UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
    SECURITIES EXCHANGE ACT OF 1934
    FOR THE FISCAL YEAR  ENDED       DECEMBER 31, 1997
                                     ---------------------------------

[ ]  TRANSITION REPORT UNDER 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    (407)269-9680
(ADDRESS OF  PRINCIPAL EXECUTIVE OFFICES)        (ZIP CODE) (ISSUER'S TELEPHONE
                                                                  NUMBER)


SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

         TITLE OF EACH CLASS          NAME OF EACH EXCHANGE ON WHICH REGISTERED
         -------------------          -----------------------------------------
         COMMON STOCK                 BOSTON STOCK EXCHANGE

         REDEEMABLE COMMON STOCK      BOSTON STOCK EXCHANGE
             PURCHASE WARRANTS

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE EXCHANGE ACT:

                                  COMMON STOCK
                    REDEEMABLE COMMON STOCK PURCHASE WARRANTS
                                (TITLE OF CLASS)

INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE  PRECEDING 12 MONTHS (OR FOR SUCH  SHORTER  PERIOD THAT THE  REGISTRANT  WAS
REQUIRED  TO FILE  SUCH  REPORTS)  AND  (2)  HAS  BEEN  SUBJECT  TO SUCH  FILING
REQUIREMENTS FOR THE PAST 90 DAYS.
YES       [ X ]        NO    [   ]


<PAGE>

     INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT  FILERS PURSUANT TO ITEM
405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST OF REGISTRANT'S  KNOWLEDGE,  IN DEFINITIVE PROXY OR INFORMATION  STATEMENTS
INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS
FORM 10-K. [ X ]

     AGGREGATE MARKET VALUE OF THE COMMON EQUITY HELD BY  NON-AFFILIATES  OF THE
REGISTRANT $53,657,108.75 AS OF APRIL 9, 1998.

     AS OF APRIL 9, 1998,  12,264,482  SHARES OF THE  REGISTRANT'S  COMMON STOCK
WERE OUTSTANDING.

                       DOCUMENTS INCORPORATED BY REFERENCE

     THE REGISTRANT'S DEFINITIVE PROXY STATEMENT WITH RESPECT TO ITS 1998
ANNUAL MEETING OF SHAREHOLDERS IS INCORPORATED HEREIN BY REFERENCE.
-------------------------------------------------------------------------------



<PAGE>


                                     PART I
ITEM 1.  BUSINESS.

GENERAL

     Smart Choice Automotive Group, Inc. ("Smart Choice" or the "Company") is an
integrated  retailer  of new  and  used  cars  and  related  services,  focusing
primarily  on  selling  reliable,  quality  used cars to its buy  here-pay  here
customers.  Buy here-pay here  customers are typically  persons who have limited
credit histories, low incomes, or past credit problems. Under the "First Choice"
name,  the Company owns and  operates one of the largest  chains of buy here-pay
here used car  dealerships  in the  Southeastern  United States with 22 used car
locations  throughout  Florida.  The Company  also owns and operates two new car
dealerships  which  sell  mid-priced  new cars and late  model used cars to more
creditworthy customers.  These new car dealerships also provide the Company with
an additional  source of inventory for its used car operations  through  quality
trade-ins,  access to an additional  customer base, and a diversified  source of
revenue.  The  Company  also  provides  financing  for  its  buy  here-pay  here
customers,  manufactures  and retails  licensed  Corvette parts and  accessories
through  its  subsidiary,  Eckler  Industries,  Inc.  ("Eckler"),  and  provides
training and insurance services to automobile dealers.

     The  Company's  integrated  approach to  automobile  retailing  consists of
selling,  sourcing  and  financing  used  cars and  selling  new cars  through a
combination of used and new car dealerships. The Company primarily competes with
independent used car dealerships through the use of cost-effective  advertising,
leveraging   overhead   and   centralized   purchasing.   The  Company   further
distinguishes its used car dealerships from those of its competitors through (i)
comprehensive  inspection and  refurbishment of its inventory,  (ii) value-added
marketing  programs and (iii) dedication to customer service.  The Company's buy
here-pay here  dealerships  sell cars that are generally  three to six years old
with  less  than  80,000  miles  and  an  average   retail   purchase  price  of
approximately  $9,500.  The Company  reconditions  its used car inventory at one
reconditioning  facility  that is separate from its retail  dealerships  and two
locations  that are part of retail  dealerships.  Management  believes  that the
quality  and  reliability  of its used cars  reduce the  probability  of product
failure,  and in turn,  increase the  likelihood  that  customers will continue
payments on their finance contracts.  The Company also distinguishes itself from
used car  "superstores"  by its wider coverage of a targeted market area through
multiple  locations  (resulting in more  convenient  locations for consumers and
more  visibility for the Company) and the  flexibility to more easily relocate a
dealership in response to changes in demographics.

     The  Company  was  established  in  January  of 1997 by a merger of various
companies  involved in the sale and  financing of new and used cars with Eckler.
Since the  combination,  the Company has grown its  operations by acquiring five
used car  dealerships  with 13  locations  in central and  southern  Florida and
opening 9 additional buy here-pay here locations.  The Company has also acquired
two new car  dealerships.  The Company  intends to continue its expansion as its
capital resources and available acquisition opportunities permit.

OPERATING STRATEGY

     The  Company  seeks to  establish  and  maintain  customer  loyalty  to the
Company's First Choice name by offering a diverse range of quality  products and
emphasizing  customer  service  while taking  advantage of economies of scale by
concentration of facilities in targeted  geographic  areas. The Company seeks to
realize these goals through the following operating strategies.

     OFFER RELIABLE TRANSPORTATION.  The Company's management believes that most
defaults of buy here-pay here customers result from product failure. The Company
offers  reliable  quality  used  cars at its  First  Choice  buy  here-pay  here
dealerships.  Generally, these cars are makes and models with a good or superior
reputation for quality and reliability, are between three to six years old, have
been driven  less than  80,000  miles and have  undergone  thorough  inspection,
reconditioning and, if needed,  repair, before being placed on a dealership lot.
Because of the quality, reliability, condition and age of the vehicles, the

<PAGE>


Company  (i) has in the past  offered  and  beginning  April 1, 1998  provides a
24-month/24,000  mile  service  agreement  on  cars  sold  at its  First  Choice
dealerships  and (ii) offers longer term financing which may not be available at
other car dealerships.

     EMPHASIZE  CUSTOMER  SERVICE.  The Company  offers its  customers  multiple
locations  and a diverse  selection  of vehicles  for  convenient  shopping.  In
addition to the  24-month/24,000  mile  service  agreement,  the  Company  makes
available  to its  customers  other  value-added  programs  such as rapid credit
evaluations for financing and a toll-free  telephone number potential  customers
can call for financing  pre-qualification.  By developing customer loyalty,  the
Company hopes to develop repeat and referral business.

     CREATE DISTINCT  IDENTITY.  The Company  attempts to maintain a consistency
between its buy here-pay here facilities through the use of standardized signage
and a white, blue and yellow color theme,  utilized at each of its locations and
in marketing materials.  On placing a buy here-pay here location in service, the
Company upgrades the facilities which includes painting the buildings white with
blue and yellow trim or installing blue awnings.  The Company's  salespeople are
required to wear tan pants and a blue dress shirt.  The  Company's  buy here-pay
here dealerships operate under the trade name First Choice Auto Finance and each
of the Company's facilities has the Company's blue and yellow First Choice sign.
Through such consistency in appearance of multiple  locations in the same market
area, the Company hopes to establish name recognition in these markets.

     ACHIEVE  ECONOMIES  OF SCALE.  The  Company  expects  that it will  achieve
certain economies of scale by having multiple  dealerships within a market area.
Car sales are enhanced by each  dealership  having  on-line access to the entire
used vehicle inventory of the Company's other dealerships within the same market
area. In addition, vehicles that may not sell within a prescribed time period at
one dealership are moved to another  dealership  within the same market area for
an additional period of time. Further, the Company's advertising is maximized by
advertising  vehicle  inventory  in each market under a single,  regional  trade
name.

     EMPLOY  INTEGRATED  MANAGEMENT  INFORMATION  SYSTEMS.  The  Company  has an
integrated  computer-based management information system that allows the Company
to obtain  current  information  on operations in order to manage its operations
uniformly and efficiently.  Through its accounting software, the Company is able
to operate from one accounting  platform,  bar code inventory,  track sales, and
provide a network for its dealerships to access inventory available at its other
dealerships  locations.  The Company currently  utilizes financing software that
allows the Company to rapidly  transmit to its  dealerships  and receive finance
contracts  and all  required  state motor  vehicle  forms and to track  customer
payments.

     CENTRALIZED CREDIT APPROVAL. The Company maintains a separation between the
credit approval  process for its used cars and its sales department by utilizing
separate  corporate  subsidiaries.  Credit  review and  approval is conducted by
experienced  finance personnel at the Company's  headquarters,  exclusive of the
sales function. The Company employs credit approval criteria which it applies to
its credit  decisions  and  evaluation of the credit risks  associated  with the
loans.

     DEVELOP  AND  RETAIN  QUALIFIED  MANAGEMENT  AND  EMPLOYEES.   The  Company
continually seeks to develop and retain qualified personnel and promote talented
employees to assume more  responsible  positions in the Company's  organization.
The Company  employs an  incentive  based  compensation  program to motivate and
retain quality  personnel,  such as equity sharing  through a stock option plan,
bonuses, and a competitive benefit package.

<PAGE>


ACQUISITIONS

     Acquisitions have been a key element in the Company's growth strategy.  The
Company completed the acquisitions described below in 1997.

<TABLE>
<CAPTION>
                                                                  1996
                                                  DATE          REVENUES
                  COMPANY                       ACQUIRED     (IN THOUSANDS)      PRIMARY BUSINESS
<S>                                               <C>       <C>                      <C>    
PREDECESSOR COMPANIES

Smart Choice Holdings, Inc.                   1/28/97         --              Formation stage company

Eckler Industries, Inc.
Titusville, Florida                           1/28/97       $14,893           Sale of Corvette parts and accessories

Florida Finance Group, Inc. and affiliates
St. Petersburg, Florida                       1/28/97       $ 6,130           Used vehicle sales and financing

Palm Beach Finance and Mortgage Company and
affiliates                                    2/14/97       $11,999           Used vehicle sales and financing
West Palm Beach, Florida

Liberty Finance, Inc. and affiliates
Orlando, Florida                              2/12/97       $21,687           Used vehicle sales and financing

OTHER ACQUISITIONS

Dealers Insurance Services, Inc.
Tampa, Florida                                1/28/97       $   812           Insurance broker for auto dealerships

Dealers Development Services, Inc.
Tampa, Florida                                1/28/97       $   698           Auto dealership training services

Ready Finance, Inc. and affiliates
West Palm Beach, Florida                      6/27/97       $11,621           Used vehicle sales and financing

Fedo Finance, Inc. and affiliates
West Palm Beach, Florida                      6/30/97       $ 3,465           Used vehicle sales and financing

Jack Winters Enterprises, Inc.
Stuart, Florida                               8/21/97       $21,149           New vehicle dealership (Volvo)

B & B Florida Enterprises, Inc.
Stuart, Florida                               8/29/97       $24,473           New vehicle dealership (Nissan)
</TABLE>

<PAGE>

AUTO RETAIL OPERATIONS

     BUY HERE-PAY  HERE USED CAR  DEALERSHIPS.  The Company  currently  owns and
operates 19 buy here-pay here used car dealerships under the "First Choice" name
and three used car dealerships  under the "Team Auto Sales" name.  Vehicles with
mileage of 80,000 miles or less are placed at First Choice  locations.  Vehicles
with mileage that exceeds 80,000 miles (usually  repossessions or trade-ins) are
placed at Team Auto Sales locations. The Company's buy here-pay here dealerships
are divided into three regions (the Tampa-St. Petersburg, Orlando, and West Palm
Beach,  Florida  metropolitan  areas),  and each region is managed by a regional
manager.  Each  dealership  is managed by a sales  manager who  oversees a sales
staff. On acquired dealerships,  the Company upgrades the facilities it acquires
with fresh  exterior and interior paint and new signage (with an emphasis on the
blue and yellow  colors of First  Choice);  replaces  furniture  and fixtures as
necessary; reconditions existing inventory of the acquired dealership; increases
inventory; and installs upgraded computer systems.

     The Company's First Choice dealerships  generally maintain an average of 50
to 125 used cars and  feature a wide  variety  of makes and  models  (with  ages
generally  ranging from three to six years) and a range of sale  prices,  all of
which enable the Company to meet the  preferences and budgets of a wide range of
potential  customers.  The Company has in the past offered and now provides a 24
month/24,000  mile service  agreement  with each used car sold at a First Choice
dealership,  making the  vehicle  more  attractive  for the buyer.  In the past,
approximately 65% of the Company's customers purchased the service agreement. As
of April 1998, the Company included a service  agreement with each car sold. The
Company  believes  that by selling  higher  quality  used cars and  providing  a
service  agreement to cover major repairs,  improved  customer  satisfaction and
fewer defaults on finance contracts result.

     The Company acquires most of its used vehicles  through auto auctions.  All
vehicles are processed  through one of the Company's  reconditioning  facilities
and are  subjected  to a 110 point  inspection  program and  reconditioning,  as
necessary.  The Company  outsources  painting and body work. The Company invests
approximately  $300 per vehicle in repairs prior to  delivering  the vehicles to
the individual  dealerships for sale. The regional managers determine the number
and types of vehicles for the  dealerships in their  regions.  If the vehicle is
not sold in 90 days,  it is rotated to another  First Choice  dealership  in the
same  region for an  additional  90 days after  which,  if not sold,  it is sold
wholesale to other dealers.

     NEW CAR DEALERSHIPS. The Company owns and operates two new car dealerships,
one with  Nissan  and the other  with Volvo  factory  franchises.  These new car
dealerships also sell late-model used vehicles (between one to three years old).
These dealerships operate under the name of the city where they are located plus
the franchise brand name (e.g. Stuart Volvo).  The Company  anticipates that the
new car  dealerships  will be an additional  source of quality used cars for its
used car business and will provide additional lots for its used car dealerships.

     The  Company's  new car  dealerships  are managed by a general  manager who
oversees a sales staff,  finance department and service department.  The Company
does not  finance  its new  vehicle  sales,  although  it  arranges  third party
financing  through  banks,  credit  unions  or  manufacturers'  captive  finance
companies.

     Substantially   all  of  the  Company's  new  vehicles  are  acquired  from
manufacturers.  Allocation  of vehicle  inventory  from  manufacturers  is based
primarily on sales volume and input from dealers. Vehicle purchases are financed
through  revolving  (floorplan)  credit  facilities.  New vehicle  sales include
retail  lease  transactions  and  lease-type  transactions,  both of  which  are
arranged by the Company with third-party  lenders.  New vehicle leases generally
have short terms. Lease customers,  therefore,  return to the new vehicle market
more  frequently.  Leases also  provide a source of  late-model,  generally  low
mileage, vehicles for the Company's used vehicle inventory.

BUY HERE-PAY HERE FINANCE

     The Company  offers  financing  to its buy  here-pay  here  customers.  The
Company  does not acquire any loans from third  parties.  It provides  financing
only  for  its own buy  here-pay  here  customers,  thereby  relying  on its own
underwriting  standards and not those of third parties.  Sales and financing are
separate functions performed by different Company  subsidiaries.  All credit and
financing  review and decisions are made by experienced  financing  personnel at
the Company's headquarters. The Company's buy here-pay here used car dealerships
use a standardized  sales contract that typically  provides for down payments of
approximately  10% of the purchase  price with the balance of the purchase price
financed at an average annual  percentage rate of approximately 26% over periods
ranging from 12 to 48 months.  The Company finances  approximately  95.0% of the
used car sales at its buy here-pay here dealerships  through retail  installment
contracts  that the  Company  originates  and  services.  The  Company  does not
purchase  third-party finance contracts,  except for finance contracts purchased
in the Company's acquisitions.

     CUSTOMER  CREDIT  PROFILE.  The  Company  targets  the  buy  here-pay  here
customers  with "C" and "D" credit  profiles.  A "C" rated  consumer may have an
inconsistent  employment record or unresolved  problems with credit in the past.
This  borrower  will  generally  not be  able to  obtain  a loan  to  finance  a
late-model  or older used car purchase  from a captive  finance  subsidiary or a
bank  otherwise  available to customers  with "A" or "B" credit  ratings.  A "D"
rated  consumer  has  an  unfavorable  employment  history  and  serious  credit
problems, such as personal bankruptcy. This borrower's only choice is to finance
his or her used car purchase, which is often from an independent as opposed to a
franchise dealer,  through an independent finance company that is active in this
market segment. Based on a random sample by the Company of its loan portfolio in
October, 1997, the Company's average customer (at the time such customer applies
for  or  is  approved  for  credit)  has  gross  annual   household   income  of
approximately $30,000, has an average length of employment at his or her current
job  of  approximately   3.2  years  and  has  resided  in  the  same  area  for
approximately 4.9 years.

     CREDIT EVALUATION PROCEDURES.  The Company applies uniform underwriting and
credit approval  standards in originating its used car loans. The most important
criteria   the  Company  uses  in   evaluating   a  loan  are  the   applicant's
creditworthiness,  the collateral value of the vehicle,  employment and resident
histories,  income  information,   personal  references,   income  and  expenses
information,   credit  bureau  reports,  and  other  information  regarding  the
customer's  credit  history.   The  sales  managers  at  the  Company  used  car
dealerships   submit  the  customer's   credit   application  to  the  Company's
headquarters in Titusville,  Florida,  where the customer's  creditworthiness is
reviewed. The Company utilizes a credit evaluation system it developed to assist
in determining a customer's creditworthiness. Financing decisions are made by an
experienced loan staff with a minimum of five years  experience,  and overall an
average of 10 years experience in car financing. For applicants who fall outside
of the  guidelines,  the  ultimate  financing  determination  is made by  senior
management.  Further,  members  of senior  management  regularly  review  credit
decisions made by the Company's  employees to assure  uniformity in underwriting
standards.  Periodically, the Company retains credit underwriting consultants to
review the Company's loan quality,  collection and  underwriting  procedures and
recommend areas for improvement.  See  "Management's  Discussion and Analysis of
Financial Condition and Results of Operations - Allowance for Credit Losses" for
information about the Company's loan loss and delinquency experience.

     CONTRACT  SERVICING.  The  Company  services  its  finance  contracts.  The
servicing  procedures  have been  specifically  tailored  to buy  here-pay  here
customers  and  include  (i)  monitoring  loans  and  related  collateral,  (ii)
accounting for and posting all payments received, (iii) responding to borrowers'
inquiries,  (iv) taking all necessary  action to maintain the security  interest
granted  in  the  financed  automobile,  (v)  investigating   delinquencies  and
communicating   with  borrowers  to  obtain  timely   payments,   (vi)  pursuing
deficiencies on loans and (vii) when necessary, contracting licensed, bonded and
insured third-party agents to repossess the financed automobile.

     COLLECTION  POLICY.  The Company is aggressive in its collection  policies,
believing that by acting promptly and working with the customers, the Company is
able to minimize its loss exposure.  The Company  employs a credit  counselor in
each of its major market areas to work directly with delinquent  customers,  and
the Company also maintains regional payment centers so customers can pay by cash
rather than send  checks  through the mail.  Approximately  60% of the  customer
payments are received through the regional  payment centers.  The Company begins
collection efforts when an account balance becomes one day past due.  Generally,
the Company's policy is to work with the customer to permit the customer to keep
the automobile and continue making payments,  and to take more aggressive action
if the customer fails to continue making payments. Generally, the Company begins
the process of repossession  when two payments are past due.  Repossessions  are
handled by independent  licensed,  bonded and insured repossession firms engaged
by the Company.

MANAGEMENT INFORMATION SYSTEMS

     The Company's  management  information system (the "MIS System") allows the
Company to manage its operations  uniformly and efficiently  through "real time"
information.  Utilizing its MIS System,  the Company is able to operate from one
accounting platform, bar code inventory,  track sales and costs, and provide its
dealerships  access to inventory  available at other  Company  dealerships.  The
Company also employs financial software to facilitate the Company's underwriting
and credit approval  process,  track collections and monitor its loan portfolio.
The Company  has  assimilated  loan  tracking  software  utilized by the finance
companies it acquired in  connection  with  acquisitions  of buy  here-pay  here
dealerships.  The  Company is  installing  financial  software  for its  finance
contracts that will  integrate  into one uniform system all loan  monitoring and
servicing functions.  The Company intends to place in service within the next 60
days a recovery  system in the event of a natural  disaster  (i.e.,  hurricanes,
tornadoes,  fire, lightning) under which all systems can be rerouted to a remote
location and fully  operational  within 24 hours. The Company has the ability to
customize and upgrade its software  in-house with its own staff of MIS personnel
and to trouble-shoot any interruptions that may occur.

ADVERTISING AND MARKETING

     In  general,  the  Company's   advertising   campaigns  for  its  used  car
dealerships  emphasize its multiple  locations,  wide  selection of quality used
cars, and ability to provide financing to most buy here-pay here borrowers,  and
value-added programs such as service agreements and loan pre-qualifications. The
Company's used car  advertising  campaign  revolves around a series of radio and
television  commercials,  as well as  complementary  print  advertisements.  The
television  spots  appear at targeted  television  hours (early  evening,  three
minute  "infomercials"  late at night,  as well as televised  sporting  events).
However,  the  Company  receives  its best  response  from radio ads in which it
advertises  specific  sales in addition to the Company's  value-added  programs.
Moreover,  the Company's upgraded facilities also provide effective advertising.
The facilities' fresh and inviting  appearance fosters the image of a dealership
that offers quality cars and encourages  drive-by traffic to visit  dealerships.
The Company believes that its marketing  approach creates brand name recognition
and  promotes  its  image as a  professional,  customer  oriented  business,  in
contrast to the lack of name recognition and generally  unfavorable public image
of used car dealerships.

     A  primary  focus  of the  Company's  marketing  strategy  for its used car
dealerships is its ability to finance consumers with poor credit histories.  The
Company has initiated  marketing  programs designed to attract buy here-pay here
customers,  assist such customers in reestablishing  their credit,  reward those
customers who pay on time,  develop customer  loyalty and increase  referral and
repeat business. The Company created for its customers such value-added programs
as  providing   quality   vehicles   through  a  comprehensive   inspection  and
refurbishment  program,  providing a  24-month/24,000  mile service agreement on
cars sold at First Choice dealerships,  rapid loan application  processing,  and
pre-qualification  over the  telephone by calling an "800"  number.  The Company
reports  monthly to credit bureaus,  allowing  customers the opportunity to work
toward reestablishing their credit, and providing an avenue for them to purchase
newer cars as their credit improves.

     The  Company  advertises  extensively  in the print,  radio and  television
media. The Company also utilizes various  telemarketing  programs.  For example,
potential  customers  are  contacted  within  several  days of their  visit to a
Company dealership to follow up on leads and obtain information  regarding their
experience while at a Company dealership.  In addition,  used car customers with
satisfactory  payment  histories are contacted  several  months before  contract
maturity  and are offered an  opportunity  to purchase  another  vehicle  with a
nominal down payment  requirement or to move up to a newer vehicle at one of the
Company's new car dealerships if the customer has improved credit.

