1998  period as compared to the sale of 680 cars at the 10
used car stores that were open during the 1997 period. In addition,  the average
number of used cars sold per  store  increased  to 88 cars for the three  months
ended June 30, 1998 as  compared  to average  sales of 68 used cars for the same
period of 1997.

        Gross profit  increased  to $6.2  million  during the three months ended
June 30, 1998 from $1.7  million  during the three  months  ended June 30, 1997.
Gross profit as a percentage of sales increased to

33.1% for the three  months  ended June 30,  1998 as  compared  to 24.3% for the
three  months ended June 30,  1997.  The  improvement  resulted  primarily  from
management's  focus on increasing  gross  margins,  as well as a higher  average
sales volume per store.

        Operating  expenses  relating to sales at used car stores  increased  to
$3.7 million from $1.4 million as a result of the increase in the number of used
car stores.

FINANCING OF USED CAR SALES
<TABLE>
<CAPTION>

                                                  THREE MONTHS ENDED        THREE MONTHS ENDED
                                                    JUNE 30, 1998             JUNE 30, 1997
                                               ------------------------- -------------------------
                                                             (DOLLARS IN THOUSANDS)

<S>                                               <C>            <C>          <C>          <C>
Income on finance receivables.............      $  4,059        100.0%    $ 1,928         100.0%
Provision for credit losses...............         2,097         62.7         499          25.9
Operating expenses........................           725         17.9         449          23.3
                                                --------         ----         ---          ----
       Operating income...................         1,237         19.4         980          50.8
Interest expenses on finance receivables...        1,267         31.2         639          33.1
                                                --------         ----         ---          ----
       Net income (loss)..................      $    (30)       (11.8)%   $   341          17.7%
</TABLE>

        Income on finance  receivables  increased  to $4.0 million for the three
months  ended June 30, 1998 from $1.9  million for the same period in 1997.  The
increase   reflects  the  increase  in  the  average  net  finance   receivables
outstanding to $59.0 million for the three months ended June 30, 1998 from $26.7
million  for  the  same  period  of  1997.   This  increase   results  from  the
corresponding  increase in sales of used cars during the three months ended June
30, 1998.

        Interest  expense on finance  receivables  increased to $1.3 million for
the three  months  ended June 30,  1998 from $.6  million for the same period in
1997. The increase reflects the higher level of finance  receivables,  which was
only  partially  offset by the  reduction in the  interest  rate on the borrowed
funds to 11% for the three  months  ended June 30, 1998 from 11.5% for the three
months ended June 30, 1997.

        A high  percentage of the  Company's  customers do not make all of their
contractually  scheduled  payments on their  finance  contracts,  requiring  the
Company to charge off the remaining principal balance and accrued interest,  net
of recoveries on repossessed cars. The Company maintains on its balance sheet an
allowance for credit losses to absorb such losses.  To accrue to the  allowance,
the Company  records an expense  (the  "provision")  based upon its  estimate of
future credit losses on finance receivables originated. The provision for credit
losses for the three months ended June 30, 1998 was $2.1million  compared to $.5
million for the same period in 1997.  The increase  reflects  the  significantly
higher amount of finance receivables outstanding.

        Operating   income  for  the  three  months  ended  June  30,  1998  was
approximately  $1.2 million  compared to an operating income of $1.0 million for
the same period in 1997 as a result of a lower  provision for credit losses as a
percentage of income on finance receivables.


NEW CAR DEALERSHIPS
<TABLE>
<CAPTION>
                                                  THREE MONTHS ENDED        THREE MONTHS ENDED
                                                    JUNE 30, 1998             JUNE 30, 1997
                                               ------------------------- -------------------------
                                                             (DOLLARS IN THOUSANDS)
<S>                                                  <C>              <C>         <C>          <C>  

Sales at new car dealerships...................     $  6,226        100.0%          --          --
Cost of sales at new car dealership............        5,400         86.7           --          --
                                                       -----       ------
        Gross profit...........................          826         13.3           --          --
Operating expenses.............................        1,004         16.2           --          --
                                                       -----         ----
         Operating loss........................     $   (178)        (2.9)%         --          --
</TABLE>

        The Company  acquired two new car  dealerships in August 1997.  Sales at
new car  dealerships  were $6.2  million  during the three months ended June 30,
1998.  During the three months ended June 30, 1998, the Company sold 275 cars at
its  two  new  car  dealerships.  The  gross  profit  on  sales  at the  new car
dealerships was $.8 million during the three months ended June 30, 1998.

        The Company's operating expenses of $1.0 million during the three months
ended June 30, 1998 exceeded the gross profit  during such period,  resulting in
an operating loss at the new car dealerships of $178,000.

CORVETTE PARTS AND ACCESSORIES
<TABLE>
<CAPTION>
                                                  THREE MONTHS ENDED        THREE MONTHS ENDED
                                                    JUNE 30, 1998             JUNE 30, 1997
                                               ------------------------- -------------------------
                                                             (DOLLARS IN THOUSANDS)
<S>                                                    <C>         <C>           <C>           <C>    <C>

Sales of Corvette parts and accessories.....      $   6,048       100.0%     $  5,268        100.0%
Cost of Corvette parts and accessories......          3,880        64.2         3,250         61.7
                                                      -----        ----         -----        -----
        Gross profit........................          2,168        35.8         2,018         38.3
Operating expenses..........................          1,141        18.8         1,173         22.3
                                                      -----        ----         -----        -----
         Operating income (loss)............      $   1,027        17.0%     $    845         16.0%
</TABLE>

        Sales of Corvette parts and accessories  increased to $6 million for the
three months ended June 30, 1998 compared to $5.3 million for the same period in
1997.  The increase in sales  reflects an  additional  mailing of Eckler's  mail
order catalog in late 1997.

