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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549




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FORM 10-Q


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|    |                                                                                        
|--- | ---------------------------------------------------------------------------------------
|[X] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|   
|    | FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2002                                          

OR

|      |                                                                                         
|----- | ----------------------------------------------------------------------------------------
|[   ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|     
|      | FOR THE TRANSITION PERIOD FROM ___________ TO ___________                               

COMMISSION FILE NUMBER: 28050

ONYX ACCEPTANCE CORPORATION

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


|                                                                        |  |                                                
|----------------------------------------------------------------------- |  | -----------------------------------------------
|DELAWARE
(STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION) |  | 33-0577635
(I.R.S. EMPLOYER
IDENTIFICATION NO.)

ONYX ACCEPTANCE CORPORATION
27051 TOWNE CENTRE DRIVE
FOOTHILL RANCH, CA 92610
(949) 465-3900
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES)



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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  [   ]

As of March 14, 2002 there were 5,086,793 shares of registrants Common
Stock, par value $.01 per share outstanding.



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TABLE OF CONTENTS



|                              |                                                                                               |                                                          |  |  |  |  |  | 
|----------------------------- | --------------------------------------------------------------------------------------------- | -------------------------------------------------------- |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION
|                              | ITEM 1. FINANCIAL STATEMENTS                                                                 
|                              |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
|                              |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF INCOME             
|                              |                                                                                               | CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY          
|                              |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS         
|                              |                                                                                               | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS    
|                              | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                              | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|PART II. OTHER INFORMATION   
|                              | ITEM 1. LEGAL PROCEEDINGS                                                                    
|                              | ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                  
|                              | ITEM 5. OTHER INFORMATION                                                                    
|                              | ITEM 6. EXHIBITS AND REPORTS OF FORM 8-K                                                     
|SIGNATURE                    
|EXHIBIT INDEX                
|EXHIBIT 10.120               
|EXHIBIT 10.121               
|EXHIBIT 10.122               
|EXHIBIT 10.123               
|EXHIBIT 10.124               
|EXHIBIT 21.1                 



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TABLE OF CONTENTS

ONYX ACCEPTANCE CORPORATION

INDEX TO QUARTERLY REPORT ON FORM 10-Q

|              |  |                                                                                                              |    |      |    | 
|------------- |  | ------------------------------------------------------------------------------------------------------------ | -- | ---- | -- | 
|              |  |                                                                                                              |    | PAGE
|              |  |                                                                                                              |    |     
|PART I        |  | Financial Information                                                                                        |    |      | 3  | 
|Item 1.       |  | Financial Statements                                                                                         |    |      | 3  | 
|              |  | Condensed Consolidated Statements of Financial Condition at March 31, 2002 and December 31, 2001             |    |      | 3  | 
|              |  | Condensed Consolidated Statements of Income for the three months ended March 31, 2002
and March 31, 2001     |    |      | 4  | 
|              |  | Consolidated Statement of Stockholders Equity at March 31, 2002                                             |    |      | 5  | 
|              |  | Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2002
and March 31, 2001 |    |      | 6  | 
|              |  | Notes to Condensed Consolidated Financial Statements                                                         |    |      | 7  | 
|Item 2.       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                        |    |      | 11 | 
|Item 3.       |  | Quantitative and Qualitative Disclosures about Market Risk                                                   |    |      | 18 | 
|PART II       |  | Other Information                                                                                            |    |      | 19 | 
|Item 1.       |  | Legal Proceedings                                                                                            |    |      | 19 | 
|Item 4.       |  | Submission of Matters to a Vote of Security Holders                                                          |    |      | 20 | 
|Item 5.       |  | Other Information                                                                                            |    |      | 20 | 
|Item 6.       |  | Exhibits and Reports on Form 8-K                                                                             |    |      | 26 | 
|SIGNATURES    |  |                                                                                                              | 27 |     
|EXHIBIT INDEX |  |                                                                                                              | 28 |     

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PART I. FINANCIAL INFORMATION




ITEM 1. FINANCIAL STATEMENTS




ONYX ACCEPTANCE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(UNAUDITED)


|                                                   |                                                                                                                                                     |                              |         |                        |         |              |         |         |         | 
|-------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------- | ------- | ---------------------- | ------- | ------------ | ------- | ------- | ------- | 
|                                                   |                                                                                                                                                     |                              |         | MARCH 31,              |         | DECEMBER 31,
|                                                   |                                                                                                                                                     |                              |         | 2002                   |         | 2001        
|                                                   |                                                                                                                                                     |                              |         |                        |         |             
|                                                   |                                                                                                                                                     |                              |         | (DOLLARS IN THOUSANDS)
|ASSETS                                            
|Cash and cash equivalents                          |                                                                                                                                                     | $                            | 6,818   |                        |         | $            | 1,135   |        
|Credit
enhancement assets, at fair value           |                                                                                                                                                     |                              | 189,552 |                        |         |              | 184,300 |        
|Contracts held for sale                            |                                                                                                                                                     |                              | 201,913 |                        |         |              | 189,265 |        
|Contracts
held for investment (net of allowance)   |                                                                                                                                                     |                              | 3,082   |                        |         |              | 2,259   |        
|Other assets                                       |                                                                                                                                                     |                              | 10,380  |                        |         |              | 9,326   |        
|                                                   |                                                                                                                                                     |                              |         |                        |         |              |         |        
|                                                   |                                                                                                                                                     | Total assets                 |         | $                      | 411,745 |              |         | $       | 386,285 | 
|                                                   |                                                                                                                                                     |                              |         |                        |         |              |         |        
|LIABILITIES                                       
|Accounts payable                                   |                                                                                                                                                     | $                            | 31,062  |                        |         | $            | 27,024  |        
|Debt                                               |                                                                                                                                                     |                              | 290,063 |                        |         |              | 274,595 |        
|Other liabilities                                  |                                                                                                                                                     |                              | 28,152  |                        |         |              | 24,965  |        
|                                                   |                                                                                                                                                     |                              |         |                        |         |              |         |        
|                                                   | Total liabilities                                                                                                                                   |                              |         | 349,277                |         |              |         | 326,584 |        
|EQUITY                                            
|Common
stock                                       |                                                                                                                                                     |                              |         |                        |         |              |         |        
|                                                   | Par value $.01 per share; authorized 15,000,000 shares; issued and outstanding 5,086,793 as of March 31, 2002
and 5,078,046 as of December 31, 2001 |                              |         | 51                     |         |              |         | 51      |        
|Paid in capital                                    |                                                                                                                                                     |                              | 32,651  |                        |         |              | 32,647  |        
|Retained earnings                                  |                                                                                                                                                     |                              | 26,369  |                        |         |              | 25,960  |        
|Accumulated other comprehensive income, net of tax |                                                                                                                                                     |                              | 3,397   |                        |         |              | 1,043   |        
|                                                   |                                                                                                                                                     |                              |         |                        |         |              |         |        
|                                                   |                                                                                                                                                     | Total equity                 |         |                        | 62,468  |              |         |         | 59,701  | 
|                                                   |                                                                                                                                                     |                              |         |                        |         |              |         |        
|                                                   |                                                                                                                                                     | Total liabilities and equity |         | $                      | 411,745 |              |         | $       | 386,285 | 
|                                                   |                                                                                                                                                     |                              |         |                        |         |              |         |        

See the accompanying notes to the condensed consolidated financial statements.

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ONYX ACCEPTANCE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)


|                               |                                     |   |                                              |        |      |   |           |        | 
|------------------------------ | ----------------------------------- | - | -------------------------------------------- | ------ | ---- | - | --------- | ------ | 
|                               |                                     |   | THREE MONTHS ENDED                          
|                               |                                     |   | MARCH 31,                                   
|                               |                                     |   |                                             
|                               |                                     |   | 2002                                         |        | 2001
|                               |                                     |   |                                              |        |     
|                               |                                     |   | (Dollars in
Thousands except per share data)
|REVENUES:                      |                                     |   |                                              |        |      |   |           |       
|Interest income                |                                     | $ | 8,255                                        |        |      | $ | 5,637     |       
|Interest expense               |                                     |   | 2,597                                        |        |      |   | 4,186     |       
|                               |                                     |   |                                              |        |      |   |           |       
|Net interest income            |                                     |   | 5,658                                        |        |      |   | 1,451     |       
|Gain on sale of contracts      |                                     |   | 4,295                                        |        |      |   | 9,319     |       
|Service fee income             |                                     |   | 13,473                                       |        |      |   | 14,248    |       
|                               |                                     |   |                                              |        |      |   |           |       
|Total Revenues                 |                                     |   | 23,426                                       |        |      |   | 25,018    |       
|EXPENSES:                      |                                     |   |                                              |        |      |   |           |       
|                               | Provision for credit losses         |   |                                              | 479    |      |   |           | 334    | 
|                               | Interest expense  other            |   |                                              | 1,036  |      |   |           | 1,540  | 
|OPERATING EXPENSES:            |                                     |   |                                              |        |      |   |           |       
|                               | Salaries and benefits               |   |                                              | 13,401 |      |   |           | 12,507 | 
|                               | Systems and servicing               |   |                                              | 578    |      |   |           | 1,550  | 
|                               | Telephone and data lines            |   |                                              | 882    |      |   |           | 1,150  | 
|                               | Depreciation                        |   |                                              | 1,000  |      |   |           | 1,254  | 
|                               | General and administrative expenses |   |                                              | 5,351  |      |   |           | 5,170  | 
|                               |                                     |   |                                              |        |      |   |           |       
|Total Operating Expenses       |                                     |   | 21,212                                       |        |      |   | 21,631    |       
|                               |                                     |   |                                              |        |      |   |           |       
|Total Expenses                 |                                     |   | 22,727                                       |        |      |   | 23,505    |       
|                               |                                     |   |                                              |        |      |   |           |       
|                               | Income before Income Taxes          |   |                                              | 699    |      |   |           | 1,513  | 
|                               | Income Taxes                        |   |                                              | 290    |      |   |           | 628    | 
|                               |                                     |   |                                              |        |      |   |           |       
|Net Income                     |                                     | $ | 409                                          |        |      | $ | 885       |       
|                               |                                     |   |                                              |        |      |   |           |       
|Net Income per share  Basic   |                                     | $ | 0.08                                         |        |      | $ | 0.18      |       
|Net Income per share  Diluted |                                     | $ | 0.08                                         |        |      | $ | 0.17      |       
|Basic Shares Outstanding       |                                     |   | 5,081,156                                    |        |      |   | 4,989,504 |       
|Diluted Shares Outstanding     |                                     |   | 5,191,935                                    |        |      |   | 5,132,111 |       

See the accompanying notes to the condensed consolidated financial statements.