COMPETITION

     The used and new  automobile  business  in which the  Company  competes  is
highly fragmented and very competitive.  Each Company dealership competes with a
myriad of new car dealerships and independent used automobile  dealers,  ranging
in size  from the  independent  dealer  with  less  than 20 cars on a lot to the
large,  well-capitalized  new  car  dealership  chains.  The  Company  may  face
increased  competition  from  automobile  consolidators  such as  Ugly  Duckling
Corporation and "superstores"  such as CarMax,  AutoNation USA and Driver's Mart
Worldwide,  Inc.  Others,  such as Auto By Tel,  are  marketing  vehicles on the
Internet.  In addition,  certain regional and national car rental companies have
begun to operate retail used car lots to dispose of their used rental cars. Many
of these competitors have significantly  greater financial,  marketing and other
resources than the Company.

     The  used car  "superstores"  typically  use a  mega-dealer  approach  with
substantial   investments  in  real  estate  and  extensive  inventory  at  each
dealership.   In  contrast,  the  Company  maintains  several  medium  to  large
dealerships  in  each of its  marketing  areas.  The  Company  believes  that by
covering more  territory  with  multiple  locations in a market area rather than
having one superstore serving a large geographic area, the Company's dealerships
are more easily  accessible to a wider  population and the Company benefits from
more  visibility in its market area.  Also, the existence of multiple  locations
gives the Company greater flexibility in responding to a change in demographics.

     The Company's buy here-pay here  dealerships  do not directly  compete with
superstores such as CarMax or AutoNation  which inventory newer,  more expensive
vehicles than the Company and do not target buy here-pay here borrowers.  Of the
large  companies that have entered the buy here-pay here car business,  thus far
only Ugly  Duckling has announced an intention to focus on the buy here-pay here
borrower.  However,  the Company believes that it competes  effectively with the
independent  Buy Here-Pay Here Dealers and could compete  effectively  with Ugly
Duckling because the Company's vehicles are generally newer, lower mileage cars.
Further,  the Company now provides  each customer  with a  24-month/24,000  mile
service  agreement  on each  used car  sold at a First  Choice  dealership.  The
Company  distinguishes  its direct sales and financing  operations from those of
typical buy  here-pay  here dealers by providing  multiple  locations,  upgraded
facilities,  large  inventories  of used  automobiles,  centralized  purchasing,
value-added marketing programs, and dedication to customer service. In addition,
the Company has developed  underwriting  guidelines and techniques to facilitate
rapid credit  decisions,  as well as an integrated,  technology-based  corporate
infrastructure  that  enables  the  Company to monitor  and  service its finance
contracts.  The  Company  believes  that it is the  largest  buy  here-pay  here
dealership in Florida.

     The buy here-pay  here segment of the used car  financing  business is also
highly  fragmented and very  competitive.  In recent periods,  several  consumer
finance  companies have completed public offerings in order to raise the capital
necessary to fund expansion and support  increased  purchases of used car retail
installment  contracts.  In  addition,  there are  numerous  financial  services
companies  serving,  or capable  of  serving,  this  market.  While  traditional
financial  institutions,  such as commercial  banks,  savings and loans,  credit
unions and captive finance companies of major automobile  manufacturers have not
consistently  serviced buy  here-pay  here  borrowers,  the high rates of return
earned by companies  involved in buy here-pay  here  financing  have  encouraged
certain of these  traditional  institutions to enter,  or contemplate  entering,
this market.

CORVETTE PARTS AND ACCESSORIES

     The Company, through its Eckler subsidiary,  is a manufacturer and supplier
of aftermarket  Corvette parts and accessories.  For the year ended December 31,
1997, Eckler accounted for approximately  21.7% of the Company's  revenues.  The
Company expects that Eckler's revenues, as a percentage of overall revenue, will
decrease as the Company expands its vehicle dealership business.

     In December, 1993, the Company entered into a Reproduction and Service Part
Tooling  License  Agreement  with  General  Motors  Corporation,  Service  Parts
Operations ("GM") (the "GM Agreement").  Under the GM Agreement,  the Company is
licensed to manufacture, sell, distribute and market numerous parts discontinued
by GM which the Company may sell under the GM  Restoration  Parts  trademark for
various  Corvette  model years.  The initial term of the GM Agreement  continues
through  December 31, 2001 with two  consecutive  five-year  renewal  options to
December 31, 2011. As consideration for the GM Agreement, the Company paid GM an
advance of  $1,000,000  against  future  royalties  on sales of  licensed  parts
through December 31, 1999. The renewal options are subject to the Company making
certain  minimum net royalty  payments to GM of at least $750,000  during the 12
months  immediately  preceding  the first  renewal term and at least  $1,000,000
during the 12 months immediately preceding the second renewal term.

     For each twelve month period  commencing  January 1, 2000 through  December
31,  2001,  and  annually  thereafter  during any renewal  term,  the Company is
obligated to pay to GM a percentage  royalty up to a maximum of 8% on net sales,
with a minimum of $500,000  annually in royalties  for net sales of the licensed
parts (i.e.,  gross sales of licensed parts less quantity  discounts and returns
for damaged  goods).  For each twelve  month period  commencing  January 1, 2002
through  December  31,  2006,  the annual  minimum  royalty is $750,000  and for
January  1, 2007  through  December  31,  2011 the  annual  minimum  royalty  is
$1,000,000.

     SALES  AND  DISTRIBUTION  METHODS.  The  Company  typically  generates  its
revenues  through catalog sales  (including  mail-in orders) and showroom sales.
The Company markets its Corvette products  primarily through the distribution of
the "Eckler's" catalog which markets approximately 17,000 items and historically
has generated most of Eckler's  revenues.  In 1996 and 1997,  respectively,  the
Company  distributed  over 325,000 and 400,000  copies of its  catalog,  and the
Company  intends to  distribute in 1998 over 725,000  copies of its catalog,  to
existing and prospective customers, both retail and wholesale by two (instead of
the traditional one) mailings. The Company's  telemarketing staff is principally
an inbound, order-taking department,  although in recent months more out calling
has occurred.  In each of the fiscal years ended  December 31, 1997,  1996,  and
1995,  catalog sales accounted for  approximately 93% of Eckler's  revenues.  In
addition to its catalog,  the Company markets  Corvette  products from its 5,000
square foot Titusville showroom, advertises in magazines and trade publications,
and  sponsors  various  promotional  programs.   The  Company  also  distributes
approximately 30,000 copies of its catalog through newsstands.

     In each of the three fiscal years ended  December 31, 1997,  domestic sales
accounted for  approximately  97% of the Company's total Corvette product sales,
with the  States of  Florida,  Pennsylvania,  New  Jersey,  New  York,  Indiana,
Illinois, Ohio, Texas, Michigan and California constituting approximately 50% of
total sales.  International  sales accounted for approximately 3% of total sales
in those years.

     SOURCING AND PRODUCTION.  A substantial  majority of the Company's Corvette
products are obtained from many independent manufacturers and distributors.  The
Company  sources  its GM  Restoration  Parts by having  them made by third party
manufacturers  and by purchasing  inventory of discontinued  parts directly from
GM. The Company has over 400 Corvette  product  suppliers  with no single source
accounting during each of the fiscal years 1997, 1996, and 1995 for more than 5%
of purchases, except for Bob Steele Chevrolet, which accounted for approximately
14% of purchases in 1996. Of the Company's  approximately  95,000 customers,  no
single  customer  accounted for more than 5% of Eckler's total  revenues  during
1997.

     COMPETITION. The Company competes directly with a number of local, regional
and national suppliers of aftermarket Corvette automotive parts. The Company has
identified seven primary competitors, five of which are located in the mid-west,
one in Pennsylvania and one in Virginia.


DEALER TRAINING AND INSURANCE SERVICES

     The Company's subsidiary Dealers Insurance Services,  Inc. ("DIS") provides
a full range of insurance  services to the franchised  automobile dealer market.
DIS currently provides various insurance products to over half of the franchised
dealers in Florida.

     The  Company's  subsidiary,   Dealer  Development  Services,  Inc.  ("DDS")
provides  sales  training  to  franchised   dealership  employees  and  business
consulting to such  dealerships.  DDS is an authorized  training  vendor for the
over 3,500  Chevrolet  dealerships  nationwide  and has  provided  training  and
consulting to over 200 dealerships representing nearly every manufacturer.

REGULATION, SUPERVISION, AND LICENSING

     The Company's  operations are subject to ongoing  regulation,  supervision,
and licensing under various federal, state and local statutes,  ordinances,  and
regulations.  Among other things, these laws require that the Company obtain and
maintain  certain licenses and  qualifications,  limit or prescribe terms of the
contracts  that the  Company  originates  and/or  purchases,  require  specified
disclosures  to  customers,  limit the  Company's  right to  repossess  and sell
collateral,  and  prohibit  the  Company  from  discriminating  against  certain
customers.  The  Company is also  subject to federal and state  franchising  and
insurance laws.

     The Company  typically  charges  interest rates ranging from 25.0% to 29.9%
per  annum on the  finance  contracts  originated  at its used car  dealerships.
Currently,  all of the Company's used car sales activities are conducted in, and
its finance contracts are originated in, Florida, which limits the interest rate
that a lender may  charge.  The  Company  may expand its  operations  into other
states that also impose interest rate limits.

TRADEMARKS AND PROPRIETARY RIGHTS

     The Company does not have any registered  trademarks or service marks other
than "Eckler's." Under certain license  agreements with GM, the Company licensed
the right to use the GM Restoration  Parts label on discontinued  Corvette parts
it  manufactures  or acquires  under the GM Agreement.  The Company also has the
non-exclusive right to use certain GM trademarks (i.e.,  "CORVETTE," "VETTE" and
Corvette body  designs)  under certain  trademark and licensing  agreements,  in
connection  with  the   manufacture,   sale,   promotion  and   distribution  of
pre-approved accessory, novelty, gift and apparel items.

EMPLOYEES

     At December 31, 1997,  the Company  employed 436 persons,  of which 50 were
employed  in the  Company's  executive  and  administrative  offices,  254  were
employed in its Company dealership operations, 53 were employed in the Company's
credit and collection  activities,  and 79 were employed by Eckler.  None of the
Company's  employees  are  covered by a  collective  bargaining  agreement.  The
Company considers its relations with its employees to be good.

ITEM 2.  PROPERTIES.

     The  Company  owns  approximately  5.57 acres of real  property at its main
facilities  (the  "Main  Facility")  in  Titusville,  Florida.  Three  buildings
comprise the Company's Main Facility as follows:  one building of  approximately
33,000 square feet housing the Company's main office and showroom; a building of
approximately 30,000 square feet housing the Company's manufacturing  facilities
where the Company  manufactures  Corvette  body parts;  and a third  building of
approximately 24,825 square feet serving as the Company's warehouse and shipping
and receiving facilities.  The Company also owns additional  undeveloped acreage
adjacent  to  its  Main  Facility,   comprising  approximately  5.3  acres  (the
"Undeveloped Property").

     The Main  Facility and the  Undeveloped  Property are subject to a mortgage
and security  agreement with an outstanding  principal  balance of approximately
$2.5  million.  The Company is  obligated  to make  monthly  payments of $13,333
principal  plus  interest  at 1.5%  above the prime rate as quoted by the lender
from time to time.  The loan matures on July 1, 1998,  at which time the Company
intends to negotiate a later maturity.

     As of December 31, 1997, the Company leased 25 facilities including 21 used
car dealerships, two new car dealerships, office space in Tampa, Florida and two
vehicle  reconditioning  facilities.  The locations and annual lease payments on
the existing properties are as follows:
                                            APPROX. SIZE   ANNUAL     LEASE
                    NAME AND LOCATION          (ACRES)      RENT     EXPIRES(1)
  
          Lakeland Reconditioning Center         6.7      $  212,844  5/12/1998
          310 County Line Road
          Lakeland, FL  33809

          Stuart Nissan                         9.25      $  346,680  8/31/2002
          4313 S. Federal Highway
          Stuart, FL  34997

          Stuart Volvo                           9.0      $  250,380  12/19/2003
          4205 S. Federal Highway
          Stuart, FL  34997

          All other leased facilities(2)          -       $1,311,000      -


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

(1)      Does not include renewal options.

(2)      Includes 20 buy here-pay here dealerships located throughout Florida, a
         four-bay  reconditioning  facility  in West Palm  Beach,  Florida,  and
         approximately 2,000 square feet of office space in Tampa, Florida.


ITEM 3.  LEGAL PROCEEDINGS.

     From time to time,  the  Company is named in claims  involving  the sale of
automobiles,  contractual  disputes and other  matters  arising in the Company's
business.  Currently,  no legal  proceedings  are pending against or involve the
Company that, in the opinion of management, could be expected to have a material
adverse effect on the business,  financial condition or results of operations of
the Company.

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

         None.
                                     PART II

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

MARKET PRICE OF COMMON EQUITY

     The Company's Common Stock, $.01 par value per share ("Common Stock"),  and
Redeemable Common Stock Purchase Warrants ("Public  Warrants") are listed on the
Nasdaq SmallCap Market and the Boston Stock Exchange.  There were  approximately
1,418 beneficial  holders of the Common Stock and 258 beneficial  holders of the
Public  Warrants.  The following  table sets forth the high and low closing sale
prices of Common  Stock and the  Public  Warrants,  as  reported  by the  Nasdaq
SmallCap Market, for the periods indicated.

1996                      HIGH           LOW
----

COMMON STOCK
     First Quarter        5-1/8          3
     Second Quarter       4-13/16        3-3/8
     Third Quarter        4-1/2          2-7/8
     Fourth Quarter       6-1/4          3

PUBLIC WARRANTS
     First Quarter        15/16          3/8
     Second Quarter       13/16          9/16
     Third Quarter        15/16          1/2
     Fourth Quarter       1-3/16         7/16

1997
----

COMMON STOCK
     First Quarter        6-1/8          4-5/8
     Second Quarter       6-3/4          4
     Third Quarter        7              4-3/16
     Fourth Quarter       6-1/4          3-1/2

PUBLIC WARRANTS
     First Quarter        1-5/16         3/4
     Second Quarter       1-7/8          3/4
     Third Quarter        1-1/2          3/4
     Fourth Quarter       1-5/32         1/2

1998 
----

COMMON STOCK
     First Quarter        4-9/16         1-15/16

PUBLIC WARRANTS
     First Quarter         23/32         5/16     

     Continued  inclusion of the Common Stock and Public  Warrants on the Nasdaq
SmallCap Market requires the Company to maintain certain criteria such as market
value,  public float,  capital and surplus. As of February 23, 1998, the Company
was not in compliance with certain listing  criteria which became  applicable to
SmallCap Market listed  companies on that date.  Nasdaq has notified the Company
that the Common  Stock and Public  Warrants  would be  scheduled  for  delisting
unless the  Company  requested  a hearing for an  exception  from these  listing
criteria. The Company has requested a hearing which has stayed the delisting.

     The Company has not paid  dividends  on its Common  Stock since its initial
public offering of Common Stock in 1995. The Company has no present plans to pay
cash dividends in the foreseeable  future and intends to retain earnings for the
future operation and expansion of the business.  Any determination to declare or
pay dividends in the future will be at the discretion of the Company's  Board of
Directors  and will depend on the  Company's  results of  operations,  financial
condition,  any contractual  restrictions,  considerations imposed by applicable
law and other factors deemed  relevant by the Board of Directors.  The Company's
current obligations to Finova Capital Corporation, Huntington National Bank, and
Sirrom  Capital  Corporation  restrict the  Company's  ability to declare or pay
dividends.


RECENT SALES OF UNREGISTERED SECURITIES

     Described  below are all sales of  securities  by the  Company  during  the
fourth  quarter of 1997 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 offerees as "accredited investors."

     On September  30, 1997,  the Company  completed an offering of 300 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
$2,965,000.  Each unit consists of one share of Series A redeemable  convertible
preferred  stock and one warrant to acquire 300 shares of common  stock for each
preferred  share  purchased  at a price equal to $8.10 per share.  The  warrants
expire five years after the date of issuance. The preferred stock is convertible
into shares of common  stock at a conversion  price which,  at the option of the
buyer,  is either fixed at a rate of 135% of the market price of common stock on
the date of issuance of the  preferred  stock,  or floating at a rate of 100% of
the market  price of the  common  stock if  converted  during the period 90 days
after  the  issuance  of the  preferred  stock  and 90% of the  market  price if
converted at any time after that 90-day period.  Accordingly,  since none of the
preferred stock was converted 90 days after issuance, a preferred stock dividend
of $333,333  ($.04 per share) has been recorded for the year ended  December 31,
1997 for the difference between the discounted conversion price of the preferred
stock and the fair market  value of the  Company's  common  stock at the time of
issuance.  The preferred stock is redeemable at the option of the buyer upon the
occurrence of certain  events at a price per share that is also  dependent  upon
the occurrence of certain events.

     On December 10, 1997,  the Company  issued an  additional  100 units of the
Series A redeemable  convertible preferred stock and associated warrants for net
proceeds of  $1,000,000.  Each unit consists of one share of Series A redeemable
convertible  preferred  stock and one  warrant to  acquire  300 shares of common
stock for each  preferred  share  purchased at a price equal to $5.23 per share.
The warrants  expire five years after the date of issuance.  The preferred stock
has features identical to that of the Series A redeemable  convertible preferred
stock issued on September 30, 1997.

     Subsequent  to  December  31,  1997,  the  holders of the  preferred  stock
converted 245 shares of preferred stock into 1,265,827 shares of common stock.

     On December  16, 1997,  the Company  issued 7,008 shares of Common Stock to
Robert Eckler on the exercise of a stock option held by him for $2.50 per share.

     On December  29,  1997,  the Company  issued 600 shares of Common  Stock to
Richard  Bogani on exercise of a warrant to purchase  Common Stock for $3.00 per
share held by him.

     On  December  30, 1997 the Company  issued the  following  shares of Common
Stock to the following  persons in  cancellation  of debt owed by the Company to
such persons as indicated:

                                                         Debt
          Name                   No. of Shares        Cancelled
          ----                   -------------       ------------
Lawrence O'Blander                  99,096             $396,385

Albert Klopf                        21,200               84,800

Ellen Deane                          5,968               23,870

R.C. Hill, II                      316,250            1,265,000


     On December  31, 1997,  the Company  issued 5,500 shares of Common Stock to
Greenberg Traurig, a law firm, in payment of $22,000 of legal services.

     On the following dates,  the Company issued,  as compensation to employees,
options to purchase Common Stock for the exercise prices indicated:

                                            No. of          Exercise
     Employee             Date              Shares           Price
     --------           --------          --------          --------
John Zurenda            10/29/97            9,000             $5.63

Erin Burke              10/29/97           12,000             $5.63

Michael Passaro         10/27/97           45,000             $5.88

Jeannette Frazier       11/14/97           10,000             $5.63

Ted Wilhite             11/14/97           10,000             $5.63

All Employees of
the Company at
year end                12/31/97          41,700*             $4.00

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

*  100 shares to each employee for 41,700 shares in the aggregate.

     On the following  dates,  the Company  issued  warrants to purchase  Common
Stock for $3.00 per share to the  following  holders of  debentures  issued by a
subsidiary  of the  Company  on  maturity  of  such  debentures,  pursuant  to a
contractual requirement under such debentures:

                                              No. of Shares
         Person                Date         Covered by Warrants          
         ------                ----         -------------------
Robert Raw, II               11/19/97             800

Leon J. Cort Trust           11/19/97             800

John S. Petit                11/19/97             800

Robert Lanteri               11/19/97           1,200

Charles S. Joy               11/19/97           1,200

John Thatch                  11/19/97           1,200

Edgar J. Rosenberry          11/19/97          16,800

Lee R. Bohner Trust          11/19/97           1,200

John Ward                    12/31/97           2,400

Carl A. Alfrey               11/19/97           1,200

Robert O. Baratta            11/19/97           1,320

Charles V. Ditoro            11/19/97           1,200

Michael F. Ciferri           11/19/97             600

Douglas Sampson              11/19/97           1,200

Nicholas Diterlizzi          11/19/97           1,200




ITEM 6.  SELECTED FINANCIAL DATA.

                   SELECTED CONSOLIDATED FINANCIAL INFORMATION
                  (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

     The following  table sets forth selected  historical  financial data of the
Company and its predecessors as of the dates and for the periods indicated.  The
selected   financial   data  of  the  Company  were  derived  from  the  audited
consolidated  financial  statements included herein. The selected financial data
for the predecessors for 1996, 1995, 1994 and 1993 were derived from the audited
combined  financial  statements of Florida  Finance Group,  Inc. and affiliates,
Eckler Industries,  Inc., Liberty Finance Company and affiliates, and Palm Beach
Finance  Mortgage  Company  and  affiliate  (collectively  referred  to  as  the
"predecessors").

