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                                  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, 1998  
                                     ----------------------------------

[     ]  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                 THE NASDAQ STOCK MARKET

         REDEEMABLE COMMON STOCK      THE NASDAQ STOCK MARKET
         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 $8,731,034.00 AS OF APRIL 14, 1999.

     AS OF APRIL 15, 1999,  6,676,545  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.

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<PAGE>

                                TABLE OF CONTENTS


PART 1                                                                PAGE

 Item 1     Business                                                  1

 Item 2     Properties                                                9

 Item 3     Legal Proceedings                                         9

 Item 4     Submission of Matters to a Vote of 
            Security Holders                                          10

 Item 4A    Executive Officers of the Registrant                      10

PART II

 Item 5      Market for the Registrant's Common Equity 
             Securities and Related Stockholder Matters               11

 Item 6      Selected Consolidated Financial Data                     12

 Item 7      Management's Discussion and Analysis of Financial   
             Condition and Results of Operations                      14

 Item 7A     Quantitative and Qualitative Disclosures about 
             Market Risk                                              34

 Item 8      Consolidated Financial Statements and Supplementary
             Data                                                     35

 Item 9      Changes In and Disagreements with Accountants on         
             Accounting and Financial Disclosures.                    35

PART III

 Item 10     Directors and Executive Officers of the Registrant       35

 Item 11     Executive Compensation                                   35

 Item 12     Security Ownership of Certain Beneficial Owners and
             Management                                               35

 Item 13     Certain Relationships and Related Transactions           35

PART IV

 Item 14     Exhibits, Consolidated Financial Statement Schedules
             and Reports on Form 8-K                                  35


<PAGE>

                                     PART I
                               ITEM 1 -- BUSINESS

GENERAL

     Smart Choice  Automotive  Group,  Inc.  ("Smart  Choice" or the  "Company")
currently  operates  17 stores in  Florida  that sell used cars under the "First
Choice" brand name. The Company's  First Choice cars are three to six years old,
have  less  than  80,000   miles  and  have   undergone   thorough   inspection,
reconditioning and, as necessary,  repair. The Company also sells used cars that
may not meet the First Choice criteria through four additional stores in Florida
that operate  under the "Team"  brand name.  Sales of First Choice and Team Cars
are "self  financed"  through  Florida Finance Group,  Inc.  ("FFG"),  a finance
company  subsidiary.  FFG  provides  financing  for the  Company's  customers by
originating retail automobile installment sales contracts ("finance receivables"
or "finance  contracts")  secured by the cars the Company  sells.  The Company's
customers  typically are  "credit-impaired",  that is, they have limited  credit
histories, low incomes and/or past credit problems.

     Retail  sales  of  new  and  used  cars  in  the  United   States   totaled
approximately  $673 billion in 1997. Used cars represented  approximately 75% of
cars  sold  in  the  United  States  and  55%  of  total  sales  in  1997,  with
approximately  41 million used cars sold at an average price of $9,029 per unit.
Retail  sales of used cars in Florida in 1997  totaled  more than $24.4  billion
(over 2 million vehicles). Approximately 36% of Florida's used car sales in 1997
(not  including  sales  of  used  cars  at  new  car  dealerships)  occurred  at
approximately 2,800 self-financed used car stores.

     Management believes that the quality and reliability of the Company's First
Choice cars (i) reduce the  probability  of product  failure  (which  management
believes is a leading  cause of defaults on finance  contracts in the  Company's
industry),  (ii) reduce losses on the Company's  repossessions of cars and (iii)
define the First Choice brand.  Due to the quality and  reliability of its First
Choice  cars,  the  Company is able to provide a 24  month/24,000  mile  service
contract to its customers,  which is underwritten by a third party.  The Company
sells  used cars at its First  Choice  stores  for an  average  retail  price of
approximately  $9,100,  including  the service  contract  on all cars sold.  The
Company's  Team stores  generally  sell older and higher mileage cars than First
Choice cars. Team cars,  which sell for an average retail price of approximately
$8,100, are primarily cars that have been repossessed by the Company,  have been
traded in by customers or have not been sold by the First Choice  stores  within
approximately  180  days.  Cars  sold  at  Team  stores  are  covered  by  a  12
month/12,000 mile service contract.

     The automobile  financing  industry is the third largest  consumer  finance
market in the country (after  mortgage debt and credit card debt) with more than
$466  billion  in  contracts  on new and used cars  originated  in 1997.  Credit
impaired  customers,  that  is,  borrowers  with  "C" and "D"  credit  profiles,
accounted for approximately  $122 billion of the overall market in 1997, up from
$55.4 billion in 1990.  Recent  surveys show that the number of these  borrowers
has increased to 34.9% in 1997 from 21.8% in 1991 at franchised  new car dealers
and to 55.8% in 1997 from 39.5% in 1991 at  independent  used car  dealers.  The
Company believes that the portion of the automobile finance market  attributable
to used car borrowers has grown  significantly in recent years and will continue
to grow.  Factors  contributing  to such  growth  include  (i) the rise in lower
skilled  service  industry  jobs,  (ii) the rise in consumer  debt and (iii) the
increase  in  sales  of used  cars  relative  to new cars in  recent  years  due
principally  to increased  new car prices and the number of late model used cars
coming off lease.

<PAGE>

OPERATING STRATEGY

     The Company's operating strategy emphasizes the following points:

o    SELL RELIABLE, QUALITY CARS. The Company sells reliable, quality used cars.
     Management  believes that product failure is a leading cause of defaults on
     finance  contracts  in the  self-financed  used car  industry.  The Company
     utilizes guidelines in purchasing, inspecting, reconditioning and servicing
     First Choice cars to minimize defaults.

o    UTILIZE CENTRALIZED CREDIT APPROVAL AND STRICT UNDERWRITING PRACTICES.  The
     Company  separates the credit  approval  function and sales process for its
     used cars. The Company's  credit  underwriting  process strictly adheres to
     objective  underwriting standards that have resulted in improved collection
     experience  since  February  1997.  The  Company   regularly   reviews  its
     collection   results  to  assess  the  effectiveness  of  its  underwriting
     standards.

o    APPLY RIGOROUS COLLECTION PRACTICES. The Company diligently and proactively
     pursues the  collection  of its finance  receivables  while  maintaining  a
     professional, customer-friendly atmosphere. The Company's collection policy
     includes  telephoning a borrower if the borrower's payment is one day late,
     and  repossession  procedures  generally  begin  when the  customer  is two
     payments past due. As of December 31, 1998, 93.6% of the Company's  finance
     receivables were current.

o    MAXIMIZE  RECOVERY ON REPOSSESSIONS.  Management  believes that the Company
     generally  experiences lower losses on repossessions  than other lenders in
     the  self-financed  used car industry due to (i) the quality of the cars it
     sells,  (ii) the timeliness of its  repossessions  and (iii) its ability to
     remarket   repossessions.    The   Company   reconditions   and   remarkets
     approximately 64% of its repossessions through its Team stores, rather than
     through  auctions  (where cars are generally sold at lower  prices).  These
     practices  allowed the  Company to recover  51% (on a retail  basis) of the
     principal amount of loans charged off for the year ended December 31, 1998.

o    INCREASE  OPERATING  EFFICIENCY.  Since late 1997, in an effort to increase
     operating  efficiency  by  reducing   administrative  costs  and  enhancing
     administrative  functions,  the Company has combined certain administrative
     functions,  such as accounting,  treasury,  insurance,  employee  benefits,
     strategic marketing and legal support. During 1998, the Company believes it
     further  increased its operating  efficiency in such areas as  advertising,
     reconditioning and purchasing and transporting inventory.

o    EMPLOY INTEGRATED  MANAGEMENT  INFORMATION SYSTEMS.  Each used car store is
     linked to an integrated  computer-based  management information system (the
     "MIS")  that allows the Company to obtain  "real time"  information  on its
     operations.  The  Company  uses  the  MIS  to  transmit  data  between  its
     headquarters and its stores, to evaluate store performance  daily,  monitor
     inventory,  sales, costs and customer payments and facilitate the Company's
     underwriting and collection of its finance contracts.

o    PROMOTE  FIRST CHOICE  BRAND.  The Company  believes  that its First Choice
     brand is synonymous with quality cars and customer  service.  By seeking to
     maintain  continuity in the appearance of its store locations,  the Company
     expects to promote its name recognition. The Company attempts to maintain a
     consistency  between its facilities and its marketing materials through the
     use of standardized logos and a white, blue and yellow color theme.

o    AVOID THIRD PARTY FINANCE RECEIVABLES. As part of its operating philosophy,
     the Company only originates and services  finance  receivables on used cars
     sold at its used car stores.  The Company does not intend to purchase third
     party finance receivables.

INSURANCE PRODUCTS

     During  1998,  the  Company  developed  a program  offering  collision  and
liability  insurance to its used car  customers  through a separate  subsidiary,
Easy Pay Insurance, Inc.

COMPANY GROWTH

     The  Company  commenced  used  car  sales  in  January  1997  and  expanded
significantly  throughout  1997 through  acquisitions.  In 1998,  the  Company's
growth has been through internal  expansion.  The Company  regularly reviews its
store locations to assess the effectiveness of its sales operations.

     SELF-FINANCED  USED CAR STORES The Company  currently  owns and operates 17
self-financed  used car  stores  under the First  Choice  name and four used car
stores under the Team name.  Cars that have less than 80,000 miles are placed at
First Choice  locations,  while cars that have more than 80,000  miles  (usually
repossessions  or trade-ins)  are placed at Team stores.  The Company's used car
stores 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 store is managed by a sales manager who oversees a sales
staff.  The Company  upgrades the facilities it acquires with fresh exterior and
interior  paint and new signage (with an emphasis on the blue,  yellow and white
colors of First  Choice),  replaces  furniture  and  fixtures as necessary to be
similar to the existing locations and installs upgraded computer systems.

     The Company's First Choice stores generally maintain an approximate average
of 60 used cars (ranging from 35 to 130) per store,  featuring 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 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 provides,  through a third-party underwriter, a 24 month/24,000
mile service  contract  with each used car sold at a First Choice store and a 12
month/12,000  mile service  contract to purchasers  of the Company's  Team cars.
Under the service contracts, the Company's customers may have their First Choice
or Team  cars  repaired  nationally  by any  one of  approximately  375,000  ASE
(Automotive  Service  Excellence)  certified  technicians.  The Company does not
perform  any  repairs  under  these  service  contracts,  which cover most major
repairs due to mechanical  breakdown or failure.  Customers are  responsible for
payment of up to a $100  deductible  during each repair  visit under the service
contract.

     The Company acquires its used cars primarily at auto auctions. All cars are
subjected to a 110 point inspection  program,  reconditioning and, as necessary,
repair at the Company's  reconditioning  facilities.  The Company outsources all
painting  and body  work.  The  Company  invests  approximately  $678 per car in
repairs  prior to delivering  the cars to the  individual  stores for sale.  The
Company's  regional  managers  determine  the  number  and types of cars for the
stores in their regions. If a car is not sold in 90 days, it is moved to another
First Choice store in the same region for an additional 90 days, after which, if
not sold, it is moved to a Team location or sold wholesale to other dealers.

     RECONDITIONING  CENTERS. The Company has used two reconditioning centers in
its used car  operations.  Both centers  process used cars through the Company's
110 point inspection, perform minor body work and apply detailing, as necessary.
The main reconditioning facility,  based in Lakeland,  Florida, has total square
footage of 31,286 and is located on a 6.7 acre parcel.  As of December 31, 1998,
the  Lakeland   operation  had  20  bays  and  was  capable  of   reconditioning
approximately 1,500 cars per month. The Company believes that the parcel of land
could be used to  expand  reconditioning  capacity  by  adding  more  bays.  The
Lakeland  facility  also  contains  the  Company's  off-site  disaster  recovery
operations center.

     MARKETING AND SALES.  A primary focus of the Company's  marketing  strategy
for its used car stores is its  ability to finance  consumers  with poor  credit
histories.  The Company has  initiated  marketing  programs  designed to attract
credit-impaired  customers,  assist  such  customers  in  re-establishing  their
credit,  reward those customers who pay on time,  develop  customer  loyalty and
increase referral and repeat business.  The Company created value-added programs
for its  customers  including  providing  quality cars  through a  comprehensive
inspection and refurbishment  program, a service agreement on all used cars sold
at the Company stores, rapid loan application  processing and  pre-qualification
over the telephone by calling a toll-free number. The Company reports monthly to
credit   bureaus,   allowing   customers   the   opportunity   to  work   toward
re-establishing  their  credit  while  providing  an avenue for them to purchase
newer cars as their credit improves.

     In general,  the Company's  advertising for its used car stores  emphasizes
its multiple locations,  wide selection of quality used cars, ability to provide
financing to many credit-impaired  borrowers and additional value-added programs
such as service agreements and loan  pre-qualifications.  The Company advertises
extensively in the radio and television media. In addition,  management believes
that the Company's upgraded facilities provide effective advertising and attract
drive-by traffic to visit the stores because their appearance  fosters the image
of a used car store that offers  quality  cars.  The Company  believes  that its
advertising and marketing  approach  creates brand name recognition and promotes
its image as a professional, customer oriented business.

     The Company  utilizes  various  telemarketing  programs to promote its used
cars.  For example,  potential  customers are contacted  within  several days of
their  visit to a Company  store to follow  up on leads and  obtain  information
regarding  their  experience  while at a Company  store.  In addition,  used car
customers  with  satisfactory  payment  histories are contacted  several  months
before contract  maturity and are offered an opportunity to purchase another car
with a nominal down payment requirement.

     The  Company  employs  a  dedicated  on  site  sales  force.   The  Company
continually   seeks  to  develop   and  retain   qualified   salespersons.   The
salesperson's sole responsibility is the sale of cars. The salespersons who sell
used cars do not in any way  participate  in the financing  aspects of the sale.
The Company  employed  92  full-time  salespersons  at its used car stores as of
December  31,  1998.  The   salespersons  are  compensated   primarily   through
commissions.

     COMPETITION. The used car business in which the Company competes is highly
fragmented and very competitive. The Company may face increased competition from
automobile  consolidators  such as Ugly Duckling  Corporation and  "superstores"
such as CarMax and AutoNation  USA.  Others,  such as  Auto-By-Tel,  Calling All
Cars, AutoVantage and Auto Web International are marketing cars 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 store. In
contrast,  the Company  maintains  several medium to large stores 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  stores 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 market conditions.

     The Company's used car stores do not directly compete with superstores such
as CarMax or AutoNation which offer newer,  more expensive cars than the Company
sells and do not target credit-impaired  borrowers.  Of the large companies that
have entered the  credit-impaired car business,  only Ugly Duckling  Corporation
has announced an intention to focus on the  credit-impaired  borrower.  However,
the Company believes that it competes  effectively with the other  self-financed
dealers and can compete  effectively with Ugly Duckling  Corporation because the
Company's cars are generally  newer,  lower mileage cars.  Further,  the Company
provides  each  customer  with a service  agreement on each used car sold at the
Company's  stores.  The Company  distinguishes  its direct  sales and  financing
operations from those of typical  self-financed  used car retailers 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
used car store chain in Florida that focuses on credit-impaired customers.

     The  credit-impaired  segment of the used car  financing  business  is also
highly  fragmented  and very  competitive.  In recent  years,  several  consumer
finance  companies have completed public offerings in order to raise the capital
necessary  to  fund  expansion  and  support  increased   purchases  of  finance
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
credit-impaired borrowers, the high rates of return earned by companies involved
in  credit-impaired  financing  have  encouraged  certain  of these  traditional
institutions to enter, or contemplate entering, this market.

FINANCING CUSTOMERS WITH IMPAIRED CREDIT

     The Company offers financing to its customers who purchase used cars at its
used car stores.  The Company  does not have any loans from  persons who are not
customers  except for finance  contracts  purchased  in the  Company's  used car
dealership  acquisitions.  The Company has  established  a policy not to acquire
third party originated finance contracts. It provides financing only for its own
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 uses
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 98% of the used
car sales through finance contracts that the Company originates and services.

     CUSTOMER  CREDIT  PROFILE.  The Company  targets  customers with "C" or "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 other credit problems, such as personal bankruptcy.  This borrower's
primary choice is to finance his or her used car purchase, which is often from a
self-financed  used car store,  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  originally  approved  for credit) has gross  annual
household income of approximately  $30,000,  and an average length of employment
at his or her current job of approximately 3.3 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 car,  employment  and residence
histories,   income  information,   personal  references,   income  and  expense
information and credit bureau reports.  The sales managers at the Company's used
car  stores  submit  the   customer's   credit   application  to  the  Company's
headquarters in Titusville,  Florida,  where the customer's  creditworthiness is
analyzed.  The  Company  utilizes a credit  evaluation  system it  developed  to
determine a  customer's  creditworthiness.  Financing  decisions  are made by an
experienced loan staff with a minimum of five years of experience and an average
of ten years of 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--Credit  Losses" for information
about the Company's loan loss and delinquency experience.

     CONTRACT SERVICING.  The Company services its finance contracts through the
use of  servicing  procedures  which  have  been  specifically  tailored  to the
Company's  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,  repossessing  the  financed
automobile.

     COLLECTION  POLICY.  The  Company  is  strict 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.  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.

     REPOSSESSIONS.  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. The Company reconditions
and remarkets  approximately 64% of its repossessions through the Company's Team
stores,  rather than through  auctions  (where cars are generally  sold at lower
prices).  These practices allowed the Company to recover 51% (on a retail basis)
of the principal  amount of loans and accrued  interest charged off for the year
ended December 31, 1998.

     COMPETITION.  The market for financing  credit-impaired customers is highly
competitive.  The Company's  competitors  include  local,  regional and national
automobile  dealers,  used car finance  companies and other sources of financing
for automobile  purchases,  many of which are larger and have greater  financial
and  marketing  resources  than the  Company.  Historically,  commercial  banks,
savings and loan associations,  credit unions,  captive finance  subsidiaries of
automobile  manufacturers  and other  consumer  lenders  have not  competed  for
financing  for  credit-impaired  used car  buyers.  During  the past two  years,
however, several companies,  including large, well-capitalized public companies,
have devoted considerable  resources to acquisitions in the Company's market for
credit-impaired customers.

     THIRD PARTY FINANCE  RECEIVABLES AND  ACCOUNTING.  As part of its operating
philosophy, the Company only originates and services finance receivables on used
cars sold at its used car stores and new car  dealerships.  The Company does not
intend to purchase receivables not originated by the Company.

MANAGEMENT INFORMATION SYSTEMS

     The Company's  management  information  system allows the Company to manage
its  operations  uniformly  and  efficiently  through  "real time"  information.
Utilizing  its MIS, the Company is able to bar code  inventory,  track sales and
costs,  and provide its stores  access to inventory  available at other  Company
stores from one integrated platform. 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  self-financed  used car  dealerships.  The  Company  has
installed  financial  software for its finance contracts that will integrate all
loan monitoring and servicing functions into one uniform system. The Company has
a  recovery  system  in the  event  of a  natural  disaster  (e.g.,  hurricanes,
tornadoes,  fire, lightning) under which all systems can be rerouted to a remote
location and be 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. The Company
foresees no material problems in becoming Year 2000 compliant. See "Management's
Discussion    and   Analysis   of   Financial    Condition    and   Results   of
Operations--Liquidity and Capital Resources."

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 stores. 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.

TRADEMARKS AND PROPRIETARY RIGHTS

     The Company does not have any registered trademarks or service marks.

EMPLOYEES

     At December 31, 1998,  the Company  employed 386 persons,  of which 53 were
employed  in the  Company's  executive  and  administrative  offices,  273  were
employed  in its  Company  dealership  operations  and 86 were  employed  in the
Company's credit and collection activities.  None of the Company's employees are
covered  by  a  collective  bargaining  agreement.  The  Company  considers  its
relations with its employees to be good.

DISCONTINUED OPERATIONS

     In  January  1999,  management  committed  to a plan  to  sell  the new car
dealerships  in Stuart,  Florida which had been acquired in August 1997,  and to
sell Eckler's, the Corvette parts and accessories subsidiary acquired in January
1997.  The  rationale to sell these  business  segments was to raise  capital to
focus on car operations in the self-financed, used car industry.

o        CORVETTE PARTS AND ACCESSORIES

     Eckler's is a manufacturer  and supplier of aftermarket  Corvette parts and
accessories. Eckler's generates revenues through catalog sales and, to a limited
extent, showroom sales. For the year ended December 31, 1998, Eckler's accounted
for approximately 13.5% of the Company's  revenues.  Eckler's has a Reproduction
and Service Part Tooling  License  Agreement  with General  Motors  Corporation,
Service Parts Operations  ("GM") (the "GM  Agreement").  Under the GM Agreement,
Eckler's is licensed to manufacture,  sell, distribute and market numerous parts
discontinued  by GM which  Eckler's  may sell  under  the GM  Restoration  Parts
trademark for various Corvette model years. Eckler's and GM have agreed to enter
into a new GM  Agreement  with a term through  December  31,  2003.  Of Eckler's
approximately 95,000 customers, no single customer accounted for more than 5% of
its total  revenues  during 1998.  At December 31,  1998,  Eckler's  employed 93
persons.

o        NEW CAR DEALERSHIPS

     The Company owns and operates two new car dealerships in Stuart, Florida, a
Nissan and a Volvo dealership.  Stuart Nissan and Stuart Volvo sell new and used
cars at these  locations  and  provide  parts and  services.  These  dealerships
accounted for 19.8% of the Company's revenues during the year ended December 31,
1998 and employed approximately 64 persons.

                              ITEM 2 -- PROPERTIES.

     The  Company  owns  approximately  5.6 acres of real  property  at its main
facilities in Titusville,  Florida.  Three buildings comprise the Company's main
facilities--an administrative building, a manufacturing facility and a warehouse
and shipping  facility--with  total square footage of 87,825.  These facilities,
aside from the administration  building,  are used in Eckler's  operations.  The
Company  also  owns  5.3  acres of  undeveloped  property  adjacent  to its main
facilities, as well as a First Choice store located in Melbourne, Florida.

     As of December 31, 1998 the Company leased 26 facilities,  consisting of 24
used car stores and its main  reconditioning  facility in Lakeland,  Florida. In
addition,  as noted  above,  the Company  owns the  Melbourne,  Florida used car
store.  The  lease on the  Lakeland  reconditioning  facility  has been  renewed
through May 11, 1999 with additional renewal provisions of four one year terms.