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ONYX ACCEPTANCE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
(IN THOUSANDS)
(UNAUDITED)

|                                                                   |  |        |       |       |  |         |    |          |  |            |        |       |  |   |        |               |  |             |       |  |  |   |        | 
|------------------------------------------------------------------ |  | ------ | ----- | ----- |  | ------- | -- | -------- |  | ---------- | ------ | ----- |  | - | ------ | ------------- |  | ----------- | ----- |  |  | - | ------ | 
|                                                                   |  |        |       |       |  |         |    |          |  |            |        |       |  |   |        |               |  | ACCUMULATED |       |  |  |  
|                                                                   |  |        |       |       |  |         |    |          |  | ADDITIONAL |        |       |  |   |        | COMPREHENSIVE |  |             |       | 
|                                                                   |  |        |       |       |  | COMMON  |    | PAID-IN  |  | RETAINED   |        | GAIN, |  |   |        |              
|                                                                   |  | SHARES |       | STOCK |  | CAPITAL |    | EARNINGS |  | NET OF TAX |        | TOTAL
|                                                                   |  |        |       |       |  |         |    |          |  |            |        |      
|BALANCE, DECEMBER 31, 2001                                         |  |        | 5,078 |       |  | $       | 51 |          |  | $          | 32,647 |       |  | $ | 25,960 |               |  | $           | 1,043 |  |  | $ | 59,701 | 
|Stock issued for options exercised                                 |  |        | 9     |       |  |         |    |          |  |            | 4      |       |  |   |        |               |  |             |       |  |  |   | 4      | 
|Comprehensive income:                                              |  |        |       |       |  |         |    |          |  |            |        |       |  |   |        |               |  |             |       |  |  |   |        | 
|Unrealized gains in securitized assets, net of
tax of $1.5 million |  |        |       |       |  |         |    |          |  |            |        |       |  |   |        |               |  |             | 2,132 |  |  |   | 2,132  | 
|Unrealized gain on hedging activities, net of
tax of $157 thousand |  |        |       |       |  |         |    |          |  |            |        |       |  |   |        |               |  |             | 222   |  |  |   | 222    | 
|Net income                                                         |  |        |       |       |  |         |    |          |  |            |        |       |  |   | 409    |               |  |             |       |  |  |   | 409    | 
|                                                                   |  |        |       |       |  |         |    |          |  |            |        |       |  |   |        |               |  |             |       |  |  |   |        | 
|Total comprehensive income                                         |  |        |       |       |  |         |    |          |  |            |        |       |  |   | 409    |               |  |             | 2,354 |  |  |   | 2,763  | 
|                                                                   |  |        |       |       |  |         |    |          |  |            |        |       |  |   |        |               |  |             |       |  |  |   |        | 
|BALANCE, MARCH 31, 2002                                            |  |        | 5,087 |       |  | $       | 51 |          |  | $          | 32,651 |       |  | $ | 26,369 |               |  | $           | 3,397 |  |  | $ | 62,468 | 
|                                                                   |  |        |       |       |  |         |    |          |  |            |        |       |  |   |        |               |  |             |       |  |  |   |       

See the accompanying notes to the condensed consolidated financial statements.

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ONYX ACCEPTANCE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(UNAUDITED)

|                                                 |                                                       |   |                        |          |      |   |        |          |  
|------------------------------------------------ | ----------------------------------------------------- | - | ---------------------- | -------- | ---- | - | ------ | -------- | -
|                                                 |                                                       |   | THREE MONTHS ENDED    
|                                                 |                                                       |   | MARCH 31,             
|                                                 |                                                       |   |                       
|                                                 |                                                       |   | 2002                   |          | 2001
|                                                 |                                                       |   |                        |          |     
|                                                 |                                                       |   | (Dollars in Thousands)
|OPERATING ACTIVITIES:                            |                                                       |   |                        |          |      |   |        |         
|                                                 | Net cash used in operating activities                 |   | $                      | (10,078  | )    |   | $      | (14,001  | )
|INVESTING ACTIVITIES:                            |                                                       |   |                        |          |      |   |        |         
|                                                 | Cash
used for purchases of property and equipment     |   |                        | (516     | )    |   |        | (1,032   | )
|FINANCING ACTIVITIES:                            |                                                       |   |                        |          |      |   |        |         
|                                                 | Proceeds from exercise of employee options            |   |                        | 4        |      |   |        |         |  
|                                                 | Payments on capital lease obligations                 |   |                        | (94      | )    |   |        | (91      | )
|                                                 | Proceeds from lease refinance                         |   |                        | 900      |      |   |        |         |  
|                                                 | Payments on residual lines of credit                  |   |                        | (68,355  | )    |   |        | (6,817   | )
|                                                 | Proceeds from drawdown on residual lines of credit    |   |                        | 75,476   |      |   |        | 8,750    |  
|                                                 | Paydown of warehouse lines related to securitizations |   |                        | (363,223 | )    |   |        | (331,000 | )
|                                                 | Proceeds from warehouse lines                         |   |                        | 371,726  |      |   |        | 347,794  |  
|                                                 | Proceeds from issuance of subordinated debt           |   |                        | 712      |      |   |        |         |  
|                                                 | Principal payments on subordinated debt               |   |                        | (869     | )    |   |        | (792     | )
|                                                 |                                                       |   |                        |          |      |   |        |         
|Net cash provided by financing activities        |                                                       |   | 16,277                 |          |      |   | 17,844 |         
|                                                 |                                                       |   |                        |          |      |   |        |         
|                                                 | Increase in cash and cash equivalents                 |   |                        | 5,683    |      |   |        | 2,811    |  
|Cash and cash equivalents at beginning of period |                                                       |   | 1,135                  |          |      |   | 3,130  |         
|                                                 |                                                       |   |                        |          |      |   |        |         
|Cash and cash equivalents at end of period       |                                                       | $ | 6,818                  |          |      | $ | 5,941  |         
|                                                 |                                                       |   |                        |          |      |   |        |         

See the accompanying notes to the condensed consolidated financial statements.

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ONYX ACCEPTANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1  NATURE OF OPERATIONS

Onyx is a specialized consumer finance company engaged in the purchase,
origination, securitization and servicing of Contracts originated by franchised
and select independent automobile dealerships in the United States. The Company
focuses its efforts on acquiring Contracts that are collateralized by late
model used and, to a lesser extent, new automobiles, that are entered into with
purchasers whom the Company believes have a favorable credit profile. Since
commencing the purchase of Contracts in February 1994, the Company has acquired
more than $7.5 billion in Contracts and currently has relationships with 10,256
dealerships. The Company has expanded its operations from a single office in
California to 19 Auto Finance Centers serving many regions of the United
States.

The Company generates revenues primarily through the purchase,
origination, warehousing, subsequent securitization and ongoing servicing of
Contracts. The Company earns net interest income on Contracts held during the
warehousing period. Upon the securitization and sale of Contracts, the Company
recognizes a gain on sale of Contracts, receives future excess cash flows
generated by owner and grantor trusts, and earns fees from servicing the
securitized Contracts.

NOTE 2  BASIS OF PRESENTATION

The condensed consolidated financial statements included herein are
unaudited and have been prepared by Onyx Acceptance Corporation (Onyx or the
Company) in accordance with generally accepted accounting principles for
interim financial reporting and Securities and Exchange Commission regulations.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to the regulations. In the opinion of
management, the financial statements reflect all adjustments (of a normal and
recurring nature) which are necessary for a fair statement of the financial position,
results of operations and cash flows for the interim period. Operating results
for the three months ended March 31, 2002 are not necessarily indicative of the
results that may be expected for the year ending December 31, 2002. The
condensed consolidated financial statements should be read in conjunction with
the audited financial statements and footnotes thereto for the year ended
December 31, 2001 included in the Companys 2001 Annual Report on Form 10-K.

USE OF ESTIMATES

In conformity with generally accepted accounting principles, management
utilizes assumptions and estimates that affect the reported values of assets
and liabilities and disclosures of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenue and
expenses for each reporting period. The more significant estimates made in the
preparation of the Companys condensed consolidated financial statements relate
to the credit enhancement assets and the gain on sale of motor vehicle retail
installment sales and loan contracts (Contracts). Such assumptions include,
but are not limited to, estimates of loan prepayments, defaults, recovery rates
and present value discount rates. The Company uses a combination of its own
historical experience and expectation of future performance to determine such
estimates. Actual results may differ from the Companys estimates due to
numerous factors both within and beyond the control of Company management.
Changes in these factors could require the Company to revise its assumptions
concerning the amount of voluntary prepayments, the frequency and/or severity
of defaults and the recovery rates associated with the disposition of
repossessed vehicles.

NOTE 3  CONTRACTS HELD FOR SALE

Contracts held for sale consisted of the following:

|                              |  |                |         |              |  |   |         |  
|----------------------------- |  | -------------- | ------- | ------------ |  | - | ------- | -
|                              |  | March 31,      |         | December 31,
|                              |  | 2002           |         | 2001        
|                              |  |                |         |             
|                              |  | (In Thousands)
|Gross contracts held for sale |  | $              | 206,890 |              |  | $ | 193,879 |  
|Less unearned interest        |  |                | (2,332  | )            |  |   | (2,164  | )
|                              |  |                |         |              |  |   |         |  
|Contracts held for sale       |  |                | 204,558 |              |  |   | 191,715 |  
|Dealer participation          |  |                | (2,645  | )            |  |   | (2,450  | )
|                              |  |                |         |              |  |   |         |  
|Total                         |  | $              | 201,913 |              |  | $ | 189,265 |  
|                              |  |                |         |              |  |   |         |  

NOTE 4  CONTRACTS HELD FOR INVESTMENT

Contracts held for
investment are net of a $1.3 million allowance for
future losses for both March 31, 2002 and December 31, 2001. Amounts held for investment include Contracts that do not
qualify for Contract securitizations as a result of delinquency status or
minimum balance.

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NOTE 5  CREDIT ENHANCEMENT ASSETS

SFAS 140 requires that following a transfer of financial assets, an entity
is to recognize the assets it controls and the liabilities it has incurred, and
derecognize assets for which control has been surrendered and liabilities that
have been extinguished.

Credit enhancement assets consisted of the following:

|                 |  |                |         |              |  |   |         | 
|---------------- |  | -------------- | ------- | ------------ |  | - | ------- | 
|                 |  | March 31,      |         | December 31,
|                 |  | 2002           |         | 2001        
|                 |  |                |         |             
|                 |  | (In Thousands)
|Trust receivable |  | $              | 3,980   |              |  | $ | 3,980   | 
|RISA             |  |                | 185,572 |              |  |   | 180,320 | 
|                 |  |                |         |              |  |   |         | 
|Total            |  | $              | 189,552 |              |  | $ | 184,300 | 
|                 |  |                |         |              |  |   |         | 

Trust receivables represents initial deposits in spread accounts.

Retained interest in securitized assets (RISA) capitalized upon
securitization of Contracts, represents the present value of the estimated
future earnings to be received by the Company from the excess spread created in
securitization transactions. Excess spread is calculated by taking the
difference between the weighted average coupon rate of the Contracts sold and
the weighted average security rate paid to the investors less contractually
specified servicing and guarantor fees and projected credit losses, after
giving effect to estimated prepayments.

Prepayment and credit loss assumptions are utilized to project future
cash flows upon securitization and are based on historical
experience. In calculating the gain on sale, the Company uses a 1.75%
prepayment rate for all outstanding securitizations with an average Contract
life range of 1.6 to 1.7 years. Credit loss assumptions range from 3.5% to 4.7%
cumulative depending upon the credit statistics of the underlying portfolio to
be securitized. Credit losses are estimated using cumulative loss frequency and
severity estimates by management. All assumptions are evaluated each quarter
and adjusted, if appropriate, to reflect the actual performance of the
underlying Contracts. The fair value of the RISA at quarter-end is calculated
by discounting the excess spread at a rate management believes to be
representative of market at the time of securitization. Historically, this rate
has equaled 3.5% over the investor rate. During the first quarter of 2002,
management revisited the assumptions used in deriving an appropriate discount
rate. Management has developed a systematic methodology that is a function of
both market benchmark rates and the seasoning of a securitizations cash flow.
As of March 31, 2002, the discount rate used for valuing RISA
ranged from 8.8%
to 11.5%, and loss assumptions ranged from 3.7% to 5.1% cumulative.

