U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C., 20549
                                    FORM 10-K

 ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

                     For the fiscal year ended June 30, 1997

                         Commission file number 0-25714


                     THE AEGIS CONSUMER FUNDING GROUP, INC.

       Delaware                                            22-3008867
(State of Incorporation)                    (I.R.S. Employer Identification No.)

                              525 Washington Blvd.
                              Jersey City, NJ 07310
                    (Address of principal executive offices)
                         Telephone number: (201)418-7300
       Securities registered under Section 12(b) of the Exchange Act: None
         Securities registered under Section 12(g) of the Exchange Act:

  Title of class                            Name of exchange on which registered
  --------------                            ------------------------------------
  Common Stock,                                 The Nasdaq National Market
 $.01 par value


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 ___

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of Registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

The  aggregate   market  value  of  the   Registrant's   Common  Stock  held  by
non-affiliates on September 12, 1996 (based upon the average of the high and low
sales prices of such stock as of such date) was approximately $.

     As of September  12, 1997,  17,677,212  shares of the  Registrant's  Common
Stock were outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

The  Registrant's  Proxy  Statement for the Annual Meeting of Stockholders to be
held in November 1997 (the "Proxy  Statement") is  incorporated  by reference in
Part III of this Form 10-K to the extent stated  herein.  Except with respect to
information specifically  incorporated by reference in this Form 10-K, the Proxy
Statement is not deemed to be filed as a part hereof.



<PAGE>



                                     PART I

Item 1:  Business.
General

The Aegis Consumer Funding Group,  Inc. is a specialty  consumer finance company
engaged in acquiring,  securitizing and servicing  automobile retail installment
contracts ("finance contracts") originated by factory authorized new car dealers
("Dealers")  in  connection  with  the sale of  late-model  used and to a lesser
extent,  new cars to consumers with sub-prime  credit.  The Company  targets the
higher  quality  segment  of the  sub-prime  credit  market,  acquiring  finance
contracts  primarily  on used cars that,  on average,  are 1.7 years old with an
original  balance of $12,400  and a term of 55 months as of June 30,  1997.  The
Company has acquired $1.25 billion of automobile  finance contracts through June
30, 1997,  $1.03 billion of which have been  securitized in twenty  offerings of
asset-backed securities.

The Company  was  organized  in 1989 to  participate  in the growing  market for
securitization   of  various  consumer  and  other   receivables.   Following  a
quasi-reorganization  in March  1992,  the Company  focused its  business on the
acquisition and securitization of high-yield  consumer-based  receivables.  Upon
acquiring The Clearing House Corporation (renamed "Aegis Auto Finance, Inc.") in
June 1993, the Company began funding  sub-prime  automobile  finance  contracts.
Since its inception,  the Company has completed  over twenty  private  placement
securitizations   of  consumer  and  other  receivables,   including   sub-prime
automobile  finance  contracts  as  well  as  medical  equipment  leases,  loans
originated under the federal Department of Housing and Urban  Development's home
improvement loans program ("HUD Title I Loans") and mutual fund fee receivables.
Beginning  in  1994,  the  Company  focused  its  business  exclusively  on  the
automobile finance business.

The Company's  strategy is to actively  manage credit risk while  increasing the
volume of finance contracts acquired,  securitized and serviced. Key elements of
the Company's strategy are:

Active Credit Risk Management. The Company focuses its credit risk management on
all aspects of the Company's  underwriting,  securitization and servicing,  with
emphasis  on  collections,  of  finance  contracts.  The  Company  has a  credit
committee  comprised  of  senior  management  that  continually   evaluates  the
underwriting  process,  Dealer performance,  collection efficiency and portfolio
performance.  The Company's  quality  control  department  reviews,  on a sample
basis,   finance  contracts,   supporting   documentation  and  compliance  with
underwriting  standards.   The  Company  believes  that  effective  credit  risk
management   will  build   institutional   investor  demand  for  the  Company's
securitized finance contracts.

Consistent Underwriting Standards. Through training,  proprietary technology and
intensive   management  review,  the  Company  strives  to  maintain  consistent
underwriting standards at its three regional processing centers. These standards
are designed both to achieve a low level of delinquencies and charge-offs and to
qualify the Company's finance contracts for securitization. The Company's credit
approval system monitors multiple evaluation criteria, and performs in excess of
100  internal  data  integrity  checks  before  the  Company  approves a finance
contract for acquisition.

Limited Loss  Exposure.  To reduce its  potential  losses on  defaulted  finance
contracts,  the Company insures each finance contract it acquires against damage
to the  financed  vehicle  through  a  vender's  comprehensive  single  interest
physical damage  insurance policy (the "VSI Policy").  In addition,  the Company
purchases credit default insurance with respect to most of the finance contracts
it  acquires,  which limits the  Company's  exposure to no more than 8.0% of the
aggregate  principal balance of the finance  contracts  covered.  Moreover,  the
Company limits loan-to-value ratios and applies a purchase price discount to the
finance 

                                        2

<PAGE>


contracts it acquires.

Servicing.  In January 1997, the Company's  wholly owned  subsidiary,  Systems &
Services  Technologies,  Inc.  ("SST") began its  operations as a loan servicing
company  designed  to service  loans  acquired by the Company as well as various
other types of marginal loans originated by third parties.  The Company believes
that performing all the servicing functions within the organization will improve
the overall  performance  of  automobile  receivables  acquired by the  Company.
[EXPAND ON]

Experienced  Management  and  State-of-the-Art   Technology.   The  Company  has
assembled a management  team of  experienced  personnel who have  backgrounds in
finance and capital markets,  systems  development,  the automobile industry and
securitizations  of a variety of  receivables.  The combined  experience  of the
Company's  management  has  enabled it to  develop  internally  its  proprietary
AutoMate  (finance  contract   acquisition)  and  PRIM  (Product  Reporting  and
Information  Management)  computer  systems and databases to effectively  manage
each stage in the financing cycle.

Funding  and  Liquidity  through  Securitization.  The  Company  uses  warehouse
facilities to provide funds for the acquisition of automobile  finance contracts
and  securitization  transactions,   to  reduce  the  impact  of  interest  rate
fluctuations and to reduce its cost of capital  relative to traditional  sources
of corporate debt financing.  Through June 30, 1997, the Company had securitized
$1.03  billion of  automobile  finance  contracts  in  twenty-one  offerings  of
asset-backed securities,  nine of which were rated A+ and one of which was rated
A, in each case by Duff & Phelps Credit Rating Co. ("Duff & Phelps"),  and eight
pools  aggregating  approximately  $425.8 million which were not rated. In March
1997,  the Company  secured a $1.0  billion  purchase  facility  (the  "Purchase
Facility")  which  was  one  of the  components  of a  multi-structured  finance
facility (the  "Facility").  The Purchase Facility contains a commitment for the
purchase of $350.0 million of subordinated Class B trust certificates which will
support the  issuance by the Company of $650.0  million of senior  Class A trust
certificates.  The Purchase  Facility is supported by a $75.0 million  warehouse
line.  As of June 30,  1997,  the Company  sold $252.9  million of Class A trust
certificates and $136.2 of Class B trust certificates for an aggregate amount of
$389.0 million under the Purchase Facility.  In addition,  in December 1995, the
Company  entered into a commitment to sell $175 million of sub-prime  automobile
finance  contracts  to be resold as  asset-backed  securities  (the "Owner Trust
Facility"),  of which  the Class A Notes  are  rated  AAA by  Standard  & Poor's
Ratings  Services  ("Standard & Poor's") and Aaa by Moody's  Investor  Services,
Inc. ("Moody's"). As of June 30, 1997, the Company had sold approximately $148.4
million,  of automobile  finance  contracts into the Owner Trust  Facility.  The
Company also has a commitment  from  Greenwich  Capital  Markets to purchase and
securitize up to $533.0 million of the Company's  finance contract  acquisitions
(the  "Securitization  Facility")  until the  commitment  is filled,  subject to
customary  conditions.  Three  securitizations  aggregating $307.0 million which
were rated A+ by Duff & Phelps were  completed as of June 30, 1997,  pursuant to
the Securitization Facility.

Nationwide  Diversification with Centralized  Operations.  The Company currently
acquires  finance  contracts in 28 states and  operates two regional  processing
centers.  In May 1997,  the  Company  closed  its  pocessing  center in  Irvine,
California  as part of its  effort to further  centralize  its  operations.  The
Company believes that its centralized  operations are a more efficient method of
processing  finance  contracts than operating  numerous  local  facilities.  The
Company  seeks to mitigate the risk of loss due to regional  economic  downturns
and to reduce  dependency on a limited  number of local markets by maintaining a
geographically diverse finance contract portfolio. While the Company establishes
and maintains  relationships with dealers through sales representatives  located
in the geographic markets served by the Company, all of the Company's day-to-day
operations are centralized at the Company's  processing  centers in Jersey City,
New Jersey and Marietta,  Georgia.  This structure allows the Company to closely
monitor its underwriting  operations and eliminates the expenses associated with
full-service branch or regional offices. 

                                       3

<PAGE>


Distinctive   Financing  Program.   The  Company  believes  that  a  significant
competitive  advantage is the  financing  flexibility  it provides to its Dealer
base.  The  Company  focuses  primarily  on the  consumer's  ability  to pay and
secondarily  on the value of the  collateral  in making  credit  decisions.  The
Company responds to credit  applications by determining  monthly payment amounts
that  consumers  can afford,  rather than  limiting  its  approval to a specific
automobile,  providing  Dealers the  flexibility to offer their customers a wide
range of automobiles.  The Company's  principal financing program is one whereby
the customer is able to purchase the vehicle without a cash down payment and the
Dealer has minimal recourse on the sale. To mitigate its risk in the transaction
the Company  acquires finance  contracts  generally at a 10% discount and limits
its  advance  rate  to  no  more  than  100%  (exclusive  of  Company  sponsored
warranties) of manufacturer's suggested retail price ("MSRP") or Kelly Blue Book
Guide ("Kelley Blue Book") retail value.

Superior  Dealer  Service.  By  providing  prompt  service,   consistent  credit
decisions  and a reliable  source of  financing  for  sub-prime  consumers,  the
Company  hopes to expand  its  Dealer  base and  increase  the volume of finance
contracts  acquired from each Dealer.  The Company typically  responds to credit
applications  within three hours,  and generally pays the Dealer within 24 hours
of receipt of complete finance contract documentation.

The  Company  has  experienced  substantial  growth  since  its  entry  into the
automobile  finance  business in 1993.  During the quarter ended March 31, 1997,
the  Company's  finance  contracts  acquisitions  decreased  substantially.  The
decrease  in loan  acquisitions  was a  reflection  of the  Company's  change in
underwriting  guidelines which were  implemented in the March 1997 quarter.  The
Company anticipates maintaining its acquisition levels at approximately $40.0 to
$45.0  million  per month while it  continues  to focus on  decreasing  its loss
ratios and costs to acquire finance  contracts.  The following table  represents
the Companys quarterly  acquisitions and securitizations of sub-prime automobile
finance contracts since its inception:

<TABLE>
<CAPTION>
                            Number of                                                                         Amount
                            Dealers at                             Number               Amount               of Finance
                            End of           Number of           of Finance           of Finance             Contracts
Quarter Ended               Quarter(1)       States(2)           Contracts            Contracts             Securitized
-------------               ----------       ---------           ---------            ---------             -----------
                                                          (dollars in thousands)
<S>                           <C>                 <C>             <C>                   <C>                     <C>  
September 30, 1993              200                8                 282                 $3.1                    $7.5
December 31, 1993               250                8                 263                  2.9                     --
March 31, 1994                  300                9                 880                  9.8                     --
June 30, 1994                   375               14               1,539                 18.0                    18.5
September 30, 1994              550               15               1,723                 20.7                    23.3
December 31, 1994               900               20               1,583                 19.2                    21.0
March 31, 1995                1,000               22               2,688                 32.8                    21.0
June 30, 1995                 1,300               25               4,901                 59.6                    54.0
September 30, 1995            1,600               30               5,943                 72.6                    67.6
December 31,1995              2,000               31               8,190                100.6                    85.4
March 31, 1996                2,500               31              10,569                128.8                   130.1
June 30, 1996                 2,900               32              12,037                149.6                   149.3
September 30, 1996            3,300               30              15,401                190.8                   173.3
December 31,1996              3,700               31              14,584                179.9                     4.9
March 31, 1997                3,900               29               8,992                110.6                   238.7
June 30, 1997                 4,200               31               8,745                110.5                   150.3
</TABLE>

----------
(1)  Approximate  number of Dealers  based upon signed  agreements  with Dealers
     from whom the Company will accept finance contract applications.

(2)  Based upon those  states in which the Company  acquired  finance  contracts
     during the related period.

4

<PAGE>


Industry Background/Competition

     The sub-prime  credit market is comprised of consumers who are deemed to be
relatively  high credit  risks due to various  factors,  including,  among other
things,  previous credit problems,  the absence or limited extent of their prior
credit history or limited financial resources. The sub-prime consumer automobile
finance market is highly fragmented,  consisting of many national,  regional and
local  competitors.  Historically,  traditional  financing  sources  (commercial
banks, savings and loan associations,  credit unions,  captive finance companies
and consumer lenders),  many of which have significantly  greater resources than
the  Company  and  may  be  able  to  offer  more  attractive  finance  contract
acquisition  prices  to  Dealers,  have not  consistently  served  this  market.
However,  such traditional financing sources have been increasing their presence
in this market.  The Company  believes that increased  regulatory  oversight and
capital requirements imposed by market conditions and governmental agencies have
limited the  activities of many banks and savings and loan  associations  in the
sub-prime credit market.  As a result,  the sub-prime credit market is primarily
serviced by smaller  finance  organizations  that solicit  business  when and as
their capital resources  permit.  The Company believes no one of its competitors
or group of  competitors  has a dominant  presence in the market.  The Company's
strategy is designed to  capitalize  on the  market's  lack of a major  national
financing source.

Finance Contract Profile

     The following tables provide  information  regarding the automobile finance
contracts  acquired  and leases  originated  by the  Company  during the periods
indicated.  The Company  commenced  lease  originations in April 1994 and ceased
originations in the first quarter of its 1996 fiscal year.

<TABLE>
<CAPTION>
                                                                              Finance Contract Acquisitions                     
                                                                                     Year Ended                             
                                                  ----------------------------------------------------------------------------------
                                                  June 30, 1993    June 30,1994     June 30,1995      June 30, 1996    June 30, 1997
                                                  -------------    ------------     ------------      -------------    -------------
                                                                               (dollars in thousands)
<S>                                                <C>              <C>              <C>               <C>               <C>       
Original Balance ...........................       $   12,181       $   33,738       $  132,282        $  451,536        $  591,841
Number acquired ............................            1,148            2,964           10,895            36,739            47,722
Average Original balance ...................       $     10.6       $     11.4       $     12.1        $     12.3              12.4
Average discount on contracts
acquired ...................................              8.1%            10.0%             9.9%             10.0%             10.0%
Current balance(1) .........................       $      620       $    6,320       $   49,348        $  283,263           532,232
Average Balance Outstanding(1) .............       $      2.6       $      5.1       $      7.8        $      9.7        $     11.5
Weighted Average Original Term
(in months)(1) .............................             56.9             56.1             55.6              54.5              54.5
Weighted Average Remaining Term
(in months)(1) .............................             14.6             21.5             31.3              39.7              49.4
Weighted Average Annual
Percentage Rate(1) .........................             20.6%            20.1%            20.1%             20.0%             20.4%
Percentage New Cars(1) .....................             35.3%            18.0%            13.0%              7.1%              4.0%
Percentage Used Cars(1) ....................             64.7%            82.0%            87.0%             92.9%             96.0%
</TABLE>

-------------
(1)  As of June 30, 1997

<TABLE>
<CAPTION>
                                                       Lease Portfolio
                                                         Year Ended    
                                         -------------------------------------------
                                         June 30,1994   June 30,1995   June 30, 1996
                                         ------------   ------------   -------------
                                                    (dollars in thousands)
<S>                                       <C>           <C>            <C>      
Original Balance ......................   $   1,571     $  29,905      $     436
Number originated .....................          92         1,914             25
Average Original balance ..............   $    17.1     $    15.6      $    17.4
Average discount on contracts
originated ............................         6.7%          7.1%           7.2%
Current balance(1) ....................   $     543     $  14,540      $     271
Average Balance Outstanding(1) ........   $     8.0     $     8.7      $    11.8
Weighted Average Original Term
(in months)(1) ........................        57.6          55.6           56.2
Weighted Average Remaining Term
(in months)(1) ........................        28.8          33.8           37.8
Weighted Average Annual
Percentage Rate(1) ....................        15.9%         16.5%          17.0%
Percentage New Cars(1) ................        60.9%         16.8%           4.3%
Percentage Used Cars(1) ...............        39.1%         83.2%          95.7%
</TABLE>


                                       5
<PAGE>

-------------
(1)As of June 30, 1997

Credit Evaluation and Procedures

Underwriting.  The Company's  automobile finance contract acquisition program is
designed   to  acquire   automobile   finance   contracts   originated   through
factory-authorized  new car  Dealers,  while  offering  them an  opportunity  to
increase vehicle sales to consumers who typically do not qualify for traditional
financing.  As of June 30, 1997,  the Company had entered into  agreements  with
approximately  4,200  Dealers,  located  in 31 States,  from  which the  Company
accepts finance contract applications.

The Company  continually  strives to improve upon the  effective  evaluation  of
credit risk,  consistency in its credit decisions,  the timely  communication of
credit  decisions  and its  reliability  as a funding  source.  The  Company has
developed,  and is constantly  refining,  the "in house" processing  systems and
controls  specifically  designed to support its evaluation process.  The Company
utilizes these systems and controls to assess each applicant's  ability to repay
the amounts due on the finance contract and the adequacy of the financed vehicle
as  collateral.  In  addition,  the Company  utilizes  these  systems to achieve
consistent  credit decisions and to reduce the elapsed time between receipt of a
credit  application from a Dealer and the Company's  response to the Dealer. The
Company  requires each Dealer  submitting a finance  contract for acquisition to
provide certain information to the Company, including a completed signed finance
contract  application that lists the applicant's  assets,  liabilities,  income,
credit and employment history as well as other personal information. The Company
does not currently  utilize  credit  scoring in its  underwriting  process.  The
Company is currently  developing its credit  scorecard  which is scheduled to be
tested in the second  quarter of its fiscal  year ended June 30,  1998 with full
implementation expected to occur in the third quarter ending March 31, 1998. The
Company  evaluates the applicants'  ability to pay by verifying their residence,
employment  and income and by  considering  the  relationship  of their  monthly
income to monthly  auto  payment  and  monthly  income to monthly  debt  burden,
including  expenses  relating to the finance  contract under  consideration  and
expenses  relating  to  automobile  insurance.  The  Company  also  engages in a
comprehensive   evaluation  of  at  least  one  credit  bureau  report  from  an
independent credit bureau.  The credit report typically contains  information on
matters such as historical payment experience, credit history with merchants and
lenders,  installment  debt  payments,  defaults and  bankruptcies,  if any. The
purpose of this credit review is to eliminate  individuals  whose credit quality
is  deteriorating or suggests too great a probability of default or whose credit
experience  is too  limited  for  the  Company  to  assess  the  probability  of
performance.  The Company's underwriting  guidelines and processes have remained
fairly  consistent  throughout  its  history  of  acquiring  automobile  finance
contracts.

Based upon its review of  information  extracted  from the credit bureau reports
and the credit  application,  the  Company  may either  (i)  approve  the credit
application;  (ii)  approve the credit  application  with  conditions;  or (iii)
decline the  application.  The credit  analyst  documents  the  decision and the
Dealer is notified by facsimile  transmission,  typically  within three hours of
receipt by the Company of the credit application. In the fiscal years ended June
30,  1995,  1996  and  1997,  the  Company  approved  41.8%,  41.3%  and  36.9%,
respectively,  and funded  12.8%,  10.6% and 9.8%,  respectively,  of the credit
applications received by it from Dealers.

Upon submission by the Dealer of the finance contract and related documentation,
the Company  undertakes a series of processes and  procedures  that are designed
to: (i)  substantiate  the  accuracy of  information  critical to the  Company's
original credit decision; (ii) verify that the finance contract submitted by the
Dealer 


                                       6
<PAGE>

complies with both the  conditions  under which the credit  approval was granted
and the Company's transaction structure criteria, including any requirements for
obtaining  credit  default  insurance and (iii)  confirm that the  documentation
complies with the Company's loss  management  requirements.  These processes and
procedures  include the  verification  of  collateral,  borrower  references and
insurance prior to funding the finance contract.  This  verification  process in
many instances requires submission of supporting  documentation and is performed
solely by Company personnel.

The Company has designed its finance programs to limit the loss exposure on each
transaction.  The Company  seeks to control loss  exposure  by: (i)  determining
whether the applicant meets the Company's  underwriting  criteria,  particularly
whether the applicant has sufficient  disposable income to meet such applicant's
existing   obligations   and  the   obligations   resulting  from  the  proposed
transaction;  (ii)  limiting  the credit it is willing to extend  based upon its
assessment of the applicant's  ability to meet payment  obligations and value of
the underlying collateral; (iii) requiring that physical damage insurance naming
the Company as loss payee be  maintained  at all times by the obligor to protect
the  Company's  financial  interest (if such  insurance  lapses,  the Company is
nonetheless  covered  under the  Company's  vehicle  single  interest  insurance
policy);  (iv) acquiring a security  interest in the vehicle  financed;  and (v)
obtaining  credit  default  insurance  with  respect  to  most  of  its  finance
contracts.  The degree of exposure in any  transaction is a function of: (a) the
creditworthiness of the applicant;  (b) the extent of credit granted compared to
the value of the underlying  collateral;  (c) the possibility of physical damage
to,  or the  loss  of the  collateral;  and  (d) the  potential  for  any  legal
impediment  to the  collection  of the  obligation  or the  repossession  of the
collateral.  The Company  determines the value of collateral based upon the MSRP
if new, or the Kelley Blue Book Guide.  The Company has a general  policy of not
extending credit exceeding 100% (exclusive of Company sponsored warranties,  not
to exceed an  additional  $1,500)  of either  the MSRP or the  Kelley  Blue Book
retail value for a finance  contract.  While the Company does not require a down
payment for finance contracts it acquires, a significant percentage of consumers
elect to make a down  payment.  In the fiscal year ended June 30, 1997,  4.0% of
the finance contracts acquired by the Company were new car finance contracts and
96.0% were used car finance contracts.

Upon acquiring a finance  contract,  the Company acquires a security interest in
the vehicle financed.  The finance contracts  acquired by the Company during the
fiscal  year ended  June 30,  1995,  averaged  approximately  $12,143  and had a
weighted  average  interest  rate  of  approximately  20.2%.  Finance  contracts
acquired  during the fiscal  year ended June 30,  1996,  averaged  approximately
$12,290 and had a weighted average interest rate of approximately 20.1%. Finance
contracts  acquired  during  the  fiscal  year  ended  June 30,  1997,  averaged
approximately  $12,402 and had a weighted average interest rate of approximately
20.4%.  All finance  contracts  acquired by the Company are fully amortizing (on
the simple interest  method) and provide for equal payments over the term of the
contract  (averaging  54 months).  The  portions of such  payments  allocable to
principal and interest are, for payoff and  deficiency  purposes,  determined in
accordance with the law of the state in which the finance contract was acquired.

During the period the Company was actively funding leases, upon the funding of a
lease,  the Company  acquired  title to the leased  vehicle.  Leases  originated
during the fiscal year ended June 30, 1995 averaged approximately $15,624, had a
weighted average interest rate of approximately  16.6% and an average term of 55
months.  During the year ended June 30, 1996, the Company originated $436,000 of
leases.  Leases  originated  during  the  year  ended  June  30,  1996  averaged
approximately  $17,436,  had a weighted  average  interest rate of approximately
17.1% and an average term of 57 months. All leases originated by the Company are
amortized to the estimated  wholesale  residual value using the direct financing
method and  provide  for equal  payment  over the term of the  contract.  In the
quarter ended  September 30, 1995,  the Company  ceased  funding  leases and has
redirected all its efforts to acquiring finance contracts.

Dealers typically send credit  applications to several financing sources.  After
reviewing the credit  application,  each financing source will notify the Dealer
whether it is willing to acquire the  finance  contract 


                                       7
<PAGE>

and, if so, under what  conditions.  If more than one finance source has offered
to acquire the finance  contract,  the Dealer  typically  will select the source
based on an analysis of the "buy rate," or the  interest  rate,  discount  fees,
finance  contract  amounts  and other  terms and  conditions  stipulated  by the
financing  source.  The Company  believes  that its  ability to process  finance
contract  applications and respond to Dealers quickly and efficiently  increases
its chances of being  selected by Dealers to acquire auto  finance  contracts as
long as the Company's  rates are  competitive.  The Company  currently  acquires
finance  contracts at a discount of 10% from Dealers.  Upon  acquiring a finance
contract,  the Company issues a check to the Dealer,  and instructs the servicer
to issue a "welcome" letter to the obligor, which advises the obligor of certain
payment procedures.

Auditing.  The Company's quality control department seeks to minimize errors and
variances in underwriting procedures by internally auditing or "re-underwriting"
approximately  10% of all funded finance  contracts.  The quality  control staff
performs  each of the  underwriting  and  auditing  functions  on  such  finance
contracts that were performed prior to the finance  contracts being approved and
funded.  Commonalities and variances in the application of underwriting criteria
and  processes  are then  communicated  to senior  management  and  underwriting
personnel and used as a training tool.

Dealer Network

The Company has developed its Dealer base through a team of  commissioned  field
sales   representatives   employed   by  the   Company.   Although   the   sales
representatives  have not worked for the  Company  for a  substantial  period of
time, they have an average of [5.5] years experience in the automobile business.
These  sales  representatives  work under the  supervision  of a national  sales
manager who has 12 years experience in the automobile  business  (including over
three years with the Company).  The Company's sales representatives are assigned
to designated  territories and are paid on a volume incentive basis with respect
to each finance contract acquired.

In addition to commissioned sales representatives,  the Company has also engaged
three  independent  exclusive  marketing  brokers who earn flat fees per finance
contract acquired in their designated  territory.  All of the Company's business
generated in such  territories is the result of introductions by the independent
marketing brokers. In the fiscal year ended June 30, 1997,  approximately $136.7
million of  finance  contracts  (approximately  23.1% of all  finance  contracts
acquired during such period),  were acquired from Dealers in Florida and Alabama
and approximately $35.7 million of all finance contracts acquired in such period
(approximately  6.0%) were acquired  from Dealers in Louisiana  and  Mississippi
introduced by such independent  marketing brokers. In the fiscal year ended June
30,  1996,  approximately  $97.0  million of finance  contracts  and $300,000 of
leases,  (approximately 21.5% and 68.8%, respectively,  of all finance contracts
acquired and leases originated during such period),  were acquired or originated
from  Dealers in Florida  and  Alabama and  approximately  $37.6  million of all
finance  contracts  acquired in such period  (approximately  8.3%) were acquired
from  Dealers  in  Louisiana  and  Mississippi  introduced  by such  independent
marketing brokers.  In the fiscal year ended June 30, 1995,  approximately $32.1
million,  of finance contracts and leases  (approximately  20.7%, of all finance
contracts acquired and leases originated during such period), were originated by
Dealers in Florida and  approximately  $25.4 million,  of all finance  contracts
acquired  in the fiscal  year ended June 30, 1995  (approximately  16.4%),  were
originated  by Dealers in Louisiana  introduced  by such  independent  marketing
brokers.

The Company continues to explore new marketing strategies in an effort to expand
and enhance its Dealer base and finance contract acquisition volume. The Company
offers three finance  contract  programs to Dealers:  (i) its zero  down-payment
program  (which  accounted  for  over  90% of  the  Company's  finance  contract
acquisitions  in the fiscal years ended June 30, 1995,  1996,  and 1997;  (ii) a
military program;  and (iii) a reduced income program (limited to an 85% advance
rate versus  100%).  Recently,  the  Company  implemented  an extended  warranty
program with approved warranty service contract  carriers.  The warranty


                                       8
<PAGE>

program allows the cost of an extended warranty to be funded above the Company's
typical 100% of MSRP or Kelly Blue Book retail value (within certain limits). In
return for each extended warranty purchased,  the Company receives a fee. Should
the extended  warranty be cancelled or the finance  contract not go to term, the
Company will receive a rebate of the unused premium financed.

The Company markets its programs  solely to factory  authorized new car dealers,
typically  with used  vehicle  sales  operations.  The Company  targets  factory
authorized  new car dealers for a number of reasons.  The Company  believes that
factory  authorized new car dealers generally have higher quality inventory than
independent  dealers and tend to attract  customers with more  desirable  credit
performance  characteristics.  Management  of the  Company  also  believes  that
factory  authorized  dealers are generally  backed by greater  capital levels as
compared to independent  dealers and are generally subject to periodic audits by
their respective manufacturers.

The Company's field sales representatives  identify and target Dealers that have
established,  or are considering  establishing,  customer  solicitation programs
designed to attract sub-prime credit consumers.  Each field sales representative
typically is responsible for pursuing and maintaining relationships with [75] to
[125]  Dealers.  The Company's  field sales  representatives  train the Dealer's
personnel in the Company's finance  programs.  This training is continuous since
dealerships generally experience a relatively high degree of personnel turnover.
The  training  provided  by the  Company  is  designed  to assist  the Dealer in
identifying  consumers  who  will  qualify  for  financing  by the  Company  and
structuring transactions that meet the Company's requirements.  Approved Dealers
enter into a non-exclusive  written Dealer agreement with the Company (a "Dealer
Agreement").  The Dealer Agreements generally provide that finance contracts are
sold by the Dealer to the Company  "without  recourse" to the Dealer,  except in
limited circumstances including, among others, that: (i) the financed vehicle is
not properly registered or titled showing the Company as first lienholder;  (ii)
the full down payment specified in the contract, if any, was not received by the
Dealer; (iii) certain representations and warranties by the Dealer regarding the
finance contract,  the financed vehicle, the finance contract process and manner
of sale are  breached  or untrue;  or (iv) the Dealer has failed to comply  with
applicable  federal and state  consumer  laws.  The Company  currently  acquires
finance contracts at a discount of 10% from Dealers.

The  following  table  indicates,  for the states in which the Company  acquired
finance  contracts in the fiscal years ended June 30, 1993, 1994, 1995, 1996 and
1997, the total number of factory-authorized  Dealers in such states, the number
of Dealers from which the Company has acquired finance contracts and the finance
contract acquisition volume of the Company in dollars for such periods.