        Although  gross  profit  increased  to $2.2 million for the three months
ended June 30, 1998 from $2.0  million for the three months ended June 30, 1997,
the gross margin on sales of Corvette  parts and  accessories  declined to 35.8%
during the three  months ended June 30, 1998 from 38.3 % during the three months
ended  June 30,  1997 as a result  of  sales of lower  margin  items in the 1998
period.

        The  decrease in  operating  expenses to $1.1  million  during the three
months ended June 30, 1998 as compared to $1.2  million  during the three months
ended June 30, 1997 was due to the reallocation of certain expenses to corporate
overhead.

COMPARISON OF SIX MONTHS ENDED JUNE 30, 1998 TO SIX MONTHS ENDED JUNE 30, 1997

        REVENUES.  The Company's  revenues were $72.7 million for the six months
ended June 30, 1998 compared to $22.1  million for the same period in 1997.  The
increase for the first six months of 1998 reflects  primarily the increase to 24
used car stores at June 30,  1998 as  compared to 10 used car stores at June 30,
1997. In addition,  the 1997 first six months revenues  reflect less than a full
six months of operations of the Predecessors,  whereas the 1998 first six months
revenues  reflect  a full  six  months  of  operations  of all of the  used  car
companies  acquired  by the Company  during 1997 and of two new car  dealerships
acquired in August  1997,  as well as an increase in the average  number of used
cars sold during the period.

        COSTS AND EXPENSES. Cost of sales increased to $50.1 million for the six
months  ended June 30,  1998  compared  to $14.5  million for the same period in
1997.  The increase in cost of sales at the used car stores  primarily  reflects
the opening of additional  used car store locations as discussed above and, to a
lesser extent, inclusion in the first six months of 1998 of a full six months of
operations of the Predecessors.  As a percent of sales, the cost of sales at the
used car stores  declined to 65.0% from 67.6% in 1997,  reflecting  management's
focus on increasing gross margins as well as an increase in average sales volume
per store. The cost of sales for the Corvette parts and accessories increased to
64.1% from  61.6% of sales,  reflecting  an  increase  in sales of lower  margin
items.

        The Company's selling,  general and administrative expenses increased to
$15.1  million for the six months ended June 30, 1998 from $10.0 million for the
same period in 1997 excluding $1.7 million in settlement  payments to terminated
employees and consultants of the  Predecessors  during the six months ended June
30, 1997. The results reflect a decrease as a percentage of revenues to 20.7% in
the first  six  months of 1998 from  45.3% in the  comparable  1997  period as a
result  of  better  utilization  of  the  Company's  infrastructure,   including
centralized marketing, accounting and management information functions.

        During the first six months of 1997, the Company  recognized a charge of
$3.2 million for  compensation  expense  related to employee and director  stock
options.  The Company  did not have a  comparable  expense  during the six month
period ended June 30, 1998.

        INTEREST EXPENSE AND OTHER INCOME. Interest expense totaled $4.0 million
for the six months  ended June 30, 1998  compared  to $1.7  million for the same
period in 1997, an increase of 131%. The increase resulted primarily from higher
outstanding  indebtedness needed to finance higher levels of finance receivables
and inventory as the Company expanded its operations.

        Other income  totaled $.6 million for the six months ended June 30, 1998
compared to $44,000 for the same  period in 1997.  The 1998 amount is  comprised
primarily of additional fees generated at the new car dealerships ($338,000) and
recoupment of prior year's expenses ($166,000).

        NET INCOME.  Net income  totaled  $4.1  million for the six months ended
June 30, 1998 as  compared to a net loss of $7.3  million for the same period in
1997. The  improvement  resulted  primarily from the refocusing of the Company's
strategy,  the  restructuring of its operations  during the last quarter of 1997
and increased levels of business activities.

SEGMENT INFORMATION

        The Company is comprised of four segments: used car stores, financing of
used car sales,  new car  dealerships  and Corvette parts and  accessories.  The
Company's  results of operations are most meaningful when analyzed and discussed
by segment.

USED CAR STORES
<TABLE>
<CAPTION>
                                              SIX MONTHS ENDED          SIX MONTHS ENDED
                                               JUNE 30, 1998             JUNE 30, 1997
                                          ------------------------- -------------------------
                                                        (DOLLARS IN THOUSANDS)

<S>                                          <C>           <C>        <C>           <C>    
Sales at used car stores..............   $ 40,603         100.0%   $ 11,789       100.0%
Cost of sales at used car stores......     26,376          65.0       7,967        67.6
                                           ------          ----       -----        ----
         Gross profits................     14,227          35.0       3,822        32.4
Operating expenses....................      7,149          17.6       2,031        17.2
                                            -----          ----       -----        ----
          Operating income............   $  7,078           17.4%  $  1,791        15.2
</TABLE>

        Sales at used car stores  increased to $40.6  million for the six months
ended June 30, 1998 compared to $11.8  million for the same period in 1997.  The
increase in sales reflects the sale of 4,435 cars at the 24 used car stores that
were open during the 1998 period as compared to the sale of 1,096 cars at the 10
used car stores that were open during the 1997 period. In addition,  the average
number  of used cars sold per  store  increased  to 185 cars for the six  months
ended June 30, 1998 as  compared to average  sales of 110 used cars for the same
period of 1997.