     The rent expense on the Company's facilities was approximately $2.7 million
for the twelve months ended  December 31, 1998. See "Certain  Relationships  and
Related Transactions."

     In addition, facilities are leased for the discontinued operations--the two
new car dealerships and Eckler's.  The lease at the Volvo dealership  expires in
2004,   while  the  lease  for  the  Nissan   dealership   expires  in  2003.  A
reconditioning center is leased as part of the Stuart Nissan new car dealership.


                          ITEM 3 -- LEGAL PROCEEDINGS.

     During March 1999,  certain  shareholders of the Company filed two putative
class action lawsuits  against the Company and certain of the Company's  current
and former  officers and directors in the United States  District  Court for the
Middle  District  of  Florida  (collectively,  the  "Securities  Actions").  The
Securities  Actions  purport  to be brought by  plaintiffs  in their  individual
capacity  and on behalf of the  class of  persons  who  purchased  or  otherwise
acquired Company publicly traded securities  between April 15, 1998 and February
26, 1999.  These  lawsuits were filed  following the Company's  announcement  on
February  26, 1999 a  preliminary  determination  had been  reached that the net
income  announced  on February  10, 1999 for the fiscal year ended  December 31,
1998 was likely overstated in a material, undetermined amount at that time. Each
of  the  complaints  assert  claims  for  violations  of  Section  10(b)  of the
Securities  Exchange Act of 1934 and Rule 10b-5 of the  Securities  and Exchange
Commission as well as a claim for the violation of Section 20(a) of the Exchange
Act. The plaintiffs allege that the defendants prepared and issued deceptive and
materially false and misleading statements to the public which caused plaintiffs
to purchase Company  securities at artificially  inflated prices. The plaintiffs
seek  unspecified   damages.   The  Company  intends  to  contest  these  claims
vigorously.  The Company cannot predict the ultimate resolution of these actions
at this time, and there can be no assurance that the litigation  will not have a
material adverse impact on our financial condition and results of operations.

     The Company is involved in other legal and  administrative  proceedings  in
the ordinary course of business. The Company believes that none of these actions
will have a  material  adverse  effect  on the  Company's  financial  condition,
results of operations or cash flows.

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

     None.

                ITEM 4A -- EXECUTIVE OFFICERS OF THE REGISTRANT.

NAME                    AGE   POSITION AND OFFICE

Robert J. Abrahams      72    Chairman of the Board
Gary R. Smith           46    President, Chief Executive Officer
Ronald W. Anderson      52    Executive Vice President, Chief Operating Officer
Joseph A. Alvarez       43    Executive Vice President and Chief Sales Officer
Robert J. Downing       41    Senior Vice President and Chief Legal Officer

     Robert J.  Abrahams  has been  Chairman of the Board of the  Company  since
1997.  For the  past ten  years,  Mr.  Abrahams  has been  self  employed  as an
independent  consultant in the financial  services  industry.  Mr. Abrahams also
serves on the Board of Directors of two public companies,  HMI Industries,  Inc.
and Ugly Duckling  Corporation,  and six private,  independent  consumer finance
companies. Prior to that time, Mr. Abrahams spent 28 years with Heller Financial
Corporation  ("Heller"),  an international financial services company, in charge
of its consumer finance activities.  Mr. Abrahams held various titles at Heller,
including  Executive Vice President from 1985 to 1988. Mr.  Abrahams serves as a
member of the  Executive  Committee and  Compensation  Committee of the Board of
Directors of the Company.

     Gary R. Smith has been the President and Chief Executive Officer of the
Company since 1997.  From 1990 until January 1997,  Mr. Smith was the President,
Chief Executive  Officer and owner of Florida Finance Group, Inc. Mr. Smith also
served, from 1981 until January 1997, as the President,  Chief Executive Officer
and owner of Suncoast Auto Brokers, Inc., an automobile dealership, and Suncoast
Auto  Brokers  Enterprises,  Inc.,  a used car  dealership.  Mr. Smith served as
President of the Florida Independent  Automobile Dealers Association in 1993 and
currently serves as a member of that association's Board of Directors. Mr. Smith
also serves as a member of the Board of Directors  of the  National  Independent
Automobile Dealers Association.

     Ronald W. Anderson joined the Company as Executive Vice President and Chief
Operating Officer in 1997. From June 1996 to March 1997 he was Vice President of
Marketing for North American  Mortgage  Insurance Group.  From 1989 through June
1996,  he served as Executive  Vice  President  for  Operations of the Riverside
Group,  a  diversified  holding  company,  the business of which  included  real
estate, insurance and retail building supplies.

     Joseph A.  Alvarez has served as  Executive  Vice  President of the Company
since 1997, in which capacity he is in charge of the Company's  automobile sales
activities. Prior to joining the Company, Mr. Alvarez was general manager of the
following  factory  franchised  new  car  dealerships:  Lokey  Automobile  Group
(1996-1997), Carlisle Motors (1994-1996), and Dimmitt Cadillac (1988-1994).

     Robert J.  Downing  joined the Company as Senior Vice  President  and Chief
Legal Officer in 1998. From 1990 through 1998, he was the principal  shareholder
in  Downing  &  Associates,  a law firm  with  offices  in  Miami,  Florida  and
previously in Albuquerque and Santa Fe, New Mexico. Mr. Downing also acted as of
counsel to Cohen & Cohen, P.A., a Santa Fe, New Mexico law firm, from 1994 until
1997 and as of counsel to Montgomery & Andrews, P.A., an Albuquerque, New Mexico
law firm,  from 1991 until 1992.  Mr.  Downing  holds a Juris Doctor degree from
Columbia   University   School  of  Law  and  a  Masters   degree  in   Business
Administration from Columbia University Graduate School of Business.

                                     PART II

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

     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. There were approximately 1,431 beneficial holders of the
Common Stock and 246 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.
  
       1997                        HIGH           LOW
       ----                        ----           ---

COMMON STOCK
     First Quarter                  6.13         4.63
     Second Quarter                 6.75         4.00
     Third Quarter                  7.00         4.19
     Fourth Quarter                 6.25         3.50

PUBLIC WARRANTS
     First Quarter                  1.31          .75
     Second Quarter                 1.88          .75
     Third Quarter                  1.50          .75
     Fourth Quarter                 1.16          .50

       1998
       ----

COMMON STOCK                                          
     First Quarter                  9.13         3.88
     Second Quarter                11.94         7.63
     Third Quarter                 11.63         4.38
     Fourth Quarter                 4.56         2.88

PUBLIC WARRANTS
     First Quarter                   .72          .31
     Second Quarter                 1.50          .59
     Third Quarter                  1.50          .31
     Fourth Quarter                  .44          .16

       1999
       ----

COMMON STOCK
     First Quarter                  5.25         1.56

PUBLIC WARRANTS
     First Quarter                   .38          .13

     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 October 26, 1998, the Company
was  notified  by Nasdaq  that it was not in  compliance  with  certain  listing
criteria  which became  applicable to SmallCap  Market listed  companies on that
date.  Nasdaq  notified the Company  that the Common  Stock and Public  Warrants
would be scheduled for delisting unless the Company earned at least $500,000 net
income for the fiscal year ended  December  31,  1998.  The Company did not earn
that amount, but because it intends to sell both the two new car dealerships and
its Eckler's business segments and take other actions, believes it will meet the
$2 million net tangible asset  requirement  upon  completing  sales on or before
December 31, 1999.

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

     As of December 1, 1998, the Company  issued  options to purchase  shares of
Common Stock to Gary R. Smith and Robert J. Abrahams in accordance with the 1998
Executive Incentive  Compensation Plan. Messrs. Smith and Abrahams each received
stock options to purchase 50,000 shares at an exercise price of $3.38 per share.

                       ITEM 6 -- SELECTED FINANCIAL DATA.

SELECTED CONSOLIDATED FINANCIAL INFORMATION.

     On January 28, 1997, the Company,  which was then named Eckler  Industries,
Inc.  and was  operating  exclusively  in the  Corvette  parts  and  accessories
business,  acquired  Smart  Choice  Holdings,  Inc.  ("SCHI")  in a  transaction
accounted for as an acquisition of Eckler's by SCHI ("Predecessor Acquisition").
Accordingly,  the financial  statements of the Company for the periods from June
21, 1996 to January 28, 1997 are those of SCHI,  which was  incorporated on June
21,  1996  and  was  a  development  stage  company  prior  to  the  Predecessor
Acquisition.  Eckler's changed its name to Smart Choice  Automotive  Group, Inc.
after the Predecessor Acquisition.  From the date of the Predecessor Acquisition
through  February 14, 1997,  the Company  acquired  three  automotive  sales and
finance  companies.  Together  with  Eckler's,  these  companies are treated and
referred to as predecessors of the Company (the  "Predecessors").  The financial
data for the four  Predecessors are presented on a combined basis.  Such data is
not comparable to that of the Company. See Note 1 to the Company's  Consolidated
Financial Statements.

     The selected combined consolidated financial data of the Predecessors as of
and for the fiscal years ended  December  31,  1994,  1995 and 1996 were derived
from the audited combined  financial  statements of the four  predecessors.  The
selected consolidated financial data of the Company was derived from the audited
consolidated  financial  statements  include herein.  The selected  consolidated
financial  data are qualified by reference to, and should be read in conjunction
with,  "Management's  Discussion and Analysis of Financial Condition and Results
of Operations" and the financial statements and notes thereto of the Company and
the Predecessors included elsewhere in this report.

<PAGE>
<TABLE>
<CAPTION>

                                                             PREDECESSORS                               THE COMPANY
                                           --------------------------------------------------    ---------------------------
                                                                       YEAR ENDED DECEMBER 31,
                                           ---------------------------------------------------------------------------------

                                                   1994             1995              1996            1997           1998
                                                   ----             ----              ----            ----           ----
<S>                                               <C>                 <C>               <C>             <C>            <C>  
                                                                                (In thousands, except per share data)
STATEMENT OF OPERATIONS DATA:
Revenues:
  Sales at used car stores.......................  $26,043         $27,521          $33,867          $35,279        $ 78,227
  Income on finance receivables..................    3,194           4,614            5,949            6,899          15,710
  Income from insurance and training............        --              --               --            1,178           1,448
                                                   --------    ------------    -------------    -------------    ------------

Total Revenues..................................    29,237          32,135           39,816           43,356          95,385
Total costs of sales............................    21,343          23,531           31,219           30,667          70,692
Selling, general and administrative expenses....     5,328           6,725            7,075           17,599          22,739
Compensation expense related to employee                                                                              
Stock options...................................        --              --               --            4,650             216
Restructuring charges...........................        --              --               --            2,118              --
                                                  ---------    ------------    -------------    -------------    ------------

Income (loss) from operations...................      2,566           1,879            1,522         (11,678)          1,738
Interest expense................................     (1,003)         (1,577)          (2,070)         (5,573)         (8,752)
Other income (expense)..........................         (8)           (452)              --              (5)            777
Failed offering costs...........................         --              --               --                          (1,063)
                                                  ----------    ------------    -------------    -------------    ------------

Net income (loss) from continuing operations....      1,555            (150)            (548)        (17,256)         (7,300)
Income (loss) from discontinued operations......         (6)             16             (316)         (1,393)            429
                                                  ----------    ------------    -------------    -------------    ------------
Net income (loss)...............................      1,549            (134)            (864)        (18,649)         (6,871)
Net income (loss) applicable to common stock....      1,549            (134)            (864)        (18,982)         (7,348)

Basic net Income (loss) per common share
from continuing operations.....................          --              --               --         $ (3.90)        $ (1.18)
Weighted average common shares                                                                                        
outstanding during the period...................         --              --               --           4,430           6,193

</TABLE>

<TABLE>
<CAPTION>



                                                           PREDECESSORS                                THE COMPANY
                                         -------------------------------------------------     -----------------------------
                                                                         AS OF DECEMBER 31,
                                         -----------------------------------------------------------------------------------

                                               1994                1995          1996            1997            1998
                                               ----                ----          ----            ----            ----
<S>                                           <C>                <C>                <C>             <C>              <C>
                                                                       (In thousands)
BALANCE SHEET DATA:
Finance receivables, net..................   $11,477           $ 16,399       $ 19,825        $ 33,227         $ 67,185
Inventories...............................     3,781              4,899          5,409          15,516           20,005
Total assets..............................    21,851             28,569         32,555          89,105          123,592
Total debt................................    14,563             19,760         23,723          69,654          101,656
Redeemable convertible preferred stock....        --                477             --           4,942               --
Total stockholders' equity................     4,143              3,503          5,854           1,680            8,863
</TABLE>




<PAGE>

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

     THIS  REPORT  CONTAINS  CERTAIN  "FORWARD-LOOKING  STATEMENTS"  WITHIN  THE
MEANING OF SECTION  27A OF THE  SECURITIES  ACT OF 1933,  AND SECTION 21E OF THE
SECURITIES  EXCHANGE ACT OF 1934. THE WORDS "BELIEVE,"  "EXPECT,"  "ANTICIPATE,"
"ESTIMATE," "PROJECT," "INTEND" AND SIMILAR EXPRESSIONS IDENTIFY FORWARD-LOOKING
STATEMENTS,  WHICH  SPEAK  ONLY AS OF THE DATE  EACH  SUCH  STATEMENT  WAS MADE.
FORWARD-LOOKING  STATEMENTS MAY INCLUDE,  BUT NOT BE LIMITED TO,  PROJECTIONS OF
REVENUES,  INCOME OR LOSS, PLANS FOR ACQUISITIONS AND EXPANSION,  INTEGRATION OF
NEW OPERATIONS,  FINANCING NEEDS, INDUSTRY TRENDS, CONSUMER DEMAND AND LEVELS OF
COMPETITION,  YEAR 2000  COMPLIANCE  AS WELL AS  ASSUMPTIONS  RELATING  TO THESE
MATTERS.  THESE  STATEMENTS  BY  THEIR  NATURE  INVOLVE  SUBSTANTIAL  RISKS  AND
UNCERTAINTIES,  SOME OF WHICH CANNOT BE PREDICTED OR  QUANTIFIED.  FUTURE EVENTS
AND ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE EXPRESSED IN, CONTEMPLATED
BY OR UNDERLYING ANY SUCH  FORWARD-LOOKING  STATEMENTS.  STATEMENTS CONTAINED IN
THIS "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS,"  IN "RISK  FACTORS," IN THE NOTES TO THE FINANCIAL  STATEMENTS  AND
ELSEWHERE IN THIS REPORT DESCRIBE FACTORS,  AMONG OTHERS,  THAT COULD CONTRIBUTE
TO OR CAUSE SUCH DIFFERENCES.

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

OVERVIEW

     Smart Choice  Automotive  Group,  Inc.  currently  operates 17 locations in
Florida  that sell used cars under the "First  Choice"  brand name.  The Company
also sells used cars that may not meet the First  Choice  criteria  through four
additional  stores in Florida that operate  under the "Team" name.  Through FFG,
its finance company subsidiary, the Company provides financing for its customers
by originating retail automobile installment sales contracts secured by the cars
it sells.

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

     In the  Predecessor  Acquisition,  shareholders  of SCHI were issued Common
Stock  having a majority of the voting  rights of the  Company.  Therefore,  the
Predecessor  Acquisition  was accounted for as a purchase of Eckler's by SCHI (a
reverse  acquisition  in which SCHI was  considered  the acquirer for accounting
purposes).  Accordingly,  the  financial  statements of the Company are those of
SCHI,  which was  incorporated  on June 21, 1996,  and was a  development  stage
company prior to the Predecessor Acquisition.

     PREDECESSOR COMPANIES AND LACK OF COMPARABILITY.  At approximately the same
time as the Predecessor  Acquisition,  the Company acquired  various  automobile
sales and finance  companies.  The Company accounted for the acquisition of each
of these companies as a purchase, recording the assets purchased and liabilities
assumed at their estimated fair values and including their results of operations
in the  consolidated  financial  statements of the Company from their respective
dates of  acquisition.  For  accounting  purposes,  the following  companies are
treated as  Predecessors  for  purposes  of  financial  statement  presentation:
Eckler's,   FFG  and   affiliates,   Liberty   Finance  Company  and  affiliates
("Liberty"), and Palm Beach Finance and Mortgage Company and affiliates ("PBF").
The  Predecessors  lacked a common  year end,  had  different  cost  bases,  had
different elections for income taxation, had different target customers for used
car sales,  and had different credit  underwriting and loss reporting  policies.
Accordingly,   the  Predecessors'  historical  results  of  operations  are  not
comparable to those of the Company.

     Eckler's  previously  had a fiscal year ending  September 30 for  financial
reporting purposes. As a result of the Predecessor Acquisition in which SCHI was
the acquirer  for  accounting  purposes,  the  Company's  fiscal year end became
December 31, which was the fiscal year end of SCHI.

RESULTS OF OPERATIONS FROM CONTINUING OPERATIONS

SEGMENT INFORMATION

     The Company is comprised of two segments:  used car stores and financing of
used car sales.  The Company's  results of operations are most  meaningful  when
analyzed and discussed by segment. The Company also has two other segments which
have been  discontinued.  These  segments are discussed  separately  below under
"Discontinued Operations."

USED CAR STORES
<TABLE>
<CAPTION>

                                                 YEAR ENDED                       YEAR ENDED
                                               DECEMBER 31, 1998               DECEMBER 31, 1997
                                       -------------------------------    ----------------------------

                                                            (Dollars in thousands)
<S>                                          <C>              <C>               <C>            <C>

Sales at used car stores...............     $ 78,227        100.0%             $ 35,279      100.0%
Cost of sales at used car stores(a)...        62,668         80.1%               27,951       79.2%
                                            --------        ------             --------       -----
                                            
  Gross profit...........................     15,559         19.9%                7,328       20.8%
Operating expenses...................         11,148         14.3%                7,256       20.6%
                                            ---------       ------             --------       -----
  Operating income...................       $  4,411          5.6%             $     72         .2%
                                            =========         ====             =========      =====

</TABLE>
          (a)  Includes intercompany costs from FFG of $5,434 and $2,311 for the
               years ended 1998 and 1997, respectively.

     Sales at used car  stores  increased  to $78.2  million  for the year ended
December  31, 1998  compared to $35.3  million for the same period in 1997.  The
increase in sales  reflect the sale of 8,338 cars at the 26 used car stores that
were open during the 1998 period as compared to the sale of 3,750 cars at the 20
used car stores that were open during the 1997 period.

     Gross profit  increased to $15.6 million during the year ended December 31,
1998 from $7.3 million during the year ended December 31, 1997.  Gross profit as
a percentage of sales  decreased  slightly to 19.9% for the year ended  December
31, 1998 as compared to 20.8% for the year ended December 31, 1997.

FINANCING OF USED CAR SALES
<TABLE>
<CAPTION>

                                               YEAR ENDED                YEAR ENDED
                                           DECEMBER 31, 1998          DECEMBER 31, 1997
                                           -----------------          -----------------

                                                            (Dollars in thousands)
<S>                                     <C>    <C>    <C>    <C>    <C>    <C>

Income on finance receivables(a)...........  $ 21,144     100.0%     $ 9,209     100.0%
Provisions for credit losses...............   (13,371)    (63.3)%     (4,942)    (53.7)%
Operating expense..........................    (2,840)    (13.4)%     (1,238)    (13.4)%
                                              -------     ------      -------    -------
  Operating income.........................     4,933      23.3%       3,029      32.9%
Interest expense on finance receivables....    (5,629)    (26.6)%     (2,902)    (31.5)%
                                              -------    -------      -------    -------
  Net income (loss)........................      (696)     (3.3)%    $   127       1.4%
                                              =======    =======     ========    ======
</TABLE>

          (a)  Includes  intercompany  revenues  from First Choice Auto Finance,
               Inc.  ("FCAF")  of $5,434 and $2,311 for the years ended 1998 and
               1997, respectively.

     Income on finance receivables increased to $21.1 million for the year ended
December  31, 1998 from $9.2  million for the same period in 1997.  The increase
reflects  the  increase in the average net finance  receivables  outstanding  to
$63.7  million for the year ended  December 31, 1998 from $25.1  million for the
same period of 1997. This increase  results from the  corresponding  increase in
the financing sales of used cars during the year ended December 31, 1998.

     A high  percentage  of the  Company's  customers  do not  make all of their
contractually  scheduled  payments on their  finance  contracts,  requiring  the
Company to charge off the remaining principal balance and accrued interest,  net
of recoveries on repossessed cars. The Company maintains on its balance sheet an
allowance for credit losses to absorb such losses.  To accrue to the  allowance,
the Company  records an expense  (the  "provision")  based upon its  estimate of
future credit losses on finance receivables originated. The provision for credit
losses for the year ended  December 31, 1998 was $13.4 million  compared to $4.9
million for the same period in 1997.  The increase  reflects  the  significantly
higher amount of finance receivables outstanding.

     Interest expense on finance  receivables  increased to $5.6 million for the
year ended  December 31, 1998 from $2.9 million for the same period in 1997. The
increase  reflects  the  higher  level of  finance  receivables,  which was only
partially  offset by the reduction in the weighted  average interest rate on the
borrowed  funds to 10.97% for the year ended  December  31, 1998 from 11.45% for
the year ended December 31, 1997.

     The net  loss for the  year  ended  December  31,  1998  was  approximately
$696,000  compared to a net income of $127,000  for the same period in 1997 as a
result of a higher  provision  for credit  losses as a  percentage  of income on
finance receivables.

COMPARISON OF THE THREE YEARS ENDED DECEMBER 31, 1998

     The following  comparison of the results of operations  for the three years
ended  December 31, 1998  compares the results of the Company for the year ended
December  31,  1998 and 1997 to the  results of the  Predecessors  on a combined
basis for the year ended December 31, 1996.

     REVENUES.  The  Company's  revenues for the fiscal year ended  December 31,
1998 were $95.4 million  representing a 120% increase over the revenues of $43.4
million  in 1997.  The  increase  was  primarily  the  result  of  growth of the
Company's  receivables  portfolio.  That growth  related to an increase of $42.9
million in the Company's used car sales as a result of the opening of additional
used car stores and increasing the number of car sales per store.

     The  Company's  revenues  for the fiscal year ended  December 31, 1997 were
$43.4 million representing a 9.0% increase over the revenues of $39.8 million in
1996  for the  Predecessors.  The  increase  was  primarily  the  result  of the
acquisition  of a used car and financing  company in 1997 after the  Predecessor
Acquisition.