<TABLE>
<CAPTION>  
                                                                 Fiscal Year Ended
                    --------------------------------------------------------------------------------------------
                                      June 30, 1993               June 30, 1994              June 30,1995           
                                  ----------------------      ----------------------      ----------------------    
                                                              (dollars  in thousands)
                     Factory-                   Finance                     Finance                     Finance     
                    Authorized   Originating    Contract    Originating     Contract    Originating     Contract    
State               Dealers(1)    Dealers       Volume        Dealers       Dealers       Dealers        Volume     
-----               --------      --------      --------      --------      --------      --------      --------    
<S>                   <C>              <C>      <C>                <C>      <C>                <C>      <C>         
Alabama ......           370             3      $     92             5      $    689             2      $    286    
Arizona ......           205             9           450             8           883            13         1,451    
California ...         1,705           149         6,948            69         1,772            23           539    
Colorado .....           270            --            --            --            --             2            47    
Connecticut ..           340            --            --            --            --            10           869    
Florida ......           935            --            --            59         5,947           149        18,955    
Georgia ......           590            37         4,259            84        12,357           107        16,900    
Illinois .....         1,155            --            --            --            --            --            --    
Indiana ......           625            --            --            --            --            28         1,994    
Kansas .......           335            --            --            --            --            --            --    
Kentucky .....           350            --            --            --            --            --            --    
Louisiana ....           335            --            --             4            91            67        25,402    
Maryland .....           590            --            --             1            12             4           516    
Michigan .....            --            --            --            --            --            --            --    
Missouri .....           555            --            --             3            85             3            31    
Mississippi ..           245            --            --            --            --             3           226    
Nevada .......            90             6           127             2            20            16         1,457    
New Jersey ...           700             7           130            57         4,267            66         4,576    
New Mexico ...           135             2            32            --            --             3           149    
New York .....         1,350            --            --            --            --            45         3,250    
North Carolina           700             1            21             8         5,227            51        28,928    
Ohio .........         1,070            --            --            --            --            40         2,220    
Pennsylvania .         1,410            --            --            16         1,049            51         5,260    
South Carolina           325             2            48            13         1,127            26         3,868    
Tennessee ....           420             1            16            --            --            14         1,223    
Texas ........         1,329            --            --            --            --            47         6,181    
Virginia .....           580             1            22             2            --            19         1,930    
West Virginia            220            --            --            --           212            21         5,699    
Other ........           560             1            36            --            --            10           337    
                    --------      --------      --------      --------      --------      --------      --------    
                      17,494           219      $ 12,181           331      $ 33,738           820      $132,294    
                    ========      ========      ========      ========      ========      ========      ========    
<CAPTION>
                                           Fiscal Year Ended    
                           --------------------------------------------------
                               June 30, 1996               June 30, 1997     
                           ----------------------     -----------------------
                                         (dollars in thousands)
                                          Finance                    Finance
                         Originating     Contract    Originating     Contract
State                      Dealers        Volume        Dealer        Volume
-----                      --------      --------      --------      --------
<S>                           <C>        <C>              <C>        <C>     
Alabama ......                   21      $  3,609           118      $ 44,838
Arizona ......                   21         1,843            36         6,317
California ...                    7           385             4           182
Colorado .....                   28         1,381            15           626
Connecticut ..                    5         4,453             1         1,106
Florida ......                  291        93,472           334        91,812
Georgia ......                  164        64,933           227        86,245
Illinois .....                   58         2,839            49         4,513
Indiana ......                   44         5,694            48         7,552
Kansas .......                   27         2,444            36        11,987
Kentucky .....                   40         3,426            55         5,725
Louisiana ....                   96        30,355            91        20,201
Maryland .....                   22         2,355            49         4,357
Michigan .....                   --            --            78         6,366
Missouri .....                   54         6,108           100        14,546
Mississippi ..                   33         7,233            62        15,462
Nevada .......                   20         4,744            23         3,346
New Jersey ...                   75         8,934            73         5,631
New Mexico ...                   16         1,756            21         2,617
New York .....                  116        10,009           110         7,235
North Carolina                  103        68,459           142        67,869
Ohio .........                   65        10,215           101        17,811
Pennsylvania .                  101        13,252           121        13,360
South Carolina                   55         9,301            94        14,348
Tennessee ....                   62        10,161           103        22,263
Texas ........                  227        57,902           263        69,317
Virginia .....                   85        10,816           120        17,145
West Virginia                    54        14,585            64        28,459
Other ........                   26           872            11           605
                           --------      --------      --------      --------
                              1,916      $451,536         2,549      $591,841
                           ========      ========      ========      ========
</TABLE>

                                       9
<PAGE>

-------------
(1)  Source:  National  Automobile  Dealers  Association  (data as of January 1,
     1996).

During the fiscal year ended June 30, 1997, no single dealer  accounted for more
than 1.0% of the  finance  contracts  acquired,  and no group of  Dealers  under
Common control  accounted for more than 2.3% of the finance  contracts  acquired
for the fiscal year ended June 30,  1997.  During the fiscal year ended June 30,
1996,  no single Dealer  accounted  for more than 1.5% of the finance  contracts
acquired,  and only one group of Dealers  under  common  control  accounted  for
approximately  5.1% of the finance contracts  acquired for the fiscal year ended
June 30,  1996.  During the fiscal  years  ended  June 30,  1994 and 1995,  City
Chevrolet  Automotive  Company,  in  Charlotte,  North  Carolina,  accounted for
approximately  12.6% and 4.5%,  respectively,  of the finance contracts acquired
and leases  originated by the Company  during such  periods,  and Dealers in the
Hendrick  Automotive  Group,   including  City  Chevrolet   Automotive  Company,
accounted  for  approximately  16.5% and  12.5%,  respectively,  of the  finance
contracts  and leases  acquired or  originated  during those  periods.  No other
Dealer accounted for more than 5.0% and 3.0% of the finance  contracts  acquired
in the fiscal years ended June 30, 1994 and 1995, respectively.

Warehouse Credit Facilities

The  Company  currently  operates  primarily  under  a $75.0  million  warehouse
facility  for  financing  new   acquisitions  of  automobile   finance  contract
receivables  which is  provided  by III  Finance  Ltd.  In addition to the above
facility,  the Company's leases are financed under a warehouse  facility that no
loner  provides for new financing  since the Company has not  originated  leases
since its  September  1995  quarter.  At June 30,  1997,  the  Company had $65.1
million  available under its finance  contract  warehouse  facility and had $7.6
million  outstanding  under  its  lease  facility.  Under  the  terms  of  these
facilities,  the loss of  certain  executive  officers  of the  Company in their
present  capacities with the Company and /or certain of its  subsidiaries  would
constitute  an event of default,  provided the loss was not for cause as defined
in their respective  employment  agreements.  To the extent the Company would be
unable to secure  alternative  sources of funding,  the loss of these facilities
could have an  adverse  impact on the  Company's  finance  contract  acquisition
activities.

Securitization Program

The periodic  securitization  of finance  contracts  is an integral  part of the
Company's  automobile  finance  program.  Securitizations  enable the Company to
reliquify and redeploy its capital resources and warehouse credit facilities for
the purchase of additional finance contracts. Through June 30, 1997, the Company
completed    twenty-one    privately   placed   automobile    finance   contract
securitizations of approximately  $1.03 billion of automobile finance contracts.
Nine of such  securitizations were rated A+ by Duff & Phelps. In March 1997, the
Company secured a $1.0 billion purchase facility (the "Purchase Facility") which
was  one  of  the  components  of  a  multi-structured   finance  facility  (the
"Facility").  The Purchase  Facility  contains a commitment  for the purchase of
$350.0 million of subordinated Class B trust certificates which will support the
issuance by the Company of $650.0 million of senior Class A trust  certificates.
The Purchase Facility is supported by a $75.0 million warehouse line. As of June
30, 1997,  the Company  sold $252.9  million of Class


                                       10
<PAGE>

A trust  certificates and $136.2 of Class B trust  certificates for an aggregate
amount of $389.0 million under the Purchase Facility.  In addition,  in December
1995,  the Company  entered into a commitment  to sell $175 million of sub-prime
automobile finance contracts to be resold as asset-backed securities,  which was
rated AAA by  Standard & Poor's and Aaa by  Moody's.  As of June 30,  1997,  the
Company sold  approximately  $148.4 million of automobile finance contracts into
this  facility.  In October 1996, it was determined  that the finance  contracts
underlying the securities were not performing in accordance with levels required
under Owners Trust  Agreement.  This event  terminated  the Company's  remaining
commitment of $26.6 million. In May 1996, the Company obtained a firm commitment
from  Greenwich  Capital to purchase and  securitize up to $533.0 million of the
Company's finance contract acquisitions until the commitment is filled,  subject
to customary conditions.  Three securitizations aggregating $307.0 million which
were rated A+ by Duff & Phelps were  completed as of June 30, 1997,  pursuant to
this commitment.

In its securitization transactions, the Company sells pools of finance contracts
to a special purpose subsidiary,  which then sells the receivables to a trust in
exchange for certificates  ("Certificates") representing either a 100% undivided
interest in, or secured  obligations of, the trust.  The  Certificates  are then
sold to  investors  who  receive  principal  and a stated  pass-through  rate of
interest on the Certificate amount  outstanding.  The Company may also retain or
sell an indirect interest in the transferred  receivables that is subordinate to
the interest of the  Certificate  holders.  The retained  interest  entitles the
holder to  receive  the  residual  cash flows  from the trust  after  payment to
investors,  absorption  of  losses,  if  any,  that  arise  in  respect  of  the
securitized  finance contracts and payment of the other expenses and obligations
of  the  trust.  The  Company  is  continually  exploring  other  structures  of
securitization  which can meet the changing  needs of the  financial and capital
markets.

Upon each  securitization,  the Company recognizes the sale of finance contracts
and  records a gain or loss in an amount  which  takes into  account the amounts
expected to be received as a result of its retained interest, net of acquisition
discounts and other deferred origination costs. The Company values each retained
interest by  calculating  the net present  value of its expected  residual  cash
distributions  from the trust.  The  calculation  of the gain or loss and of the
retained   interest  arising  from  the   securitizations   embody   prepayment,
delinquency,  default,  recovery and interest rate  assumptions that the Company
believes  are  reasonable  and  consistent  with  assumptions  that other market
participants  would use for similar  financial  instruments,  and are discounted
assuming an interest rate that the Company  believes a third party  purchaser of
such financial  instrument would demand. If actual experience differs from these
assumptions,  additional gains or losses to the Company would result. During the
fiscal year ended June 30, 1997, the Company's actual  experience  significantly
differed from its original  assumptions utilized in recognizing the initial gain
on securitization transactions.  These differences resulted in additional losses
of  approximately  [$31.0]  million in the fiscal year ended June 30, 1997.  The
Company also recognized  losses of approximately  $7.5 million in the year ended
June 30, 1996. At June 30, 1997,  the Company held retained  interests  from the
securitization  of  receivables  which  were  carried at an  aggregate  of value
[$70.2] million which are pledged to secure borrowings of [$29.8] million.

If the  Company  were  unable to  securitize  finance  contracts  in a financial
reporting  period,  the  Company  would  incur a  significant  decline  in total
revenues  and net income or report a loss for such  period.  If the Company were
unable  to  securitize  its  receivables  and did  not  have  sufficient  credit
available,  either under its warehouse credit  facilities or from other sources,
the Company would have to sell  portions of its portfolio  directly to investors
or curtail its finance contract acquisition activities.

Servicing

In  January  1997,  the  Company's  wholly  owned  subsidiary,  SST,  began  its
operations and hence servicing the Company's finance contracts  acquired.  While
SST was in its start up phase , the Company  phased in its  servicing of finance
contracts  by SST from  January 1997  through  March 1997.  In may of 1997,  the
Company, 


                                       11
<PAGE>

transferred the servicing  rights of an additional  [$653.0]  million of finance
contracts to SST. SST is now servicing  ____% of the Company's  total  remaining
finance contracts  acquired.  The balance of the Company's finance contracts and
lease  portfolio  is  serviced  by  its  initial   servicer,   American  Lenders
Facilities,  Inc. (a wholly owned subsidiary of CIGNA Corporation ("ALFI")). The
Company paid a fee of $5.00 per  contract to transfer the  servicing to SST. SST
operates  out of a  renovated [ ______ ] square  foot  building  in St.  Joseph,
Missouri.

The servicer  accounts for and posts all payments  received and provides certain
financial   reporting   with  respect  to  the  Company's   automobile   finance
receivables.  The servicer's  computer  system provides its personnel with daily
access to all information  contained in the customer's contract and application,
including  the amount of the  contract,  maturity,  interest  rate,  vehicle and
reference information and payment history.  Furthermore, the Company is provided
with daily access to the  servicer's  data through  downloading to the Company's
PRIM computer system, described below.

In  April  1996,  the  Company  renewed  its  sub-servicing  agreement  with its
third-party  servicer,   providing  for  the  transfer  of  specific  collection
functions  to  the  Company.  Through  this  arrangement,  the  Company  assumed
responsibility  for all consumer  contact with respect to all leases and finance
contracts   acquired  that  were   included  in  the  Company's   December  1994
securitization  transaction and all finance contracts  acquired  thereafter.  In
addition,  the Company assumed  responsibility for liquidation activities on its
entire finance  contract  purchase  program at such time. The Company receives a
fee from the third-party  servicer for performing  these  functions.  Due to the
transfer of  servicing  to SST, the Company is  currently  the  sub-servicer  of
approximately  [$ _____ ] million or _______ %, including its lease portfolio if
ts outstanding  automobile finance  receivables.  The Company,  as sub-servicer,
monitors   the   payment  of  the   receivables,   investigates   delinquencies,
communicates  with the  consumer  to  obtain  timely  payments,  when  necessary
(through  sub-contractors)  repossesses and disposes of the financed vehicle and
generally polices the receivable and its related  collateral.  If payment is not
received  within one day of its due date,  the  Company  takes  action by either
mailing  a  written  notice  to the  consumer  or  contacting  the  consumer  by
telephone.  It is the  Company's  policy  generally to work with the consumer to
permit the  consumer  to keep the  vehicle and  continue  payments.  The Company
believes  that  this  policy  is in  the  best  interest  of  the  Company,  the
participating  Dealer  and the  consumer,  as it builds  goodwill  and long term
customer   relationships   and   increases  the   possibility   of  the  ongoing
collectibility  of the amount due. If a consumer misses a second monthly payment
and is delinquent in his or her payment by more than 35 days and the Company has
satisfactory  reason to believe the  consumer  will not pay,  the  Company  will
initiate the necessary steps to repossess the vehicle.  If the value received as
a result  of  repossession  and  subsequent  sale is  materially  less  than the
remaining balance on the receivable,  the Company will seek to hold the consumer
liable for the deficiency.  The Company utilizes third party collection agencies
to pursue such deficiency balances.

Delinquency Control And Collection Strategy

The Company  (including  SST) and, with respect to a limited number of accounts,
ALFI,  reviews any account  that  reaches 31 days of  delinquency  to assess the
collection  efforts  to date  and to  refine,  if  appropriate,  the  collection
strategy.  The Company does not allow  finance  contracts to be  re-written  but
allows finance  contracts to be extended in certain limited  circumstances.  The
Servicer  and the Company  generally  will  design a  collection  strategy  that
includes a specific  deadline  within which the  obligation  must be  collected.
Accounts  that have not been  collected  during such period are again  reviewed,
and, unless there are specific  circumstances  which warrant further  collection
efforts,   the  account  is  assigned  to   independent   bonded   agencies  for
repossession.  Repossessed  vehicles are generally resold by the Servicer or the
Company in its capacity as  sub-servicer  through  wholesale  auctions which are
attended  principally by Dealers.  Such auctions  typically result in an average
recovery of [57.4%] of the outstanding finance contract balance or approximately
[ ____ %] of the Kelley Blue Book wholesale value.



                                       12
<PAGE>

For financial  reporting  purposes,  the Company  recognizes losses based on the
aging  profile of  delinquent  finance  contracts.  For  purposes  of  reporting
charge-off  ratios,  the  Company  reports  both gross and net  losses  when all
potential  recoveries  on a defaulted  receivable  have been  realized.  For the
fiscal years ended June 30, 1995,  1996, and 1997, the Company's net loss ratio,
based on the average  outstanding  finance  contracts,  including  those finance
contracts  sold  in  securitization  transactions,  was  0.8%,  1.2%  and  4.7%,
respectively.  Net losses reflect all recoveries including proceeds for the sale
of the repossessed vehicles,  risk default and other insurance proceeds,  net of
related repossession and disposition costs. As of June 30, 1997, the Company had
2,212 vehicles in repossession  inventory with an outstanding  finance  contract
balance of $25.5  million  (3.5% of the  average  outstanding  finance  contract
balance)  and 4,879  finance  contracts  with an  outstanding  finance  contract
balance of $33.3  million  (4.5% of the  average  outstanding  finance  contract
balance)  which were  liquidated at auction and awaiting  other  recoveries.  In
accordance  with the Company's  reporting  policy,  the losses relating to these
finance  contracts will be reflected in the charge off ratios reported in future
reporting periods.

A majority  of the  Company's  portfolio  of finance  contracts  are insured for
credit default (see discussion below) ("RDI"). The Company, since its inception,
has insured its portfolio under this type of insurance;  however,  the structure
of the policy has differed over this time frame. Its initial policy provided for
a cash reserve  deposit  thereby  decreasing the Company's net loss  experience.
Over time, in an effort to preserve cash, the Company  structured its RDI policy
to incorporate a self insured retention ("SIR"). This structure remains in force
today.   The  SIR  results  in  increased   net  losses  due  to  the  Company's
responsibility  for the first six to ten percent of losses,  depending  upon the
policy in which the  respective  contract  is insured  under.  As a result,  the
Company has reported an increase in its net loss experience. Upon receipt of all
anticipated  recoveries,  the  Company  charges off any  remaining  balance on a
receivable-by-receivable review.

Management Information Systems

The Company  believes that high levels of automation  are essential both for its
efficient operations and to maintain its competitive  position.  The Company has
spent in  excess  of $4.0  million  developing  and  maintaining  the  AutoMate,
LeaseMate  and PRIM  (Product  Reporting and  Information  Management)  computer
systems  and  databases  and its  servicing  platform  at SST.  AutoMate  is the
acquisition  software for finance  contracts  and  LeaseMate is the  origination
software for leases.  They are on-line,  real-time  systems  employing  advanced
database  management  techniques.  In  addition  to  accumulating  all  relevant
borrower and asset information, AutoMate and LeaseMate automatically request and
receive  credit  reports  from  credit  bureaus,  create  and merge all  Dealer,
borrower or lessee and internal documentation, automatically fax the appropriate
documents  to their  destinations  and  prompt  underwriting  personnel  through
verification  phone  calls.  An  electronic  copy of all  documentation  is kept
on-line  for an  extended  period of time and  off-line  indefinetely.  Prior to
funding,  AutoMate and LeaseMate  perform over 100 data integrity,  underwriting
guideline  and  numerical  accuracy  checks.  [Need  expansion for SST Servicing
Software from Matthew Burns]

Insurance

Each  finance  contract  requires  the  borrower  to  obtain  comprehensive  and
collision  insurance  with  respect to the  related  financed  vehicle  with the
Company named as a loss payee.  The Company  relies on a written  representation
from the selling Dealer and  independently  verifies that a borrower in fact has
such  insurance in effect when it  purchases  contracts.  Each finance  contract
acquired by the Company is covered  from the time of purchase by the VSI Policy.
The VSI Policy has been  issued to the Company by  Guaranty  National  Insurance
("Guaranty National").

Physical  Damage  and  Loss  Coverage.  The  Company  initially  relies  on  the
requirement,  set in its  underwriting  criteria,  that each  consumer  maintain
adequate  levels of physical  damage loss  coverage on the  respective  financed
vehicles. The servicer, either ALFI or SST, tracks the physical damage insurance
of 


                                       13
<PAGE>

consumers,  and  contacts  consumers  in the  event  of a lapse in  coverage  or
inadequate  documentation.  In addition as of [ ______ ] 1997, the Company's VSI
carrier  implemented a insurance  tracking system in order to ascertain that the
consumer is maintaining the appropriate insurance coverage on their vehicles. If
the consumer has lapsed their insurance,  a policy is offered to the consumer at
$ ____ . Moreover, the Servicer is obligated,  subject to certain conditions and
exclusions,  to assist the  processing of claims under the VSI Policy.  Guaranty
National will insure each financed vehicle securing a contract against:  (i) all
risk of physical  loss or damage from any  external  cause to financed  vehicles
which the Company  holds as  collateral;  (ii) any direct loss which the Company
may  sustain  by  unintentionally  failing  to  record  or file  the  instrument
evidencing each contract with the proper public officer or public office,  or by
failing  to cause  the  proper  public  officer  or  public  office  to show the
Company's  encumbrance  thereon,  if such  instrument is a certificate of title;
(iii) any direct loss  sustained  during the term of the VSI Policy by reason of
the  inability  of the Company to locate the  consumer  or the related  financed
vehicle,  or by reason  of  confiscation  of the  financed  vehicle  by a public
officer or public office;  and (iv) all risk of physical loss or damage from any
external cause to a repossessed  financed  vehicle for a period of 60 days while
such  financed  vehicle  is  (subject  to certain  exceptions)  held by or being
repossessed by the Company.

The physical damage  provisions of the VSI Policy generally provide coverage for
losses  sustained  on the  value of the  financed  vehicle  securing  a  finance
contract,  but in no event is the coverage to exceed:  (i) the cost to repair or
replace the financed  vehicle with  material of like kind and quality;  (ii) the
actual cash value of the financed  vehicle at the date of loss, less its salvage
value;  (iii) the unpaid  balance of the  contract;  (iv)  $50,000 per  financed
vehicle;  or (v) the lesser of the  amounts due the  Company  under  clauses (i)
through (iv) above,  less any amounts due under all other valid insurance on the
damaged  financed vehicle less its salvage value. No assurance can be given that
the insurance will cover the amount financed with respect to a financed vehicle.

There is no  aggregate  limitation  or other form of cap on the number of claims
under the VSI  Policy.  Coverage  on a  financed  vehicle is for the term of the
related contract and is  noncancellable.  The VSI Policy requires that, prior to
filing a claim, a reasonable  attempt be made to repossess the financed  vehicle
and, in the case of claims on skip losses,  every professional effort be made to
locate the financed vehicle and the related borrower.

Credit Default Insurance.  In addition to physical damage and loss coverage, the
Company  obtains credit default  insurance  policies for certain  receivables it
acquires.  Generally,  these policies are obtained for each  securitized pool of
receivables  and as a  result,  benefit  that  pool's  trustee  and  certificate
holders. The insurance provides  indemnification for certain losses incurred due
to a  deficiency  balance  following  the  repossession  and resale of  financed
vehicles securing  defaulted finance contracts  eligible for coverage.  Coverage
under these credit default  policies is strictly  conditioned upon the Company's
maintaining and adhering to the credit  underwriting  criteria set forth in each
policy. Under these policies, losses on each eligible contract are calculated in
an amount equal to the Net Payoff Balance (as defined below) less the sum of (i)
the Actual Cash Value (as defined  below) of the financed  vehicle plus (ii) the
total amount recoverable from all other applicable insurance,  including refunds
from cancelable  add-on  products.  The maximum coverage under these policies is
$15,000 per contract.

From the time it commenced  purchasing  finance contracts until August 31, 1995,
the Company relied upon a series of credit default insurance  policies purchased
through  Agricultural  Excess and Surplus Insurance Company ("AESIC") which were
guaranteed by AESIC's parent,  Great American Insurance  Company.  Each of these
policies  required  that Aegis make a deposit  of certain  moneys to  segregated
accounts from which losses incurred under a policy would be paid. Once the funds
in an account have been depleted by 


                                       14
<PAGE>

losses incurred under a policy, AESIC would directly reimburse the insured.

Since  August  1995,  the  Company  has relied  upon a series of credit  default
insurance   policies   purchased  through  The  Connecticut   Indemnity  Company
("Connecticut  Indemnity"  ) or  Empire  Fire and  Marine [a  subsidiary  of the
Zurich]  ("Empire").  Unlike the insurance  provided by AESIC, these policies do
not require the Company to deposit moneys to segregated  accounts to pay losses.
Instead,  each of the Connecticut  Indemnity  policies  provide that the Company
bear losses until such loss exceeds 8% or 10% of the  aggregate  amount  insured
under that  policy.  Connecticut  Indemnity  or Empire is  obligated  to pay all
losses in excess of this amount to the insured.

Credit default insurance was purchased for each of the finance contracts sold to
a securitization trust with the exception of Aegis Auto Receivables Trust 1995-3
for which credit  default  insurance was purchased for only $31.8 million of the
$60 million of finance  contracts sold to that trust.  Furthermore,  none of the
$148.4  million  finance  contracts  contributed to Aegis Auto Owners Trust 1995
have the benefit of credit default  insurance.  The Aegis Auto Owners Trust 1995
did not require this type of insurance  since the principal  balance owed to the
certificate holders is insured by MBIA.

"Actual Cash Value," for the purposes of credit default  insurance,  means gross
proceeds  from the  sale of the  repossessed  automobile  securing  the  finance
contract. Under certain circumstances,  this amount could be modified to reflect
the greater of (i) gross proceeds from sale and (ii) the wholesale  market value
at the time of the loss as  determined by an  automobile  guide  provided by the
insurer applicable to the region in which the financed vehicle is sold.

"Net Payoff  Balance," for the purposes of credit default  insurance,  means the
outstanding  principal  balance  as of the  default  date  plus  late  fees  and
corresponding  interest  no more than 90 days after the date of  default.  In no
event shall Net Payoff Balance include  non-approved  fees, taxes,  penalties or
assessments included in the original instrument,  or repossession,  disposition,
collection, remarketing expenses and fees or taxes incurred.

Regulation

The  Company  acts as a sales  finance  company in [38  states]  and is licensed
and/or registered in each state where it is required to be licensed. The Company
is subject to varying  degrees of regulation  and periodic  examination  in such
states. In addition,  numerous federal and state consumer protection laws impose
requirements  upon the origination and collection of consumer  receivables.  The
laws of some states impose finance  charge  ceilings and other  restrictions  on
consumer  transactions and may require certain contract  disclosures in addition
to  those  required  under  federal  law.  These  requirements  impose  specific
statutory  liabilities upon creditors who fail to comply with their  provisions.
In  addition,  certain of these laws make an assignee of such  finance  contract
liable to the obligor  thereon for any  violations by the assignor.  The Company
verifies the  accuracy of  disclosure  for each  receivable  that it  purchases;
however,  the  Company,  as an assignee of finance  contracts,  may be unable to
enforce  some of its finance  contracts  or may be subject to  liability  to the
obligors  under some of its finance  contracts if such finance  contracts do not
comply with such laws.

The Company is subject to numerous federal laws,  including the Truth in Lending
Act, the Equal Credit  Opportunity Act and the Fair Credit Reporting Act and the
rules and regulations promulgated  thereunder,  and certain rules of the Federal
Trade Commission.  These laws require the Company to provide certain disclosures
to   applicants,   prohibit   misleading   advertising   and   protect   against
discriminatory  financing or unfair credit  practices.  The Truth in Lending Act
and  Regulation Z  promulgated  thereunder  require  disclosure  of, among other
things,  the terms of repayment,  the amount financed,  the total finance charge
and the annual


                                       15
<PAGE>

percentage rate charged on each automobile  finance  contract.  The Equal Credit
Opportunity Act prohibits creditors from discriminating against finance contract
applicants  (including  finance contract  obligors) on the basis of race, color,
religion,  national  origin,  sex,  age or  marital  status or on the basis that
income is derived from public assistance. Under the Equal Credit Opportunity Act
and Regulation B promulgated thereunder,  creditors are required to make certain
disclosures   regarding  consumer  rights  and  advise  consumers  whose  credit
applications are not approved of the reasons for the rejection.  The Fair Credit
Reporting Act requires the Company to provide  certain  information to consumers
whose credit  applications  are not  approved on the basis of a report  obtained
from a consumer  reporting  agency.  The rules of the Federal  Trade  Commission
limit the types of  property a creditor  may  accept as  collateral  to secure a
consumer  finance  contract and its holder in due course  rules  provide for the
preservation of the consumer's claims and defenses when a consumer obligation is
assigned to a subject holder.  With respect to used vehicles  specifically,  the
Federal  Trade  Commission's  Rule on Sale of Used  Vehicles  requires  that all
sellers of used  vehicles  prepare,  complete and display a Buyer's  Guide which
explains any  applicable  warranty  coverage for such  vehicles.  In addition to
limiting  the types of  property  which may be taken as  collateral,  the Credit
Practices Rule of the Federal Trade Commission imposes  additional  restrictions
on finance contract provisions and credit practices.

Certain  of the  states in which the  Company  operates  prohibit  Dealers  from
charging a finance charge in excess of statutory maximum rates.  Finance charges
include interest and any cash sale  differential.  The Company's  agreements and
other  communications  with Dealers stress the importance of Dealers' compliance
with all applicable  laws.  The Company's  contractual  agreements  with Dealers
obligate  Dealers to comply with all  applicable  laws,  and  provide  that each
Dealer must indemnify the Company for any violation of law relating to a finance
contract  acquired  from the  Dealer.  Every  obligor  (as part of the  standard
financing   documentation)   currently   acknowledges   by  signing  the  retail
installment  contract that the obligor is aware,  and approves,  of the Dealer's
intended sale of the finance contract at a discount to the Company.  To the best
of the Company's knowledge,  the obligor was not quoted a lower price for a cash
purchase. Further, it is the Company's policy to terminate its relationship with
any Dealer where the Company becomes aware of such incidents  perpetrated either
with the knowledge or tacit assent of the Dealer or by more than one salesperson
at a particular Dealer. [As of June 30, 1997, no Dealer had been so terminated.]
[To the  knowledge  of the  Company,  no action has been brought or is currently
threatened or contemplated  against the Company alleging that Dealers  regularly
charge cash sale  differentials.]  Nevertheless,  if it were  determined  that a
material number of finance contracts acquired by the Company involved violations
by Dealers of applicable laws and regulations,  the Company's financial position
could be materially  adversely affected and a widespread pattern of violation by
Dealers could have a material adverse effect on the Company's future prospects.

In the event of  default by an obligor  on a finance  contract,  the  Company is
entitled to exercise the remedies of secured party under the Uniform  Commercial
Code  ("UCC").  The UCC  remedies  of a  secured  party  include  the  right  to
repossession by self-help means,  unless such means would constitute a breach of
the peace.  Unless  the  obligor  voluntarily  surrenders  a vehicle,  self-help
repossession by an independent repossession specialist engaged by the Company is
usually employed by the Company when an obligor defaults. Self-help repossession
is accomplished by retaking  possession of the vehicle. If a breach of the peace
is likely to occur,  or if  applicable  state law so requires,  the Company must
obtain a court order from the appropriate  state court and repossess the vehicle
in accordance with that order. None of the states in which the Company presently
does business, except for Louisiana, has any law that would require the Company,
in the absence of a probable breach of the peace, to obtain a court order before
it attempts to repossess a vehicle.

In most jurisdictions, the UCC and other state laws require the secured party to
provide the obligor with reasonable  notice of the date,  time, and place of any
public sale or the date after which any private  sale of the  collateral  may be
held. Unless the obligor waives his or her rights after default,  the obligor in
most circumstances would have the right to redeem the collateral prior to actual
sale by paying the secured party


                                       16
<PAGE>

all unpaid  installments  of the  receivable  (less any  required  discount  for
prepayment) plus reasonable  expenses for repossessing,  holding,  and preparing
the  collateral  for  disposition  and  arranging  for  its  sale,  plus in some
jurisdictions,  reasonable  attorneys'  fees, or, in some states,  by payment of
past-due installments.  Repossessed vehicles are generally resold by the Company
through wholesale auctions which are attended principally by dealers.

The  Company,  through  one of its  operating  subsidiaries,  is licensed by the
Federal  Housing  Administration  ("FHA") of the U.S.  Department of Housing and
Urban  Development  as an issuer  of  securities  collateralized  by HUD Title I
Loans.  As such,  the  Company  is subject  to  certain  regulations,  including
requirements  for the maintenance of certain  minimum levels of  capitalization,
and is subject to periodic examination by the FHA.

The  Company  believes  it  is  in  compliance  with  all  material  regulations
applicable to it.

Employees

As of August 31, 1997,  the Company and its  subsidiaries  employed 550 persons,
including five in senior management and 280 in finance contract  acquisition and
administrative support and 265 persons in finance contract servicing,  including
2 in  senior  management.  None  of the  Company's  employees  is  covered  by a
collective bargaining agreement. The Company believes that its relationship with
its employees is satisfactory.

Item 2: Properties.

Properties and Facilities

The Company's  headquarters are located in  approximately  30,000 square feet of
leased space at 525 Washington Boulevard, Jersey City, New Jersey. The lease for
such facility  expires in August 2005.  The Company's  headquarters  contain the
Company's  executive  offices  as well as those  related to  automobile  finance
contract  acquisitions.  The Company also has leases for office space in Irvine,
California  (expiring April 1999);  Marietta,  Georgia (expiring June 2005); and
Merriam,  Kansas (expiring  December 1999)  aggregating  approximately  [50,800]
square feet. Such facilities are used for finance contract acquisitions, systems
technology, sub-servicing and sales support. The Company, through its subsidiary
SST, owns a _____ square foot building in St. Joseph, Missouri. Such facility is
used for its servicing  operations.  The building was purchased for $_______ and
has a outstanding mortgage of $_______ million.

Item 3:  Legal Proceedings.

Litigation

[On April 28, 1996, Star Holdings,  Inc. d/b/a The Sloane  Organization  filed a
complaint  against  the  Company in the  United  States  District  Court for the
Southern  District of New York,  captioned Star Holdings,  Inc. d/b/a The Sloane
Organization  vs.  Aegis  Consumer  Funding  Group  Inc.,  alleging  that it was
entitled  to  certain  fees  under a finder's  agreement  entered  into with the
Company on January 2, 1996.  The  amounts  alleged to be due were in  connection
with the Company's private  placement of $92 million of asset-backed  securities
through Greenwich Capital Markets,  Inc. ("Greenwich Capital") in March 1996. On
July  3,  1996,  Star  amended  its  complaint  (as  so  amended,  the  "Amended
Complaint") to claim fees under the finder's agreement and under the same common
law principles cited in the original  complaint,  as well as additional theories
asserted in the Amended  Complaint  in  connection  with the series of financing
arrangements entered into by the Company and Greenwich Capital and in connection
with a  potential  sale of common  stock of the  Company  beneficially  owned by
Patrick Bennett to a purchaser allegedly  introduced to Mr. Bennett by Star. The
Amended  


                                       17
<PAGE>

Complaint seeks damages of at least $15.8 million,  punitive damages of at least
$525,000,  reimbursement  of expenses for $20,000,  declaratory  relief,  costs,
administrative  fees and such other  relief as the court deems  appropriate.  On
July 15, 1996 the Plaintiff filed a motion (the  "Attachment  Motion") to attach
the Company's  assets based on allegations  that the Company is dissipating  its
assets.  The  Company  has filed  responsive  papers to the  Attachment  Motion.
Additionally,  the Company  has filed a Motion to Dismiss  most of the counts in
the Amended Complaint. Star has filed a response to the Company's Motion seeking
summary  judgment  on  the  Amended  Complaint.  The  Company  believes  it  has
meritorious defenses to the allegations in the Complaint, the Amended Complaint,
the Attachment  Motion and the Motion for Summary Judgment and intends to defend
the matter vigorously.]