        Gross profit increased to $14.2 million during the six months ended June
30, 1998 from $3.8  million  during the six months  ended June 30,  1997.  Gross
profit as a percentage of sales increased to 35.0% for the six months ended June
30,  1998 as  compared  to 32.4% for the six  months  ended June 30,  1997.  The
improvement  resulted  primarily  from  management's  focus on increasing  gross
margins, as well as a higher average sales volume per store.

        Operating  expenses  relating to sales at used car stores  increased  to
$7.1 million from $2.0 million as a result of the increase in the number of used
car stores.

FINANCING OF USED CAR SALES
<TABLE>
<CAPTION>
                                                   SIX MONTHS ENDED          SIX MONTHS ENDED
                                                    JUNE 30, 1998             JUNE 30, 1997
                                               ------------------------- -------------------------
                                                             (DOLLARS IN THOUSANDS)
<S>                                               <C>            <C>         <C>         <C>

Income on finance receivables............      $  6,942         100.0%   $  1,723       100.0%
Provision for credit losses..............         4,418          78.5       1,549        90.0
Operating expenses.......................         1,401          20.2         803        46.5
                                               --------          ----    --------        ----
      Operating income loss..............         1,123           1.3        (629)       36.5
Interest expense on finance receivables..         2,374          34.2       1,031        59.8
                                               --------          ----    --------        ----
       Net income (loss).................      $ (1,251)        (32.9)%  $ (1,660)      (96.3)%
</TABLE>

        Income on finance  receivables  increased  to $6.9  million  for the six
months  ended June 30, 1998 from $1.7  million for the same period in 1997.  The
increase   reflects  the  increase  in  the  average  net  finance   receivables
outstanding  to $52.5  million for the six months ended June 30, 1998 from $19.9
million  for  the  same  period  of  1997.   This  increase   results  from  the
corresponding  increase in sales of used cars  during the six months  ended June
30, 1998.

        Interest  expense on finance  receivables  increased to $2.4 million for
the six months  ended June 30,  1998 from $1.0  million  for the same  period in
1997. The increase reflects the higher level of finance  receivables,  which was
only  partially  offset by the  reduction in the  interest  rate on the borrowed
funds,  to 11.0% for the six months  ended June 30,  1998 from 11.5% for the six
months ended June 30, 1997.

        A high  percentage of the  Company's  customers do not make all of their
contractually  scheduled  payments on their  finance  contracts,  requiring  the
Company to charge off the remaining principal balance and accrued interest,  net
of recoveries on repossessed cars. The Company maintains on its balance sheet an
allowance for credit losses to absorb such losses.  To accrue to the  allowance,
the Company  records an expense  (the  "provision")  based upon its  estimate of
future credit losses on finance receivables originated. The provision for credit
losses for the six months ended June 30, 1998 was $4.4 million  compared to $1.5
million for the same period in 1997.  The increase  reflects  the  significantly
higher amount of finance receivables outstanding.

        The net loss for the six months  ended June 30,  1998 was  approximately
$1.7 million  compared to a net loss of $1.7 million for the same period in 1997
as a result of a lower  provision for credit losses as a percentage of income on
finance  receivables.  Net losses resulted from the recognition of the provision
for credit losses on the significant increase in finance receivables  originated
during the first six months of 1998 and 1997.

NEW CAR DEALERSHIPS
<TABLE>
<CAPTION>
                                                   SIX MONTHS ENDED          SIX MONTHS ENDED
                                                    JUNE 30, 1998             JUNE 30, 1997
                                               ------------------------- -------------------------
                                                             (DOLLARS IN THOUSANDS)

<S>                                                <C>             <C>          <C>          <C>    
Sales at new car dealerships.................    $ 14,349          100.0%        --          --
Cost of sales at new car dealerships.........      12,587          87.7          --          --
                                                   ------          ----
        Gross profit.........................       1,762          12.3          --          --
Operating expenses...........................       2,003          14.0          --          --
                                                    -----          ----
         Operating loss......................    $   (241)        (1.7)%         --          --
</TABLE>

        The Company  acquired two new car  dealerships in August 1997.  Sales at
new car  dealerships  were $14.3  million  during the six months  ended June 30,
1998.  During the six months ended June 30,  1998,  the Company sold 675 cars at
its  two  new  car  dealerships.  The  gross  profit  on  sales  at the  new car
dealerships was $1.8 million during the six months ended June 30, 1998.

        The Company's  operating  expenses of $2.0 million during the six months
ended June 30, 1998 exceeded the gross profit  during such period,  resulting in
an operating loss at the new car dealerships of $241,000.