         The selected consolidated  financial information presented below should
be read in conjunction with  "Management's  Discussion and Analysis of Financial
Condition and Results of Operations" and the historical financial statements and
related notes thereto of the Company appearing elsewhere herein.
<TABLE>
<CAPTION>

                                                                    As of December 31,
                                               -------------------------------------------------------
                                                          Predecessors (1)                   Actual(2)
                                               ----------------------------------------      ---------
                    <S>                        <C>     <C>         <C>           <C>      <C>   
                                                  1993      1994       1995        1996        1997
                                                  ----      ----       ----        ----        ----
               STATEMENT OF OPERATIONS DATA:

               REVENUES:

                   Sales at Used Car             22,841    26,043     27,521    33,867         35,279
                   Dealerships

                   Sales at New Car                                                             9,863
                   Dealerships

                   Corvette Parts and            14,317    13,943     12,973    14,893         15,385
                   Accessories

                   Income on Finance              2,624     3,194      4,614     5,949          9,210
                   Receivables

                   Income from Insurance
                   and training                      --        --         --       --           1,178
                                                 ------    ------     ------    ------         ------
               Total Revenues                    39,782    43,180     45,108    54,709         70,915
                                                 ======    ======     ======    ======         ======

               COSTS AND EXPENSES:

                   Costs of Sales at New Car                                                    8,618
                   Dealerships

                   Cost of Sales at Used         14,611    19,868     21,916    28,338         27,951
                   Car Dealerships

                   Cost of Corvette Parts         9,040     9,103      8,429     9,648         10,206
                   and Accessories Sold

                   Provision for Credit           2,623     1,475      1,615     2,881          4,942
                   Losses
     
                   Costs of Insurance and                                                          85
                   Training

                   Selling, General and          11,349     9,837     10,902    13,236         24,708
                   Administrative Expenses

                   Compensation Expense
                   Related to Employee                                                          4,650
                   Stock Options

                   Restructuring Charges                                                        2,118
                   Interest Expense              1,380     1,409      2,012     2,435          (6,454)
                                               --------  --------    ------    -------     ----------

                                                $39,003   $41,692    $44,874   $56,538     $   76,824
                                                -------   -------    -------   -------     ----------

               Net Income (Loss)                $  (434)  $ 1,549    $ (135)   $(1,568)    $  (18,649)
                                               =========  ========   =======   ========    ===========
              
               Net Income (Loss) Per Share           --        --         --        --         (2.14)
               Weighted Average Common
               Shares Outstanding                                                           8,860,733
                  During Period

</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                                                                   As of December 31,
                                             ----------------------------------------------------------
                                                          Predecessors (1)                Actual(2)
                                               ---------------------------------------    ----------

<S>                                             <C>       <C>       <C>       <C>          <C> 
                                                1993      1994      1995      1996         1997
                                                ----      ----      ----      ----         ----
            BALANCE SHEET DATA:
            Cash and Cash Equivalents              319       268       364       618         1,067
            Finance Receivables, Net             7,608    11,477    16,399    19,825        33,227
            Inventories                          3,347     3,781     4,899     5,409        15,516
            Total Assets                        17,942    21,851    28,569    32,327        89,105
            Total Debt                          12,255    14,583    19,931    23,402        30,138
            Shareholders' Equity                 3,871     4,143     3,503     6,001         4,520

</TABLE>

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

(1)      On January  28,  1997,  the Company  (then known as Eckler  Industries,
         Inc.) acquired all of the issued and outstanding shares of common stock
         of  Smart  Choice  Holdings,   Inc.   ("SCHI")  pursuant  to  a  merger
         transaction  which  resulted  in  SCHI  becoming  a  subsidiary  of the
         Company. However, since the shareholders of SCHI obtained a majority of
         the voting  rights of the Company as a result of the  transaction,  the
         transaction was accounted for as a purchase of Eckler Industries,  Inc.
         by SCHI (a reverse acquisition in which SCHI is considered the acquiror
         for accounting purposes).  Accordingly, the financial statements of the
         Company  for the  periods  prior to January 28, 1997 are those of SCHI,
         which was incorporated on June 21, 1996.  Further,  between January 28,
         1997 and February 14, 1997, the Company acquired the following  vehicle
         dealerships and related businesses through stock or asset transactions,
         all of which were subject to acquisition  agreements with SCHI: Florida
         Finance  Group,  Inc.  and  affiliates,  Liberty  Finance  Company  and
         affiliates,  and Palm Beach Finance and Mortgage  Company and affiliate
         (collectively the "Acquired Businesses").  For accounting purposes, the
         Acquired  Businesses  and  Eckler  Industries,   Inc.  are  treated  as
         predecessors   to  the  Company.   The   acquisition  of  each  of  the
         predecessors was recorded as a purchase with the assets and liabilities
         assumed  recorded at their  estimated  fair values and their results of
         operations  included in the  consolidated  financial  statements of the
         Company  since their  respective  dates of  acquisition.  The financial
         statements of the  predecessors  are presented on a combined basis. The
         financial data for the period after the acquisitions are presented on a
         different  cost  basis  from that for the  financial  data  before  the
         acquisitions and, therefore, are not comparable.

(2)      SCHI was  incorporated  on June 21, 1996,  and was a development  stage
         corporation  prior to January 28, 1997. As more fully discussed in note
         (1) above,  the  financial  statements  of the  Company for the periods
         prior to January 28, 1997 are those of SCHI and its  predecessors.  The
         financial  statements for the year ended December 31, 1997 are those of
         SCHI  and the  predecessors  and  recent  acquisitions  (all  of  which
         occurred in 1997) from the date of  acquisition  through  December  31,
         1997.  The  financial  data for the period after the  acquisitions  are
         presented on a different  cost basis from that for the  financial  data
         before the acquisitions and, therefore, are not comparable.


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

     The  following  discussion  and  analysis  of  the  Company's  consolidated
financial  position and  consolidated  results of  operations  should be read in
conjunction  with the  Company's  Selected  Consolidated  Financial  Information
included and the  Consolidated  Financial  Statements  and related Notes thereto
included herein.

FORWARD LOOKING STATEMENTS

     THIS REPORT CONTAINS FORWARD LOOKING STATEMENTS. ADDITIONAL WRITTEN OR ORAL
FORWARD  LOOKING  STATEMENTS  MAY BE MADE BY THE  COMPANY  FROM  TIME TO TIME IN
FILINGS WITH THE SECURITIES AND EXCHANGE  COMMISSION OR OTHERWISE.  SUCH FORWARD
LOOKING  STATEMENTS  ARE  WITHIN THE  MEANING OF THE TERM IN SECTION  27A OF THE
SECURITIES ACT OF 1933, AS AMENDED,  AND SECTION 21E OF THE SECURITIES  EXCHANGE
ACT OF 1934, AS AMENDED.  SUCH  STATEMENTS  MAY INCLUDE,  BUT NOT BE LIMITED TO,
PROJECTIONS OF REVENUES,  INCOME,  OR LOSS,  ESTIMATES OF CAPITAL  EXPENDITURES,
PLANS FOR FUTURE OPERATIONS, PRODUCTS OR SERVICES, AND FINANCING NEEDS OR PLANS,
AS WELL AS ASSUMPTIONS RELATING TO THE FOREGOING. THE WORDS "BELIEVE," "EXPECT,"
"ANTICIPATE,"  "ESTIMATE,"  "PROJECT," AND SIMILAR EXPRESSIONS  IDENTIFY FORWARD
LOOKING  STATEMENTS,  WHICH  SPEAK ONLY AS OF THE DATE THE  STATEMENT  WAS MADE.
FORWARD LOOKING  STATEMENTS ARE INHERENTLY  SUBJECT TO RISKS AND  UNCERTAINTIES,
SOME OF WHICH  CANNOT BE  PREDICTED  OR  QUANTIFIED.  FUTURE  EVENTS  AND ACTUAL
RESULTS COULD DIFFER  MATERIALLY  FROM THOSE SET FORTH IN,  CONTEMPLATED  BY, OR
UNDERLYING THE FORWARD LOOKING STATEMENTS.  THE COMPANY UNDERTAKES NO OBLIGATION
TO PUBLICLY UPDATE OR REVISE ANY FORWARD LOOKING STATEMENTS, WHETHER AS A RESULT
OF NEW INFORMATION,  FUTURE EVENTS, OR OTHERWISE. THE FOLLOWING DISCLOSURES,  AS
WELL AS OTHER  STATEMENTS  IN THIS REPORT ON FORM 10-K,  AND IN THE NOTES TO THE
COMPANY'S  CONSOLIDATED  FINANCIAL STATEMENTS,  DESCRIBE FACTORS,  AMONG OTHERS,
THAT COULD  CONTRIBUTE  TO OR CAUSE SUCH  DIFFERENCES,  OR THAT COULD AFFECT THE
COMPANY'S STOCK PRICE.

RESULTS OF OPERATIONS

     The Company  was  established  in the first  quarter of 1997 by a merger of
Eckler  Industries,  Inc.  with  various  companies  involved  in the  sale  and
financing of new and used cars. Since the combination, the Company has grown its
operations by acquiring five used car  dealerships  with 13 locations in central
and southern  Florida and opening 9 additional buy here-pay here locations.  The
Company  has also  acquired  two new car  dealerships.  The  Company  intends to
continue  its  expansion  as its capital  resources  and  available  acquisition
opportunities permit.

     PREDECESSOR  COMPANIES AND LACK OF COMPARABILITY.  For accounting purposes,
and as a result of the  merger  and  acquisition  transactions  in  January  and
February,  1997,  the  following  companies  collectively  are  treated  as  the
predecessor companies for purposes of financial statement  presentation:  Eckler
Industries,  Inc., Florida Finance Group, Inc. and affiliates  ("FFG"),  Liberty
Finance Company and affiliates ("Liberty"),  and Palm Beach Finance and Mortgage
Company and affiliate  ("PBF").  The predecessor  companies lacked a common year
end, had  different  cost bases,  had different  elections for income  taxation,
grouped  and  classified  some  income,   expense  and  balance  sheet  accounts
differently,  had somewhat  different  markets for used vehicle  sales,  and had
different credit  underwriting  and loss reporting  policies.  Accordingly,  the
results of operations for the periods prior to 1997 are not comparable.

     Also, Eckler Industries, Inc. previously had a fiscal year ending September
30 for  financial  reporting  purposes and for reporting to the  Securities  and
Exchange  Commission.  As a result of the  reverse  merger in which SCHI was the
accounting acquiror,  the Company's year end became December 31, the fiscal year
end of SCHI.

     PRESENTATION OF DEALERSHIP  REVENUES AND COSTS AND EXPENSES.  Revenues from
Company new car dealerships  include sales of new and used vehicles,  as well as
revenues  from  repairs and finance and  insurance  commissions.  Revenues  from
Company used vehicle car dealership operations consist of sales of used cars and
income on finance receivables. Costs and expenses of used and new car dealership
operations is comprised of the cost of vehicles and other  products sold and the
provision  for  credit  losses on finance  receivables.  The prices at which the
Company  sells its used cars at its used car  dealerships  and the interest rate
that it  charges  to  finance  these  sales  take  into  consideration  that the
Company's  primary customers are high-risk  borrowers.  The provision for credit
losses reflects these factors and it is treated by the Company as a cost of both
the future finance income derived on the contract receivables  originated at the
Company's  First  Choice  dealerships,  as well as the cost of the  sales of the
vehicles  themselves.  Accordingly,  unlike  traditional  car  dealerships,  the
Company does not present gross profits in the Statement of Operations calculated
as sales of used cars less cost of used cars sold.

     COMPARISON OF COMBINED  YEARS ENDED DECEMBER 31, 1995 AND DECEMBER 31, 1996
TO CONSOLIDATED YEAR ENDED DECEMBER 31, 1997.

     The following  table sets forth revenues and expenses in aggregate  dollars
and as a  percentage  of total  revenue for the  Company  and its  predecessors,
Eckler,  FFG, Liberty,  and PBF, for the years ended December 31, 1995, 1996 and
1997.  As a  result  of  the  acquisitions  discussed  above,  and  the  related
differences in cost basis of the assets and liabilities of the Company after the
acquisitions and the cost bases of the  predecessors,  the results of operations
for the year ended  December 31, 1997 are not  comparable to those for the years
ended December 31, 1995 and 1996.

<TABLE>
<CAPTION>


                                                         Year Ended December 31,
                              ----------------------------------------------------------------------
                                                         (Dollars in Thousands)

                                               Combined  (1)                      Consolidated (2)
                              ---------------------------------------------     --------------------                     
                                     1995                       1996                   1997
                                     ----                       ----                   ----

<S>                           <C>       <C>               <C>          <C>         <C>       <C>
Revenues                      45,108    100.0%         $54,708       100.0%      $70,915    100.0%

Costs of revenues             31,960    70.9%           40,867        74.7%       51,801     73.0%

Selling, general and
   administrative expenses    10,902    24.2%           13,236        24.2%       24,708     34.8%

Compensation expense              --       --               -          -           4,650      6.6%
   related to employee            
   stock options

Restructuring charges             --       --               -         -            2,118      3.0%

Operating income (loss)        2,246     5.0%              606         1.1%      (12,362)   (17.4)%

Interest expense              (2,012)   (4.5%)          (2,435)      ( 4.5)%      (6,454)    (9.1)%

Other income (expense)          (369)   (0.8%)             262         0.5%          168      0.2%
                                -----   ------             ---         ---           ---      ----

Net loss                       ( 135)   (0.3%)        ($ 1,567)      ( 2.9%)    ($18,649)   (26.3)%
                               ======   ======        ======== ==    ======     =========   =======
</TABLE>

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

(1)  The  financial  data for 1995 and 1996 is the sum of the actual  results of
     the four  predecessors  for 1995 and for the  period  from the  earlier  of
     January  1, 1996 or  formation  through  December  31,  1996.  Because  the
     financial data of the  predecessors  are presented on cost bases  different
     from those of the Company after the acquisition,  the 1995 and 1996 data is
     not comparable to the data for 1997.

(2)  The  financial  data for 1997 was derived from the  consolidated  financial
     statements  included  herein of the Company and all the acquired  companies
     from the  date of  acquisition  through  December  31,  1997.  Because  the
     financial  data for 1997 includes data of the Company and its  predecessors
     which are presented on different  cost bases,  such data are not comparable
     to the financial data for 1996.

     REVENUES. The Company's revenues increased approximately $16.2 million from
$54.7  million for the year ended  December 31, 1996,  to $70.9  million for the
year ended  December 31, 1997.  The increase was  primarily  the result of three
elements:  (i) the 1997 amounts include  revenues from some additional  acquired
companies  which are not reflected as  predecessors,  including  $9.9 million in
revenues  from the  Company's  new car  dealerships  and $1.2  million  from the
Company's  insurance and dealer  training  subsidiaries;  (ii) income on finance
receivables increased by $3.3 million due to growth of the Company's receivables
portfolio since the merger;  and (iii) used car sales increased by approximately
$1.4  million  with  the  acquisition  and  opening  of  additional   dealership
locations.

     Combined revenues of the predecessor  companies  increased by approximately
21.3 percent from $45.1  million in calendar  year 1995 to $54.7 million for the
year ended  December  31,  1996,  reflecting  an increase in the total number of
dealership lots in 1996, a related  increase in the number of vehicles sold, and
an increase in prices of the vehicles offered for sale.

     COSTS AND EXPENSES. Costs of revenues were $51.8 million for the year ended
December 31, 1997 compared to $40.9 million for the predecessors during the same
period in 1996, representing an increase of $10.9 million, or 26.7%. The cost of
sales in 1997 includes $8.6 million  attributable to new car sales which are not
reflected  in the 1996  amounts.  The cost of sales for the  Company's  used car
dealerships  decreased  slightly as the Company achieved profit margins of 20.8%
for the year ended  December 31, 1997,  compared to 16.3% for the same period in
1996.

     The provision for credit  losses  increased  from 8.5% of used car revenues
for the year ended December 31, 1996, to 14.0% for 1997. The increase  primarily
reflects  management's   assessment  of  finance  receivables  acquired  through
acquisition of additional used vehicle finance companies during 1997.

     The cost of vehicle and related revenues  increased by  approximately  $8.9
million, or approximately 27.9 percent, from the year ended December 31, 1995 to
the year ended December 31, 1996. The increase is slightly  higher than the 21.3
percent increase in sales for the same period, reflecting (i) an increase in the
quality and price of cars offered for sale in order to attract more creditworthy
customers;  and (2) aggressive pricing campaigns  associated with the opening of
additional dealerships lots in 1996.

     SELLING,  GENERAL  AND  ADMINISTRATIVE   EXPENSES.   Selling,  general  and
administrative  expenses (including  depreciation and amortization),  were $24.7
million for the year ended  December  31,  1997,  compared to $13.2  million for
1996. The increase  reflects  additional  expenses related to increased  company
dealership  activity,  and  continued  development  of corporate  infrastructure
resulting  from the merger.  For  example,  the  Company  greatly  expanded  the
headquarters staffing in information systems,  credit underwriting,  collections
and accounting  during the period to provide for current and future growth while
gradually phasing out the related local dealership  staffs and equipment.  These
costs were offset only  partially by certain  decreases in costs  resulting from
the consolidation of the acquired companies' management functions.

     Selling,  general and  administrative  expenses  increased to approximately
$13.2 million in 1996 as compared to $10.9 million in 1995.  Approximately  $1.3
million  of  the  increase  was  attributed  to  additional  costs  at  Eckler's
associated with extensive additional printing and advertising costs which helped
contribute  to an increase  in sales as  discussed  above,  and with the Company
becoming  a  publicly  held  company  that year.  Excluding  Eckler's  increase,
operating  expenses  increased  approximately  9.5%,  reflecting a  commensurate
increase in advertising and employment associated with increased sales.

     COMPENSATION  EXPENSE  RELATED TO EMPLOYEE STOCK OPTIONS AND  RESTRUCTURING
CHARGES.  The Company incurred  approximately $6.8 million in charges during the
year  ended  December  31,  1997  which  were not  incurred  by the  predecessor
companies in 1996, and which the Company  believes will not recur in the future.
These charges include:  (i) the recognition of non-cash  compensation expense of
approximately  $4.7  million  associated  with  issuance of stock  options by an
affiliated  trust to attract key management  personnel;  and (ii)  restructuring
charges of approximately  $2.1 million associated with the settlement of various
employment and consulting  agreements and the Company's shift to focus primarily
on used car sales rather than acquisition of additional new car dealerships.

     ALLOWANCE  FOR CREDIT  LOSSES.  The  allowance for credit losses on finance
receivables  (the  "Allowance")  at the Company's used vehicle  dealerships  was
17.1%  of the  outstanding  principal  balance  as of  December  31,  1997.  The
following  table  reflects  activity in the  Allowance,  as well as  information
regarding charge off activity, on finance receivables  originated at the Company
dealerships for fiscal year ended December 31, 1997.



                                     Twelve Months Ended
                                     December 31, 1997
Allowance Activity:

Allowance on acquired finance
  receivables at date of                 
  acquisition                              $ 5,627,937
Provision for credit losses                  4,941,983
  Net charge offs                           (3,712,655)
                                           -----------
Balance, end of period                     $ 6,857,265
                                           ===========

Charge off Activity:
Principal Balances:
   Collateral Repossessed:                 $ 7,920,623
   Other                                        36,637
                                           -----------
Total Principal Balances                     7,957,260
Recoveries, net                              4,244,605
                                           -----------
      Net Charge Offs                      $ 3,712,655
                                           -----------

Analysis of the portfolio delinquencies is considered in evaluating the adequacy
of the Allowance. The following table reflects the principal balances of current
and delinquent finance  receivables as a percentage of total outstanding finance
receivable principal balance as of December 31, 1997.

         AGING PERCENTAGES:                          DECEMBER 31, 1997
         Principal balances current                            91.11%
         Principal balances 31 to 60 days                        3.96%
         Principal balances over 60 days                         4.93%

     INTEREST EXPENSE.  Interest expense totaled $6.5 million for the year ended
December 31, 1997 compared to $2.4 million for the predecessors  during 1996, an
increase of $4.1 million or 171%. This resulted  primarily from interest on debt
attributable to the merger and related  acquisitions  plus interest on financing
the  increased  finance  receivables  and  inventory  as  the  Company  expanded
operations.  In addition,  the Company incurred  substantial  non-cash  interest
expense associated with the accounting recognition of the conversion features of
certain debt obligations.

     Interest  expense  increased  from  approximately  $2.0  million in 1995 to
approximately  $2.4 million in 1996. The annual increase  reflects the increased
vehicle  sales  and  finance  income  discussed  earlier.  As  sales  increased,
predecessor  companies  borrowed  more to finance the  increased  inventory  and
finance receivables.  Inventories grew from $4.8 million in 1995 to $5.4 million
in 1996, and finance  receivables  increased from $16.4 million in 1995 to $19.8
million  in  1996.   Total  debt   increased  from  $20.2  million  in  1995  to
approximately $23.5 million in 1996.

LIQUIDITY AND CAPITAL RESOURCES

     The following table sets forth the major  components of the increase in the
cash and cash equivalents of the combined predecessor companies in thousands:
<TABLE>
<CAPTION>

                                                         1997           1996           1995
                                                     ------------- --------------- --------------
<S>                                                         <C>       <C>                 <C>    
Net cash provided (used) by operating activities     $  (5,943)    $  (2,597)       $   469
Net cash used by investing activities                  (26,583)       (3,731)        (5,298)
Net cash provided by financing activities               33,593         6,593          4,825
Net increase (decrease) in cash and cash
equivalents (1)                                      $   1,067     $     265        $     4
                                                     =========     ===========      ========
</TABLE>

(1)      The financial data for the combined predecessor companies is the sum of
         the actual results of the four companies. Because the financial data of
         the  predecessors  are presented on cost bases  different from those of
         the Company after the  acquisitions  and  different from those of each
         predecessor the results are not comparable.

     The Company requires capital to support  increases in finance  receivables,
vehicle inventory, parts and accessories inventory,  property and equipment, and
working capital for general corporate purposes. Funding sources available to the
Company  include   operating  cash  flow,  third  party   investors,   financial
institution  borrowings and borrowings against finance receivables.  The Company
intends to explore selling (securitizing) its finance receivables in the future.

     Net cash flows used by operating activities were approximately $2.6 million
and $5.9 million  during 1996 and 1997,  respectively.  Cash used for  operating
activities  in 1996 can be primarily  attributed  to over $700,000 in first year
start-up  expenses by SCHI, and by further  expansion of inventory and reduction
of payables by the predecessor companies. In addition to a net operating loss in
1997,  the Company  used nearly $6.6  million to expand  inventory  and accounts
receivable.  The  predecessor  companies  had  approximately  $469,000  of  cash
provided  by  operating  activities,  attributable  primarily  to  increases  in
accounts payable and deferred.

     Cash used in investing  activities  was  approximately  $5.3 million,  $3.7
million and $26.6 million during 1995, 1996 and 1997, respectively. The 1995 and
1996 amount primarily reflects increases in finance  receivables  carried by the
companies.  The 1997 amount  reflects the  Company's  growth,  including a $13.6
million increase to finance receivables,  approximately $12.2 million associated
with the  acquisition  of  companies,  and $1.3 million to acquire  property and
equipment.

     Cash provided by financing activities was approximately $4.8 million,  $6.6
million  and  $33.6   million   during  1995,   1996  and  1997,   respectively.
Approximately $3 million was raised by Eckler  Industries,  Inc. through sale of
common  stock  in  the  Company's   initial  public  offering  in  1995.  Eckler
Industries,  Inc.  raised an additional $4 million through the issuance of notes
payable in 1996. The balance of the increase in cash from  investing  activities
in 1995 and 1996 is  attributable  to an increase in notes  payable by the other
predecessor companies to finance increased inventories and receivables.

     In 1997, the Company raised  approximately $4.6 million through the sale of
Preferred  Stock,  and increased its line of credit and floorplan  borrowings by
$16.4 million and $4.2 million,  respectively,  as the Company expanded its auto
sales and financing activities.  Notes payable increased by $14.2 million during
1997 with the  borrowings  primarily  used for  acquisitions  and  expansion  of
operations.

     OPERATIONAL  CHANGES.  Management  undertook a major  restructuring  of the
Company  beginning in late 1997 with the  expectation  of better  meeting future
operational and liquidity needs.  Some components of the  restructuring  include
the following:

          Management  emphasized  its used car  operations,  which  tend to have
          higher gross margins than new car dealerships.  Acquisition  plans for
          new car dealerships were curtailed in early December 1997.  Management
          concentrated on achieving operational  efficiencies at the 23 used car
          dealerships it had acquired and/or started up during 1997.

          Management  took  one-time  charges  in the  fourth  quarter  of  1997
          relating to acquisition expenses and severance payments.

          Staff was reduced by 15% in November and December 1997.

          Overhead  expenses  were reduced over $2 million  during late November
          and December, 1997 and January, 1998.

          A new  Chief  Financial  Officer  was  retained  in  September,  a new
          Vice-President of Finance in November and a significant portion of the
          accounting staff was replaced.

          A Company-wide budget was prepared and implemented.