[On May 2,  1996,  a  purported  class  action  lawsuit  on behalf of  Josephine
Thornton and other  individuals,  captioned  Josephine C.  Thornton,  et al., on
behalf of themselves and all others similarly  situated vs. Bennett Finance Inc.
et al.,  was filed in the New York  Supreme  Court for New York  County  against
Bennett Finance Inc. and various other persons and entities alleged to have been
affiliated  with or  employed  by The  Bennett  Funding  Group,  Inc.  ("Bennett
Funding") and Bennett Management and Development Corp.  ("Bennett  Management").
Other  entities,  including the Company,  were named as defendants  because they
were allegedly alter egos and agents for Patrick Bennett, Michael Bennett, their
parents and certain other named  individual  defendants.  It is further  alleged
that,  as such alter egos and agents,  the corporate  defendants,  including the
Company,  engaged in common law fraud, negligent  misrepresentations,  deceptive
acts or practices,  sale of  unregistered  securities  and breaches of fiduciary
duty in connection with the financing  activities of Bennett Funding and Bennett
Management.   Plaintiffs  in  this  action  seek  an   accounting,   unspecified
compensatory and punitive damages, injunctive relief, costs, attorneys' fees and
such other relief as the court deems appropriate.  The Company believes that the
allegations  as set forth in the  complaint  are  without  merit and  intends to
defend the matter vigorously.]

The Company is also subject to various legal  proceedings  and claims that arise
in the ordinary course of business.  The Company believes that the amount of any
ultimate  liability  with  respect  to  these  actions,  including  the  actions
described above, in the aggregate or individually will not materially affect the
results of operations, cash flows or financial position of the Company.

Item 4:  Submission of Matters to a Vote of Security Holders.

There were no submissions of matters to a vote of security holders.

                                     PART II

Item 5:  Market for Common Equity and Related Stockholder Matters.

The Company's Common Stock is quoted on the Nasdaq National Market ("NNM") under
the symbol "ACAR".  The following table sets forth,  for the periods  indicated,
the high and low per share sales  prices for the Common Stock as reported on the
NNM.

                                                        Price of Common Stock
                                                        ---------------------
                                                        High              Low
                                                        ----              ---
Fiscal year ended June 30, 1995:
Quarter ended June 30, 1995 ( from April 6, 1995)      $8 1/4           $7 1/4


Fiscal year ended June 30, 1996:
Quarter ended September 30, 1995                       $8 3/8           $7
Quarter ended December 31, 1995                         8 3/4            7
Quarter ended March 31, 1996                            7 1/2            5 5/8
Quarter ended June 30, 1996                             6 5/8            5

Fiscal year ended June 30, 1997:
Quarter ended September 30, 1996                       $5 3/4           $3 7/8
Quarter ended December 31, 1996                         5 1/2            2 3/8
Quarter ended March 31, 1997                            3 1/2              31/32
Quarter ended June 30, 1997                             1 11/32            5/8

                                       18
<PAGE>

As of August 29, 1997, there were approximately[ 3,000] holders of record of the
Company's Common Stock.

The Company's  capital stock consists of 30,000,000  authorized shares of common
stock,  par value $.01 per share,  of which,  as of August 29, 1997,  17,677,217
shares were issued and outstanding; and 2,000,000 authorized shares of preferred
stock,  par value $.10 per share, of which, as of August 29, 1997,  1,100 shares
were  authorized  as  Series  C with  920  shares  issued  and 306  shares  were
outstanding and 21, 350 shares were authorized as Series D with no shares issued
not outstanding.

The  Company  has not paid any  dividends  on its common  stock.  The payment of
dividends,  if any,  in the  future is  within  the  discretion  of the Board of
Directors and will depend on the Company's  earnings,  its capital  requirements
and financial  condition.  It is the current intention of the Board of Directors
to retain all earnings,  if any, for use in the Company's  business  operations,
and  accordingly,  the Board of Directors  does not expect to declare or pay any
dividends in the foreseeable future.

The transfer agent and registrar for the Company's Common Stock is FCTC Transfer
Services, 111 Wood Avenue South, Suite 206, Iselin, NJ 08830.


                                       19
<PAGE>


Item 6:  Selected Financial Data.

<TABLE>
<CAPTION>
                                                                                          Year Ended June 30,             
                                                                   ---------------------------------------------------------------
                                                                      1993        1994           1995         1996         1997
                                                                   ---------    ---------      ---------    ---------    ---------
                                                                                          (dollars in thousands)
<S>                                                                <C>          <C>            <C>          <C>          <C>       
Statement of Income Data:
Auto Finance Revenues
   Gains (losses) from securitization transactions                 $      --    $   2,876(1)   $   9,523    $  32,429    ($  9,439)
   Interest Income                                                        --        1,321          6,710       13,406       26,259
   Fees and commissions                                                  438        2,294            259          274          138
   Other income                                                           --           --            230          113        1,141
                                                                   ---------    ---------      ---------    ---------    ---------
      Total auto business revenues                                       438        6,491         16,722       46,222       18,099
Other business revenues(2)                                             5,926        4,686          1,088          106           --
                                                                   ---------    ---------      ---------    ---------    ---------
           Total revenues                                              6,364       11,177         17,810       46,328       18,099
                                                                   ---------    ---------      ---------    ---------    ---------
Operating Expenses
   Salaries and other employee costs                                   2,701        3,568          3,897        8,266       14,325
   Interest expense                                                       --          968          4,794       10,091       16,486
   Provision for credit losses                                            --          287            941        3,505        9,427
   Other operating expenses                                            3,016        3,599          4,511        6,898       12,790
                                                                   ---------    ---------      ---------    ---------    ---------
      Total operating expenses                                         5,717        8,422         14,143       28,760       53,028
                                                                   ---------    ---------      ---------    ---------    ---------
   Charge for release of Escrowed Shares (3)                              --           --            879          807           --
                                                                   ---------    ---------      ---------    ---------    ---------
   Operating income (loss)                                               647        2,755          3,042       16,761      (34,929)
                                                                   ---------    ---------      ---------    ---------    ---------

   Provision for (recovery of) income taxes                              334        1,352          1,768        7,472       (8,427)
                                                                   ---------    ---------      ---------    ---------    ---------
   Net income (loss)                                               $     313    $   1,403      $   1,274    $   9,289    ($ 26,502)
                                                                   =========    =========      =========    =========    =========

Net income (loss) available for common stockholders                $     313    $   1,178      $   1,079    $   9,018    ($ 26,694)
                                                                   =========    =========      =========    =========    =========
Portfolio Data:
Number of finance contracts acquired                                   1,148        2,964         10,895       36,739       47,722
Amount of finance contracts acquired                               $  12,181    $  33,738      $ 132,294    $ 451,536    $ 591,841
Weighted average size of finance contracts acquired                $    10.6    $    11.4      $    12.1    $    12.3    $    12.4
Weighted average interest rate of finance contracts
   acquired                                                             20.6%        20.1%          20.2%        20.1%        20.4%
Finance contract portfolio securitized                             $   4,289    $  26,043      $ 119,251    $ 432,410    $ 567,181
Repossession Inventory:
   Number of vehicles                                                      9           30             78          698        2,212
   Defaulted principal balance                                     $      99    $     322      $     840    $   7,861    $  25,500
Finance Contracts liquidated awaiting other recoveries:
   Number of vehicles                                                     11           25             30        1,552        4,879
   Defaulted principal balance                                     $      53    $     124      $     122    $   9,212    $  33,348
Gross charge-off ratio(4)(5)                                             0.4%         2.1%           3.4%         2.4%         6.7%
Net charge-off ratio(4)(6)                                               N/M          0.2%           0.8%         1.2%         4.7%
Number of leases originated(7)                                            --           92          1,914           25           --
Amount of leases originated(7)                                     $      --    $   1,571      $  29,025    $     436    $      --
Weighted average interest rate of leases
 originated(7)                                                           N/A         15.8%          16.6%        17.1%          --
Operating Data:
Finance contract portfolio outstanding(8)                          $  11,156    $  38,844      $ 146,557    $ 500,694    $ 813,055
Delinquency (>30 days) ratio(9)                                          3.8%         0.7%           6.5%         9.0%        12.0%
Loans in repossession or bankruptcy(10)                                  1.9%         2.7%           2.3%         4.2%         8.5%
                                                                   ---------    ---------      ---------    ---------    ---------
Total delinquencies                                                      5.7%         3.4%           8.8%        13.2%        20.5%
                                                                   =========    =========      =========    =========    =========
Number of states                                                         N/M           14             25           32           31
Number of Dealers                                                        N/M          375          1,200        2,900        4,200
Number of sales representatives                                          N/M            8             24           49           38
</TABLE>


                                       20
<PAGE>

<TABLE>
<CAPTION>
                                                                                             At June 30,                       
                                                                --------------------------------------------------------------------
                                                                  1993           1994           1995           1996           1997
                                                                --------       --------       --------       --------       --------
<S>                                                             <C>            <C>            <C>            <C>            <C>     
Balance Sheet Data:
Cash and cash equivalents                                       $    495       $    981       $  5,971       $  3,091       $  4,485
Automobile finance receivables, net                                   --         15,788         39,784         41,058         33,572
Retained interests in securitized receivables                      1,243          4,434         23,985         70,243         51,330
  Total assets                                                     4,442         23,527         84,737        121,452        101,799
Warehouse credit facilities                                           --         15,260         48,162         37,154         17,407
Notes payable                                                         --             --         12,956         29,897         38,409
Subordinated debentures                                               --             --             --             --         24,032
Stockholders' equity                                               2,677          4,083         15,697         33,991          7,423
</TABLE>

-----------
(1)  Includes  approximately  $678,000 in gains realized from related parties in
     connection with securitization transactions.

(2)  Other   business   revenues   represents   revenues   from  the   Company's
     non-automobile finance related activities.

(3)  Represents  a charge  for  release of  113,386  shares in 1995 and  150,118
     shares in 1996 of Common Stock placed in escrow by the  executive  officers
     of the Company in connection with the Company's  initial public offering of
     Common Stock.

(4)  The Company records both gross and net losses when all potential recoveries
     on a defaulted finance contract have been realized.

(5)  The gross  charge-off ratio is calculated as losses after the proceeds from
     repossessed vehicle sales, service contract rebates, consumer insurance and
     VSI insurance;  net of repossession and liquidation  costs, as a percentage
     of average outstanding  principal balance of the finance contract portfolio
     outstanding as of each period end.

(6)  The net charge-off ratio equals the aggregate  balance of finance contracts
     liquidated  (including those  previously sold in securitized  transactions)
     plus  repossession and liquidation  expenses,  less all recoveries from the
     sale of the  collateral,  risk  default  and other  insurance  proceeds  or
     otherwise,  as a percentage of average outstanding principal balance of the
     finance contract portfolio as of each period end.

(7)  The Company  ceased  funding leases in the first quarter of its 1996 fiscal
     year.

(8)  Principal  balance  of all  finance  contracts  acquired,  including  those
     previously sold in securitized  transactions  and excluding those which are
     in repossession and no longer eligible for  reinstatement as of each period
     end.

(9)  Percentage based on outstanding principal balance.

(10) Includes finance  contracts in bankruptcy,  authorized for repossession and
     in repossession and still eligible for reinstatement.

N/M  not meaningful.

QUARTERLY FINANCIAL DATA:

Summarized  financial data is as follows  (dollars in thousands,  except for per
share amounts):

<TABLE>
<CAPTION>
                                                                                  Quarter Ended
                                             ---------------------------------------------------------------------------------------
                                             Sept. 30,  Dec. 31,   March 31,  June 30    Sept. 30,  Dec. 31,    March 31,   June 30,
                                               1995       1995       1996       1996       1996       1996        1997        1997 
                                             --------   --------   --------   --------   --------   --------    --------    --------
<S>                                          <C>        <C>        <C>       <C>        <C>        <C>         <C>         <C>     
Revenues                                     $  9,158   $  9,405   $13,064   $ 14,700   $ 13,689   ($22,532)   $ 15,607    $ 11,336
                                             --------   --------   -------   --------   --------   --------    --------    --------
Interest expense                                2,124      2,459     2,723      2,784      3,014      4,214       6,447       2,812
Other expenses                                  3,386      3,720     5,824      6,547      5,361     10,759       9,926      10,497
                                             --------   --------   -------   --------   --------   --------    --------    --------
Total expenses                                  5,511      6,179     8,547      9,331      8,374     14,973      16,372      13,309
                                             --------   --------   -------   --------   --------   --------    --------    --------

Net income (loss) before income
 taxes (benefit)                                3,647      3,227     4,517      5,369      5,315    (37,505)       (765)     (1,973)
Provision for income taxes                      1,641      1,384     1,988      2,460      2,179    (10,606)         --          --
                                             --------   --------   -------   --------   --------   --------    --------    --------

Net income (loss)                            $  2,006   $  1,844   $ 2,529   $  2,909   $  3,136   ($26,899)   ($   765)   $  1,973
                                             ========   ========   =======   ========   ========   ========    ========    ========
Net income (loss) available to shareholders  $  2,006   $  1,844   $ 2,529   $  2,768   $  3,136   ($26,958)   ($   810)          0
                                             ========   ========   =======   ========   ========   ========    ========    ========
Net income (loss) per common share:
            Primary                          $   0.15   $   0.13   $  0.17   $   0.19   $   0.19    ($  1.68)   ($  0.05)
                                             ========   ========   =======   ========   ========    ========    ========
            Fully Diluted                    $   0.14   $   0.12   $  0.16   $   0.18   $   0.19    ($  1.68)   ($  0.05)
                                             ========   ========   =======   ========   ========    ========    ========
</TABLE>

The quarters ended December 31, 1995,  March 31, 1996, June 30, 1996,  September
30, 1996,  December 31, 1996 and June 30, 1997 included  write downs on retained
interests  in  securitized  receivables  of $1.5  million,  $2.5  million,  $3.5
million, $2.0 million, $29.0 million and [$14.0] million, respectively.


                                       21
<PAGE>

The quarter ended June 30, 1996,  included a non-cash  charge  $807,000 from the
release of escrowed  shares which was offset by an increase in  paid-in-capital.
There  was no  impact on total  stockholders'  equity as a result of the  escrow
share release and the resultant non-cash charge.

Item 7: Managements  Discussion and Analysis of Financial  Condition and Results
of Operations

     The  following  discussion  of  the  financial  condition  and  results  of
operations of the Company  relates to fiscal years ended June 30, 1994, 1995 and
1996, and should be read in conjunction  with the preceding  Selected  Financial
Data and the  Company's  Consolidated  Financial  Statements  and Notes  thereto
included  elsewhere in this annual  report.  All references to full years are to
the applicable fiscal year of the Company.

Overview

     The Company is a specialty  consumer  finance company engaged in acquiring,
securitizing and servicing finance contracts originated by Dealers in connection
with the sale of late-model used and, to a lesser extent,  new cars to consumers
with sub-prime credit.  Since commencing the acquisition of finance contracts in
May 1992, through June 30, 1996, the Company has acquired  approximately $ _____
million of finance  contracts,  of which $_____ million have been securitized in
thirteen offerings of asset-backed securities.

     The following table illustrates the Company's finance contract  acquisition
volume,  total revenue,  securitization  activity and servicing portfolio during
the past nine fiscal quarters.

<TABLE>
<CAPTION>
                                                                         For the Quarters Ended                       
                                   -------------------------------------------------------------------------------------------------
                                   June 30,   Sept. 30,  Dec. 31.   Mar. 31,   June  30,  Sept. 30,  Dec. 31.    Mar. 31,  June  30,
                                     1995       1995       1995       1996       1996       1996       1996        1997       1997
                                   --------   --------   --------   --------   --------   --------   --------    --------   --------
                                                                              (dollars in thousands)
<S>                                <C>        <C>        <C>        <C>        <C>        <C>        <C>         <C>        <C>     
Number of finance contracts
acquired during period ..........     4,901      5,943      8,190     10,569     12,037     15,401     14,584       8,992      8,745
Average finance contract balance   $   12.2   $   12.2   $   12.3   $   12.2   $   12.4   $   12.4   $   12.3    $   12.3   $   12.6
Aggregate value of finance
 contracts acquired during period    59,609     72,562    100,582    128,781    149,612    190,843    179,933     110,580    110,485
Gains from securitization
transactions(1)(2) ..............     5,197      6,023      7,424     12,759     10,824     10,349       (578)      5,979
Gains from whole loan sales .....        40         48         64        111        290          0          0          37
Net interest (expense) income ...       765        866      1,021        546        993      2,139      2,747       2,894
Total revenue ...................     6,111      7,034      6,946     10,341     11,916     10,675    (26,747)      9,161
Finance contracts securitized
during period ...................    54,000     67,630     85,368    130,138    149,274    173,270      4,870     238,693    150,348
Finance contracts sold during
period ..........................     1,000      1,000      1,801      2,752      2,250          0          0      15,000          0
Servicing portfolio(at period
 end)(3) ........................   146,557    197,911    287,481    401,704    500,694    645,551    759,304     783,757    813,055
</TABLE>

---------
(1)  Excludes gains from whole loan sales of finance contracts.

(2)  The quarters ended December 31, 1995, March 31, 1996 are before write downs
     of $3.1  million,  $1.5 million and $3.5 million ,  respectively,  taken on
     prior retained interests in securitized receivables.

(3)  Excludes finance  contracts in bankruptcy,  authorized for repossession and
     in repossession and still eligible for reinstatement.

Revenues

     The Company's primary sources of revenues consist of two components:  gains
from securitization transactions and interest income.

     Gains from Securitization Transactions.  The Company warehouses the finance
contracts  it acquires  and  periodically  sells them to a trust,  which in turn
sells  asset-backed   securities  to  investors.  By  securitizing  its  finance
contracts,  the  Company  is able to lock  in the  difference  ("gross  spread")
between the annual rate of interest paid by the consumer  ("APR") on the finance
contracts  acquired and the interest rate on the  asset-backed  securities  sold
("certificate  rate").  When the Company  securitizes its finance contracts,  it
records  a gain  from  securitization  transactions  and  establishes  an  asset
referred  to  as  retained  interest  in  securitized  


                                       22
<PAGE>

receivables.  Gains from  securitization  transactions are equal to the retained
interest on the  securitized  receivables  plus the  difference  between the net
proceeds from the  securitization and the cost (including the cost of VSI Policy
and credit default  premiums) to the Company of the finance  contracts sold. The
retained  interest on securitized  receivables  represents the estimated present
value  of the  estimated  future  cash  flows  to be  received  by the  Company,
discounted at a market-based  rate,  taking into  consideration  (i) contractual
obligations of the obligors,  (ii) amounts due to the investors in  asset-backed
securities, (iii) various costs of the securitizations, including the effects of
hedging transactions,  if any, and (iv) adjustments to the cash flows to reflect
estimated  prepayments  of finance  contracts and losses  incurred in connection
with defaults.  Subsequent to  securitization,  the Company continues to service
the securitized finance contracts,  for which it recognizes  servicing fees over
the life of the  securitization.  Retained  interest in securitized  receivables
represents the difference  between the weighted  average  finance  contract rate
earned  and the  rate  paid  on  certificates  issued  to the  investors  in the
securitization,  less  servicing  fees  and  other  costs  over  the life of the
securitization.  Retained  interest in  securitized  receivables  is computed by
taking  into  account  certain  assumptions  regarding  prepayments,   defaults,
servicing and other costs. The Company reviews on a quarterly basis the retained
interest in  securitized  receivables.  If actual  experience  differs  from the
Company's  assumptions  or to the extent that market and economic  changes occur
that  adversely  impact the  assumptions  utilized in  determining  the retained
interest in securitized receivables,  the Company records a charge against gains
from securitization transactions.  The discount rate utilized in determining the
retained  interest  in  securitized  receivables  and gain  from  securitization
transactions is based on the Company's estimate of the yield required by a third
party purchaser of such instrument.  The Company also bases these assumptions on
the performance  characteristics  of the Company's finance contract portfolio to
date.  The Company's  default  assumptions  are based on estimated  repossession
rates, proceeds from the liquidation of repossessed vehicles,  proceeds from VSI
Policy coverage and recoveries from the Company's credit default insurance.

     Interest Income. Interest income consists of: (i) interest income earned on
finance  contracts  (ii) interest  income  earned on leases (the Company  ceased
funding leases in the quarter ended  September 30, 1995),  (iii)  servicing fees
net of expenses,  (iv) the accretion of finance contract  acquisition  discounts
net of related  capitalized  costs and (v) the amortization of capitalized costs
net of  origination  discounts for leases.  Other factors  influencing  interest
income during a given fiscal period  include (a) the annual  percentage  rate of
the finance contracts  acquired,  (b) the aggregate principal balance of finance
contracts acquired and funded through the Company's  warehouse credit facilities
prior to  securitization,  and (c) the length of time such finance contracts are
funded by the  warehouse  credit  facilities  prior to  securitization.  Finance
contract  acquisition  growth has a significant impact on the amount of interest
income earned by the Company.

The  following  table  provides  information  for  each of the  Company's  rated
securitizations:

<TABLE>
<CAPTION>
                                                                     Weighted
                                                      Remaining       Average    Weighted
                                                       balance at     Finance    Average
                                       Original         June 30,      Contract  Certificate  Current       Gross           Net
    Securitizations                     Balance           1997        Rate(1)     Rate(1)    Ratings   Spread (1)(2)  Spread(1)(3)
----------------------                  --------        -------       -------     -------    -------   -------------  ------------
                                                                  (dollars in thousands)
<S>                                     <C>             <C>            <C>         <C>       <C>            <C>        <C>  
Aegis Auto Receivables Trust,
Series:
1994-A .............................    $ 18,539        $  2,595       20.28%      7.74%        A(4)        12.54%      8.70%
1994-2 .............................      23,251           4,722       19.82       8.04        A+(4)        11.78       8.12
1994-3 .............................      21,000(5)        5,379       19.66       9.46        A+(4)        10.20       6.46
1995-1 .............................      21,000(5)        6,437       20.41       8.60        A+(4)        11.81       8.46
1995-2 .............................      54,000(5)       19,381       19.94       7.16        A+(4)        12.78       8.98
1995-3 .............................      60,000(5)       24,809       20.04       7.09        A+(4)        12.95      10.12
1995-4 .............................      70,000(5)       32,440       19.88       6.65      BBB+(4)        13.23      10.41
1996-1 .............................      92,000(5)       49,626       20.13       8.44(6)       (7)        11.69       8.89
1996-2 .............................     105,000(5)       65,912       20.10       8.93(8)       (9)        11.17       8.40
1996-3 .............................     110,000(5)       79,329        20.2       8.82(10)      (11)       11.40       8.75
Aegis Auto
Owners Trust .......................     148,347          90,766       20.14       6.53          (12)       13.61      10.87
</TABLE>

                                       23
<PAGE>

---------
(1)  Values as of closing date.

(2)  Difference  between the Weighted  Average APR on finance  contracts and the
     Weighted  Average  APR on the trust  certificates  (the  "Weighted  Average
     Certificate Rate").

(3)  Difference  between  Weighted  Average  APR on  finance  contracts  and the
     Weighted  Average  Certificate  Rate, net of servicing and trustee  monthly
     fees and  annualized  issuance  costs that  include  underwriting  fees and
     hedging gains or losses, if any.

(4)  Indicates ratings by Duff & Phelps.

(5)  Includes  prefunded  amounts which were transferred to the related trust by
     the end of the quarter for 1995-1,  1995-2, 1995-3, 1995-4, 1996-1, 1996-2,
     1996-3 and by the first week of the next quarter for 1994-3.

(6)  The Weighted  Average  Certificate  Rate is composed of the following:  the
     Class A certificate  rate is 8.39%,  the Class B certificate  rate is 7.86%
     and the Class C certificate rate is 12.14%.

(7)  The  1996-1  Securitization  has  Class A Notes  rated  B+ by Duff & Phelps
     andBBB by Fitch; Class C Notes rated B by Duff & Phelps and BB by Fitch and
     Class C Notes rated C by Duff & Phelps and B- by Fitch.

(8)  The Weighted  Average  Certificate  Rate is composed of the following:  the
     Class A certificate  rate is 8.9%, the Class B certificate rate is 8.4% and
     the Class C certificate rate is 11.65%.

(9)  The 1996-2  Securitization has Class A notes rated B+ by both Duff & Phelps
     and BBB- by  Fitch;  Class C notes  rated B by Duff and  Phelps  and BB- by
     Fitch and Class C notes rated C by Duff & Phelps and CCC+ Fitch.

(10) The weighted  average  Certificate  Rate is composed of the following:  the
     Class A certificate  is 8.8%, the Class B certificate is 8.3% and the Class
     C certificate is 11.1%.

(11) The 1996-3 Securitization has Class A notes rated BBB- by Duff & Phelps and
     B+ by  Fitch;  Class C notes  rated B by Duff & Phelps  and BB by Fitch and
     Class C notes rated C by Duff & Phelps and B- by Fitch.

(12) The Owner Trust  Facility  has Class A notes rated AAA by Standard & Poor's
     and Aaa by Moody's and Class B certificates rated Ba1 by Moody's.


The   following   table   provides   information   for  each  of  the  Company's
securitizations under its $1.0 Billion Purchase Facility

<TABLE>
<CAPTION>
                                                       Weighted
                                                      Remaining         Average        Weighted
                                                      balance at        Finance        Average
                                    Original            June 30,       Contract       Certificate       Gross             Net
    Securitizations                  Balance             1997           Rate(1)         Rate(1)      Spread (1)(2)     Spread(1)(3)
----------------------              --------             ----           -------         -------      -------------     ------------
<S>                                  <C>               <C>               <C>              <C>              <C>             <C> 
1997-1 ........................      238,693           205,137           20.43            9.5(4)           10.93           8.46
1997-2 ........................       37,163            35,258           20.67           9.75(5)           10.92           8.48
1997 -3 .......................       38,475            37,673           20.73           9.53(6)           11.20           8.81
1997-4 ........................       74,721            74,111           20.40           9.38(7)           11.22           8.62
</TABLE>
----------
(1)  Values as of closing date.

(2)  Difference  between the Weighted  Average APR on finance  contracts and the
     Weighted  Average  APR on the trust  certificates  (the  "Weighted  Average
     Certificate Rate").

(3)  Difference  between  Weighted  Average  APR on  finance  contracts  and the
     Weighted Average Certificate Rate, net of servicing and trustee monthly.

(4)  The weighted  average  Certificate  Rate is composed of the following:  the
     Class A certificate rate is 7.3% and the Class B certicate rate is 13.73%

(5)  The weighted  average  Certificate  Rate is composed of the following:  the
     Class A certificate rate is 7.5% and the Class B Certificate rate is 13.9%.

(6)  The weighted  average  Certificate  Rate is composed of the following:  the
     Class A  certificate  rate is 7.25%  and the  Class B  Certificate  rate is
     13.8%.

(7)  The weighted  average Certificate  Rate is composed of the  following:  the
     Class Acertificate rate is 7.1% and the Class B Certificate Rate is 13.6%.



                                       24
<PAGE>


Results of Operations

Fiscal Year Ended June 30, 1996 Compared To Fiscal Year Ended June 30, 1995

Revenues

     Revenues  increased  to $______  million for the fiscal year ended June 30,
1996 from $_____  million  for the fiscal  ended June 30,  1995,  an increase of
$_____ million or ____%.

     Gains  from   Securitization   Transactions.   Gains  from   securitization
transactions increased to $_____ million for the fiscal year ended June 30, 1996
from $____ million for the fiscal year ended June 30, 1995, an increase of $____
million or ______%.  The increase in securitized gains was offset by write downs
of $_____  million taken on the retained  interests in  securitized  receivables
from  earlier  securitizations  and a  $600,000  valuation  allowance  on a note
receivable  from a  then-related  party  created  in a prior  sale of a retained
interest.   Additionally,   the  Company's  securitization  costs  increased  by
approximately  $ ________  as a result of the  inherent  costs  associated  with
issuing  warrants to Greenwich  Capital in  connection  with the  Securitization
Facility.  Quarterly, the Company revalues its retained interests in securitized
receivables using actual experience on the respective underlying  securitization
trust's finance contract  performance.  When the actual experience  differs from
the original  assumptions  utilized in the initial  valuation  in a  detrimental
direction, the Company can incur permanent losses in the carrying value of these
assets.  During the year  ended June 30,  1996,  the  Company  incurred $ ______
million of, what  management  believes to be,  permanent  losses on its retained
interests  in  securitized  receivables  portfolio.  The cause of the  permanent
impairment  was higher than  expected  default rates on the  underlying  finance
contracts.  As a result of these  increases,  current  assumptions  utilized  in
current valuations have been adjusted to reflect the higher default rates.

     Interest Income. Interest income increased to $_____ million for the fiscal
year ended June 30, 1996 from $ _____ million for the fiscal year ended June 30,
1995, an increase of $ _____  million or ______ %,  primarily as a result of the
Company's  increased  finance  contract volume.  The Company's  weighted monthly
average  outstanding  balance of finance  contracts  owned  increased to $ _____
million in the fiscal  year ended June 30,  1996 from $ ______  million  for the
fiscal year ended June 30,  1995,  an  increase of $ _____  million or ______ %.
Since the  Company's  weighted  average  coupon has  remained  at  approximately
______%,  the  increase  in interest  income is  partially  attributable  to the
increase in the weighted average  outstanding balance of $ ______ million during
the fiscal year ended June 30, 1996 or  approximately $ ____ million.  (Interest
income is net of servicing fees paid and earned.)

Operating Expenses. Operating expenses increased to $____ million for the fiscal
year ended June 30, 1996 from $_____  million for the fiscal year ended June 30,
1995, an increase of $_____ million or ____%.

     Interest  Expense.  Interest  expense  increased to $_____  million for the
fiscal  year ended June 30,  1996 from $ ____  million for the fiscal year ended
June 30, 1995,  an increase of $ _____  million or _______ %, as a result of the
increased  financing  requirements  caused by the  Company's  increased  finance
contract  acquisition  activity.  The  increase in interest  expense  represents
______  %  of  the  total  increase  in  operating  expenses  and  is  partially
attributable  to  the  Company's  warehouse  credit  facilities,  which  are  at
fluctuating  interest  rates that  ranged from as low as _______ % to as high as
______ % for the fiscal year ended June 30, 1996  compared to a low of ____% and
a high of ____% for the fiscal  year  ended  June 30,  1995.  In  addition,  the
Company's monthly average  outstanding  balance on its warehouse credit facility
increased  to $_____  million  for the fiscal  year  ended June 30,  1996 from $
_______  million  for the fiscal  year ended June 30,  1995.  The  Company  also
incurred  interest on notes  payable at a % interest  rate on a monthly  average
outstanding balance of $ _______ million for the fiscal year ended June 30, 1996
compared  to a monthly  outstanding  average  balance of $ ____  million for the
fiscal year ended June 30, 1995.

     Salaries  and Other  Employee  Costs.  Salaries  and other  employee  costs
increased to $_____ million for the fiscal year ended June 30, 1996 from $ _____
million for the fiscal year ended June 30,  1995,  an increase of $ ____ million
or ______ %, due to an  increase  in the number of  employees  to  approximately
_____ at June 30, 1996 from  approximately  140  employees  at June 30, 1995 and
approximately $ ____ million of bonus


                                       25
<PAGE>

expense based on the Company's pre-tax net income for the fiscal year ended June
30,  1996.  For the fiscal year ended June 30, 1995,  certain  members of senior
management  elected to forgo bonuses that would have aggregated  approximately $
_________ .