     COSTS AND EXPENSES. The Company's cost of sales of used cars sold was $57.2
million for 1998  compared to $25.6  million  for the same period  during  1997,
representing  an increase of $31.6  million,  or 123%.  The gross profit margins
decreased  slightly to 26.8% for the year ended  December 31, 1998,  compared to
the gross profit margin of 27.3% for the same period in 1997.

     The  Company's  cost of sales of used cars sold was $25.6  million for 1997
compared to $28.3  million  during the same period  during 1996 for the combined
operations  of the  Predecessor  Acquisition,  representing  a decrease  of $2.7
million,  or 9.5%. The gross profit margin increased to 27.3% for the year ended
December  31, 1997,  compared to the gross  profit  margin of 16.3% for the same
period in 1996.

     The  Company's  provision for credit losses was 17.1% of sales of used cars
in 1998 as compared to the  provision  for credit losses over sales of used cars
in 1997 of 14%.  The  higher  provision  primarily  reflects  the  significantly
greater number of finance receivable contracts originated during 1998.

     The  Company's  selling,  general and  administrative  expenses  (including
depreciation  and  amortization)  were $22.7  million for 1998,  compared to the
selling,  general and  administrative  expenses of $17.6  million for 1997.  The
higher amount reflects expenses related to an increase in the number of used car
stores and  continued  development  of the Company's  corporate  infrastructure.
Selling,  general and administrative  expenses as a percentage of gross revenues
for 1998 was 23.8% for the year ended  December  31, 1998  compared to 40.6% for
the year ended December 31, 1977.

     The Company  incurred $1 million in charges  related to a withdrawn  public
offering  during 1998 which were not  comparable to any charges  incurred by the
Company in 1997 and which the Company believes will not recur in the future.

     INTEREST EXPENSE AND OTHER INCOME.  The Company's  interest expense totaled
$8.8 million for 1998,  compared to $5.6  million for 1997,  an increase of $3.2
million or 57%. This resulted  primarily  from higher  outstanding  indebtedness
needed to finance  higher  levels of finance  receivables  and  inventory as the
Company expanded its operations.

     NET LOSS.  The Company's  net loss for the year ended  December 31, 1998 of
$6.9 million was less than the loss of $18.6 million for the year ended December
31, 1997.  The net loss for 1997 included  one-time  charges of $4.6 million for
compensation  expense  related to employees'  stock options and $2.1 million for
restructuring charges.

CREDIT LOSSES

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

     The allowance decreased from 17.3% of outstanding  principal balances as of
December 31, 1997 to 15.5% as of December 31, 1998. The following table reflects
activity in the allowance for the year ended December 31, 1998 and 1997.


                                          YEAR ENDED             YEAR ENDED
                                      DECEMBER 31, 1998       DECEMBER 31, 1997
                                      -----------------       -----------------

                                               (Dollars in thousands)


Balance, beginning of period...........    $ 6,857               $   --
Balance at dates of acquisitions.......         --                5,628
Provision for credit losses............     13,371                4,941
Net charge offs........................     (8,070)              (3,712)
                                          ---------             ---------
Balance, end of period.................    $ 12,158              $ 6,857
Allowance as a percentage of
finance receivables....................        15.5%                17.3%


     NET CHARGE OFFS. The Company's policy is to charge off finance  receivables
when they are  deemed  uncollectible  but in any event at such time as a finance
receivable  is  delinquent  for 180  days.  The net  charge  off  amount  is the
principal  balance of the finance  receivable at the time of the charge off plus
accrued  but  unpaid  interest,   less  any  recovery.  The  Company  recognizes
recoveries in the amount of the wholesale value of repossessions.  The following
table sets forth  information  regarding  charge off activity for the  Company's
finance receivables for the year ended December 31, 1998 and 1997.


                                            YEAR ENDED            YEAR ENDED
                                        DECEMBER 31, 1998     DECEMBER 31, 1997
                                        -----------------     -----------------
                                                  (Dollars in thousands)
Principal Balances:
Collateral repossessed...................    $  17,345            $   7,920
Other....................................          --                    37
                                             ---------           ----------
Total principal balances.................       17,345                7,957
Recoveries, net..........................       (9,275)              (4,245)
                                             ----------          -----------
Net charge offs..........................        8,070                3,712
Average principal balances...............    $  63,118            $  29,037
Net charge offs as a percentage of
Average principal balance outstanding....         12.8%                12.8%


     The  Company's   credit  loss  experience  has  been  improving  since  the
Predecessor Acquisition. The Company believes that the improvement in its credit
loss  experience  as a percentage  of finance  receivables  resulted  from (i) a
continuing  improvement  in the  application of its  underwriting  standards and
servicing  and  collection   efforts,   (ii)   maximization   of  recoveries  on
repossessions and (iii) reduced defaults due to improved  operating  performance
of used cars sold.

     DELINQUENCIES.  Analysis  of  delinquency  trends  is  also  considered  in
evaluating  the adequacy of the  allowance.  The  following  table  reflects the
principal  balance of delinquent  finance  receivables  as a percentage of total
outstanding principal balances of the Company's finance receivables portfolio as
of December 31, 1998 and 1997.
   
                                          YEAR ENDED            YEAR ENDED
                                        DECEMBER 31, 1998    DECEMBER 31, 1997
                                        -----------------   -----------------
                                            (Dollars in thousands)


Aging Percentages:
Principal balances current..............        93.6%                91.1%
Principal balances 31 days to 60 days...         2.9                  4.0
Principal balances over 60 days.........         3.5                  4.9
Total over 31 days......................         6.4                  8.9

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

LIQUIDITY AND CAPITAL RESOURCES

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

     Net cash provided by (used for) operating activities was approximately $4.3
million,  $(5.9)  million and ($97,000)  for the years ended  December 31, 1998,
1997 and 1996, respectively. Net cash provided from operating activities for the
year ended December 31, 1998  primarily  reflected  operations  adjusted for the
non-cash charges for depreciation,  amortization and provision of credit losses,
impairment  of  goodwill  and  write  down  of  inventories.  The  Company  used
approximately $5.6 million to expand inventory during 1998. In addition to a net
operating loss in 1997, the Company used  approximately  $6.6 million in 1997 to
expand inventory and accounts receivable.  Cash used for operating activities in
1996 is primarily attributable to first year start-up expenses by the Company.

     Cash used in investing  activities was approximately  $45.9 million,  $26.6
million and $.7 million  during the years ended  December  31, 1998,  1997,  and
1996,  respectively.  The 1998 amount  primarily  reflects  increases in finance
receivables.  The 1997 amount reflects the Company's  growth,  including a $13.6
million increase to finance receivables,  approximately $12.2 million associated
with  acquisitions  and $1.3 million  related to the acquisition of property and
equipment.

     Cash provided by financing  activities  was  approximately  $41.8  million,
$33.6 million and $.8 million  during the years ended  December 31, 1998,  1997,
and  1996,  respectively.  In 1998,  the  Company  increased  its line of credit
borrowings by $32.3 million.  The Company raised  approximately  $5.9 million in
1998 and $4.6 million in 1997 through the sale of preferred stock.  During 1997,
the  Company   increased  its  line  of  credit  and  floorplan   borrowings  by
approximately  $20.6  million.  Notes payable  increased by $14.2 million during
1997 with the  borrowings  primarily  used for  acquisitions  and  expansion  of
operations.

     The Company has borrowed, and will continue to borrow,  substantial amounts
to fund its used car sales and financing operations. The Company has a revolving
credit  facility with Finova Capital  Corporation to provide funding for finance
receivables from used car sales originated by the Company (the "Finova Revolving
Facility").  The Finova  Revolving  Facility had a maximum  commitment  of $35.0
million at December 31, 1997,  was  increased to a maximum  commitment  of $75.0
million,  effective  May 11,  1998,  and was  increased  again to a maximum $100
million  effective  November 9, 1998. Under the Finova Revolving  Facility,  the
Company may borrow the lesser of  $100,000 or up to 55% of the gross  balance of
eligible finance  contracts.  The Finova Revolving  Facility expires in December
31, 2001, at which time its renewal will be subject to renegotiation. The Finova
Revolving  facility is secured by  substantially  all of the  Company's  finance
receivables.  As of December 31, 1998 and 1997, the principal amount outstanding
under the  Finova  Revolving  Facility  was  $63.7  million  and $31.2  million,
respectively.  The Finova  Revolving  Facility  bears interest at the prime rate
plus 2.5%  (10.25% as of December  31,  1998).  As part of the Finova  Revolving
Facility,  the Company  may finance up to $10 million of its used car  inventory
through Finova Capital Corporation. The Company was in violation of certain loan
covenants at December 31, 1998. Finova Capital  Corporation  granted a waiver of
the violation for December 31, 1998.

     During 1998 and 1997, the Company financed its used car inventory through a
line of credit with Manheim Automotive  Financial  Services,  Inc. (the "Manheim
Facility") which had an outstanding balance of $3.2 million at December 31, 1998
and $2.7 million at December 31, 1997. The maximum  commitment under the Manheim
Facility is $3.75 million. The Manheim Facility is secured by the Company's used
car  inventory  and bears  interest  at 1.5% over the  prime  rate  (9.25% as of
December 31, 1998).  Amounts  outstanding  are payable on the earlier of the day
after a car is sold or 180 days after the floorplan  advance.  The Company is in
the  process  of  liquidating  the  Manheim  Facility.  As of  April  1999,  the
outstanding balance was approximately $160,000.

     In March 1997 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 that bears  interest at 12.0% and is  convertible  into Common
Stock at a price  per of $7.40 per share  until  its  maturity  date of June 30,
2000,  and a $4.0 million  convertible  note that bears interest at 12.0% and is
convertible  at a price of $15.00 per share until its  maturity  date of May 12,
2002,  subject to  adjustment.  The Company  was in  violation  of certain  loan
covenants at December 31, 1998. Sirrom Capital  Corporation  granted a waiver of
the violation for December 31, 1998.

     In  September  1997,  the  Company   completed  the  private  placement  of
convertible notes in the aggregate amount of $1,050,000. The notes bear interest
at the  rate of  8.0%  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. All of the debt has been converted into Common
Stock as of  December  31,  1998.  The  Company  recorded  deferred  interest of
$525,000 as a result of the discount on the conversion price which was amortized
from the date of issuance to the first conversion date of the notes.

     In December 1997,  Raytheon Aircraft Credit Corporation  extended credit to
the Company in the amount of $2.2 million to finance the purchase of  equipment.
In December  1998,  the Company  entered into a sale  leaseback  agreement  (the
"Lease") with GE Capital  Corporation  in the aggregate  amount of $2,160,000 in
respect  of such  equipment.  The basic  term of the  Lease is 120  months at an
interest  rate per annum of 9.72% for the first 36 months and an  interest  rate
per annum of 6.79% for the remainder of the Lease's term.

     In October 1997 and January and May 1998,  the Company  borrowed a total of
$8.5 million from Stephens Inc. ("Stephens").  The Stephens' loans bear interest
at the rate of 10% per annum and are  secured  by all of the  assets  and common
stock of Eckler's.  The Company  guaranteed  the debt.  When the planned sale of
Eckler's  occurs,  the Notes  will have to be  satisfied  or  renegotiated  with
different terms. Stephens has extended the maturities on each of the three notes
to April 30, 2000.

     In  September  and  December  1997,  the Company  completed  an offering to
institutional  investors  of  400  units  of  Series  A  Redeemable  Convertible
Preferred  Stock and warrants at a price of $10,000 per unit.  Proceeds from the
offering,  net of offerings costs, were  approximately  $3.9 million.  Each unit
consisted of one share of Series A Redeemable  Convertible Preferred Stock and a
five year warrant to acquire 150 shares of Common Stock for each preferred share
purchased.  The exercise prices of the warrants are $16.20 for 45,000 shares and
$10.46 for 15,000  shares.  As of December  31,  1998,  all but one share of the
Series A Redeemable  Convertible  Preferred Stock had been converted into Common
Stock.

     In May and December  1997,  the Company  borrowed $1.0 million from Bankers
Life Insurance Company and its affiliates. On March 29, 1999, Bankers elected to
convert the $1.0 million,  plus accrued  interest and received 531,732 shares of
Company Common Stock.

     In May 1998, the Company sold to a private  investment  group 220 shares of
the Company's Series B Convertible  Preferred Stock for $10,000 per share for an
aggregate of $2.2 million. The Series B Convertible Preferred Stock has an 11.0%
dividend per year and is convertible  into Common Stock at a conversion  rate of
$10.00 per share. After November 5, 1999, the Company may, at its option, redeem
the Series B Convertible  Preferred  Stock for $10,000 per share.  In connection
with the  issuance  of the Series B  Convertible  Preferred  Stock,  the Company
agreed to certain  limitations on the issuance of additional shares of preferred
stock by the Company.

     In June 1998, the Company sold to a private  investment  group 24.98 shares
of the Company's Series C Convertible  Preferred Stock for $10,000 per share for
an aggregate of $249,800.  The Series C Convertible Preferred Stock has an 11.0%
dividend per year and is convertible  into Common Stock at a conversion  rate of
$11.18 per share. After December 2, 1999, the Company may, at its option, redeem
the Series C Convertible  Preferred  Stock for $10,000 per share.  In connection
with the  issuance  of the Series C  Convertible  Preferred  Stock,  the Company
agreed to certain  limitations on the issuance of additional shares of preferred
stock by the Company.

     In June 1998, the Company sold to a private  investment group 350 shares of
the Company's Series D Convertible  Preferred Stock for $10,000 per share for an
aggregate of $3.5 million. The Series D Convertible Preferred Stock has an 11.0%
dividend per year for five years and  thereafter has a 20% dividend per year and
is convertible into Common Stock at a conversion rate of $12.00 per share. After
June 22, 2001,  the Company may, at its option,  redeem the Series D Convertible
Preferred  Stock for $10,000 per share.  In connection  with the issuance of the
Series D Convertible  Preferred Stock, the Company agreed to certain limitations
on the issuance of additional shares of preferred stock by the Company.

     In January 1999,  pursuant to a  Subordinated  Loan  Agreement  dated as of
January 31, 1999  ("Subordinated Loan Agreement") by and between the Company and
High Capital Funding,  LLC ("High Cap"),  the Company  borrowed $2 million.  The
Company issued 1999 Series A  Subordinated  Notes ("High Cap Notes") to High Cap
and other  purchasers in connection with the  Subordinated  Loan Agreement.  The
Notes,  which mature on January 31, 2000, bear interest on the unpaid  principal
balance at the rate of 15% per annum,  payable monthly in arrears.  The interest
rate  increases  to 18% per annum on May 1, 1999 and to 22% per annum on October
1, 1999.  The High Cap Notes may be prepaid to any time  without  permission  or
penalty.

SEASONALITY

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

INFLATION

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

YEAR 2000

     At the  beginning  of the third  quarter  of 1996,  the  Company's  primary
operating  system and its  peripherals  were made Year 2000  compliant.  All new
computer systems and software  installations,  including the computer systems of
the Company's subsidiaries, are currently Year 2000 compliant. All other systems
including  the  Company's  local  and wide  area  networks,  telephone  systems,
uninterruptible  power  supply  systems and  historical  information  are or are
expected  to be in  compliance  no later  than the fourth  quarter of 1998.  The
Company continues to evaluate other  computerized  equipment to include security
systems,  fire control systems and power control systems,  to determine  whether
they are Year 2000 compliant.  The anticipated  expense associated with the year
2000 compliance  project will not include  additional  hardware cost or external
staffing.  The  amounts  incurred  to date and  expected  to be  incurred in the
future,  in connection  with  compliance  with Year 2000 are not believed by the
Company to be material. The Company is taking into account whether third parties
with which the Company has material  relationships  are Year 2000 compliant.  In
addition, the Company will develop contingency  strategies,  as appropriate,  in
the event the Company  encounters a Year 2000 compliance  problem in its own, or
in a third party vendor's, software applications.

RECENT ACCOUNTING PRONOUNCEMENTS

     In June 1998, the Financial  Accounting Standards Board issued Statement of
Financial Accounting  Standards No. 133, "Accounting for Derivative  Instruments
and Hedging  Activities"  (SFAS No. 133) which becomes  effective for us July 1,
1999. The Company believes the adoption of SFAS No. 133 will not have a material
impact on the Consolidated Financial Statements.

     In June 1998, the AICPA issued SOP 98-5 "Reporting on the Costs of Start-Up
Activities," SOP 98-5 requires costs of start-up  activities and  organizational
costs,  as  defined,  to be expensed as  incurred.  The Company  does not expect
adoption of the new SOP on January 1, 1999 to materially affect its consolidated
financial statements.

DISCONTINUED OPERATIONS

     In January 1999,  management  made a decision to discontinue the operations
of the new car  dealerships  segment  and the parts and  accessories  segment in
order to focus on the Company's  continuing  operations.  These two segments are
expected to be sold at a net gain during 1999.

     Revenues  of the  discontinued  operations  were  $46.5  million  and $25.2
million in 1998 and 1997,  respectively.  The Company's discontinued  operations
achieved an income of $0.4 million for the year ending December 31, 1998,  which
is an increase over a net loss of $1.4 million for the same period in 1996.  The
improved performance is primarily due to a significant increase in profitability
for the Corvette parts and accessories  segment.  The profitability  increase is
due to an  increasing  volume  of sales for the year  ended  December  31,  1998
compared to the same period in 1997.

RISK FACTORS

     There are various risks in purchasing the Company's securities or investing
in its business, including those described below.

LIMITED COMBINED OPERATING HISTORY

     The Company has only a limited  history of operations as a combined  entity
upon which to base its results of operations or prospects. The Company should be
evaluated  in  light  of  the  risks,   expenses  and  difficulties   frequently
encountered  by similar  companies in early stages of operations.  Further,  the
historical  financial  results of the companies  considered by the Company to be
its  Predecessors  are  presented  on a  different  basis  than  the  historical
financial  results of the Company and,  therefore,  may not be indicative of the
Company's future operating results or financial condition.

HISTORY OF LOSSES

     The Company  incurred a net loss of  approximately  $6.9  million for 1998,
reflecting  the  costs of a  withdrawn  public  offering,  and the  increase  in
provision  for credit losses  associated  with the  significant  increase in the
amount of finance  receivables,  and the interest  expense  incurred on a highly
leveraged  capital  structure.  The Company incurred a net loss of approximately
$18.6  million for 1997,  reflecting  the costs of  integration  of the acquired
companies,  development of the Company's  infrastructure,  compensation  expense
related to stock  options,  restructuring  charges  related to the settlement of
various  employment and consulting  agreements and costs related to acquisitions
that were not completed. Although the Company has experienced growth in revenues
since January 1997  subsequent to the Predecessor  Acquisition,  there can be no
assurance that growth and future  profitability  can be achieved.  The Company's
ability to maintain  profitability and positive cash flow while implementing its
business strategy will depend on a number of factors,  including its ability to:
(i)  assimilate  and  manage  past and future  expansion,  (ii)  expand  revenue
generating  operations while not  proportionately  increasing its administrative
overhead,  (iii) originate  finance contracts with an acceptable level of credit
risk, (iv) obtain sufficient  financing with acceptable terms to fund expansion,
(v) adapt to the  increasingly  competitive  market in which it  operates,  (vi)
obtain and purchase  adequate  supplies of cars,  and (vii)  collect its finance
receivables.  There can be no assurance  that the Company will be  successful in
maintaining  or  increasing  revenues,  earnings or  positive  cash flows in the
future.  Any such failure could have a material  adverse effect on the Company's
financial  condition,  results of  operations or cash flows.  See  "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

ABILITY  TO MANAGE  GROWTH;  RISKS  ASSOCIATED  WITH  EXPANSION  AND  CHANGES IN
BUSINESS

     The  Company's  future  growth  will depend in large part on its ability to
open  additional  used  car  stores,  manage  expansion,  control  costs  in its
operations,  integrate  acquisitions  into existing  operations,  underwrite and
collect  finance  receivables  without  significant  losses,  develop  the human
resources  necessary  to support  rapid  growth and  establish  and maintain the
infrastructure  necessary  to execute its  business  plan.  While the Company is
presently focusing on internal expansion, a significant portion of the Company's
growth  historically  has  resulted  from  acquisitions  of  existing  used  car
dealerships and related  businesses,  including used car finance  companies that
lend  primarily  to  credit-impaired  customers.  The Company  will  continue to
consider   selected   acquisitions   under   appropriate   circumstances.    See
"Business--Company Growth."

     The Company's growth has placed  significant  demands on all aspects of the
Company's  business,  including  its  management,  administrative,  operational,
financial  reporting  and  other  systems  personnel.  Additional  growth by the
Company may further strain the Company's systems and resources, and there can be
no assurance that the Company's systems, resources, procedures and controls will
be adequate to support further expansion of the Company's operations.  As growth
continues,  the Company will review its management  infrastructure,  systems and
financial  controls,  and any acquired used car  dealership  operations and make
adjustments or complete reorganizations as appropriate.  Additionally, from time
to time, the Company may consider the disposition of certain non-core  operating
units. Unforeseen capital and operating expenses, liabilities, barriers to entry
in the markets in which the Company has little or no prior experience,  or other
difficulties, complications and delays frequently encountered in connection with
the expansion and integration of operations could inhibit the Company's  growth.
In order  for the  Company  to  recognize  the full  benefits  of a  significant
acquisition,  it will need to integrate the acquisition with its administrative,
finance, sales, personnel and marketing organizations.

     The  Company's  ability to continue to grow its used car business will also
be dependent  upon,  among other things,  the  Company's  ability to attract and
retain competent  management,  the availability of capital to fund expansion and
the  availability of suitable store locations and, to a lesser extent,  suitable
acquisition  candidates.  The  Company  intends to finance  expansion  through a
combination  of  its  available  cash   resources,   borrowings  from  financial
institutions  and, in appropriate  circumstances,  the issuance of equity and/or
debt  securities.  Expansion  will have a  significant  effect on the  Company's
financial  position and could cause  substantial  fluctuations  in the Company's
quarterly and yearly operating  results.  Acquisitions are also likely to result
in the recording of significant  goodwill and intangible assets on the Company's
financial  statements,  the amortization of which would reduce reported earnings
in subsequent  years. In addition,  the issuance of additional  shares of Common
Stock and other  securities in connection with  acquisitions  may  substantially
dilute the interests of existing shareholders.

     The  Company's  finance  receivables  portfolio has grown rapidly since the
Company's inception and such growth is expected to continue. This growth creates
the risk that the  Company's  provision for credit losses will not be sufficient
to cover actual losses on the  portfolio.  The  Company's  failure to maintain a
sufficient  provision for credit losses could have a material  adverse effect on
the Company's  financial  condition,  results of  operations or cash flows.  See
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations--Credit Losses."