Emerging Issues Task Force (EITF) 99-20,
Recognition of Interest Income and Impairment on Purchased and Retained
Beneficial Interests in Securitized Financial Assets has
established
new income and impairment recognition standards for interests in certain
securitized assets. The Company adopted EITF 99-20 effective
April 1,
2001. Under the provisions of EITF 99-20, the holder of
beneficial interests should recognize the excess of all estimated cash flows
attributable to the beneficial interest estimated at the acquisition date over
the initial investment (the accretable yield) as interest income over the life
of the beneficial interest using the effective yield method. If the estimated
cash flows change, then the holder of the beneficial interest should
recalculate the accretable yield and adjust the periodic accretion recognized
as income prospectively. If the fair value of a beneficial interest has
declined below its carrying amount, an other-than-temporary decline is
considered to exist if there has been a decline in the present value
of estimated future cash flows
and the difference between the carrying value and fair value of the beneficial
interest is recorded as an impairment loss through the income statement.

During the first quarter of 2002, the Company recorded a pre-tax
write-down of the Companys RISA asset by $1.35 million stemming from higher
than expected losses and delinquency on a securitization executed prior to
2001. This write-down was recorded against the gain on sale. Prior to the
adoption of EITF 99-20, the balance of RISA was amortized against actual excess
spread income earned on a monthly basis over the expected repayment life of the
underlying Contracts. The adoption of EITF 99-20 resulted in amounts previously
recognized as service fee income being recognized as interest income. In initially valuing
the RISA, the Company reduces projected cash flows for probable
credit losses by establishing an off balance
sheet allowance for estimated credit losses over the life of the
underlying Contracts. The allowance is based upon
historical experience and managements estimate of future performance regarding
credit losses. The amount is reviewed periodically and adjustments are made if
actual experience or other factors indicate that future performance may differ
from managements prior estimates.

8



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##### Table of Contents



The following table presents the estimated future undiscounted RISA
earnings to be received from securitizations. Estimated future undiscounted
RISA earnings are calculated by taking the difference between the coupon rate
of the Contracts sold and the weighted average security rate paid to the
investors, less the contractually specified servicing fee of 1.0% and financial
guaranty insurance fees, after giving effect to estimated prepayments and
assuming no losses. To arrive at the RISA, this amount is reduced by the off
balance sheet allowance established for potential future losses and by
discounting to present value.

|                                                              |  |                |           |              |  |   |           |  
|------------------------------------------------------------- |  | -------------- | --------- | ------------ |  | - | --------- | -
|                                                              |  | March 31,      |           | December 31,
|                                                              |  |                |           |             
|                                                              |  | 2002           |           | 2001        
|                                                              |  |                |           |             
|                                                              |  | (In thousands)
|Estimated net undiscounted RISA earnings                      |  | $              | 314,226   |              |  | $ | 324,162   |  
|Off balance sheet allowance for losses                        |  |                | (95,293   | )            |  |   | (110,347  | )
|Discount to present value                                     |  |                | (33,361   | )            |  |   | (33,495   | )
|                                                              |  |                |           |              |  |   |           |  
|Retained interest in securitized assets                       |  | $              | 185,572   |              |  | $ | 180,320   |  
|                                                              |  |                |           |              |  |   |           |  
|Outstanding balance of contracts sold through securitizations |  | $              | 2,624,325 |              |  | $ | 2,635,042 |  

NOTE 6  NET INCOME PER SHARE

The following table sets forth the computation of basic and diluted net
income per share (EPS):

|                                              |  |                                       |       |      |  |   |       | 
|--------------------------------------------- |  | ------------------------------------- | ----- | ---- |  | - | ----- | 
|                                              |  | THREE MONTHS ENDED                   
|                                              |  | MARCH 31,                            
|                                              |  |                                      
|                                              |  | 2002                                  |       | 2001
|                                              |  |                                       |       |     
|                                              |  | (In Thousands, Except Per Share data)
|Net Income                                    |  | $                                     | 409   |      |  | $ | 885   | 
|                                              |  |                                       |       |      |  |   |       | 
|Weighted average shares outstanding           |  |                                       | 5,081 |      |  |   | 4,990 | 
|Net effect of dilutive stock options/warrants |  |                                       | 111   |      |  |   | 142   | 
|                                              |  |                                       |       |      |  |   |       | 
|Diluted weighted average shares outstanding   |  |                                       | 5,192 |      |  |   | 5,132 | 
|                                              |  |                                       |       |      |  |   |       | 
|Net income per share:                         |  |                                       |       |      |  |   |       | 
|Basic EPS                                     |  | $                                     | 0.08  |      |  | $ | 0.18  | 
|                                              |  |                                       |       |      |  |   |       | 
|Diluted EPS                                   |  | $                                     | 0.08  |      |  | $ | 0.17  | 
|                                              |  |                                       |       |      |  |   |       | 

At March 31,
2002, there were 1.76 million options and 184 thousand warrants
outstanding.

NOTE 7  NEW PRONOUNCEMENTS

In June 2001, the Financial Accounting Standards Board issued Statements
on Financial Accounting Standards (SFAS) Nos. 141 (Business Combinations) and
142 (Goodwill and Other Intangible Assets). SFAS No. 141, among other things,
eliminates the use of the pooling of interests method of accounting for
business combinations. Under the provisions of SFAS No. 142, goodwill will no
longer be amortized, but will be subject to a periodic test for impairment
based upon fair values. SFAS No. 141 is effective for all business combinations
initiated after June 30, 2001. SFAS No. 142 was effective for the Company
on January 1, 2002. The adoption of these statements had no effect on the Companys financial statements.

In August 2001, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets. This Statement addresses financial accounting
and reporting for the impairment or disposal of long-lived assets, and
supersedes FAS-121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of. The statement also
supersedes those portions of APB-30,
Reporting the Results of Operations  Reporting the Effects of Disposal of a
Segment of a Business and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions, relating to the disposal of a business
segment. This Statement is effective for financial statements
issued for fiscal years beginning after December 15, 2001. The adoption of
FAS-144 did not have a material effect on the Companys consolidated financial
statements.

In April 2002, the
Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 145, Rescission of FASB
Statements No. 4, 44, and 64, Amendment of FASB Statement
No. 13, and Technical Corrections. The Statement updates,
clarifies and simplifies existing accounting pronouncements with
regard to extinguishments of debt made to satisfy sinking-fund
requirements, accounting for intangible assets of motor carriers and
accounting for leases. Adoption of SFAS No. 145 will not have a
material effect on the Companys financial statements.

NOTE 8  CONTINGENCIES

The Company is party to various legal proceedings similar to actions
brought against other companies in the motor vehicle finance and other
industries, which may or may not be covered under insurance policies it holds.
The Company vigorously defends such proceedings; however, there is no assurance
as to the results. Based upon information presently available, the Company
believes that

9



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##### Table of Contents



the final outcome of all such proceedings should not have a material
adverse effect upon the Companys results of operations, cash flows or
financial condition.

NOTE 9  SUBSEQUENT EVENTS

During the second quarter of 2002, the Company securitized $400 million in
Contracts, and refinanced the Companys residual securitization from the first
quarter of 2000 in the amount of $21.0 million.




ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

OVERVIEW

Onyx is a specialized consumer finance company engaged in the purchase,
origination, securitization and servicing of Contracts originated by franchised
and select independent automobile dealerships in the United States. The Company
focuses its efforts on acquiring Contracts that are collateralized by late
model used and, to a lesser extent, new automobiles, that are entered into with
purchasers whom the Company believes have a favorable credit profile. Since
commencing the purchase of Contracts in February 1994, the Company has acquired
more than $7.5 billion in Contracts and currently has relationships with 10,256
dealerships. The Company has expanded its operations from a single office in
California to 19 Auto Finance Centers serving many regions of the United
States.

The Company generates revenues primarily through the purchase,
origination, warehousing, subsequent securitization and ongoing servicing of
Contracts. The Company earns net interest income on Contracts held during the
warehousing period. Upon the securitization and sale of Contracts, the Company
recognizes a gain on sale of Contracts, receives future excess cash flows
generated by owner and grantor trusts, and earns fees from servicing the
securitized Contracts.

RESULTS OF OPERATIONS

NET INTEREST INCOME

Net interest income
consists primarily of 1) the difference between the finance
revenue earned on Contracts held on balance sheet during the
warehousing period and the interest costs associated with the
Companys borrowings to purchase such Contracts; and 2) the
difference between income accreted on RISA and the interest costs
associated with residual line borrowings secured by RISA.

Net interest income
increased to $5.7 million for the first quarter 2002, from
$1.5 million for the same period in 2001. The increase for 2002
was principally due to $2.8 million of net interest income
related to RISA and residual borrowings. In accordance with Emerging
Issues Task Force 99-20 (EITF 99-20), which became
effective beginning in the second quarter 2001, the Company is
required to recognize income of RISA on a level yield
accrual method over the remaining estimated life of the
corresponding asset and record RISA-related income as interest income
instead of as excess service fee income. Total excess service fee
income recognized as interest income for the quarter was
approximately $4.3 million. Interest expense associated with
borrowings under residual lines secured by RISA totaled approximately
$1.5 million. The Company has elected to reclassify this interest
expense as a component of net interest income to better match RISA
revenues with RISA-secured expenses. Without the effects of
EITF 99-20 and RISA expense reclassifications, net interest
income for first quarter 2002 would have been approximately
$2.8 million. This increase is principally due to
the reduction in the Companys cost of warehouse borrowings during the period.
The weighted average cost of warehouse borrowings decreased to 1.85% for the
quarter ended March 31, 2002, compared to 5.75% for the same period in 2001.
The average balance of Contracts held on balance sheet, which provides
collateral for warehouse borrowings, was $141.5 million and 205.8 million for
the first quarter of 2002 and 2001 respectively.

GAIN ON SALE OF CONTRACTS

The Company computes a gain on sale with respect to Contracts securitized
based on the present value of the estimated future excess cash flows to be
received from such Contracts using a market discount rate. Gain on sale is
recorded as a credit enhancement asset on the statement of financial condition.
The gain recorded in the statement of income is adjusted for prepaid dealer
participation, issuance costs and the gain or loss on the termination of the
cash flow hedge. The gain on the sale of Contracts is affected by the amount of
Contracts securitized and the net interest rate spread on those Contracts.

The Company completed
one securitization qualifying for sale treatment totaling $375.0 million during
the quarter ended March 31, 2002, resulting in a gain of
$5.6 million or 1.5%
of the dollar amount of Contracts securitized, compared to a securitization of
$400.0 million in the first quarter of 2001, resulting in a gain of $9.3
million or 2.3% of the dollar amount securitized. Included in the 2002 first
quarter gain is a pre-tax write-down of $1.35 million of the Companys RISA
asset stemming from higher than expected losses and delinquency on a
securitization executed prior to 2001.

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The reduction in the gain as a percentage of the Contracts securitized for
the first quarter of 2002 was attributable to a decrease in net interest rate
spreads. The net interest rate spread is the difference between the weighted
average Contract rate of the securitized assets, and the weighted average
investor rate inclusive of all costs related to the securitization transaction.
Interest rate spread is affected by product mix, general market conditions and
overall market interest rates. The risks inherent in interest rate fluctuations
are partially reduced through hedging activities.

The Company has had
a reduction in the weighted average net interest spread
for securitizations executed during the first quarters of 2002 and 2001. The
weighted average net interest rate spread for the securitization executed
during the first quarter of 2002 was 1.61%, compared to 2.14% for the same
period in 2001. The reduction in net interest rate spread for 2002 was
principally due to a reduction in the weighted average annual percentage rate
in the Contracts securitized, which decreased to 10.68% versus 13.39% for the
same period in 2001. The allowance for loan loss has declined as a percentage of
loans outstanding as newer transactions have lower loss reserves based on the
improved quality of the underlying Contracts. Delinquency has declined due in
part to the newer Contracts originated. The majority of the charge-offs relate
to older transactions that have been impacted by the slow-down in the economy
and to a lesser extent, the softening of the used car market, which resulted in
lower recovery rates on repossessions.