     Provision for Credit Losses.  The provision for credit losses  increased to
$_____ million for the fiscal year ended June 30, 1996 from $ _________, for the
fiscal year ended June 30, 1995, an increase of $______  million due to: (i) the
Company's increased acquisition volume of finance contracts;  (ii) the Company's
decision  to  discontinue  purchasing  credit  default  insurance  on its  lease
origination  effective  January 1995;  (iii) the Company's  decision,  effective
August  1995,  to  insure  on  a  discretionary   basis  its  finance   contract
acquisitions (to the extent finance contracts remain uninsured for default,  the
Company's  loss ratio is higher);  (iv) the  increase in  delinquent  automobile
finance  receivables (as discussed below);  and (v) the higher amount of finance
contracts and leases owned by the Company at June 30, 1996 ($ _____  million) as
compared to June 30, 1995 ($ ________  million).  These changes also resulted in
an increase in the Company's  reserve rate as a percentage  of total  automobile
finance receivables held on the Company's balance sheet (i.e.,  original balance
net of receivables  repaid,  sold or charged off) to _____ % in 1996 from ____ %
in 1995. The Company maintains  residual value insurance  relating to its entire
lease portfolio.

     Charge for  Release of  Escrowed  Shares.  Charge for  release of  escrowed
shares  decreased  to $ ________  for the fiscal year ended June 30, 1996 from $
________  for the fiscal  year ended June 30,  1995,  a decrease of $ _______ or
____ %. The decrease is a result of the decrease in the Company's  quoted market
price of $  _________  at June 30,  1996 from $ _______  at June 30,  1995;  the
market  price is one of the  components  for  computing  the  charge.  The other
component is the number of shares released.  In fiscal 1996, _________ shares of
the remaining  escrowed  shares were subject to the charge compared to _________
shares of the _________  released in fiscal 1995.  All escrowed  shares owned by
the  executive  officers were subject to this charge.  As of June 30, 1996,  all
escrowed shares are being released, thus the Company will not incur this expense
in future years.

     Rent  and  Electricity,  Office  Expenses  and  Communications.   Rent  and
electricity  charges increased to $ _____ million for the fiscal year ended June
30, 1996 from $ ________ for the fiscal year ended June 30, 1995, an increase of
$ ________ or ______ % due to all  processing  centers  being opened or expanded
for the full  fiscal  year of 1996,  whereas in the fiscal  year 1995 two of the
Company's  processing  centers were newly leased in the latter part of the third
quarter. In addition, in the second quarter of fiscal 1996, the Company expanded
its Jersey City Headquarters and in the third quarter of fiscal 1996 the Company
relocated and expanded its collections department located in Irvine, California.
Correspondingly,  office  expenses  increased  to $ ________ for the fiscal year
ended June 30, 1996 from $ ________ for the fiscal year ended June 30, 1995,  an
increase of $________ or ____% and communication  expenses  increased to $______
for the fiscal year ended June 30, 1996 from $________ for the fiscal year ended
June 30, 1995, an increase of $________ or ____%. Communication expenses include
expenses  relating to receiving and sending  electronic data including  expenses
relating to obtaining credit reports and other data services, telephone charges,
faxes, the linking of the collections department to the third party servicer and
the linking of all the offices to systems  development  location in the Merriam,
Kansas facility.

     Professional  fees.  Professional  fees,  including  those  paid to related
parties,  increased  to $ _____  million for the fiscal year ended June 30, 1996
from $  ________  for the  fiscal  year  ended June 30,  1995,  an  increase  of
$________ or _____ % due to the  following:  (i) an increase in  accounting  and
auditing  fees of  approximately  $________  primarily  as a  result  of the new
reporting  requirements  of the Company as a public  company for the fiscal year
ended  June  30,  1996;  (ii)  an  increase  in  legal  fees  of   approximately
$___________  primarily  as a result of the new  reporting  requirements  of the
Company as a public  company  for the fiscal  year ended June 30,  1996 and as a
result of defending  primarily two lawsuits  entered into against the Company as
previously discussed; (iii) an increase of approximately $ ________ in directors
fees; and (iv) an increase of approximately $________ in consulting fees (offset
by a decrease in related party  consulting fees of $_______ ). During the fiscal
year ended June 30, 1996, the Company engaged public relation firms to assist it
in developing its


                                       26
<PAGE>

marketing  strategies in both the sub-prime  automobile  finance industry and in
the investor community; whereas, these expenses were not incurred for the fiscal
year ended June 30, 1995.

     Equipment  Rental.  Equipment  rental  increased to $_______ for the fiscal
year ended  June 30,  1996 from $  ________  for the fiscal  year ended June 30,
1995,  an increase of $ ________ or _____ % due to the increase in the number of
employees to _____ at June 30, 1996 from _____  employees at June 30, 1995,  the
majority of the new employees require computers,  the most significant component
of equipment rental costs.

     All Other Operating Expenses.  Other operating expenses increased to $_____
million  for the fiscal  year ended June 30,  1996 from  $_____  million for the
fiscal  year ended June 30,  1995,  an  increase  of  $________  or ____%.  This
increase  is the  result  of  the  following:  (i) an  increase  in  travel  and
entertainment  expense  of  $_____  due  to the  Company's  expansion  into  new
territories  including seven new states;  (ii) an increase in  amortization  and
depreciation of $ ________ due to increased purchases of fixed assets, including
leasehold  improvements  to  expanded  office  space  and (iii) an  increase  of
$_______  in other  expenses  such as  insurance,  advertising  and  promotional
expenses,  other taxes,  such as state privilege  taxes and other  miscellaneous
taxes and miscellaneous expenses.

     Income Taxes.  Income taxes  increased to $_____  million (an effective tax
rate of _____%) for the fiscal year ended June 30, 1996 from $ ____  million (an
effective  tax rate of _____ %) for the  fiscal  year ended  June 30,  1995,  an
increase of $ ____ million.  The decrease in the Company's effective tax rate of
_____ % is a result  of the  decrease  in the  impact of  permanent  differences
(primarily  from the charge for the release of escrowed  shares  discussed above
that is not tax deductible) between book and taxable income. For the fiscal year
ended June 30, 1996, the impact of the charge for the release of escrowed shares
decreased  to ____ % from _____ % for the fiscal  year  ended June 30,  1995,  a
decrease of ____ %, the other  significant  component is the state and local tax
benefit  which  decreased to ____ % for the fiscal year ended June 30, 1996 from
____% for the fiscal year ended June 30, 1995, a decrease of ____ %.

 Net Income

     Net income  increased to $______ million for the fiscal year ended June 30,
1996 from $_____  million for the fiscal year ended June 30 , 1995,  an increase
of $ _____  million  or _____  %.  This  increase  resulted  primarily  from the
increase in the size of  automobile  securitization  transactions  to $ ________
million for the fiscal  year ended June 30, 1996 from $ _______  million for the
fiscal year ended June 31, 1995.

Fiscal Year Ended June 30, 1995 Compared to Fiscal Year Ended June 30, 1994

Revenues

     Revenues  increased  to $_____  million  for the fiscal year ended June 30,
1995 from $_____ million for the fiscal year ended June 30, 1994, an increase of
$_____ million or ____%.

     In the fiscal year ended June 30, 1995, the Company increasingly focused on
its  automobile   finance   business,   and  its  dependence  on  related  party
transactions declined. Revenues from non-automobile related businesses decreased
to $ ____ million for the fiscal year ended June 30, 1995 from  $______  million
for the fiscal year ended June 30,  1994,  a decrease of $ ____ million or _____
%, or from ____ % of total  revenues  for the fiscal year ended June 30, 1995 to
_____  %  of  total   revenues   for  the  fiscal  year  ended  June  30,  1994.
Non-automobile   related   revenues  were  derived  mainly  from  related  party
consulting   and  other   fee  based   engagements   that   involved   analysis,
administration  and  securitization  of  consumer-based  receivable  portfolios.
Revenues from related party transactions  (consisting entirely of non-automobile
related  consulting  fees) decreased to $________ for the fiscal year ended June
30, 1995 from $ ____ million  (consisting  of $ ________ of automobile  business
revenues and $ ____ million of non-automobile  related management and consulting
fees)


                                       27
<PAGE>

for the fiscal year ended June 30, 1994, a decrease of $ ____  million,  or from
____ % of total  revenues  for the fiscal year ended June 30, 1995 to _____ % of
total revenues for the fiscal year ended June 30, 1994.

     Revenues from the Company's automobile finance business increased to $_____
million  for the fiscal  year ended June 30,  1995 from $ ____  million  for the
fiscal year ended June 30, 1994, an increase of $_____ million or ______ %. This
increase was primarily  attributable to an increase in interest income to $ ____
million  for the fiscal  year ended June 30,  1995 from $ ____  million  for the
fiscal year ended June 30,  1994 and an  increase  in gains from  securitization
transactions  to $ ____ million  (including no related  party  revenues) for the
fiscal year ended June 30, 1995 from $ _____  million  (including  related party
revenues of $ _______ ) for the fiscal year ended June 30, 1994,  an increase of
$ ____  million or ______ %. This  increase  was offset in part by a decrease in
fees and  commissions  earned to $ ________  for the fiscal  year ended June 30,
1995 from $ _____ million for the fiscal year ended June 30, 1994. The increases
in automobile finance revenues are a result of the Company's efforts to focus on
the automobile finance business versus its commission and fee based business.

     Revenues from the Company's  non-automobile  businesses  declined to $_____
million  for the fiscal  year ended June 30,  1995 from $ ____  million  for the
fiscal year ended June 30, 1994, a decrease of $______  million or _____ %. This
decrease  in  revenues  from   non-automobile   businesses   resulted  from  the
significant  reduction  in the fiscal year ended June 30, 1995 of related  party
fees and commissions,  gains from non-automobile securitization transactions and
management fee revenues,  which had decreased to $ ______________ for the fiscal
year ended June 30, 1995 from $ _____ million for the fiscal year ended June 30,
1994, a decrease of $_____ million  representing a ________ % decline in related
party  revenues.  There was also a decrease  in fees and  commissions  and other
income  earned  from  non-related  parties  in the  non-automobile  business  to
$___________ for the fiscal year ended June 30, 1995 from $ ________ million for
the fiscal year ended June 30, 1994,  a decrease of  $________  or ____%.  These
decreases are attributable to the Company's  efforts and resources being focused
on its  automobile  business.  Other income was derived from  trailing  revenues
earned from  transactions  in previous  periods and a forfeiture of a good faith
deposit from a terminated transaction,  both relating to the Company's HUD Title
I Loan business line.

     Gains  from   securitization   transactions.   Gains  from   securitization
transactions increased to $_____ million for the fiscal year ended June 30, 1995
from  $_____  million for the fiscal  year ended June 30,  1994,  an increase of
$_____ million or ____%.

     Interest  income.  Interest  income  increased  to $______  million for the
fiscal year ended June 30, 1995 from $ _______ million for the fiscal year ended
June 30, 1994, an increase of $ _____ million or ____%, primarily as a result of
the Company's  increased finance contract volume. The Company's weighted monthly
average  outstanding  balance of finance contracts owned increased to $ ________
million in the fiscal year ended June 30,  1996 from $ ________  million for the
fiscal year ended June 30, 1995, an increase of $ _______  million or _______ %.
The Company's  weighted  average coupon is  approximately  _______ % at June 30,
1995 and thus $______ million of the increase in interest income is attributable
to the  increase  in the  weighted  average  outstanding  balance  of $ ________
million.  (Interest  income  is net of  servicing  fees  paid  and  earned.)  In
addition,  the Company's  leases held  increased to a weighted  monthly  average
outstanding  of  $_______  million in the fiscal year ended June 30, 1995 from a
weighted monthly average outstanding of $ ________ , an increase of $___________
million.  The Company's weighted average interest rate on its lease portfolio at
June 30,  1995 is  ________  %,  thus the  increase  in  interest  on the  lease
portfolio represents approximately $ ______ million. The remaining difference of
approximately  $_________  is  attributable  to the Company's  weighted  average
interest rate on finance contracts increasing to _______ % at June 30, 1995 from
_____ % at June 30,  1994,  an  increase of _______ % and its  weighted  average
interest on its leases  increasing  to ________ % at June 30, 1995 from ______ %
at June 30, 1994, an increase of ____%.

                                       28
<PAGE>

     Operating Expenses.  Operating expenses increased to $_____ million for the
fiscal year ended June 30,  1995 from  $_____  million for the fiscal year ended
June 30, 1994, an increase of $_____ million or ____%.

     Interest  expense.  Interest  expense  increased to $_____  million for the
fiscal year ended June 30, 1995 from $ ______  million for the fiscal year ended
June 30, 1994, an increase of $ ______ million or ______ % of the total increase
in operating expenses.  The increase is a result of the increased financing need
required by the  Company's  increased  finance  contract  acquisition  and lease
origination activity. In addition, the Company's warehouse credit facilities are
at  fluctuating  interest  rates that  ranged from a low of _____ % to a high of
_____% for the fiscal  year ended June 30,  1995  compared to a low of _______ %
and a high of  ________ % for the fiscal year ended June 30,  1994.  The Company
also incurred related party interest expense of $ __________ for the fiscal year
ended June 30, 1995 compared to $ __________  for the fiscal year ended June 30,
1994, an increase of $____ or __________  %. The Company  repaid its  borrowings
under the related party credit facility in April 1995 and has not borrowed under
it subsequently.

     Salaries  and Other  Employee  Costs.  Salaries  and other  employee  costs
increased  to $_____  million  for the fiscal  year  ended June 30,  1995 from $
_______  million  for the fiscal  year ended June 30,  1994,  an  increase  of $
_________  or  _______  % due to the  increase  in the  number of  employees  to
approximately  _________ at June 30, 1995 from approximately  __________ at June
30, 1994 (an increase of approximately  ______ %) offset by the increased amount
of direct  origination costs ultimately  capitalized in accordance with relevant
accounting rules incurred to acquire finance  contracts and originate leases for
the fiscal  year ended June 30,  1995 as  compared to the fiscal year ended June
30,  1994.  For the fiscal year ended June 30, 1995,  certain  members of senior
management  elected to forgo bonuses that would have aggregated  approximately $
_________ , net of income tax effect. Had such bonuses been paid, net income for
the  fiscal  year  ended  June 30,  1995  would  have been $  ________  million,
_________ % less than reported net income.

     Provision for Credit Losses.  The provision for credit losses  increased to
$_____ for the fiscal year ended June 30, 1995 from $ __________  for the fiscal
year ended June 30, 1994, an increase of $________ or ____% due to the Company's
increased  acquisition  volume in finance  contracts and  origination  volume in
leases and the  Company's  decision to  discontinue  purchasing  credit  default
insurance on its lease originations  effective January 1995. As a result of this
discontinuance,  the Company's  reserve rate as a percentage  of total  consumer
receivables held on the Company's  balance sheet (i.e.,  original balance net of
receivables  repaid or sold)  increased  to ________ % for the fiscal year ended
June 30,  1995 from 1.7% for the fiscal  year ended June 30,  1994.  The Company
maintains residual value insurance relating to its entire lease portfolio.

     Charge for Release of Escrowed Shares. Another significant component of the
increase in operating  expense was the charge for the release of Escrowed Shares
of $_____  (representing  ____% of the total increase) for the fiscal year ended
June 30, 1995 with no comparable charge for the fiscal year ended June 30, 1994.

     Rent  and  Electricity,  Office  Expenses  and  Communications.   Rent  and
electricity  charges  increased  to $616,000  for the fiscal year ended June 30,
1995 from $ __________ for the fiscal year ended June 30, 1994, an increase of $
_________ or ______ % due to an increase in the number of processing  centers to
three for the fiscal year ended June 30, 1995 from two for the fiscal year ended
June  30,  1994 and the  expansion  of the  Company's  systems  and  development
facility in Kansas City and its  headquarters  facility and operation  center in
Jersey City. Correspondingly, office expenses increased to $ ___________ for the
fiscal year ended June 30,  1995 from $ ________  for the fiscal year ended June
30,  1994,  an  increase  of $  ______  or  _____ % and  communication  expenses
increased to $ _______ for the fiscal year ended June 30, 1995 from $ ______ for
the fiscal  year ended June 30,  1994,  an  increase of $ ________ or _______ %.
Communication  expenses  include  expenses  relating  to  receiving  and sending
electronic  data  including  expenses  relating to obtaining  credit reports and
other data services, telephone charges, faxes and the linking of all the offices
to systems development location in the Merriam, Kansas City facility.

                                       29
<PAGE>

     All Other Operating Expenses.  Other operating expenses increased to $_____
for the fiscal  year ended June 30,  1995 from $  _________  for the fiscal year
ended June 30,  1994,  an increase of $ _________  or _____%  (included in other
operating  expenses  is an  increase  in  equipment  rental to $ _______ for the
fiscal year ended June 30, 1995 from $ ___________ or the fiscal year ended June
30,  1994,  an increase  of $  ______________  ) due to the  increase in finance
contract  acquisitions and lease originations and an additional operation center
opened  in 1995.  These  increases  were  offset  by the  following:  (i) a 100%
decrease  in a  one-time  expense  of a purchase  of a Dealer  list and  related
support  services for the fiscal year ended June 30, 1994 for $ ___________ from
a company in which a  significant  stockholder  of the Company had a significant
beneficial  ownership  interest;   (ii)  a  decrease  in  professional  fees  to
$___________  for the fiscal year ended June 30, 1995 from $ ___________ for the
fiscal year ended June 30,  1994,  a decrease of $ _________  or ________ % that
resulted  substantially from the termination of a consulting  agreement when the
Company completed its initial public offering on April 6, 1995; and (iii) travel
and  entertainment  expense  decreased to $ __________ for the fiscal year ended
June 30, 1995 from $_____ for the fiscal year ended June 30, 1994, a decrease of
$___________  or _________ % due to changes in the  composition of the Company's
sales force and due to increases in  capitalization  of such  expenses  that are
deemed to be a direct  cost of  acquisitions  and in  accordance  with  relevant
accounting rules.

     Income Taxes.  Income taxes  increased to $_____  million (an effective tax
rate of ____%) for the fiscal year ended June 30,  1995 from $_____  million (an
effective  tax rate of _____%)  for the fiscal  year  ended  June 30,  1994,  an
increase of $________ or ____%. The increase in the Company's effective tax rate
of ____% is primarily due to the non-cash  charge of $  ___________  relating to
the  release  of  Escrowed  Shares  which is not a  deductible  expense  for tax
purposes.  This  difference  caused a  _________  %  increase  in the  Company's
effective  tax rate.  Other factors  affecting the Company's  effective tax rate
were a decrease in the Company's state taxes, net of federal benefit,  to a rate
of __________ % for the fiscal year ended June 30, 1995 from a rate of ____% for
the fiscal  year ended June 30,  1994,  a net  decrease  of ________ % and other
factors increasing _________ %. The decrease in state taxes is attributed to the
Company moving its headquarters and northeast  operating facility from New York,
New York to Jersey City, New Jersey.

     Net  Income.  Net income  decreased  to $_____  million for the fiscal year
ended June 30,  1995 from $  ___________  million for the fiscal year ended June
30,  1994,  a decrease  of $  __________  or  ________ %. The net income for the
fiscal year ended June 30, 1995  includes a non-cash  charge of $  _____________
for the release of Escrowed  Shares (which is not  deductible for tax purposes);
excluding this charge,  net income for the fiscal year ended June 30, 1995 would
have been $ _________  million,  or an increase of $ ______ or ______ % from the
fiscal year ended June 30, 1994.  These  increases  resulted  primarily from the
increase in the number and size of  automobile  securitization  transactions  to
four such  transactions  aggregating  approximately $ _________  million for the
fiscal  year  ended  June  30,  1995  from  one such  transaction  amounting  to
approximately $ _______ million for the fiscal year ended June 30, 1994. For the
fiscal year ended June 30, 1995, certain members of senior management elected to
forgo  bonuses  to which  they  were  contractually  entitled  that  would  have
aggregated  $_____ net of income tax effect.  Had such  bonuses  been paid,  the
Company's  net income  would have been $_____  million for the fiscal year ended
June 30, 1995.

Financial Condition

     Automobile  Finance   Receivables,   Net.  Automobile  finance  receivables
consists  of  finance  contracts  held  for  sale,  finance  contracts  held for
investment  (including  vehicles held for  repossession) and the Company's lease
portfolio.  The Company suspended originating leases in the first quarter of its
1996 fiscal year.

     Automobile  finance  receivables,  net  of  allowance  for  credit  losses,
increased to $_____ million at June 30, 1996 from $ _______  million at June 30,
1995,  an increase of $ _____  million or ______ %. Finance 


                                       30
<PAGE>

contracts  held for sale  increased  to $ _____  million at June 30, 1996 from $
______  million at June 30, 1995, an increase of $ ______ million or ________ %.
Finance contracts held for investment  increased to $ ______ million at June 30,
1996 from $ _______ million at June 30, 1995, an increase of $ ______ million or
______  %. As of June 30,  1996,  approximately  $  ______  million  of  finance
contracts held for investment were in the repossession  process. The increase in
the finance  contracts  held for  investment  was due primarily to the increased
volume of finance contract  acquisitions.  These increases were offset, in part,
by an increase in the allowance  for credit losses to $ _______  million in 1996
from $ _________ in 1995 and a decrease in automobile leases held for investment
to $_____  million at June 30,  1996 from  $_____  million at June 30,  1995,  a
decrease of $_____ million or ____%,  primarily due to normal  amortization  and
write offs.

     The number and  principal  balance of finance  contracts  held are  largely
dependent upon the timing and size of the Company's securitizations. The Company
plans to securitize finance contracts on a regular quarterly basis.

     Retained Interests in Securitized Receivables. The following table provides
historical data regarding the retained interests in securitized  receivables for
the periods shown:

                                                Year Ended June 30,      
                               -----------------------------------------------
                                1994        1995             1996        1997
                               -------     --------        --------     ------
                                             (dollars in thousands)
Beginning balance ........    $  1,243     $  4,434        $ 23,985
Additions ................       6,117       21,347          56,749
Amortization .............        (123)      (1,796)         (2,991)
Sales ....................      (2,803)          --              --
Write downs ..............          --           --          (7,500)
                              --------     --------        --------
Ending balance ...........    $  4,434     $ 23,985        $ 70,243
                              ========     ========        ========

Delinquency Experience

The following tables reflect the delinquency experience of all finance contracts
acquired or leases  originated,  including those sold in whole finance  contract
sales or securitizations, by the Company at the dates shown:

<TABLE>
<CAPTION>
                                                                    Finance Contract Portfolio
                                                                              June 30,     
                                   -------------------------------------------------------------------------------------------------
                                            1994                    1995                     1996                     1997
                                            ----                    ----                     ----                     ----
<S>                                <C>               <C>    <C>               <C>    <C>              <C>     <C>              <C>  
Principal balance                                                   (dollars in thousands)
outstanding(1)                     $ 38,844                 $146,557                 $500,694                 $813,055
Number of finance
contracts outstanding (1)             3,785                   13,345                   44,600                   75,847
Delinquent loans
 31-59 days                             195          0.5%   $  7,974          5.4%   $ 33,625          6.7%   $ 71,008          8.7%
 60-89 days                              36          0.1%      1,186          0.8%      9,172          1.8%     21,831          2.7%
 90 days and over                        40          0.1%        410          0.3%      2,054          0.4%      4,781          0.6%
                                   --------   ----------    --------   ----------    --------   ----------    --------   ----------
  Total                                 271          0.7%      9,570          6.5%     44,851          8.9%     97,620         12.0%
Finance contracts in repossession
or bankruptcy(2)                      1,051          2.7%      3,384          2.3%     21,022          4.2%     69,485          8.6%
                                   --------   ----------    --------   ----------    --------   ----------    --------   ----------
  Grand Total                      $  1,322          3.4%   $ 12,954          8.8%   $ 65,874         13.1%   $167,105         20.6%
                                   ========   ==========    ========   ==========    ========   ==========    ========   ==========
</TABLE>

----------
(1)  Excludes  contracts for which notice of intent to liquidate has expired and
     those having an outstanding balance less than or equal to $500.

(2)  Excludes finance  contracts in bankruptcy,  authorized for repossession and
     in repossession and still eligible for reinstatement.

                                       31
<PAGE>

<TABLE>
<CAPTION>
                                                         Lease Contract Portfolio
                                                                 June 30,  
                        ------------------------------------------------------------------------------------------     
                                 1994                  1995                    1996                 1997
                                 ----                  ----                    ----                 ----
<S>                     <C>             <C>    <C>            <C>     <C>            <C>     <C>            <C>  
Principal balance                                           (dollars in thousands)
outstanding             $ 1,391                $27,756                $21,261                $10,049
Number of finance
contracts outstanding        82                  1,976                  1,890                    996
Delinquent loans(2)
 31-59 days                  44         3.1%   $ 2,221         8.0%   $ 1,976         9.3%       835         8.3%
 60-89 days                   0         0.0%       688         2.5%       475         2.2%       252         2.5%
 90 days and over             0         0.0%       160         0.6%       384         1.8%       363         3.6%
                        -------   ---------    -------   ---------    -------   ---------    -------   ---------
  Total                 $    44         3.1%     3,069        11.1%     2,834        13.3%     1,450        14.4%
                        =======   =========    =======   =========    =======   =========    =======   =========
</TABLE>

----------
(1)  The  Company  began  originating  leases in April 1994 and  ceased  funding
     leases in the first quarter of its 1996 fiscal year.

(2)  Percentages based on outstanding  principal  balance;  includes vehicles in
     repossession and/or in bankruptcy.

Credit Loss Experience

     An allowance for credit losses is maintained for all finance contracts held
for sale and for all finance contracts held for investment. Management evaluates
the  reasonableness  of  the  assumptions  employed  by  reviewing  credit  loss
experience, delinquencies, repossession trends, the size of the finance contract
portfolio and general economic conditions and trends. If necessary,  assumptions
are  changed  to  reflect  historical  experience  to  the  extent  it  deviates
materially from that which was assumed.

     If a  delinquency  exists  and  a  default  is  deemed  inevitable  or  the
collateral  is in  jeopardy,  and  in no  event  later  than  the  35th  day  of
delinquency, the Company's collections department will initiate the repossession
of the financed vehicle.  Bonded, insured outside repossession agencies are used
to  secure  involuntary  repossessions.  In most  jurisdictions,  notice  to the
borrower  of the  Company's  intention  to sell the  repossessed  automobile  is
required,  whereupon the borrower may exercise certain rights to cure his or her
default  or redeem the  automobile.  Following  the  expiration  of the  legally
required  notice  period,  the  repossessed  vehicle is sold at a wholesale auto
auction,  usually  within 150 days of the  repossession.  The  Company  monitors
vehicles set for auction,  and procures an appraisal  under the VSI Policy prior
to  sale.  Liquidation  proceeds  are  applied  to  the  borrower's  outstanding
obligation under the finance  contract and loss deficiency  claims under the VSI
Policy and credit default  insurance  policy are then filed. The Company reports
the remaining  deficiency as a net  charge-off  against the allowance for credit
losses for  automobile  finance  receivables  owned by the Company.  For finance
contracts  held in  securitization  trusts,  charge-offs  are  accounted  for in
accordance with the underlying pooling and servicing agreements.

     Because of the Company's  limited operating  history,  its finance contract
portfolio is unseasoned.  Accordingly,  delinquency and charge-off  rates in the
portfolio  may not fully  reflect  the rates  that may  apply  when the  average
holding  period for finance  contracts in the portfolio is longer.  Increases in
the delinquency  and/or charge-off rates in the portfolio would adversely affect
the Company's  ability to obtain credit or securitize its finance  contracts and
would  have an  adverse  effect  on the  Company's  results  of  operations  and
financial condition.

     The following  table shows the Company's  repossession  and loss experience
for its managed finance contract portfolio for the periods indicated:



                                       32
<PAGE>

<TABLE>
<CAPTION>
                                                                        Year ended June 30,  
                                                           --------------------------------------------
                                                             1994        1995        1996        1997
                                                           --------    --------    --------    --------
                                                                       (dollars in thousands)
<S>                                                        <C>         <C>         <C>         <C>     
Average principal balance outstanding(1) ...............   $ 26,062    $ 96,569    $333,183    $737,423
Balance of finance contracts at the time of repossession      1,707       7,722      40,258     138,643
Number of repossessions ................................        172         722       3,494      11,964
Repossession ratio (2) .................................        6.8%        8.2%       13.0%       18.8%
Default balance of fully liquidated vehicles ...........   $  1,391    $  6,719    $ 15,920    $ 84,713
Proceeds from liquidation, net of repossession costs ...        914       3,393       7,964      35,654
Gross charge offs(3) ...................................        477       3,326       7,956      49,059
Credit default insurance proceeds (4) ..................        436       2,669       4,092      14,749
Net charge offs (5) ....................................         41         657       3,864      34,310
Net charge offs as a percentage of liquidations(6) .....        2.9%        9.8%       12.0%       40.5%
Net charge offs as a percentage of average
principal balance outstanding ..........................        0.2%        0.8%        1.2%       4.65%
</TABLE>

----------
(1)  Arithmetic mean of beginning and ending  outstanding  principal  balance of
     all  finance  contracts   acquired   including  those  previously  sold  in
     securitization transactions.

(2)  Balance of finance contracts at the time of repossession divided by average
     principal balance outstanding during the period.

(3)  Gross  charge  offs  equals the  aggregate  balance  of  finance  contracts
     liquidated, including those previously sold in securitization transactions,
     less all recoveries  from the sale of the financed  vehicles.  Repossession
     and liquidation expenses are included in gross charge offs.

(4)  Since August  1995,  the Company no longer  deposits  money to a segregated
     account from which losses incurred under a policy would be paid.

(5)  Net charge offs are gross charge offs reduced by credit  default  insurance
     proceeds received relating to the defaulted finance contracts.

(6)  Net charge off amount divided by the aggregate balance of finance contracts
     relating to vehicles liquidated.

The  Company  has  prepared  analyses,  based on its own credit  experience  and
available  industry data, to identify the relationship  between finance contract
delinquency  and  default  rates at the  various  stages of a  finance  contract
repayment term. The results of these analyses, which have been incorporated into
the Company's methodology of determining gains from securitization  transactions
suggest that the probability of a finance contract becoming  delinquent or going
into default is highest  during the  "seasoning  period" that occurs between the
sixth to the eighteenth month payment period from the acquisition date.

If the rate of the Company's  finance contract  acquisition  volume continues to
escalate,  an  increasingly  greater portion of the Company's  finance  contract
portfolio is expected to fall into the "seasoning period" described above, which
may cause a rise in the  overall  finance  contract  portfolio  delinquency  and
default rates, without regard to underwriting  performance.  Assuming no changes
in any other factors that may affect  delinquency and default rates, the Company
believes  this  trend  should  stabilize  or  reverse  when the volume of mature
finance  contracts  (with lower  delinquency and default rates) is sufficient to
offset the total finance contract portfolio delinquency and default rates.

The  Company  believes  delinquencies  and  losses can be  mitigated  through an
in-house collection program. Accordingly, the Company responded to the increased
rates of  delinquencies  and  losses in the fiscal  year ended June 30,  1995 by
entering into a sub-servicing  agreement with its third-party  servicer in April
1995,  providing  for the  transfer  of  specific  collection  functions  to the
Company.  Through this  arrangement the Company assumed  responsibility  for all
customer contact with respect to all existing leases and with respect to finance
contracts  that were  included in the  Company's  December  1994  securitization
transaction and all finance  contracts  acquired  thereafter.  In addition,  the
Company assumed  responsibility for liquidation activities on its entire finance
contract  portfolio  (including  securitized  finance  contracts)  at such time.

Because of the Company's  limited  operating history and the rapid growth of its
finance  contract  acquisitions,  a significant  portion of its finance contract
portfolio  is  unseasoned.  Accordingly,  delinquency  and  loss  rates  in  the
portfolio may not be indicative of rates the Company may  experience  over time.
There can be no assurance that the  performance of the Company's  portfolio will
be  maintained,  or that the  rate of  future  defaults  and/or  losses  will be
consistent with prior experience or at levels that will not adversely affect the
Company's profitability.

                                       33
<PAGE>

Repossession Experience - Static Pool Analysis

The Company's  finance  contract  portfolio is  continuing to grow rapidly.  The
Company does not record its provision for credit losses based on a percentage of
the Company's finance contract portfolio  outstanding because percentages can be
favorably affected by large balances of recently acquired finance contracts. The
Company  utilizes  actual dollar levels of  delinquencies  and  charge-offs  and
analyzes the data on a "static pool" basis.  The  Company's  goal is to complete
the liquidation  process as quickly as possible.  All  repossessed  vehicles are
sold  at  wholesale  auction.  The  Company  is  responsible  for the  costs  of
repossession,  transportation  and storage.  The  Company's net  charge-off  per
repossession  equals  the  unpaid  balance  less the  auction  proceeds  (net of
associated costs) and less proceeds from insurance claims.