     The diversion of  management's  attention  required by the  integration  of
multiple stores, as well as any other  difficulties  which may be encountered in
the transition and integration process,  could have a material adverse effect on
the  financial  condition,  results of  operations or cash flows of the Company.
There can be no assurance  that the Company will  successfully  open  additional
used  car  stores,   or  identify  suitable   acquisition   candidates  or  that
acquisitions will be consummated on acceptable terms or that the Company will be
able to integrate  successfully  the expanded  operations  or manage the related
increase in personnel.

HIGH RISK OF DEFAULTS ON RECEIVABLES PORTFOLIO

     The self-financed  used car business sells to customers that typically have
limited credit  histories,  low incomes and/or past credit  problems  (generally
referred  to herein as  "credit-impaired  customers").  Such  customers  cannot,
generally,  obtain a loan from a local financial  institution or from the credit
facilities of a major automobile  manufacturer (e.g.,  General Motors Acceptance
Corporation or Ford Motor Credit  Company).  One industry report  estimated that
between 5% and 40% of any group of loans made to credit-impaired  customers will
default during the life of that particular  group.  Consequently,  the Company's
finance contracts have a higher probability of delinquency and default and, as a
result,  greater  servicing  costs than loans made to consumers  who pose lesser
credit risks.  The Company's  profitability  depends in part upon its ability to
properly  evaluate  the   creditworthiness  of  credit-impaired   customers  and
efficiently  service  its loans.  There can be no  assurance  that  satisfactory
credit  performance  of the Company's  customers  will be maintained or that the
rate of future defaults  and/or losses will be consistent with prior  experience
or at levels  that  will  allow  the  Company  to  achieve  profitability.  Most
borrowers' ability to remit payments in accordance with the terms of their loans
is dependent on their continued  employment.  An economic downturn  resulting in
increased  unemployment  could cause a  significant  rise in  delinquencies  and
defaults,  which could have a material adverse effect on the Company's financial
condition,  results of  operations  or cash flows.  Moreover,  increases  in the
delinquency  and/or loss rates in the Company's loan portfolio  could  adversely
affect the Company's  ability to obtain or maintain its financing  sources.  See
"Business--Financing   Customers   with  Impaired   Credit"  and   "Management's
Discussion and Analysis of Financial Condition and Results of Operations--Credit
Losses."

UNSEASONED LOAN PORTFOLIO

     Due to the growth of the Company's loan portfolio  during the last eighteen
months, a significant portion of the loan portfolio is unseasoned.  Accordingly,
delinquency  and  loss  rates  in  the  portfolio  will  most  likely  fluctuate
unpredictably.  Cars that serve as collateral will, in most cases, be worth less
than the unamortized  principal and interest charges.  The resale prices of used
cars will  affect the amount  realized  following  repossession  of  collateral.
Further,   the  Company  may  also  incur   significant  legal  costs  prior  to
repossessing a financed  vehicle or reselling  such vehicle after  repossession.
The  Company  does not intend to  purchase  insurance  to protect  against  loan
defaults or make up the difference  between the principal  amount remaining on a
defaulted  loan and the net  proceeds  realized  on the resale of a  repossessed
vehicle that secured such defaulted loan.  There is no assurance that loans made
by the Company to its customers will ultimately be repaid, which would result in
the Company  having to write off such loans and would  materially  and adversely
affect the Company's financial  condition,  results of operations or cash flows.
See "Management's  Discussion and Analysis of Financial Condition and Results of
Operations--Credit Losses."

HIGH LEVERAGE

     The Company is highly leveraged.  On December 31, 1998, the Company's total
indebtedness  (including  discontinued   operations)  was  approximately  $113.2
million,  or 91.6% of its total assets.  A  substantial  portion of such debt is
collateralized  by the Company's  finance  contracts,  automobile  inventory and
certain property,  plant and equipment. The Company's substantial leverage could
have  adverse  consequences,  including:  (i)  limiting  its  ability  to obtain
additional financing,  (ii) requiring the Company to use substantial portions of
operating cash flow to meet interest and principal repayment obligations,  (iii)
exposing  the Company to interest  rate  fluctuations  due to floating  interest
rates on certain  borrowings,  (iv)  increasing the Company's  vulnerability  to
changes  in  general  economic  conditions  and  competitive  pressures  and (v)
limiting the Company's ability to capitalize on potential growth  opportunities.
In addition, the Company's loan agreements contain certain covenants that limit,
among  other  things,  the  Company's  ability to engage in certain  mergers and
acquisitions,  incur additional indebtedness or further encumber its assets, pay
dividends or make other distributions. The covenants also require the Company to
meet certain financial tests. A default under the Company's borrowing agreements
could have a  material  adverse  effect on the  Company's  financial  condition,
results of operations or cash flows.  The Company has a material  amount of debt
maturing in the year 2000 and refinancing  said debt could result in unfavorable
terms to the Company.  See  "Management's  Discussion  and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital Resources."

SUBSTANTIAL NEED FOR ADDITIONAL CAPITAL

     The Company will require additional capital in order to fund any expansion.
If adequate  funds are not  available on terms  acceptable  to the Company,  the
Company  may  be  required  to   significantly   curtail  its  expansion  plans.
Historically,  the Company has funded most of its capital  expenditures  for the
opening of new stores through the issuance of debt and preferred  stock,  which,
in many cases, is convertible into shares of Common Stock. The Company's ability
to fund the  planned  expansion  of its store  base is  directly  related to the
continued availability of these and other funding sources.

     The  operation  of used car  dealerships  and finance  companies is capital
intensive. The Company requires capital to: (i) acquire and maintain inventories
of cars and parts, (ii) originate finance contracts, (iii) purchase and maintain
service  equipment and (iv) maintain its  facilities.  The Company  finances the
purchase of all of its used car inventory  and leases most of the  properties on
which  it  conducts  business.  Consequently,  the  Company  incurs  significant
operating,  borrowing and fixed occupancy costs.  Should the Company's expansion
plans  require  additional  funding or should its  capital  requirements  exceed
current estimates, the Company could be required to seek additional financing in
the future.  There can be no  assurance  that the Company  will be able to raise
such financing when needed or on acceptable terms. As a result,  the Company may
be forced to reduce or delay additional expenditures or otherwise delay, curtail
or discontinue some or all of its operations. Further, if the Company is able to
access  additional  capital  through  borrowings,  such debt will  increase  the
already substantial debt obligations of the Company, which could have a material
adverse effect on the Company's  financial  condition,  results of operations or
cash flows. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Liquidity and Capital Resources."

     The terms of the Company's financing  transactions are affected by a number
of other  factors which are beyond the control of the Company,  including  among
others,  conditions in the securities and finance markets generally,  prevailing
interest  rates and  prevailing  economic  conditions.  If additional  funds are
raised by issuing equity securities, dilution to the holders of Common Stock may
result.

HIGHLY COMPETITIVE MARKET

     The market for financing  credit-impaired  customers is highly competitive.
The  Company's  competitors  include  local,  regional and  national  automobile
dealers,  used  car  finance  companies  and  other  sources  of  financing  for
automobile  purchases,  many of which are larger and have greater  financial and
marketing resources than the Company.  Historically,  commercial banks,  savings
and loan associations, credit unions, captive finance subsidiaries of automobile
manufacturers  and other  consumer  lenders,  many of which  have  significantly
greater  resources  than  the  Company,  have not  competed  for  financing  for
credit-impaired  used car buyers.  To the extent that such lenders  expand their
activities in the  credit-impaired  market, the Company's  financial  condition,
results of operations or cash flows could be materially and adversely  affected.
During the past two years, several companies,  including large, well-capitalized
public  companies,  have devoted  considerable  resources to acquisitions in the
Company's market for credit-impaired customers.

     The Company also  competes with  franchised  dealers,  individual  used car
dealerships,  as well as  individual  buyers and sellers of used cars.  Industry
wide gross profit margins on sales of cars generally  have been  declining,  and
the used car market faces increasing  competition from  non-traditional  sources
such as  independent  leasing  companies,  brokers,  buying  services,  Internet
companies and used car  superstores.  Some of the recent market  entrants may be
capable of operating on smaller gross margins than the Company.  There can be no
assurance  that  the  Company  will be able to  maintain  or  increase  its size
relative to that of its competitors or to increase profit margins in the face of
increased  competition.  The  Company  expects  that  there  will be  increasing
competition  in the  acquisition  of other  used  car  dealerships  as  industry
participants become larger. See "Business--Self-Financed Used Car Stores."

SENSITIVITY TO INTEREST RATES

     A substantial portion of the Company's finance contract income results from
the difference  between the rate of interest it pays on the funds it borrows and
the  rate  of  interest  it  earns  pursuant  to the  finance  contracts  in its
portfolio.  While the finance  contracts that the Company services bear interest
at fixed rates, the Company's  indebtedness generally bears interest at floating
rates. In the event the Company's interest expense increases,  the Company would
seek to compensate  for such  increases by raising the interest rates on its new
finance  contracts  or by raising the retail  sales  prices of its cars.  To the
extent the Company is unable to do so because of legal limitations or otherwise,
the net margins on the  Company's  finance  contracts  would  decrease,  thereby
adversely affecting the Company's financial condition,  results of operations or
cash flows. See "Management's Discussion and Analysis of Financial Condition and
Results of  Operations--Regulation  and Litigation" and "Management's Discussion
and Analysis of Financial  Condition  and Results of  Operations--Liquidity  and
Capital Resources."

FLUCTUATIONS IN OPERATING RESULTS

     The  Company's  operating  results  have  varied  in the  past and may vary
significantly in the future.  Factors causing  fluctuations in operating results
include,  among other things,  seasonality in car purchases,  changes in pricing
policies by the  Company and its  competitors,  changes in  operating  expenses,
changes in the Company's  strategy,  personnel changes,  the failure,  delay and
expense  in making  the  Company's  software,  systems  and  networks  Year 2000
compliant,  the effect of acquisitions and general economic factors. The Company
has limited or no control over many of these factors.  As a result,  the Company
believes that period-to-period  comparisons of its results of operations are not
necessarily  meaningful  and should not be relied upon as  indicative  of future
performance.  Due to all of these  factors,  it is  likely  that in some  future
period the Company's results of operations will fall below market  expectations.
This would likely negatively impact the Company's financial  condition,  results
of  operations or cash flows and cause the price of the Common Stock to decline.
See "Management's  Discussion and Analysis of Financial Condition and Results of
Operations--Seasonality."

BUSINESS CYCLES

     Sales of motor vehicles  historically have been cyclical,  fluctuating with
general economic cycles.  During economic  downturns,  the automotive  retailing
industry  tends to experience the same periods of decline and recession as those
experienced in the general  economy.  The Company  believes that the industry is
influenced  by  general   economic   conditions  and  particularly  by  consumer
confidence,  employment  rates,  the level of personal  discretionary  spending,
interest  rates and  credit  availability.  There can be no  assurance  that the
industry will not experience  sustained  periods of declines in car sales in the
future.  Any such declines would have a material adverse effect on the Company's
financial condition, results of operations or cash flows.

POTENTIAL ADVERSE EFFECT OF ECONOMIC SLOWDOWN

     The Company's business is directly related to sales of used cars, which are
affected  by  employment  rates,  prevailing  interest  rates and other  general
economic  conditions.  A future  economic  slowdown or  recession  could lead to
increased  delinquencies,  repossessions and credit losses that could hinder the
Company's  business  and  planned  expansion.  Due to  the  Company's  focus  on
credit-impaired  customers, its actual rate of delinquencies,  repossessions and
credit losses on finance contracts could be higher under adverse conditions than
those  experienced  in the  automobile  finance  industry in  general.  Economic
changes are uncertain and weakness in the economy could have a material  adverse
effect on the  Company's  financial  condition,  results of  operations  or cash
flows.

GEOGRAPHIC CONCENTRATION

     The Company's car sales and financing operations are presently concentrated
in the  central  and  southeast  regions of  Florida.  An  economic  slowdown or
recession, a change in the regulatory or legal environment, natural disasters or
other adverse  conditions in Florida could have a material adverse effect on the
Company's financial condition, results of operations or cash flows.

SOURCING USED CARS

     The Company acquires a significant amount of its used car inventory through
auctions and, to a lesser extent, from other sources,  including wholesalers and
trade-ins at the Company's  franchised new car stores.  Some of the auctions for
cars  are  open  only  to the  franchised  dealers  of  specific  manufacturers.
Accordingly,  there can be no assurance that sufficient  inventory will continue
to be  available  to the  Company  or will be  available  at  comparable  costs,
particularly if changes occur in the type of used cars that are sold in auctions
closed to the Company or if  competitive  pressures  increase as a result of new
entrants into the  Company's  market.  Any  reduction in available  inventory or
increase in inventory  wholesale costs that cannot be reflected in retail market
prices  could  have  a  material  adverse  effect  on  the  Company's  financial
condition,  results of  operations or cash flows.  See  "Business--Self-Financed
Used Car Stores."

RISKS RELATED TO GOODWILL

     As of December  31, 1998,  the  Company's  total assets were  approximately
$123.5 million,  of which approximately $23.8 million, or approximately 19.3% of
total  assets,  was  goodwill.  Goodwill  is the excess of cost over fair market
value of net assets  acquired.  There can be no assurance that the value of such
goodwill will ever be realized by the Company.  The Company's  goodwill is being
amortized on a straight-line basis over a period of 40 years, which will produce
an annual  charge to  operations  of  approximately  $331,000.  The Company will
evaluate on a regular basis whether events and circumstances have occurred which
indicate that the carrying  amount of goodwill  warrants  revision or may not be
recoverable.  Any future determination  requiring the write-off of a significant
portion of unamortized  goodwill could adversely affect the Company's  financial
condition.

SHARES ELIGIBLE FOR FUTURE SALE

     A total of 1,555,650 shares of Common Stock have been reserved for issuance
under the Company's employee  compensation plans and certain  outstanding option
agreements.  The  Company  also  had  outstanding,  as  of  December  31,  1998,
convertible notes, public and non-public warrants,  convertible preferred stock,
and certain other rights to acquire a total of 2,379,183 shares of Common Stock,
of which  all but  approximately  680,012  shares  of  Common  Stock  have  been
registered for resale on registration  statements on Form S-3, including 600,000
shares  underlying  publicly traded warrants.  The beneficial  owners of 660,012
shares of Common  Stock,  issuable  upon  conversion  of  currently  outstanding
convertible preferred stock and debt have registration rights that allow them to
cause the Company to register their shares for sale under certain circumstances.
Sales of substantial amounts of Common Stock, or the availability of substantial
amounts of Common Stock for future sale,  could adversely  affect the prevailing
market price of the Common Stock..

REGULATION AND LITIGATION

     The  Company's  business is subject to extensive  federal,  state and local
regulation and supervision.  Such regulation,  among other things,  requires the
Company  to limit  interest  rates,  fees and other  charges  related to finance
contracts,  make specified  disclosures to consumers and adhere to strict limits
in the repossession and selling of collateral.  Such regulations exist primarily
for the  benefit of  consumers,  rather  than for the  protection  of dealers or
finance  companies  and could limit the  Company's  discretion  in operating its
business. Noncompliance with any applicable statutes or regulations could result
in the  suspension  or  revocation  of any  license  at  issue,  as  well as the
imposition of civil fines and criminal penalties.

     Currently,  the Company's  used car sales  activities are conducted and its
finance contracts have been originated in Florida, where existing statutes limit
the  interest  rate  which a lender may charge on  consumer  finance  contracts.
Before the Company  expands its  operations  to states other than  Florida,  the
Company must  consider the impact of usury laws in those  states.  To the extent
that the  interest  rates and fees  charged by the  Company  are  limited by the
application of maximum  allowable  interest rates and charges that in the future
may be  lower  than  those  currently  charged  by the  Company,  the  Company's
financial  condition,  results  of  operations  or cash  flows may be  adversely
affected. See "Business--Regulation, Supervision and Licensing."

     In addition, due to the consumer-oriented  nature of the automobile finance
industry,  used car dealerships are frequently named as defendants in litigation
involving alleged violations of federal and state consumer lending or other laws
and  regulations.  There can be no  assurance  that the Company  will not become
subject to such  litigation in the future.  A significant  judgment  against the
Company  could  have  a  material  adverse  effect  on the  Company's  financial
condition, results of operations or cash flows. See "Legal Proceedings."

DEPENDENCE ON KEY PERSONNEL

     The  Company's  future  success  depends on the  continued  services of the
Company's key management  personnel as well as the Company's  ability to attract
additional  members to its management team with experience in the used car sales
and  financing  industries.  The  unexpected  loss of the services of any of the
Company's key  management  personnel,  or an inability to attract new management
when  necessary,  could  have a  material  adverse  effect  upon  the  Company's
financial condition, results of operations or cash flows.

POTENTIAL VOLATILITY OF STOCK PRICE

     The  market  price of the  Common  Stock  has been and may  continue  to be
subject  to  wide   fluctuations   in   response   to,   among   other   things,
quarter-to-quarter   variations  in  operating  results,   changes  in  earnings
estimates by analysts,  market  conditions in the industry and general  economic
conditions.  Further, the stock market from time to time experiences significant
price  and  volume   fluctuations  which  may  be  unrelated  to  the  operating
performance of particular companies.  Factors such as the foregoing could have a
material adverse effect on the price of the Common Stock.

ENVIRONMENTAL RISKS

     The Company is subject to federal,  state and local  laws,  ordinances  and
regulations which establish various health and environmental  quality standards,
and liability  related  thereto,  and provide  penalties for violations of those
standards.  Under certain laws and  regulations,  a current or previous owner or
operator of real property may be liable for the cost of removal and  remediation
of hazardous or toxic  substances or wastes on, under, in or emanating from such
property.  Such laws  typically  impose  liability  whether  or not the owner or
operator  knew of, or was  responsible  for, the  presence of such  hazardous or
toxic substances or wastes.  Certain laws, ordinances and regulations may impose
liability on an owner or operator of real property  where on-site  contamination
discharges into waters of the state, including groundwater.  Under certain other
laws,  generators  of  hazardous  or toxic  substances  or wastes that send such
substances  or wastes to  disposal,  recycling or  treatment  facilities  may be
liable  for  remediation  of  contamination  at  such  facilities.  Other  laws,
ordinances  and   regulations   govern  the   generation,   handling,   storage,
transportation  and disposal of hazardous and toxic  substances  or wastes,  the
operation and removal of underground  storage tanks, the discharge of pollutants
into  surface  waters  and  sewers,  emissions  of certain  potentially  harmful
substances into the air and employee health and safety. The business  operations
of the Company are subject to such laws,  ordinances and  regulations  including
the use,  handling  and  contracting  for  recycling or disposal of hazardous or
toxic substances or wastes, including  environmentally  sensitive materials such
as motor oil,  transmission  fluid,  antifreeze,  freon, waste paint and lacquer
thinner, batteries, solvent, lubricants,  degreasing agents, gasoline and diesel
fuels.  The Company is subject to other laws,  ordinances  and  regulations as a
result of the past or present existence of underground  storage tanks at many of
the Company's properties.

     Certain laws and  regulations,  including those governing air emissions and
underground  storage tanks, are amended  periodically to require compliance with
new or more stringent  standards as of future dates.  The Company cannot predict
what  other  environmental  legislation  or  regulations  will be enacted in the
future,  how  existing or future laws or  regulations  will be  administered  or
interpreted  or what  environmental  conditions  may be  found  to  exist in the
future.  Compliance  with new or more  stringent laws or  regulations,  stricter
interpretation  of  existing  laws,  or the future  discovery  of  environmental
conditions  may  require  expenditures  by the  Company,  some of  which  may be
material.

NO ANTICIPATED DIVIDENDS

     The Company has not paid  dividends  on its Common  Stock since its initial
public  offering  of  Common  Stock in 1995,  and  does  not  intend  to pay any
dividends on its Common Stock for the foreseeable future. It is anticipated that
any  earnings  which the Company may realize in the  foreseeable  future will be
retained to finance the development and expansion of its business.  In addition,
under certain loan covenants,  the Company is prohibited  from paying  dividends
without the prior consent of the lender.  Also,  certain series of the Company's
preferred  stock provide for cumulative  dividends on such  preferred  stock and
prohibit the payment of dividends  on the Common Stock if unpaid  dividends  are
outstanding on such preferred stock.

NO ASSURANCE OF CONTINUED MARKET FOR COMMON STOCK

     The  Company's  Common  Stock is  currently  listed on the Nasdaq  SmallCap
Market.  Continued  inclusion on the Nasdaq SmallCap Market requires the Company
to maintain  certain  criteria such as market value,  public float, net tangible
asset value,  capital and surplus.  The Company is currently  not in  compliance
with the listing  requirements of the Nasdaq SmallCap  Market.  In the past, the
Company  has  not  met  the  Nasdaq  SmallCap  Market  requirement  of a  market
capitalization of $35 million,  and Nasdaq commenced the delisting process.  The
Company requested a hearing and made a submission  against  delisting.  Based on
the  submission  and  the  Company's  subsequent   compliance  with  the  market
capitalization  requirement,  Nasdaq terminated the delisting process.  However,
when the  Company  again did not comply with the  listing  requirements,  Nasdaq
again commenced the delisting process.  By letter dated October 26, 1998, Nasdaq
allowed the Company to continue its listing,  provided  that the Company earn at
least  $500,000  net income for the fiscal year ended  December  31,  1998.  The
Company  did not earn that  amount,  but because it intends to sell both the two
new car dealerships and its Eckler's  business  segments and take other actions,
believes  it will meet the $2  million  net  tangible  asset  requirements  upon
completing sales on or before December 31, 1999.