SERVICE FEE INCOME

Contractual servicing fee income is earned at a rate of 1.0% per annum on
the outstanding principal balance of Contracts securitized. Servicing fee
income is related to the size of the serviced portfolio and also includes
investment interest, late fees, extension fees, document fees and other fees
charged to customer accounts.

Servicing fee income was $13.5 million for the quarter ended March 31,
2002, compared to $14.2 million for the quarter ended March 31, 2001, or $13.4
million, excluding excess service fee income as reported prior to the adoption
of EITF 99-20. Service fee income increased as a result of the growth
of the average serviced portfolio, which increased to $2.86 billion versus
$2.76 billion in 2001.

PROVISION FOR CREDIT LOSSES

The Provision for
credit losses represents actual net credit losses incurred on Contracts
held on balance sheet. The provision for credit losses increased to $0.5
million for the period ended March 31, 2002 compared to $0.3 million for the
same period in 2001.

OTHER INTEREST EXPENSE

Other interest
expense was $1.0 million for the period ending March 31,
2002, compared to $1.5 million for the same period in 2001.
Other interest expense includes interest on the Company's
subordinated debt, capital lease obligations and hedging activities
under the guidelines of FAS-133. For the first quarter of 2001, the
Company also included interest from its residual lines of credit. For
2002, the Company has classified interest expense from its residual
lines of credit under net interest income as a means to match income
generated under the provisions of EITF 99-20.

OPERATING EXPENSES

The Company has made a significant effort to control
operating expenses through renegotiation of existing service contracts
beginning in 2000, and has effectively reduced its operating expenses as a
percent of the serviced portfolio as a result of these efforts. Total operating
expenses as a percent of the average serviced portfolio decreased to 2.97% for
the quarter ended March 31, 2002, compared to 3.14% for the quarter ended March
31, 2001.

The Company incurred salary and benefit expenses of $13.4 million for the
period ended March 31, 2002, compared to $12.5 million for the same period in
2001. The increase is primarily due to staff additions in the Companys
collection and customer service departments. The increase is also related to
normal merit increases and higher health care costs in connection with the
Companys benefit plans.

System and servicing expense decreased during the quarter
ended March 31, 2002.
During the first half of 2001, the Company used the services of an external
service provider for its collection and loan accounting processes. The charges
associated with this provider were directly correlated to the number of
Contracts serviced by the Company. As of July 1, 2001, the Company successfully
converted to an in-house system and shortly thereafter terminated its agreement
with the external provider. In addition to the system cost savings of the
in-house loan servicing and collection system, the Company also experienced
reductions in systems and servicing expense as a direct result of renegotiated
contracts with several of the Companys other service providers.

Telephone and data line expenses decreased
for the quarters ended March 31, 2002. Although
these charges generally increase with the growth of the serviced portfolio, the
significant decrease was principally due to renegotiated contracts with the Companys data and
voice carriers. Assuming no additional reduction in long distance rates, the
Company expects these charges to increase relative to the continued growth of
the serviced portfolio.

11



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##### Table of Contents



Depreciation expense decreased for the period
ended March 31, 2002.
Most of the system upgrades in connection with the Companys relocation to
Foothill Ranch during 1999 have been fully depreciated. Management expects
that depreciation expense will continue to run approximately $1.0 million per
quarter for the remainder of the year. Other operating expenses remained relatively stable at
$5.4 million.

INCOME TAXES

The Company files federal and certain state tax returns as a consolidated
group. Tax liabilities from the consolidated returns are allocated in
accordance with a tax sharing agreement based on the relative income or loss of
each entity on a stand-alone basis. The effective tax rate for the quarters
ended March 31, 2002 and 2001 was 41.5%.

FINANCIAL CONDITION

CONTRACTS HELD FOR SALE

Contracts held for sale totaled $201.9 million at March 31, 2002, compared
to $191.5 million at December 31, 2001. The balance in the held for sale
portfolio is largely dependent upon the timing of the origination and
securitization of Contracts. The Company completed a securitization transaction
of $375.0 million during the first quarter of 2002. The Company plans to
continue to securitize Contracts on a regular basis.

The following table illustrates the changes in the Companys Contract
acquisition volume, securitization activity and servicing portfolio during the
past five fiscal quarters:

SELECTED QUARTERLY FINANCIAL INFORMATION

|                                     |  |                        |           |          |  |                        |           |          |  |          |           |  |  |   |           |  |  |   |           | 
|------------------------------------ |  | ---------------------- | --------- | -------- |  | ---------------------- | --------- | -------- |  | -------- | --------- |  |  | - | --------- |  |  | - | --------- | 
|                                     |  | FOR THE QUARTERS ENDED
|                                     |  |                       
|                                     |  | MAR. 31,               |           | JUNE 30, |  | SEPT. 30,              |           | DEC. 31, |  | MAR. 31,
|                                     |  | 2001                   |           | 2001     |  | 2001                   |           | 2001     |  | 2002    
|                                     |  |                        |           |          |  |                        |           |          |  |         
|                                     |  |                        |           |          |  | (DOLLARS IN THOUSANDS) |           |          |  |         
|Contracts purchased during period    |  | $                      | 430,524   |          |  | $                      | 379,595   |          |  | $        | 430,940   |  |  | $ | 365,270   |  |  | $ | 378,180   | 
|Average monthly volume during period |  |                        | 143,508   |          |  |                        | 126,531   |          |  |          | 143,646   |  |  |   | 121,757   |  |  |   | 126,060   | 
|Gain on sale of Contracts            |  |                        | 9,319     |          |  |                        | 10,257    |          |  |          | 6,591     |  |  |   | 7,938     |  |  |   | 5,645     | 
|RISA write-down                      |  |                        |          |          |  |                        |          |          |  |          |          |  |  |   | 3,340     |  |  |   | 1,350     | 
|Contracts securitized during period  |  |                        | 400,000   |          |  |                        | 400,000   |          |  |          | 400,000   |  |  |   | 400,000   |  |  |   | 375,000   | 
|Servicing portfolio at period end    |  |                        | 2,784,411 |          |  |                        | 2,807,181 |          |  |          | 2,876,986 |  |  |   | 2,864,338 |  |  |   | 2,848,022 | 

12



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CONTRACTS HELD FOR INVESTMENT

Contracts held for investment are net of a $1.3 million allowance for future
losses for both March 31, 2002 and December 31, 2001. Amounts held for investment include Contracts that do not qualify for
Contract securitizations due to delinquency status or minimum balance
requirements.

ASSET QUALITY

The Company monitors and attempts to minimize delinquencies and losses
through timely collections and the use of predictive dialing and
other systems. Annualized net charge-offs as a percentage of the average serviced
portfolio were 3.35% for the quarter ended March 31, 2002, compared to 2.68%
for the same period in 2001. The increase in charge-offs is principally due to older
Contracts that have been impacted by both the slow-down in the
economy during 2000 and 2001. At March 31, 2002, thirty plus day delinquencies represented 2.34% of the
amount of Contracts in its serviced portfolio compared to 4.01% at December 31,
2001. The reduction in delinquency is principally due to the Companys efforts
to improve borrower credit statistics, and to a lesser extent, to seasonal
fluctuations. Off balance sheet reserves at March 31, 2002 were 3.6%, compared to 4.2%
at December 31, 2001. Off balance sheet reserves are those reserves established
and maintained on Contracts sold to the grantor and owner trusts in connection
with securitizations. The allowance for loan loss has declined as a percentage
of loans outstanding as newer transactions have lower loss reserves based on
the improved quality of the underlying Contracts.

DELINQUENCY EXPERIENCE OF SERVICED PORTFOLIO

|                                                       |              |       |           |                |        |                   |         |                        |       |     |           |        |         |  |         |       |        |  |  |  |  | 
|------------------------------------------------------ | ------------ | ----- | --------- | -------------- | ------ | ----------------- | ------- | ---------------------- | ----- | --- | --------- | ------ | ------- |  | ------- | ----- | ------ |  |  |  |  | 
|                                                       |              |       |           | March 31, 2002 |        | December 31, 2001 |         |                        |       |    
|                                                       |              |       |           |                |        |                   |         |                        |       |    
|                                                       |              |       |           | Amount         |        | No.               |         | Amount                 |       | No. |           |        |         | 
|                                                       |              |       |           |                |        |                   |         |                        |       |     |           |        |         | 
|                                                       |              |       |           |                |        |                   |         | (Dollars in Thousands) |       |     |           |        |         |  |         |      
|Serviced portfolio                                     |              | $     | 2,848,022 |                |        |                   | 289,709 |                        |       | $   | 2,864,338 |        |         |  | 289,426 |       |        |  |  | 
|Delinquencies(1)(2)                                    |              |       |           |                |        |                   |         |                        |       |     |           |        |         |  |         |       |        |  |  | 
|                                                       | 30  59 days |       | $         | 42,947         |        |                   |         | 5,178                  |       |     | $         | 78,056 |         |  |         | 8,918 |        |  |  |  | 
|                                                       | 60  89 days |       |           | 11,404         |        |                   |         | 1,448                  |       |     |           | 20,859 |         |  |         | 2,456 |        |  |  |  | 
|                                                       | 90+ days     |       |           | 12,183         |        |                   |         | 1,814                  |       |     |           | 15,887 |         |  |         | 2,023 |        |  |  |  | 
|                                                       |              |       |           |                |        |                   |         |                        |       |     |           |        |         |  |         |       |        |  |  | 
|                                                       |              | Total |           | $              | 66,534 |                   |         |                        | 8,440 |     |           | $      | 114,802 |  |         |       | 13,397 |  |  |  |  | 
|                                                       |              |       |           |                |        |                   |         |                        |       |     |           |        |         |  |         |       |        |  |  | 
|Total delinquencies as a percent of Serviced portfolio |              |       | 2.34      | %              |        |                   | 2.91    | %                      |       |     | 4.01      | %      |         |  | 4.63    | %     |        |  |  | 



---

|(1) |  | Delinquencies include principal amounts only, net of repossessed
inventory and accounts in bankruptcy. Delinquent thirty-plus day
repossessed inventory as a percent of the serviced portfolio was 0.71% and
0.77% at March 31, 2002 and December 31, 2001, respectively. Delinquent
thirty-plus day Contracts in bankruptcy as a percent of the serviced
portfolio were 1.06% and 1.09% at March 31, 2002 and December 31, 2001,
respectively.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | The period of delinquency is based on the number of days payments are
contractually past due.                                                                                                                                                                                                                                                                                                                                                  

LOAN LOSS EXPERIENCE OF SERVICING PORTFOLIO

|                                                                      |  |                            |           |      |  |   |           |  
|--------------------------------------------------------------------- |  | -------------------------- | --------- | ---- |  | - | --------- | -
|                                                                      |  | FOR THE THREE MONTHS ENDED
|                                                                      |  | MARCH 31,                 
|                                                                      |  |                           
|                                                                      |  | 2002                       |           | 2001
|                                                                      |  |                            |           |     
|                                                                      |  | (DOLLARS IN THOUSANDS)    
|Average servicing portfolio(1)                                        |  | $                          | 2,857,281 |      |  | $ | 2,758,385 |  
|Number of gross charge-offs                                           |  |                            | 3,303     |      |  |   | 3,108     |  
|Gross charge-offs                                                     |  | $                          | 28,258    |      |  | $ | 20,907    |  
|Net charge-offs(2)                                                    |  | $                          | 23,922    |      |  | $ | 18,488    |  
|Annualized net charge-offs as a
percent of average Serviced
portfolio |  |                            | 3.35      | %    |  |   | 2.68      | %

13



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##### Table of Contents





---

|(1) |  | Average is based on daily balances.                                                        
|--- |  | -------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Net charge-offs are gross charge-offs minus recoveries on Contracts
previously charged off.