          "Flash Reports" were developed for the Company's  divisions  beginning
          January 15,  1998.  These Flash  Reports are used to monitor  business
          operations and results on a regular basis.

          In late 1997,  the Company  completed a "static  pool"  analysis  that
          establishes  a  benchmark  for  potential  investors  and  lenders  to
          determine the quality of the Company's financing portfolio. The static
          pool indicated that the actual losses  (approximately 12 percent) with
          the  loan  portfolio  are   substantially   less  than  loss  reserves
          (approximately 17 percent).

          The Company's finance subsidiary,  FFG, expanded its loan portfolio to
          $71.9  million  while   establishing   and  maintaining   underwriting
          procedures  that have resulted in 93.9% of the accounts  being current
          (30 days or less).

          The  Eckler  subsidiary  was  revamped  to  focus on  higher  customer
          service.  Inventory  carrying costs were reduced by  negotiating  with
          vendors.  "Drop ship"  delivery is being  utilized.  As the mail order
          business  constitutes  over  93%  Eckler's  revenue,  two  mail  order
          catalogs are now used, instead of one per year as in the past.

     Management also undertook a restructuring  of debt obligations in late 1997
and early 1998 in order to better meet its foreseeable liquidity needs. The debt
restructuring  included expansion of financings for key areas of the business as
well as  negotiating  conversions  of some  debt  instruments  into  equity  and
refinancing obligations with maturities in 1998.

     REVOLVING CREDIT FACILITIES.  The Company's  revolving credit facility with
Finova  Capital  Corporation  (the "Finova  Revolving  Facility")  had a maximum
commitment of $35 million at December 31, 1997. The credit line was increased to
a maximum  commitment to $42.5 million,  effective March 27, 1998.  During early
1998,  the Company has  continued  to negotiate  an  additional  increase in the
credit line. Under the Finova Revolving  Facility,  the Company may borrow up to
60% 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
renegotiation.  The Finova Revolving Facility is secured by substantially all of
the Company's  receivables.  As of December 31, 1997,  the  aggregate  principal
amount  outstanding under the Finova Revolving  Facility was $31.4 million.  The
Finova  Revolving  Facility  bears  interest  at the prime rate  (currently  the
Citibank N.A. prime rate) plus 3%.

     The Company  currently  finances its used car  inventory  through a line of
credit with Manheim Automotive Financial Services, Inc. (the "Manheim Facility")
which had an  outstanding  balance at  December  31, 1997 of $2.7  million.  The
maximum  commitment  on the  Manheim  Facility  is $3.75  million.  The  Manheim
Facility is secured by the  Company's  buy here-pay  here used car inventory and
bears interest at 1.5% over the prime rate. The Company is in negotiations  with
other lenders to increase its credit line.

     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% above the
prime rate, and at December 31, 1997 had an outstanding balance of approximately
$1.98 million.  The Company's  floorplan  facility with Nissan Motor  Acceptance
Corporation  has a $3 million  maximum  commitment,  bears  interest at 1% above
prime, and at December 31, 1997 had an outstanding balance of approximately $2.3
million.

     LOANS. In March and May 1997, Sirrom Capital Corporation  ("Sirrom") loaned
the Company a total of $7.5  million.  The Company  issued Sirrom a $3.5 million
convertible note, convertible until March 12, 1999 at $3.67 per share and a $4.0
million  convertible  note,  convertible  at $7.50 per share until May 12, 2002,
subject to adjustment.

     In  September  1997,  the  Company   completed  the  private  placement  of
convertible  notes in the aggregate  amount of  $1,050,000.  The notes mature on
April 15, 1998,  bear interest at the rate of 8% per annum,  and, since December
14, 1997, have been convertible into Common Stock of the Company at a conversion
price of 66 2/3% of the  average  closing  bid price for the five  trading  days
immediately  preceding the effective date of conversion.  Nearly $475,000 of the
debt had been  converted  into  common  stock by March  31,  1998.  The  Company
recorded  deferred  interest  of  $525,000  as a result of the  discount  on the
conversion price which is being amortized from the date of issuance to the first
conversion  date of the Notes.  In conjunction  with the borrowing,  the Company
also issued  common stock  warrants for 52,500  shares of the  Company's  Common
Stock exercisable at $7.00 per share at any time prior to August 29, 2002.

     In December 1997,  Raytheon Aircraft Credit  Corporation loaned the Company
$2.2 million to finance the purchase of  equipment.  The loan,  which matures in
December,  2009,  bears interest at 8.5%,  requires  monthly payments of $19,995
plus balloon  payments of $100,000 in September 1998 and September  1999, and is
secured by equipment.

     In  September  1997,  Eckler  borrowed  $1.5  million  from  Stephens  Inc.
("Stephens"),  an investment banking firm. The loan matures on October 15, 1998,
bears interest at the rate of 10% per annum, and is secured by all of the assets
and common stock of Eckler. The Company guaranteed the debt.

     In January 1998, Eckler borrowed $3.0 million from Stephens. The note bears
interest  at the rate of 10% per  annum,  is  secured  by all of the  assets and
common stock of the Eckler subsidiary and is guaranteed by the Company. The note
requires principal payments of $1 million on June 30, 1998 and $2 million on the
earlier of June 30, 1999 or a public offering of equity  securities in which the
Company realizes at least $10 million in gross proceeds.

     On September  30, 1997,  the Company  completed an offering of 300 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
$2,965,000.  Each unit consists of one share of Series A redeemable  convertible
preferred  stock and one warrant to acquire 300 shares of common  stock for each
preferred  share  purchased  at a price equal to $8.10 per share.  The  warrants
expire five years after the date of issuance. The preferred stock is convertible
into shares of common  stock at a conversion  price which,  at the option of the
buyer,  is either fixed at a rate of 135% of the market price of common stock on
the date of issuance of the  preferred  stock,  or floating at a rate of 100% of
the market  price of the  common  stock if  converted  during the period 90 days
after  the  issuance  of the  preferred  stock  and 90% of the  market  price if
converted at any time after that 90-day period.  Accordingly,  since none of the
preferred stock was converted 90 days after issuance, a preferred stock dividend
of $333,333  ($.04 per share) has been recorded for the year ended  December 31,
1997 for the difference between the discounted conversion price of the preferred
stock and the fair market  value of the  Company's  common  stock at the time of
issuance.  The preferred stock is redeemable at the option of the buyer upon the
occurrence of certain  events at a price per share that is also  dependent  upon
the occurrence of certain events.

     On December 10, 1997,  the Company  issued an  additional  100 units of the
Series A redeemable  convertible preferred stock and associated warrants for net
proceeds of  $1,000,000.  Each unit consists of one share of Series A redeemable
convertible  preferred  stock and one  warrant to  acquire  300 shares of common
stock for each  preferred  share  purchased at a price equal to $5.23 per share.
The warrants  expire five years after the date of issuance.  The preferred stock
has features identical to that of the Series A redeemable  convertible preferred
stock issued on September 30, 1997.

     Subsequent  to  December  31,  1997,  the  holders of the  preferred  stock
converted 245 shares of preferred stock into 1,265,827 shares of common stock.

     In November 1997, the Company borrowed $750,000 from Bankers Life Insurance
Company.  The unsecured loan matures on December 31, 2000, bears interest at the
prime rate (8.5% at December 31, 1997),  and is  convertible  into the Company's
common stock at $9.00 per share.

     MORTGAGE LOAN. The Company has a long-term  mortgage payable to a bank with
a current principal balance of approximately  $2.5 million at a variable rate of
1.5%  above  prime.  The  mortgage  loan  is  collateralized  by  the  Company's
headquarters real property and machinery, equipment and fixtures. The loan terms
require  monthly  principal  payments of $13,333,  plus  interest,  and the loan
matures on July 1, 1998, at which time the Company  intends to negotiate a later
maturity.

     In June, 1997, the Company purchased  approximately 2.71 acres of land with
a sales showroom and repair  facility to be used as a used car sales  dealership
in Melbourne,  Florida. The property was purchased for $950,000 and was financed
by a mortgage  from the seller of  $825,000.  The note  matures on May 31, 2007,
bears  interest  at the rate of 8.0% and  requires  equal  monthly  payments  of
$10,009 for ten years.

     In connection with acquisition of one of the predecessor companies in 1997,
the Company acquired  approximately 7.92 acres of undeveloped land in Lake Mary,
Florida.  The land, held for resale by the Company, is recorded at $1,050,000 on
the  Company's  books.  The property is subject to a first  mortgage in favor of
AmSouth Bank and a second  mortgage in favor of Barnett  Bank.  The AmSouth debt
had a principal balance of $498,923 as of December 31, 1997, an interest rate of
7.75%, and monthly payments of $8,683 until December 2003. The Barnett Bank note
has a principal  balance of $600,000,  bears interest at 1% over Barnett's prime
interest  rate and requires  quarterly  interest  payments.  The note matures on
April 30, 1998. The Lake Mary property is presently under contract to be sold to
an  unrelated  party  in May  1998  for $1.3  million.  Both  mortgages  will be
satisfied when the property is sold.

     ACQUISITION DEBT. Upon the closing of various  acquisitions during the year
ended December 31, 1997, the Company  incurred debt to certain  stockholders  of
the acquired companies.  The balance as of December 31, 1997 for the acquisition
debt  totaled  $8.3  million.  Of this amount,  $4.9  million  requires  monthly
principal payments of $27,112 plus interest and matures on June 27, 1999.

     SEASONALITY.  Historically, the Company's predecessors,  except for Eckler,
have 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.

     The Eckler business is also subject to seasonal fluctuations. Historically,
Eckler 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.  The business of Eckler is  particularly  dependent on sales to
Corvette  enthusiasts  during the spring and summer months.  This is the time of
year that  Corvette  enthusiasts  are  preparing for upcoming car shows that are
held in the late summer and early fall.

     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.  Instead,  the Company will seek to limit this risk,  to the extent  market
conditions  permit,  by increasing  the profit margin on the cars sold. To date,
inflation has not had a significant impact on the Company's operations.

     YEAR 2000. In the second quarter of 1997, the Company began  converting the
Eckler computer systems to be year 2000 compliant. At the beginning of the third
quarter of 1996, the operating  system and its  peripherals  were made year 2000
compliant.  Beginning first quarter 1997 and beyond all new software development
on the Eckler  computer  system was to be  developed  and tested to be year 2000
compliant. All existing core applications are to be modified and tested for year
2000  compliance  no later than the last  quarter of 1998.  All new  systems and
software  installations  including the other subsidiaries'  computer systems 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 either in  compliance  or will be compliant 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 be year  2000  compliant.  The  anticipated  expense
associated  with the year 2000  compliance  project will not include  additional
hardware cost or external staffing.  The majority of the Company is operating on
new systems and software that are already 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.

ITEM 7A.  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 three 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 the fair value is estimated as of December 31, 1997,  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.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

     The financial  statements of Smart Choice  Automotive  Group,  Inc. are set
forth in Appendix A hereto.

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

     None.

                                    PART III


ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

     The  information  contemplated by this Item is incorporated by reference to
the  Registrant's  definitive  proxy  statement  for its 1998 annual  meeting of
shareholders.

ITEM 11.  EXECUTIVE COMPENSATION.

     The  information  contemplated by this Item is incorporated by reference to
the  Registrant's  definitive  proxy  statement  for its 1998 annual  meeting of
shareholders.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     The  information  contemplated by this Item is incorporated by reference to
the  Registrant's  definitive  proxy  statement  for its 1998 annual  meeting of
shareholders.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     The  information  contemplated by this Item is incorporated by reference to
the  Registrant's  definitive  proxy  statement  for its 1998 annual  meeting of
shareholders.

                                     PART IV

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

(a)      The following documents are filed as part of this report:

          (1)  Financial statements

               Report of Independent Certified Public Accountants

               Consolidated  Balance  Sheets of Smart Choice  Automotive  Group,
               Inc. and Subsidiaries at December 31, 1997 and 1996

               Consolidated  Statements of Operations of Smart Choice Automotive
               Group, Inc. and Subsidiaries for the year ended December 31, 1997
               and for  the  period  from  inception  (June  21,  1996)  through
               December 31, 1996

               Consolidated Statements of Stockholders' Equity (Capital Deficit)
               for the year ended  December  31,  1997 and for the  period  from
               inception (June 21, 1996) through December 31, 1996

               Consolidated Statements of Cash Flows for the year ended December
               31,  1997 and for the  period  from  inception  (June  21,  1996)
               through December 31, 1996

               Summary of Significant Accounting Policies

               Notes to Consolidated Financial Statements


          (2)  Financial statement schedules

               Omitted  because not  applicable  or because data is reflected in
               the Notes to the Financial Statements

          (3)  Exhibits
<TABLE>
<CAPTION>

EXHIBIT
NO.       EXHIBIT DESCRIPTION                    FILED HEREWITH OR INCORPORATED BY REFERENCE TO:
<S>        <C>                                    <C>  

3.1    Amended and Restated Articles of          Exhibit 3.1 to Form SB-2 Registration Statement, filed on
       Incorporation of Smart Choice             September 1, 1995, File No. 33-96520-A
       Automotive Group, Inc. (the
       "Company")

3.1.1  Articles of Amendment to Articles of      Exhibit 3.2 to Form 10-Q filed on May 20, 1997
       Incorporation of SMCH

3.2    Amended and  Restated  By-Laws of the     Exhibit 3.2 to Form SB-2  Registration
       Company                                   Statement, filed on September 1, 1995, File No. 33-96520-A.

3.2.1  Amendment No. 1 to Amended and            Exhibit 3.2.1 to Amendment No. 2 to Form SB-2 Registration
       Restated Bylaws                           Statement, filed on November 6, 1995, File No. 33-96520-A.

3.2.2  Second Articles of Amendment to           Exhibit 3.1 to Form 8-K filed on October 9, 1997.
       Articles of Incorporation

4.1    Specimen Common Stock  Certificate        Exhibit 4.1 to Form 8-A Registration  Statement,  filed on
                                                 April 16, 1997.

4.2    Specimen of Warrant Certificate           Exhibit 4.2 to Form 8-A Registration Statement, filed on
                                                 April 16, 1997.

4.3    Warrant Agreement between the Company     Exhibit 4.5 to Amendment No. 2 to Form SB-2 Registration
       and American Stock Transfer & Trust       Statement, filed on November 6, 1995, File No. 33-96520-A.
       Company, as Warrant Agent, dated
       November 9, 1995

4.3.1  Form of Amendment to Warrant Agreement    Exhibit 4.4 to Form 8-A Registration  Statement,  filed on
                                                 April 16, 1997.

10.1   Eckler Industries, Inc. Retirement and    Exhibit 10.4.1 to Form SB-2 Registration Statement, filed
       Savings Plan and Trust Agreement, as      on September 1, 1995, File No. 33-96520-A.
       Amended and Restated on September 14,
       1992

10.2   Amendment No. 1 to Eckler Industries,     Exhibit 10.4.2 to Form SB-2 Registration Statement filed
       Inc. Retirement and Savings Plan Trust    on September 1, 1995, File No. 33-96520-A.
       Agreement Dated March 28, 1994.

10.3   Eckler Industries, Inc. Non-Qualified     Exhibit 10.6 to Form SB-2 Registration Statement, filed on
       Stock Option Plan                         September 1, 1995, File No. 33-96520-A.

10.4   Eckler Industries, Inc. 1995 Combined     Exhibit 10.7 to Form SB-2 Registration Statement, filed on
       Qualified and Non-Qualified Employee      September 1, 1995, File No. 33-96520-A.
       Stock Option Plan

10.5   Registration Rights Agreement by and      Exhibit 10.15 to Amendment No. 1 to Form SB-2 Registration
       among the Company and each of the         Statement, filed on October 13, 1995, File No. 33-96520-A.
       Purchasers referred to in Schedule 1 
       thereto, dated September 20, 1995.

10.6   Unit Purchase Option Agreement between    Exhibit 1.2 to Amendment No. 2 to Form SB-2 Registration
       the Company and Argent Securities,        Statement, filed on November 6, 1995, File No. 33-96520-A.
       Inc. and Certificate dated November
       15, 1995

10.7   Loan  Agreement  between the Company      Exhibit  10.19 to Post-Effective Amendment  No.  2 to Form
       and Barnett  Bank, N.A. dated             SB-2 Registration   Statement,   filed  on  November  14,  1996,
       September 30, 1996                        File No. 33-96520-A.

10.8   Mortgage and Security Agreement           Exhibit 10.20 to Post-Effective Amendment No. 2 to Form
       between the Company and Barnett Bank,     SB-2 Registration Statement, filed on November 14, 1996,
       N.A. dated September 30, 1996.            File No. 33-96520-A.

10.9   Promissory Note in the amount of          Exhibit 10.21 to  Post-Effective  Amendment No. 2 to Form SB-2 
       $2,400,000 from the Company in favor      Registration Statement, filed on November 14, 1996, File No.
       of Barnett Bank, N.A. dated September 30, 33-96520-A.
       1996.

10.10  Assignment  of Loan  Documents  dated      Filed  herewith.  
       November  4, 1997 between Barnett Bank, 
       N.A. and The Huntington National Bank 
       ("Huntington")

10.11  Modification of Mortgage Deed and          Filed herewith.
       Security Agreement dated November 3,
       1997 between the Company and Huntington

10.12  Future Advance  Promissory  Note dated     Filed  herewith.
       December 30, 1997,principal amount 
       $260,000, the Company maker, 
       Huntington, payee

10.13  Modification of Mortgage and Mortgage      Filed herewith.
       Note and Extension Agreement dated
       December 30, 1997 between the Company
       and Huntington

10.14  Merger Agreement between Smart             Exhibit 10.1 to Form 8-K, filed on February 12, 1997
       Choice Holdings, Inc. ("SCHI"), the
       Company, Thomas E. Conlan and
       Gerald C. Parker dated December 30,
       1997.

10.15 First Amended and Restated Loan and         Exhibit 4.1 to Form 10-Q, filed on May 20, 1997.
      Security Agreement between Florida
      Finance Group, Inc. ("FFG") and Finova
      Capital Corporation ("Finova"), dated
      February 4, 1997.

10.16 Warrant to Purchase Common Stock of the     Exhibit 4.2 to Form 10-Q, filed on May 20, 1997.
      Company between the Company and Finova,
      dated January 13, 1997.

10.17 Intentionally Omitted

10.18 Intentionally Omitted

10.19 Guaranty to Finova from the Company         Exhibit 4.5 to Form 10-Q, filed on May 20, 1997.
      dated January 13, 1997.

10.20 Eighth Amended and Restated Promissory      Filed herewith.
      Note dated March 27, 1998, between FFG,
      maker, and Finova.

10.21 Fourth Amended and Restated Schedule to     Filed herewith.
      Amended and Restated Loan and Security
      Agreement, FFG, borrower, Finova, lender,
      dated March 27, 1998.

10.22 Stock Purchase  Agreement dated January     Exhibit 10.1 to Form 10-Q, filed on May 20, 1997. 28, 1997 
      between SCHI and Gary Smith.

10.23 Promissory Note dated January 28, 1997,     Exhibit 10.2 to Form 10-Q filed on May 20, 1997.
      First Choice Auto Finance, Inc.
      ("FCAF"), maker, Gary Smith, payee, in
      the principal amount of $1,031,008.

10.24 Lease dated April 5, 1997 between Gary      Filed herewith
      R. Smith and Team Automobile Sales and
      Finance, Inc.
 
10.25 Promissory Note Modification Agreement,     Filed herewith.
      dated December 15, 1997 between FCAF
      and Gary R. Smith.

10.26 Asset Purchase  Agreement dated January     Exhibit 10.3 to Form 10-Q, filed on May 20, 1997. 
      28, 1997 between FCAF and Gary Smith.

10.27 Asset  Purchase  Agreement among FCAF,      Exhibit 10.17 to Form 8-K, filed on February 26, 1997.
      Palm Beach Finance and Mortgage Company
      ("PBF"), Two Two Five North Military
      Corp. ("225"), and David Bumgardner,
      and Amendment thereto.

10.28 Loan and Security Agreement between 225     Exhibit 10.18 to Form 8-K, filed on February 26,.
      and FCAF dated February 14, 1997.

10.29 9% Secured  Convertible Note of FCAF to     Exhibit 10.20 to Form 8-K, filed on February 26, 1997. 
      225 and PBF.

10.30 9% Convertible Debenture of SCHI to PBF.    Exhibit 10.21 to Form 8-K, filed on February 26, 1997.

10.31 Lease between David Bumgardner as           Exhibit 10.22 to Form 8-K, filed on February 26, 1997.
      Lessor and FCAF, Lessee, dated February
      13, 1997.

10.32 Indemnification Agreement in favor of       Exhibit 10.23 to Form 8-K, filed on February 26, 1997.
      PBF and 225 by FCAF, dated February 
      dated February 14, 1997.

10.33 Executive Employment Agreement between      Exhibit 10.15 to Form 10-Q, filed on May 20, 1997.
      the Company and Gary Smith.

10.34 Executive Employment Agreement between      Exhibit 10.16 to Form 10-Q, filed May 20, 1997.
      the Company and Robert Abrahams.

10.35 Executive Employment Agreement dated        Filed herewith.
      April 11, 1997 between the Company and
      Joseph Alvarez.

10.36 Executive Employment Agreement dated        Filed herewith.
      April 24, 1997 between the Company and
      Ronald Anderson.

10.37 Non Qualified Stock Option Agreement        Filed herewith.
      dated March 5, 1997 among the Smart    
      Choice Holdings Management Trusts (the
      "Management Trusts"), Eckler Industries, 
      Inc., and Robert J. Abrahams.

10.38 Non Qualified Stock Option Agreement        Filed herewith.
      dated March 5, 1997 among the Management 
      Trusts, Eckler Industries, Inc., and
      Robert J. Abrahams.

10.39 Non Qualified Stock Option Agreement        Filed herewith.
      dated April 11, 1997, among the
      Management Trusts, the Company and 
      Joseph Alvarez.

10.40 Stock Option  Agreement  dated March 24,    Filed  herewith.  
      1997 between the
      Company and Ronald Anderson.

10.41 Non-Qualified Stock Option Agreement        Filed herewith
      dated April 17, 1997 between the
      Company and David Bumgardner.

10.42 Non-Qualified Stock Option Agreement        Filed herewith
      dated April 17, 1997 between the
      Company and Craig Macnab.

10.43 Stock Option  Agreement  dated March 19,    Filed  herewith.  
       1997 between the
      Company and Gerald Parker.

10.44 Non-Qualified Stock Option Agreement        Filed herewith.
      dated April 17, 1997 between the
      Company and Gerald Parker.

10.45 Non-Qualified Stock Option Agreement        Filed herewith.
      dated April 17, 1997 between the
      Company and Donald Wojnowski.

10.46 Non-Qualified Stock Option Agreement        Filed herewith.
      dated April 17, 1997 between the
      Company and Joseph Yossifon.

10.47 Convertible Senior Promissory Note          Exhibit 10.18 to Form 10-Q, filed May 20, 1997.
      dated March 13, 1997, the Company,
      maker, Sirrom Capital Corporation
      ("Sirrom"), payee.