     If  the  Company  fails  to  comply  with  the  applicable  Nasdaq  listing
requirements,  it would lose Nasdaq listing and trading in the securities  would
be conducted in the over-the-counter market known as the OTC Electronic Bulletin
Board, or the "pink sheets." In such event,  purchasers of Common Stock may have
difficulty  selling their shares  because some  brokerage  firms will not effect
transactions in securities that are traded in the pink sheets.  Further,  if for
any reason the Company fails to maintain sufficient qualifications for continued
listing on the Nasdaq  SmallCap  Market and the market price of the Common Stock
declines  to  below  $5.00  per  share,  purchasers  of  Common  Stock  may have
difficulty selling their shares should they desire to do so because of the penny
stock rules.  The  Securities and Exchange  Commission  has adopted  regulations
which generally define a penny stock to be any equity security that has a market
price of less than $5.00 per share or an  exercise  price of less than $5.00 per
share,  subject to certain exceptions.  The shares of Common Stock are currently
exempt from the  definition of penny stock because they are quoted on the Nasdaq
SmallCap  Market.  If they are later removed from listing by the Nasdaq SmallCap
Market,  and are traded at a price below  $5.00 per share,  the shares of Common
Stock may become subject to the penny stock rules that impose  burdensome  sales
practice  requirements  on  broker-dealers  who sell such  securities to persons
other than established customers and institutional  accredited  investors,  and,
thus,  the  rules  will  restrict  the  ability  of  broker-dealers  to sell the
Company's  Common Stock.  Some brokerage  firms will not effect  transactions in
securities if such  securities  trade below $5.00 per share,  and it is unlikely
that  any  bank  or  financial   institution  will  accept  such  securities  as
collateral, which could have an adverse effect on the development or maintenance
of a market for such securities.

POTENTIAL CONFLICTS OF INTEREST

     Robert J.  Abrahams,  the Chairman of the Board of the  Company,  is also a
director of Ugly  Duckling  Corporation  ("Ugly  Duckling"),  a retailer of used
cars.  Although the Company  believes that it is not in direct  competition with
Ugly  Duckling  because  the  Company  generally  retails  later model cars to a
different  market  segment of  customers,  Mr.  Abrahams  may have a conflict of
interest in the future  should  Ugly  Duckling  and the Company  pursue the same
acquisitions  or customers  having the same credit profile.  In such event,  Mr.
Abrahams  would be required  to recuse  himself  from both  boards of  directors
regarding any decisions to be made about business opportunities.  See "Executive
Officers of the Registrant."

POTENTIAL INFLUENCE OF EXISTING SHAREHOLDERS

     As of December 31, 1998,  the Company's  directors and executive  officers,
their affiliates, and certain principal shareholders owned or had voting control
of  approximately  38.4%  of the  issued  and  outstanding  Common  Stock of the
Company.  Further,  assuming  exercise  by all of the  Company's  directors  and
executive  officers of all of the  outstanding  options and warrants to purchase
Common  Stock  held by  them,  they  would  control,  as of  December  31,  1998
approximately 46.7% of the voting stock. Consequently, management may be able to
direct the election of the Company's  directors,  effect  significant  corporate
events and generally  direct the affairs of the Company.  The  concentration  of
ownership  by  the  Company's  directors  and  executive  officers  and  certain
principal  shareholders may have the effect of approving or preventing a sale or
takeover of the Company on terms unfavorable to other shareholders.

ANTI-TAKEOVER CONSIDERATIONS

     Certain   provisions  of  Florida  law  and  the   Company's   Articles  of
Incorporation  as  amended  or  Bylaws  as  amended  ("Articles/Bylaws")  could,
together or separately,  discourage potential  acquisition  proposals,  delay or
prevent a change in control  of the  Company  and limit the price  that  certain
investors might be willing to pay in the future for the Company's  Common Stock.
The  Company is subject to the  "affiliated  transactions"  and  "control  share
acquisition"  provisions of the Florida  Business  Corporation Act (the "FBCA").
Those provisions  require,  subject to certain  exceptions,  that an "affiliated
transaction"  be  approved by a majority of  disinterested  directors  or by the
holders of two-thirds of the voting shares other than those  beneficially  owned
by an "interested shareholder." Voting rights must also be conferred on "control
shares" acquired in specified control share acquisitions,  generally only to the
extent conferred by resolution  approved by the shareholders,  excluding holders
of  shares   defined  as  "interested   shares."  In  addition,   the  Company's
Articles/Bylaws, among other things, provide for a classified Board of Directors
for the Company  and provide  that (i) any action  required or  permitted  to be
taken by the  shareholders  of the Company may be effected  only at an annual or
special meeting of shareholders and not by written consent of the  shareholders;
(ii) any special meeting of the  shareholders may be called only by the Chairman
of the Board, the President or the Chief Executive Officer,  or upon the written
demand of the holders of not less than 25% of the votes entitled to be cast at a
special  meeting;  (iii)  an  advance  notice  procedure  must be  followed  for
nomination of directors and for other shareholder  proposals to be considered at
annual shareholders' meetings; and (iv) a director may be removed only for cause
upon approval of holders of not less than 662/3% of the  Company's  voting stock
as such  term is  used in the  Articles/Bylaws.  In  addition,  the  Company  is
authorized to issue up to 5.0 million shares of preferred  stock, in one or more
series,  having  terms  fixed by the  Board  of  Directors  without  shareholder
approval, including voting, dividend or liquidation rights that could be greater
than or senior to the rights of  holders of Common  Stock.  As of  December  31,
1998, the Company had outstanding 595.98 shares of preferred stock.  Issuance of
additional  shares of Common Stock or new series of  preferred  stock could have
the effect of  preventing  or delaying a sale or  takeover of the Company  which
might have been in the best interests of the Company and its  shareholders.  See
"Description of Capital Stock."

PENDING LITIGATION - PUTATIVE CLASS ACTION LAWSUIT

     During March 1999,  certain  shareholders of the Company filed two putative
class action lawsuits  against the Company and certain of the Company's  current
and former  officers and directors in the United States  District  Court for the
Middle  District  of  Florida  (collectively,  the  "Securities  Actions").  The
Securities  Actions  purport  to be brought by  plaintiffs  in their  individual
capacity  and on behalf of the  class of  persons  who  purchased  or  otherwise
acquired Company publicly traded securities  between April 15, 1998 and February
26, 1999.  These  lawsuits were filed  following the Company's  announcement  on
February  26, 1999 a  preliminary  determination  had been  reached that the net
income  announced  on February  10, 1999 for the fiscal year ended  December 31,
1998 was likely overstated in a material, undetermined amount at that time. Each
of  the  complaints  assert  claims  for  violations  of  Section  10(b)  of the
Securities  Exchange Act of 1934 and Rule 10b-5 of the  Securities  and Exchange
Commission as well as a claim for the violation of Section 20(a) of the Exchange
Act. The plaintiffs allege that the defendants prepared and issued deceptive and
materially false and misleading statements to the public which caused plaintiffs
to purchase Company  securities at artificially  inflated prices. The plaintiffs
seek  unspecified   damages.   The  Company  intends  to  contest  these  claims
vigorously.  The Company cannot predict the ultimate resolution of these actions
at this time, and there can be no assurance that the litigation  will not have a
material adverse impact on our financial condition and results of operations.

     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  2.5%.  Accordingly,  a  significant  increase  or
decrease in the prime rate could  affect the  Company's  earnings in the future.
The Company believes,  however,  that its financial instruments are disclosed at
their fair values. Fair value estimates are made at a specific point in time and
are based on relevant market  information  and  information  about the financial
instrument;  they are subjective in nature and involve uncertainties and matters
of judgment and, therefore, cannot be determined with precision. These estimates
do not reflect any premium or discount  that could result from offering for sale
at one time the Company's entire holdings of a particular instrument. Changes in
assumptions  could  significantly  affect  these  estimates.  Since  fair  value
estimates  are as of a  particular  date,  the  amounts  that will  actually  be
realized  or  paid in  settlement  of the  instruments  could  be  significantly
different.

     The carrying amount of cash and cash  equivalents is assumed to be the fair
value due to the  liquidity of these  instruments.  The  carrying  amount of the
finance  receivables  is assumed to be the fair value due to 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 due to 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, 1998 and 1997.

               Consolidated  Statements of Operations of Smart Choice Automotive
               Group,  Inc. and  Subsidiaries  for the years ended  December 31,
               1998 and 1997 and for the period from  inception  (June 21, 1996)
               through December 31, 1996

               Consolidated  Statements  of  Stockholders'  Equity for the years
               ended  December  31,  1998  and  1997  and  for the  period  from
               inception (June 21, 1996) through December 31, 1996

               Consolidated  Statements  of  Cash  Flows  for  the  years  ended
               December  31,  1998 and 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 Financial Statements

          (3)  Exhibits



<PAGE>

EXHIBIT LIST HERE



<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 15, 1999.

                              SMART CHOICE AUTOMOTIVE GROUP, INC.


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

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

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


/S/ ROBERT J. ABRAHAMS      Director                             April __, 1999
 ---------------------
Robert J. Abrahams

/S/ GARY R. SMITH          President, Chief Executive            April __, 1999
-----------------          Officer and a Director (Principal
Gary R. Smith              Executive Officer)

/S/ JOHN HOLDEN, JR.       Director                              April __, 1999
--------------------
John Holden, Jr.

/S/ LEWIS H. BERMAN        Director                              April __, 1999
-------------------
Lewis H. Berman

/S/ CRAIG MACNAB           Director                              April __, 1999
------------------
Craig Macnab

/S/ Richard M. Todd        Chief Accounting Officer              April __, 1999
--------------------
Richard M. Todd
<PAGE>



<TABLE>
<CAPTION>

   EXHIBIT                                          
     NO.         EXHIBIT DESCRIPTION                FILED HEREWITH OR INCORPORATED BY REFERENCE TO:

<S>                 <C>                                <C> 
 3.1            Amended and Restated Articles      Exhibit 3.1 to Form SB-2 Registration Statement, filed on         
                of Incorporation of Smart          September 1, 1995, File No. 33-96520-A.                                 
                Choice Automotive Group, Inc.                                                                 
                (the "Company")                    
                                                   
 
 3.1.1          Articles of Amendment to           Exhibit 3.2 to Form 10-Q filed on May 20, 1997.                    
                Articles of Incorporation of                                                                  
                the Company                              
  
 3.2            Amended and Restated By-Laws of    Exhibit 3.2 to Form SB-2 Registration Statement, filed on
                the Company                        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
                Restated Bylaws                    Registration 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          

 3.2.3          Third Articles of Amendment to     Exhibit 3.1 to Form 10-Q filed on May 15, 1998. 


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

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

 4.1            Specimen Common Stock              Exhibit 4.1 to Form 8-A Registration Statement, filed on
                Certificate                        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      Exhibit 4.5 to Amendment No. 2 to Form SB-2 Registration                
                Company and American Stock         Statement, filed on November 6, 1995, File No. 33-96520-A.             
                Transfer & Trust Company, as                                                                  
                Warrant Agent, dated November      
                9, 1995                            

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

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

 10.1.1         1998 Executive Incentive           Exhibit A to Proxy Statement filed on June 9, 1998.                          
                Compensation Plan                  

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

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

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

                Option Plan                        

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

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

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

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

 10.10           Assignment of Loan Documents      Exhibit 10.10 to Form 10-K filed on April 14, 1998.          
                 dated November 4, 1997 between                                                                
                 Barnett Bank, N.A. and The                                                                    
                 Huntington National Bank                                                                      
                 ("Huntington")                     

 10.11           Modification of Mortgage Deed     Exhibit 10.11 to Form 10-K filed on April 14, 1998.           
                 and Security Agreement dated                                                                  
                 November 3, 1997 between the                                                                  
                 Company and Huntington             

 10.12           Future Advance Promissory Note    Exhibit 10.12 to Form 10-K filed on April 14, 1998.         
                 dated December 30, 1997,                                                                      
                 principal amount $260,000, the                                                                
                 Company maker, Huntington, payee   
 
 10.13           Modification  of  Mortgage  and    Exhibit 10.13 to Form 10-K filed on April 14, 1998.
                 Mortgage  Note  and  Extension   
                 Agreement dated December 30, 
                 1997 between the Company and 
                 Huntington.                         

 10.13.1         Modification  of Mortgage  Note    Exhibit  10.13.1 to From S-1 filed on August 21, 1998,
                 and Extension  Agreement  dated    file no. 333-59375
                 July 24, 1998 between the
                 Company and Huntington.            

 10.14           Merger Agreement between           Exhibit 10.1 to Form 8-K, filed on February 12, 1997
                 Smart Choice Holdings, Inc.                                                                   
                 ("SCHI"), the Company, Thomas                                                                 
                 E. Conlan and  Gerald C. Parker                                                               
                 dated December 30,  1997.          
                
10.15            First Amended and Restated Loan    Exhibit 4.1 to Form 10-Q, filed on May 20, 1997.
                 and Security Agreement between                                                               
                 Florida Finance Group, Inc.                                                                  
                 ("FFG") and Finova Capital                                                                   
                 Corporation ("Finova"), dated                                                                
                 February 4, 1997.                  

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

10.17            Promissory Note by Eckler          Exhibit 10.1 to Form 8-K filed on March 5, 1998                           
                 Industries, Inc. in favor of                                                                 
                 Stephens Inc.                      
                 
10.17.1          Amendment to Guaranty Agreement    Exhibit 10.4 to Form 8-K filed on March 5, 1998.
                 between Registrant and Stephens                                                              
                 Inc.      
                         
10.17.2          Amendment to Pledge and Security   Exhibit 10.5 to Form 8-K filed on March 5, 1998.                              
                 Agreement between Registrant and                                                             
                 Stephens Inc.                      

10.17.3          Loan Extension and Modification    Filed herewith.                                                          
                 Agreement between Registrant and                                                                  
                 Stephens Inc. dated April 15, 1999.                

10.17.4          Extension of Engagement Letter     Filed herewith.                                                         
                 between Stephens Inc. and                                                                    
                 Registrant dated March 1, 1999.   
                                                                                                             
10.17.5          Warrant Agreement Issued to        Filed herewith.                                                          
                 Stephens Inc.                      

10.18            Promissory note dated February     Exhibit 10.9 to Form 8-K filed on March 5, 1998.                            
                 24, 1998, First Choice Auto                                                                  
                 Finance, Inc., maker, and                                                                    
                 Manheim Automotive Financial                                                                 
                 Services, Inc., payee.             

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

10.19           Second Amended and Restated Loan    Filed herewith                                                        
                and Security Agreement dated                                                                 
                November 9, 1998 between FFG,                                                                
                Liberty Finance Company, Smart                                                               
                Choice Receivable Holdings                                                                
                Company and First Choice Auto                                                                
                Finance, Inc., SC Holdings, Inc.,                                                             
                the Company and Finova Capital                                                               
                Corporation.                       

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

10.19.2         Guaranty to Finova from SC         Filed herewith.                                                        
                Holdings, Inc. dated 
                November 9,1998.                               

10.19.3         Guaranty to Finova from the        Filed herewith.                                                         
                Company.      

10.20           Eighth Amended and Restated        Exhibit 10.20 to Form S-1 filed on August 21, 1998, File
                Promissory Note dated March 27,    No. 333-59375                                                          
                1998, between FFG, maker, and      
                Finova

10.20.1         Ninth Amended and Restated         Exhibit 10.1 to Form 10-Q, filed on May 15, 1998.
                Promissory Note dated March 27, 
                1998, between FFG, maker and
                Finova.
                           
10.20.2         Tenth Amended and Restated         Filed herewith.                                                         
                Promissory Note dated November                                                               
                9, 1998, between FFG, Liberty                                                                
                Finance Company, Smart Choice                                                                
                Receivable Holdings Company and                                                              
                First Choice Auto Finance, Inc.   

10.21           Fourth Amended and Restated        Exhibit 10.21 to Form S-1 filed on August 21, 1998,
                Schedule to Amended and Restated   File No. 333-59375                                                      
                Loan and Security Agreement,                                                                 
                FFG, borrower, Finova, lender, 
                dated March 27, 1998.

10.21.1         Fifth Amended and Restated         Exhibit 10.2 to Form 10-Q filed on May 15, 1998.                             
                Schedule to Amended and Restated                                                             
                Loan and Security Agreement,                                                                 
                FFG, borrower,  Finova, lender. 
              
10.21.2         Schedule to Second Amended and     Filed herewith                                                 
                Restated Loan and Security                                                                   
                Agreement, dated November 9,                                                                 
                1998, FFG, Liberty Finance                                                                   
                Company and First Choice Auto                                                                
                Finance, Inc., borrower.           

10.21.3         Intercreditor Agreement between    Filed herewith.                                                          
                Manheim Automotive Financial                                                                 
                Services, Inc. and Finova                                                                    
                Capital Corporation.               

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

10.23           Promissory Note dated January      Exhibit 10.2 to Form 10-Q filed on May 20, 1997.                             
                28, 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 R. Smith and Team                                                               
                Automobile Sales and Finance,      Exhibit 10.24 to Form S-1 filed on August 21, 1998, File
                Inc.                               No. 333-59375

10.25           Promissory Note Modification       Exhibit 10.25 to Form S-1 filed on August 21, 1998, File
                Agreement, dated December 15,      No. 333-59375                                                          
                1997 between FCAF and Gary R.      
                Smith.

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

10.27           Asset Purchase Agreement among     Exhibit 10.17 to Form 8-K, filed on February 26, 1997.
                FCAF, 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        Exhibit 10.18 to Form 8-K, filed on February 26, 1997.           
                between 225 and FCAF dated                                                                   
                February 14, 1997.                

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

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

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

10.32           Indemnification Agreement in       Exhibit 10.23 to Form 8-K, filed on February 26, 1997.
                favor of PBF and 225 by FCAF,                                                                
                dated February 14, 1997. 
         
10.33           Executive Employment Agreement     Exhibit 10.15 to Form 10-Q, filed on May 20, 1997.                       
                between the Company and Gary                                                                 
                Smith.                            

10.34           Executive Employment Agreement     Exhibit 10.16 to Form 10-Q, filed May 20, 1997.
                between the Company and Robert                                                               
                Abrahams.                          
                                             
10.35           Executive  Employment Agreement    Exhibit 10.35 to Form 10-Q filed on August 21, 1998,
                dated April 11, 1997 between the   File No. 333-59375.
                Company and Joseph Alvarez.        

10.36           Executive  Employment Agreement    Exhibit 10.36 to Form S-1 filed on August 21, 1998,
                between the Company and Ronald     File No. 333-59375.
                Anderson.     
               
10.36.1         Executive  Employment  Agreement   Exhibit  10.36.2 to Form S-1 filed on August 21, 1998,
                dated February 9, 1998 between     File No. 333-53975.
                the Company and Robert J. Downing. 
                
10.37           Non Qualified Stock Option         Exhibit 10.37 to Form S-1 filed on August 21, 1998, File    
                Agreement dated March 5, 1997      No. 333-53975.                                                          
                among the Smart Choice Holdings                                                              
                Management Trusts (the                                                                       
                "Management Trusts"), Eckler                                                                 
                Industries, Inc., and Robert J.    
                Abrahams.                          

10.38           Non Qualified Stock Option         Exhibit 10.38 to Form S-1 filed on August 21, 1998, File           
                Agreement dated March 5, 1997      No. 333-59375.                                                          
                among the Management Trusts,                                                                 
                Eckler Industries, Inc., and       
                Robert J. Abrahams.                

10.39           Non Qualified Stock Option         Exhibit 10.39 to Form 10-K, filed on April 14, 1998.                     
                Agreement dated April 11, 1997,                                                              
                among the Management Trusts, the                                                             
                Company and Joseph Alvarez.       

10.40           Stock Option  Agreement dated      Exhibit 10.40 to Form S-1 filed on August 21, 1998, File
                March 24, 1997 between the         No. 333-59375.
                Company and Ronald Anderson.       

10.41           Non-Qualified Stock Option         Exhibit 10.41 to Form S-1 filed on August 21, 1998, File                     
                Agreement dated April 17, 1997     No. 333-59375                                                          
                between the Company and David      
                Bumgardner.                        

10.42           Non-Qualified Stock Option         Exhibit 10.42 to Form S-1 filed on August 21, 1998, File                
                Agreement dated April 17, 1997     No. 333-59375                                                          
                between the Company and Craig      
                Macnab.                           

10.43           Stock Option  Agreement dated      Exhibit 10.43 to Form S-1 filed on August 21, 1998, File 
                March 19, 1997 between the         No. 333-59375
                Company and Gerald Parker. 
 
10.44           Non-Qualified Stock Option         Exhibit 10.44 to Form S-1 filed on August 21, 1998, File             
                Agreement dated April 17, 1997     No. 333-59375                                                   
                between the Company and Gerald     
                Parker.                            

10.45           Non-Qualified Stock Option         Exhibit 10.45 to Form S-1 filed on August 21, 1998, File              
                Agreement dated April 17, 1997     No. 333-59375.                                                         
                between the Company and Donald     
                Wojnowski.                         

10.46.1         Non-Qualified Stock Option         Exhibit  10.46.1 to Form S-1 filed on August 21, 1998,
                Agreement dated July 29, 1997      File No. 333-59375.
                between the  Company  and  
                Joseph Alvarez. 
                                   
10.46.2         Non-Qualified  Stock  Option       Exhibit 10.46.2 to Form S-1 filed on August 21, 1998,
                Agreement  dated  January 29,      File No. 333-59375.
                1997 between the Company and 
                Joseph Mohr.                              

10.46.3         Non-Qualified  Stock  Option       Exhibit 10.46.3 to Form S-1 filed on August 21, 1998,
                Agreement  dated  February 9,      File No. 333-59375.
                1998 between the Company and 
                Robert Downing. 
                                   
10.46.4         Non-Qualified  Stock  Option       Exhibit 10.46.4 to Form S-1 filed on August 21, 1998,
                Agreement  dated  January 29,      File No. 333-59375.
                1997 between the Company and 
                Ron Anderson.                  

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

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

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

10.50           Asset  Purchase  Agreement         Exhibit 10.1 to Form 8-K filed on July 14, 1997.
                dated as of 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    Exhibit 10.1 to Form 8-K filed on October 9, 1997.                       
                by the Company to High Capital                                                               
                Funding, LLC, and other                                                                      
                purchasers.                        

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

10.52           Subordinated Loan Agreement        Filed herewith.
                dated January 30, 1999, between                                                              
                High Capital Funding, LLC and                                                                
                the Company.                              
                    
10.52.1         Company Form of 1999 Series A      Filed herewith.                                                                
                Subordinated Note.                 

10.52.2         Guaranty Agreement between SC      Filed herewith.                                                         
                Holdings, Inc., First Choice                                                                 
                Auto Finance, Inc. and High                                                                  
                Capital Funding, LLC.              

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

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

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

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

10.57           Pledge and Security Agreement      Exhibit 10.5 to Form 8-K filed on October 9, 1997.
                between 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      Exhibit 10.6 to Form 8-K filed on October 9, 1997.                   
                between the Company and certain                                                              
                buyers represented by Promethean                                                             
                Investment Group, L.L.C.           

10.60           Form of Warrant from the Company   Exhibit 10.7 to Form 8-K filed on October 9, 1997.                    
                to certain buyers represented by                                                             
                Promethean Investment Group,       
                L.L.C. 
                    