The following table provides static pool analysis of the Company's  portfolio as
of June 30, 1996 for the periods  shown.  In this table,  all finance  contracts
have  been  segregated  by month of  acquisition.  All  repossessions  have been
segregated by the month in which the repossessed finance contract was originally
acquired  by  the  Company.   Cumulative   repossessions  equals  the  ratio  of
repossessions as a percentage of finance contracts  acquired for each segregated
month.  Annualized  repossessions  equals an annual equivalent of the cumulative
repossession  ratio for each segregated month.  This table provides  information
regarding the Company's repossession experience over time. For example, recently
acquired   finance   contracts   demonstrate  very  few   repossessions.   After
approximately one year of seasoning,  frequency of repossessions appear to reach
a plateau.  Based on industry  statistics and the performance  experience of the
securitizations,  the Company believes that finance contracts seasoned in excess
of  approximately  18 months will start to  demonstrate  declining  repossession
frequency.

<TABLE>
<CAPTION>
                                                                       Repossession Frequency                                Net
Fiscal Year and Month                       Repossessions by        ---------------------------    Finance Contracts     Charge-Off
   of Acquisition                             Month Acquired        Cumulative(1)  Annualized(2)       Acquired           Per Unit
---------------------                    -----------------------    -------------  ------------   ------------------     ---------
                                           Units       Amount                                     Units       Amount       Amount 
                                           -----       ------                                     -----       ------       ------ 
                                                    (Dollars in                                             (Dollars in   (Actual 
                                                     Thousands)                                              Thousands)   Dollars)
<S>                                          <C>        <C>             <C>          <C>         <C>          <C>            <C>  
Fiscal 1994
         July ......................          22       $   191          21.36%        5.34%        103       $ 1,138       $ 2,119
         August ....................          24           210          24.49%        6.25%         98         1,113         1,323
         September .................          18           153          22.22%        5.80%         81           856         1,068
         October ...................          15           142          20.27%        5.41%         74           801         1,433
         November ..................          22           193          34.38%        9.38%         64           685         2,670
         December ..................          37           304          29.60%        8.26%        125         1,382         1,682
         January ...................          45           434          25.86%        7.39%        174         1,913         1,895
         February ..................          52           529          23.64%        6.92%        220         2,436         1,537
         March .....................         122         1,156          25.10%        7.53%        486         5,403         1,853
         April .....................         144         1,444          29.03%        8.93%        496         5,719         2,083
         May .......................         122         1,283          25.63%        8.09%        476         5,573         1,839
         June ......................         163         1,599          28.75%        9.32%        567         6,718         2,501
Fiscal 1995
         July ......................         149         1,500          28.11%        9.37%        530         6,320         2,272
         August ....................         175         1,822          28.88%        9.90%        606         7,327         2,536
         September .................         152         1,644          25.89%        9.14%        587         7,064         2,917
         October ...................         144         1,534          30.25%       11.00%        476         5,674         3,020
         November ..................         149         1,623          27.49%       10.31%        542         6,658         3,907
         December ..................         156         1,638          27.61%       10.69%        565         6,856         3,763
         January ...................         208         2,340          30.77%       12.31%        676         8,334         4,191
         February ..................         249         2,748          31.20%       12.91%        798         9,736         3,741
         March .....................         362         4,073          29.82%       12.78%      1,214        14,715         4,098
         April .....................         426         4,779          30.63%       13.61%      1,391        16,843         3,956
         May .......................         458         5,165          29.55%       13.64%      1,550        18,906         3,857
         June ......................         563         6,292          28.72%       13.79%      1,960        23,860         4,304
</TABLE>

                                       34
<PAGE>

<TABLE>
<CAPTION>
                                                                       Repossession Frequency                                Net
Fiscal Year and Month                       Repossessions by        ---------------------------    Finance Contracts     Charge-Off
   of Acquisition                             Month Acquired        Cumulative(1)  Annualized(2)       Acquired           Per Unit
---------------------                    -----------------------    -------------  ------------   ------------------     ---------
                                           Units       Amount                                     Units       Amount       Amount 
                                           -----       ------                                     -----       ------       ------ 
                                                    (Dollars in                                             (Dollars in   (Actual 
                                                     Thousands)                                              Thousands)   Dollars)
<S>                                          <C>        <C>             <C>          <C>         <C>          <C>            <C> 
Fiscal 1996
         July ......................         503         5,765          27.81%       13.90%      1,809        22,401         5,053
         August ....................         607         6,956          29.51%       15.40%      2,057        25,024         6,247
         September .................         535         6,080          25.76%       14.05%      2,077        25,137         5,656
         October ...................         689         7,906          29.36%       16.78%      2,347        28,449         2,508
         November ..................         751         8,618          26.79%       16.08%      2,803        34,391         1,504
         December ..................         820         9,706          26.97%       17.04%      3,040        37,743         2,021
         January ...................         810         9,423          24.81%       16.54%      3,265        39,922         4,466
         February ..................         781         8,939          23.66%       16.70%      3,301        39,875         3,018
         March .....................         853        10,054          21.31%       15.98%      4,003        48,984         5,171
         April .....................         786         9,243          20.67%       16.53%      3,803        46,952         5,322
         May .......................         777         9,267          19.27%       16.51%      4,033        50,025         5,912
         June ......................         764         9,409          18.19%       16.79%      4,201        52,635         6,835
Fiscal 1997
         July ......................         826        10,183          16.35%       16.35%      5,051        62,843         6,208
         August ....................         755         9,147          14.66%       16.00%      5,149        63,518         6,747
         September .................         640         7,778          12.31%       14.77%      5,201        64,482         6,839
         October ...................         462         5,630           8.83%       11.78%      5,231        64,048         6,841
         November ..................         325         3,936           7.16%       10.74%      4,538        56,322         6,683
         December ..................         252         3,168           5.23%        8.97%      4,815        59,563         6,298
         January ...................         110         1,354           2.82%        5.63%      3,907        48,363         5,536
         February ..................          55           664           2.22%        5.34%      2,474        30,054            --
         March .....................          21           269           0.80%        2.41%      2,611        32,164            --
         April .....................           9            92           0.30%        1.20%      3,004        37,617            --
         May .......................           0             0           0.00%        0.00%      2,917        36,941            --
         June ......................           0             0           0.00%        0.00%      2,824        35,927            --
</TABLE>
-----------
(1)  For each month,  cumulative repossession frequency equals the dollar amount
     of  repossessions  divided  by  the  dollar  amount  of  finance  contracts
     acquired.

(2)  Annualized   repossession   frequency  converts   cumulative   repossession
     frequency  into  an  annual  equivalent  (e.g.,  for  December  1994,  $245
     repossessions divided by $1,382,  divided by 30 months outstanding times 12
     equals an annualized repossession frequency of 6.9%).

(3)  The  increase in fiscal 1996 is due to the change in the  Company's  credit
     default insurance policy. Since August 1995, the Company no longer deposits
     money to a segregated  account from which losses  incurred under the policy
     would be paid. The new policies  provide for the Company to bear all losses
     until a deductible  amount is met. The rise in Net Charge-Off Per Unit cost
     commencing in August 1995 reflects the application of the deductible  under
     the policy.

The following  table provides  static pool  information  regarding the Company's
rated securitization transactions as of June 30, 1996:

<TABLE>
<CAPTION>
                                                                                                Gross Loss   Gross Loss   Net Loss
                                                                      Percentage   Cumulative   per Default     Pool,       Pool
                                  Issuance       Original   Current   of Original     Repos     Receivable   Cumulative  Cumulative,
                                   Date           Amount     Amount    Amount (1)    (1)(2)       (1)(3)      (1)(3)(4)    (1)(5)
                                   -----          ------     ------   ----------    ---------     ------      ---------    ------
                                                                              (dollars in thousands)
<S>                              <C>           <C>          <C>          <C>          <C>          <C>           <C>       <C>  
Aegis Auto Receivable Trust
Series 1994-A..................    Jun-94         $18,539     $2,595     14.00%       20.06%       50.40%        9.51       3.87%
Aegis Auto Receivable Trust
Series 1994-2..................    Sep-94          23,251      4,722     20.31        22.21        53.03        10.87       4.48
Aegis Auto Receivable Trust
Series 1994-3..................    Dec-94          21,000      5,379     25.61        22.36        53.22        10.44       5.41
Aegis Auto Receivable Trust
Series 1995-1..................    Mar-95          21,000      6,437     30.65        25.62        54.11        11.51       6.49
Aegis Auto Receivable Trust
Series 1995-2..................    Jun-95          54,000     19,381     35.89        25.83        54.86        11.91       7.34
Aegis Auto Receivable Trust
Series 1995-3..................    Sep-95          60,000     24,809     41.35        25.87        56.62        11.97      10.95
Aegis Auto Receivable Trust
Series 1995-4..................    Dec-95          70,000     32,440     46.34        27.54        57.22         9.63       1.64
Aegis Auto Receivable Trust
Series 1996-1..................    Mar-96          92,000     49,626     53.94        22.60        56.07         5.64       1.22
Aegis Auto Receivable Trust
Series 1996-2..................    Jun-96         105,000     65,912     62.77        18.93        57.16         3.53       2.48
Aegis Auto Receivable Trust
Series 1996-3..................    Sep-96         110,000     79,329     72.12        14.77        54.21         0.71       0.50
Aegis Auto Owners Trust
1995-A......................... Dec-95 - Oct-96   148,347     90,766     61.18        14.65        58.24         6.45       6.45

Total Managed Portfolio........                $1,220,416   $867,603     71.09%       15.47%       55.69         4.99%     3.20%
</TABLE>

----------
(1)  Data computed from trustee reports of Juy 1997 reflecting  servicer data of
     June 30, 1997 and from Company's records as of June 30, 1997.

                                       35
<PAGE>

(2)  Cumulative  Repossession  Frequency  reflects  the total  dollar  volume of
     finance  contracts  that have been  liquidated,  or are in the  liquidation
     process (but in any event can no longer be reinstated),  as a percentage of
     the original pool balance.

(3)  Receivable  gross losses are  calculated  as losses after the proceeds from
     repossessed vehicle sales, service contract rebates, consumer insurance and
     VSI insurance,  net of repossession and liquidation  costs, as a percentage
     of the defaulted receivable balance.

(4)  Calculated as the  receivable  gross losses for the pool as a percentage of
     the original pool balance.

(5)  Net loss is  calculated  as the  receivable  gross losses for the pool less
     proceeds  received from credit  default  insurance,  as a percentage of the
     original pool balance.

Liquidity and Capital Resources

     The Company's  business requires  substantial cash to support its operating
activities.  The principal cash  requirements  include (i) amounts  necessary to
acquire automobile  finance contracts pending  securitization and (ii) cash held
from time to time in restricted spread accounts to support  securitizations  and
other  securitization  expenses.  The Company also uses material amounts of cash
for operating expenses and debt service and, on occasion, to hedge interest rate
risk.  The Company  has  operated  on a negative  operating  cash flow basis and
expects  to  continue  to do so for so long as the  Company's  volume of finance
contract  acquisition  continues to grow.  The Company has funded these negative
operating cash flows principally through borrowings from financial  institutions
and sales of equity securities, among other resources. There can be no assurance
that the  Company  will have  access to  capital  markets  in the future or that
financing will be available to satisfy the Company's  operating and debt service
requirements  or to fund future growth.  If these resources are not available on
terms  acceptable  to the  Company,  the Company may have to curtail its finance
contract acquisition volume levels.

     The Company's external capital resources primarily consist of the warehouse
credit  facilities and the Company's  securitization  program.  When the Company
securitizes  finance contracts it repays a portion of its outstanding  warehouse
indebtedness  with the proceeds from such  securitizations,  making such portion
available for future borrowing.  The Company expects to securitize its assets at
least  quarterly,  although  there can be no assurance  that the Company will be
able to do so. The Company also continues to seek additional  arrangements  with
financial  institutions with respect to the disposition of its portfolio assets.
In addition, the Company has borrowed against its retained interests to increase
liquidity. The Company is exploring the feasibility of securitizing pools of its
leases or selling whole leases as possible  complements to its current financing
arrangements.  The Company  ceased the funding of leases in the first quarter of
fiscal 1996.

     The  following  table  sets  forth the  major  components  of the  increase
(decrease) in cash and cash equivalents for the periods shown:


<TABLE>
<CAPTION>
                                                             Year Ended June 30,            
                                               --------------------------------------------         
                                                 1994        1995        1996        1997
                                               --------    --------    --------    --------
                                                           (dollars in thousands)

<S>                                            <C>         <C>         <C>      
Net cash used in operating activities(1) ...   $(18,986)   $(49,208)   $(15,782)
Net cash provided by (used in) investing
  activities(2) ............................      2,180         745        (390)
Net cash provided by financing activities ..     17,291      53,452      13,292
                                               --------    --------    --------
Net increase (decrease) in cash and cash
  equivalents ..............................   $    485    $  4,989    $ (2,880)
                                               ========    ========    ========
</TABLE>
----------
(1)  Includes net cash used in  acquisition of automobile  finance  contracts of
     $(16,075) in fiscal 1994,  $(32,523) in fiscal 1995, and $(6,324) in fiscal
     1996.

(2)  Includes  net cash (used in)  provided by warehouse  credit  facilities  of
     $15,260 in fiscal  1994,  $32,902 in fiscal 1995,  and  $(10,960) in fiscal
     1996.

                                       36
<PAGE>

     Net cash used in  operating  activities  primarily  represents  cash  flows
utilized to support the Company's  acquisition of automobile  finance contracts,
including  amounts  representing  capitalized  acquisition  costs,  net of  cash
proceeds  of sales,  including  through  securitizations,  and  repayments  from
automobile  finance  receivables.  The cash used to acquire  automobile  finance
contracts is generated  primarily by financing  activities  under the  Company's
warehouse credit facilities, discussed below.

     A further  significant  source of cash used in operating  activities is net
income  offset by non-cash  revenue  items,  most  notably  unrealized  gains on
securitization  transactions,  which is  expected  to  generate  cash in  future
periods. The unrealized gains principally represent the discounted present value
of the amount of anticipated  collections from securitized  receivables over the
amounts due to  investors  in the  securitizations.  These  amounts were $ _____
million,  $ ____  million and $ _______  million for the fiscal years ended June
30,  1994,  1995 and 1996,  respectively.  During the years ended June 30, 1994,
1995 and 1996, the Company  received cash proceeds of $ _____ , $_______ million
and $______ million,  respectively,  from its retained  interests in securitized
receivables which were utilized in meeting both its operating needs and its debt
repayment requirements under the related financing agreements.  During the first
quarter  of the  fiscal  year  ended  June  30,  1994,  the  Company  also  sold
substantially all of its previously  acquired retained  interests in securitized
receivables, resulting in a non-cash use of operating funds of $ ______ million.
The  Company  generated  cash  proceeds  from  investing   activities  in  these
transactions of $ ________ million,  providing it with excess cash receipts of $
________ which were also utilized in meeting its operating cash needs.

     Other non-cash  adjustments  include  depreciation and amortization,  which
amounted  to $ _____ or the fiscal  year ended June 30,  1994,  $ ______ for the
fiscal  year ended June 30, 1995 and $ ______ for the fiscal year ended June 30,
1996;  provision for credit  losses,  which  amounted to $ ______ for the fiscal
year ended June 30,  1994,  $ ______ for the fiscal year ended June 30, 1995 and
$______ million for fiscal year ended June 30, 1996; and provision (benefit) for
deferred  income  taxes of $( ______ ) for the fiscal year ended June 30,  1994,
$______  million for the fiscal year ended June 30, 1995 and $ _____ million for
the fiscal year ended June 30, 1996. In addition,  as of June 30, 1995 and 1996,
the Company released _______ and ________  respectively,  of the Escrowed Shares
(of which ____ shares were released to the executive  officers of the Company in
1995 and _______  shares were released to the executive  officers of the Company
in 1996) and consequently  incurred  non-cash charges of $ _______ and $ _______
respectively.  The  charges  did not affect the  Company's  total  stockholders'
equity or working  capital.  The Company  also  incurred  non-cash  charges of $
______  million  and $ ______ for the fiscal  year ended June 30, 1996 for write
downs  and  valuations  allowances,   respectively,  on  retained  interests  in
securitized  receivables  and a note  receivable,  respectively,  with  no  such
charges in the prior periods.

     To the extent that the foregoing  activities  were net users of cash,  such
cash was  provided  primarily  by  borrowings  under notes  payable of $ _______
million  for the fiscal  year ended June 30,  1995 and $ ______  million for the
fiscal year ended June 30, 1996  secured by retained  interests  in  securitized
receivables    created   in   the   Company's    automobile   finance   contract
securitizations.  Principal  repayments  are made  from the  Company's  proceeds
received from pay downs on such assets,  which amounted to $ _______ million for
the fiscal  year ended June 30, 1995 and $ _______  million  for the  comparable
1996  period.  The  borrowing  base on the  retained  interests  in  securitized
receivables  is  determined  on each  transaction  through  a  calculation  that
incorporates prevailing prepayment default and loss experience. Consequently, as
each  securitization  transaction  becomes seasoned,  it experiences a period of
higher  incidence  of default and loss,  resulting  in a repayment  on the notes
secured by the allocable  retained  interests in  securitized  receivables.  The
Company made additional principal pay downs of $ __________ million in excess of
proceeds  received  for the fiscal year ended June 30, 1995 and $8.6 million for
the comparable 1996 period.

     The  Company's  cash  flows  and  results  of  operations  may be  affected
adversely  in the near term by  rising  interest  rates,  since not all costs of
funds,  which under the Company's  warehouse  credit  facilities are at floating
rates of interest,  can be  immediately  passed on to  consumers,  whose finance
contracts are at fixed rates of interest.  In addition,  rising  interest  rates
would  result in a decrease  in the  Company's  net  spreads  on  securitization
transactions  thereby  decreasing  future  projected  cash flows  from  retained
interests in securitized receivables.  Furthermore,  the Company's discount rate
utilized in determining its borrowing base may also 


                                       37
<PAGE>

rise,  decreasing  the amount  available  to borrow.  Moreover,  interest  rates
charged by the Company may be more significantly  affected by factors other than
prevailing  interest rates,  most notably  geographic  distribution  and varying
state interest rate limitations. The Company has a hedging policy which seeks to
limit the risks associated with changes in interest rates.

     In connection with its securitization transactions, the Company enters into
pooling  and  servicing  agreements  (the  "Agreements")  in which  its  finance
contracts  are sold to a Trust which,  in turn,  sells  securities to investors.
Generally,  the Company is required to make an initial cash deposit to the Trust
as a form  of  credit  enhancement  for the  securitization.  The  terms  of the
Agreements generally require that the excess servicing cash flows of the finance
contracts  be retained in a bank  account  under the control of the Trustee (the
"Reserve Fund") until the Reserve Fund meets predetermined deposit requirements.
Any cash  flows in excess of  Reserve  Fund  requirements  are  released  to the
Company on a monthly basis.  For the fiscal years ended June 30, 1994,  1995 and
1996, the Company  received $ ________ $ ______ million and $ ________  million,
respectively,  in excess  servicing cash flows from Reserve Funds.  In the event
that the  finance  contracts  owned  by the  Trusts  fail to meet  predetermined
delinquency  and loss  performance  measures,  the  Agreements  require that the
Trustee  retain  excess  servicing  cash flows  until the Reserve  Fund  attains
pre-set  incrementally  higher levels of credit  enhancement.  The predetermined
performance  measures are not always  maintained on a consistent  monthly basis,
thus  deferring  the release of the cash flows to the  Company  from the Reserve
Fund of the applicable  Trust. In addition,  certain of the Agreements  required
the  Company to deposit  additional  cash into the Trust's  Reserve  Fund if its
initial minimum required levels were not met within a predetermined  time frame.
For the fiscal  year ended June 30,  1996,  the  Company  paid  additional  cash
contributions  to certain  Reserve  Funds of $______  million and in August 1996
paid a $_______  million  deposit  which,  management  believes  to be its final
payment to Reserve Funds under the existing Agreements.

     The  Company's   warehouse  credit  facility  with  III  Finance  Ltd.  for
automobile  finance contracts provides that the Company may borrow the lesser of
$ _______  million  (less the  amount  outstanding  under  the  Company's  lease
warehouse  credit  facility  with III Finance  Ltd.  described  below ($ _______
million  as of  August  20,  1996))  or the sum of (A)  100% of the  outstanding
principal amount of performing, insured, finance contracts and (B) the lesser of
90% of the outstanding  principal amount of delinquent  finance contracts (which
percentages  are  reduced  to  80%  and  70%,  respectively,  if  the  Company's
automobile  insurer  fails to maintain  an A.M.  Best  Company  rating of "A" or
better  (defined by A.M.  Best Company as an  "excellent"  rating  regarding the
insurer's   financial   strength  and  ability  to  meet  its   obligations   to
policyholders))  and $ _____  million plus 92%  (declining 1% per month for each
month the receivable is outstanding past 180 days) of the outstanding  principal
amount of uninsured  automobile  finance  contracts for the purpose of acquiring
automobile  finance  contracts in  accordance  with the  Company's  underwriting
guidelines.  The Company has a warehouse  credit  facility for  originating  its
lease  transactions,  which  provides the Company with a $______  million credit
line  on  substantially  the  same  terms  as the  automobile  finance  contract
facility.  These facilities are secured  primarily by the Company's auto finance
receivables  and bear  interest  at the rate of the  one-month  LIBOR plus 4.0%,
adjusted  monthly ( ________ % for July,  1996).  Under these  warehouse  credit
facilities,  principal  payments  are made  monthly to the  extent of  principal
payments received on the underlying  collateral,  and interest payments are made
quarterly  in arrears  and on the date of any  prepayment  of  principal  on the
underlying  collateral.  The Company's ability to continue to borrow under these
warehouse  credit  facilities is dependent  upon its  compliance  with the terms
thereof,  including the  maintenance by the Company of certain  minimum  capital
levels. Under each warehouse credit facility,  the Company is required to prepay
5% of the outstanding principal balance of finance contracts held by the Company
for more than 180 days. In addition,  each warehouse credit facility  requires a
prepayment fee of ________ % of the outstanding principal balance of the finance
contracts voluntarily prepaid,  including in connection with the sale of finance
contracts.  In the event the  prepayment  occurs  within  the same  month of the
borrowings,  the  prepayment  fee  is  _______  % of the  outstanding  principal
balance. As of June 30, 1996, the Company had approximately $ _______ million of
borrowings available through the warehouse credit facility arrangements with III
Finance Ltd. In addition, the Company has a $ _________ million warehouse credit
facility dedicated to the purchase of HUD Title I Loans, which


                                       38
<PAGE>

the Company  does not  anticipate  utilizing at this time.  All three  warehouse
credit facilities with III Finance, Ltd. expire in November 1997.

     In the quarters ended June 1994, September 1994, December 1994, March 1995,
June 1995,  September 1995, December 1995, March 1996 and June 1996, the Company
securitized  approximately $ ________ million,  $ ________  million,  $ ________
million,  $________ million,  $ ________ million, $ ________ million,  $________
million,  $ ________ million and $ ________  million,  respectively,  of finance
contracts and used the net proceeds to pay down  borrowings  under its warehouse
credit facilities.  In each of its last seven  securitizations,  the Company has
utilized a  "pre-funding  account"  that  enabled  the  Company to fund  certain
finance contract  acquisitions  without committing its warehouse credit facility
for an extended period of time.  Additionally,  the Company directly sold in the
form  of  whole  finance  contract  sales,   approximately  $  ________  million
(approximately  $ ________  million in the fiscal  year ended June 30,  1996) of
automobile  finance  contracts as of June 30, 1996 and used part of the proceeds
to pay down borrowings under its warehouse credit facility.

     In December 1995, the Company  entered into a commitment to sell $ ________
million of sub-prime  automobile  finance contracts to be resold as asset-backed
securities through Rothschild,  Inc. During the fiscal year ended June 30, 1996,
the Company sold  approximately $ ______ million of automobile  receivables into
this  facility.  This  facility  requires the Company to directly sell between $
______ million and $ _____ million per month for a fifteen-month  funding period
subsequent to the initial funding date. If the Company fails to meet the minimum
target,  the terms of the  facility  provide that the Company may not be able to
sell future finance  contracts to the facility.  As of June 30, 1996 the Company
has a remaining commitment of $ _______ million.

     In February  1996,  the Company  issued $ ________ of Series C  Convertible
Preferred  Stock (the  "Preferred  Stock") under  Regulation S of the Securities
Act. The Preferred Stock is convertible into Common Stock at the lower of $6.425
per share of Common Stock or 85% of the fair market value of the Common Stock at
the time of  conversion.  The  Company  can  redeem  the  Preferred  Stock  upon
conversion  at the fair  market  value  of the  Common  Stock  into  which  such
Preferred Stock is convertible.  The Preferred Stock has an 8.0% annual dividend
payable  in  Common  Stock at the time of  conversion.  The  Preferred  Stock is
automatically  converted  into  Common  Stock on the  third  anniversary  of its
issuance.  For the fiscal year ended June 30, 1996, the Company redeemed _______
shares of Preferred Stock for $ _______ million and converted ________ shares of
Preferred Stock into shares of Common Stock.

     In May 1996, the Company  secured an additional  warehouse  credit facility
with Greenwich  Capital.,  a subsidiary of Long Term Credit Bank of Japan (which
has recently  entered into an agreement to sell  Greenwich  Capital,  to NatWest
Markets) for $ ______  million,  which will provide the Company with  additional
flexibility to purchase  greater volumes of receivables or warehouse  automobile
receivables  for  longer  periods.  The  facility  is secured  primarily  by the
Company's  finance  contracts  and bears  interest at the rate of the  one-month
LIBOR  plus 3.0%  (8.4297%  at August 22,  1996),  adjusted  monthly.  Principal
payments  are  made to the  extent  that  principal  is  paid on the  underlying
collateral,  and are required to be made if the underlying  collateral  does not
meet certain  specified  conditions.  Prepayment of principal is not  permitted,
except in connection with securitization  transactions and whole loan sales. The
Company's  ability to continue to borrow under this facility is dependent on its
compliance  with the terms thereof,  including the maintenance by the Company of
certain  minimum  capital  levels.   As  of  June  30,  1996,  the  Company  had
approximately $ ________ million of borrowings  available through this facility.
In addition to the  warehouse  financing,  the Company  also  secured a one-year
$______ million revolving credit facility (with a six-month renewal option) from
Greenwich  Capital (the Company utilized $ _____ million of the revolving credit
facility in August 1996) and a one-year  commitment  from  Greenwich  Capital to
purchase  and  securitize  up to $  ________  million of the  Company's  finance
contract  acquisitions  until the  commitment  is filled,  subject to  customary
conditions. Two securitizations aggregating $ _____ million were completed as of
June 30, 1996 pursuant to this commitment.  In connection with these facilities,
the Company granted warrants to Greenwich  Capital to purchase _______ shares of
common stock at an exercise  price of $6.50 per share  (subject to adjustment as
defined in the agreement). 


                                       39
<PAGE>

The Greenwich  Capital  warehouse  credit facility is for a one year term with a
one year renewal option. In addition, the agreement provides the Company, at its
option  (expiring in December 1996), to increase the facility up to $150 million
with a 90 day notice.

     The Company  believes that cash flows from  operations,  available lines of
credit and its warehouse credit facilities along with the proceeds received from
the Series C Convertible Preferred Stock or through other financing arrangements
are adequate to support its current and near-term  funding and operations  needs
at current levels. The Company is currently in the process of seeking additional
capital;  however, there can be no assurance as to the availability or timing of
such transactions.

Inflation

     While inflation has not had a material impact upon the Company's results of
operations,  there can be no assurance  that the Company's  business will not be
affected by inflation in the future.  Increases in the inflation  rate generally
result in increased interest rates and can be expected to result in increases in
the Company's operating expenses. As the Company borrows funds at variable rates
and  generally  acquires  finance  contracts  at an  average  interest  rate  of
approximately 20.2%,  increased interest rates will increase the borrowing costs
of the  Company,  and  such  increased  borrowing  costs  may not be  offset  by
increases in the interest rates with respect to finance contracts acquired.

Seasonality

     The  Company's   operations   are  affected  to  some  extent  by  seasonal
fluctuations.  Finance contract  acquisitions  tend to increase in March through
June and September and October,  while finance contract  acquisitions are lowest
in December and January.  Delinquencies  also tend to be higher  during  certain
holiday periods, particularly at calendar year end.

Item 8:  Financial Statements and Supplementary Data.

     The information  required under this item is indexed on page F-1 herein and
is contained on the pages following said page F-1.

Item  9:  Changes  in and  Disagreements  with  Accountants  on  Accounting  and
Financial Disclosures.

     None. 

                                    PART III


Item 10:  Directors and Executive Officers of the Registrant.

     The information  required by Item 10 will be contained in the  Registrant's
Definitive  Proxy  Statement for its 1997 Annual Meeting of  Shareholders,  (the
"1996 Proxy Statement") called to be held in November 1996, which the Registrant
intends to file with the  Commission in October 1996,  and such  information  is
incorporated herein by reference.

Item 11:  Executive Compensation.

     The  information  required by Item 11 will be  contained  in the 1996 Proxy
Statement, and such information is incorporated herein by reference.

Item 12:  Security Ownership of Certain Beneficial Owners and Management.

     The  information  required by Item 12 will be  contained  in the 1996 Proxy
Statement, and such information is incorporated herein by reference.

Item 13:  Certain Relationships and Related Transactions.

     The  information  required by Item 13 will be  contained  in the 1996 Proxy
Statement, and such information is incorporated herein by reference.


        
                                       40
<PAGE>


                                     PART IV

Item 14:  Exhibits, Financial Statement Schedules and Reports on Form 8-K.

(a)  Documents filed as part of this Report:

     (1)  The  financial  statements  and schedules  listed in the  accompanying
          index to Financial  Statements  and Schedules on page F-1 are filed as
          part of the Annual Report on Form 10K.

     (2)  Exhibits. See Exhibit Index beginning on page 43.

(b)  No current  Reports on Form 8-K were filed by the Company during the fourth
     quarter ended June 30, 1996.


                                       41
<PAGE>


                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                     THE AEGIS CONSUMER FUNDING GROUP, INC.



                                     By:  S/Angelo R. Appierto         
                                        --------------------------------
                                        Angelo R. Appierto
                                        Chairman of the Board and
                                        Chief Executive Officer
Date:  September 9, 1996

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

Signature                 Title                               Date
---------                 -----                               ----

S/Angelo R. Appierto      Chairman of the Board,              September  , 1997
----------------------    Chief Executive Officer 
Angelo R. Appierto        and Director


S/Joseph F. Battiato      President                           September  , 1997
----------------------
Joseph F. Battiato


S/Dina L. Penepent        Chief Financial Officer,            September  , 1997
----------------------    Executive Vice President, 
Dina L. Penepent          Secretary, Principal 
                          Financial and Accounting Officer             
                          

S/Gary D. Peiffer         General Counsel,                    September  , 1997
----------------------    Vice-Chairman and Director
Gary D. Peiffer           


S/Felice Cutler           Director                            September 9,  1996
----------------------
Felice Cutler


S/Carl Frischling         Director                            September  , 1997
----------------------
Carl Frischling


S/Paul Fitzpatrick        Director                            September  , 1997
----------------------
Paul Fitzpatrick


                                       42
<PAGE>

                                INDEX OF EXHIBITS

Listed below are all Exhibits filed as part of this report. Certain Exhibits are
incorporated herein by reference to (1) the Company's  Registration Statement on
Form  SB-2  originally  filed on April 6,  1995  (File No.  33-  85836)  and (2)
documents  previously  filed by the Company  with The  Securities  and  Exchange
Commission under the Securities Exchange Act of 1934, as amended.