CORVETTE PARTS AND ACCESSORIES
<TABLE>
<CAPTION>
                                                   SIX MONTHS ENDED          SIX MONTHS ENDED
                                                    JUNE 30, 1998             JUNE 30, 1997
                                               ------------------------- -------------------------
                                                             (DOLLARS IN THOUSANDS)

<S>                                               <C>           <C>       <C>           <C>
Sales of Corvette parts and accessories.....    $  10,411      100.0%  $  7,972       100.0%
Cost of Corvette parts and accessories......        6,677       64.1      4,909        61.6
                                                ---------      ------  --------        -----
        Gross profit........................        3,734       35.9      3,063        38.4
Operating expenses..........................        2,107       20.3      2,817        35.3
                                                ---------      ------  --------        ----
         Operating income...................    $   1,627       15.6%  $    246         3.1%
</TABLE>

        Sales of Corvette parts and  accessories  increased to $10.4 million for
the six months ended June 30, 1998  compared to $8.0 million for the same period
in 1997. The increase in sales  reflects an additional  mailing of Eckler's mail
order catalog in late 1997.

        Although gross profit increased to $3.7 million for the six months ended
June 30, 1998 from $3.1million for the six months ended June 30, 1997, the gross
margin on sales of Corvette parts and  accessories  declined to 35.9% during the
six months  ended June 30, 1998 from 38.4 % during the six months ended June 30,
1997 as a result of sales of lower margin items in the 1998 period.

        The decrease in operating expenses to $2.1 million during the six months
ended June 30, 1998 as compared to $2.8 million during the six months ended June
30, 1997 was due to the reallocation of certain expenses to corporate overhead.

CREDIT LOSSES

        GENERAL.  The Company has established an allowance to cover  anticipated
credit  losses  on the  finance  receivables  currently  in its  portfolio.  The
allowance has been established by the recognition in the Company's statements of
operations of the provision for credit losses attributed to finance  receivables
originated by the Company.

        The allowance decreased from 17.1% of outstanding  principal balances as
of December 31, 1997 to 15.0% as of June 30, 1998. The following  table reflects
activity in the  allowance  for the six months  ended June 30, 1998 and 1997 and
for the year ended December 31, 1997.

                                                         SIX MONTHS ENDED
                                                            JUNE 30,
                                                   -----------------------
                                                           YEAR ENDED
                                                           DECEMBER 31,
                                                1998         1997        1997
                                                ----         ----        ----
                                                      (DOLLARS IN THOUSANDS)
                                                                           
Balance, beginning of period..............    $  6,857           --          --
Balance at dates of acquisitions..........          --     $  5,628    $  5,628
Provision for credit losses...............       4,419        3,469       4,941
Net charge offs...........................      (1,939)      (2,785)     (3,712)
                                              --------     --------    --------
Balance, end of period....................    $  9,337      $ 6,312    $  6,857
Allowance as a percentage of finance                 
receivables...............................        15.0%        19.0%       17.1%


        NET  CHARGE  OFFS.  The  Company's  policy  is  to  charge  off  finance
receivables when they are deemed  uncollectible but in any event at such time as
a finance receivable is delinquent for 90 days. The net charge off amount is the
principal  balance of the finance  receivable at the time of the charge off plus
accrued  but  unpaid  interest,   less  any  recovery.  The  Company  recognizes
recoveries in the amount of the wholesale value  (typically  "Clean Black Book")
of repossessions.  The following table sets forth  information  regarding charge
off activity for the Company's finance receivables for the six months ended June
30, 1998 and 1997 and for the year ended December 31, 1997.
<TABLE>
<CAPTION>

                                                  SIX MONTHS ENDED
                                                      JUNE 30,
                                               -----------------------
                                                                    YEAR ENDED
                                                                    DECEMBER 31,
                                               1998      1997       1997   
                                               ----      ----       ----
                                                  (DOLLARS IN THOUSANDS)                                
          
<S>                                             <C>         <C>        <C>
Principal Balances........................       
Collateral repossessed....................  $  5,887     $  3,818     $  7,920
Other.....................................        --           36           37
                                            ---------    --------     --------
Total principal balances..................     5,887        3,854        7,957
Recoveries, net...........................    (3,948)      (1,069)      (4,245)
                                            ---------    --------     --------
Net charge offs...........................     1,939        2,785        3,712
Average principal balances................    52,547       19,907       27,325
Net charge offs as a percentage of 
 average principal balance outstanding....      3.7%        14.0%        13.6%
</TABLE>

     DELINQUENCIES.  Analysis  of  delinquency  trends  is  also  considered  in
evaluating  the adequacy of the  allowance.  The  following  table  reflects the
principal  balance of delinquent  finance  receivables  as a percentage of total
outstanding principal balances of the Company's finance receivables portfolio as
of June 30, 1998 and 1997 and as of December 31, 1997.


                                                   AS OF JUNE 30,
                                                                  AS OF
                                                                  DECEMBER 31,
                                                 1998      1997   1997
                                                 ----      ----   ----
Aging Percentages:
Principal balances current...................    94.7%     88.0%  91.1%
Principal balances 31 days to 60 days........     2.2       5.9    4.0
Principal balances over 60 days..............     3.1       6.1    4.9
Total over 31 days   ........................     5.3      12.0    8.9


        The Company's improved delinquency experience on its finance receivables
portfolio is primarily attributable to the factors discussed above.