10.48 Convertible Senior Promissory Note          Exhibit 10.19 to Form 10-Q, filed May 20, 1997.
      dated May 13, 1997, the Company, maker,
      Sirrom, payee.

10.49 Amended and Restated Registration           Exhibit 10.20 to Form 10-Q, filed May 20, 1997.
      Rights Agreement between the Company
      and Sirrom, dated May 13, 1997.

10.50 Asset Purchase Agreement dated as of        Exhibit 10.1 to Form 8-K filed on July 14, 1997. 
      June 27, 1997 among the Company, Strata
      Holding, Inc., Ready Finance, Inc.,
      Donald Cook, Marilyn Cook and Madie A.
      Stratemeyer.

10.51 Form of Convertible Note issued by the      Exhibit 10.1 to Form 8-K filed on October 9, 1997.
      Company to High Capital Funding, LLC,
      and other purchasers.

10.52 Form of Warrant issued by the Company       Exhibit 10.2 to Form 8-K filed on October 9, 1997.
      to High Capital Funding, LLC, and other
      purchasers.

10.53 Promissory Note, principal amount           Exhibit 10.3 to Form 8-K filed on October 9, 1997.
      $1,500,000 by Eckler Industries, Inc.,
      maker, Stephens Inc., payee.

10.54 Promissory Note, principal amount           Exhibit 10.1 to Form 8-K filed on March 5, 1998.
      $3,000,000, Eckler Industries, Inc.,
      maker, Stephens Inc., payee.

10.55 Guaranty Agreement by the Company to        Exhibit 10.4 to Form 8-K filed on October 9, 1997.
      Stephens Inc.

10.56 Amendment to Guaranty Agreement between     Exhibit 10.4 to Form 8-K filed on March 5, 1998.
      the Company and Stephens Inc.

10.57 Pledge and Security Agreement between       Exhibit 10.5 to Form 8-K filed on October 9, 1997.
      the Company and Stephens Inc.

10.58 Amendment to Pledge and Security            Exhibit 10.5 to Form 8-K filed on March 5, 1998.
      Agreement between the Company and
      Stephens Inc.

10.59 Securities Purchase Agreement between       Exhibit 10.6 to Form 8-K filed on October 9, 1997.
      the Company and certain buyers
      represented by Promethean Investment
      Group, L.L.C.

10.60 Form of Warrant from the Company to         Exhibit 10.7 to Form 8-K filed on October 9, 1997.
      certain buyers represented by
      Promethean Investment Group, L.L.C.

10.61 Automotive Wholesale Financing and          Filed herewith.
      Security Agreement dated July 21, 1997
      between First Choice Stuart 1, Inc.
      ("FCS1") and Nissan Motor Acceptance
      Corporation ("NMAC").

10.62 Addendum to Automotive Wholesale            Filed herewith.
      Financing and Security Agreement

10.63 Second Addendum to Automotive Wholesale     Filed herewith.
      Financing and Security Agreement dated
      August 11, 1997 between NMAC and FCSI.

10.64 Dealer Capital Loan and Security            Filed herewith.
      Agreement dated October 12,  1995
      between B&B Florida Enterprises, Inc.
      and NMAC.

10.65 Amendment to Dealer Capital Loan and        Filed herewith.
      Security Agreement dated September 1,
      1997 between NMAC and FCS1.

10.66 Dealer Equipment Loan and Security          Filed herewith.
      Agreement dated October 12, 1995
      between NMAC and B&B Florida
      Enterprises, Inc.

10.67 Amendment to Dealer Equipment Loan and      Filed herewith.
      Security Agreement dated September 1,
      1997 between NMAC and FCSI.

10.68 Nissan Dealer Term Sales and Service        Filed herewith.
      Agreement dated August 29, 1997 between
      Nissan Motor Corporation in U.S.A., the
      Company, Smart Cars, Inc. and FCS1.

10.69 Wholesale Financing and Security            Filed herewith.`
      Agreement dated August 11, 1997 between 
      First Choice Stuart 2, Inc. ("FCS2")
      and Volvo Finance North America, Inc.

10.70 Authorized Retailer Agreement between       Filed herewith.
      Volvo Cars of North America, Inc. and
      FCS2.

10.71 Convertible Subordinated Debenture          Filed herewith.
      dated November 3, 1997, principal
      amount $750,000, the Company, maker,
      Bankers Life Insurance Company, payee.

10.72 Registration Rights Agreement dated         Filed herewith.
      November 3, 1997 between the Company
      and Bankers Life Insurance Company.

10.73 Settlement Agreement and Release dated      Filed herewith.
      January 30, 1998 among the Company,
      FCAF, FCS2, Jack Winters Enterprises,
      Inc., Jack Winters, F. Craig Clements,
      Killgore Pearlman, P.A. and Mark L.
      Ornstein.

10.74 Stock Purchase Agreement dated May 6,       Filed herewith.
      1997 between FCS1 and Thomas DeRita, Jr. 

10.75 Promissory Note dated December 19,          Filed herewith.
      1997,  principal amount  $2,199,000,  
      First Choice Melbourne 1, Inc., maker
      and Raytheon Aircraft Credit
      Corporation, payee.

10.76 Guaranty Agreement by the Company to        Filed herewith.
      Raytheon Aircraft Credit Corporation.

10.77 Security Agreement dated December 19,       Filed herewith.
      1997 between First Choice Melbourne 1,
      Inc. and Raytheon Aircraft Credit
      Corporation.

10.78 Registration Rights Agreement between       Exhibit 10.8 to Form 8-K filed on October 9, 1997.
      the Company and certain buyers
      represented by Promethean Investment
      Group, L.L.C.

10.79 Promissory Note dated February 24,          Exhibit 10.9 to Form 8-K filed on March 5, 1998.
      1998, FCAF, maker, Manheim Automotive
      Financial Services, Inc., payee.

10.80 Guaranty dated March 21, 1997 from the      Exhibit  10.10 to Form 8-K filed on March 5, 1998.
      Company in favor of Manheim Automotive
      Financial Services, Inc.

10.81 Intentionally Omitted.

10.82 Manheim Automotive Financial Services,      Filed herewith.
      Inc. Security Agreement dated March 21,
      1997 between FCAF and Manheim
      Automotive Financial Services, Inc.

10.83 Promissory Note dated June 17, 1997,        Filed herewith.
      principal amount $825,000, FCAF, maker,
      Carl Schmidt Enterprises, Inc., payee.

10.84 Real Estate Mortgage dated June 17,         Filed herewith.
      1997, FCAF, mortgagor,
      Carl Schmidt Enterprises, Inc., mortgagee.

10.85 Intentionally Omitted.

10.86 Intentionally Omitted.

10.87 Twenty-Fourth Amendment to GM               Filed herewith.
      Reproduction and Service Part Tooling
      License Agreement.

10.88 Twenty-Sixth Amendment to GM                Filed herewith.
      Reproduction and Service Part Tooling
      License Agreement.

10.89 Thirty-Fourth Amendment to GM               Filed herewith
      Reproduction Service Part Tooling
      License Agreement.

10.90 Lease between Florida Auto Auction of       Filed herewith.
      Orlando, Inc. and First Choice Auto  
      Finance, Inc. dated May 12, 1997, for
      Reconditioning Facility.

11.1  Statement re Computation of Earnings        *
      Per Share.

21.1  List of Subsidiaries.                       Filed herewith.

23.1  Consent of BDO Seidman, LLP.                Filed herewith.

27.1  Financial Data Schedule.                    Filed herewith.

____________________

*  Information regarding the computation of earnings per share is set forth
in the Notes to Consolidated Financial Statements.

</TABLE>
<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 April 13, 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.

<TABLE>
<CAPTION>
         Signatures                         Title                               Date

<S>                                     <C>                                     <C>    

/s/ Robert J. Abrahams              Director                                    April 13, 1998
---------------------------
Robert J. Abrahams

/s/ Gary R. Smith                   President, Chief Executive                  April 13, 1998
---------------------------         Officer and a Director (Principal
Gary R. Smith                       Executive Officer)

/s/ Joseph E. Mohr                  Chief Financial Officer (Principal          April 13, 1998
---------------------------         Financial and Accounting Officer)
Joseph E. Mohr                           

/s/ Joseph Yossifon                 Director                                    April 13, 1998
---------------------------
Joseph Yossifon

/s/ David E. Bumgardner             Director                                    April 10, 1998
---------------------------             
David E. Bumgardner

/s/ Donald A. Wojnowski, Jr.        Director                                    April 13, 1998
----------------------------
Donald A. Wojnowski, Jr.

/s/ Gerald C. Parker                Director                                    April 13, 1998
----------------------------
Gerald C. Parker

/s/ Craig Macnab                    Director                                    April 10, 1998
----------------------------
Craig Macnab

</TABLE>

<PAGE>
                                  APPENDIX "A"




                      SMART CHOICE AUTOMOTIVE GROUP, INC.
                                AND SUBSIDIARIES


                        CONSOLIDATED FINANCIAL STATEMENTS
                        YEAR ENDED DECEMBER 31, 1997 AND
                  FOR THE PERIOD FROM INCEPTION (JUNE 21, 1996)
                            THROUGH DECEMBER 31, 1996




<PAGE>


                                             SMART CHOICE AUTOMOTIVE GROUP, INC.
                                                                AND SUBSIDIARIES

                                                                        CONTENTS







REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS               F-2

CONSOLIDATED FINANCIAL STATEMENTS
      Balance sheets                                             F-3  -  F-4 
      Statements of operations                                           F-5 
      Statements of stockholders' equity (capital deficit)               F-6
      Statements of cash flows                                   F-7  -  F-8 
      Summary of significant accounting policies                 F-9  -  F-13 
      Notes to consolidated financial statements                 F-14 -  F-38



<PAGE>
 
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


To the Board of Directors
Smart Choice Automotive Group, Inc.
Titusville, Florida

     We have  audited  the  accompanying  consolidated  balance  sheets of Smart
Choice  Automotive Group, Inc. and subsidiaries as of December 31, 1997 and 1996
and the related statements of operations, stockholders' equity (capital deficit)
and cash  flows  for the year  ended  December  31,  1997  and the  period  from
inception (June 21, 1996) through December 31, 1996. These financial  statements
are the  responsibility of the Company's  management.  Our  responsibility is to
express an opinion on these financial statements based on our audits.

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

     In our opinion,  the consolidated  financial  statements  referred to above
present fairly, in all material respects, the financial position of Smart Choice
Automotive Group, Inc. and subsidiaries as of December 31, 1997 and 1996 and the
results of their operations and their cash flows for the year ended December 31,
1997 and the period from inception (June 21, 1996) through  December 31, 1996 in
conformity with generally accepted accounting principles.


                                  
                                   BDO Seidman, LLP
Orlando, Florida
April 13, 1998

<PAGE>


                                             SMART CHOICE AUTOMOTIVE GROUP, INC.
                                                                AND SUBSIDIARIES

                                                     CONSOLIDATED BALANCE SHEETS

DECEMBER 31,                                           1997         1996
--------------------------------------------------------------------------------

ASSETS

Cash and cash equivalents                        $   1,066,949   $         -
Accounts receivable                                  1,773,124        25,000
Finance receivables:
  Principal balances, net                           40,084,412             -
  Less allowance for credit losses                  (6,857,265)            -
--------------------------------------------------------------------------------
         Finance receivables, net                   33,227,147             -
--------------------------------------------------------------------------------
Inventories, at cost                                15,516,084             -
Land held for resale                                 1,050,000             -
Property and equipment, net                          9,214,207        22,454
Notes receivable                                        46,280       400,000
Deferred acquisition costs                                   -       194,101
Deferred financing costs, net of accumulated
  amortization of $207,508 and $2,249                  426,823        24,735
Goodwill, net of accumulated
  amortization of $470,897                          25,562,162             -
Prepaid expenses                                     1,008,229             -
Deposits and other assets                              213,986        50,000
--------------------------------------------------------------------------------
                                                 $  89,104,991   $   716,290
================================================================================

    SEE ACCOMPANYING SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO
                       CONSOLIDATED FINANCIAL STATEMENTS.

                                      F-3
<PAGE>


                                             SMART CHOICE AUTOMOTIVE GROUP, INC.
                                                                AND SUBSIDIARIES

                                                     CONSOLIDATED BALANCE SHEETS

DECEMBER 31,                                          1997             1996
--------------------------------------------------------------------------------

LIABILITIES AND STOCKHOLDERS' EQUITY (CAPITAL DEFICIT)

LIABILITIES:
  Bank overdraft                                 $           -   $     82,884
  Accounts payable                                   5,259,903        438,890
  Accrued expenses                                   4,633,841        183,314
  Line of credit, net of discount                   31,229,600              -
  Floor plans payable                                8,287,092              -
  Capital lease obligations                            940,280              -
  Notes payable                                     29,197,458        322,000
  Other liabilities                                     94,913              -
--------------------------------------------------------------------------------
    TOTAL LIABILITIES                               79,643,087      1,027,088
--------------------------------------------------------------------------------

REDEEMABLE CONVERTIBLE PREFERRED STOCK               4,941,834        387,022

STOCKHOLDERS' EQUITY (CAPITAL DEFICIT):
  Common stock $.01 par value, authorized
    100,000,000 shares; issued 9,734,007 and 
    5,488,432 shares                                    97,340         54,884
  Additional paid-in capital                        24,108,456        (48,916)
  Accumulated deficit                              (19,685,726)      (703,788)

--------------------------------------------------------------------------------
    TOTAL STOCKHOLDERS' EQUITY (CAPITAL DEFICIT)     4,520,070       (697,820)
--------------------------------------------------------------------------------
                                                 $  89,104,991   $    716,290
================================================================================

        SEE ACCOMPANYING SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO
                       CONSOLIDATED FINANCIAL STATEMENTS.
                                      F-4

<PAGE>


                                             SMART CHOICE AUTOMOTIVE GROUP, INC.
                                                                AND SUBSIDIARIES

                                           CONSOLIDATED STATEMENTS OF OPERATIONS


                                                                    PERIOD FROM
                                                                      INCEPTION
                                                                (JUNE 21, 1996)
                                                  YEAR ENDED            THROUGH
                                                DECEMBER 31,       DECEMBER 31,
                                                        1997               1996

--------------------------------------------------------------------------------
REVENUES:
  Sales at new car dealerships                    $  9,863,245      $        -
  Sales at used car dealerships                     35,279,228               -
  Income on finance receivables                      9,209,656               -
  Income from insurance and training                 1,177,903               -
  Corvette parts and accessories sales              15,384,589               -

--------------------------------------------------------------------------------
         Total revenues                             70,914,621               -
--------------------------------------------------------------------------------

COSTS AND EXPENSES:
  Costs of sales at new car dealerships              8,618,109               -
  Costs of sales at used car dealerships            27,950,703               -
  Costs of Corvette parts and accessories sold      10,205,633               -
  Provision for credit losses                        4,941,983               -
  Costs of insurance and training                       85,098
  Selling, general and administrative expenses      24,707,839         670,616
  Compensation expense related to employee and 
     director stock options                          4,649,702               -
  Restructuring charges                              2,117,906               -

--------------------------------------------------------------------------------
         Total costs and expenses                   83,276,973         670,616
--------------------------------------------------------------------------------
         Loss from operations                      (12,362,352)       (670,616)
--------------------------------------------------------------------------------

OTHER INCOME (EXPENSE):
  Interest expense                                  (6,454,175)        (33,172)
  Other income, net                                    167,922               -
--------------------------------------------------------------------------------
                                                    (6,286,253)        (33,172)
--------------------------------------------------------------------------------
NET LOSS                                           (18,648,605)       (703,788)

PREFERRED STOCK DIVIDENDS                             (333,333)              -
--------------------------------------------------------------------------------
NET LOSS APPLICABLE TO COMMON STOCK               $(18,981,938)     $ (703,788)

--------------------------------------------------------------------------------
BASIC LOSS PER COMMON SHARE                       $      (2.14)     $      (.13)

--------------------------------------------------------------------------------
WEIGHTED AVERAGE NUMBER OF COMMON 
SHARES OUTSTANDING                                   8,860,733       5,488,432
--------------------------------------------------------------------------------

           SEE ACCOMPANYING SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
                 AND NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
                                      F-5

<PAGE>
<TABLE>
<CAPTION>

                                                                                SMART CHOICE AUTOMOTIVE GROUP, INC.
                                                                                                   AND SUBSIDIARIES

                                                  CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (CAPITAL DEFICIT)

                                              COMMON STOCK     
                                          -------------------        ADDITIONAL
                                           NUMBER         PAR          PAID-IN      ACCUMULATED
                                        OF SHARES       VALUE          CAPITAL          DEFICIT             TOTAL

<S>                                           <C>           <C>            <C>            <C>            <C>    

BALANCE, June 21, 1996
  (date of incorporation)                       -    $      -     $          -    $           -     $           -

Issuance of founders' shares            5,488,432      54,884          (48,916)               -             5,968

Net loss                                        -           -                -         (703,788)         (703,788)
------------------------------------------------------------------------------------------------------------------

BALANCE, December 31, 1996              5,488,432      54,884          (48,916)        (703,788)         (697,820)

Common stock issued for acquisitions    4,110,952      41,110       14,372,770                -        14,413,880

Contribution and retirement
  of common stock                        (331,428)     (3,314)           3,314                -                 -

Common stock options granted
  to employees and directors                    -           -        3,809,826                -         3,809,826

Common stock options and warrants
  granted to lenders and consultants            -           -        1,957,953                -         1,957,953

Treasury stock purchased and retired       (2,000)        (20)         (13,570)               -           (13,590)

Issuance of common stock for
  professional services                    17,929         179           99,627                -            99,806

Issuance of common stock for
  conversion of debt                      442,514       4,425        1,765,631                -         1,770,056

Exercise of common stock options
  and warrants, net                         7,608          76           41,600                -            41,676

Convertible debt issued at a discount           -           -          827,685                -           827,685

Common stock issued by stockholders for
  cancellation of common stock options
  granted by the Company                        -           -          800,000                -           800,000

Contribution to capital                         -           -          159,203                -           159,203

Preferred stock dividend                        -           -          333,333         (333,333)                -

Net loss                                        -           -                -      (18,648,605)      (18,648,605)
------------------------------------------------------------------------------------------------------------------
BALANCE, December 31, 1997              9,734,007    $ 97,340     $ 24,108,456    $ (19,685,726)    $   4,520,070
=================================================================================================================


                                    SEE ACCOMPANYING SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
                 AND NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
                                                            F-6
             
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                           SMART CHOICE AUTOMOTIVE GROUP, INC.
                                                                                              AND SUBSIDIARIES

                                                                         CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                                                                    PERIOD FROM
                                                                                                        INCEPTION
                                                                                                   (JUNE 21, 1996)
                                                                                     YEAR ENDED           THROUGH
                                                                                   DECEMBER 31,       DECEMBER 31,
                                                                                           1997              1996

<S>                                                                                       <C>                 <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                                      $   (18,648,605)        $(703,788)
  Adjustments to reconcile net loss to net cash
    used for operating activities:
      Depreciation                                                                      445,311             2,132
      Amortization                                                                    1,239,929             2,249
      Gain on disposal of property and equipment                                         (8,166)                -
      Provision for credit losses                                                     4,941,983                 -
      Compensation expense related to stock options                                   4,649,702                 -
      Issuance of common stock for services and interest                                374,806             4,968
      Stock options and warrants issued to consultants and lenders                    1,296,863                 -
      Cash provided by (used for), net of effect of acquisitions:
        Accounts receivable                                                            (662,488)          (25,000)
        Inventories                                                                  (5,969,719)                -
        Prepaid expenses                                                                679,663                 -
        Accounts payable                                                              2,668,636           438,890
        Accrued expenses and other liabilities                                        3,048,563           183,314

------------------------------------------------------------------------------------------------------------------
Net cash used for operating activities                                               (5,943,522)          (97,235)
------------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Increase in finance receivables                                                   (13,600,550)                -
  Cash for acquisitions, net of cash acquired                                        (7,927,844)                -
  Advances to acquired companies prior to acquisition                                (4,230,761)                -
  Purchase of property and equipment                                                 (1,356,644)          (24,586)
  Increase in notes receivable                                                                -          (400,000)
  Repayments of notes receivable                                                        530,420                 -
  Proceeds from disposal of property and equipment                                       24,425                 -
  Other                                                                                 (21,981)         (244,101)
------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities                                              (26,582,935)         (668,687)
------------------------------------------------------------------------------------------------------------------

                                                                 F-7
</TABLE>
<PAGE>

<TABLE>
<CAPTION>

                                                                                                      PERIOD FROM
                                                                                                        INCEPTION
                                                                                                   (JUNE 21, 1996)
                                                                                     YEAR ENDED           THROUGH
                                                                                   DECEMBER 31,       DECEMBER 31,
                                                                                           1997              1996

<S>                                                                                         <C>               <C>  

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from sale of preferred stock                                               4,554,812           387,022
  Proceeds from sale of common stock                                                          -             1,000
  Proceeds from exercise of common stock warrants                                         1,800                 -
  Purchase of treasury stock                                                            (13,590)                -
  Increase (decrease) in bank overdraft                                                 (82,884)           82,884
  Proceeds from line of credit borrowings                                            16,462,090                 -
  Proceeds from floor plan notes payable                                              4,201,467                 -
  Proceeds from notes payable                                                        14,163,892           322,000
  Repayment of notes payable                                                         (5,271,154)                -
  Proceeds from capital lease obligations                                               251,722                 -
  Repayments of capital lease obligations                                               (67,402)                -
  Deferred financing costs                                                             (607,347)          (26,984)

------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities                                            33,593,406           765,922
------------------------------------------------------------------------------------------------------------------

NET INCREASE IN CASH AND CASH EQUIVALENTS                                             1,066,949                 -

CASH AND CASH EQUIVALENTS, beginning of period                                                -                 -
------------------------------------------------------------------------------------------------------------------

CASH AND CASH EQUIVALENTS, end of period                                        $     1,066,949         $       -
==================================================================================================================

                         SEE ACCOMPANYING SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO
                                        CONSOLIDATED FINANCIAL STATEMENTS.

                                                  F-8
                              
</TABLE>
<PAGE>


                                             SMART CHOICE AUTOMOTIVE GROUP, INC.
                                                                AND SUBSIDIARIES

                                      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES




PRINCIPLES OF CONSOLIDATION
---------------------------
                             
     The consolidated  financial statements include the accounts of Smart Choice
     Automotive Group,  Inc. and its wholly-owned  subsidiaries (the "Company").
     All significant intercompany accounts and transactions have been eliminated
     in consolidation.
  
CONCENTRATION OF CREDIT RISK
----------------------------

     The Company  provides sales finance services in connection with the sale of
     used cars to individuals residing primarily in Central and South Florida.

     Periodically  during the year,  the  Company  maintains  cash in  financial
     institutions in excess of the amounts insured by the federal government.