<TABLE>
<CAPTION> 
Exhibit No.                           Description                                                                 Page No.
-----------                           -----------                                                                 --------
<S>           <C>                                                                                               <C>
3.1           Certificate of Incorporation(1)..............................................................
3.2           By-laws(1)...................................................................................
3.3           Form of Amended and Restated Certificate of Incorporation(1).................................
3.4           Form of Amended and Restated By-laws(1)......................................................
3.5           Certificate of Designation of Series C Preferred Stock(2)....................................
4.1           Specimen Common Stock Certificate(1).........................................................
4.2           Warrant issued to Drew Schaefer(1)...........................................................
4.3           Underwriters' Warrant Agreement(1)...........................................................
4.4           Form of Escrow Agreement(1)..................................................................
4.6           Voting Agreement dated February 15, 1996(1)..................................................
4.6           Irrevocable Proxy dated February 15, 1995(1).................................................
4.7           Warrants to purchase 114,553 shares of Common Stock (2)......................................
4.8           Warrant issued to Chaneil Associates(2)......................................................
4.9           Warrant issued to Beckett Reserve Fund, L.L.C(2).............................................
4.10          Warrant issued to Bjorn Ahlstrom.............................................................
5.1           Opinion of Shereff, Friedman, Hoffman & Goodman, LLP(1)......................................
10.1          Revolving Credit Facility Agreement, dated July 23, 1993, between
              The Bennett Funding Group, Inc. and the Company(1)...........................................
10.2          Loan and Security Agreement, dated as of February 28, 1994, among Aegis
              Acceptance Corp., Aegis Consumer Finance, Inc. and III Finance Ltd(1)........................
10.2.1        Form of Promissory Note relating to Exhibit 10.2(1)..........................................
10.2.2        Aging Receivables Report relating to Exhibit 10.2(1).........................................
10.2.3        Form of Dealer Agreement relating to Exhibit 10.2(1).........................................
10.2.4        GAP Auto Protection Insurance Policy relating to Exhibit 10.2.(1)............................
10.2.5        Form of Lease relating to Exhibit 10.2(1)....................................................
10.2.6        Liability Insurance Policy relating to Exhibit 10.2(1).......................................
10.2.7        Risk Default Policy relating to Exhibit 10.2(1)..............................................
10.2.8        Residual Value Insurance Policy relating to Exhibit 10.2(1)..................................
10.2.9        Underwriting Criteria relating to Exhibit 10.2(1)............................................
10.2.10       Vendor Single Interest Physical Damage Insurance Policy relating to
              Exhibit 10.2(1)..............................................................................
10.2.11       Form of Custodian Confirmation relating to Exhibit 10.2(1)...................................
10.2.12       List of Closing Documents relating to Exhibit 10.2(1)........................................
10.3          Loan and Security Agreement, dated as of November 8, 1993, between
              Aegis Capital Markets, Inc., Aegis Acceptance Corp.,
              Aegis Auto Finance, Inc. and III Finance Ltd.(1).............................................
10.3.1        Form of Promissory Note relating to Exhibit 10.3(1)..........................................
10.3.2        Aging Receivables Report relating to Exhibit 10.3(1).........................................
10.3.3        Form of Dealer Agreement relating to Exhibit 10.3(1).........................................
10.3.4        Form of RDI Policy relating to Exhibit 10.3(1)...............................................
10.3.5        Underwriting Criteria relating to Exhibit 10.3(1)............................................
10.3.6        Form of VSI Policy relating to Exhibit 10.3(1)...............................................
10.3.7        Form of Servicer's Confirmation relating to Exhibit 10.3(1)..................................
10.3.8        List of Closing Documents relating to Exhibit 10.3(1)........................................
</TABLE>

                                       43
<PAGE>

<TABLE>
<CAPTION> 
Exhibit No.                           Description                                                                 Page No.
-----------                           -----------                                                                 --------
<S>           <C>                                                                                               <C>
10.4          Loan and Security Agreement, dated as of July 1, 1993, between Aegis
              Securitized Assets, Inc. and III Finance Ltd.(1).............................................
10.4.1        Underwriting Criteria relating to Exhibit 10.4(1)............................................
10.5          1994 Stock Option Plan of the Company(1).....................................................
10.5.1        1994 Stock Option Plan of the Company, as amended(2).........................................
10.5.2        1996 Stock Option Plan of the Company(2).....................................................
10.6          Employment Agreement with Angelo R. Appierto(1)..............................................
10.6.1        Amendment to Employment Agreement with Angelo R. Appierto(2).................................
10.6.2        Form of Amendment to Employment Agreement with Angelo R. Appierto(2).........................
10.6.3        Form of Amendment to Employment Agreement with Angelo R. Appierto............................
10.6.4        AMENDED AND RESTATED EMPLOYMENT AGREEMENT dated
              as of April 1, 1997, by and between THE AEGIS CONSUMER FUNDING
              GROUP, INC. and Mr. Angelo R. Appierto.......................................................
10.7          Employment Agreement with Gary D. Peiffer(1).................................................
10.7.1        Amendment to Employment Agreement with Gary D. Peiffer(2)....................................
10.7.2        Form of Amendment to Employment Agreement with Gary D. Peiffer(2)............................
10.7.3        Form of Amendment to Employment Agreement with Gary D. Peiffer...............................
10.7.4        TERMINATION AGREEMENT dated as of June 18, 1997, between
              THE AEGIS CONSUMER FUNDING GROUP, INC. and Mr. Gary D.
              Peiffer......................................................................................
10.8          Employment Agreement with Joseph F. Battiato(1)..............................................
10.8.1        Amendment to Employment Agreement with Joseph F. Battiato(2).................................
10.8.2        Form of Amendment to Employment Agreement with Joseph F. Battiato(2).........................
10.8.3        Form of Amendment to Employment Agreement with Joseph F. Battiato............................
10.8.4        AMENDED AND RESTATED EMPLOYMENT AGREEMENT dated as of
              April 1, 1997, by and between THE AEGIS CONSUMER FUNDING GROUP,
              INC. and Mr. Joseph F. Battiato..............................................................
10.9          Employment Agreement with Matthew B. Burns(1)................................................
10.9.1        Amendment to Employment Agreement with Matthew B. Burns(2)...................................
10.9.2        Amendment to Employment Agreement of Matthew B. Burns,
              dated as of October 11, 1995.(2).............................................................
10.9.3        Termination of Employment Agreement with Matthew B. Burns....................................
10.10         Employment Agreement with Jorge G. Rios(1)...................................................
10.10.1       AMENDED AND RESTATED EMPLOYMENT AGREEMENT dated as of
              April 1, 1997, by and between THE AEGIS CONSUMER  FUNDING GROUP, INC.
              and Mr. Jorge Rios...........................................................................
10.11         Employment Agreement with Robert G. Nelson(1)................................................
10.12         Consulting Agreement with Drew E. Schaefer and Nustar Financial Corp.(1).....................
10.13         Termination of Consulting Agreement with Drew E. Schaefer
              Nustar Financial Corporation(1)..............................................................
10.14         Lease, dated June 29, 1992, by and between the Company and First Pac
              Limited, with respect to 33 Whitehall St., New York, New York(1).............................
10.15         Additional Space Agreement, dated September 30, 1993, by and
              between the Company and First Pac Limited(1).................................................
10.16         Sublease,  dated  September  27, 1993, by and between the
              Company as subtenant and Centre  Reinsurance  Company and
              International Insurance
              Advisors, Inc., as sublessors(1).............................................................
10.17         Sublease, dated as of October 1, 1993, by and between the Company as
              sublessor and Americorp Financial Services, Inc. as subtenant(1).............................
10.18         Master Servicing Agreement, dated as of February 28, 1994, between
              American Lenders Facilities, Inc. and Aegis Consumer Finance, Inc.(1)........................
</TABLE>

                                       44
<PAGE>

<TABLE>
<CAPTION> 
Exhibit No.                           Description                                                                 Page No.
-----------                           -----------                                                                 --------
<S>           <C>                                                                                               <C>
10.19         Program Management Agreement, dated as of November 16, 1992, by and
              between Aegis Financial Advisers, Inc., and The Bennett Funding
              Group, Inc(1)................................................................................
10.20         Program Management Agreement Amendment No. 1, dated as of
              July 1, 1993 by and between Aegis Financial Advisers, Inc. and
              The Bennett Funding Group, Inc.(1)...........................................................
10.21         Loan and Security Agreement, dated as of August 11, 1994, between Aegis
              Consumer Finance, Inc. and III Finance Ltd.(1)...............................................
10.21.1       Form of Promissory Note relating to Exhibit 10.21(1).........................................
10.21.2       Form of Cash Flow Valuation Report relating to Exhibit 10.21(1)..............................
10.21.3       Aegis Auto Receivables 1994-A, L.P., Agreement of Limited Partnership
              relating to Exhibit 10.21(1).................................................................
10.21.4       Pooling and Servicing Agreement relating to Exhibit 10.21.(1)................................
10.21.5       List of Closing Documents relating to Exhibit 10.21.(1)......................................
10.21.6       See Exhibit 10.3.4.(1).......................................................................
10.21.7       See Exhibit 10.3.6.(1).......................................................................
10.22         Loan and Security Agreement, dated as of September 28, 1994, between
              Aegis Consumer Finance, Inc. and III Finance Ltd.(1).........................................
10.22.1       Form of Promissory Note relating to Exhibit 10.22(1).........................................
10.22.2       See Exhibit 10.21.2(1).......................................................................
10.22.3       See Exhibit 10.21.3(1).......................................................................
10.22.4       See Exhibit 10.21.4(1).......................................................................
10.22.5       See Exhibit 10.21.5(1).......................................................................
10.22.6       See Exhibit 10.3.4(1)........................................................................
10.22.7       See Exhibit 10.3.6.(1).......................................................................
10.23         Form of Dealer Agreement(1)..................................................................
10.24         Form of Customer Credit Application(1).......................................................
10.25         Partnership Agreement of Aegis Investment Partners(1)........................................
10.26         Employment Termination Agreement, dated as of February 22, 1995,
              between the Company and Robert Nelson(1).....................................................
10.27         Servicing Agreement with American Lenders Facility, Inc.(2)..................................
10.28         Loan and Security Agreement, dated as of December 22, 1994
              between Aegis Consumer Finance, Inc. and III Finance Ltd.(2).................................
10.28.1       Form of Promissory Note relating to Exhibit 10.28(2).........................................
10.28.2       Exhibit 10.21.2 Form of Cash Flow Valuation  Report relating to
              Exhibit 10.21(1).............................................................................
10.28.3       Exhibit 10.21.3 Aegis Auto Receivables 1994-A, L.P., Agreement of
              Limited Partnership relating to Exhibit 10.21(1).............................................
10.28.4       Exhibit 10.21.4 Pooling and Servicing Agreement relating to
              Exhibit 10.21(1).............................................................................
10.28.5       Exhibit 10.21.5 List of Closing Documents relating to Exhibit 10.21(1).......................
10.28.6       Exhibit 10.3.4 Form of RDI policy relating to Exhibit 10.3(1)................................
10.28.7       Exhibit 10.3.6 Form of VSI Policy relating to Exhibit 10.3(1)................................
10.29         Loan and Security Agreement dated as of March 22, 1995,
              between Aegis Consumer Finance, Inc. and III Finance LTD.(2).................................
10.29.1       Form of Promissory Note relating to Exhibit 10.29(2).........................................
10.29.2       Exhibit 10.21.2 Form of Cash Flow Valuation Report relating to
              Exhibit 10.21(1).............................................................................
10.29.3       Exhibit 10.21.3 Aegis Auto Receivables 1994-A, L.P., Agreement of
              Limited Partnership relating to Exhibit 10.21(1).............................................
10.29.4       Exhibit 10.21.4 Pooling and Servicing Agreement relating to
              Exhibit 10.21(1).............................................................................
</TABLE>

                                       45
<PAGE>

<TABLE>
<CAPTION> 
Exhibit No.                           Description                                                                 Page No.
-----------                           -----------                                                                 --------
<S>           <C>                                                                                               <C>
10.29.5       Exhibit 10.21.5 List of Closing Documents relating to Exhibit 10.21(1).......................
10.29.6       Exhibit 10.3.4 Form of RDI Policy relating to Exhibit 10.3(1)................................
10.29.7       Exhibit 10.3.6 Form of VSI Policy relating to Exhibit 10.3(1)................................
10.39         Employment Agreement with Dina L. Penepent(2)................................................
10.40         Master Amendment to Loan and Security Agreements, dated as of August 24, 1995
              between Aegis Auto Finance, Inc. and III Finance Ltd(2)......................................
10.41         Amendment No. 4 to Loan and Security Agreement, dated as of September 12, 1995
              between Aegis Acceptance Corp., Aegis Consumer Finance, Inc. and III Finance Ltd.(2).........
10.42         Amendment No. 5 to Loan and Security Agreement, dated as of October 18, 1995
              between Aegis Acceptance Corp., Aegis Consumer Finance, Inc. and III Finance ................
              Ltd.(2)......................................................................................
10.43         Amendment No.5 to Loan and Security Agreement, dated as of September 13, 1995,
              between Aegis Auto Finance, Inc. and III Finance Ltd.(2).....................................
10.44         Amendment No. 6 to Loan and Security Agreement, dated as of October 18, 1995,
              between Aegis Auto Finance, Inc. and III Finance Ltd.(2).....................................
10.45         Purchase Agreement dated as of 611/95 by and between Aegis Auto Finance, Inc.
              as Seller and Aegis Auto Funding Corp. as Purchaser(2).......................................
10.46         Purchase Agreement dated as of 6/20/95 by and between Aegis Auto Funding
              Corp. as Seller and Smith Barney Inc. as Purchaser.(2).......................................
10.47         Loan and Security Agreement, dated as of June 20, 1995 between Aegis Auto
              Finance, Inc. as Borrower and III Finance Ltd. as Lender.(2).................................
10.47.1       Promissory Note relating to Exhibit 10.45.(2)................................................
10.48.        Exhibit 10.30.2 Form of Cash Flow Valuation Report relating to Exhibit
              10.29.2, relating to Exhibit 10.21.3, relating to Exhibit 10.21(1)...........................
10.48.1       Exhibit 10.30.3 Pooling and Servicing Agreement relating to Exhibit
              10.29.4, relating to Exhibit 10.21.4, relating to Exhibit 10.21(1)...........................
10.48.2       Exhibit 10.30.4 List of Closing Documents relating to Exhibit 10.29.5,
              relating to Exhibit 10.21.5, relating to Exhibit 10.21(1)....................................
10.48.3       Exhibit 10.30.5 Form of RDI Policy relating to Exhibit 10.29.6, relating to Exhibit
              10.3.4, relating to Exhibit 10.3(1)..........................................................
10.48.4       Exhibit 10.30.6 Form of VSI Policy relating to Exhibit 10.29.7, relating to Exhibit
              10.3.6, relating to Exhibit 10.3(1)..........................................................
10.49         Purchase Agreement dated as of 9/1/95 by and between Aegis Auto Finance, Inc.
              as Seller and Aegis Auto Funding Corp. as Purchaser.(2)......................................
10.50         Purchase Agreement dated as of 9/20/95 by and between Aegis Auto Funding
              Corp. as Seller and Smith Barney Inc. as Purchaser.(2).......................................
10.51         Loan and Security Agreement, dated as of September 25, 1995 between Aegis....................
              Auto Finance, Inc. as Borrower and III Finance Ltd. as Lender.(2)............................
10.51.1       Promissory Note relating to Exhibit 10.49.(2)................................................
10.52         Exhibit 10.46 Form of Cash Flow Valuation Report relating to Exhibit
              10.30.2, relating to Exhibit 10.29.2, relating to Exhibit 10.21.3, relating to Exhibit
              10.21(1).....................................................................................
10.52.1       Exhibit 10.46.1 Pooling and Servicing  Agreement relating
              to Exhibit 10.30.3, relating to Exhibit 10.29.4, relating
              to Exhibit 10.21.4, relating to
              Exhibit 10.21(1).............................................................................
10.52.2       Exhibit 10.46.2 List of Closing Documents relating to Exhibit 10.30.4,
              relating to Exhibit 10.29.5, relating to Exhibit 10.21.5, relating to Exhibit
              10.21(1).....................................................................................
10.52.3       Exhibit 10.46.3 Form of RDI Policy relating to Exhibit 10.30.5, relating to Exhibit
              10.29.6, relating to Exhibit 10.3.4, relating to Exhibit 10.3(1).............................
</TABLE>

                                       46
<PAGE>

<TABLE>
<CAPTION> 
Exhibit No.                           Description                                                                 Page No.
-----------                           -----------                                                                 --------
<S>           <C>                                                                                               <C>
10.52.4       Exhibit 10.46.4 Form of VSI Policy relating to Exhibit 10.30.6, relating to Exhibit
              10.29.7, relating to Exhibit 10.3.6, relating to Exhibit 10.3(1).............................
10.53         Purchase Agreement dated as of 11/7/95 by and between Aegis Auto
              Finance, Inc. as Seller and Cameron State Bank as Purchaser.(2)..............................
10.54         Purchase Agreement dated as of 11/7/95 by and between Aegis Auto Finance, Inc.
              as Seller and City Savings Bank and Trust as Purchaser.(2)...................................
10.55         Amendment No. 1 to 6/20/95 Loan and Security Agreement, dated as of October
              27, 1995 between Aegis Auto Finance, Inc. and III Finance LTD.(2)............................
10.56         Amendment No. 1 to 9/25/95 Loan and Security Agreement, dated as of October
              27, 1995 between Aegis Auto Finance, Inc. and III Finance LTD.(2)............................
10.57         Form of Regulation S Subscription Agreement (2)..............................................
10.57.1       Registration Rights Agreement relating to Exhibit 10.57 (2)..................................
10.58         Loan and Security Agreement, dated as of 11/7/95 between The Aegis Consumer
              Funding Group, Inc., as Borrower, and both Aegis Consumer Finance, Inc., and
              Aegis Auto Funding Corp.,as Guarantors, and Beckett Reserve Fund, L.L.C.,
              as Lender. (2)...............................................................................
10.58.1       Promissory Note relating to Exhibit 10.58.(2)................................................
10.59         Purchase Agreement dated as of 11/7/95 between Aegis Auto Finance, Inc.,
              as Seller, and City Savings Bank and Trust as Purchaser.(2)..................................
10.60         Purhase Agreement dated as of 11/7/95 between Aegis Auto Finance, Inc.,
              as Seller, and Cameron State Bank as Purchaser.(2)...........................................
10.61         Agreement of Sublease dated as of 11/10/95 between Aegis Consumer
              Funding Group, Inc., and Peterson & Ross.(2).................................................
10.62         Purchase Agreement dated as of 12/12/95 between Aegis Auto Finance, Inc.
              as Seller and Calcasieu Marine National Bank as Purchaser.(2)................................
10.63         Funding Agreement dated as of 4/4/95 between U.S. Investment Group, Inc.,
              and The Aegis Consumer Funding Group, Inc.(2)................................................
10.63.1       Amendment dated as of 8/4/95 relating to Exhibit 10.63.(2)...................................
10.64         Fee Agreement dated as of 12/20/95 with Chaneil Associates.(2)...............................
10.65         Loan Purchase Agreement dated as of 12/1/95 between Aegis Auto Finance, Inc.
              and Aegis Auto Funding Corp. II, as Purchaser.(2)............................................
10.65.1       Trust Purchase Agreement dated as of 12/1/95 between Aegis Auto Owner Trust 1995
              as Issuer, and Aegis Auto Funding Corp. II, as Seller.(2)....................................
10.65.2       Trust Agreement dated as of 12/1/95 among Aegis Auto Funding Corp. II,
              as Depositor, and Bankers Trust as Owner Trustee.(2).........................................
10.65.3       Indenture dated as of 12/1/95 between Aegis Auto Owner Trust 1995, as Issuer, and
              Norwest Bank Minnesota, National Association, as Indenture Trustee.(2).......................
10.65.4       Insurance Agreement dated as of 12/1/95 by and between MBIA Insurance
              Corporation, as Insurer, Aegis Auto Funding Corp. II, as Seller, Aegis Auto
              finance, Inc., as Servicer, Aegis Auto Owner Trust 1995, as Issuer, Norwest
              Bank Minnesota, National association, as Indenture Trustee, and Norwest Bank
              Minnesota, National Association, as Back-up Servicer.(2).....................................
10.65.5       Servicing Agreement dated as of 12/1/95 among Aegis Auto Finance, Inc., as Servicer,
              Aegis Auto Funding Corp. II, as Seller, Aegis Auto Owner Trust 1995, as Issuer, and
              Norwest Bank Minnesota, National Association, as Back-up Servicer.(2)........................
10.65.6       Addendum to Servicing Agreement, relating to Exhibit 10.65.5.(2).............................
10.65.7       Placement agency Agreement dated as of 12/13/95, relating to Exhibit 10.65.2.(2).............
10.65.8       Note Purchase Agreement dated as of 12/20/95, by and between Aegis Auto Owner
              Trust 1995, Issuer, Aegis Auto Finance, Inc, as Servicer, Aegis Auto Funding Corp.,
              as Seller, Market Street Capital Corporation, as Purchaser.(2)...............................
</TABLE>

                                            47
<PAGE>


<TABLE>
<CAPTION> 
Exhibit No.                           Description                                                                 Page No.
-----------                           -----------                                                                 --------
<S>           <C>                                                                                               <C>
10.65.9       Administration Agreement dated as of 12/20/95 between
              Aegis Auto Finance, Inc., as Servicer, and Rothschild Inc., as Administrator.(2).............
10.70         Lease Agreement dated as of 11/14/94, between Newport L.G.-I, Inc.,
              as Landlord, and The Aegis Consumer Funding Group, Inc., as Tenant.(2).......................
10.70.1       Amendment to Lease, dated as of 12/23/94 between Newport L.G.-I, Inc., as
              Landlord, and The Aegis Consumer Funding Group, Inc., as Tenant, relating to
              Exhibit 10.70.(2) ...........................................................................
10.70.2       Second Amendment to Lease, dated as of 12/29/95 between Newport L.G.-I, Inc., as
              Landlord, and The Aegis Consumer Funding Group, Inc.,as Tenant, relating
              to Exhibit 10.70 (2).........................................................................
10.71         Fee Agreement dated as of 12/20/95 with U.S. Investment Group, Inc., relating
              to Exhibit 10.63.............................................................................
10.72         Purchase Agreement dated as of 12/1/95 by and between Aegis Auto Finance, Inc.
              as Seller and Aegis Auto Funding Corp., as Purchaser.(2).....................................
10.73         Purchase Agreement dated as of 12/20/95 by and between
              Aegis Auto Funding Corp. as Seller and Smith Barney Inc., as Purchaser.(2)...................
10.74         Loan and Security Agreement dated as of 12/20/95 between
              Aegis Auto Finance, Inc. as Borrower and III Finance Ltd., as Lender.(2).....................
10.74.1       Form of Promissory Note relating to Exhibit 10.60.(2)........................................
10.75         Exhibit 10.48 Form of Cash Flow Valuation Report, relating to Exhibit 10.30.2,
              relating to Exhibit 10.29.2, relating to Exhibit 10.21.3, relating to Exhibit 10.21(1).......
10.75.1       Exhibit 10.48.1 Pooling and Servicing Agreement, relating to Exhibit 10.30.3, relating
              to Exhibit 10.29.4, relating to Exhibit 10.21.4, relating to Exhibit 10.21(1)................
10.75.2       Exhibit 1048.2 List of Closing Documents, relating to Exhibit 10.30.4,
              relating to Exhibit 10.29.5, relating to Exhibit 10.21.5, relating to Exhibit 10.21(1).......
10.75.3       Exhibit 10.48.3 Form of RDI Policy, relating to Exhibit 10.30.5, relating to
              Exhibit 10.29.6 relating to Exhibit 10.3.4, relating to Exhibit 10.3(1)......................
10.75.4       Exhibit 10.48.4 Form of VSI Policy, relating to Exhibit 10.30.6,  relating to
              Exhibit  10.29.7, relating to Exhibit 10.3.6, relating to Exhibit 10.3(1)....................
10.76         Form of Servicing Agreement dated as of 12/1/95 by and between
              Aegis Auto Finance, Inc. as Seller and Aegis Auto Funding Corp. as Purchaser.(2).............
10.77         Consultant/Advisor Agreement dated as of 1/2/96, between The Sloane Organization,
              as Consultant, and The Aegis Consumer Funding Group, Inc., as the Consultee.(2)..............
10.77.1       Sloane Letter Agreement dated as of 1/3/96, relating to Exhibit 10.77.(2)....................
10.78         Purchase Agreement dated as of 1/19/96 between Aegis Auto Finance, Inc.
              as Seller and United Bank and Trust Company as Purchaser.(2).................................
10.79         Purchase Agreement dated as of 1/24/96 between Aegis Auto Finance, Inc.
              as Seller and Gulf Coast Bank as Purchaser.(2)...............................................
10.79.1       Reserve Account Agreement, relating to Exhibit 10.79.(2).....................................
10.80         Notice of Annual Meeting of Stockholders and Proxy Statement.(2).............................
10.80.1       Proxy Card, relating to 10.80.(2)............................................................
10.81         Purchase Agreement dated as of 2/29/96 between Aegis Auto Finance, Inc. as
              Seller and First Bank of Eunice as Purchaser.(2).............................................
10.82         Purchase Agreement dated as of 3/21/96 between Aegis Auto Finance, Inc. as
              Seller and United Bank and Trust Company as Purchaser.(2)....................................
10.83         Purchase Agreement dated as of 3/1/96 by and between Aegis Auto Finance, Inc.
              as Seller and Aegis Auto Funding Corp., as Purchaser.(2).....................................
10.84         Purchase Agreement dated as of 3/22/96 by and between Aegis Auto Funding
              Corp. as Seller and Greenwich Capitol Markets, Inc., as Purchaser.(2)........................
10.85         Loan and Security Agreement dated as of 3/22/96 between Aegis Auto Finance,
              Inc. as Borrower and III Finance Ltd., as Lender.(2).........................................
</TABLE>

                                            48
<PAGE>


<TABLE>
<CAPTION> 
Exhibit No.                           Description                                                                 Page No.
-----------                           -----------                                                                 --------
<S>           <C>                                                                                               <C>
10.85.1       Form of Promissory Note relating to Exhibit 10.85(2).........................................
10.86         Exhibit 10.75 Form of Cash Flow Valuation Report, relating to Exhibit 10.48
              relating to Exhibit 10.30.2, relating to Exhibit 10.29.2, relating to
              Exhibit 10.21.3, relating to Exhibit
              10.21(1).....................................................................................
10.86.1       Exhibit 10.75.1 Pooling and Servicing Agreement, relating to Exhibit 10.48.1,
              relating to Exhibit 10.30.3, relating to Exhibit 10.29.4, relating to Exhibit
              10.21.4, relating to Exhibit 10.21(1)........................................................
10.86.2       Exhibit 10.75.2 List of Closing Documents, relating to Exhibit 10.48.2, relating to
              Exhibit 10.30.4, relating to Exhibit 10.29.5, relating to Exhibit 10.21.5, relating to
              Exhibit 10.21(1).............................................................................
10.86.3       Exhibit 10.75.3 Form of RDI Policy, relating to Exhibit 10.48.3, relating to
              Exhibit 10.30.5, relating to Exhibit 10.29.6, relating to Exhibit 10.3.4, relating to
              Exhibit 10.3(1)..............................................................................
10.86.4       Exhibit 10.75.4 Form of VSI Policy, relating to Exhibit 10.48.4, relating to
              Exhibit 10.30.6, relating to Exhibit 10.29.7, relating to Exhibit 10.3.6, relating to
              Exhibit 10.3(1)..............................................................................
10.87         Servicing Agreement dated as of 3/1/96 by and between Aegis Auto Finance, Inc.
              as Servicer and Norwest Bank Minnesota, National Association in its capacity as
              Backup Servicer and Norwest Bank Minnesota, National Association in its
              capacity as Trustee.(2)......................................................................
10.88         Master Servicing Agreement dated as of 4/6/96 by and between American
              Lenders Facilities, Inc. as Servicer and Aegis Consumer Finance, Inc. as
              Company.(2)..................................................................................
10.89         Subcontracting Agreement dated as of 4/6/96 by and between American Lenders
              Facilities, Inc. as Servicer and Aegis Consumer Finance, Inc. as Subcontractor.(2)...........
10.90         Form of Greenwich Capital Markets, Inc. Warrant ("Greenwich Warrant") to
              purchase Common Stock of The Aegis Consumer Funding Group, Inc.(2)...........................
10.90.1       Form of Escrow letter concerning Greenwich Warrant, relating to Exhibit 10.90.(2)............
10.90.2       Form of Acknowledgement letter concerning the adequacy of the Greenwich
              Warrant, relating to Exhibit 10.90.(2).......................................................
10.91         Exhibit 10.86 Form of Cash Flow Valuation Report, relating to Exhibit 10.75, relating
              to Exhibit 10.48, relating to Exhibit 10.30.2, relating to Exhibit 10.29.2, relating to
              Exhibit 10.21.3, relating to Exhibit 10.21(1)................................................
10.91.1       Exhibit 10.86.1 Pooling and Servicing Agreement,  relating to Exhibit 10.75.1,
              relating to Exhibit 10.48.1, relating to Exhibit 10.30.3, relating to Exhibit 10.29.4,
              relating to Exhibit 10.21.4, relating to Exhibit 10.21(1)....................................
10.91.2       Exhibit 10.86.2 List of Closing Documents,  relating to Exhibit 10.75.2,
              relating to Exhibit 10.48.2, relating to Exhibit 10.30.4, relating to Exhibit 10.29.5,
              relating to Exhibit 10.21.5, relating to Exhibit 10.21(1)....................................
10.91.3       Exhibit 10.86.3 Form of RDI Policy, relating to Exhibit 10.75.3,
              relating to Exhibit 10.48.3, relating to Exhibit 10.30.5, relating to Exhibit 10.29.6,
              relating to Exhibit 10.3.4, relating to Exhibit 10.3(1)......................................
10.91.4       Exhibit 10.86.4 Form of VSI Policy, relating to Exhibit 10.75.4,
              relating to Exhibit 10.48.4,  relating to Exhibit 10.30.6, relating to Exhibit 10.29.7,
              relating to Exhibit 10.3.6, relating to Exhibit 10.3(1)......................................
10.91.5       Form of Purchase Agreement dated as of 6/01/96 by and between Aegis Auto Finance,
              Inc. as Seller and Aegis Auto Funding Corp., as Purchaser....................................
10.91.6       Form of Purchase Agreement dated as of 6/01/96 by and between Aegis Auto Funding
              Corp. III, as seller and Aegis Auto Finance, Inc., as Purchaser..............................
10.91.7       Fom of Servicing Agreement dated as of 6/1/96 by and between Aegis Auto Finance,
              Inc. as Servicer and Norwest Bank Minnesota, National Association in its capacity as
              Backup Servicer and Norwest Bank Minnesota, National Association in its
              capacity as Trustee.(2)......................................................................
</TABLE>

                                            49
<PAGE>

<TABLE>
<CAPTION> 
Exhibit No.                           Description                                                                 Page No.
-----------                           -----------                                                                 --------
<S>           <C>                                                                                               <C>
10.91.8       Form of Purchase Agreement as of May 17, 1996, by and between Aegis Auto Finance,
              Inc. as Seller and Aegis Auto Funding Corp. III as Purchaser.................................
10.92         Form of Rothschild Placement Agency Agreement Letter.........................................
10.93         Greenwich Capital Commitment Letter..........................................................
10.93.1       Amendment to Greenwich Capital Commitment Letter ............................................
10.94         Warehouse Lending Agreement dated as of May 17, 1996 by and between The
              Aegis Consumer Funding Group, Inc. as Guarantor, Aegis Auto Funding Corp. III
              and Greenwich Capital Financial Products, Inc., as Lender....................................
10.94.1       Form of Note relating to Exhibit 10.94.......................................................
10.94.2       Form of Security Agreement relating to Exhibit 10.94.........................................
10.94.3       Form of Servicing Agreement relating to Exhibit 10.94........................................
10.95         Credit Agreement Dated as of May 17, 1996, Among The Aegis Consumer Funding
              Group, Inc. as borrower, Aegis Consumer Finance, Inc., as Guarantor, Aegis Auto
              Finance, Inc., as Guarantor, and Greenwich Capital Financial Products, Inc.,
              as Lender ...................................................................................
10.95.1       Form of Note relating to Exhibit 10.95.......................................................
10.95.2       Form of Aegis Consumer Finance, Inc. Security and Pledge Agreement relating to
              Exhibit 10.95................................................................................
10.95.3       Form of Aegis Auto Finance, Inc. Security and Pledge Agreement
              relating to Exhibit 10.95....................................................................
10.95.4       AMENDED AND RESTATED CREDIT AGREEMENT dated as of June 23, 1997
              to the Credit Agreement dated as of May 17, 1996 among THE AEGIS CONSUMER
              FUNDING GROUP, INC., as Borrower and AEGIS CONSUMER FINANCE, INC.
              and AEGIS AUTO FINANCE, INC. as Guarantors and GREENWICH CAPITAL
              FINANCIAL PRODUCTS, INC......................................................................
10.96         Loan and Security Agreement dated June 25, 1996, between Aegis Consumer
              Finance, Inc. and III Finance, Inc. LTD......................................................
10.96.1       Form of Promissory Note relating to Exhibit 10.96............................................
10.97         PURCHASE AGREEMENT dated as of September 1, 1996 by and between AEGIS
              AUTO FINANCE, INC. as Seller and AEGIS AUTO FUNDING CORP. as Purchaser.......................
10.97.1       SERVICING AGREEMENT dated as of September 1, 1996 among AEGIS AUTO FINANCE,
              INC., as Servicer NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION in its
              capacity as Backup Servicer and NORWEST BANK 
              MINNESOTA, NATIONAL ASSOCIATION in its capacity as Trustee...................................
10.97.2       POOLING AND SERVICING AGREEMENT Dated as of September 1, 1996 by
              and between AEGIS AUTO FUNDING CORP., as Seller and NORWEST BANK
              MINNESOTA, NATIONAL ASSOCIATION as Trustee and Backup Servicer...............................
10.98         LOAN AND SECURITY AGREEMENT dated as of September 12, 1996 by and between
              AEGIS AUTO FINANCE, INC. as Borrower and III FINANCE, INC. as Lender.........................
10.98.1       NOTE relating to 10.98.......................................................................
10.99         POOLING AND SERVICING AGREEMENT dated as of September 1, 1996 by and
              between AEGIS AUTO FUNDING CORP., as Seller and NORWEST BANK MINNESOTA,
              NATIONAL ASSOCIATION, as Trustee and Backup Servicer.........................................
10.99.1       PURCHASE AGREEMENT dated as of September 1, 1996 by and
              between AEGIS AUTO FINANCE, INC. as Seller and AEGIS AUTO
              FUNDING CORP. as Purchaser...................................................................
10.99.2       CERTIFICATE PURCHASE AGREEMENT dated as of September 27,
              1996 by and between AEGIS AUTO FUNDING CORP. and
              GREENWICH CAPITAL MARKETS, INC...............................................................
</TABLE>

                                            50
<PAGE>


<TABLE>
<CAPTION> 
Exhibit No.                           Description                                                                 Page No.
-----------                           -----------                                                                 --------
<S>           <C>                                                                                               <C>
10.100        SERVICING AGREEMENT dated as of September 1, 1996 among AEGIS AUTO FINANCE,
              INC., as Servicer, NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION in its
              capacity as Backup Servicer and NORWEST BANK MINNESOTA, NATIONAL
              ASSOCIATION in its capacity as Trustee.......................................................
10.101        Employment Agreement by and between SYSTEMS AND SERVICES TECHNOLOGIES,
              INC. and Matthew B. Burns....................................................................
10.102        Employment Agreement by and between SYSTEMS AND SERVICES TECHNOLOGIES,
              INC. and John Chappell.......................................................................
10.103        PURCHASE AGREEMENT dated as of December 9, 1996 by and
              between AEGIS AUTO FINANCE, INC. as Seller and ENTERPRISE
              NATIONAL BANK OF PALM BEACH as Purchaser.....................................................
10.103.A      FIRST MODIFICATION OF PURCHASE AGREEMENT
              dated as of March 20, 1997, by and between AEGIS
              AUTO FINANCE, INC. as Seller and ENTERPRISE
              NATIONAL BANK OF PALM BEACH as Purchaser.....................................................
10.103.1      ADDENDUM TO MASTER SERVICING AGREEMENT dated as of
              December 9, 1996 by and among AMERICAN LENDERS FACILITIES,
              INC. as Servicer, AEGIS CONSUMER FINANCE, INC., AEGIS AUTO
              FINANCE INC. as Seller and ENTERPRISE NATIONAL BANK OF
              PALM BEACH...................................................................................
10.103.1A     MODIFICATION OF ADDENDUM TO MASTER SERVICING
              AGREEMENT dated as of March 20, 1997, by
              and among AMERICAN LENDERS FACILITIES, INC.
              as Servicer, AEGIS CONSUMER FINANCE, INC., AEGIS
              AUTO FINANCE, INC. as Seller and ENTERPRISE NATIONAL
              BANK OF PALM BEACH as Purchaser..............................................................