LIQUIDITY AND CAPITAL RESOURCES

        The  Company   requires   capital  to  support   increases   in  finance
receivables,  car  inventory,  parts and  accessories  inventory,  property  and
equipment,  and working capital for general corporate purposes.  Funding sources
potentially  available to the Company include  operating cash flow,  third-party
investors,   financial  institution   borrowings,   borrowings  against  finance
receivables and the securitization of its finance receivables.

        Net cash provided by (used for) operating  activities was  approximately
$3.6 million and ($2.0)  million for the six month  periods  ended June 30, 1998
and 1997, respectively. Net cash provided from operating activities in the first
six months of 1998  primarily  reflected the net income for the period which was
partially offset by increases in accounts receivable and inventory. The increase
from the first six months of 1997 was  primarily  a result of the large net loss
in the first six months of 1997.

        Cash used in investing  activities was  approximately  $24.8 million and
$15.2 million during the six months ended June 30, 1998 and 1997,  respectively.
The 1998 amount primarily  reflects increases in finance  receivables.  The 1997
amount reflects an increase in finance receivables  associated with acquisitions
during the first six months of 1997.

        Cash provided by financing  activities was  approximately  $23.9 million
and  $18.2  million  during  the six  months  ended  June  30,  1998  and  1997,
respectively.  In the first six months of 1998, the Company  increased its notes
payable on finance  receivables  by $14.5 million and borrowed $7.0 million.  In
the first six months of 1997,  the Company  raised  approximately  $0.6  million
through a sale of preferred stock and increased its line of credit and floorplan
borrowings by approximately $11.7 million.

        The  Company has  borrowed,  and will  continue  to borrow,  substantial
amounts to fund its used car sales and financing  operations.  The Company has a
revolving credit facility with Finova Capital Corporation to provide funding for
finance  receivables  from used car sales originated by the Company (the "Finova
Revolving Facility").  The Finova Revolving Facility had a maximum commitment of
$35.0 million at December 31, 1997 and was increased to a maximum  commitment of
$75.0 million,  effective May 11, 1998. Under the Finova Revolving Facility, the
Company may borrow up to 55% of the gross balance of eligible finance contracts.
The Finova  Revolving  Facility  expires  in  December  1999,  at which time its
renewal  will be subject to  renegotiations.  The Finova  Revolving  Facility is
secured by substantially  all of the Company's finance  receivables.  As of June
30, 1998 and December 31,  1997,  the  principal  amount  outstanding  under the
Finova Revolving Facility was $45.9 million and $31.4 million, respectively. The
Finova  Revolving  Facility bears interest at the prime rate plus 2.5% (11.0% as
of June 30, 1998).

        In the first six months of 1998 and in 1997,  the Company  financed  its
used car inventory  through a line of credit with Manheim  Automotive  Financial
Services, Inc. (the "Manheim Facility") which had an outstanding balance of $2.5
million at June 30, 1998 and $2.7  million at  December  31,  1997.  The maximum
commitment under the Manheim Facility is $3.75 million.  The Manheim Facility is
secured by the Company's  used car inventory and bears interest at 1.5% over the
prime rate (10.0% as of June 30, 1998).  Amounts  outstanding are payable on the
earlier of the day after a car is sold or 180 days after the floorplan advance.

        The  Company  finances  its  new  car  inventory  through   manufacturer
floorplan facilities.  The Company's floorplan facility with Volvo Finance North
America,  Inc. has a maximum commitment of $3.3 million,  bears interest at 1.0%
above  the  prime  rate  (9.5% as of June 30,  1998),  and at June 30,  1998 and
December 31, 1997 had  outstanding  balances of $3.2  million and $3.3  million,
respectively.  The Company's  floorplan  facility  with Nissan Motor  Acceptance
Corporation has a $3.0 million maximum commitment,  bears interest at 1.0% above
prime (9.5% as of June 30, 1998), and at June 30, 1998 and December 31, 1997 had
outstanding balances of $2.8 million and $2.3 million, respectively.

        In December  1997,  the Company  completed an offering to  institutional
investors of 400 units of Series A Redeemable  Convertible  Preferred  Stock and
warrants at $10,000 per unit. Proceeds from the offering, net of offering costs,
were  approximately  $3.9 million.  Each unit consisted of one share of Series A
Redeemable  Convertible  Preferred Stock and a five-year warrant to acquire 1200
shares of Common Stock for each preferred share purchased. The exercise price of
the warrants are $8.10 for 90,000 shares and $5.23 for 30,000 shares. As of June
30,  1998 all but one share of the  Series A  Redeemable  Convertible  Preferred
Stock had been converted into Common Stock.

        In May 1998, the Company sold to a private  investment  group 220 shares
of the Company's Series B Convertible  Preferred Stock for $10,000 per share for
an aggregate of $2.2 million.  The Series B Convertible  Preferred  Stock has an
11.0%  dividend  per year and is  convertible  into Common Stock at a conversion
rate of $5.00 per share. After November 5, 1999, the Company may, at its option,
redeem  the Series B  Convertible  Preferred  Stock for  $10,000  per share.  In
connection with the issuance of the Series B Convertible  Preferred  Stock,  the
Company agreed to certain  limitations  on the issuance of additional  shares of
preferred stock by the Company.