The following table illustrates the monthly cumulative loss performance of each
of the securitized pools outstanding for the period from the date of
securitization through March 31, 2002:

|                                                                                                                        |  |      |                                                                                                                                                                                                                                                                   |      |  |      |                                                                                                                                                                                                                                                       |      |  |      |                                                                                                                                                                                                                                     |      |  |      |                                                                                                                                                                                                                   |      |  |      |                                                                                                                                                                                                 |      |  |      |                                                                                                                                                                                     |      |  |      |                                                                                                                                                             |      |  |      |                                                                                                                                                 |  |  |  |                                                                                                                               |  |  |  |                                                                                                       |  |  |  |                                                                                     |  |  |  |                                                                   |  |  |  |                                                       |  |  |  |                                     |  |  |  |                   | 
|----------------------------------------------------------------------------------------------------------------------- |  | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---- |  | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---- |  | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---- |  | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---- |  | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---- |  | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---- |  | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------- | ---- |  | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  | ----------------------------------------------------------------------------------------------------------------------------- |  |  |  | ----------------------------------------------------------------------------------------------------- |  |  |  | ----------------------------------------------------------------------------------- |  |  |  | ----------------------------------------------------------------- |  |  |  | ----------------------------------------------------- |  |  |  | ----------------------------------- |  |  |  | ----------------- | 
|MONTH                                                                                                                   |  | 98-B |                                                                                                                                                                                                                                                                   | 98-C |  | 99-A |                                                                                                                                                                                                                                                       | 99-B |  | 99-C |                                                                                                                                                                                                                                     | 99-D |  | 00-A |                                                                                                                                                                                                                   | 00-B |  | 00-C |                                                                                                                                                                                                 | 00-D |  | 01-A |                                                                                                                                                                                     | 01-B |  | 01-C |                                                                                                                                                             | 01-D |  | 02-A
|                                                                                                                        |  |      |                                                                                                                                                                                                                                                                   |      |  |      |                                                                                                                                                                                                                                                       |      |  |      |                                                                                                                                                                                                                                     |      |  |      |                                                                                                                                                                                                                   |      |  |      |                                                                                                                                                                                                 |      |  |      |                                                                                                                                                                                     |      |  |      |                                                                                                                                                             |      |  |     
|1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43 |  |      | 0.00%
0.00%
0.02%
0.08%
0.19%
0.33%
0.45%
0.61%
0.82%
0.95%
1.10%
1.20%
1.36%
1.48%
1.64%
1.89%
2.05%
2.22%
2.37%
2.50%
2.67%
2.79%
2.92%
3.06%
3.14%
3.23%
3.28%
3.35%
3.45%
3.50%
3.57%
3.67%
3.73%
3.81%
3.86%
3.91%
4.00%
4.04%
4.08%
4.13%
4.18%
4.21%
4.23% |      |  |      | 0.00%
0.02%
0.02%
0.04%
0.15%
0.27%
0.46%
0.57%
0.74%
0.94%
1.12%
1.30%
1.54%
1.73%
1.90%
2.10%
2.28%
2.51%
2.71%
2.83%
2.95%
3.08%
3.25%
3.39%
3.45%
3.57%
3.72%
3.81%
3.91%
4.05%
4.13%
4.21%
4.27%
4.33%
4.42%
4.46%
4.55%
4.63%
4.73%
4.76%
4.80% |      |  |      | 0.00%
0.00%
0.02%
0.05%
0.11%
0.21%
0.35%
0.49%
0.63%
0.81%
1.04%
1.29%
1.49%
1.72%
1.90%
2.10%
2.26%
2.46%
2.59%
2.71%
2.83%
2.88%
3.03%
3.21%
3.28%
3.34%
3.47%
3.61%
3.67%
3.78%
3.85%
3.96%
4.07%
4.18%
4.25%
4.32%
4.37%
4.44% |      |  |      | 0.00%
0.00%
0.03%
0.07%
0.14%
0.27%
0.43%
0.60%
0.85%
1.07%
1.34%
1.56%
1.79%
1.90%
2.08%
2.23%
2.42%
2.63%
2.71%
2.89%
3.08%
3.21%
3.31%
3.43%
3.55%
3.67%
3.77%
3.88%
4.01%
4.14%
4.25%
4.37%
4.49%
4.55%
4.66% |      |  |      | 0.00%
0.01%
0.03%
0.06%
0.16%
0.28%
0.47%
0.64%
0.83%
1.09%
1.31%
1.47%
1.62%
1.77%
2.00%
2.08%
2.29%
2.48%
2.61%
2.73%
2.92%
3.07%
3.22%
3.32%
3.43%
3.65%
3.79%
3.90%
4.03%
4.19%
4.28%
4.43% |      |  |      | 0.00%
0.00%
0.01%
0.04%
0.09%
0.15%
0.24%
0.43%
0.59%
0.76%
0.99%
1.20%
1.41%
1.52%
1.70%
2.00%
2.17%
2.40%
2.61%
2.87%
3.05%
3.20%
3.33%
3.53%
3.70%
3.88%
4.03%
4.22%
4.42%
4.58% |      |  |      | 0.00%
0.00%
0.02%
0.04%
0.11%
0.18%
0.37%
0.63%
0.87%
1.05%
1.27%
1.59%
1.82%
2.03%
2.25%
2.48%
2.64%
2.80%
2.98%
3.25%
3.52%
3.69%
3.91%
4.12%
4.32%
4.52% |      |  |      | 0.00%
0.00%
0.02%
0.04%
0.10%
0.17%
0.30%
0.44%
0.67%
0.90%
1.11%
1.38%
1.57%
1.84%
2.08%
2.26%
2.42%
2.69%
2.96%
3.20%
3.44%
3.69%
3.94%
4.18% |  |  |  | 0.00%
0.00%
0.01%
0.03%
0.06%
0.11%
0.26%
0.41%
0.65%
0.85%
1.08%
1.29%
1.42%
1.65%
1.93%
2.16%
2.42%
2.65%
2.97%
3.25%
3.48% |  |  |  | 0.00%
0.00%
0.00%
0.02%
0.07%
0.15%
0.26%
0.39%
0.50%
0.65%
0.85%
1.03%
1.25%
1.41%
1.62%
1.86%
2.04% |  |  |  | 0.00%
0.00%
0.00%
0.02%
0.07%
0.12%
0.20%
0.31%
0.47%
0.60%
0.77%
0.95%
1.14%
1.31% |  |  |  | 0.00%
0.00%
0.01%
0.03%
0.10%
0.18%
0.30%
0.39%
0.50%
0.65%
0.77% |  |  |  | 0.00%
0.00%
0.00%
0.02%
0.05%
0.11%
0.18%
0.29%
0.38% |  |  |  | 0.00%
0.00%
0.00%
0.02%
0.04%
0.08% |  |  |  | 0.00%
0.00%
0.01%

14



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##### Table of Contents



LIQUIDITY AND CAPITAL RESOURCES

The Company requires substantial cash and capital resources to operate its
business. Its primary uses of cash include: (i) acquisition of Contracts; (ii)
payments of dealer participation; (iii) securitization costs; (iv) settlements
of hedging transactions; (v) operating expenses; and (vi) interest expense. The
capital resources available to the Company include: (i) interest income during
the warehousing period; (ii) servicing fees; (iii) releases from spread
accounts; (iv) settlements of hedging transactions; (v) sales of Contracts in
securitizations; and (vi) borrowings under its credit facilities. Management
believes that the resources available to the Company will provide the needed
capital to fund the further expansion of the Company, Contract purchases, and
investments in origination and servicing capabilities.

The Companys primary source of funds from continuing operations is
securitization proceeds. The Company uses the cash generated from
securitizations to pay down outstanding commercial paper obligations. These
facilities are then used to fund the purchase of Contracts or to finance normal
operating expenses. The Company has historically operated on a negative cash
flow basis from operating activities. Cash used in operating activities was
$10.1 million for the quarter ended March 31, 2002, compared to $14.0 million
for the same period in 2001. The reduction in cash used in operating activities
for 2002 is principally due to the reduction in Contract purchases for the
quarter and the relative size of the Companys securitization for the same
period. During the first quarter of 2002, the Company securitized $375.0
million in Contracts and generated approximately $378.2 million in Contract
volume. During the first quarter of 2001, the Company securitized $400.0
million in Contracts with Contract volume of $430.5 million.

The Company continued to focus its efforts on building and maintaining its
dealer relations through its existing branch locations and did not open any
branches location during the quarter. Management is currently reviewing market
conditions in both Ohio and New York. Capital acquisitions of $516.0 thousand
during the first quarter of 2002 were due to the ongoing maintenance and
upgrade of the Companys servicing infrastructure, while acquisitions during
2001 were principally due to the initial charges related to the conversion and
installation of the Companys in-house loan accounting and collection system.
During the quarter, the Company successfully completed its second residual
securitization from the residual cash flows of nine outstanding
securitizations. The Company did not record a gain on the transaction, as it
was structured as a financing transaction rather than a sale. The transaction
was rated by Moodys Investor Service Inc. as Ba2, with proceeds of
approximately $75.0 million. A spread account equal to one years interest was
structured into the transaction. The proceeds of the residual securitization
were used to pay down the Companys Residual Lines (described
below) with affiliates of its
securitization underwriters.

CP Facility: As of March 31, 2002, the Company was party to a $355 million
warehousing facility (the CP Facility), with Triple-A One Funding Corporation
(Triple-A). Onyx Acceptance Financial Corporation (Finco), a special
purpose subsidiary of the Company, is the borrower under the CP Facility. The
CP Facility is used to fund the purchase or origination of Contracts. Triple-A
is a rated commercial paper asset-backed conduit sponsored by MBIA Insurance
Corporation (MBIA). MBIA provides credit enhancement for the facility by
issuing a financial guarantee insurance policy covering all principal and
interest obligations owed for the borrowings under the facility. The Company
pledges its Contracts held for sale to borrow from Triple-A. The CP Facility
was renewed in November 2001 for a three-year term, subject to annual renewals
by liquidity providers.

The Residual Lines: The Company, through Onyx Acceptance Funding
Corporation (Fundco), currently has two residual financing facilities: a
$50.0 million line with Salomon Smith Barney Realty Corporation (SBRC) and a
$35.0 million facility with Credit Suisse First Boston (Europe) Limited, as
buyer (CSFB-Europe), and Credit Suisse First Boston Corporation, as agent
(CSFB). (The SBRC facility together with the CSFB-Europe facility are
sometimes referred to herein as the Residual Lines). The Residual Lines are
used by the Company to finance operating requirements. The lines utilize
collateral-based formulas that set borrowing availability to a percentage of
the value of excess cash flow to be received from certain securitizations. Each
loan under the SBRC line matures one year after the date of the loan; the
Company expects each loan to be renewed at term. The CSFB-Europe line was
renewed in October 2001 for a one-year term.

As an additional source of funds, the Company utilizes residual
securitizations to pay down its residual interest financing credit facilities
to increase the Companys liquidity. During the first quarter of 2000, the
Company securitized the residual cash flows from 15 of its then outstanding
securitizations. The proceeds of this transaction were used by the Company to
pay down two residual financing facilities and pay off another residual
financing facility. The Company recently completed its second residual interest
securitization for the purpose of providing additional borrowing capacity under
its Residual Lines. This transaction was finalized in March of 2002 and
generated approximately $75.0 million in proceeds.

Subordinated Debt: As of March 31, 2002, the Company had outstanding
approximately $16.1 million of subordinated debt. $3.4 million of which is
being amortized through February 2003 with a stated interest rate of 9.5%.
$12.0 million of subordinated debt has a stated interest rate of 12.5% and a
maturity of June 2006. The remaining balance of $0.7 million was raised through
the Companys

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##### Table of Contents



renewable unsecured subordinated note program launched during the first
quarter of 2002. The weighted average interest rate on the balance outstanding
as of March 31, 2002 was 8.35%. The notes have varying maturities ranging from
three months through March of 2007.