10.61           Automotive Wholesale Financing     Exhibit 10.61 to Form S-1 filed on August 21, 1998, File                 
                and Security Agreement dated       No. 333-59375                                                          
                July 21, 1997 between First                                                                  
                Choice Stuart 1, Inc. ("FCS1")                                                               
                and Nissan Motor Acceptance        
                Corporation ("NMAC").              

10.62           Addendum to Automotive Wholesale   Exhibit 10.62 to Form S-1 filed on August 21, 1998, File
                Financing and Security Agreement   No. 333-59375

10.63           Second Addendum to Automotive      Exhibit 10.63 to Form S-1 filed on August 21, 1998, File            
                Wholesale Financing and Security   No. 333-59375                                                           
                Agreement dated August 11, 1997    
                between NMAC and FCSI.             

10.64           Dealer Capital Loan and Security   Exhibit 10.64 to Form S-1 filed on August 21, 1998, File                   
                Agreement dated October 12,        No. 333-59375                                                           
                1995 between B&B Florida           
                Enterprises, Inc. and NMAC.       

10.65           Amendment to Dealer Capital Loan   Exhibit 10.65 to Form S-1 filed on August 21, 1998, File                   
                and Security Agreement dated       No. 333-59375                                                           
                September 1, 1997 between NMAC     
                and FCS1.                          

10.66           Dealer Equipment Loan and          Exhibit 10.66 to Form S-1 filed on August 21, 1998, File               
                Security Agreement dated October   No. 333-59375                                                           
                12, 1995 between NMAC and B&B     
                Florida Enterprises, Inc.          

10.67           Amendment to Dealer Equipment      Exhibit 10.67 to Form S-1 filed on August 21, 1998, File               
                Loan and Security Agreement        No. 333-59375                                                           
                dated September 1, 1997 between    
                NMAC and FCSI.                    

                Second Amendment to Dealer         Exhibit 10.67 to Form S-1 filed on August 21, 1998, File                      
                Equipment Loan and Security        No. 333-59375.
10.67.1         Agreement.                      

10.67.2         Second Amendment to Dealer         Filed herewith.                                                           
                Capital Loan and Security                                                                     
                Agreement, dated July 29, 1998,                                                               
                between Nissan Motor Acceptance                                                               
                Corporation and First Choice                                                                  
                Stuart 1, Inc., dba Stuart                                                                    
                Nissan.                           

10.68           Nissan Dealer Term Sales and       Exhibit 10.68 to Form S-1 filed on August 21, 1998, File                 
                Service Agreement dated August     No. 333-59375                                                           
                29, 1997 between Nissan Motor                                                                 
                Corporation in U.S.A., the                                                                    
                Company, Smart Cars, Inc. and      
                FCS1.                              

                Wholesale Financing and Security   Exhibit 10.69 to Form S-1 filed on August 21, 1998, File              
10.69           Agreement dated August 11, 1997    No. 333-59375                                                           
                between First Choice Stuart 2,                                                                
                Inc. ("FCS2") and Volvo Finance   
                North America, Inc.                

10.70           Authorized Retailer Agreement      Exhibit 10.70 to Form S-1 filed on August 21, 1998, File               
                between Volvo Cars of North        No. 333-59375.
                America, Inc. and FCS2.           

10.71           Convertible Subordinated           Exhibit 10.71 to Form S-1 filed on August 21, 1998, File             
                Debenture dated November 3,        No. 333-59375.                                                            
                1997, principal amount $750,000,                                                              
                the Company, maker, Bankers Life   
                Insurance Company, payee.         

10.72            Registration Rights Agreement     Exhibit 10.72 to Form S-1 filed on August 21, 1998, File              
                 dated November 3, 1997 between    No. 333-59375                                                           
                 the Company and Bankers Life       
                 Insurance Company.                 

10.73            Settlement Agreement and Release  Exhibit 10.73 to Form S-1 filed on August 21, 1998, File                    
                 dated January 30, 1998 among the  No. 333-59375.                                                             
                 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    Exhibit 10.74 to Form S-1 filed on August 21, 1998, File
                 May 6, 1997 between FCS1 and      No. 333-59375.
                 Thomas DeRita, Jr.                 

10.75            Promissory Note dated December    Exhibit 1075 to Form S-1 filed on August 21, 1998, File                     
                 19, 1997, principal amount        No. 333-59375.                                                           
                 $2,199,000, First Choice                                                                      
                 Melbourne 1, Inc., maker and                                                                  
                 Raytheon Aircraft Credit           
                 Corporation, payee.                

10.76            Guaranty Agreement by the         Exhibit 10.76 to Form S-1 filed on August 21, 1998, File                    
                 Company to Raytheon Aircraft      No. 333-59375.
                 Credit Corporation.               

10.77            Security Agreement dated          Exhibit 10.77 to Form S-1 filed on August 21, 1998, File                       
                 December 19, 1997 between First   No. 333-59375                                                           
                 Choice Melbourne 1, Inc. and                                                                  
                 Raytheon Aircraft Credit           
                 Corporation.                       

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

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

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

10.81            Intentionally Omitted.                                                                        

10.82            Manheim Automotive Financial      Exhibit 10.82 to Form S-1 filed on August 21, 1998, File                
                 Services, Inc. Security           No. 333-59375                                                           
                 Agreement dated March 21, 1997                                                                
                 between FCAF and Manheim                                                                      
                 Automotive Financial Services,     
                 Inc.                               

10.83            Promissory Note dated June 17,    Exhibit 10.83 to Form S-1 filed on August 21, 1998, File                       
                 1997, principal amount $825,000,  No. 333-59375                                                           
                 FCAF, maker, Carl Schmidt          
                 Enterprises, Inc., payee.          

10.84            Real Estate Mortgage dated June   Exhibit 10.84 to Form S-1 filed on August 21, 1998, File                       
                 17, 1997, FCAF, mortgagor, Carl   No. 333-59375                                                           
                 Schmidt Enterprises, Inc.,         
                 mortgagee.                         

10.85            Intentionally Omitted.                                                                        

10.86            Intentionally Omitted.                                                                        

10.87            Twenty-Fourth Amendment to GM     Exhibit 10.87 to Form S-1 filed on August 21, 1998, File
                 Reproduction and Service Part     No. 333-59375
                 Tooling License Agreement.         

10.88            Twenty-Sixth  Amendment to GM     Exhibit 10.88 to Form S-1 filed on August 21, 1998
                 Reproduction and Service Part     No. 333-59375
                 Tooling License Agreement.        

10.89            Thirty-Fourth  Amendment  to GM   Exhibit 10.89 to Form S-1 filed on August 21, 1998, File
                 Reproduction  Service Part        No. 333-593759375
                 Tooling License Agreement.         

10.90            Lease between Florida Auto        Exhibit 10.90 to Form S-1 filed on August 21, 1998, File           
                 Auction of Orlando, Inc. and      No. 333-59375                                                           
                 First Choice Auto Finance, Inc.                                                               
                 dated May 12, 1997, for            
                 Reconditioning Facility.           

10.91            Aircraft Lease between General     Filed herewith.                                          
                 Electric Capital Corporation                                      
                 and the Company, dated 
                 December 1998.          
      
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.

</TABLE>


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

                                  APPENDIX "A"


                       SMART CHOICE AUTOMOTIVE GROUP, INC.
                                AND SUBSIDIARIES

                                    CONTENTS





  REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS            F-1  - F-2

  CONSOLIDATED FINANCIAL STATEMENTS
      Balance sheets                                            F-3  - F-4
      Statements of operations                                  F-5
      Statements of stockholders' equity                        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-46


                                      F-1
<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, 1998 and 1997 and the
related statements of operations,  stockholders'  equity and cash flows for each
of the three  years in the period  ended  December  31,  1998.  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, 1998 and 1997 and the
results of their  operations and their cash flows for each of the three years in
the period  ended  December  31,  1998 in  conformity  with  generally  accepted
accounting principles.


                                        /s/ BDO Siedman, LLP
                                        --------------------
                                        BDO Seidman, LLP

Orlando, Florida
April 12, 1999


                                      F-2

<PAGE>

<TABLE>
<CAPTION>

                                                                           SMART CHOICE AUTOMOTIVE GROUP, INC.
                                                                                              AND SUBSIDIARIES

                                                                                   CONSOLIDATED BALANCE SHEETS



<S>                                                                                  <C>                      <C>                 
DECEMBER 31,                                                                           1998                  1997
--------------------------------------------------------------------------------------------------------------------

ASSETS

Cash and cash equivalents                                                  $      1,268,589       $     1,066,949
Accounts receivable                                                               1,206,710             1,773,124
Finance receivables:
  Principal balances, net                                                        79,342,835            40,084,412
  Less allowance for credit losses                                              (12,157,569 )          (6,857,265 )
--------------------------------------------------------------------------------------------------------------------

         Finance receivables, net                                                67,185,266            33,227,147
--------------------------------------------------------------------------------------------------------------------

Inventories, at cost                                                             20,004,600            15,516,084
Land held for resale                                                                      -             1,050,000
Property and equipment, net                                                       7,655,324             9,214,207
Notes receivable                                                                    425,000                46,280
Deferred financing costs, net of accumulated amortization of $343,063                                               
  and $207,508                                                                      226,152               426,823   

Goodwill, net of accumulated amortization of $1,117,432 and $470,897             23,871,080            25,562,162   
Prepaid expenses                                                                  1,263,858             1,008,229
Deposits and other assets                                                           485,454               213,986
--------------------------------------------------------------------------------------------------------------------




                                                                           $    123,592,033       $    89,104,991
--------------------------------------------------------------------------------------------------------------------
</TABLE>

 

<PAGE>
<TABLE>
<CAPTION>


                                                                             SMART CHOICE AUTOMOTIVE GROUP, INC.
                                                                                                AND SUBSIDIARIES

                                                                                     CONSOLIDATED BALANCE SHEETS




<S>                                                                                  <C>                      <C>               
DECEMBER 31,                                                                           1998                   1997
---------------------------------------------------------------------------------------------------------------------

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES:
  Bank overdraft                                                           $      3,112,930       $              -
  Accounts payable                                                                4,746,157              5,259,903
  Accrued expenses                                                                3,664,651              4,633,841
  Line of credit, net of discount                                                63,612,433             31,229,600
  Floor plans payable                                                             8,701,968              8,287,092
  Capital lease obligations                                                         997,916                940,280
  Notes payable                                                                  28,343,479             29,197,458
  Other liabilities                                                                       -                 94,913
---------------------------------------------------------------------------------------------------------------------

         TOTAL LIABILITIES                                                      113,179,534             79,643,087
---------------------------------------------------------------------------------------------------------------------


CONTINGENT REDEMPTION VALUE OF COMMON STOCK PUT OPTIONS                           1,539,148              2,840,000   

REDEEMABLE CONVERTIBLE PREFERRED STOCK                                               10,000              4,941,834

STOCKHOLDERS' EQUITY:
  Preferred stock $.01 par value, authorized 5,000,000 shares; issued                                                
    and outstanding 595 shares                                                    5,891,410                      -   
  Common stock $.01 par value, authorized 50,000,000 shares; issued                                                  
    and outstanding 6,676,545 and 4,867,004 shares                                   66,765                 48,670   
  Additional paid-in capital                                                     30,054,488             21,317,126
  Common stock notes receivable                                                    (115,200 )                    -
  Accumulated deficit                                                           (27,034,112 )          (19,685,726 )
---------------------------------------------------------------------------------------------------------------------

TOTAL STOCKHOLDERS' EQUITY                                                        8,863,351              1,680,070
---------------------------------------------------------------------------------------------------------------------

                                                                           $    123,592,033       $     89,104,991
---------------------------------------------------------------------------------------------------------------------
</TABLE>
                                      F-4




<PAGE>
<TABLE>
<CAPTION>


                                                                              SMART CHOICE AUTOMOTIVE GROUP, INC.
                                                                                                 AND SUBSIDIARIES

                                                                            CONSOLIDATED STATEMENTS OF OPERATIONS

<S>                                                                                  <C>          <C>       <C>
                                                              
YEAR ENDED DECEMBER 31,                                                           1998           1997     1996 (a)
---------------------------------------------------------------------------------------------------------------------

REVENUES:
  Sales at used car stores                                                $ 78,227,027   $ 35,279,228   $        -
  Income on finance receivables                                             15,709,539      6,898,694            -
  Income from insurance and training                                         1,448,261      1,177,903            -
---------------------------------------------------------------------------------------------------------------------

         Total revenues                                                     95,384,827     43,355,825            -
---------------------------------------------------------------------------------------------------------------------

COSTS AND EXPENSES:
  Costs of sales at used car stores                                         57,233,088     25,639,741            -
  Provision for credit losses                                               13,371,169      4,941,983            -
  Costs of insurance and training                                               87,909         85,098            -
  Selling, general and administrative expenses                              22,739,174     17,599,003      670,616
  Compensation expense related to employee and director stock options          215,875      4,649,702            -
  Restructuring charges                                                              -      2,117,906            -
---------------------------------------------------------------------------------------------------------------------

         Total costs and expenses                                           93,647,215     55,033,433      670,616
---------------------------------------------------------------------------------------------------------------------

         Income (loss) from operations                                       1,737,612     (11,677,608)   (670,616 )
---------------------------------------------------------------------------------------------------------------------

OTHER INCOME (EXPENSE):
  Interest expense                                                          (8,751,661 )   (5,573,307 )    (33,172 )
  Other income (expense), net                                                  777,574         (4,772 )          -
  Abandoned public offering costs                                           (1,062,962 )            -            -
---------------------------------------------------------------------------------------------------------------------

                                                                            (9,037,049 )   (5,578,079 )    (33,172 )
---------------------------------------------------------------------------------------------------------------------

NET LOSS FROM CONTINUING OPERATIONS                                         (7,299,437 )   (17,255,687)   (703,788 )
INCOME (LOSS) FROM DISCONTINUED OPERATIONS                                     428,838     (1,392,918 )            -
---------------------------------------------------------------------------------------------------------------------

NET LOSS                                                                    (6,870,599)   (18,648,605)   (703,788 )

\PREFERRED STOCK DIVIDENDS                                                    (477,787)     (333,333 )          -
---------------------------------------------------------------------------------------------------------------------
NET LOSS APPLICABLE TO COMMON STOCK                                       $ (7,348,386)  $ (18,981,938)  $ (703,788)
---------------------------------------------------------------------------------------------------------------------
BASIC AND DILUTED INCOME (LOSS) PER COMMON SHARE:
                                                                                                 
  Continuing operations                                                   $     (1.26)   $   (3.97)      $ (.26 )
  Discontinued operations                                                          .07        (.31)           --
---------------------------------------------------------------------------------------------------------------------
BASIC AND DILUTED LOSS PER COMMON SHARE                                   $     (1.19)   $   (4.28)      $ (.26 )
---------------------------------------------------------------------------------------------------------------------
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING                         6,193,472   4,430,367     2,744,216
---------------------------------------------------------------------------------------------------------------------
</TABLE>
     SEE ACCOMPANYING  SUMMARY OF SIGNIFICANT  ACCOUNTING  POLICIES AND NOTES TO
     CONSOLIDATED  FINANCIAL  STATEMENTS.  (A) PERIOD FROM  INCEPTION  (JUNE 21,
     1996) THROUGH DECEMBER 31, 1996.

                                      F-6
<PAGE>
<TABLE>
<CAPTION>

                                                                                SMART CHOICE AUTOMOTIVE GROUP, INC.
 
                                                                                SMART CHOICE AUTOMOTIVE GROUP, INC.
                                                                                                   AND SUBSIDIARIES

                                                                    CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                                                                                                                           
                                                                          PREFERRED STOCK            COMMON STOCK        
                                                                        --------------------     -------------------
                                                                        NUMBER                   NUMBER                
                                                                          OF                       OF            PAR     
                                                                        SHARES       VALUE       SHARES         VALUE     
-----------------------------------------------------------------------------------------------------------------------
<S>                                                                     <C>       <C>           <C>           <C>      
BALANCE, June 21, 1996 (date of inception)                                --     $     --            --       $   --   
Issuance of founders' shares                                              --           --       2,744,216       27,442
Net loss                                                                  --           --            --           --   

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

BALANCE, December 31, 1996                                                --           --       2,744,216       27,442

Common stock issued for acquisitions                                      --           --       2,055,476       20,555
Contribution and retirement of common stock                               --           --        (165,714)      (1,657)
Common stock options granted to employees and directors                   --           --            --           --   
Common stock options and warrants granted to lenders and consultants      --           --            --           --   
Treasury stock purchased and retired                                      --           --          (1,000          (10
Issuance of common stock for professional services                        --           --           8,965           90
Issuance of common stock for conversion of debt                           --           --         221,257        2,212
Exercise of common stock options and warrants, net                        --           --           3,804           38
Convertible debt issued at a discount                                     --           --            --           --   
Common stock issued by stockholders for cancellation of common
  stock options granted by the Company                                    --           --            --           --   
Contribution to capital                                                   --           --            --           --   
Contingent liability of put options                                       --           --            --           --   
Preferred stock dividend                                                  --           --            --           --   
Net loss                                                                  --           --            --           --   

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

BALANCE, December 31, 1997                                                --           --       4,867,004       48,670

Issuance of common stock for conversion of debt                           --           --         343,943        3,439
Issuance of common stock for conversion of preferred stock and accrued
  dividends                                                               --           --       1,398,962       13,990
Issuance of common stock for services                                     --           --           4,547           45
Exercise of common stock options, net                                     --           --          71,250          713
Purchase and retirement of treasury stock                                 --           --          (9,161          (92
Modification to conversion price of debt                                  --           --            --           --   
Common stock warrants granted to preferred stockholders                   --           --            --           --   
Common stock options granted to directors                                 --           --            --           --   
Decrease in contingent liability of put options                           --           --            --           --   
Preferred stock dividends                                                 --           --            --           --   
Issuance of preferred stock, net                                          595     5,891,410          --           --   
Net loss                                                                  --           --            --           --   

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

BALANCE, December 31, 1998                                                595    $5,891,410     6,676,545     $ 66,765
--------------------------------------------------------------------   ------    ----------     ---------     --------
</TABLE>
<TABLE>
<CAPTION>

                                                                                                         COMMON 
                                                                            ADDITIONAL                    STOCK 
                                                                             PAID-IN         NOTES      ACCUMULATED
                                                                             CAPITAL      RECEIVABLE     DEFICIT          TOTAL    
-------------------------------------------------------------------------------------------------------------------------------- 
<S>                                                                      <C>               <C>          <C>             C> 
BALANCE, June 21, 1996 (date of inception)                                $       --      $    --       $      --               --
Issuance of founders' shares                                                   (21,474          --             --             5,968
Net loss                                                                          --            --       (703,788          (703,788)

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

BALANCE, December 31, 1996                                                     (21,474          --       (703,788          (697,820)

Common stock issued for acquisitions                                        14,393,325          --              --      14,413,880
Contribution and retirement of common stock                                      1,657          --              --            --
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                                           (13,580          --              --         (13,590
Issuance of common stock for professional services                              99,716          --              --          99,806
Issuance of common stock for conversion of debt                              1,767,844          --              --       1,770,056
Exercise of common stock options and warrants, net                              41,638          --              --          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
Contingent liability of put options                                         (2,840,00)          --              --      (2,840,000)
Preferred stock dividend                                                       333,333          --        (333,333)              --
Net loss                                                                          --            --      (18,648,60)     (18,648,60)

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

BALANCE, December 31, 1997                                                  21,317,126          --      (19,685,72)       1,680,070

Issuance of common stock for conversion of debt                              1,494,277          --              --       1,497,716
Issuance of common stock for conversion of preferred stock and accrued
  dividends                                                                  5,042,066          --              --       5,056,056
Issuance of common stock for services                                           36,331          --              --          36,376
Exercise of common stock options, net                                          403,634    (115,200)             --         289,147
Purchase and retirement of treasury stock                                      (93,808          --              --         (93,900
Modification to conversion price of debt                                        83,333          --              --          83,333
Common stock warrants granted to preferred stockholders                        254,802          --              --         254,802
Common stock options granted to directors                                      215,875          --              --         215,875
Decrease in contingent liability of put options                              1,300,852          --              --       1,300,852
Preferred stock dividends                                                         --            --        (477,787)       (477,787)
Issuance of preferred stock, net                                                  --            --              --       5,891,410
Net loss                                                                          --            --     (6,870,599)      (6,870,599)

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

BALANCE, December 31, 1998                                                $ 30,054,488   $(115,200)    $(27,034,11)   $  8,863,351
---------------------------------------------------------------------     -------------   ---------     ----------     ------------
</TABLE>


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


 

<PAGE>
<TABLE>
<CAPTION>


                                                                                    SMART CHOICE AUTOMOTIVE GROUP, INC.
                                                                                                       AND SUBSIDIARIES

                                                                                  CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                                                                                                  
YEAR ENDED DECEMBER 31,                                                                    1998           1997       1996(a)   
------------------------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                                  <C>                <C>             <C>   
                                                                                                            
  Net loss                                                                         $ (6,870,599) $   (18,648,605)  $(703,788)
  Adjustments to reconcile net loss to net cash provided by (used for)                                                        
    operating activities:                                                                                                     
      Depreciation                                                                      725,107        445,311        2,132
      Amortization                                                                    1,489,089      1,239,929        2,249
      Gain on disposal of property and equipment                                         95,324         (8,166)          -
      Impairment of goodwill                                                          1,045,847              -            -
      Write-down of inventory                                                         1,094,096              -            -
      Provision for credit losses                                                    13,371,169      4,941,983            -
      Compensation expense related to stock options                                     215,875      4,649,702            -
      Issuance of common stock for services and interest                                 36,376        374,806        4,968
      Stock options and warrants issued to consultants, lenders and others              254,802      1,296,863            -
      Modification to conversion price of debt                                           83,333              -            -
      Cash provided by (used for), net of effect of acquisitions:
        Accounts receivable                                                             172,514      (662,488)    (25,000 )
        Inventories                                                                  (5,582,612)   (5,969,719)          -
        Prepaid expenses                                                               (255,629)      679,663            -
        Accounts payable                                                               (513,746)    2,668,636      438,890
        Accrued expenses and other liabilities                                       (1,064,103)    3,048,563      183,314
------------------------------------------------------------------------------------------------------------------------------

Net cash provided by (used for) operating activities                                  4,296,843     (5,943,522)    (97,235 )
------------------------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Increase in finance receivables                                                    (47,329,288)   (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                                                 (1,148,386 )   (1,356,644 )    (24,586 )
  Increase in notes receivable                                                         (425,000 )            -      (400,000)
  Repayments of notes receivable                                                         46,280        530,420            -
  Proceeds from disposal of property and equipment                                    3,253,354         24,425            -
  Other                                                                                (293,572 )      (21,981 )    (244,101)
------------------------------------------------------------------------------------------------------------------------------

Net cash used for investing activities                                               (45,896,612)   (26,582,935)    (668,687)
------------------------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from sale of preferred stock                                               5,891,410      4,554,812      387,022
  Proceeds from sale of common stock                                                          -              -        1,000
  Proceeds from exercise of common stock options and warrants                           289,147          1,800            -
  Purchase of treasury stock                                                                  -        (13,590 )          -
  Increase (decrease) in bank overdraft                                               3,112,930        (82,884 )     82,884
  Proceeds from line of credit borrowings                                            32,300,000     16,462,090            -
  Proceeds from floor plan notes payable                                                414,876      4,201,467            -
  Proceeds from notes payable                                                         7,096,690     14,163,892      322,000
  Repayment of notes payable                                                         (6,647,539 )   (5,271,154 )          -
  Proceeds from capital lease obligations                                                     -        251,722            -
  Repayments of capital lease obligations                                              (258,880 )      (67,402 )          -
  Payments of dividends                                                                (353,566 )            -            -
  Deferred financing costs                                                              (43,659 )     (607,347 )    (26,984 )
------------------------------------------------------------------------------------------------------------------------------

Net cash provided by financing activities                                            41,801,409     33,593,406      765,922
------------------------------------------------------------------------------------------------------------------------------

NET INCREASE IN CASH AND CASH EQUIVALENTS                                               201,640      1,066,949            -

CASH AND CASH EQUIVALENTS, beginning of year                                          1,066,949              -            -
------------------------------------------------------------------------------------------------------------------------------

CASH AND CASH EQUIVALENTS, end of year                                             $  1,268,589   $  1,066,949    $       -
------------------------------------------------------------------------------------------------------------------------------
</TABLE>

          SEE ACCOMPANYING SUMMARY OF SIGNIFICANT  ACCOUNTING POLICIES AND NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS.  (A) PERIOD FROM INCEPTION (JUNE
          21, 1996) THROUGH DECEMBER 31, 1996.