        In June 1998,  the  Company  sold to a private  investment  group  24.98
shares of the  Company's  Series C Convertible  Preferred  Stock for $10,000 per
share for an aggregate of $249,800. The Series C Convertible Preferred Stock has
an 11.0% dividend per year and is convertible  into Common Stock at a conversion
rate of $5.59 per share. After December 2, 1999, the Company may, at its option,
redeem  the Series C  Convertible  Preferred  Stock for  $10,000  per share.  In
connection with the issuance of the Series C Convertible  Preferred  Stock,  the
Company agreed to certain  limitations  on the issuance of additional  shares of
preferred stock by the Company.

        In June 1998, the Company sold to a private  investment group 350 shares
of the Company's Series D Convertible  Preferred Stock for $10,000 per share for
an aggregate of  $3,500,000.  The Series D  Convertible  Preferred  Stock has an
11.0%  dividend until June 2003 when the dividend rate increases to 20% per year
and is  convertible  into Common Stock at a conversion  rate of $6.00 per share.
After  June 22,  2001,  the  Company  may,  at its  option,  redeem the Series D
Convertible  Preferred  Stock for  $10,000  per share.  In  connection  with the
issuance of the Series D  Convertible  Preferred  Stock,  the Company  agreed to
certain  limitations on the issuance of additional  shares of preferred stock by
the Company.

SEASONALITY.

        Historically,  the Company's  used car business has  experienced  higher
revenues in the first two quarters of the calendar  year than in the latter half
of the year.  Management  believes that these results are due to seasonal buying
patterns  resulting  in part from the fact that  many of its  customers  receive
income tax refunds during the first half of the year, which are a primary source
of down payments on used car purchases.

        Eckler's   business   is  also   subject   to   seasonal   fluctuations.
Historically,  Eckler's  has  realized a higher  portion of its  revenues in the
second and third  quarters of the  calendar  year and the lowest  portion of its
revenues in the fourth quarter.  Eckler's is particularly  dependent on sales to
Corvette enthusiasts during the spring and summer months.

INFLATION.

         Increases  in  inflation  generally  result in higher  interest  rates.
Higher  interest rates on the Company's  borrowings  would increase the interest
expense related to the Company's existing debt. The Company cannot seek to limit
this risk by increasing interest rates earned on its finance contracts since the
interest charged is at or near the maximum permitted under Florida law. To date,
inflation has not had a significant impact on the Company's operations.

YEAR 2000

        At the  beginning of the third quarter of 1996,  the  Company's  primary
operating system and its peripherals were made Year 2000 compliant. Beginning in
the first quarter of 1997, all new software on the Eckler's  computer system was
developed and tested to be Year 2000  compliant.  All of Eckler's  existing core
applications  are to be modified  and tested for Year 2000  compliance  no later
than  the  last  quarter  of  1998.  All  new  computer   systems  and  software
installations,  including  the computer  systems of the  Company's  subsidiaries
other than  Eckler's,  are  currently  Year 2000  compliant.  All other  systems
including  the  Company's  local  and wide  area  networks,  telephone  systems,
uninterruptible  power  supply  systems and  historical  information  are or are
expected  to be in  compliance  no later  than the fourth  quarter of 1998.  The
Company continues to evaluate other  computerized  equipment to include security
systems,  fire control  systems and power control  systems to determine  whether
they are Year 2000 compliant.  The anticipated  expense associated with the year
2000-compliance  project will not include  additional  hardware cost or external
staffing.  The Company's computer systems and software are generally new and are
Year 2000  compliant.  All systems are expected to be in  compliance by the last
quarter of 1998.

RECENT ACCOUNTING PRONOUNCEMENT

        In June 1997, the Financial  Accounting Standards Board issued Statement
of Financial  Accounting  Standards No. 130,  "Reporting  Comprehensive  Income"
("FAS 130") and No. 131, "Disclosure about Segments of an Enterprise and Related
Information"  ("FAS 131").  FAS 130  establishes  standards  for  reporting  and
displaying  comprehensive income, its components and accumulated  balances.  FAS
131 establishes  standards for the way that public companies report  information
about operating  segments in annual financial  statements and requires reporting
of selected information about operating segments in interim financial statements
issued  to the  public.  Both  FAS 130 and FAS  131 are  effective  for  periods
beginning  after December 15, 1997.  Adoption of these standards is not expected
to have a material  adverse effect on the Company's  financial  statements.  The
Company elected early adoption of FAS 131 during the three months ended June 30,
1998.