The facilities and lines above contain affirmative, negative and financial
covenants typical of such credit facilities. The Company was in compliance with
these covenants as of March 31, 2002.

Hedging and Interest Rate Risk Management. The Company employs a hedging
strategy that is intended to minimize the risk of interest rate fluctuations
and which historically has involved the execution of forward interest rate
swaps or use of a pre-funding structure for the Companys securitizations. The
Company is not required to maintain collateral on the outstanding hedging
program.

Securitizations

Off balance sheet arrangements are used in the ordinary course of business. Generally, these transactions are structured as off balance sheet sales of Contracts. One of the most common forms of off balance sheet arrangement is Contract securitizations. Regular securitizations are an integral part of the Companys business
plan because they allow the Company to increase its liquidity, provide for
redeployment of its capital and reduce risks associated with interest rate
fluctuations. The Company has developed a securitization program that involves
selling interests in pools of its Contracts to investors through the public
issuance of AAA/Aaa rated asset-backed securities. The Company completed a
AAA/Aaa rated publicly underwritten asset-backed securitization in the amount
of $375 million in the first quarter of 2002.

During the second quarter of 2002, the Company executed a securitization
totaling $400 million and refinanced the Companys residual securitization from
the first quarter of 2000 in the amount of $21.0 million. The
Company plans to continue to
integrate residual securitizations in its business plan as a
regular source of liquidity.

The net proceeds of securitizations are used to pay down outstanding
indebtedness incurred under the Companys credit facilities to purchase
Contracts, thereby creating availability for the purchase of additional
Contracts. Through March 31, 2002, the Company has securitized $7.1 billion of
its Contracts in 27 separate transactions. In each of its securitizations, the
Company has sold its Contracts to a newly formed grantor or owner trust, which
issues certificates and/or notes in an amount equal to the aggregate principal
balance of the Contracts.

The Company arranges for credit enhancement to achieve an improved credit
rating on the asset-backed securities issued. This credit enhancement has taken
the form of a financial guaranty insurance policy issued by MBIA or a
predecessor of MBIA (the Financial Guarantee Insurance Policy), insuring the
payment of principal and interest due on the asset-backed securities.

The Company receives servicing fees for its duties relating to the
accounting for and collection of the Contracts. In addition, the Company is
entitled to the future excess cash flows arising from the trusts. Generally,
the Company sells the Contracts at face value and without recourse, except that
certain representations and warranties with respect to the Contracts are
provided by the Company as the servicer and Finco as the seller to the trusts.

Gains on sale of Contracts arising from securitizations provide a
significant portion of the Companys revenues. Several factors affect the
Companys ability to complete securitizations of its Contracts, including
conditions in the securities markets generally, conditions in the asset-backed
securities market specifically, the credit quality of the Companys portfolio
of Contracts and the Companys ability to obtain credit enhancement.

INTEREST RATE EXPOSURE AND HEDGING

The Company is able through the use of varying maturities on advances from
the CP Facility to lock in rates during the warehousing period, when in
managements judgment it is appropriate, to limit interest rate exposure during
such warehousing period (See Risk Factors  Interest Rate
Fluctuations).

The Company has the ability to move rates upward in response to rising
borrowing costs because the Company currently does not originate Contracts near
the maximum rates permitted by law. Further, the Company employs a hedging
strategy, which primarily consists of the execution of forward interest rate
swaps. These hedges are entered into by the Company in numbers and amounts
which generally correspond to the anticipated principal amount of the projected
next securitization. Gains and losses relative to these hedges are recognized
in full at the time of securitization as an adjustment to the gain on sale of
the Contracts. The Company has only used counterparties with investment grade
debt ratings from national rating agencies for its hedging transactions.

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##### Table of Contents



Management monitors the Companys hedging activities on a frequent basis
to ensure that the hedges, their correlation to the total consideration to be
received in the forecasted securitization and the amounts being hedged continue
to provide effective protection against interest rate risk. The Companys
hedging strategy requires estimates by management of monthly Contract
acquisition volume and timing of its securitizations. If such estimates are
materially inaccurate, then the Companys gain on sales of Contracts and
results of operations and cash flows could be adversely affected. The amount
and timing of hedging transactions are determined by senior management based
upon the amount of Contracts purchased and the interest rate environment.




ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Companys earnings are affected by changes in interest rates as a
result of its dependence upon the issuance of interest-bearing securities and
the incurrence of debt to fund its lending activities. Several factors can
influence the Companys ability to manage interest rate risk. First, Contracts
are purchased at fixed interest rates, while the amounts borrowed under the
warehouse credit facilities bear interest at variable rates that are subject to
frequent adjustment to reflect prevailing market interest rates. Second, the
interest rate demanded by investors in a securitization is a function of
prevailing market rates for comparable transactions and the general interest
rate environment. Because the Contracts originated by the Company have fixed
interest rates, the Company bears the risk of smaller gross interest rate
spreads in the event interest rates increase during the period between the date
Contracts are purchased and the completion and pricing of securitization
transactions.

The Company uses several strategies to minimize interest rate risk,
including the utilization of derivative financial instruments, the regular
securitization of Contracts and pre-funding of securitization transactions.
Pre-funding securitizations is the practice of issuing more asset-backed
securities than the amount of Contracts initially sold to the Trust. The
proceeds from the pre-funded portion are held in an escrow account until
additional Contracts are sold to the Trust in amounts up to the balance of the
pre-funded escrow account. In pre-funded securitizations, borrowing costs are
locked in with respect to the Contracts subsequently delivered to the Trust.
However, the Company incurs an expense in pre-funded securitizations equal to
the difference between the money market yields earned on the proceeds held in
escrow prior to the subsequent delivery of Contracts and the interest rate paid
on the asset-backed securities outstanding.

Derivative financial instruments are utilized to manage the gross interest
rate spread on the Companys securitization transactions. The Company sells
fixed rate Contracts to the trusts that, in turn, sell fixed rate securities to
investors. The fixed rates on securities issued by the trusts are indexed to
Swap rates on U.S. Treasury Notes with similar average maturities or various
London Interbank Offered Rates (LIBOR). The Company periodically executes the
sale of forward swap agreements to lock in the indexed rate for specific
anticipated securitization transactions. The Company utilizes these derivative
financial instruments to modify its net interest sensitivity to levels deemed
appropriate based on the Companys risk tolerance. All transactions are entered
into for purposes other than trading, and are settled quarterly upon pricing of
the securitization.




PART II. OTHER INFORMATION




ITEM 1. LEGAL PROCEEDINGS

As a consumer finance company, the Company is subject to various consumer
claims and litigation seeking damages and statutory penalties based upon, among
other things, disclosure inaccuracies and wrongful repossession, which could
take the form of a plaintiffs class action complaint. The Company, as the
assignee of finance Contracts originated by dealers, may also be named as a
co-defendant in lawsuits filed by consumers principally against dealers.
Finally, the Company also is subject to other litigation common to the motor
vehicle finance industry and businesses in general. The damages and penalties
claimed by consumers and others in these types of matters can be substantial.
The relief requested by the plaintiffs varies but includes requests for
compensatory, statutory and punitive damages.

On January 25, 2000, a putative class action complaint was filed against
the Company and certain of the Companys officers and directors alleging
violations of Section 10(b) and 20(a) of the Securities and Exchange Act of
1934 arising from the Companys prior use of the cash-in method of measuring
and accounting for credit enhancement assets in the financial statements. The
matter is entitled D. Colin v. Onyx Acceptance Corporation, et al. in the U.S.
District Court for the Central District of California (Case number SACV 00-0087
(GLT)(EEx)). The Company has asserted that its previous use of the cash-in
method of measuring and accounting for credit enhancement assets was consistent
with then current generally accepted accounting principles and accounting
practices of other finance companies. In February 2001, an amended complaint
was dismissed with prejudice by the District Court; the Ninth Circuit Court of
Appeals recently affirmed this dismissal.

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##### Table of Contents



Management believes that the Company has taken prudent steps to address
the litigation risks associated with the Companys business. However, there can
be no assurance that the Company will be able to successfully defend against
all such claims or that the determination of any such claim in a manner adverse
to the Company would not have a material adverse effect on the Companys
automobile finance business.

In the opinion of management, the resolution of the proceedings described
in this section will not have a material adverse effect on the Companys
consolidated financial position, results of operations or liquidity.




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

No matters were submitted during the first quarter of the fiscal year
covered by this Quarterly Report on Form 10-Q to a vote of security holders,
through the solicitation of proxies or otherwise.




ITEM 5. OTHER INFORMATION

FORWARD LOOKING STATEMENTS

The preceding Managements Discussion and Analysis of the Companys
Financial Condition and Results of Operations contains certain forward-looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995, which provides a safe harbor for these types of statements. This
Quarterly Report on Form 10-Q contains forward-looking statements which reflect
the current views of Onyx Acceptance Corporation with respect to future events
and financial performance. These forward looking statements are subject to
certain risks and uncertainties, including those identified below which could
cause actual results to differ materially from historical results or those
anticipated. Forward-looking terminology can be identified by the use of terms
such as may, will, expect, anticipate, estimate, should or
continue or the negative thereof or other variations thereon or comparable
terminology. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of their dates. Onyx Acceptance
Corporation undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. The following factors could cause actual results to differ
materially from historical results or those anticipated: (1) the level of
demand for auto contracts, which is affected by such external factors as the
level of interest rates, the strength of the various segments of the economy,
debt burden held by consumers and demographics of the lending markets of Onyx
Acceptance Corporation; (2) continued dealer relationships; (3) fluctuations
between consumer interest rates and the cost of funds; (4) federal and state
regulation of auto finance operations; (5) competition within the consumer
lending industry; (6) the availability and cost of securitization transactions
and (7) the availability and cost of warehouse and residual financing.

RISK FACTORS

We Need Substantial Liquidity.

We require a substantial amount of liquidity to operate our business.
Among other things, we use such liquidity to:



| |  |  | acquire Contracts;                                                  
| | - |  | --------------------------------------------------------------------
|
| |  |  | pay dealer participation;                                           
|
| |  |  | pay securitization costs and fund related accounts;                 
|
| |  |  | settle hedge transactions;                                          
|
| |  |  | satisfy working capital requirements and pay operating expenses; and
|
| |  |  | pay interest expense.                                               

A substantial portion of our revenues in any period is represented by gain
on sale of Contracts generated by a securitization in such period, but the cash
underlying such revenues is received over the life of the Contracts.

We have operated on a negative cash flow basis and expect to do so in the
future as long as the volume of Contract purchases continues to grow. We have
historically funded these negative operating cash flows principally through
borrowings from financial

18



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##### Table of Contents



institutions, sales of equity securities and sales of subordinated notes.
We cannot assure you, however, that (1) we will have access to the capital
markets in the future for equity, debt issuances or securitizations, or (2)
financing through borrowings or other means will be available on acceptable
terms to satisfy our cash requirements. If we are unable to access the capital
markets or obtain acceptable financing, our results of operations, financial
condition and cash flows would be materially and adversely affected. See
Managements Discussion and Analysis of Financial Condition and Results of
Operations  Liquidity and Capital Resources.

We Depend on Warehouse Financing.

We depend on a warehouse facility with a financial institution to finance
the purchase or origination of Contracts pending securitization. See Business
 Financing and Sale of Contracts. Our business strategy requires that such
financing continue to be available during the warehousing period.