                                      F-9
<PAGE>


                                           SMART CHOICE AUTOMOTIVE GROUP, INC.
                                                              AND SUBSIDIARIES

                                     UMMARY 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.  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."  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.

ALLOWANCE FOR 
CREDIT LOSSES

               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.

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.

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.  The  Company  uses an  estimate  of the
               related undiscounted  operating income over the remaining life of
               goodwill in measuring whether it is recoverable.  During the year
               ended December 31, 1998, the Company  recorded a total write-down
               of goodwill of  $1,045,847  from an asset sale and an  impairment
               charge.

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 using the  liability
                    method.   Under  this   method,   deferred  tax  assets  and
                    liabilities  are  determined  based on  differences  between
                    financial reporting and tax bases of assets and liabilities.
                    Measurement  of deferred  income tax is based on enacted tax
                    rates and laws that will be in effect  when the  differences
                    are expected to reverse,  with the  measurement  of deferred
                    income tax assets being  reduced by  available  tax benefits
                    not expected to be realized.

IMPAIRMENT OF LONG-LIVED ASSETS

                    Assets are  evaluated for  impairment  when events change 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.

                    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 COMMON  SHARE

                    Loss per  common  share is based upon the  weighted  average
                    number of common  shares  outstanding  during  each  period.
                    Potential  common  shares  for 1998,  1997 and 1996 have not
                    been  included  since their  effect  would be  antidilutive.
                    Potential  common  shares as of December  31,  1998  include
                    1,895,375  stock options,  warrants  exercisable for 919,070
                    shares, 1,117,135 shares underlying the convertible debt and
                    536,745 shares underlying the convertible preferred stock.

RECLASSIFICATIONS 

                    Certain  reclassifications  have been made to the prior year
                    financial  statements  to  confirm  with  the  current  year
                    presentation.

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

                    In June 1998,  the AICPA issued SOP 98-5,  "Reporting on the
                    Costs of Start-Up  Activities."  SOP 98-5 requires  costs of
                    start-up activities and organizational costs, as defined, to
                    be  expensed  as  incurred.  The  Company  does  not  expect
                    adoption  of the new SOP on  January  1, 1999 to  materially
                    affect its consolidated financial statements.


<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 car
                    dealerships and used car stores in Florida and  underwrites,
                    finances,   and  services   retail   installment   contracts
                    generated from the sale of used cars by its dealerships. The
                    Company  also  operates  an  insurance  division  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 1,463,969.5 shares of EII Class
                    A and 788,162 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
                    was  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
                    acquirer 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 EII was
                    computed by valuing the  outstanding  shares of common stock
                    of EII (the  equivalent  of  1,378,750  shares)  at $6.75 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, previously operated by SAB and SABE. DIS was based in
                    Tampa,   Florida  and   provided   insurance   services  for
                    automobile  dealers.  DDS was  based in Tampa  and  provided
                    consulting  services  and  training  programs to  automobile
                    dealers. During 1998, DDS had no operations, and the related
                    goodwill of $794,852 was recorded as an  impairment  charge.
                    In September  1998,  the net assets of DIS were sold back to
                    the  original  seller  for  $425,000  in the  form of a note
                    receivable  from the buyer. A portion of the DIS goodwill of
                    $250,995 was written off in connection  with the sale of the
                    net assets and a net gain of $201,814 was recorded.  The DIS
                    operations began focusing on providing credit life, warranty
                    protection  and auto  insurance  to the  Company's  used car
                    customers.  The purchase price of FFG was  $1,181,008  notes
                    due to the seller,  142,857 shares of common stock valued at
                    $6.75 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 176,078 shares of
                    common  stock  valued at $6.75 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,  142,857 shares of common stock valued at
                    $6.75 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.

                    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,  112,500 shares of common stock
                    valued  at  $9.00  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,  9,161  shares of common  stock valued at $10.25 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  43,273  shares of  common  stock
                    valued at $12.625 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 the significant 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  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 includes the activities
                    of ORGANIZATION discontinued operations (see Note 19) and is
                    not necessarily  indicative of the AND results of operations
                    as  they  would  have  been  had  the  transactions  been 1.
                    ACQUISITIONS effected on the assumed dates.

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

 Total revenues                          $   93,247,492  $  90,158,113
 Net loss applicable to common stock        (19,884,913 )   (3,803,046 )
 Basic loss per common share                      (4.32 )        (1.34 )
 ------------------------------------------------------------------------

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


2.      FINANCE     
        RECEIVABLES 

     The  following is a summary of principal  balances,  net as of December 31,
     1998 and 1997:

                                                     1998              1997
 ----------------------------------------------------------------------------

 Contractually scheduled payments       $    113,651,628   $    55,107,232
 Less: unearned finance charges              (35,127,485 )     (15,510,342 )
 ----------------------------------------------------------------------------

 Principal balances                           78,524,143        39,596,890
 Add: loan origination costs                     818,692           487,522
 ----------------------------------------------------------------------------

 Principal balances, net                      79,342,835        40,084,412
 Less: allowance for credit losses           (12,157,569 )      (6,857,265 )
 ----------------------------------------------------------------------------

 Finance receivables, net               $     67,185,266   $    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 5).

     Changes in the allowance for credit losses are as follows:

 YEAR ENDED DECEMBER 31,                           1998              1997
 ---------------------------------------------------------------------------

 Balance at beginning of year            $    6,857,265    $            -
 Balance at dates of acquisitions                     -         5,627,937
 Loans charged off, net of recoveries        (8,070,865 )      (3,712,655 )
 Provision for credit losses                 13,371,169         4,941,983
 ---------------------------------------------------------------------------

 Balance at end of year                  $   12,157,569    $    6,857,265
 ---------------------------------------------------------------------------

3.   PROPERTY AND EQUIPMENT

     Property and equipment consist of the following:

                                    ESTIMATED                                 
 DECEMBER 31,                     USEFUL LIFE             1998            1997
 ------------------------------------------------------------------------------

 Land                                          $   1,177,091   $   1,177,091
 Buildings and improvements       10-40 years      4,421,271       4,263,930
 Leasehold improvements            7-39 years      1,043,221         708,009
 Machinery and equipment            3-7 years        946,796         909,197
 Molds                             5-10 years        408,712         310,305

 Office equipment and furniture     3-8 years      4,239,758       3,542,413   
 Transportation equipment          3-10 years        134,946       2,482,521
 Signs                                7 years        251,201         152,234
 ------------------------------------------------------------------------------

                                                  12,622,996      13,545,700
 Less accumulated depreciation                     4,967,672       4,331,493
 ------------------------------------------------------------------------------

                                               $   7,655,324   $   9,214,207
 ------------------------------------------------------------------------------

     Property  and  equipment  is pledged as  collateral  under a line of credit
     agreement and various notes payable (see Notes 5 and 6).

4.   ACCRUED EXPENSES

 Accrued expenses consist of the following:

 DECEMBER 31,                                            1998             1997
 ----------------------------------------------------------------------------

 Accrued compensation                       $   1,157,793    $     855,806
 Accrued interest                                 829,114          411,913
 Accrued professional fees                        337,984          897,837
 Accrued restructuring charges                    415,412        1,101,266
 Accrued taxes and other                          924,348        1,367,019
 ----------------------------------------------------------------------------

                                           $   3,664,651    $   4,633,841
 ----------------------------------------------------------------------------

     The Company has a revolving  line of credit with a lender  which allows the
     Company  to borrow the lesser of  $100,000,000  or 55% of certain  eligible
     accounts  receivable at prime plus 2.5%.  Interest is payable  monthly with
     all of the  outstanding  principal due December 2001. The line of credit is
     collateralized  by  substantially  all the assets of Florida Finance Group,
     Inc.  and is  guaranteed  by Smart  Choice  Holdings,  Inc.;  Smart  Choice
     Automotive Group, Inc.; and First Choice Auto Finance,  Inc. The balance at
     December  31, 1998 and 1997 under this line of credit was  $63,700,000  and
     $31,400,000,  respectively,  and represents  the maximum  amount  available
     under the line of credit at these  dates.  Unamortized  debt  discount  was
     $87,567 and $170,400 at December 31, 1998 and 1997, respectively.  The line
     of credit agreement contains various financial and operating covenants.  As
     of  December  31,  1998,  the Company  was in  violation  of the net income
     requirement.  The  lender  waived  compliance  with this  covenant  through
     January 1, 2000.

                       
5.      LINE OF CREDIT  
  
          The following  summarizes  certain  information  about the  borrowings
     under the line of credit:

                                                           1998           1997
 -------------------------------------------------------------------------------

 Maximum amount outstanding at any month                                      
   end                                            $  65,941,239  $  31,681,590 
 Average amount outstanding during the                                        
   period                                            49,591,667     21,921,484 
 Weighted average interest rate during the                                    
   period                                                10.97%         11.45% 
------------------------------------------------------------------------------

               Interest  rates ranged from 10.25% to 11.50% and 11.25% to 11.50%
               and interest  expense was $5,373,239 and $2,235,954 for the years
               ended December 31, 1998 and 1997, respectively.


<PAGE>



6. NOTES PAYABLE Notes payable consist of the following:
<TABLE>
<CAPTION>

DECEMBER 31,                                                                              1998               1997
--------------------------------------------------------------------------------------------------------------------
<S>                                                                                  <C>                     <C>    

10% term notes payable, interest payable semiannually, unpaid principal and                                         
  interest due April 2000 or upon the sale of all or substantially all of the                                       
  outstanding stock or assets of Eckler Industries, Inc. or the completion of                                       
  a public offering in which the Company realizes at least $10 million in                                           
  gross proceeds, collateralized by substantially all of the assets as well as                                      
  all of the issued and outstanding stock of Eckler Industries, Inc. and                                            
  guaranteed by Smart Choice Automotive Group, Inc.                               $  7,000,000        $         -   

Notes payable issued in connection with various acquisitions, interest ranging                                      
  from 9% to 12%, payable through June 2002.                                         4,776,695          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 $15.00 of outstanding principal, conversion price                                          
  adjustable upon the occurrence of certain events.                                  4,000,000          4,000,000   

12% convertible note payable, net of discount, interest payable quarterly,                                          
  unpaid principal and interest due June 2000, originally convertible at a                                          
  rate of one share of common stock for every $12.00 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 year ended December 31, 1997 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 adjustment.              3,418,125          3,025,125   

Prime + 1.5% (9.25% at December 31, 1998) mortgage note payable, principal                                          
  payments of $14,405 plus interest payable monthly, outstanding principal and                                      
  interest due July 2001, collateralized by property and equipment of Eckler                                        
  Industries, Inc. and guaranteed by Eckler Industries, Inc.                         2,306,903          2,500,000   

Variable rate installment loan payable, principal and interest payable                                              
  monthly, outstanding principal and interest due December 2009,                                                    
  collateralized by certain property of the Company, repaid in 1998.                         -          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.                                                             1,270,507          1,699,142   




10% term note payable, interest payable monthly, outstanding principal due                                          
  upon the earlier of April 2000, or the sale or transfer of all or                                                 
  substantially all of the outstanding stock or assets of Eckler Industries,                                        
  Inc., collateralized by substantially all of the assets as well as all of                                         
  the issued and outstanding capital stock of Eckler Industries, Inc. and                                           
  guaranteed by Smart Choice Automotive Group, Inc.                                  1,500,000          1,500,000   

9% unsecured convertible notes payable, interest and principal due June 2000,                                       
  convertible at a rate of one share of common stock for each $17.50 of                                             
  principal, $800,000 was repaid in 1998.                                              467,601          1,267,601   

8% convertible debentures, net of discount (see below)                                       -            965,784

12% unsecured convertible note payable, interest and principal due June 2000,                                       
  convertible at a rate of one share of common stock for each $17.50 of                                             
  principal.                                                                           600,000          1,031,008   

Prime plus 1.75% (9.5% at December 31, 1998) notes payable, principal of                                            
  $16,871 plus interest payable monthly, unpaid principal and interest due at                                       
  various dates through July 2003, 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. The notes are subject to various                                             
  financial and operating covenants. As of December 31, 1998, the Company was                                       
  in violation of the working capital and cash requirements. The lender has                                         
  waived these violations through January 1, 2000.                                     759,818            894,173   

8% note payable, principal and interest of $10,010 payable monthly through                                          
  June 2007, collateralized by certain property of the Company.                        739,062            797,488   

Prime (7.75% at December 31, 1998) unsecured convertible subordinated                                               
  debenture, net of discount, interest payable quarterly, unpaid principal and                                      
  interest due December 31, 2000, originally convertible at the rate of one                                         
  share of common stock for every $18.00 of outstanding principal, conversion                                       
  price adjustable upon the occurrence of certain events. On March 6, 1998,                                         
  the conversion price was adjusted to 90% of the market price of the                                               
  Company's common stock. Accordingly, $83,333 of interest expense has been                                         
  recorded for the difference between the conversion price of the debenture                                         
  and the fair market value of the Company's common stock on the date of                                            
  adjustment. This debenture was converted in March 1999 into 398,799 shares                                        
  of common stock.                                                                     715,263            697,895   

Prime plus 1% unsecured note payable, interest payable monthly, outstanding                                         
  principal repaid in 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, repaid in                                         
  1998.                                                                                      -            498,923   

12% convertible debentures (see below)                                                 340,000            410,000

Prime plus 1% note payable, interest payable monthly, principal due upon                                            
  demand, repaid in 1998.                                                                    -            300,000   

Various notes payable bearing interest at rates from 6% to 12%, principal and                                       
  interest payable through April 2011.                                                 199,505            274,023   

10% unsecured note payable, interest payable monthly, outstanding principal                                         
  repaid in 1998.                                                                            -            257,250   

Prime plus 1% (8.75% at December 31, 1998) unsecured convertible subordinated                                       
  note payable, interest payable quarterly, unpaid principal and interest due                                       
  June 1999, originally convertible at a rate of one share of common stock for                                      
  every $15.00 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, $20,179 of interest expense has been recorded for the year                                           
  ended December 31, 1997 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. This note was converted in March 1999 into 132,933                                          
  shares of common stock.                                                              250,000            250,000   
--------------------------------------------------------------------------------------------------------------------

Total notes payable                                                               $ 28,343,479        $ 29,197,458
--------------------------------------------------------------------------------------------------------------------
</TABLE>


               Aggregate  maturities  of notes  payable over future years are as
               follows:   1999  -  $3,118,952;   2000  -  $14,405,735;   2001  -
               $2,737,175;  2002 -  $7,528,895;  2003 - $167,342;  thereafter  -
               $385,380.

               Unamortized  debt  discount was $116,610 and $611,196 at December
               31, 1998 and 1997, respectively.

               8% CONVERTIBLE DEBENTURES

               The  unsecured  convertible   debentures  bear  interest  at  8%.
               Interest is payable monthly, and all outstanding principal is due
               April 1999. The  debentures  were  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 was
               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.  During the year ended December 31,
               1998,  $965,784 of the  debentures  was  converted  into  276,523
               shares of common stock.

               12% CONVERTIBLE DEBENTURES

               The  convertible  debentures bear interest at 12% and were due on
               November 19,  1997.  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  $10.00  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  600  shares of the  Company's
               common stock at $6.00 per share.  The  warrants  are  immediately
               exercisable  and expire  five  years  from the date of  issuance.
               During 1998, the maturity date of the convertible  debentures was
               extended to January 1999 and the interest  rate was  increased to
               15%.

7. FLOOR PLANS PAYABLE Floor plans payable consist of the following:
<TABLE>
<CAPTION>

DECEMBER 31,                                                                                    1998         1997
--------------------------------------------------------------------------------------------------------------------
<S>                                                                                       <C>                 <C>    
$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.                                                                        $ 3,007,827  $ 3,285,165  

$3,750,000 floor plan line of credit, interest at prime plus 1.5% (9.25% at December                                
  31, 1998), 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.                                                       3,190,739    2,659,968  

$3,000,000 floor plan line of credit, interest at prime plus 1% (8.75% at December 31,                              
  1998), interest payable monthly, principal payable upon sale of floored vehicle,                                  
  guaranteed by Smart Choice Automotive Group, Inc., collateralized by certain assets                               
  of First Choice Stuart 1, Inc. The line of credit is subject to various financial                                 
  and operating covenants. As of December 31, 1998 and December 31, 1997, the Company                               
  was in violation of certain of the covenants. The lender has waived these covenants                               
  through January 1, 2000.                                                                  2,503,402    2,341,959  
--------------------------------------------------------------------------------------------------------------------

Total                                                                                     $ 8,701,968  $ 8,287,092
--------------------------------------------------------------------------------------------------------------------
</TABLE>

8.      INCOME TAXES             

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

 DECEMBER 31,                                           1998              1997
 -------------------------------------------------------------------------------

 Deferred income tax assets:
   Net operating loss carryforwards        $      2,910,000    $    3,476,000
   Accounts receivable                            4,672,000         2,589,000
   Stock options                                  1,901,000         1,805,000

   Charitable contribution carryforwards            303,000           523,000   

   Compensation and accrued vacation                915,000           423,000   
   Depreciation and amortization                    626,000           243,000
   Inventory and other                              103,000           149,000
   Warranty reserve                                 235,000            93,000
 -------------------------------------------------------------------------------

 Gross deferred income tax assets                11,665,000         9,301,000
 Valuation allowance                            (11,665,000 )      (9,301,000 )
 -------------------------------------------------------------------------------

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

The Company's  valuation  allowance  increased by  approximately  $2,364,000 and
$9,063,000 for the years ended December 31, 1998 and 1997,  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 of these assets through future taxable income.

At December 31, 1998,  the Company had unused  federal tax net operating  losses
(NOLs) to carry forward  against future years'  taxable income of  approximately
$8,557,000  expiring in various  amounts  through  2018.  As a result of certain
acquisitions,  the use of  approximately  $1,141,000 of 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.

9.  Committments 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 2003. The total  capitalized  cost for this equipment
     is $1,304,807 and $1,004,961 with accumulated  depreciation of $509,444 and
     $116,015 as of December 31, 1998 and 1997, respectively.

     As of December 31, 1998, future minimum lease payments under capital leases
     and future minimum rental  payments  required under  operating  leases that
     have AND initial or  remaining  noncancelable  lease terms in excess of one
     year are as follows:

                                              CAPITAL         OPERATING   
                                               LEASES            LEASES   
 -------------------------------------------------------------------------

 1999                                   $     368,993     $   2,257,000
 2000                                         351,203         1,848,000
 2001                                         280,355         1,702,000
 2002                                         189,936         1,158,000
 2003                                           1,737           670,000
 Thereafter                                         -           804,000
 -------------------------------------------------------------------------

                                            1,192,224     $   8,439,000
                                                          --------------

Less amount representing interest             194,308
                                          ------------


Present value of net minimum lease
                          payments     $     997,916                     
                                      --------------

     Rental  expense  for the  years  ended  December  31,  1998  and  1997  was
     approximately $2,742,000 and $1,524,000, respectively.

     EMPLOYMENT AGREEMENTS

     The Company  has entered  into  employment  agreements  expiring at various
     dates through the year 2002. As of December 31, 1998,  the Company's  total
     noncancellable  obligation under all employment agreements is approximately
     $2,222,000.

     LITIGATION

     During March 1999,  certain  shareholders of the Company filed two punitive
     class  action  lawsuits  against the  Company and certain of the  Company's
     current and former  officers and  directors in the United  States  District
     Court for the Middle  District of Florida  (collectively,  the  "Securities
     Actions").  The Securities  Actions  purport to be brought by plaintiffs in
     their  individual  capacity  and on  behalf  of the  class of  persons  who
     purchased or otherwise  acquired Company publicly traded securities between
     April 15,1998 and February 26, 1999.  These  lawsuits were filed  following
     the Company's announcement on February 26, 1999 a preliminary determination
     had been reached  that the net income for the year ended  December 31, 1998
     announced  on  February  10,  1999  was  likely  overstated  in a  material
     undetermined  amount at that time. Each of the complaints assert claims for
     violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule
     10b-5 of the Securities and Exchange  Commission as well as a claim for the
     violation of Section 20(a) of the Exchange Act. The plaintiffs  allege that
     the  defendants  prepared and issued  deceptive  and  materially  false and
     misleading  statements  to the public which caused  plaintiffs  to purchase
     Company  securities at artificially  inflated  prices.  The plaintiffs seek
     unspecified   damages.   The  Company   intends  to  contest  these  claims
     vigorously.  The Company  cannot  predict the ultimate  resolution of these
     actions at this time,  and there can be no  assurance  that the  litigation
     will  not  have  a  material  adverse  impact  on the  Company's  financial
     condition and results of operations.