        In June 1998, the Financial  Accounting Standards Board issued SFAS 133,
Accounting for Derivative  Instruments and Hedging Activities ("SFAS 133"). SFAS
133 required  companies to recognize all derivatives  contracts as either assets
or  liabilities  in the  balance  sheet and to measure  them at fair  value.  If
certain  conditions  are met, a derviative may be  specifically  designated as a
hedge, the objective of which is to match the timing of gain or loss recognition
on the hedging  derivative  with the  recognition of (I) the changes in the fair
value of the hedged asset or liability that are  attributable to the hedged risk
or  (ii)  the  earnings  effect  of the  hedged  forecasted  transaction.  For a
derivative  not  designated  as a  hedging  instrument,  the  gain  or  loss  is
recognized  in income in the period of  change.  SFAS 133 is  effective  for all
fiscal quarters of fiscal years beginning after June 15, 1999. Historically, the
Company has not entered  into  derivatives  contracts  either to hedge  existing
risks or for  speculative  purposes.  Accordingly,  the Company  does not expect
adoption  of the new  standard  on  January  1,  2000 to  affect  its  financial
statements.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

        The Company  does not invest or trade in foreign  currency or  commodity
transactions,  which would  ordinarily  be subject to market risk.  The interest
rate on the Company's  revolving credit facility with Finova Capital Corporation
is based on the prime rate plus 2.5 percent. Accordingly, a significant increase
or decrease in the prime rate could affect the Company's earnings in the future.
The Company believes,  however,  that its financial instruments are disclosed at
their fair values. Fair value estimates are made at a specific point in time and
are based on relevant market  information  and  information  about the financial
instrument;  they are subjective in nature and involve uncertainties and matters
of judgment and, therefore, cannot be determined with precision. These estimates
do not reflect any premium or discount  that could result from offering for sale
at one time the Company's entire holdings of a particular instrument. Changes in
assumptions could significantly affect these estimates.

        Since fair value estimates are as of a particular date, the amounts that
will  actually be realized or paid in  settlement  of the  instruments  could be
significantly different.

        The carrying  amount of cash and cash  equivalents  is assumed to be the
fair value because of the liquidity of these instruments. The carrying amount is
assumed  to be the  fair  value  because  of the  relative  short  maturity  and
repayment  terms of the  portfolio  as  compared  to  similar  instruments.  The
carrying amount of accounts payable and accrued expenses approximates fair value
because of the short maturity of these  instruments.  The terms of the Company's
notes payable  approximates the terms in the market place at which they could be
replaced.  Therefore,  the fair value  approximates  the carrying value of these
financial instruments.


<PAGE>



                             SMART CHOICE AUTOMOTIVE GROUP, INC.

                                      OTHER INFORMATION

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS.

        Described  below are the sales of securities  by the Company  during the
second  quarter of 1998 that were not  registered  under the  Securities  Act of
1933,  as amended (the "1933  Act").  On the  issuance of these  securities  the
Company relied on the exemption from  registration  under the 1933 Act set forth
in Section 4(2) thereof,  based on established  criteria for effecting a private
offering,  including  the number of  offerees  for each  transaction,  access to
information  regarding the Company,  disclosure of  information  by the Company,
restrictions on resale of the securities offered,  investment representations by
the purchasers, and the qualification of the offerees as "accredited investors."

        On various  dates  during the three  months  ended  June 30,  1998,  the
Company  issued  Common  Stock to holders of the  Company's  Series A Redeemable
Convertible  Preferred Stock (the "Series A Preferred Stock"),  on conversion of
Series A Preferred Stock. The Company had issued the Series A Preferred Stock in
1997 to institutional investors. The Series A Preferred Stock was converted into
Common  Stock at a  conversion  price that was based on the market  price of the
Common  Stock at the time of  conversion.  A total of  958,000  shares of Common
Stock were issued in the second  quarter of 1998 on  conversion  of the Series A
Preferred Stock.

        On various  dates  during the three  months  ended  June 30,  1998,  the
Company  issued Common Stock to holders of the Company's 12%  convertible  notes
due April 15, 1998 (the  "Notes") on  conversion  of the Notes.  The Company had
issued the Notes in 1997 to institutional and individual  accredited  investors.
The Notes were converted into Common Stock at a conversion  price that was based
on the market  price of the Common Stock at the time of  conversion.  A total of
280,000  shares of Common  Stock were  issued in the  second  quarter of 1998 on
conversion of the Notes.

        In May 1998, the Company sold to a private  investment  group 220 shares
of the Company's Series B Convertible  Preferred Stock for $10,000 per share for
an aggregate of $2.2 million.  The Series B Convertible  Preferred  Stock has an
11.0%  dividend  per year and is  convertible  into Common Stock at a conversion
rate of $5.00 per share. After November 5, 1999, the Company may, at its option,
redeem  the Series B  Convertible  Preferred  Stock for  $10,000  per share.  In
connection with the issuance of the Series B Convertible  Preferred  Stock,  the
Company agreed to certain  limitations  on the issuance of additional  shares of
preferred stock by the Company.

        In June 1998,  the  Company  sold to a private  investment  group  24.98
shares of the  Company's  Series C Convertible  Preferred  Stock for $10,000 per
share for an aggregate of $249,800. The Series C Convertible Preferred Stock has
an 11.0% dividend per year and is convertible  into Common Stock at a conversion
rate of $5.59 per share. After December 2, 1999, the Company may, at its option,
redeem  the Series C  Convertible  Preferred  Stock for  $10,000  per share.  In
connection with the issuance of the Series C Convertible  Preferred  Stock,  the
Company agreed to certain  limitations  on the issuance of additional  shares of
preferred stock by the Company.