Whether the CP Facility continues to be available to us depends on, among
other things, whether we maintain a target net yield for the Contracts financed
under the CP Facility and comply with certain financial covenants contained in
the sale and servicing agreement between us, as seller, and our wholly-owned
special purpose finance subsidiary, Finco, as purchaser. These financial
covenants include:



| |  |  | a minimum ratio of net worth plus subordinated debt to total assets;   
| | - |  | -----------------------------------------------------------------------
|
| |  |  | a maximum ratio of credit enhancement assets to tangible net worth; and
|
| |  |  | earnings before interest, depreciation and taxes coverage ratio.       

We cannot assure you that our CP Facility will be available to us or that
it will be available on favorable terms. If we are unable to arrange new
warehousing credit facilities or extend our existing credit facility when it
expires, our results of operations, financial condition and cash flows could be
materially and adversely affected.

We Depend on Residual Financing.

When we sell our Contracts in securitizations, we receive cash and a
residual interest in the securitized assets (RISA). The RISA represents the
future cash flows to be generated by the Contracts in excess of the interest
paid on the securities issued in the securitization and other costs of
servicing the Contracts and completing the securitization. (See Managements
Discussion and Analysis of Financial Condition and Results of Operations 
Securitizations). We typically use the RISA from each securitization as
collateral to borrow cash under our Residual Lines to finance our operations.
The amount of cash advanced by our lenders under our Residual Lines depends on
a collateral formula that is determined in large part by how well our
securitized Contracts perform. If our portfolio of securitized Contracts
experience higher delinquency and loss ratios than expected, then the amount of
money we can borrow under the Residual Lines would be reduced. The reduction in
availability under these Residual Lines could materially and adversely affect
our operations, financial condition and cash flows. Additionally, we are
subject, under the documentation governing the Residual Lines, to certain
financial covenants. During the first quarter of 2002, the Company recorded a
$1.35 million write-down of the Companys RISA asset stemming from higher than
expected losses and delinquency on a securitization executed prior to 2001.
This write-down reduced the amount of cash available to the Company through its
Residual Lines. The Company attributes a portion of the higher losses and
delinquency experienced to the general economic slow-down the nation
experienced and the events of September 11th.

We Depend on Residual Securitizations.

We depend on securitizing future cash flows generated by RISA to pay off
balances on our Residual Lines and increase liquidity. If our portfolio of
securitized Contracts experience higher delinquency and loss ratios than
expected, then the proceeds of a residual securitization could be significantly
reduced, and the resulting risk associated with the securities could command a
higher yield. The inability to successfully market these residual
securitizations could materially and adversely affect our operations, financial
condition and cash flows.

19



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##### Table of Contents



We Depend on Securitizations to Generate Revenue.

We rely significantly upon securitizations to generate cash proceeds for
repayment of our warehouse and our residual credit facilities and to create
availability to purchase additional Contracts. Further, gain on sale of
Contracts generated by our securitizations represents a significant portion of
our revenues. Our ability to complete securitizations of our Contracts is
affected by the following factors, among other things:



| |  |  | conditions in the securities markets generally;               
| | - |  | --------------------------------------------------------------
|
| |  |  | conditions in the asset-backed securities market specifically;
|
| |  |  | the credit quality of our portfolio of Contracts; and         
|
| |  |  | our ability to obtain credit enhancement.                     

If we were unable to profitably securitize a sufficient number of our
Contracts in a particular financial reporting period, then our revenues for
such period could decline and could result in lower net income or a loss for
such period. In addition, unanticipated delays in closing a securitization
could also increase our interest rate risk by increasing the warehousing period
for our Contracts. See Managements Discussion and Analysis of Results of
Operations and Financial Condition  Liquidity and Capital Resources, and
Business Financing and Sale of Contracts.

We Depend on Credit Enhancement.

From inception through March 31, 2002, each of our securitizations has
utilized credit enhancement in the form of a financial guarantee insurance
policy in order to achieve AAA/Aaa ratings. This form of credit enhancement
reduces the cost of the securitizations relative to alternative forms of credit
enhancement currently available to us. We cannot assure you that:



| |  |  | we will be able to continue to obtain credit enhancement in any form from our current provider;                   
| | - |  | ------------------------------------------------------------------------------------------------------------------
|
| |  |  | we will be able to obtain credit enhancement from any other provider of credit enhancement on acceptable terms; or
|
| |  |  | future securitizations will be similarly rated.                                                                   

We also rely on a financial guarantee insurance policy to reduce our
borrowing cost under the CP Facility. If our current providers credit rating
is downgraded or if it withdraws our credit enhancement, we could be subject to
higher interest costs for our future securitizations and financing costs during
the warehousing period. Such events could have a material adverse effect on our
results of operations, financial condition and cash flows.

We Are Subject to Interest Rate Fluctuations.

Our profitability is largely determined by the difference, or spread,
between the effective rate of interest received by us on the Contracts acquired
and the interest rates payable under our credit facilities during the
warehousing period and for securities issued in securitizations.

Several factors affect our ability to manage interest rate risk. First,
the Contracts are purchased or originated at fixed interest rates, while
amounts borrowed under our credit facilities bear interest at variable rates
that are subject to frequent adjustment to reflect prevailing rates for
short-term borrowings. Our policy is to increase the buy rates we issue to
dealerships or, for the Contracts we originate, to increase rates we make
available to consumers for Contracts in response to increases in our cost of
funds during the warehousing period. However, there is generally a time lag
before such increased borrowing costs can be offset by increases in the buy
rates for Contracts and, in certain instances, the rates charged by our
competitors may limit our ability to pass through our increased costs of
warehouse financing.

Second, the spread can be adversely affected after a Contract is purchased
or originated and while it is held during the warehousing period by increases
in the prevailing rates in the commercial paper markets. While the CP Facility
permits us to select maturities to coincide with the projected end of the
warehouse period, if we selected a shorter maturity or had a delay in
completing a securitization, we would face this risk.

20



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##### Table of Contents



Third, the interest rate demanded by investors in securitizations is a
function of prevailing market rates for comparable transactions and the general
interest rate environment. Because the Contracts purchased or originated by us
have fixed rates, we bear the risk of spreads narrowing because of
interest-rate increases during the period from the date the Contracts are
purchased until the pricing of our securitization of such Contracts. We employ
a hedging strategy that is intended to minimize this risk and which
historically has involved the execution of forward interest rate swaps or use
of a pre-funding structure for our securitizations. However, we cannot assure
you that this strategy will consistently or completely offset adverse
interest-rate movements during the warehousing period or that we will not
sustain losses on hedging transactions. Our hedging strategy requires estimates
by management of monthly Contract acquisition volume and timing of our
securitizations. If such estimates are significantly inaccurate, then our gains
on sales of Contracts, results of operations and cash flows could be materially
and adversely affected.

We also have exposure to interest rate fluctuations under the Residual
Lines. In periods of increasing interest rates, our cash flows, results of
operations and financial condition could be materially adversely affected.

In addition, we have some interest rate exposure to falling interest rates
to the extent that the interest rates charged on Contracts sold in a
securitization with a pre-funding structure decline below the rates prevailing
at the time that the securitization prices. Such a rate decline would reduce
the interest rate spread because the interest rate on the notes and/or the
certificates would remain fixed. This would negatively impact the gain on sale
of Contracts and our results of operations and cash flows.

We Will Be Adversely Affected When Contracts are Prepaid or Defaulted.

Our results of operations, financial condition, cash flows, and liquidity
depend, to a material extent, on the performance of Contracts purchased,
originated, warehoused, and securitized by us. A portion of the Contracts
acquired by us may default or prepay during the warehousing period. We bear the
risk of losses resulting from payment defaults during the warehousing period.
In the event of payment default, the collateral value of the financed vehicle
may not cover the outstanding Contract balance and costs of recovery. We
maintain an allowance for credit losses on Contracts held during the
warehousing period which reflects managements estimates of anticipated credit
losses during such period. If the allowance is inadequate, then we would
recognize as an expense the losses in excess of such allowance, and our results
of operations could be adversely affected. In addition, under the terms of the
CP Facility, we are not able to borrow against defaulted Contracts.

Our servicing income can also be adversely affected by prepayments of or
defaults under Contracts in the serviced portfolio. Our contractual servicing
revenue is based on a percentage of the outstanding principal balance of such
Contracts. Thus, if Contracts are prepaid or charged-off, then our servicing
revenue will decline to the extent of such prepaid or charged-off Contracts.

The gain on sale of Contracts recognized by us in each securitization and
the value of the retained interest in securitized assets (RISA) in each
transaction reflects managements estimate of future credit losses and
prepayments for the Contracts included in such securitization. If actual rates
of credit loss or prepayments, or both, on such Contracts exceed those
estimated, the value of the RISA would be impaired. We periodically review our
credit loss and prepayment assumptions relative to the performance of the
securitized Contracts and to market conditions. Our results of operations and
liquidity could be adversely affected if credit loss or prepayment levels on
securitized Contracts substantially exceed anticipated levels. If necessary, we
would write-down the value of the RISA through a reduction to servicing fee
income. Further, any write down of RISA could reduce the amount available to us
under our Residual Lines, thus possibly requiring us to pay down amounts
outstanding under these facilities or provide additional collateral to cure any
borrowing base deficiency.

We Will Be Adversely Affected If We Lose Servicing Rights.

Our results of operations, financial condition and cash flows would be
materially and adversely affected if any of the following were to occur:



| |  |  | loss of the servicing rights under our sale and servicing agreement
for the CP Facility;                                                                   
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | loss of the servicing rights under the applicable pooling and
servicing or sale and servicing agreement of a grantor trust or owner
trust, respectively; or
|
| |  |  | a trigger event that would block release of future excess cash flows
generated from the grantor trusts or owner trusts respective spread
accounts.       

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We are entitled to receive servicing income only while we act as servicer
under the applicable sale and servicing agreement or pooling and servicing
agreement. Under the CP Facility our right to act as servicer can be terminated
by our lender or financial insurer, upon the occurrence of certain events.

Our Quarterly Earnings May Fluctuate.

Our revenues have fluctuated in the past and are expected to fluctuate in
the future principally as a result of the following factors:



| |  |  | the timing and size of our securitizations;                                                             
| | - |  | --------------------------------------------------------------------------------------------------------
|
| |  |  | variations in the volume of our Contract acquisitions;                                                  
|
| |  |  | the interest rate spread between our cost of funds and the average interest rate of purchased Contracts;
|
| |  |  | the effectiveness of our hedging strategies;                                                            
|
| |  |  | the investor rate for securitizations; and                                                              
|
| |  |  | the marketability and execution of our residual interest securitizations.                               

Any significant decrease in our quarterly revenues could have a material
adverse effect on our results of operations, financial condition, cash flows
and stock price.

We Depend on Key Personnel.

Our future operating results depend in significant part upon the continued
service of our key senior management personnel, none of whom is bound by an
employment agreement. Our future operating results also depend in part upon our
ability to attract and retain qualified management, technical, and sales and
support personnel for our operations. We cannot assure you that we will be
successful in attracting or retaining such personnel. The loss of any key
employee, the failure of any key employee to perform in his or her current
position or our inability to attract and retain skilled employees, as needed,
could materially and adversely affect our results of operations, financial
condition and cash flows.

Our Industry is Highly Competitive.

Competition in the field of financing retail motor vehicle sales is
intense. The automobile finance market is highly fragmented and historically
has been serviced by a variety of financial entities including the captive
finance affiliates of major automotive manufacturers, as well as banks, savings
associations, independent finance companies, credit unions and leasing
companies. Several of these competitors have greater financial resources than
we do. Many of these competitors also have long-standing relationships with
automobile dealerships, and offer dealerships or their customers other forms of
financing or services not provided by us. Our ability to compete successfully
depends largely upon our relationships with dealerships and the willingness of
dealerships to offer those Contracts that meet our underwriting criteria to us
for purchase. We cannot assure you that we will be able to continue to compete
successfully in the markets we serve.