REVENUE RECOGNITION
-------------------
                               
     Income on finance  receivables  is  recognized  using the interest  method.
     Direct loan  origination  costs are  deferred and charged  against  finance
     income  over the  life of the  related  installment  sales  contract  as an
     adjustment of yield.
    
     Revenue from the sale of cars is recognized  upon delivery,  when the sales
     contract is signed and the agreed-upon down payment has been received.

     Parts and  accessories  sales are  recognized  upon shipment of products to
     customers.

FINANCE RECEIVABLES
-------------------

     The  Company  originates  installment  sales  contracts  from  its  Company
     dealerships.   Finance  receivables  consist  of  contractually   scheduled
     payments from installment  sales contracts net of unearned finance charges,
     direct loan origination costs and an allowance for credit losses.

     Unearned finance charges represent the balance of finance income (interest)
     remaining from the  capitalization  of the total interest to be earned over
     the original term of the related  installment  sales contract.  Direct loan
     origination  costs represent the  unamortized  balance of costs incurred in
     the origination of contracts at the Company's dealerships.

     The Company  follows the  provisions  of Statement of Financial  Accounting
     Standards No. 91,  "Accounting for Nonrefundable  Fees and Costs Associated
     with Originating or Acquiring Loans and Initial Direct Costs of Leases."


                                      F-9
<PAGE>


ALLOWANCE FOR CREDIT LOSS
-------------------------

     The  allowance for  uncollectible  finance  receivables  is maintained at a
     level which,  in  management's  judgment,  is adequate to absorb  potential
     losses inherent in the loan portfolio. The amount of the allowance is based
     on  management's  evaluation of the  collectibility  of the loan portfolio,
     which all  originated in the State of Florida,  including the nature of the
     portfolio,  credit  concentrations,  trends in historical loss  experience,
     specific impaired loans, collateral values and economic conditions. Because
     of uncertainties  associated with regional economic conditions,  collateral
     values and future cash flows on impaired loans,  it is reasonably  possible
     that management's  estimate of credit losses inherent in the loan portfolio
     and the related allowance may change materially in the near term.  However,
     the amount of change that is reasonably  possible cannot be estimated.  The
     allowance for uncollectible finance receivables is increased by a provision
     for loan  losses,  which is charged to expense.  Repossessed  vehicles  are
     recorded as inventory at the lower of estimated net realizable value or the
     related  loan  balances.   The  difference   between  the  balance  of  the
     installment   contract  and  the  amount  recorded  as  inventory  for  the
     repossessed vehicle is charged to the allowance for credit losses.

PRESENTATION OF REVENUES AND COST OF REVENUES
---------------------------------------------

     The prices at which the Company  sells its used 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.  The provision for
     credit  losses  reflects  these  factors and is treated by the Company as a
     cost of both the future finance income derived on the contract  receivables
     originated  by the  Company  as  well as a cost  of the  sale  of the  cars
     themselves.  Accordingly,  unlike traditional car dealerships,  the Company
     does not  present  gross  profit  margin  in its  statement  of  operations
     calculated as sales of cars less cost of cars sold.

INVENTORY
---------

     Inventory  consists  of  new  and  used  vehicles  and  vehicle  parts  and
     accessories. Vehicle reconditioning costs are capitalized as a component of
     inventory  cost.  The cost of new and used vehicles sold is determined on a
     specific  identification basis. Vehicle parts and accessories are valued at
     the  lower  of  first-in,  first-out  (FIFO)  cost or  market.  Repossessed
     vehicles are valued at the lower of estimated net  realizable  value or the
     related loan balance.

                                      F-10
<PAGE>



PROPERTY AND EQUIPMENT
----------------------

     Property and  equipment are stated at cost.  Depreciation  is computed over
     the estimated useful lives of the assets by the straight-line method.

DEFERRED ACQUISITION COSTS
--------------------------

     Deferred   acquisition   costs  were   related  to  specific   identifiable
     acquisitions and were allocated to the purchase price of the companies when
     acquired.

GOODWILL
--------

     Goodwill  represents  acquisition  costs in excess of the fair value of net
     tangible  assets of businesses  purchased.  These costs are being amortized
     over  40  years  on  a  straight-line  basis.  Goodwill  is  evaluated  for
     impairment  when  events or  changes  in  circumstances  indicate  that the
     carrying  amounts  of the  assets  may not be  recoverable.  When  any such
     impairment exists, the related assets will be written down to fair value.

DEFERRED FINANCING COSTS
------------------------

     Deferred  financing costs include costs related to obtaining debt financing
     and are being amortized over the term of the debt.

INCOME TAXES 
-------------

     The Company  accounts  for income  taxes in  accordance  with  Statement of
     Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("FAS
     109").  FAS 109 is an  asset  and  liability  approach  that  requires  the
     recognition of deferred tax assets and  liabilities for the expected future
     tax  consequences  of events  that have been  recognized  in the  Company's
     financial statements or tax returns.  Measurement of deferred income tax is
     based on enacted tax laws  including  tax rates,  with the  measurement  of
     deferred  income tax assets  being  reduced by  available  tax benefits not
     expected to be realized.

                                      F-11
<PAGE>

IMPAIRMENT OF LONG-LIVED ASSETS
-------------------------------

     The Company adopted  Statement of Financial  Accounting  Standards No. 121,
     "Accounting  for the  Impairment  of Long-Lived  Assets and for  Long-Lived
     Assets to be  Disposed  Of,"  (SFAS 121)  during  1997.  SFAS 121  requires
     impairment  losses to be recorded on  long-lived  assets used in operations
     and goodwill when indicators of impairment are present and the undiscounted
     cash flows  estimated  to be  generated  by those  assets are less than the
     assets'  carrying  amount.  The  adoption  of SFAS 121 did not  impact  the
     financial statements of the Company.

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 at
     the date of the financial  statements and the reported  amounts of revenues
     and expenses during the reporting period.  Actual results could differ from
     those estimates.

LOSS PER SHARE
--------------

     Loss per share is based upon the weighted  average  number of common shares
     outstanding  during  each  period.  Potential  common  shares have not been
     included since their effect would be antidilutive.  Potential common shares
     include  2,224,000  stock options,  1,682,720  warrants,  2,281,767  shares
     underlying  the  convertible  debt  and  1,972,083  shares  underlying  the
     convertible preferred stock.

     In February 1997, the Financial Accounting Standards Board issued Statement
     of Financial Accounting Standards No. 128, "Earnings per Share," (FAS 128),
     which is effective for financial statements issued for periods ending after
     December 15, 1997. FAS 128 simplifies the standards for computing  earnings
     per share and makes them  comparable  to  international  earnings per share
     standards.  This  statement  replaces the  presentation  of primary EPS and
     fully  diluted  EPS with a  presentation  of  basic  EPS and  diluted  EPS,
     respectively.  Basic EPS  excludes  dilution  and is  computed  by dividing
     earnings available to common stockholders by the weighted-average number of
     common  shares  outstanding  for the period.  Similar to fully diluted EPS,
     diluted EPS reflects the potential  dilution of securities that could share
     in the earnings.  Adoption of this statement did not have a material effect
     on the Company's reported loss per share amounts.

                                      F-12
<PAGE>


RECENT ACCOUNTING PRONOUNCEMENTS
--------------------------------

     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.
     The Company has not  determined  the impact that the  adoption of these new
     accounting  standards  will have on its  future  financial  statements  and
     disclosures.



                                      F-13
<PAGE>


                                             SMART CHOICE AUTOMOTIVE GROUP, INC.
                                                                AND SUBSIDIARIES

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND ACQUISITIONS
--------------------------------

          Smart Choice Automotive  Group,  Inc. (the "Company"),  formerly named
          "Eckler  Industries,  Inc.," operates new vehicle dealerships and used
          vehicle dealerships in Florida and underwrites, finances, and services
          retail installment  contracts  generated from the sale of used cars by
          its dealerships. The Company also operates automobile dealers training
          and  insurance  divisions as well as Eckler's,  a supplier of Corvette
          parts and accessories.

          On January 28, 1997, pursuant to an Agreement and Plan of Merger dated
          December 30, 1996 (the "Agreement"),  Eckler Industries,  Inc. ("EII")
          acquired all of the issued and  outstanding  shares of common stock of
          Smart Choice Holdings,  Inc. ("SCHI") in exchange for 2,927,939 shares
          of EII Class A and  1,576,324.5  shares of EII Class B, common  stock.
          Under the terms of the Agreement,  the  shareholders  of SCHI obtained
          approximately  64% of the voting  rights of EII.  Although  EII is the
          parent  of  SCHI  following  the  transaction,   the  transaction  was
          accounted for as a purchase of EII by SCHI (a reverse  acquisition  in
          which SCHI is considered the acquiror for accounting purposes),  since
          the  shareholders  of SCHI obtained a majority of the voting rights in
          EII  as a  result  of  the  transaction.  Accordingly,  the  financial
          statements  of the Company  for the periods  prior to January 28, 1997
          are those of SCHI.  The  purchase  price for  Eckler was  computed  by
          valuing  the  outstanding  shares  of  common  stock  of  Eckler  (the
          equivalent  of  2,757,500   shares)  at  $3.375  or   $9,306,563   and
          acquisition costs of $100,119.

          SCHI was  incorporated  on June 21,  1996 and was a  development-stage
          corporation  prior to  January  28,  1997.  On August 16,  1996,  SCHI
          acquired the stock of First Choice Auto  Finance,  Inc.  ("FCAF").  On
          January 28, 1997, in addition to the acquisition of EII, SCHI acquired
          the stock of Florida Finance Group,  Inc.  ("FFG"),  Dealer  Insurance
          Services,  Inc. ("DIS") and Dealer Development Services, Inc. ("DDS").
          FFG underwrites,  finances and services  automobile retail installment
          contracts and was based in St. Petersburg,  Florida prior to moving to
          the Company headquarters in Titusville, Florida. FCAF was incorporated
          on March 22, 1994 and had no significant operations or assets until it
          acquired  the assets of  Suncoast  Auto  Brokers,  Inc.  ("SAB"),  and
          Suncoast Auto Brokers Enterprises,  Inc. ("SABE") on January 28, 1997.
          FCAF, based at the Company  headquarters in Titusville,  Florida,  now
          operates  the three used  vehicle  lots in St.  Petersburg  and Tampa,


                                      F-14
<PAGE>

          previously  operated by SAB and SABE.  DIS is based in Tampa,  Florida
          and provides insurance services for automobile  dealers.  DDS is based
          in Tampa and provides  consulting  services  and training  programs to
          automobile dealers. The purchase price of FFG was $1,181,008 notes due
          to the seller,  285,714  shares of common  stock  valued at $3.375 per
          share ($964,285) and acquisition costs of $40,643.  The purchase price
          of DDS and DIS was $781,000  notes due to the sellers and  acquisition
          costs of $24,561.

          On  February  12,  1997,  the  Company  acquired  the stock of Liberty
          Finance Company ("Liberty"). On the same date, FCAF acquired the stock
          of Wholesale Acquisitions,  Inc. ("WA"), and Team Automobile Sales and
          Finance,  Inc. ("Team").  FFG services the receivables  purchased from
          Liberty,  and FCAF  operates  the five used  vehicle  lots  previously
          operated by WA and Team in Orlando,  Florida.  The outstanding capital
          stock of Liberty and affiliates was acquired for $1,500,000  notes due
          to the seller, the equivalent of 352,156 shares of common stock valued
          at $3.375 per share ($1,188,527) and $109,249 in acquisition costs.

          On February 14, 1997,  FCAF  acquired the assets of Palm Beach Finance
          and Mortgage  Company  ("PBF") and Two Two Five North  Military  Corp.
          d/b/a  Miracle  Mile Motors  ("MMM").  FFG  services  the  receivables
          purchased  from PBF, and FCAF operates the used vehicle lot previously
          operated by MMM located in West Palm Beach, Florida. The net assets of
          PBF and MMM were acquired for $3,050,000 cash, $1,473,175 notes due to
          the seller,  285,714 shares of common stock valued at $3.375 per share
          ($964,285) and $53,299 in acquisition costs.

          On June 27, 1997, the Company  acquired the assets of Strata Holdings,
          Inc. ("SHI") and Ready Finance,  Inc. ("RFI"). FCAF operates the three
          used  vehicle  lots  previously  operated  by SHI in West Palm  Beach,
          Florida and FFG services the finance  receivables  purchased from RFI.
          The net  assets  of SHI and RFI were  acquired  for  $5,000,000  cash,
          $4,880,089 notes due to the seller and $27,271 in acquisition costs.

                                      F-15
<PAGE>

          On June 30, 1997, the Company  acquired the assets of Roman Fedo, Inc.
          ("FEDO")  and Fedo  Finance,  Inc.  ("FFI").  FCAF  operates  the used
          vehicle lot previously  operated by FEDO in West Palm Beach,  Florida,
          and FFG  services  the finance  receivables  purchased  from FFI.  The
          assets of FEDO were  acquired for  $268,000  cash,  225,000  shares of
          common  stock  valued at $4.50 per share  ($1,012,500)  and  $8,741 in
          acquisition costs.

          On August 21,  1997,  the Company  acquired the assets of Jack Winters
          Enterprises,  Inc.  ("Winters").  These  assets  consisted of a retail
          automobile dealership located in Stuart, Florida for Volvo automobiles
          and other consumer  vehicles.  The business is being operated by First
          Choice  Stuart 2, Inc., a 100%-owned  subsidiary of the Company and is
          doing  business as Motorcars of Stuart.  The purchase price of Winters
          was $442,500 cash,  $1,200,000 notes due the seller,  18,322 shares of
          common  stock  valued at $5.125 per share  ($93,900)  and  acquisition
          costs of $49,540.

          On August 29, 1997, the Company  acquired the stock of B&B Enterprises
          Inc. ("B&B").  B&B operates a retail automobile  dealership located in
          Stuart,  Florida for Nissan  automobiles and other consumer  vehicles.
          The business is being operated by First Choice Stuart 1, Inc., a 100%-
          owned  subsidiary  of the  Company  and is doing  business  as  Stuart
          Nissan.  The purchase  price of B&B was 86,546  shares of common stock
          valued  at  $6.3125  per share  ($546,322)  and  acquisition  costs of
          $55,385.

          The  acquisitions  described  above have been  accounted for using the
          purchase method of accounting,  and  accordingly,  the purchase prices
          have  been  allocated  to the  assets  purchased  and the  liabilities
          assumed  based upon the fair values at the dates of  acquisition.  The
          excess of the  purchase  prices over the fair values of the net assets
          acquired  was  approximately  $26,000,000  and has  been  recorded  as
          goodwill,  which is being amortized on a  straight-line  basis over 40
          years.

          The operating results of these acquired  businesses have been included
          in  the  consolidated  statement  of  operations  from  the  dates  of
          acquisition.  The  following pro forma  information  has been prepared
          assuming  certain of the acquisitions  above,  which were deemed to be


                                      F-16
<PAGE>

          significant  acquisitions,  had taken  place at the  beginning  of the
          respective periods. The pro forma information includes adjustments for
          interest  expense  that  would  have  been  incurred  to  finance  the
          purchases, additional depreciation based on the fair value of property
          acquired  and  the  amortization  of  intangibles   arising  from  the
          transactions.  The pro forma financial  information is not necessarily
          indicative  of the results of  operations  as they would have been had
          the transactions been effected on the assumed dates.

                                                        UNAUDITED
                                               ---------------------------
          YEAR ENDED DECEMBER 31,              1997                  1996
          ----------------------------------------------------------------

          Net sales                      $  92,405,005       $  90,158,113
          Net loss                         (19,155,105)         (3,803,046)
          Loss per common share                  (2.08)               (.67)
          =================================================================

          The results of operations of the  insignificant  acquisitions were not
          material to the Company's consolidated results of operations.


                                      F-17
<PAGE>

2. FINANCE RECEIVABLES
----------------------
              
          The following is a summary of principal  balances,  net as of December
          31, 1997:

          ---------------------------------------------------------------
          Contractually scheduled payments           $       55,107,232
          Less: unearned finance charges                    (15,510,342)
          ---------------------------------------------------------------

          Principal balances                                 39,596,890
          Add: loan origination costs                           487,522
          ---------------------------------------------------------------

          Principal balances, net                            40,084,412
          Less: allowance for credit losses                  (6,857,265)
          ---------------------------------------------------------------

          Finance receivables, net                   $       33,227,147
          ===============================================================


          Finance  receivables  consist of sales of used cars under  installment
          sale contracts with maturities that generally do not exceed 48 months.
          The receivables bear interest at rates ranging from 25.0% to 29.9% and
          are  collateralized  by the vehicles  sold. The Company holds title to
          the vehicles until full contract payment is made. Finance  receivables
          are pledged as collateral  under a line of credit  agreement (see Note
          6).

          Changes in the allowance for credit losses are as follows:

          YEAR ENDED DECEMBER 31,                                 1997
          ---------------------------------------------------------------

          Balance at dates of acquisitions          $        5,627,937
          Loans charged off, net of recoveries              (3,712,655)
          Provision for credit losses                        4,941,983
          ---------------------------------------------------------------

          Balance at end of year                    $        6,857,265
          ===============================================================

                                      F-18
<PAGE>

3. PROPERTY AND EQUIPMENT
-------------------------

          Property and equipment consist of the following:

                                             ESTIMATED
          DECEMBER 31,                      USEFUL LIFE       1997        1996
          ---------------------------------------------------------------------
          Land                                           $ 1,177,091    $    -
          Buildings and improvements       10-40 years     4,263,930         -
          Leasehold improvements            7-39 years       708,009         -
          Machinery and equipment           3-7  years       909,197         -
          Molds                             5-10 years       310,305         -
          Office equipment and furniture    3-8  years     3,542,413     24,586
          Transportation equipment          3-10 years     2,482,521         -
          Signs                                7 years       152,234         -
          ---------------------------------------------------------------------

                                                          13,545,700     24,586
          Less accumulated depreciation                    4,331,493      2,132
          ---------------------------------------------------------------------

                                                         $ 9,214,207    $22,454
          =====================================================================
          
          Depreciation  expense for the years ended  December  31, 1997 and 1996
          was $445,311 and $2,132, respectively.


4. NOTE RECEIVABLE
------------------

          At December 31, 1996,  note  receivable  consisted of advances under a
          $800,000  line of  credit  extended  to a company  which had  signed a
          contract to be acquired by Smart Choice Holdings,  Inc. Advances under
          the line of  credit  bore  interest  at the prime  rate,  were due and
          payable  30 days  after  written  demand  and were  collateralized  by
          substantially all assets of the borrower.



                                      F-19
<PAGE>

5. ACCRUED EXPENSES
-------------------
         Accrued expenses consist of the following:

         DECEMBER 31,                                 1997              1996
         -------------------------------------------------------------------

         Accrued compensation             $        855,806        $  141,713
         Accrued interest                          411,913            32,620
         Accrued professional fees                 897,837                 -
         Accrued restructuring charges           1,101,266                 -
         Accrued taxes and other                 1,367,019             8,981
         -------------------------------------------------------------------
                                          $      4,633,841        $  183,314
         ===================================================================


6. LINE OF CREDIT
-----------------

          The Company has a revolving  line of credit with a lender which allows
          the  Company  to borrow the  lesser of  $42,500,000  or 60% of certain
          eligible  accounts  receivable  at prime plus 3%.  Interest is payable
          monthly with all of the  outstanding  principal due December 1999. The
          line of credit is  collateralized  by substantially  all the assets of
          Florida  Finance  Group,  Inc.  and  is  guaranteed  by  Smart  Choice
          Holdings,  Inc. and Smart Choice Automotive Group, Inc. The balance at
          December  31,  1997  under  this  line  of  credit  was   $31,400,000.
          Unamortized  debt discount was $170,400 at December 31, 1997. The line
          of  credit  agreement   contains   various   financial  and  operating
          covenants.  As of December 31,  1997,  the Company was in violation of
          certain of these covenants,  including leverage ratios and minimum net
          income  requirement.   The  lender  has  waived  compliance  of  these
          covenants  for the year  ending  December  31,  1997.  The  Company is
          currently in  negotiations  with the lender to modify the terms of the
          line of credit  agreement  and to  increase  the amount of the line of
          credit.  The  amount  of  the  line  of  credit  was  increased  from
          $35,000,000 to $42,500,000 on March 27, 1998.

          The following  summarizes  certain  information  about the  borrowings
          under the line of credit: 
                                                                      1997
          --------------------------------------------------------------------
          Maximum amount outstanding at any month end            $  31,681,590
          Average amount outstanding during the period           $  21,921,484
          Weighted average interest rate during the period              11.45%
          --------------------------------------------------------------------


          Interest rates ranged from 11.25% to 11.5%,  and interest  expense was
          $2,235,954 for the year ended December 31, 1997.