     The Company is involved in other 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 or results of operations
     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.

10.  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.  As of December 31, 1998, all
     of these Series A shares had been  exchanged  for 526,500  shares of common
     stock of the Company.

     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 150 shares of common
     stock for each  preferred  share  purchased  at a price equal to $16.20 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
     $333,333 ($.08 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  150
     shares of common stock for each preferred  share purchased at a price equal
     to $10.46 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. As
     of December 31, 1998, all but one share of Series A redeemable  convertible
     preferred  stock  issued  in  September  1997  and  December  1997 had been
     converted into 872,462 shares of common stock.

11.  Preferred Stock

     In May 1998, the Company sold to a private  investment  group 220 shares of
     the Company's  Series B convertible  preferred stock for $10,000 per share.
     Proceeds from this  offering,  net of offering  costs,  were  approximately
     $2,200,000. The Series B convertible preferred stock accrues dividends at a
     rate of 11% per year and is  convertible  into common stock at a conversion
     rate of $10.00 per share.  After  November 5, 1999, the Company may, at its
     option,  redeem the Series B  convertible  preferred  stock for $10,000 per
     share.  In  connection  with  the  issuance  of the  Series  B  convertible
     preferred stock, the Company agreed to certain  limitations on the issuance
     of additional shares of preferred stock by the Company.

     In June 1998, the Company sold to a private  investment  group 24.98 shares
     of the  Company's  Series C  convertible  preferred  stock for  $10,000 per
     share.   Proceeds  from  this  offering,   net  of  offering  costs,   were
     approximately  $249,800.  The Series C convertible  preferred stock accrues
     dividends at a rate of 11.0% per year and is convertible  into common stock
     at a  conversion  rate of $11.18 per share.  After  December  2, 1999,  the
     Company may, at its option, redeem the Series C convertible preferred stock
     for  $10,000 per share.  In  connection  with the  issuance of the Series C
     convertible  preferred stock, the Company agreed to certain  limitations on
     the issuance of additional shares of preferred stock by the Company.

     In June 1998, the Company sold to a private  investment group 350 shares of
     the Company's  Series D convertible  preferred stock for $10,000 per share.
     Proceeds from this  offering,  net of offering  costs,  were  approximately
     $3,441,600. The Series D convertible preferred stock accrues dividends at a
     rate of 11.0% per year for five years,  after which the rate  increases  to
     20% per year. The Series D convertible  preferred stock is convertible into
     common stock at a conversion rate of $12.00 per share. After June 22, 2001,
     the Company may, at its option,  redeem the Series D convertible  preferred
     stock for $10,000 per share.  In connection with the issuance of the Series
     D convertible preferred stock, the Company agreed to certain limitations on
     the issuance of additional shares of 11. PREFERRED STOCK preferred stock by
     the Company.

12.  Contingent Redemption Value of Put Options

     In  connection   with  the   acquisitions  in  January  and  February  1997
     ("Predecessor  Acquisition"),   two  founding  stockholders  of  SCHI  each
     received  588,695  shares of common  stock of the Company in  exchange  for
     shares of SCHI common  stock.  Each of the two founding  stockholders  were
     also  beneficiaries  under two trusts, the Management Trust and the Finance
     Trust.  As part of the  Predecessor  Acquisition,  these trusts  received a
     total of 710,000  shares of common  stock in  exchange  for the SCHI common
     stock.  The  founding  stockholders  have the sole  right  to  receive  any
     proceeds of the sale of the common stock held by the trusts.

     The  trusts  shall,  after  the first to occur of the  satisfaction  of the
     purposes  of the trusts  and the  exercise  or  expiration  of all  options
     granted  with  respect  to the  shares  of the  Company's  common  stock on
     February  15,  2007,  cause  shares of common stock held by the trust to be
     purchased by the Company (the "Put Options").  The purchase price per share
     for the Finance Trust is $4.00 and for the Management  Trust is the average
     of the closing market price for 20 days  immediately  preceding the date of
     the trustees' notice  regarding such purchase by the Company.  Accordingly,
     the  redemption  value of the Put Option of $1,539,148 and $2,840,006 as of
     December 31, 1998 and 1997,  respectively  represents  the  options'  price
     multiplied  by the number of shares under  option,  and is presented in the
     accompanying  consolidated balance sheet as "Contingent Redemption Value of
     Common  Stock  Put  Options."  The  decrease  in the  redemption  value  of
     $1,300,852 during 1998 was recorded as additional paid-in capital.

     Options were  granted to  employees  and lenders  under these  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 included in Note 13.

13.  Capital Stock

     INCREASE IN PAR VALUE AND STOCK SPLIT

     In March 1997,  the Company  authorized an increase in the par value of its
     common stock from $.001 to $.01.  On July 23, 1998,  the Board of Directors
     authorized a 1-for-2  reverse stock split with respect to the common stock.
     All  common  share  information  included  in  the  accompanying  financial
     statements has been  retroactively  adjusted to give effect to the increase
     in par value and the reverse stock split.

     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 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 years ended  December
     31, 1998 and 1997, respectively: no dividend yield, an expected life of 5.0
     and 4.9 years; expected volatility of 75% and 61%, and a risk-free interest
     rate of 5.6% and 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:

 YEAR ENDED DECEMBER 31,                       1998           1997        1996
 -------------------------------------------------------------------------------

 Net loss applicable to common                                                
   stock from continuing operations                                           
                                                                         
     As reported                       $ (7,777,224) $  (17,589,020) $ (703,788)
     Pro forma                           (7,998,224 )   (21,177,799)   (703,788)

 Basic loss per common share from                                               
   continuing operations                                                   
                                                             
     As reported                       $      (1.26 $        (3.97 $      (.26 )
     Pro forma                                (1.29 )        (4.76 )      (.26 )

 Net loss applicable to common stock
                                                            
     As reported                       $ (7,348,386) $(18,981,938) $  (703,788)
     Pro forma                           (7,569,386 )   (22,570,717)   (703,788)

 Basic loss per common share
                                                              
     As reported                       $      (1.19) $      (4.28) $      (.26 )
     Pro forma                                (1.22 )        (5.09 )      (.26 )
 -------------------------------------------------------------------------------

     The following table summarizes information about employee plan and non-plan
     stock option  activity for the periods  ended  December 31, 1998,  1997 and
     1996:

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

Outstanding, December 31, 1996           -              $ -               $ -
  Acquired in merger                87,500             5.32                 -
  Granted, at market value         419,000             9.78              5.56
  Granted, above market value       15,000            13.00              7.10
  Granted, below market value       25,000             8.14              5.06
  Exercised                         (6,250 )           5.00                 -
  Forfeited                         (1,500 )           9.76                 -
-----------------------------------------------------------------------------

Outstanding, December 31, 1997     538,750             9.12                 -
  Granted, at market value         909,200             8.17              5.27
  Exercised                         (5,000 )           5.50                 -
  Forfeited                        (104,575)           9.39                 -
----------------------------------------------------------------------------

Outstanding, December 31, 1998     1,338,375          $8.47               $ -
-----------------------------------------------------------------------------

     At December 31, 1998 and 1997, a total of 413,250 and 301,250  options were
     exercisable  at a  weighted-average  exercise  price  of $7.34  and  $8.48,
     respectively.

     The following  table  summarizes  information  about  non-plan stock option
     activity issued to  non-employees  for the periods ended December 31, 1998,
     1997 and 1996:

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

Outstanding - inception                  -              $ -               $ -
  Granted, above market value      145,000             9.50                 -
--------------------------------------------------------------------------------

Outstanding, December 31, 1996     145,000             9.50                 -
  Acquired in merger               522,000             7.62                 -
  Granted, at market value         116,250            10.12              5.16
  Granted, above market value      150,000            16.34              4.56
  Forfeited                        (340,000)           7.58                 -
  Expired                          (20,000 )          10.00                 -
--------------------------------------------------------------------------------

Outstanding, December 31, 1997     573,250            10.82                 -
  Granted, at market value          43,750             6.34              4.16
  Granted, above market value        6,250             8.75              5.42
  Exercised                        (66,250 )           5.69                 -
--------------------------------------------------------------------------------

Outstanding, December 31, 1998     557,000           $10.14               $ -
--------------------------------------------------------------------------------

     At  December  31,  1998,  1997 and 1996,  a total of  532,000,  498,250 and
     131,000 options were  exercisable at a  weighted-average  exercise price of
     $10.17, $10.28 and $9.84, respectively.

     The following table summarizes  information about stock options outstanding
     and exercisable at December 31, 1998:

                          OPTIONS OUTSTANDING             OPTIONS EXERCISABLE
                   ----------------------------------  -------------------------
                                WEIGHTED-  WEIGHTED-                  WEIGHTED
                                 AVERAGE     AVERAGE                   AVERAGE
 RANGE OF              NUMBER   EXERCISE   REMAINING         NUMBER   EXERCISE
 EXERCISE PRICES   OUTSTANDING     PRICE        LIFE    EXERCISABLE      PRICE 
 ------------------------------------------------------------------------------
**                                                            
         
 $3.38 to $5.00       254,250      $4.10   3.9 years        156,250      $3.96
 $6.00 to $8.50        96,975       7.59   3.7 years         32,500       7.15
 $9.00 to $13.00      987,150       9.68   4.0 years        224,500       9.72
 -------------------------------------------------------------------------------
                    1,338,375      $8.47                    413,250      $7.34
 -------------------------------------------------------------------------------

 NON-EMPLOYEE                
   NON-PLAN                
     OPTIONS          
 $3.52 to $6.00       127,500      $5.24   3.0 years        127,500      $5.24
 $8.75 to $13.00      379,500      10.82   3.2 years        354,500      10.90
 $17.50                50,000      17.50   3.0 years         50,000      17.50
 -------------------------------------------------------------------------------

                      557,000     $10.14                    532,000     $10.17
 -------------------------------------------------------------------------------

          COMMON STOCK OPTIONS ISSUED - COMPENSATION

          During  the years  ended  December  31,  1998 and  1997,  compensation
          expense of $215,875  and  $3,809,826  was  recognized  on common stock
          options granted to employees and directors, respectively.

          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.

          COMMON STOCK ISSUED - PROFESSIONAL FEES

          During the year ended  December  31,  1997,  the Company  issued 8,965
          shares of common  stock as  payment  for  professional  services.  The
          shares were valued at $99,806,  which represents 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  236,250
          shares of the Company's  common stock at exercise  prices ranging from
          $4.00 to $24.00 per share.  The options and warrants expire at various
          dates ranging from December 1999 through August 2002. During 1998, the
          exercise  price of certain of the  options  and  warrants  was reduced
          pursuant  to the  provisions  of the  individual  option  and  warrant
          agreements.

          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
          $577,419 and $466,979 for the years ended  December 31, 1998 and 1997,
          respectively.

          COMMON STOCK WARRANTS ISSUED - PREFERRED STOCKHOLDERS

          During the year ended  December 31, 1998,  the Company  issued  common
          stock  warrants to purchase  40,000 shares of common stock at exercise
          prices  ranging  from  $10.46 to $16.20  per share to  certain  of its
          preferred  stockholders.  The  warrants  were  valued at  $254,802  in
          accordance with the provisions of FAS 123. This amount was recorded as
          penalty expense and is included as selling, general and administrative
          expenses in the accompanying consolidated statements of operations.

          COMMON STOCK ISSUED - DEBT CONVERSION

          During the year ended  December 31, 1998,  the Company  issued 343,943
          shares of common stock in conversion of debt amounting to $1,497,716.

          During the year ended  December 31, 1997,  the Company  issued 221,257
          shares of common stock in conversion of debt amounting to $1,770,056.

          COMMON STOCK - INCENTIVE PLAN

          During  1998,  the  Company's  Board  of  Directors  and  stockholders
          approved the 1998 Executive Incentive  Compensation Plan (the "Plan").
          This Plan  provides for grants of stock  options,  stock  appreciation
          rights,  restricted  stock,  deferred stock dividend  equivalents  and
          other forms of stock-based and non stock-based compensation.  The Plan
          provides that up to 750,000  shares of the Company's  common stock may
          be granted as awards under the Plan.

          STOCK WARRANTS

          At December 31, 1998,  the Company had the  following  stock  warrants
          outstanding:

                                                    NUMBER OF      
                                                   UNDERLYING         EXERCISE 
 EXPIRATION DATE                                       SHARES            PRICE 
 ------------------------------------------------------------------------------

 December 31, 1999                                     35,000        $    4.00
 November 8, 2000                                       6,250        $   12.00
 November 14, 2000                                    642,000        $   13.00
 March 30, 2001                                        10,000        $    8.40
 August 29, 2002                                       26,250        $    4.75
 September 30, 2002                                    45,000        $   16.20
 November 19, 2002                                     16,560        $    6.00
 December 10, 2002                                     15,000        $   10.46
 December 24, 2002                                     45,000        $    8.00
 December 30, 2002                                        600        $    6.00
 January 29, 2003                                      37,410        $   10.00
 June 1, 2003                                          10,001        $   10.46
 June 1, 2003                                          29,999        $   16.20
                                                  ------------

                                                      919,070
                                                 ------------

          At December 31, 1998, 919,070 of the warrants were exercisable.

          SHARES RESERVED

          At  December  31,  1998,   the  Company  has  reserved   approximately
          11,985,000 shares of common stock for future issuance under all of the
          above arrangements, the convertible debt and the convertible preferred
          stock.

          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.
          At  December   31,   1998  and  1997,   approximately   $415,000   and
          RESTRUCTURING  $1,101,266 related to disputed  employment  termination
          claims was included in 14. CHARGE accrued expenses.

15.  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 years ended December
          31, 1998 and 1997.

16. SUPPLEMENTAL CASH FLOW INFORMATION

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

YEAR ENDED DECEMBER 31,                                    1998          1997
--------------------------------------------------------------------------------

Cash paid for interest                            $   8,611,127 $   4,228,339
--------------------------------------------------------------------------------

Noncash investing and financing activities:
  Notes payable and capital lease obligations                                   
    incurred in connection with the purchase of                                 
    property and equipment                        $     316,516 $   3,722,670   
  Notes payable issued in connection with                                       
    acquisitions                                              -    11,015,272   
  Modification to conversion price of debt               83,333             -
  Increase (decrease) in contingent liability of                                
    put options                                      (1,300,852 )   2,840,000   
  Common stock issued in connection with                                        
    acquisitions                                              -    14,413,880   
  Common stock issued for conversion of debt          1,497,716     1,770,056
  Common stock options granted to employees and                                 
    directors                                           215,875     3,809,826   
  Common stock options and warrants issued to                                   
    consultants, lenders and others                     254,802     1,957,953   
  Common stock issued for services                       36,376        99,806
  Common stock issued by stockholders for                                       
    cancellation of common stock options granted                                
    by the Company                                            -       800,000   

  Common stock issued for stock notes receivable        115,200             -   
  Contribution to capital by stockholder                      -       159,203
  Debt discount on convertible debt                           -       827,685
  Common stock issued for conversion of                                         
    preferred stock and accrued dividends             4,931,835             -   
  Purchase of treasury stock for reduction of                                   
    accounts receivable and acquisition debt             93,900             -   
--------------------------------------------------------------------------------

     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, 1998, 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.

     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.

     During  1998,  the  Company  adopted  Statement  of  Financial   Accounting
     Standards No. 131 (SFAS 131),  "Disclosures about Segments of an Enterprise
     and Related  Information." SFAS 131 requires that public enterprises report
     certain  information about reporting segments in financial  statements.  It
     also requires the  disclosure  of certain  information  regarding  services
     provided, geographic areas of operation and major customers.

     The accounting  policies of the segments are the same as those described in
     the summary of significant  accounting policies.  Intercompany revenues are
     market based. The Company evaluates performance based on operating earnings
     of the respective business units.

     The Company's  continuing  operations  are  classified  into two reportable
     segments.  The used car  stores  segment  operates a network of 26 used car
     stores  in  Florida.   The  Company   primarily   sells  used  vehicles  to
     payment-sensitive  non-prime customers who, most likely, would be unable to
     purchase  a vehicle  without  financing  through  the  Company's  financing
     services segment. These segments exclude the activities of the discontinued
     operations (see Note 18).

     The  following  table shows  certain  financial  information  by reportable
     segment as of and for the years ended December 31, 1998,  1997 and 1996 and
     excludes the operations of the discontinued segments:

<TABLE>
<CAPTION>

                                         USED CAR      FINANCING      CORPORATE    DISCONTINUED                   
                                           STORES       SERVICES      AND OTHER      OPERATIONS        COMBINED   
------------------------------------------------------------------------------------------------------------------
<S>                                          <C>           <C>           <C>            <C>             <C>    

               1998
Revenue from external customers      $ 78,227,027    $ 15,709,539  $  1,448,261     $         -    $ 95,384,827
Intercompany revenues                           -      5,434,451              -               -       5,434,451
Operating income (loss)                 4,411,292      4,933,046     (7,606,726 )             -       1,737,612
Depreciation and amortization             181,377         69,469      1,690,551         272,799       2,214,196
Interest expense                          300,527      5,629,078      2,822,056               -       8,751,661
Abandoned public offering costs                 -              -      1,062,962               -       1,062,962
Identifiable assets                    15,918,151      66,174,394    16,913,961       24,585,527     123,592,033
Capital expenditures                      447,039        266,709        409,155         341,999       1,464,902


               1997
Revenue from external customers      $ 35,279,228    $ 6,898,694   $  1,177,903     $         -    $ 43,355,825
Intercompany revenues                           -      2,310,962              -               -       2,310,962
Operating income (loss)                    71,502      3,028,598     (14,777,708)             -      (11,677,608)
Depreciation and amortization              41,709          8,078      1,270,695         364,758       1,685,240
Compensation expense related to                                                                                   
  options                                       -              -      4,649,702               -       4,649,702   
Restructuring charges                           -              -      2,117,906               -       2,117,906
Interest expense                          153,405      2,902,039      2,517,863               -       5,573,307
Identifiable assets                    10,273,420      34,763,399    18,719,167       25,349,005     89,104,991
Capital expenditures (exclusive of                                                                                
  acquisitions)                         1,494,370        178,238      3,182,884         223,822       5,079,314   

               1996
Revenue from external customers      $          -    $         -   $          -     $         -    $          -
Operating income (loss)                         -              -       (670,616 )             -        (670,616 )
Depreciation and amortization                   -              -          4,381               -           4,381
Interest expense                                -              -         33,172               -          33,172
Identifiable assets                             -              -        716,290               -         716,290
Capital expenditures                            -              -         24,586               -          24,586
------------------------------------------------------------------------------------------------------------------
</TABLE>


     In January 1999,  management of the Company made a decision to  discontinue
     the  operations  of the new car  dealerships  segment  and  the  parts  and
     accessories segment in order to focus the Company's  continuing  operations
     exclusively on the retail sale of used cars through its used car stores, as
     well as the  financing  of the  used  cars  sold.  The new car  dealerships
     segment  operates  two  new car  dealerships  in  Florida.  The  parts  and
     accessories  segment sells and  distributes  Corvette parts and accessories
     throughout  the United  States,  primarily  through its extensive  catalog.
     These two segments are expected to be sold during 1999 at a net gain.

     Revenues of the  discontinued  operations were  $46,499,679 and $25,247,834
     during  1998 and  1997,  respectively.  Consolidated  interest  that is not
     attributable   to  other   operations  of  the  Company  was  allocated  to
     discontinued   operations   based  upon  net  assets  of  the  discontinued
     operations to the total net assets of the consolidated  Company. The amount
     of interest allocated to discontinued  operations was $584,587 and $487,989
     during 1998 and 1997, respectively.

19. DISCONTINUED OPERATIONS

     The net assets of the discontinued  operations included in the December 31,
     1998 and 1997 consolidated balance sheets consist of the following:

DECEMBER 31,                                             1998            1997
----------------------------------------------------------------------------

Cash and cash equivalents                  $      448,596   $     489,509
Accounts receivable                               857,293         854,382
Inventories                                     6,776,414       7,602,221
Notes receivable                                        -          46,280
Prepaid expenses                                  960,582         666,512
Property and equipment, net                     4,187,687       4,098,723
Goodwill, net                                  11,286,075      11,580,303
Other assets                                       68,880          11,075
Accounts payable                               (1,405,617 )    (1,663,149 )
Accrued expenses                                 (625,187 )      (696,467 )
Notes payable                                  (3,066,721 )    (5,189,282 )
Floor plans payable                            (5,511,229 )    (5,627,123 )
Capital lease obligations                        (147,817 )      (234,381 )
----------------------------------------------------------------------------

Net assets of discontinued operations      $   13,828,956   $  11,938,603
----------------------------------------------------------------------------

20. FOURTH QUARTER ADJUSTMENTS
            
During the fourth quarter of 1998 and 1997,  the Company  recorded the following
adjustments:

                                                        1998           1997
 -----------------------------------------------------------------------------

 Expense costs of abandoned public offering      $ 1,062,962    $   479,406
 Restructuring charge                                      -      2,117,906
 Expense related to stock options, warrants and                               
   beneficial conversion feature                     554,010      1,405,087   
 Increase in allowance for credit losses and                                  
   other adjustments to finance receivables        3,314,012              -   
 Inventory write-downs                             1,094,096              -
 Write-down of goodwill from asset sale and                                   
   impairment                                      1,045,847              -   
 -----------------------------------------------------------------------------

The effect of the above 1998 fourth quarter  adjustments on previous quarters is
as follows:

                                             THREE MONTHS          THREE MONTHS
                                                    ENDED                 ENDED 
                                                 JUNE 30,         SEPTEMBER 30,
                                                     1998                  1998
-------------------------------------------------------------------------------

Quarterly adjustment                         $  1,115,783          $  3,661,616
-------------------------------------------------------------------------------

Net income (loss) applicable to common stock:
    As reported                              $  2,355,206          $  1,627,992
    As restated                                 1,239,423           (2,033,624 )

Basic earnings (loss) per share:
    As reported                              $       0.36          $       0.25
    As restated                                      0.19                (0.34 )

Diluted earnings (loss) per share:
    As reported                              $       0.36          $       0.23
    As restated                                      0.17                (0.34 )
--------------------------------------------------------------------------------