We May Be Harmed by Adverse Economic Conditions.

We are a motor vehicle consumer auto finance company whose activities are
dependent upon the sale of motor vehicles. Our ability to continue to acquire
Contracts in the markets in which we operate and to expand into additional
markets is dependent upon the overall level of sales of new and used motor
vehicles in those markets. A prolonged downturn in the sale of new and used
motor vehicles, whether nationwide or in the California market, could have an
adverse impact upon us, our results of operations and our ability to implement
our business strategy.

The automobile industry generally is sensitive to adverse economic
conditions both nationwide and in California, where we have our largest
single-state exposure. Periods of rising interest rates, reduced economic
activity or higher rates of unemployment generally result in a reduction in the
rate of sales of motor vehicles and higher default rates on motor vehicle
contracts. We cannot assure you that such economic conditions will not occur,
or that such conditions will not result in severe reductions in our revenues or
the cash flows available to us to permit us to remain current on our credit
facilities.

22



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##### Table of Contents



We Are Subject to System Risks.

As of July 1, 2001, the Company converted from an external service
provider for its loan accounting and collections system to an in-house system.
If issues with the in-house system arise in the future, we may be unable to
acquire Contracts and service the outstanding portfolio. The failure of this
system could materially and adversely affect our results of operations,
financial condition and cash flows.

We Are Subject to Many Regulations.

Our business is subject to numerous federal and state consumer protection
laws and regulations, which, among other things:



| |  |  | require us to obtain and maintain certain licenses and qualifications;    
| | - |  | --------------------------------------------------------------------------
|
| |  |  | limit the interest rates, fees and other charges we are allowed to charge;
|
| |  |  | limit or prescribe certain other terms of our Contracts;                  
|
| |  |  | require specific disclosures; and                                         
|
| |  |  | define our rights to repossess and sell collateral.                       

We believe that we are in compliance, in all material respects, with all
such laws and regulations, and that such laws and regulations have had no
material adverse effect on our ability to operate our business. However, we
will be materially and adversely affected if we fail to comply with:



| |  |  | applicable laws and regulations;                                     
| | - |  | ---------------------------------------------------------------------
|
| |  |  | changes in existing laws or regulations;                             
|
| |  |  | changes in the interpretation of existing laws or regulations; or    
|
| |  |  | any additional laws or regulations that may be enacted in the future.

We Are Subject to Litigation Risks.

We are party to various legal proceedings, similar to actions brought
against other companies in the motor vehicle finance industry and other
businesses. Companies in the motor vehicle finance industry have also been
named as defendants in an increasing number of class action lawsuits brought by
purchasers of motor vehicles and others claiming violation of various federal and state
consumer credit, as well as similar and other, laws and regulations.

For example, on January 25, 2000, a putative class action complaint was
filed against us and certain of our officers and directors alleging violations
of Section 10(b) and 20(a) of the Securities and Exchange Act of 1934 arising
from our prior use of the cash-in method of measuring and accounting for credit
enhancement assets in the financial statements. The matter is entitled D. Colin
v. Onyx Acceptance Corporation, et al. in the U.S. District Court for the
Central District of California (Case number SACV 00-0087 (GLT)(EEx)). We have
asserted that our previous use of the cash-in method of measuring and
accounting for credit enhancement assets was consistent with then current
generally accepted accounting principles and accounting practices of other
finance companies. In February 2001, an amended complaint was dismissed with
prejudice by the District Court; the Ninth Circuit Court of Appeals recently
affirmed this dismissal.

While we intend to vigorously defend ourselves against such proceedings,
there is a chance that our results of operations, financial condition and cash
flows could be materially and adversely affected by unfavorable outcomes.

23



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##### Table of Contents



Item 2.Properties

The Company did not own any real property at March 31, 2002. The Companys
leases approximately 82,000 square feet of office space for its headquarters
located in Foothill Ranch, California. The Company also leases office space for
its Auto Finance Centers and its Hazelwood, Missouri collection center; the
average size of an Auto Finance Center is generally four to five thousand
square feet. The Hazelwood collection center is in approximately 20,000 square
feet. One Auto Finance Center is located in the corporate headquarters
building.




ITEM 6. EXHIBITS AND REPORTS OF FORM 8-K



|(a) |  | Exhibits
|--- |  | --------

|        |  |                                                                                                                                                                                                                                                                                  
|------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBIT |  |                                                                                                                                                                                                                                                                                  
|NUMBER  |  | EXHIBIT TITLE                                                                                                                                                                                                                                                                    
|        |  |                                                                                                                                                                                                                                                                                  
|        |  |                                                                                                                                                                                                                                                                                  
|4.2     |  | Indenture, dated as of February 11, 2002, by and between Onyx Acceptance
Corporation, as Obligor, and U.S. Bank National Association, a national banking
association, as trustee.*                                                                                               
|        |  |                                                                                                                                                                                                                                                                                  
|10.120  |  | Sale and Assignment Agreement, dated March 15, 2002, among Onyx
Acceptance Residual Funding Owner Trust 2002-A, as Issuer, Onyx Acceptance
Financial Corporation, as Seller, and JPMorgan Chase Bank, as Indenture Trustee
and as Trust Agent.                                   
|        |  |                                                                                                                                                                                                                                                                                  
|       
|       
|       
|       
|10.121  |  | Indenture, dated February 20, 2002, between Onyx Acceptance Residual
Funding Owner Trust 2002-A, as Issuer, and JPMorgan Chase Bank, as Indenture
Trustee.                                                                                                                       
|        |  |                                                                                                                                                                                                                                                                                  
|       
|       
|       
|       
|10.122  |  | Trust Agreement, dated March 15, 2002, among Onyx Acceptance Financial
Corporation, as Depositor, Bankers Trust (Delaware), as Owner Trustee, and JPMorgan Chase
Bank, as Trust Agent, with respect to Onyx Acceptance Residual Funding
Owner Trust 2002-A.                      
|        |  |                                                                                                                                                                                                                                                                                  
|10.123  |  | Amended and Restated Indenture, dated April 12, 2002, between Onyx
Acceptance Residual Funding Owner Trust 2000-A1, as Issuer, and JPMorgan Chase
Bank, as Indenture Trustee.                                                                                                    
|        |  |                                                                                                                                                                                                                                                                                  
|10.124  |  | Amended and Restated Trust Agreement, dated April 12, 2002, among Onyx
Acceptance Financial Corporation, as Depositor, Bankers Trust
(Delaware), as Owner
Trustee, and JPMorgan Chase Bank, as Trust Agent, with respect to Onyx
Acceptance Residual Funding Owner Trust 2000-A1.
|        |  |                                                                                                                                                                                                                                                                                  
|10.125  |  | Distribution and Management Agreement, dated as of February 15, 2002, by
and between Onyx Acceptance Corporation and Sumner Harrington Ltd., a Minnesota
corporation, as agent.*                                                                                                 
|        |  |                                                                                                                                                                                                                                                                                  
|10.126  |  | Form of Sale and Servicing Agreement between Onyx Acceptance Owner Trust
2002-A, Onyx Acceptance Financial Corporation, Onyx Acceptance
Corporation and JPMorgan Chase Bank, in connection with the Onyx
Acceptance Owner Trust 2002-A.**                                        
|        |  |                                                                                                                                                                                                                                                                                  
|21.1    |  | Subsidiaries of the Registrant.                                                                                                                                                                                                                                                  



---

|*  |  | Previously filed with the Commission as an exhibit to the Registrants Form
8-K on March 1, 2002.                                              
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------
|** |  | Incorporated by reference from Onyx Acceptance Financial Corporation's
Current Report on Form 8-K filed February 7, 2002. (File No. 333-51636).



|(b) |  | REPORTS ON FORM 8-K
|--- |  | -------------------

None.

24



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##### Table of Contents






SIGNATURE

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

|                   |  |                             |  |                                                                      
|------------------ |  | --------------------------- |  | ---------------------------------------------------------------------
|                   |  | ONYX ACCEPTANCE CORPORATION |  |                                                                      
|                  
|                   |  | By:                         |  | /s/ JOHN W. HALL                                                     
|                   |  |                             |  |                                                                      
|                   |  |                             |  | John W. Hall
President and Principal Executive Officer               
|                  
|Date: May 15, 2002 |  | By:                         |  | /s/ DON P. DUFFY                                                     
|                   |  |                             |  |                                                                      
|                   |  |                             |  | Don P. Duffy
Executive Vice President and
Principal Financial Officer
|Date: May 15, 2002 |  |                             |  |                                                                      

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##### Table of Contents






EXHIBIT INDEX

|        |  |                                                                                                                                                                                                                                               
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBIT |  |                                                                                                                                                                                                                                               
|NUMBER  |  | EXHIBIT TITLE                                                                                                                                                                                                                                 
|        |  |                                                                                                                                                                                                                                               
|        |  |                                                                                                                                                                                                                                               
|4.2     |  | Indenture, dated as of February 11, 2002, by and between Onyx Acceptance
Corporation, as Obligor, and U.S. Bank National Association, a national banking
association, as trustee.*                                                            
|        |  |                                                                                                                                                                                                                                               
|10.120  |  | Sale and Assignment Agreement, dated March 15, 2002, among Onyx
Acceptance Residual Funding Owner Trust 2002-A, as Issuer, Onyx Acceptance
Financial Corporation, as Seller, and JPMorgan Chase Bank, as Indenture Trustee
and as Trust Agent.
|        |  |                                                                                                                                                                                                                                               
|       
|       
|       
|       
|10.121  |  | Indenture, dated March 15, 2002, between Onyx Acceptance Residual
Funding Owner Trust 2002-A, as Issuer, and JPMorgan Chase Bank, as Indenture
Trustee.                                                                                       
|        |  |                                                                                                                                                                                                                                               
|       
|       
|       
|       
|10.122  |  | Trust Agreement, dated March 15, 2002, among Onyx Acceptance Financial
Corporation, as Depositor, Bankers Trust, as Owner Trustee, and JPMorgan Chase
Bank, as Trust Agent.                                                                   
|        |  |                                                                                                                                                                                                                                               
|10.123  |  | Amended and Restated Indenture, dated April 12, 2002, between Onyx
Acceptance Residual Funding Owner Trust 2000-A1, as Issuer, and JPMorgan Chase
Bank, as Indenture Trustee.                                                                 
|        |  |                                                                                                                                                                                                                                               
|10.124  |  | Amended and Restated Trust Agreement, dated April 12, 2002, among Onyx
Acceptance Financial Corporation, as Depositor, Bankers Trust, as Owner
Trustee, and JPMorgan Chase Bank, as Trust Agent.                                              
|        |  |                                                                                                                                                                                                                                               
|10.125  |  | Distribution and Management Agreement, dated as of February 15, 2002, by
and between Onyx Acceptance Corporation and Sumner Harrington Ltd., a Minnesota
corporation, as agent.*                                                              
|        |  |                                                                                                                                                                                                                                               
|10.126  |  | Form of Sale and Servicing Agreement between Onyx Acceptance Owner Trust
2002-A, Onyx Acceptance Financial Corporation, Onyx Acceptance
Corporation and JPMorgan Chase Bank, in connection with the Onyx
Acceptance Owner Trust 2002-A.**     
|        |  |                                                                                                                                                                                                                                               
|21.1    |  | Subsidiaries of the Registrant.                                                                                                                                                                                                               



---

|*  |  | Previously filed with the Commission as an exhibit to the Registrants Form
8-K on March 1, 2002.                                              
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------
|** |  | Incorporated by reference from Onyx Acceptance Financial Corporation's
Current Report on Form 8-K filed February 7, 2002. (File No. 333-51636).

26