                                      F-20
<PAGE>


7. NOTES PAYABLE
------------------

Notes payable consist of the following:
<TABLE>
<CAPTION>

--------------------------------------------------------------------------------
DECEMBER 31,                                                                                   1997          1996

<S>                                                                                            <C>            <C>

Notes payable issued in connection with various acquisitions, interest ranging 
  from 8% to 10%, payable through June 1999.                                              $  6,029,146     $    -

12% unsecured  convertible  note payable,  interest  payable  quarterly,  unpaid
  principal  and  interest due May 2002,  convertible  at a rate of one share of
  common  stock for  every  $7.50 of  outstanding  principal,  conversion  price
  adjustable upon the occurrence of certain events.                                          4,000,000          -

12%  convertible  note payable,  net of discount,  interest  payable  quarterly,
  unpaid  principal  and interest due March 1999,  convertible  at a rate of one
  share of common  stock for every $6.00 of  outstanding  principal,  conversion
  price adjustable upon the occurrence of certain events.  On December 31, 1997,
  the conversion  price was adjusted to 90% of the market price of the Company's
  common stock. Accordingly,  $282,506 of interest expense has been recorded for
  the difference  between the conversion  price of the note payable and the fair
  market value of the Company's common stock on the date of issuance.                        3,025,125          -

Prime + 1.5%  (10% at  December  31,  1997)  mortgage  note  payable,  principal
  payments of $13,333 plus interest payable monthly,  outstanding  principal and
  interest due July,  1998,  collateralized  by property and equipment of Eckler
  Industries, Inc. and guaranteed by a stockholder of the Company.                           2,500,000          -

Variable rate (8.5% at December 31, 1997)  installment  loan payable,  principal
  and interest payable monthly,  outstanding principal and interest due December
  2009, collateralized by certain property of the Company.                                   2,199,900          -

Various unsecured notes payable to investors bearing interest at rates ranging 
  from 10%-16%, interest   payable monthly, outstanding principal balances due
  through December 2001.                                                                     1,699,142          -

$1,500,000 note payable, net of discount (see below)                                         1,415,784          -

9% unsecured convertible notes payable, interest and principal due February 
   1998,convertible at a rate of one share of common stock for each $8.75 of 
   principal.                                                                                1,267,601          -

8% convertible debentures (see below)                                                        1,050,000          -

9%unsecured  convertible note payable,  interest and principal due January 1999,
  convertible  at a rate  of one  share  of  common  stock  for  each  $8.75  of
  principal.                                                                                 1,031,008          -

                                      F-21
<PAGE>

Prime plus 1.75% (10.25% at December 31, 1997) notes payable, principal of $24,274
  plus interest payable monthly through June 1998 at which time all remaining 
  principal and interest are due, secured by substantially all the assets of 
  First Choice Stuart 1, Inc. and guaranteed by First Choice Auto Finance, Inc. 
  and Smart Choice Holdings, Inc.                                                              894,173          -

8% note payable, principal and interest of $10,010 payable monthly through June 2007, 
  collateralized by certain property of the Company.                                           797,488          -

Prime (8.5% at December 31, 1997) unsecured convertible  subordinated debenture,
  net of discount, interest payable quarterly, unpaid principal and interest due
  December  31, 2000,  convertible  at the rate of one share of common stock for
  every $9.00 of outstanding  principal,  conversion  price  adjustable upon the
  occurrence of certain events.                                                                697,895          -

Prime plus 1% (9.5% at December  31,  1997)  unsecured  note  payable,  interest
  payable monthly, outstanding principal due April 1998.                                       600,000          -

7.75% note payable, principal and interest of $8,683 payable monthly through 
  December 2003, secured by certain real property of the Company.                              498,923          -

12% convertible debentures (see below)                                                         410,000       262,000

Prime  plus 1% (9.5% at  December  31,  1997)  note  payable,  interest  payable
  monthly, principal due upon demand.                                                          300,000          -

Various notes payable bearing interest at rates from 6% to 10%, principal and interest
  payable through July 2001.                                                                   274,023        60,000

10% unsecured note payable, interest payable monthly, outstanding principal due
  December 1998.                                                                               257,250          -

Prime plus 1% (9.5% at December 31,  1997)  unsecured  convertible  subordinated
  note payable,  interest payable  quarterly,  unpaid principal and interest due
  June 1999,  convertible at a rate of one share of common stock for every $7.50
  of outstanding  principal,  conversion price adjustable upon the occurrence of
  certain events. On December 31, 1997, the conversion price was adjusted to 90%
  of the market price of the  Company's  common stock.  Accordingly,  $20,179 of
  interest  expense has been recorded for the difference  between the conversion
  price of the note  payable and the fair market value of the  Company's  common
  stock on the date of issuance.                                                             250,000            -
--------------------------------------------------------------------------------------------------------------------
Total notes payable                                                                     $ 29,197,458       $322,000
====================================================================================================================
</TABLE>


Aggregate  maturities of notes payable over future years are as follows:  1998 -
$11,180,849;  1999 -  $10,471,143;  2000 - $1,002,763;  2001 - $740,415;  2002 -
$4,264,519; thereafter - $2,148,965.

Unamortized debt discount was $611,196 at December 31, 1997.

                                      F-22
<PAGE>


$1,500,000 Note Payable
-----------------------

On December 31, 1997,  the Company  signed a $1,500,000  note payable.  The note
payable bears interest at 10%.  Interest is payable  monthly and the outstanding
principal  balance is due October 1998. If the Company or any of its  affiliates
should, prior to the repayment in full of the note, either (i) issue any debt or
equity  securities in a public  offering or (ii) issue,  in the aggregate,  more
than seven and one-half  million dollars of debt or equity  securities in one or
more private placements, including any securitization or other sale or financing
of chattel paper or receivables,  but excluding  floor plan financing;  then all
the  outstanding  principal and all the accrued and unpaid  interest on the note
will be due in full  on the  date of  closing  of  such  issuance.  The  note is
collateralized  by substantially all the assets as well as all of the issued and
outstanding capital stock of Eckler Industries, Inc.

8% Convertible Debentures
-------------------------

The unsecured  convertible  debentures  bear interest at 8%. Interest is payable
monthly,  and all  outstanding  principal is due April 1998.  The debentures are
convertible  from December 14, 1997 through April 15, 1998 at a conversion price
equal to 66 2/3% of the average closing bid price of the Company's  common stock
for  the  five  trading  days   immediately   preceding  the  conversion   date.
Accordingly,  $525,000 of interest  expense has been recorded for the year ended
December  31,  1997  for the  difference  between  the  conversion  price of the
debentures  and the  fair  market  value of the  Company's  stock at the time of
issuance.  The interest rate and conversion  price are both  adjustable upon the
occurrence of certain events.

12% Convertible Debentures
--------------------------

The  convertible  debentures  bear  interest at 12% and were due on November 19,
1997.  Holders of  $340,000  of the  debentures  have  extended  the due date to
January 1999. Outstanding principal after November 19 bears interest at 18%. The
debentures were convertible prior to November 19, 1997 into the Company's common
stock at a rate of one  share of  common  stock  for each  $5.00 of  outstanding
principal.  Additionally, holders of the debentures who did not convert prior to
the maturity date received,  for each $20,000  debenture,  a warrant to purchase
1,200 shares of the Company's  common stock at $3.00 per share. The warrants are
immediately exercisable and expire five years from the date of issuance.


                                      F-23
<PAGE>


8.  FLOOR PLANS PAYABLE
-----------------------

Floor plans payable consist of the following:
<TABLE>

<S>                                                                                            <C>            <C> 

DECEMBER 31,                                                                                   1997          1996
----------------------------------------------------------------------------------------------------------------------

$3,350,000 floor plan line of credit,  variable interest rate,  interest payable
  monthly,  principal  balance  payable at the  earlier of the time a vehicle is
  sold or 360 and 180 days from the time a vehicle is  floored  for new and used
  vehicles,  respectively,  guaranteed by Smart Choice Automotive  Group,  Inc.,
  collateralized  by vehicle  inventory  floored.  The line of credit  agreement
  contains certain financial ratio covenants.                                             $ 3,285,165      $    -

$3,000,000  floor  plan  line of  credit,  interest  at prime  plus 1.5% (10% at
  December 31, 1997),  interest payable monthly,  principal  balance payable the
  earlier  of (i) 48 hours from the time of sale of a vehicle or within 24 hours
  from the time  payment is received  from the  purchaser of the vehicle or (ii)
  upon demand. Collateralized by all inventory, fixed assets, holdback reserves,
  manufacturers'  rebates,  incentive  payments and  intangible  assets of First
  Choice Auto Finance,  Inc.,  guaranteed by Smart Choice Automotive Group, Inc.            2,659,968

$3,000,000  floor  plan  line of  credit,  interest  at  prime  plus 1% (9.5% at
  December 31, 1997),  interest payable monthly,  principal payable upon sale of
  floored  vehicle,  collateralized  by certain assets of First Choice Stuart 1,
  Inc.  The line of credit  expired  December 31, 1997 and is subject to various
  financial and operating covenants. As of December 31, 1997, the Company was in
  violation of certain of the covenants.  The lender has waived these  covenants
  through  December 31, 1997. The Company is currently in negotiations  with the
  lender to modify the terms of the line of credit agreement.                               2,341,959           -

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

Total                                                                                    $  8,287,092      $    -
======================================================================================================================

</TABLE>


                                      F-24
<PAGE>



9. INCOME TAXES
---------------

          The components of deferred income tax assets consist of the following:

          DECEMBER 31,                                        1997        1996
          ---------------------------------------------------------------------

          Deferred income tax assets:
            Net operating loss carryforwards      $      3,476,000    $ 238,000
            Accounts receivable                          2,589,000           -
            Stock options and warrants                   1,805,000           -
            Accruals                                       523,000           -
            Compensation                                   423,000           -
            Depreciation and amortization                  243,000           -
            Inventory                                      149,000           -
            Other                                           93,000           -
          ---------------------------------------------------------------------

          Gross deferred income tax assets               9,301,000      238,000
          Valuation allowance                           (9,301,000)    (238,000)

          ---------------------------------------------------------------------
          Total deferred income tax assets        $              -    $      -

          =====================================================================

          The  Company's   valuation   allowance   increased  by   approximately
          $9,063,000  and $238,000 for the periods  ended  December 31, 1997 and
          1996,  respectively,  which  represents  the  effect of changes in the
          temporary  differences  and net  operating  losses.  The  Company  has
          recorded a valuation  allowance  to state its  deferred  tax assets at
          estimated  net  realizable  value due to the  uncertainty  related  to
          realization to these assets at estimated net  realizable  value due to
          the uncertainty  related to realization of these assets through future
          taxable income.

          At December 31, 1997, the Company had unused federal tax net operating
          losses (NOLs) to carry forward against future years' taxable income of
          approximately  $10,223,000,  expiring in various amounts through 2012.
          As  a  result  of  certain  acquisitions,  the  use  of  approximately
          $1,141,000  the NOLs will be limited each year under the provisions of
          Section 382 of the Internal Revenue Code of 1986, as amended,  and the
          provisions of Treasury Regulation  1.1502-21 regarding separate return
          limitation years.


                                      F-25
<PAGE>
                    
10. COMMITMENTS AND CONTINGENCIES
---------------------------------

     Leases
     ------

          The Company conducts its operations  partially from leased facilities.
          These leases are classified as operating  leases and expire on various
          dates through 2005.

          The Company also leases equipment under capital leases which expire on
          various  dates  through  2002.  The  total  capitalized  cost for this
          equipment is $1,004,961 with  accumulated  depreciation of $116,015 as
          of December 31, 1997.

          As of December 31, 1997,  future  minimum lease payments under capital
          leases and future minimum  rental  payments  required under  operating
          leases that have  initial or  remaining  noncancelable  lease terms in
          excess of one year are as follows:

                                                  CAPITAL         OPERATING
          DECEMBER 31, 1997                       LEASES            LEASES
          ----------------------------------------------------------------


          1998                                 $    322,490   $  2,247,147
          1999                                      268,330      1,584,132
          2000                                      254,342      1,481,429
          2001                                      204,906      1,446,639
          2002                                      101,111        936,414
          Thereafter                                      -        479,160
          ----------------------------------------------------------------

                                                  1,151,179   $  8,174,921
                                                              ============

          Less amount representing interest         210,899
                                               ------------

          Present value of minimum lease 
          payments                             $    940,280
                                               ============


          Rental expense for the year ended December 31, 1997 was  approximately
          $1,542,000.


                                      F-26
<PAGE>



          Employment Agreements
          ---------------------

          The Company has entered into employment agreements expiring at various
          dates  through the year 2002.  As of December 31, 1997,  the Company's
          total  noncancellable  obligation  under all employment  agreements is
          approximately $2,404,000.

          Litigation
          ----------

          The Company is involved in legal and  administrative  proceedings  and
          claims of various types.  While any litigation  contains an element of
          uncertainty,  based upon the opinion of the Company's  legal  counsel,
          management  presently believes that the outcome of such proceedings or
          claims  which are  pending or known to be  threatened  will not have a
          material adverse effect on the Company's  financial position since the
          Company has accrued  sufficient amounts to cover the costs expected to
          be incurred in settlement of these actions.

          Environmental Matters
          ---------------------

          Some of the Company's past and present  operations  involve activities
          which  are  subject  to  extensive  and  changing  federal  and  state
          environmental  regulations and can give rise to environmental  issues.
          As  a  result,   the  Company  is  from  time  to  time   involved  in
          administrative and judicial  proceedings and administrative  inquiries
          related  to  environmental   matters.  Based  on  advice  of  counsel,
          management  believes that the outcome of these matters will not have a
          material impact on the Company's financial position.


11. REDEEMABLE CONVERTIBLE PREFERRED STOCK
------------------------------------------


          During December 1996 and January 1997, the Company sold 395,000 shares
          of Series A redeemable  convertible  preferred  stock.  Proceeds  from
          these offerings,  net of offering costs, were approximately  $977,000.
          The liquidation  preference of each preferred share is $2.00. Upon the
          completion of an initial public  offering of the Company that raises a
          minimum of $20 million in gross proceeds, each preferred share will be
          converted  automatically  into the  higher  of:  (i) one  share of the
          Company's $.01 par value common stock or (ii) that number of shares of
          common  stock having a value (as  measured by a public  offering  sale
          price) equal to $9.00. The holders of the Series A shares may require,
          by a two-thirds  vote of the issued and  outstanding  Series A shares,
          that the Company offer to redeem the Series A shares at any time after
          September 30, 1998. The redemption price will equal $2.00 per share.

          On September 30, 1997, the Company  completed an offering of 300 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  $2,965,000.  Each unit  consists  of one share of
          Series A  redeemable  convertible  preferred  stock and one warrant to
          acquire 300 shares of common stock for each preferred  share purchased
          at a price equal to $8.10 per share.  The  warrants  expire five years
          after the date of issuance.  The preferred  stock is convertible  into
          shares of common stock at a conversion  price which,  at the option of
          the buyer,  is either  fixed at a rate of 135% of the market  price of
          common  stock on the  date of  issuance  of the  preferred  stock,  or
          floating at a rate of 100% of the market  price of the common stock if
          converted  during  the  period  90  days  after  the  issuance  of the
          preferred  stock and 90% of the market  price if converted at any time
          after that 90-day  period.  Accordingly,  since none of the  preferred
          stock was converted 90 days after issuance, a preferred stock dividend
          of  $333,333  ($.04 per  share) has been  recorded  for the year ended
          December 31, 1997 for the difference between the discounted conversion
          price  of the  preferred  stock  and  the  fair  market  value  of the
          Company's common stock at the time of issuance. The preferred stock is
          redeemable  at the option of the buyer upon the  occurrence of certain
          events at a price per share that is also dependent upon the occurrence
          of certain events.


                                      F-28
<PAGE>

          On December 10, 1997,  the Company  issued an additional  100 units of
          the Series A redeemable  convertible  preferred  stock and  associated
          warrants for net  proceeds of  $1,000,000.  Each unit  consists of one
          share of  Series A  redeemable  convertible  preferred  stock  and one
          warrant to acquire 300 shares of common stock for each preferred share
          purchased  at a price equal to $5.23 per share.  The  warrants  expire
          five  years  after  the date of  issuance.  The  preferred  stock  has
          features  identical  to that of the  Series A  redeemable  convertible
          preferred stock issued on September 30, 1997.

          Subsequent to December 31, 1997,  the holders of the  preferred  stock
          converted  245  shares of  preferred  stock into  1,265,827  shares of
          common stock.

12. CAPITAL STOCK
-----------------

          Increase in Par Value
          ---------------------

          In March 1997, the Company  authorized an increase in the par value of
          its common stock from $.001 to $.01. All share information included in
          the accompanying  financial statements has been retroactively adjusted
          to give effect to the increase in par value.

          Stock Options
          -------------

          The Company  applies APB Opinion 25,  "Accounting  for Stock Issued to
          Employees,"  and related  interpretations  in  accounting  for options
          issued  to  employees.  Accordingly,  no  compensation  cost  has been
          recognized for options  granted to employees at exercise  prices which
          equal or exceed the market price of the Company's  common stock at the
          date of grant.  Options granted at exercise prices below market prices
          are recognized as compensation cost measured as the difference between
          market price and exercise price at the date of grant.

          Statement  of  Financial   Accounting  Standards  No.  123  (FAS  123)
          "Accounting  for  Stock-Based  Compensation,"  requires the Company to
          provide pro forma  information  regarding  net income and earnings per
          share as if compensation cost for the Company's employee stock options
          had been  determined in accordance with the fair market value based on
         

                                      F-29
<PAGE>

          the method prescribed in FAS 123. The Company estimates the fair value
          of each  stock  option  at the grant  date by using the  Black-Scholes
          option-pricing model with the following  weighted-average  assumptions
          used for grants in the year  ended  December  31,  1997:  no  dividend
          yield, an expected life of 4.9 years;  expected volatility of 61%, and
          a risk-free interest rate of 6%.

          Under the  accounting  provisions  of FAS 123, the  Company's net loss
          applicable  to  common  stock  and  loss per  share  would  have  been
          increased to the pro forma amounts indicated below:

         DECEMBER 31,                                1997             1996
         ---------------------------------------------------------------------

         Net loss applicable to common stock
           As reported                          $ (18,981,938)   $  (703,788)
           Pro forma                              (22,570,717)      (703,788)

         Basic loss per common share
           As reported                          $       (2.14)   $      (.13)
           Pro forma                                    (2.55)          (.13)
         ======================================================================

          The following  table  summarizes  information  about employee plan and
          non-plan stock option activity for the periods ended December 31, 1997
          and 1996:
<TABLE>
<CAPTION>

                                                                             WEIGHTED-AVERAGE
                                                         WEIGHTED-AVERAGE      FAIR VALUE OF
                                                SHARES    EXERCISE PRICE       OPTIONS GRANTED

                    <S>                          <C>             <C>                 <C>    

            Outstanding, December 31, 1996           -        $    -              $    -
              Acquired in merger               175,000          2.66                   -
              Granted, at market value         838,000          4.89                 2.78
              Granted, above market value       30,000          6.50                 3.55
              Granted, below market value       50,000          4.07                 2.53
              Exercised                        (12,500)         2.50                   -
              Forfeited                         (3,000)         4.88                   -


            Outstanding, December 31, 1997   1,077,500        $ 4.56             $     -

</TABLE>

                                      F-30
<PAGE>


          At December 31, 1997, a total of 602,500 options were exercisable at a
          weighted-average exercise price of $4.24.

          The following table summarizes information about non-plan stock option
          activity  issued to  non-employees  for the periods ended December 31,
          1997 and 1996:

<TABLE>
<CAPTION>
                                                                                  WEIGHTED-AVERAGE
                                                             WEIGHTED-AVERAGE     FAIR VALUE OF
                                               SHARES        EXERCISE PRICE       OPTIONS GRANTED

                    <S>                           <C>                 <C>                <C>    
           ---------------------------------------------------------------------------------------
           Outstanding - inception                    -             $    -            $    -
             Granted, above market value        290,000                4.75                -


           Outstanding, December 31, 1996       290,000                4.75                -
             Acquired in merger               1,044,000                3.81                -
             Granted, at market value           232,500                5.06              2.58
             Granted, above market value        300,000                8.17              2.28
             Forfeited                         (680,000)               3.79                -
             Expired                            (40,000)               5.00                -

          -----------------------------------------------------------------------------------------
           Outstanding, December 31, 1997     1,146,500             $  5.41           $    -
           ========================================================================================
</TABLE>

          At December 31, 1997 and 1996, a total of 996,500 and 262,000  options
          were  exercisable  at a  weighted-average  exercise price of $5.14 and
          $4.92, respectively.



                                      F-31
<PAGE>

          The  following  table  summarizes   information  about  stock  options
          outstanding and exercisable at December 31, 1997:
<TABLE>
<CAPTION>

                                          OPTIONS OUTSTANDING          OPTIONS EXERCISABLE
                             -------------------------------------   ------------------------
                                           WEIGHTED-     WEIGHTED-                  WEIGHTED-
                                             AVERAGE       AVERAGE                    AVERAGE
          RANGE OF              NUMBER      EXERCISE     REMAINING       NUMBER      EXERCISE
          EXERCISE PRICES   OUTSTANDING        PRICE          LIFE   EXERCISABLE        PRICE
          -----------------------------------------------------------------------------------
               <S>                 <C>            <C>            <C>       <C>          <C>

          Employee Plan and
            Non-Plan Options

          $2.50 to $3.88       187,500        $    2.84    3.3 years   162,500       $ 2.68
          $4.25 to $6.50       890,000             4.93    4.4 years   440,000         4.82
          ---------------------------------------------------------------------------------
                             1,077,500        $    4.56                602,500       $ 4.24
          =================================================================================

          Non-Employee
            Non-Plan Options

          $2.88 to $3.00       275,000        $    2.91    3.7 years   275,000       $ 2.91
          $4.50 to $6.50       721,500             5.44    3.8 years   621,500         5.55
          $8.75 to $12.00      150,000             9.83    3.7 years   100,000         8.75

         ----------------------------------------------------------------------------------
                             1,146,500        $    5.41                996,500       $ 5.41
         ==================================================================================


</TABLE>

          Common Stock Options Issued - Compensation
          ------------------------------------------

          During the year  ended  December  31,  1997,  compensation  expense of
          $3,809,826 was recognized on common stock options granted to employees
          and  directors.  These  options were granted by trusts  created by two
          major  stockholders to purchase  shares of the Company's  common stock
          owned by the trusts.  The trusts will  receive the  proceeds,  if any,
          from the  exercise  of these  options.  Since these  options  were not
          granted  by the  Company  and their  exercise  will not  result in the
          issuance of any additional  common stock, they have been excluded from
          the tables above.

          Common Stock Options Issued - Consultants
          -----------------------------------------

          During  the  year  ended  December  31,  1997,   options   granted  to
          consultants were valued at $607,700 in accordance with FAS 123.

                                      F-32
<PAGE>

          Common Stock Issued - Professional Fees
          ---------------------------------------

          The  Company  issued  17,929  shares of common  stock as  payment  for
          professional  services which were valued at $99,806  representing  the
          fair value of the stock on the date of issuance.

          Common Stock Options and Warrants Issued - Lenders
          --------------------------------------------------

          During 1997, the Company entered into various  agreements with lending
          institutions  and issued  options and  warrants  to  purchase  472,500
          shares of the Company's  common stock at exercise  prices ranging from
          $2.00 to $12.00 per share. Of these options and warrants, 422,500 were
          exercisable at December 31, 1997.  The options and warrants  expire at
          various dates ranging from December 1999 through August 2002.

          The above common stock  options and warrants were valued at $1,350,253
          in accordance with the provisions of FAS 123. This amount was recorded
          as debt discount and is being  amortized  over the life of the related
          debt.  Interest  expense  related to these  options and  warrants  was
          $466,979 for the year ended December 31, 1997.

          Common Stock Issued - Debt Conversion
          -------------------------------------

          During the year ended  December 31, 1997,  the Company  issued 442,514
          shares of common stock in conversion of debt amounting to $1,770,056.

                                      F-33


<PAGE>

          Stock Warrants
          --------------

          At December 31, 1997,  the Company had the  following  stock  warrants
          outstanding:

                                    NUMBER OF
                                   UNDERLYING       EXERCISE
          EXPIRATION DATE              SHARES          PRICE


          December 31, 1999            70,000       $ 2.00
          November 8, 2000             12,500       $ 6.00
          November 14, 2000         1,284,000       $ 6.50
          March 30, 2001               20,000       $ 4.20
          August 29, 2002              52,500       $ 7.00
          September 30, 2002           90,000       $ 8.10
          November 19, 2002            33,720       $ 3.00
          December 10, 2002            30,000       $ 5.23
          December 24, 2002            90,000       $ 4.00
                                   ----------

                                    1,682,720
                                    =========


          At December 31, 1997, 1,632,000 of the warrants were exercisable.

          Shares Reserved
          ---------------

          At December 31, 1997, the Company has reserved approximately 8,159,970
          shares of  common  stock for  future  issuance  under all of the above
          arrangements,  the  convertible  debt  and the  convertible  preferred
          stock.

     13. RESTRUCTURING CHARGE
     ------------------------

          During  the  fourth  quarter  of 1997,  after  all  acquisitions  were
          completed,  the  Company  implemented  a  restructuring  program  (the
          "Program") designed to enhance overall  competitiveness and efficiency
          through the reduction of operating  costs.  The Program  resulted in a
          charge to operations of $2,117,906.  The charge consists  primarily of
          costs related to employment contract terminations and severance pay.