10.104        MASTER TRUST AGREEMENT dated as of March 1, 1997, by and
              among AEGIS AUTO FUNDING CORP. IV, NORWEST BANK
              MINNESOTA, NATIONAL ASSOCIATION as Backup Servicer,
              and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
              as Trustee with respect to the Aegis Auto Receivables Trusts.................................
10.104.1      MASTER PURCHASE AGREEMENT dated as of
              March 1, 1997, by and between AEGIS AUTO FINANCE, INC. as
              Borrower and AEGIS AUTO FUNDING CORP. IV.....................................................
10.104.2      MASTER SERVICING AGREEMENT dated as of March
              1, 1997, by and among AEGIS AUTO FUNDING CORP. IV,
              NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
              as Backup Servicer and NORWEST BANK MINNESOTA,
              NATIONAL ASSOCIATION as Trustee..............................................................
10.104.3      POOLING AND SERVICING AGREEMENT dated as of March 1,
              1997, by and among AEGIS AUTO FUNDING CORP. IV., NORWEST
              BANK MINNESOTA, NATIONAL ASSOCIATION as Trustee and
              Backup Servicer..............................................................................
10.104.4      MASTER CERTIFICATE PURCHASE AGREEMENT dated as of
              March 14, 1997, by and among AEGIS AUTO FUNDING CORP. IV
              THE AEGIS CONSUMER FUNDING GROUP, INC., and III FINANCE
              LTD., III GLOBAL LTD. and III LIMITED PARTNERSHIP,
              collectively, as Purchasers..................................................................
</TABLE>

                                            51
<PAGE>

<TABLE>
<CAPTION> 
Exhibit No.                           Description                                                                 Page No.
-----------                           -----------                                                                 --------
<S>           <C>                                                                                               <C>
10.104.5      POOLING AND SERVICING AGREEMENT dated as of April 1, 1997,
              by and between AEGIS AUTO FUNDING CORP. IV, as Seller
              and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
              as Trustee and Backup Servicer...............................................................
10.104.6      SUPPLEMENTAL CONVEYANCE  dated as of April 16, 1997, by
              AEGIS AUTO FINANCE, INC. to AEGIS AUTO FUNDING CORP. IV,
              as Purchaser.................................................................................
10.104.7      PROMISSORY NOTE dated as of Apr 16, 1997, executed by THE
              AEGIS CONSUMER FUNDING GROUP, INC. in favor of AEGIS
              AUTO FUNDING CORP. IV........................................................................
10.104.8      POOLING AND SERVICING dated as of May 1, 1997,
              by and between AEGIS AUTO FUNDING CORP. IV, as Seller
              and NORWEST BANK MINNESOTA, NATIONAL
              ASSOCIATION, as Trustee and Backup Servicer..................................................
10.104.9      PROMISSORY NOTE dated as of May 12, 1997, executed by THE
              AEGIS CONSUMER FUNDING GROUP, INC. in favor of
              AEGIS AUTO FUNDING CORP. IV.
10.104.10     SUPPLEMENTAL CONVEYANCE dated as of May 12, 1997,
              executed by AEGIS AUTO FINANCE, INC. to AEGIS AUTO
              FUNDING CORP. IV, as Purchaser...............................................................
10.104.11     AMENDED AND RESTATED MASTER TRUST AGREEMENT dated as of May
              1, 1997, by and between AEGIS AUTO FUNDING CORP. IV, as Seller and
              NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as Trustee.....................................
10.104.12     POOLING AND SERVICING AGREEMENT dated as of [            ] by and
              between AEGIS AUTO FUNDING CORP. IV, as Seller and NORWEST BANK
              MINNESOTA, NATIONAL ASSOCIATION, as Trustee and Backup Servicer..............................
10.104.13     SUPPLEMENTAL CONVEYANCE dated as of [                     ] by AEGIS AUTO
              FINANCE, INC. to AEGIS AUTO FUNDING CORP. IV, as Purchaser...................................
10.104.14     TERM NOTE dated as of [                 ] by THE AEGIS CONSUMER FUNDING
              GROUP, INC. in favor of AEGIS AUTO FUNDING CORP. IV..........................................
10.104.15     POOLING AND SERVICING AGREEMENT dated as of [            ] by and between
              AEGIS AUTO FUNDING CORP. IV, as Seller and NORWEST BANK
              MINNESOTA, NATIONAL ASSOCIATION, as Trustee and Backup Servicer..............................
10.104.16     SUPPLEMENTAL CONVEYANCE dated as of [                     ] by AEGIS AUTO
              FINANCE, INC. to AEGIS AUTO FUNDING CORP. IV, as Purchaser...................................
10.104.17     TERM NOTE dated as of [                 ] by THE AEGIS CONSUMER FUNDING
              GROUP, INC. in favor of AEGIS AUTO FUNDING CORP. IV..........................................
10.105        LOAN AND SECURITY AGREEMENT dated as of March
              14, 1997, by and among AEGIS AUTO FINANCE, INC. as
              Borrower, III FINANCE LTD. and III GLOBAL LTD., collectively
              as Lenders...................................................................................
10.105.1      PROMISSORY NOTE dated as of March 14, 1997,
              executed by AEGIS AUTO FINANCE, INC. in favor of III FINANCE
              LTD..........................................................................................
10.105.2      PROMISSORY NOTE dated as of March 14, 1997,
               executed by AEGIS AUTO FINANCE, INC. in favor of
              III GLOBAL LTD...............................................................................
10.105.3      GUARANTY dated as of March 14, 1997, executed by THE AEGIS
              CONSUMER FUNDING GROUP, INC. in favor of III FINANCE
              LTD. and III GLOBAL LTD......................................................................
</TABLE>

                                       52
<PAGE>


<TABLE>
<CAPTION> 
Exhibit No.                           Description                                                                 Page No.
-----------                           -----------                                                                 --------
<S>           <C>                                                                                               <C>
10.105.4      PLEDGE AGREEMENT dated as of March 14,1997,
              executed by THE AEGIS CONSUMER FUNDING GROUP, INC. in
              favor of III FINANCE LTD. and III GLOBAL LTD.................................................
10.105.5      PLEDGE AGREEMENT dated as of March 14, 1997,
              executed by AEGIS CONSUMER FINANCE, INC. in favor of
              III FINANCE LTD. and III GLOBAL LTD..........................................................
10.105.6      PLEDGE AGREEMENT dated as of March 14, 1997,
              executed by AEGIS CAPITAL MARKETS, INC.
              (d/b/a MARKETS) in favor of III FINANCE LTD. AND III
              GLOBAL LTD...................................................................................
10.105.7      RETAINED YIELD PLEDGE AGREEMENT dated as of March 14,
              1997, executed by AEGIS AUTO FINANCE, INC. in favor of  III
              FINANCE LTD..................................................................................
10.105.8      AMENDMENT NO. 6 dated as of March 12, 1997,
              by and among AEGIS ACCEPTANCE CORP., AEGIS CONSUMER
              FINANCE, INC. and III FINANCE LTD. to the LOAN AND
              SECURITY AGREEMENT dated as of February 28, 1994.............................................
10.105.9      SECURITY AGREEMENT dated as of March 14,
              1997, by and between AEGIS ACCEPTANCE CORP. and AEGIS
              CONSUMER FINANCE, INC., as grantors and III FINANCE LTD.
              and III GLOBAL LTD., as Secured Parties......................................................
10.105.10     MASTER AMENDMENT TO LOAN AND
              SECURITY  AGREEMENT  dated  as of March  19,  1997 by and
              between  AEGIS  CONSUMER  FINANCE,  INC.  and AEGIS  AUTO
              FINANCE,  INC.,  as Borrowers  and III FINANCE  LTD.,  as
              Lender and an ASSIGNMENT  AGREEMENT dated as of March 19,
              1997 by and among AEGIS CAPITAL MARKETS, AEGIS ACCEPTANCE
              CORP. AND AEGIS AUTO FINANCE, INC............................................................
10.106        SERVICING AGREEMENT dated as of January 3, 1997,
              by and between SYSTEMS & SERVICES TECHNOLOGIES, INC.
              and AEGIS CONSUMER FINANCE, INC..............................................................
10.107        INDENTURE dated as of April 30, 1997, among AEGIS AUTO FINANCE, INC.,
              as Borrower, THE AEGIS CONSUMER FUNDING GROUP and NORWEST
              BANK MINNESOTA, NATIONAL ASSOCIATION, as Indenture Trustee as to
              the Subordinated Debentures..................................................................
10.107.1      12% EXCHANGEABLE SUBORDINATED NOTES due 2004 (i) the first payable
              to THE HIGH RISK OPPORTUNITIES HUB FUND LTD. in the principal amount
              of $5,000,000; and (ii) the second payable to III FINANCE LTD. in the principal
              amount of $16,333,333........................................................................
10.107.2      NOTE PURCHASE AGREEMENT dated as of April 30, 1997, among AEGIS
              AUTO FINANCE, INC., THE AEGIS CONSUMER FUNDING GROUP, INC.,
              III FINANCE LTD. AND THE HIGH RISK OPPORTUNITIES HUB FUND LTD.
10.107.3      REGISTRATION RIGHTS AGREEMENT dated as of April 30, 1997, among
              THE AEGIS CONSUMER FUNDING GROUP, INC., THE HIGH RISK
              OPPORTUNITIES HUB FUND LTD., AND III FINANCE LTD.............................................
10.107.4      GUARANTY AGREEMENT dated as of April 30, 1997, executed by THE AEGIS
              CONSUMER FUNDING GROUP, INC. in favor of NORWEST BANK
              MINNESOTA, NATIONAL ASSOCIATION, as Indenture Trustee.
10.107.5      PLEDGE AGREEMENT dated as of April 30, 1997, from THE AEGIS
              CONSUMER FUNDING GROUP, INC. to NORWEST BANK MINNESOTA,
              NATIONAL ASSOCIATION, as Indenture Trustee...................................................
</TABLE>

                                            53
<PAGE>

<TABLE>
<CAPTION> 
Exhibit No.                           Description                                                                 Page No.
-----------                           -----------                                                                 --------
<S>           <C>                                                                                               <C>
10.107.6      PLEDGE AGREEMENT dated as of April 30, 1997, from AEGIS CONSUMER
              FINANCE, INC. to NORWEST BANK MINNESOTA, NATIONAL
              ASSOCIATION..................................................................................
10.107.7      PLEDGE AGREEMENT dated as of April 30, 1997, from AEGIS CAPITAL
              MARKETS, INC. to NORWEST BANK MINNESOTA, NATIONAL
              ASSOCIATION..................................................................................
10.107.8      PLEDGE AGREEMENT dated as of April 30, 1997, from AEGIS AUTO
              FINANCE, INC. to NORWEST BANK MINNESOTA, NATIONAL
              ASSOCIATION..................................................................................
10.107.9      PLEDGE AGREEMENT dated as of April 30, 1997, from AEGIS CONSUMER
              FINANCE, INC. to NORWEST BANK MINNESOTA, NATIONAL
              ASSOCIATION..................................................................................
10.107.10S    ECURITY AGREEMENT dated as of April 30, 1997, from AEGIS AUTO
              FINANCE, INC. to NORWEST BANK MINNESOTA, NATIONAL
              ASSOCIATION..................................................................................
10.107.11     SECURITY AGREEMENT dated as of April 30, 1997, from AEGIS
              ACCEPTANCE CORP. and AEGIS CONSUMER FINANCE, INC. to NORWEST
              BANK MINNESOTA, NATIONAL ASSOCIATION.........................................................
10.107.12     LIEN SUBORDINATION AGREEMENT dated as of April 30, 1997, by
              NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION in favor
              of III FINANCE LTD...........................................................................
10.107.13     DESIGNEE AMENDMENT AGREEMENT dated as of April 30, 1997, from
              AEGIS CONSUMER FINANCE, INC. and acknowledged by III FINANCE LTD.
              and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION.............................................
10.107.14     CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS OF
              CLASSD REDEEMABLE PREFERRED STOCK OF THE AEGIS CONSUMER
              FUNDING GROUP, INC. dated as of May 15, 1997.................................................
10.108        AMENDED AND RESTATED MASTER LOAN AGREEMENT dated as of
              April 30, 1997, among AEGIS AUTO FINANCE, INC., AEGIS CONSUMER
              FINANCE, INC. AND III FINANCE LTD............................................................
10.108.1      AMENDED AND RESTATED NOTE dated as of May 21, 1997...........................................
10.108.2      PLEDGE AGREEMENT dated as of April 30, 1997, from AEGIS AUTO
              FINANCE, INC. to III FINANCE LTD.............................................................
10.108.3      PLEDGE AGREEMENT dated as April 30, 1997, from AEGIS CONSUMER
              FINANCE, INC. to III FINANCE LTD.............................................................
10.108.4      MASTER SECURITY AGREEMENT dated as of April 30, 1997, from each of
              THE AEGIS CONSUMER FUNDING GROUP, INC., AEGIS CONSUMER
              FINANCE, INC., AEGIS CAPITAL MARKETS, INC. and AEGIS AUTO
              FINANCE, INC. to III FINANCE LTD.............................................................
10.108.5      GUARANTY dated as of April 30, 1997, from THE AEGIS CONSUMER
              FUNDING GROUP, INC. to III FINANCE LTD.......................................................
10.109        EMPLOYMENT AGREEMENT dated as of July 1, 1997, by and between THE
              AEGIS CONSUMER FUNDING GROUP, INC. and Mr. William F. Henle.
11            Computation of Earnings Per Share............................................................
21            Subsidiaries of the Company(1)...............................................................
27            Financial Data Schedule......................................................................
</TABLE>


                                            54
<PAGE>


                          THE AEGIS CONSUMER FUNDING GROUP, INC.
                        INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                                           Page
                                                                                           ----
<S>                                                                                         <C>
Report of Independent Auditors..............................................................F-2
Consolidated Statements of Financial Condition at June 30, 1996 and 1997 ...................F-3
Consolidated Statements of Income for the fiscal years ended June 30, 1995, 1996
    and 1997................................................................................F-4
Consolidated Statements of Changes in Stockholders' Equity for the fiscal years ended
    June 30, 1995, 1996 and 1997............................................................F-5
Consolidated Statements of Cash Flows for the fiscal years ended June 30, 1995, 1996
    and 1997................................................................................F-6
Notes to Consolidated Financial Statements..................................................F-7
</TABLE>





                                       F-1

<PAGE>



                         REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Stockholders
The Aegis Consumer Funding Group, Inc.

     We have  audited the  accompanying  consolidated  statements  of  financial
condition  of The Aegis  Consumer  Funding  Group,  Inc. and  subsidiaries  (the
"Company") as of June 30, 1997 and 1996 and the related consolidated  statements
of income,  changes in stockholders'  equity, and cash flows for the three years
in the period ended June 30, 1997. These consolidated  financial  statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.

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

     In our opinion,  the consolidated  financial  statements  referred to above
present fairly, in all material respects, the consolidated financial position of
the  Company as of June 30,  1997 and 1996 and the  consolidated  results of its
operations  and its cash flows for the three years in the period  ended June 30,
1997, in conformity with generally accepted accounting principles.



                                                  ERNST & YOUNG LLP



September __, 1997
New York, New York


                                       F-2

<PAGE>



                     The Aegis Consumer Funding Group, Inc.

                 Consolidated Statements of Financial Condition


<TABLE>
<CAPTION>
                                     Assets

                                                                 June 30,      
                                                        ---------------------------
                                                            1996           1997 
                                                        ------------   ------------
<S>                                                     <C>            <C>         
Cash and cash equivalents                               $  3,090,624   $  4,492,591
Interest and other receivables                             1,660,442      4,146,667
Automobile finance receivables, net                       41,058,222     33,572,010
Retained interests in securitized receivables             70,242,773     36,329,946
Fixed assets, net of accumulated
 depreciation of $712,073 in 1995
 and $1,401,048 in 1996                                    1,817,356      5,024,814
Other assets                                               3,582,337      3,234,620
                                                        ------------   ------------

                                                        $121,451,754   $ 87,720,321
                                                        ============   ============


                      Liabilities and stockholders' equity

Warehouse credit facilities                             $ 37,202,342   $ 17,407,004
Notes payable                                             29,848,859     38,409,302
Accounts payable and accrued expenses                     11,220,644     14,685,011
Income taxes payable                                       9,188,444        764,902
                                                        ------------   ------------

 Total liabilities                                        87,460,289     71,266,219
                                                        ------------   ------------


Subordinated debentures, net                                      --     24,031,746
                                                        ------------   ------------

Stockholders' equity:
Common stock, $.01 par value; 30,000,000
 shares authorized; shares issued
 and outstanding in 1996 and 17,677,217 shares
 issued and outstanding in 1997                              154,560        176,772
Preferred stock, Series C, $0.10 par value;
 1,100 shares authorized; 920 shares
 issued; 525 shares outstanding in 1996
 and 106 shares outstanding in 1997                               53             11
Paid-in capital                                           22,199,545     22,303,034
Retained earnings, (defecit) since date of
 recapitalization (March 1, 1992)                         11,637,307    (30,057,461)
                                                        ------------   ------------

 Total stockholders' equity                               33,991,465      7,577,644
                                                        ------------   ------------

                                                        $121,451,754   $ 87,720,321
                                                        ============   ============
</TABLE>


             See notes to these consolidated financial statements.

                                       F-3

<PAGE>



                     The Aegis Consumer Funding Group, Inc.

                        Consolidated Statements of Income

<TABLE>
<CAPTION>
                                                                   Years Ended June 30,  
                                                       ------------------------------------------
                                                           1995           1996           1997
                                                       ------------   ------------   ------------
<S>                                                    <C>            <C>            <C>          
Revenues:
Gains (losses) from securitization transactions, net   $  9,522,648   $ 32,428,861   ($ 9,438,729)
Interest income                                           6,853,819     13,576,948     22,221,346
Servicing fee income                                                                    4,037,772
Fees and commissions earned                                 769,953        283,319        138,072
Fees and commissions earned - related parties               275,000             --             --
Other income                                                388,881         38,759      1,140,990
                                                       ------------   ------------   ------------

                                                         17,810,301     46,327,887     18,099,451
                                                       ------------   ------------   ------------
Operating Expenses:
Interest                                                  4,541,006     10,090,712     16,486,325
Interest paid to related parties                            252,879             --             --
Salaries and other employee costs                         3,896,697      8,267,376     14,324,924
Provision for credit losses                                 941,354       3,504,62      9,426,802
Charge for release of escrowed shares                       878,739        806,886             --
Office expenses                                             744,149        899,667      2,082,352
Professional fees                                           372,324      1,131,759      2,330,632
Professional fees to related parties                        350,000        125,000             --
Rent and electricity                                        615,749      1,249,557      2,018,778
Communications                                              606,523        974,979      2,463,008
Amortization and depreciation                               453,821        611,833      1,140,478
Travel and entertainment                                    126,640        300,042        483,106
Dealer list purchased from related parties                       --             --
Other                                                       988,775      1,604,816      2,271,800
                                                       ------------   ------------   ------------

                                                         14,768,656     29,567,249     53,028,205
                                                       ------------   ------------   ------------

Net income before income taxes                            3,041,645     16,760,638    (34,928,754)

Income taxes                                              1,768,024      7,472,022     (8,427,030)
                                                       ------------   ------------   ------------

Net income                                             $  1,273,621   $  9,288,616   ($26,501,724)
                                                       ============   ============   ============

Net income available for common stockholders           $  1,079,423   $  9,017,976   ($26,694,201)
                                                       ============   ============   ============

Net income per common and common equivalent share:
 Primary Earnings Per Share:
    Historical basis                                   $       0.09   $       0.65
                                                       ============   ============
    Pro-forma basis                                    $       0.12            N/A            N/A
                                                       ============   ============   ============

 Fully Diluted Earnings Per Share:
    Historical basis                                           0.08   $       0.61
                                                       ============   ============
    Pro forma basis                                    $       0.11            N/A            N/A
                                                       ============   ============   ============
</TABLE>


             See notes to these consolidated financial statements.

                                       F-4

<PAGE>



                     The Aegis Consumer Funding Group, Inc.

           Consolidated Statements of Changes in Stockholders' Equity
                    Years Ended June 30, 1994 , 1995 and 1996

<TABLE>
<CAPTION>
                                                                                           Other          
                                                        Preferred Stock                  Transactions    Retained 
                                               Common  ------------------   Paid-in         With        (Defecit)
                                                Stock  Series B  Series C   Capital      Shareholders    Earnings          Total 
                                               ------  --------  -------- ------------   ------------  ------------    ------------
<S>                                            <C>        <C>     <C>     <C>                          <C>             <C>         
Balance, July 1 , 1994                         $122,563   $ 25    $ --    $  2,755,484    ($335,000)   $  1,539,907    $  4,082,979

Issuance of common stock from
    initial public offering, net                 21,921     --      --      11,824,936           --              --      11,846,857
Issuance of common stock from
    exercise of warrants                          3,284     --      --          23,716           --              --          27,000
Amortization of  common stock issued                 --     --      --              --       25,000              --          25,000
Redemption of preferred stock                        --    (25)     --      (2,452,653)          --              --      (2,452,678)
Repayment of stockholder receivable                  --     --      --              --      210,000              --         210,000
Net income                                           --     --      --              --           --       1,273,621       1,273,621
Release of escrowed shares                           --     --      --         878,739           --              --         878,739
Series B preferred stock dividends                   --     --      --              --           --        (194,198)       (194,198)
                                               --------   ----    ----    ------------    ---------    ------------    ------------

Balance, June 30, 1995                          147,768     --      --      13,030,222     (100,000)      2,619,330      15,697,320

Issuance of Series C preferred stock                 --     --      92       8,463,908           --              --       8,464,000
Conversions of Series C preferred
    stock to common stock                         6,792     --     (31)         (6,761)          --              --              --
Redemptions of Series C preferred stock              --     --      (8)     (1,104,413)          --              --      (1,104,421)
Issuance of warrants from debt agreements            --     --      --         739,064           --              --         739,064
Amortization of common stock issued                  --     --      --              --      100,000              --         100,000
Net income                                           --     --      --              --           --       9,288,616       9,288,616
Release of escrow shares                             --     --      --         806,886           --              --         806,886
Series C preferred stock dividends                   --     --      --         270,639           --        (270,639)             --
                                               --------   ----    ----    ------------    ---------    ------------    ------------

Balance, June 30, 1996                          154,560     --      53      22,199,545           --      11,637,307      33,991,465
                                               --------   ----    ----    ------------    ---------    ------------    ------------


Conversion of Series C preferred
 stock to common stock                           22,212     --     (42)        (22,170)          --              --              --
Issuance of warrants from debt
 agreements                                                                    265,985
Treasury stock reclassed to common
 from preferred stock conversion                     --     --      --        (340,000)          --              --        (340,000)
Net loss                                             --     --      --              --           --     (26,501,724)    (26,501,724)

Series C preferred stock dividends                   --     --      --         199,674           --        (192,477)             --
                                               --------   ----    ----    ------------    ---------    ------------    ------------
Balance, June 30, 1997                         $176,772   $ --    $ 11    $ 22,303,034           --    $ 15,056,894    $  7,422,923
                                               ========   ====    ====    ============    =========    ============    ============
</TABLE>


             See notes to these consolidated financial statements.

                                       F-5

<PAGE>



                     The Aegis Consumer Funding Group, Inc.

                      Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                                                 Years Ended June 30, 
                                                                                ---------------------------------------------------
                                                                                     1995               1996               1997
                                                                                -------------      -------------      -------------
<S>                                                                             <C>                <C>                <C>           
Cash flows from operating activities:
    Net income (loss)                                                           $   1,273,621      $   9,288,616      ($ 41,495,093)
    Adjustments to reconcile net income (loss) to net cash used in
     operating activities:
   Amortization and depreciation                                                      453,821           611,833c          1,140,478
   Provision for credit losses                                                        941,354          3,504,622          9,426,802
   Valuation allowance on note receivable                                                  --            600,000                 --
   Provision (benefit) for deferred income taxes                                    1,546,540          5,918,034
   Release of Escrowed shares                                                         878,739            806,886                 --
   Unrealized gains on securitization transactions                                (21,439,207)       (53,950,552)       (12,316,889)
   Sale of retained yield assets                                                                                          1,028,797
   Write down of retained interests in securitized receivables                             --          7,500,000         46,000,000
   Automobile finance receivables portfolio:
       Purchases of automobile finance receivables                               (162,154,536)      (451,972,152)      (593,755,887)
       Sales of automobile finance receivables                                    123,899,778        432,582,175        567,209,169
       Repayments of automobile finance receivables                                 6,515,100         15,930,459         24,341,440
       Increase in prepaid insurance and direct costs of acquisition
          net of deferred acquisition fees                                           (757,582)        (1,319,746)         7,257,419
   Decrease in note receivable                                                             --          7,651,985                 --
   (Increas) decrease  in interest and other receivables                           (4,182,398)         3,047,448                 --
   Increase in other assets                                                          (217,500)        (2,551,691)           160,556
   (Increase)(decrease)  in accounts payable and accrued expenses                   5,017,747          5,104,868          4,196,022
   Decrease (increase) in income taxes payable                                       (983,063)         1,464,933         (9,155,199)
                                                                                -------------      -------------      -------------
        Net cash used in operating activities                                     (49,207,586)       (15,782,282)         4,037,615
                                                                                -------------      -------------      -------------

Cash flows from investing activities:
   Additional payments to securitized receivable trusts                                    --         (2,335,562)        (2,4212849)
   Distributions from retained interests in securitized receivables                 1,796,173          2,991,063          1,622,203
   Purchases of fixed assets                                                         (802,419)        (1,045,553)        (6,239,621)
   Write off fixed asets
   Purchase of sales territory                                                       (248,490)                --
        Net cash provided by (used in) investing activities                           745,264           (390,052)       703,897,020
                                                                                -------------      -------------      -------------

Cash flows from financing activities:
   Proceeds from borrowings under warehouse credit
     facilities                                                                   161,641,043        468,882,721        626,283,300
   Repayment of borrowings under warehouse credit facilities                     (128,738,913)      (479,842,650)      (646,078,639)
   Proceeds from borrowings under notes payable                                    16,044,277         39,416,908         84,325,383
   Repayment of borrowings under notes payable                                     (3,088,154)       (22,524,171)       (75,764,941)
   Proceeds from borrowings under revolving credit facility                         5,273,006                 --
   Repayment of borrowings under revolving credit facility                         (7,116,673)                --
   Proceeds from subordinated debt                                                         --                 --         26,333,333
   Pay of subordinated debt/Unamortized costs of sub debt                                  --                 --         (2,301,587)
   Utilization of net operating loss carryforward                                          --                 --
   Proceeds from initial public offering, net                                      11,846,857                 --
   Exercise of warrants to purchase common stock                                       27,000                 --
   Preferred stock, Series B dividends paid                                          (194,198)                --
   Proceeds from repayment of stockholder receivable                                  210,000                 --
   Redemption of preferred stock, Series B in 1995, Series C in 1996               (2,452,678)        (1,104,421)                --
   Purchase of treasury stock                                                                                              (340,000)
   Dividends preferred stock                                                                                                 21,435
   Proceeds from preferred stock issue, Series C                                           --          8,464,000
                                                                                -------------      -------------      -------------

        Net cash provided by financing activities                                  53,451,567         13,292,387         12,478,284
                                                                                -------------      -------------      -------------

   Net increase (decrease) in cash and cash equivalents                             4,989,245         (2,879,947)         1,401,967

   Cash and cash equivalents, beginning of year                                       981,326          5,970,571          3,090,624
                                                                                -------------      -------------      -------------

   Cash and cash equivalents, end of year                                       $   5,970,571      $   3,090,624      $   4,492,591
                                                                                =============      =============      =============
</TABLE>



             See notes to these consolidated financial statements.

                                       F-6

<PAGE>


                     The Aegis Consumer Funding Group, Inc.

                   Notes to Consolidated Financial Statements
                    Years Ended June 30, 1995, 1996 and 1997


1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

     The  consolidated  financial  statements  include the accounts of The Aegis
Consumer  Funding  Group,  Inc.  (ACFG),   and  its  wholly  owned  subsidiaries
(collectively,  the  "Company").  Such  subsidiaries  are engaged  primarily  in
automobile finance (acquiring  automobile retail installment  contracts and from
April 1994  through  August  1995  originated  automobile  leases),  the capital
markets  business  (structuring  the  securitizations  of  the  Company),   loan
servicing   (as  of  January  1,  1997)  and  providing   financial   advise  to
institutional  investors.  All material  intercompany  balances and transactions
have been eliminated.

     ACFG was formed for the purpose of  providing  management  and  operational
services  to  its  subsidiaries.  Its  principal  subsidiaries,  Aegis  Consumer
Finance,  Inc.  (ACF),ams Systems and Services  Technologies,  Inc. ("SST") were
formed for the purpose of providing  operational  services,  warehouse  facility
arrangements and marketing  support for its  subsidiaries,  and to service loans
acquired by the Companyas  well as other types of marginal  loans  originated by
third parties, respectively.

     On March 1, 1992, the Company underwent a significant recapitalization;  at
that time,  the  approximately  $3,000,000  deficit from the  operations  of the
Company since the date of formation  (October 4, 1989) were  transferred to paid
in  capital.  The  carrying  amount  of the  Company's  assets  and  liabilities
approximated their fair values at that time.