        In June 1998, the Company sold to a private  investment group 350 shares
of the Company's Series D Convertible  Preferred Stock for $10,000 per share for
an aggregate of  $3,500,000.  The Series D  Convertible  Preferred  Stock has an
11.0%  dividend  per year and is  convertible  into Common Stock at a conversion
rate of $6.00 per share.  After June 22,  2001,  the Company may, at its option,
redeem  the Series D  Convertible  Preferred  Stock for  $10,000  per share.  In
connection with the issuance of the Series D Convertible  Preferred  Stock,  the
Company agreed to certain  limitations  on the issuance of additional  shares of
preferred stock by the Company.

ITEM 3. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

        On  June  24,  1998,  the  Company  held  its  1998  annual  meeting  of
shareholders  (the  "Annual  Meeting").  At the Annual  Meeting  directors  were
elected as set forth  below and the  shareholders  of the Company  approved  the
following matters by the votes indicated:

        1.     The  following  persons were elected to serve as directors of the
               Company for the terms indicated:
                                                 TERM                  WITHHOLD
                                          CLASS  (YEARS)   FOR        AUTHORITY

               Robert J. Abrahams           I      3     8,758,465      101,640
               Gary R. Smith                I      3     8,758,465      101,630
               Craig Macnab                 I      3     8,758,465      101,630
               Jeffrey Congdon              II     2     8,758,465      101,630
               John W. Holden, Jr.          II     2     8,758,465      101,630
               Gerald C. Parker             III    1     8,758,465      101,630
               Donald J. Wojnowski, Jr.     III    1     8,758,475      101,630

        2.     Approval of an amendment to the  Company's  Bylaws to provide for
               classification  of the  Company's  Board of Directors  into three
               classes  serving  staggered  terms  as  described  above.  For  -
               5,125,414; against - 156,300; abstain - 43,116.

        3.     Approval of the Company's 1998 Executive  Incentive  Compensation
               Plan. For - 5,023,799; against - 207,686; abstain - 40,416.

        4.     Approval of a specific  stock  option  grant of 12,500  shares of
               Common Stock to each of the Company's  outside directors as their
               1998 director compensation.  For - 5,053,654;  against - 209,269;
               abstain - 59,905.

        5.     Approval  of a  specific  stock  grant of 2,000  shares of Common
               Stock to each of 24 of the Company's automobile sales managers to
               vest if sales goals are met. For - 5,127,461;  against - 166,889;
               abstain - 30,380.

ITEM 4.  OTHER INFORMATION

        The Securities and Exchange  Commission (the "SEC") recently amended its
proxy rules to provide that a registrant,  such as the Company,  may specify, in
its proxy  statement  or form of proxy for its annual  meeting of  stockholders,
that proxies solicited by the registrant will confer discretionary  authority to
vote with regard to matters not  identified in the proxy  statement  that may be
raised at the meeting,  if the registrant  first mailed its proxy  materials for
the prior year's annual meeting of stockholders, or by such other date as may be
specified in an advance notice provision adopted by the registrant.  The Company
has not adopted an advance notice provision.  The Company first mailed its proxy
materials for its 1998 Annual Meeting of Stockholders on May 22, 1998. Under the
SEC's amended rules, the 45-day deadline for notice to the Company of matters to
be raised at the Company's 1999 Annual Meeting of  Stockholders is thus March 8,
1999. Any  stockholder  who wishes to have a proposal  included in the Company's
proxy  statement  for its 1999 Annual  Meeting of  Stockholders  must submit the
proposal to the Company by January 22, 1999.

ITEM 5.  EXHIBITS AND REPORTS ON FORM 8-K.

(A)  EXHIBITS
<TABLE>
<CAPTION>

EXHIBIT                                        FILED HEREWITH OR INCORPORATED BY
LIST            EXHIBIT DESCRIPTION            REFERENCE TO:

<S>     <C>                                     <C>              
 3.1    Third Articles of Amendment to         Exhibit 3.1 to Form 10-Q filed on May
        Articles of Incorporation.             15, 1998.

 3.2    Fourth  Articles  of  Amendment  to    Exhibit  3.2.4 to Form S-1 filed on
        Articles of Incorporation.             July 17, 1998.

 3.3    Fifth  Articles  of  Amendment  to     Exhibit  3.2.5 to Form S-1  filed on
        Articles of Incorporation.             July 17, 1998.

11.0    Statement re computation of per        Filed herewith.
        share earnings.

27.0    Financial Data Schedule.               Filed herewith.

</TABLE>



(B)     REPORTS ON FORM 8-K

               None.


<PAGE>

                                   SIGNATURES


        In  accordance  with  Section  13 or  15(d)  of the  Exchange  Act,  the
Registrant  caused  this  report to be signed on its behalf by the  undersigned,
thereunto duly authorized on August 19, 1998.


                                   SMART CHOICE AUTOMOTIVE GROUP, INC.


                                   By:   /S/ GARY R. SMITH                
                                   --------------------------------------------
                                         Gary R. Smith
                                         President and Chief Executive Officer



        In  accordance  with the Exchange Act, this report has been signed below
by the following  persons on behalf of the  registrant and in the capacities and
on the dates indicated.


        SIGNATURES               TITLE                           DATE
        ----------               -----                           ----


  /S/ GARY R. SMITH          President and Chief Executive     August 19, 1998
-------------------          Officer, Director
Gary R. Smith               


/S/ JOSEPH E. MOHR           Chief Financial Officer,           August 19, 1998
-------------------          (Principal Financial and
Joseph E. Mohr               Accounting Officer)