                                      F-34
<PAGE>

     14. RETIREMENT BENEFIT PLAN
     ---------------------------

     The Company sponsors a defined  contribution pension plan for all employees
     meeting certain eligibility  requirements.  The plan provides for voluntary
     employee contributions and contributions by the Company to be determined at
     the discretion of the Board of Directors.  The Company made no contribution
     to the plan for the year  ended  December  31,  1997.  There was no plan in
     effect from the period of inception to December 31, 1996.

     15. SUPPLEMENT CASH FLOW INFORMATION
     ------------------------------------

     The Company  considers  all highly  liquid  investments  with a maturity of
     three months or less to be cash equivalents.
<TABLE>
<CAPTION>

     YEAR ENDED DECEMBER 31,                                               1997     1996
     -----------------------------------------------------------------------------------
     Cash paid for interest                                        $  4,228,339   $  552
     ===================================================================================
          <S>                                                         <C>            <C>    

     Noncash investing and financing activities:
       Notes  payable and  capital  lease  obligations
         incurred in  connection  with the purchase of
         property and equipment                                    $ 3,722,670    $   -
       Notes  payable   issued  in   connection   with
         acquisitions                                               11,015,272        - 
       Common stock issued in
         connection with acquisitions                               14,413,880        - 
       Common stock issued for conversion of debt                    1,770,056
       Common stock  options  granted to employees and
         directors                                                   3,809,826        -
       Common stock  options and warrants issued to 
         lenders  and  consultants                                   1,957,953        -
       Common stock issued for professional services                    99,806    4,968
       Common stock issued by stockholders for cancellation of 
         common stock options granted by the Company                   800,000        -
       Contribution to capital by stockholder                          159,203        -
       Debt discount on convertible debt                               827,685        -
     ===================================================================================
</TABLE>

                                      F-35
<PAGE>

     16. DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
     ---------------------------------------------------------

     Statement of Financial  Accounting  Standards No. 107,  "Disclosures  about
     Fair Value of Financial  Instruments,"  requires that the Company  disclose
     estimated fair values for its financial instruments.  The following summary
     presents  a  description  of the  methodologies  and  assumptions  used  to
     determine such amounts:

     Limitations
     -----------

     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,  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 the fair value is estimated as of December 31, 1997, the amounts that
     will actually be realized or paid in settlement of the instruments could be
     significantly different.

     Cash and Cash Equivalents
     -------------------------

     The  carrying  amount  is  assumed  to be the  fair  value  because  of the
     liquidity of these instruments.

     Finance Receivables, Net
     ------------------------

     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.

     Accounts Payable and Accrued Expenses
     -------------------------------------

     The carrying amount  approximates  fair value because of the short maturity
     of these instruments.

                                      F-36
<PAGE>

     Notes Payable
     -------------

     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.

17. SEGMENT INFORMATION
-----------------------

     The Company's  operations are classified into four business  segments.  The
     dealership segment operates a network of 24 new and used car dealerships in
     the Southeastern  United States.  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  financing   services  segment  finances  consumer
     purchases  of  used  vehicles  sold  in the  Company's  used  and  new  car
     dealerships.   Operations   within  the  dealer  services  segment  include
     providing  consulting services to new car dealers on the use of finance and
     insurance  products  in the sale of  vehicles.  The 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 business segment
     as of and for the years ended December 31, 1997 and 1996:
<TABLE>
<CAPTION>

                                               FINANCING           DEALER        PARTS AND
                           DEALERSHIPS          SERVICES         SERVICES      ACCESSORIES   CORPORATE     CONSOLIDATED


 
         1997
<S>                                <C>            <C>                 <C>            <C>            <C>           <C>

Sales                         $ 45,142,473   $  9,209,656    $ 1,177,903  $  15,384,589   $      -         $ 70,914,621
Operating income (loss)           (399,237)     3,028,596        207,320         17,635    (15,216,666)     (12,362,352)
Depreciation and
  amortization                     128,673          8,078          2,552        277,794      1,268,143        1,685,240
Identifiable assets             17,642,458     34,763,399        111,312      5,439,449     31,148,373       89,104,991
Capital expenditures             1,431,339        178,238          3,684        286,853      3,179,200        5,079,314
  (exclusive of acquisitions)

         1996
Sales                         $      -       $       -       $     -       $      -       $     -          $     -
Operating income (loss)              -               -             -              -           (670,616)        (670,616)
Depreciation and
  amortization                       -               -             -              -              4,381            4,381
Identifiable assets                  -               -             -              -            716,290          716,290
Capital expenditures                 -               -             -              -             24,586           24,586
========================================================================================================================
</TABLE>

                                      F-37
<PAGE>
     18. FOURTH QUARTER ADJUSTMENTS
     ------------------------------

     During the fourth  quarter of 1997,  the  Company  recorded  the  following
     adjustments:


     --------------------------------------------------------------------
     Expense costs of abandoned public offering          $       479,406
     Restructuring charge                                      2,117,906
     Expense related to stock options                          1,405,087
     --------------------------------------------------------------------


                                      F-38

<PAGE>
<TABLE>
<CAPTION>
                                   EXHIBIT INDEX

EXHIBIT
NO.       EXHIBIT DESCRIPTION                    FILED HEREWITH OR INCORPORATED BY REFERENCE TO:
<S>        <C>                                    <C>  

3.1    Amended and Restated Articles of          Exhibit 3.1 to Form SB-2 Registration Statement, filed on
       Incorporation of Smart Choice             September 1, 1995, File No. 33-96520-A
       Automotive Group, Inc. (the
       "Company")

3.1.1  Articles of Amendment to Articles of      Exhibit 3.2 to Form 10-Q filed on May 20, 1997
       Incorporation of SMCH

3.2    Amended and  Restated  By-Laws of the     Exhibit 3.2 to Form SB-2  Registration
       Company                                   Statement, filed on September 1, 1995, File No. 33-96520-A.

3.2.1  Amendment No. 1 to Amended and            Exhibit 3.2.1 to Amendment No. 2 to Form SB-2 Registration
       Restated Bylaws                           Statement, filed on November 6, 1995, File No. 33-96520-A.

3.2.2  Second Articles of Amendment to           Exhibit 3.1 to Form 8-K filed on October 9, 1997.
       Articles of Incorporation

4.1    Specimen Common Stock  Certificate        Exhibit 4.1 to Form 8-A Registration  Statement,  filed on
                                                 April 16, 1997.

4.2    Specimen of Warrant Certificate           Exhibit 4.2 to Form 8-A Registration Statement, filed on
                                                 April 16, 1997.

4.3    Warrant Agreement between the Company     Exhibit 4.5 to Amendment No. 2 to Form SB-2 Registration
       and American Stock Transfer & Trust       Statement, filed on November 6, 1995, File No. 33-96520-A.
       Company, as Warrant Agent, dated
       November 9, 1995

4.3.1  Form of Amendment to Warrant Agreement    Exhibit 4.4 to Form 8-A Registration  Statement,  filed on
                                                 April 16, 1997.

10.1   Eckler Industries, Inc. Retirement and    Exhibit 10.4.1 to Form SB-2 Registration Statement, filed
       Savings Plan and Trust Agreement, as      on September 1, 1995, File No. 33-96520-A.
       Amended and Restated on September 14,
       1992

10.2   Amendment No. 1 to Eckler Industries,     Exhibit 10.4.2 to Form SB-2 Registration Statement filed
       Inc. Retirement and Savings Plan Trust    on September 1, 1995, File No. 33-96520-A.
       Agreement Dated March 28, 1994.

10.3   Eckler Industries, Inc. Non-Qualified     Exhibit 10.6 to Form SB-2 Registration Statement, filed on
       Stock Option Plan                         September 1, 1995, File No. 33-96520-A.

10.4   Eckler Industries, Inc. 1995 Combined     Exhibit 10.7 to Form SB-2 Registration Statement, filed on
       Qualified and Non-Qualified Employee      September 1, 1995, File No. 33-96520-A.
       Stock Option Plan

10.5   Registration Rights Agreement by and      Exhibit 10.15 to Amendment No. 1 to Form SB-2 Registration
       among the Company and each of the         Statement, filed on October 13, 1995, File No. 33-96520-A.
       Purchasers referred to in Schedule 1 
       thereto, dated September 20, 1995.

10.6   Unit Purchase Option Agreement between    Exhibit 1.2 to Amendment No. 2 to Form SB-2 Registration
       the Company and Argent Securities,        Statement, filed on November 6, 1995, File No. 33-96520-A.
       Inc. and Certificate dated November
       15, 1995

10.7   Loan  Agreement  between the Company      Exhibit  10.19 to Post-Effective Amendment  No.  2 to Form
       and Barnett  Bank, N.A. dated             SB-2 Registration   Statement,   filed  on  November  14,  1996,
       September 30, 1996                        File  No. 33-96520-A.

10.8   Mortgage and Security Agreement           Exhibit 10.20 to Post-Effective Amendment No. 2 to Form
       between the Company and Barnett Bank,     SB-2 Registration Statement, filed on November 14, 1996,
       N.A. dated September 30, 1996.            File No. 33-96520-A.

10.9   Promissory Note in the amount of          Exhibit 10.21 to  Post-Effective  Amendment No. 2 to Form SB-2 
       $2,400,000 from the Company in favor      Registration Statement, filed on November 14, 1996, File No.
       of Barnett Bank, N.A. dated September 30, 33-96520-A.
       1996.

10.10  Assignment  of Loan  Documents  dated      Filed  herewith.  
       November  4, 1997 between Barnett Bank, 
       N.A. and The Huntington National Bank 
       ("Huntington")

10.11  Modification of Mortgage Deed and          Filed herewith.
       Security Agreement dated November 3,
       1997 between the Company and Huntington

10.12  Future Advance  Promissory  Note dated     Filed  herewith.
       December 30, 1997,principal amount 
       $260,000, the Company maker, 
       Huntington, payee

10.13  Modification of Mortgage and Mortgage      Filed herewith.
       Note and Extension Agreement dated
       December 30, 1997 between the Company
       and Huntington

10.14  Merger Agreement between Smart             Exhibit 10.1 to Form 8-K, filed on February 12, 1997
       Choice Holdings, Inc. ("SCHI"), the
       Company, Thomas E. Conlan and
       Gerald C. Parker dated December 30,
       1997.

10.15 First Amended and Restated Loan and         Exhibit 4.1 to Form 10-Q, filed on May 20, 1997.
      Security Agreement between Florida
      Finance Group, Inc. ("FFG") and Finova
      Capital Corporation ("Finova"), dated
      February 4, 1997.

10.16 Warrant to Purchase Common Stock of the     Exhibit 4.2 to Form 10-Q, filed on May 20, 1997.
      Company between the Company and Finova,
      dated January 13, 1997.

10.17 Intentionally Omitted

10.18 Intentionally Omitted

10.19 Guaranty to Finova from the Company         Exhibit 4.5 to Form 10-Q, filed on May 20, 1997.
      dated January 13, 1997.

10.20 Eighth Amended and Restated Promissory      Filed herewith.
      Note dated March 27, 1998, between FFG,
      maker, and Finova.

10.21 Fourth Amended and Restated Schedule to     Filed herewith.
      Amended and Restated Loan and Security
      Agreement, FFG, borrower, Finova, lender,
      dated March 27, 1998.

10.22 Stock Purchase  Agreement dated January     Exhibit 10.1 to Form 10-Q, filed on May 20, 1997. 28, 1997 
      between SCHI and Gary Smith.

10.23 Promissory Note dated January 28, 1997,     Exhibit 10.2 to Form 10-Q filed on May 20, 1997.
      First Choice Auto Finance, Inc.
      ("FCAF"), maker, Gary Smith, payee, in
      the principal amount of $1,031,008.

10.24 Lease dated April 5, 1997 between Gary      Filed herewith
      R. Smith and Team Automobile Sales and
      Finance, Inc.
 
10.25 Promissory Note Modification Agreement,     Filed herewith.
      dated December 15, 1997 between FCAF
      and Gary R. Smith.

10.26 Asset Purchase  Agreement dated January     Exhibit 10.3 to Form 10-Q, filed on May 20, 1997. 
      28, 1997 between FCAF and Gary Smith.

10.27 Asset  Purchase  Agreement among FCAF,      Exhibit 10.17 to Form 8-K, filed on February 26, 1997.
      Palm Beach Finance and Mortgage Company
      ("PBF"), Two Two Five North Military
      Corp. ("225"), and David Bumgardner,
      and Amendment thereto.

10.28 Loan and Security Agreement between 225     Exhibit 10.18 to Form 8-K, filed on February 26,.
      and FCAF dated February 14, 1997.

10.29 9% Secured  Convertible Note of FCAF to     Exhibit 10.20 to Form 8-K, filed on February 26, 1997. 
      225 and PBF.

10.30 9% Convertible Debenture of SCHI to PBF.    Exhibit 10.21 to Form 8-K, filed on February 26, 1997.

10.31 Lease between David Bumgardner as           Exhibit 10.22 to Form 8-K, filed on February 26, 1997.
      Lessor and FCAF, Lessee, dated February
      13, 1997.

10.32 Indemnification Agreement in favor of       Exhibit 10.23 to Form 8-K, filed on February 26, 1997.
      PBF and 225 by FCAF, dated 
      February 14, 1997.

10.33 Executive Employment Agreement between      Exhibit 10.15 to Form 10-Q, filed on May 20, 1997.
      the Company and Gary Smith.

10.34 Executive Employment Agreement between      Exhibit 10.16 to Form 10-Q, filed May 20, 1997.
      the Company and Robert Abrahams.

10.35 Executive Employment Agreement dated        Filed herewith.
      April 11, 1997 between the Company and
      Joseph Alvarez.

10.36 Executive Employment Agreement dated        Filed herewith.
      April 24, 1997 between the Company and
      Ronald Anderson.

10.37 Non Qualified Stock Option Agreement        Filed herewith.
      dated March 5, 1997 among the Smart    
      Choice Holdings Management Trusts (the
      "Management Trusts"), Eckler Industries, 
      Inc., and Robert J. Abrahams.

10.38 Non Qualified Stock Option Agreement        Filed herewith.
      dated March 5, 1997 among the Management 
      Trusts, Eckler Industries, Inc., and
      Robert J. Abrahams.

10.39 Non Qualified Stock Option Agreement        Filed herewith.
      dated April 11, 1997, among the
      Management Trusts, the Company and 
      Joseph Alvarez.

10.40 Stock Option  Agreement  dated March 24,    Filed  herewith.  
      1997 between the
      Company and Ronald Anderson.

10.41 Non-Qualified Stock Option Agreement        Filed herewith
      dated April 17, 1997 between the
      Company and David Bumgardner.

10.42 Non-Qualified Stock Option Agreement        Filed herewith
      dated April 17, 1997 between the
      Company and Craig Macnab.

10.43 Stock Option  Agreement  dated March 19,    Filed  herewith.  
       1997 between the
      Company and Gerald Parker.

10.44 Non-Qualified Stock Option Agreement        Filed herewith.
      dated April 17, 1997 between the
      Company and Gerald Parker.

10.45 Non-Qualified Stock Option Agreement        Filed herewith.
      dated April 17, 1997 between the
      Company and Donald Wojnowski.

10.46 Non-Qualified Stock Option Agreement        Filed herewith.
      dated April 17, 1997 between the
      Company and Joseph Yossifon.

10.47 Convertible Senior Promissory Note          Exhibit 10.18 to Form 10-Q, filed May 20, 1997.
      dated March 13, 1997, the Company,
      maker, Sirrom Capital Corporation
      ("Sirrom"), payee.

10.48 Convertible Senior Promissory Note          Exhibit 10.19 to Form 10-Q, filed May 20, 1997.
      dated May 13, 1997, the Company, maker,
      Sirrom, payee.

10.49 Amended and Restated Registration           Exhibit 10.20 to Form 10-Q, filed May 20, 1997.
      Rights Agreement between the Company
      and Sirrom, dated May 13, 1997.

10.50 Asset Purchase Agreement dated as of        Exhibit 10.1 to Form 8-K filed on July 14, 1997. 
      June 27, 1997 among the Company, Strata
      Holding, Inc., Ready Finance, Inc.,
      Donald Cook, Marilyn Cook and Madie A.
      Stratemeyer.

10.51 Form of Convertible Note issued by the      Exhibit 10.1 to Form 8-K filed on October 9, 1997.
      Company to High Capital Funding, LLC,
      and other purchasers.

10.52 Form of Warrant issued by the Company       Exhibit 10.2 to Form 8-K filed on October 9, 1997.
      to High Capital Funding, LLC, and other
      purchasers.

10.53 Promissory Note, principal amount           Exhibit 10.3 to Form 8-K filed on October 9, 1997.
      $1,500,000 by Eckler Industries, Inc.,
      maker, Stephens Inc., payee.

10.54 Promissory Note, principal amount           Exhibit 10.1 to Form 8-K filed on March 5, 1998.
      $3,000,000, Eckler Industries, Inc.,
      maker, Stephens Inc., payee.

10.55 Guaranty Agreement by the Company to        Exhibit 10.4 to Form 8-K filed on October 9, 1997.
      Stephens Inc.

10.56 Amendment to Guaranty Agreement between     Exhibit 10.4 to Form 8-K filed on March 5, 1998.
      the Company and Stephens Inc.

10.57 Pledge and Security Agreement between       Exhibit 10.5 to Form 8-K filed on October 9, 1997.
      the Company and Stephens Inc.

10.58 Amendment to Pledge and Security            Exhibit 10.5 to Form 8-K filed on March 5, 1998.
      Agreement between the Company and
      Stephens Inc.

10.59 Securities Purchase Agreement between       Exhibit 10.6 to Form 8-K filed on October 9, 1997.
      the Company and certain buyers
      represented by Promethean Investment
      Group, L.L.C.

10.60 Form of Warrant from the Company to         Exhibit 10.7 to Form 8-K filed on October 9, 1997.
      certain buyers represented by
      Promethean Investment Group, L.L.C.

10.61 Automotive Wholesale Financing and          Filed herewith.
      Security Agreement dated July 21, 1997
      between First Choice Stuart 1, Inc.
      ("FCS1") and Nissan Motor Acceptance
      Corporation ("NMAC").

10.62 Addendum to Automotive Wholesale            Filed herewith.
      Financing and Security Agreement

10.63 Second Addendum to Automotive Wholesale     Filed herewith.
      Financing and Security Agreement dated
      August 11, 1997 between NMAC and FCSI.

10.64 Dealer Capital Loan and Security            Filed herewith.
      Agreement dated October 12,  1995
      between B&B Florida Enterprises, Inc.
      and NMAC.

10.65 Amendment to Dealer Capital Loan and        Filed herewith.
      Security Agreement dated September 1,
      1997 between NMAC and FCS1.

10.66 Dealer Equipment Loan and Security          Filed herewith.
      Agreement dated October 12, 1995
      between NMAC and B&B Florida
      Enterprises, Inc.

10.67 Amendment to Dealer Equipment Loan and      Filed herewith.
      Security Agreement dated September 1,
      1997 between NMAC and FCSI.

10.68 Nissan Dealer Term Sales and Service        Filed herewith.
      Agreement dated August 29, 1997 between
      Nissan Motor Corporation in U.S.A., the
      Company, Smart Cars, Inc. and FCS1.

10.69 Wholesale Financing and Security            Filed herewith.`
      Agreement dated August 11, 1997 between 
      First Choice Stuart 2, Inc. ("FCS2")
      and Volvo Finance North America, Inc.

10.70 Authorized Retailer Agreement between       Filed herewith.
      Volvo Cars of North America, Inc. and
      FCS2.

10.71 Convertible Subordinated Debenture          Filed herewith.
      dated November 3, 1997, principal
      amount $750,000, the Company, maker,
      Bankers Life Insurance Company, payee.

10.72 Registration Rights Agreement dated         Filed herewith.
      November 3, 1997 between the Company
      and Bankers Life Insurance Company.

10.73 Settlement Agreement and Release dated      Filed herewith.
      January 30, 1998 among the Company,
      FCAF, FCS2, Jack Winters Enterprises,
      Inc., Jack Winters, F. Craig Clements,
      Killgore Pearlman, P.A. and Mark L.
      Ornstein.

10.74 Stock Purchase Agreement dated May 6,       Filed herewith.
      1997 between FCS1 and Thomas DeRita, Jr. 

10.75 Promissory Note dated December 19,          Filed herewith.
      1997,  principal amount  $2,199,000,  
      First Choice Melbourne 1, Inc., maker
      and Raytheon Aircraft Credit
      Corporation, payee.

10.76 Guaranty Agreement by the Company to        Filed herewith.
      Raytheon Aircraft Credit Corporation.

10.77 Security Agreement dated December 19,       Filed herewith.
      1997 between First Choice Melbourne 1,
      Inc. and Raytheon Aircraft Credit
      Corporation.

10.78 Registration Rights Agreement between       Exhibit 10.8 to Form 8-K filed on October 9, 1997.
      the Company and certain buyers
      represented by Promethean Investment
      Group, L.L.C.

10.79 Promissory Note dated February 24,          Exhibit 10.9 to Form 8-K filed on March 5, 1998.
      1998, FCAF, maker, Manheim Automotive
      Financial Services, Inc., payee.

10.80 Guaranty dated March 21, 1997 from the      Exhibit  10.10 to Form 8-K filed on March 5, 1998.
      Company in favor of Manheim Automotive
      Financial Services, Inc.

10.81 Intentionally Omitted.

10.82 Manheim Automotive Financial Services,      Filed herewith.
      Inc. Security Agreement dated March 21,
      1997 between FCAF and Manheim
      Automotive Financial Services, Inc.

10.83 Promissory Note dated June 17, 1997,        Filed herewith.
      principal amount $825,000, FCAF, maker,
      Carl Schmidt Enterprises, Inc., payee.

10.84 Real Estate Mortgage dated June 17,         Filed herewith.
      1997, FCAF, mortgagor,
      Carl Schmidt Enterprises, Inc., mortgagee.

10.85 Intentionally Omitted.

10.86 Intentionally Omitted.

10.87 Twenty-Fourth Amendment to GM               Filed herewith.
      Reproduction and Service Part Tooling
      License Agreement.

10.88 Twenty-Sixth Amendment to GM                Filed herewith.
      Reproduction and Service Part Tooling
      License Agreement.

10.89 Thirty-Fourth Amendment to GM               Filed herewith
      Reproduction Service Part Tooling
      License Agreement.

10.90 Lease between Florida Auto Auction of       Filed herewith.
      Orlando, Inc. and First Choice Auto  
      Finance, Inc. dated May 12, 1997, for
      Reconditioning Facility.

11.1  Statement re Computation of Earnings        *
      Per Share.

21.1  List of Subsidiaries.                       Filed herewith.

23.1  Consent of BDO Seidman, LLP.                Filed herewith.

27.1  Financial Data Schedule.                    Filed herewith.

____________________

*  Information regarding the computation of earnings per share is set forth
in the Notes to Consolidated Financial Statements.

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