     Certain prior year financial statement line items have been reclassified to
conform to current year presentation.

Cash and Cash Equivalents

     For purposes of reporting  cash flows,  cash and cash  equivalents  include
cash and short-term  investments  with an original  maturity of less than ninety
days.

Automobile Finance Receivables

     Automobile  finance  receivables held for sale (through the  securitization
process)  are  carried  at the lower of cost or market  value.  Market  value is
estimated based on the  characteristics  of the finance  contracts held for sale
and the terms of recent  securitizations of similar finance contracts  completed
by the Company and others.  Automobile  finance  receivables held as investments
are  receivables  the Company  believes it can not currently  securitize and are
carried at their amortized cost.

     The  Company's  evaluation of its allowance for credit losses is based upon
the Company's  historical and expected  future default  rates,  the  liquidation
value of the  underlying  collateral  in the  existing  portfolio,  estimates of
repossession  expenses and any recoveries expected from insurance proceeds.  The
Company's  charge  off  policy  is based on a  receivable-by-receivable  review.
Interest on automobile  finance  receivables is accrued and credited to interest
income  based upon the daily  principal  amount  outstanding  using the interest
method. If an automobile  receivable becomes more than 60 days delinquent in its
payment of  interest  and  principal,  the  Company no longer  accrues  interest
revenue and reverses all interest previously accrued and uncollected.

     Finance  contract  acquisition fees received,  insurance  premiums paid and
direct costs incurred for the underwriting and acquisition of automobile finance
receivables  held for sale are  deferred  until the related  automobile  finance
receivables  are  securitized  and sold.  Origination  fees received,  insurance
premiums paid at origination, and direct costs incurred for the underwriting and
origination of automobile  finance  receivables held for investment are deferred
and amortized to interest income over their contractual lives using the interest
method. Unamortized amounts are recognized in income at the time that automobile
finance receivables are sold or paid in full.

Retained Interests in Securitized Receivables

     Retained  interests in  securitized  receivables  represent the  discounted
amount of expected  collections  from  securitized  receivables in excess of the
amounts due to investors in the  securitizations.  Amortization  of the carrying
value amount is based on the declines  during the period in the present value of
the  currently  projected  collections  using  the  same  discount  rate  as was
appropriate at the time of securitization.

                                      F-7
<PAGE>


                     The Aegis Consumer Funding Group, Inc.

                   Notes to Consolidated Financial Statements
                    Years Ended June 30, 1995, 1996 and 1997


Fixed Assets

     The Company  depreciates  fixed assets on a straight-line  basis over their
estimated  useful  lives  which  range  from  three  to seven  years.  Leasehold
improvements  are amortized over the lesser of the estimated  useful life of the
asset or the remaining life of the lease.

Fees and Commissions

     Fees and  commissions  earned are recorded as income at the closing date of
the related  transaction  or as they are earned in accordance  with the terms of
the underlying agreements.

Income Taxes

     Deferred income taxes are determined by recognizing deferred tax assets and
liabilities for the future tax consequences  attributable to differences between
the financial  statement carrying amounts of existing assets and liabilities and
their  respective tax bases.  The realization of deferred tax assets is assessed
and a valuation  allowance is provided when it is more likely than not that some
portion of the deferred tax asset will not be realized.  Deferred tax assets and
liabilities  are measured  using enacted tax rates  expected to apply to taxable
income in the years in which  those  temporary  differences  are  expected to be
recovered or settled.

Use of Estimates and Judgements

     The Company's  consolidated financial statements include amounts determined
using estimates and assumptions. For example, estimates and assumptions are used
in  determining  asset  valuations  and  allowances  for  retained  interests in
securitized receivables, automobile finance receivables and interest receivable.
While these  estimates  are based on the best  judgement of  management,  actual
results could differ from these estimates.

Impact of New Accounting Pronouncements

     The Company has not adopted Statement of Financial Accounting Standards No.
123, "Accounting for Stock-Based Compensation" ("SFAS 123"), which was issued by
the Financial  Accounting Standards Board in October 1995. SFAS 123 provides for
companies  to  recognize   compensation  expense  associated  with  stock  based
compensation  plans over the anticipated  service period based on the fair value
of the  award on the date of  grant.  SFAS 123 is  effective  for  fiscal  years
beginning after December 15, 1995. Upon adoption, and as allowed under SFAS 123,
the Company plans to elect to adopt SFAS 123's  disclosure only  alternative and
will  continue  to  account  for  stock-based   compensation  as  prescribed  by
Accounting  Principles  Board  Opinion No 25,  "Accounting  for Stock  Issued to
Employees."

     Statement  of  Financial  Accounting  Standards  No. 125,  "Accounting  for
Transfers and Servicing of Financial Assets and  Extinguishment  of Liabilities"
("SFAS 125"),  was issued by the Financial  Accounting  Standards  Board in June
1996. SFAS 125 provides for companies,  upon a transfer of financial  assets, to
recognize  financial and  servicing  assets it controls,  derecognize  financial
assets when  control  has been  surrendered  and  derecognize  liabilities  when
extinguished.  SFAS 125 is effective  for  transfers  and servicing of financial
assets and extinguishment of liabilities occurring after December 31, 1996. SFAS
125 will not have a  material  impact on the  Company's  consolidated  financial
statements.

2.   AUTOMOBILE FINANCE RECEIVABLES, NET

     ACF,  through  its  subsidiaries,  acquires  retail  installment  contracts
("finance  contracts") and from April 1994 through August 1995 originated direct
finance  receivables  ("leases") maturing within a range of three to five years.
At June  30,  1996,  27%,  22%,  and 15%,  respectively  of  automobile  finance
receivables outstanding were acquired in Georgia,  Louisiana and North Carolina,
respectively,  with the  remaining 36% being  originated in 29 other states.  At
June  30,  1997,  ____%,  ____%,  ____%  and  ____%  of  automobile  receivables
outstanding  were purchased in Florida,  Georgia,  Louisiana and North Carolina,
respectively,  with the  remaining  ____% being  generated in ____ other states.
Automobile  finance  receivables are acquired through the Company's  established
dealership base to individual consumers with sub-prime credit.


                                      F-8
<PAGE>

                     The Aegis Consumer Funding Group, Inc.

                   Notes to Consolidated Financial Statements
                    Years Ended June 30, 1995, 1996 and 1997



2.   AUTOMOBILE FINANCE RECEIVABLES, NET (CONTINUED)

     For the fiscal years ended June 30, 1995, 1996 and June 30, 1997,  separate
groups of Dealers with common ownership accounted for _____ %, _____ % and ____%
respectively,  of the finance contracts and leases acquired or originated by the
Company.  In addition;  for the fiscal year ended June 30,  1995,  approximately
20.3%,  19.1%,  16.3%  and  15.1% of all  automobile  finance  receivables  were
purchased in North Carolina, Florida, Louisiana and Georgia,  respectively,  for
the fiscal  year  ended  June 30,  1996,  20.7%,  15.2%,  14.4% and 12.8% of all
automobile  finance  receivables  were  purchased  in Florida,  North  Carolina,
Georgia  and Texas and for the fiscal  year ended June 30,  1997,  approximately
____%, _____ %, _____ % and _____ % of all automobile  finance  receivables were
purchased in the Georgia, Florida, North Carolina and New Jersey,  respectively.
Independent marketing brokers are engaged by the Company to introduce Dealers in
Florida, Louisiana and four other states.

     ACF  periodically  packages and  securitizes,  as asset-backed  securities,
portions  of  its  automobile  finance  receivables  to  sell  to  institutional
investors.  During the years  ended June 30,  1995,  1996 and 1997,  the Company
securitized $11.93 million, $424.8 million and $ _____ million, respectively, of
its automobile  finance  contracts.  For the years ended June 30, 1995, 1996 and
1997,  the  Company  also  sold  $12.3,  $7.8  million  and $  _______  million,
respectively,  of its finance  contract  receivables  in whole loan  sales.  The
Company  contracts  with a third party agent to perform  all  servicing  for its
automobile finance receivables acquired prior to December 31, 1996. Effective in
April 1995,  the Company  entered  into a  sub-servicing  agreement,  whereby it
performs  certain   collection   functions  on  designated   automobile  finance
receivables and receives a sub-servicing  fee. This servicer is also retained by
the  purchasers  of  the  asset-backed  securitization  transactions.  Effective
January 1, 1997, the Company's wholly owned subsidiary, SST, began servicing its
finance contracts as acquired. In May of 1997, the Company transferred servicing
on $______  million  from its third  party  servicer to SST,  including  $______
million of finance contracts in asset-back securitization transactions.

Automobile finance receivables consist of the following:

                                                       Year Ended June 30, 
                                                  ----------------------------
                                                      1996            1997 
                                                  -------------   ------------
Automobile finance contracts -
          Held for sale                           $ 12,930,864
          Held for investment                       11,426,903
Automobile leases - held for investment             25,991,174
Unearned income on automobile leases                (6,156,486)
Unamortized prepaid insurance and direct costs of
    acquisition, net of deferred acquisition fees        9,451
                                                  ------------
                                                    44,201,906
Less allowance for credit losses                    (3,143,684)
                                                  ------------
                                                  $ 41,058,222
                                                  ============
Weighted average interest rates:
          Finance contracts                              20.10%
                                                  ============
          Leases                                         16.53%
                                                  ============

The Company's  expected future minimum lease payments from performing  leases to
be received as of June 30, 1996 are as follows:

        Year Ending
           June 30                                                  Amount  
           -------                                                  ------  
            1998                                                 $ 5,549,000
            1999                                                   5,462,000
            2000                                                   4,539,000
                                                                 -----------
                                                                 $17,019,000
                                                                 ===========

                                      F-9
<PAGE>

                     The Aegis Consumer Funding Group, Inc.

                   Notes to Consolidated Financial Statements
                    Years Ended June 30, 1995, 1996 and 1997


2.   AUTOMOBILE FINANCE RECEIVABLES, NET (CONTINUED)

     An analysis of the allowance for credit losses follows:

                                                       Year Ended June 30,      
                                                 ------------------------------
                                                     1995               1996 
                                                 -----------        -----------
Balance, beginning of year                       $   268,194        $ 1,183,988
Provision charged to income                          941,354          3,504,622
Charge-offs                                          (25,560)        (1,544,926)
                                                 -----------        -----------
Balance, end of year                             $ 1,183,988        $ 3,143,684
                                                 ===========        ===========

     As of  June  30,  1995  and  1996,  substantially  all  automobile  finance
receivables  are  pledged  as  security  under the  Company's  warehouse  credit
facilities.

     At June 30,  1996 and  1997,  the  estimated  fair  value of the  Company's
automobile  finance  receivables  held for sale  approximated  $13.5 million and
$_____ million, respectively,  which is $931,000 and $ ________ respectively, in
excess of book value.  The  estimated  fair values of the  Company's  automobile
finance  receivables held for investment at June 30, 1996 and 1997  approximated
their book values of $28.6 million and $ ______ million, respectively.

3.   RETAINED INTERESTS IN SECURITIZED RECEIVABLES

     Retained  interests in securitized  receivables are computed by taking into
account certain assumptions regarding prepayments, defaults, servicing and other
costs.  The  Company  reviews on a quarterly  basis the  retained  interests  in
securitized  receivables.  If  actual  experience  differs  from  the  Company's
assumptions  or to the  extent  that  market  and  economic  changes  occur that
adversely impact the assumptions  utilized in determining the retained interests
in  securitized  receivables,  the Company  records a charge  against gains from
securitization  transactions.  The discount  rate  utilized in  determining  the
retained  interest  in  securitized  receivables  and gain  from  securitization
transactions is based on the Company's estimate of the yield required by a third
party purchaser of such instrument.  The Company also bases these assumptions on
the performance  characteristics  of the Company's finance contract portfolio to
date.  The Company's  default  assumptions  are based on estimated  repossession
rates, proceeds from the liquidation of repossessed vehicles,  proceeds from VSI
Policy coverage and recoveries from the Company's credit default insurance.

     An analysis of the retained  interests in securitized  receivables  follows
(in thousands):

                                                         Year Ended June 30,
                                                     --------------------------
                                                       1996              1997 
                                                     --------          --------
Balance, beginning of year                           $ 23,985          $ 70,243
Additions                                              56,749            14,738
Amortization                                           (2,991)           (2,651)
Write-downs                                            (7,500)          (31,000)
                                                     --------          --------
Balance, end of year                                 $ 70,243          $ 51,330
                                                     ========          ========

     The estimated fair values of the Company retained  interests in securitized
receivables  at June 30, 1996 and 1997  approximated  their book values of $70.2
million and $51.3 million, respectively.



                                      F-10
<PAGE>


                     The Aegis Consumer Funding Group, Inc.

                   Notes to Consolidated Financial Statements
                    Years Ended June 30, 1995, 1996 and 1997


4.   WAREHOUSE AND OTHER CREDIT FACILITIES

     [ACF has two  separate  two-year  Loan  and  Security  agreements  with III
Finance Ltd. ("III Finance"),  (the "Auto Agreements")  whereby, as borrower, it
may borrow,  in total,  the lesser of $100,000,000 or the sum of the outstanding
principal  amount of auto  finance  contracts  or leases,  as  defined,  for the
purpose of financing auto finance  contracts or leases in accordance  with ACF's
underwriting guidelines. Interest is charged at the annual rate of the one-month
LIBOR  plus  4.0%,  adjusted  monthly.  As of June 30,  1995 and  1996,  amounts
outstanding  under the Auto Agreements were  $______________  and  $___________,
respectively,  and the  applicable  interest  rate  was  10.0625%  and  9.4805%,
respectively. The Auto Agreements expire in November 1997.]

     Principal  payments  are made  monthly  in an  amount  equal  to  principal
payments  received  from the  underlying  collateral.  Prepayments  of principal
occurs  when the  Company  securitizes  and  sells  the  underlying  collateral.
Interest payments are made quarterly in arrears and on the date of any principal
prepayments  on the unpaid  principal  amount of each finance  contract or lease
made in accordance with the Auto Agreements.

     The  Company  also  has  a  Loan  and  Security  agreement  (the  "Title  I
Agreement") whereby, as borrower, it may borrow the lesser of $50,000,000 or the
sum of the  outstanding  principal  amount of mortgage loans and 90% of the then
outstanding  principal amount of deficient  mortgage loans, as defined,  for the
purpose of  purchasing or financing  home  improvement  and mortgage  loans from
originators  and  servicers  of HUD Title I Loans in  connection  with  separate
purchase  agreements that are approved by the lender.  Interest is charged at an
annual rate of the  one-month  LIBOR plus 4.0%. As of June 30, 1996 and 1997, no
amounts  were  outstanding  under the Title I  Agreement.  The Title I Agreement
expires in November 1997.

     Under the Auto  Agreements  and the Title I Agreement,  ACF and the Company
may also borrow funds to sell 90- day  Eurodollar  futures  contracts as a hedge
against interest rate  fluctuations.  At June 30, 1996 and 1997, the Company had
no futures contracts outstanding.

     In May 1996, the Company  secured an additional  warehouse  credit facility
with Greenwich Capital Markets,  Inc., [a subsidiary of Long Term Credit Bank of
Japan (which has recently  entered into an agreement to sell  Greenwich  Capital
Markets,  Inc. to NatWest  Markets)  ("Greenwich  Capital")] for $100.0 million,
which will provide the Company with additional  flexibility to purchase  greater
volumes of receivables or warehouse  automobile  receivables for longer periods.
The facility was secured primarily by the Company's finance contracts and had an
interest  rate of the  one-month  LIBOR plus 3.0%  (8.4805%  at June 30,  1996),
adjusted monthly.  Principal payments were made to the extent that principal was
paid  on  the  underlying  collateral,  and  were  required  to be  made  if the
underlying collateral did not meet certain specified  conditions.  Prepayment of
principal  is  not   permitted,   except  in  connection   with   securitization
transactions and whole loan sales.  The Company's  ability to continue to borrow
under this  facility is  dependent  on its  compliance  with the terms  thereof,
including the maintenance by the Company of certain  minimum capital levels.  As
of June 30, 1996,  the Company had  approximately  $100.0  million of borrowings
available through this facility. This facility expired in May 1997.

4.   WAREHOUSE AND OTHER CREDIT FACILITIES (CONTINUED)

     Additionally,  the  Company  has a  commitment  from  Greenwich  Capital to
purchase and securitize up to $533.0 million of the Company's  finance  contract
acquisitions until the commitment is filled, subject to customary conditions. As
of  June  30,  1997,  three  securitizations  aggregating  $307.0  million  were
completed  pursuant  to the  securitization  commitment.  The  Credit  Agreement
expired  in May 1997 and was at an  interest  rate of 15.0% or LIBOR  plus  9.0%
determined  by the Company at the time of  borrowing.  As of June 30, 1996,  and
1997 the Company had $5.0  million and $0.0 million  available  under the Credit
Agreement. [expand footnote for 5/23/97}.

5.   NOTES PAYABLE

     [The Company has entered into several two-year Loan and Security Agreements
(the "Financing Agreements") with III Finance, whereby, it may borrow the lesser
of an  aggregate  amount of $66.4  million or the  maximum  borrowing  base,  as
defined  under the  Financing  Agreements.  As of June 30,  1995 and  1996,  the
Company  had  notes  payable  aggregating  $  ____________  and $  __________  ,
respectively  (which approximates their fair value) and related interest payable
of  


                                      F-11
<PAGE>


                     The Aegis Consumer Funding Group, Inc.

                   Notes to Consolidated Financial Statements
                    Years Ended June 30, 1995, 1996 and 1997


$_____________ and $ __________ , respectively,  under the Financing Agreements.
The notes  bear  interest  at 12.0% per annum and are  secured by certain of the
Company's  retained  interests in securitized  receivables  with carrying values
aggregating  approximately $ ________ million and $ ________ million at June 30,
1995 and 1996, respectively, which approximates their fair value. As of June 30,
1996, the Company had $ ______ million available under the Financing Agreements.
These  Financing  Agreements  expire at varying dates from December 1996 through
June 1998.]

6.   SUBORDINATED DEBENTURES

     On May 23, 1997,  the Company sold $21.3  million  subordinated  debentures
(the  "Debentures")  for $20.0  million.  The debenture is  convertible  into 8%
non-voting  preferred stock (the "Preferred  Shares") of the Company on a common
share  equivalent  basis equal to $2.0 per common share.  The Debenture is for a
term of seven years and carries a coupon rate of twelve percent (12%) per annum.
Approximately  [$15.1] million of the proceeds of the Debenture were utilized to
repay  existing  debt.  The Debenture and the Preferred  Shares,  into which the
Debenture is convertible,  are redeemable ar any time by the Company for cash or
by the folder for cash;  however,  if the redemption is requested by the holder,
the Company at its election may pay the  redemption  price in the form of common
stock.  In the event the Debentures are redeemed for any reason,  in addition to
the  redemption  price,  warrants  shall  be  issued  to the  holder  which  are
exercisable  for that  number  of  Preferred  Shares  into  which  the  redeemed
Debentures were  convertible.  If Preferred Shares are redeemed at the option of
the  Company,  the  Company  must  issue to the  holder  warrants  to acquire an
equivalent number of shares of common stock ar an aggregate purchase price equal
to the  redemption  price paid by the Company.  All warrants  will expire at the
original stated maturity date of the Debenture.

     In May 1996,  the Company  entered into a one year $5.0  million  revolving
credit  agreement with Greenwich  Capital (the "Credit  Agreement") at an annual
interest rate of 15.0% or LIBOR plus 9% determined by the Company at the time of
borrowing.  As of June 30, 1996,  the Company had no borrowing  under the Credit
Agreement.  During the year ended  June 30,  1997,  the  Company  borrowed  $5.0
million at LIBOR plus 9% (14% as of June , 1997).  On June , 1997,  the  Company
paid down $1.0  million  under  the  Credit  Agreement  and  entered  into a new
agreement with Greenwich Capital for the remaining $4.0 million outstanding. The
Company  will repay $2.0  million of the adjusted  balance  under the  revolving
credit facility proportionately (pari passu) with principal payments made on the
balances of the Debentures and certain notes payable  aggregating $41.3 million.
The term of the loan was extended for four years from the date of closing of the
Debenture and the interest rate decreased to 12.0% per annum,  payable  monthly.
Early  repayment for the other $2.0 million under the revolving  credit facility
is  permitted  if  Greenwich  provides for lowering the strike price on warrants
issued  to them by the  Company  from  $6.50 to as low as $4.00,  contingent  on
achieving  certain  levels of auto loan  servicing  placed by Greenwich with the
Company.


7.   COMMITMENTS AND CONTINGENCIES

     The Company  leases its office  space and  certain of its office  equipment
under noncancelable  operating leases. The Company also has subleased certain of
its office space and offsets its rent expense by the amount  collected under the
subleases.

           The Company's minimum rental payments as of June 30, 1996 are:

Year Ending                     Gross             Sub-lease             Net
  June 30,                      Amount              Amount             Amount  
-----------                  ------------        ------------        -----------
   1998                         2,882,000            (637,000)         2,245,000
   1999                         2,249,000            (371,000)         1,878,000
   2000                         1,040,000                  --          1,040,000
   2001                           977,000                  --            977,000
   2002                      
Thereafter                      3,916,000                  --          3,916,000
                             ------------        ------------        -----------

                             $ 14,001,000        $ (1,642,000)       $12,359,000
                             ============        ============        ===========


                                      F-12
<PAGE>



                     The Aegis Consumer Funding Group, Inc.

                   Notes to Consolidated Financial Statements
                    Years Ended June 30, 1995, 1996 and 1997


7.   COMMITMENTS AND CONTINGENCIES (CONTINUED)

     The Company has employment agreements with several of its key employees and
officers which expire at various times through July 1, 2001.  Under the terms of
these  agreements,  the Company is obligated to pay minimum  annual  payments of
$1.7 million, $1.4 million and $400,000, respectively,  during each of the years
ending June 30, 1998 through June 30, 2001. In addition to the minimum payments,
the Company is further obligated to pay incentive bonuses based on its earnings,
as defined in the respective agreements.

     In December  1995,  the Company  entered into a  commitment  to sell $175.0
million of sub-prime  automobile  finance contracts to be resold as asset-backed
securities through an Owner Trust Agreement (the "Agreement").  During the years
ended June 30, 1996 and 1997, the Company sold  approximately  $97.8 million and
$50.6 million,  respectively of automobile  receivables  into this facility.  In
October  1996,  it was  determined  that the finance  contracts  underlying  the
securities  were not performing in accordance with the levels required under the
Agreement.  This event  terminated the Company's  remaining  commitment of $26.6
million  (as of that  date,  the  Company  had sold  $148.4  million  of finance
contracts of the $175.0 million total commitment).

     In connection  with  securitization  transactions,  the Company enters into
pooling and servicing agreements. The agreements require the Company to increase
its cash  contribution  to the  underlying  trusts  when the  delinquencies  and
default  rates  increase to certain  levels  defined in certain  agreements.  As
delinquencies   and/or  default  rates  increase  or  decrease,   the  Company's
obligation varies. For the year ended June 30, 1996, the Company paid additional
contributions  to the trusts of  approximately  $2.3 million and,  $2.4 million,
respectively.

     On April 28, 1996, a complaint  was filed against the Company in the United
States  District  Court for the Southern  District of New York alleging that the
complainant was entitled to certain fees under a finder's agreement entered into
with the Company on January 2, 1996 (the  Complaint).  The amounts alleged to be
due were in connection  with the Company's  private  placement of $92 million of
asset-backed  securities  in March  1996.  On July 3, 1996,  the  complaint  was
amended  (the  "Amended  Complaint")  to include  fees  allegedly  due under the
finder's agreement in connection with a series of financing arrangements entered
into by the Company and in connection  with a potential  sale of common stock of
the Company.  The complainant  seeked damages of $21.0 million plus interest and
punitive damages of at least $545,000  together with costs,  attorneys' fees and
such other  relief as the court  deemed  appropriate.  On  January 8, 1997,  the
United  States  District  Court for the  Southern  District  of New York  denied
Plaintiffs Attachment Motion and its cross motion for partial summary judgement.
The Company's  Motion to Dismiss was granted with respect to certain  claims for
relief made by the  Plaintiff.  In  accordance  with the  procedures  set by the
court,  both  parties  have  submitted  their  direct  cases in writing  and the
remainder of the trial was set for late May 1997.  [On May 19, 1997, a judgement
of $650,000 was entered in favor of the  complainant.  The Company  subsequently
filed a counter claim seeking relief for  attorney's  fees paid in defending the
Complaint.  In August 1997, the Company agreed to a settlement amount of $50,000
from the complainant  versus  incurring  additional  costs to defend the counter
claim.]

The Company  believes it has  meritorious  defenses  to the  allegations  in the
complaint and intends to defend the matter vigorously.

     The Company is subject to various other legal  proceedings  and claims that
arise in the ordinary  course of business.  In the opinion of  management of the
Company,  based in part on the advice of  counsel,  the  amount of any  ultimate
liability with respect to these actions will not  materially  affect the results
of operations, cash flows or financial position of the Company.

8.   CAPITAL STOCK

     On October 18, 1994, the Board of Directors and the Company's  stockholders
authorized a 47,654.4578 for 1 split of the common stock,  the  reclassification
of the  common  stock  from no par  value to $.01 par  value  per  share  and an
increase in the number of authorized  shares of common stock to 30,000,000.  All
share and per share amounts  presented in these  financial  statements have been
adjusted to reflect the effect of such stock split and reclassification.

                                      F-13
<PAGE>



                     The Aegis Consumer Funding Group, Inc.

                   Notes to Consolidated Financial Statements
                    Years Ended June 30, 1995, 1996 and 1997


     In  July  1993,  the  Company  issued   3,637,477  shares  to  an  existing
stockholder  in  consideration  for  extending  it  credit  under a  $10,000,000
revolving credit facility.  The Company recorded a commitment fee of $150,000 in
consideration  for this credit facility.  This fee was capitalized and amortized
as additional  issuance of common shares over the six year life of the revolving
credit  facility.  In March,  1996 the revolving  credit facility was cancelled,
whereby the Company expended the then remaining balance.

     The Series B preferred stock provided for the accrual of no dividends until
the first anniversary date of its issuance.  Dividends accrued at an annual rate
of 10%,  payable  quarterly,  which  commenced  October  1,  1994.  The Series B
preferred stock was cumulative,  nonvoting and non redeemable; however, ACFG had
the option, upon 30 days notice to, redeem all or part of the outstanding Series
B preferred stock at its liquidation value of $10,000 per share. During the year
ended June 30, 1995, the Company paid cash Series B preferred stock dividends of
$194,198  and retired its Series B preferred  stock at its  redemption  value of
$2,452,678.

     During the year ended June 30, 1995, the Company received $210,000 from one
of its  stockholders  as  the  repayment  of an  outstanding  receivable  from a
previous year's transaction.

     On September 15, 1993,  the Company  granted a warrant in  connection  with
consulting  services  received by the Company.  Such warrant is exercisable  for
2.68% of the Company's common stock (328,389 shares)  outstanding at the time of
grant at an aggregate exercise price equal to $27,000, which was estimated to be
the fair  market  value on the date of grant.  In April  1995,  the  warrant was
exercised and the Company  issued 328,389 shares of common stock at its exercise
price of $27,000.

     On April 6, 1995, the Company completed the issuance of 1,875,955 shares of
common stock in an initial public  offering  (IPO).  Net proceeds to the Company
were  approximately   $9,997,000  after  deducting  expenses  of  the  offering.
Subsequently,  on April 13, 1995, the Company  completed the issuance of 316,250
shares of  common  stock  pursuant  to the  exercise  of the  underwriters'  IPO
over-allotment  option,  resulting in additional  net proceeds to the Company of
approximately $1,850,000.

     On April 6, 1995,  the  executive  officers  of the Company and Patrick and
Michael  Bennett placed  1,892,763  shares of common stock in escrow pending the
Company's attainment of certain pre-determined earnings or market price targets.
In the event the Company  attains any of the  pre-determined  earnings or market
price targets, the fair market value of the escrowed shares at the time they are
released  will be deemed  additional  compensation  expense to the  extent  such
shares are released from escrow to officers, directors or other employees of the
Company.  For the years  ended  June 30,  1995 and 1996,  the  Company  incurred
non-cash  (non tax  deductible)  charges in the amount of $878,739 and $806,886,
respectively from the release of 113,386 and 150,118 escrowed shares released to
the  executive  officers of the Company  (814,455 and  1,078,308 of the escrowed
shares were released,  respectively).  As of June 30, 1996, all escrowed  shares
have been  released.  There was no  impact on total  stockholders  equity on the
Company's financial statements as a result of the release of the escrowed shares
due to a corresponding increase in paid-in capital.

     In February,  1996 the Company  issued  $9,200,000  of Series C convertible
preferred  stock under  Regulation S of the Securities Act of 1933. The Series C
preferred stock is convertible  into common stock of the Company at the lower of
$6.425 per share of common  stock or 85% of the fair market  value of the common
stock at the time of  conversion.  The Company can redeem the Series C preferred
stock upon  conversion  at the fair market  value of the common stock into which
such Series C preferred stock is  convertible.  The Series C preferred stock has
an 8% annual  dividend  payable in common stock at the time of  conversion.  The
Series C preferred  stock is  automatically  converted  into common stock on the
third anniversary of its issuance. For purposes of computing earnings per share,
the Series C preferred stock is deemed to be a common stock  equivalent,  and as
such is included in the weighted  average  common and common  equivalent  shares
outstanding. The Company also issued warrants to the placement agent to purchase
114,553  shares of common  stock of the  Company at a price of $6.425 per share,
which expire five years from their  issuance  date.  None of these warrants were
exercised as of June 30, 1997.  During the year ended June 30, 1996, the Company
redeemed 88 Series C preferred  shares for $1.1 million and converted 307 Series
C preferred  shares into 679,114  shares of common stock.  During the year ended
June 30, 1997, the Company converted 419 shares of Series C Preferred Stock into
2,221,259  shares of Common Stock.  In July 1996, the Company  purchased  80,000
shares of common stock from a former  executive  officer of the Company,  who is
currently  the  CEO of  SST,


                                      F-14
<PAGE>



                     The Aegis Consumer Funding Group, Inc.

                   Notes to Consolidated Financial Statements
                    Years Ended June 30, 1995, 1996 and 1997


for $340,000.  These shares were re-issued in connection  with the conversion of
preferred  stock  to  common  stock.  In  connection  with the  issuance  of the
Debenture,  the Company has reserved 21,  333.33  shares of Preferred  Stock and
designated  them as Series D. As of June 30,  1997,  no shares  have been issued
under the Series D.

     In  September,  1994,  the Company  adopted the 1994 stock option plan (the
"1994 Plan") and reserved 1,000,000 shares for such purposes and in May 1996 the
Company  adopted  the 1996  stock  option  plan (the "1996  Plan") and  reserved
750,000 shares for such purposes  (collectively  the "Option Plan").  The Option
Plan is administered  by the Board of Directors or a committee  appointed by the
Board of Directors and provides for grants of incentive  stock options  ("ISOs")
and  non-incentive  stock  options  ("Non-ISOs")  to  employees,  directors  and
consultants of the Company or its subsidiaries (as defined in the Option Plan).

     Consultants  and  directors  who are not also  employees of the Company may
only be granted  Non-ISOs.  The exercise  price of each ISO may not be less than
100% of the fair market value of the common  stock at the time of grant,  except
that  in the  case  of a  grant  to an  employee  who  owns  10% or  more of the
outstanding  common stock of the Company or a subsidiary  of the Company (a "10%
Stockholder"), the exercise price shall not be less than 110% of the fair market
value on the date of grant. The exercise price of each Non-ISO granted under the
Option  Plan may not be less  than 85% of the fair  market  value of the  common
stock  at the time of  grant  or,  in the  case of a  Non-ISO  granted  to a 10%
Stockholder,  110% of the fair market  value of the common  stock at the time of
the  Grant.  ISOs  may not be  exercised  after  the  tenth  anniversary  (fifth
anniversary  in the case of any option  granted to a 10%  Stockholder)  of their
grant.  Options may not be transferred  during the lifetime of an option holder.
No stock  options may be granted  under the Option Plan after ten years from the
adoption of the Option  Plan.  Each  director who is not also an employee of the
Company will automatically receive each year Non-ISO's to purchase 10,000 shares
of Common Stock pursuant to such terms as are provided in the formula provisions
of the Option Plan.

     The stock options are  immediately  vested or are subject to vesting over a
three year period. Activity of the Option Plan is summarized as follows:

                                                                    Plan
                                            1994         1996       Total
                                         ----------    -------   ----------
Granted                                     945,000    309,163    1,254,163
Terminated                                 (105,000)        --     (105,000)
                                         ----------    -------   ----------
Outstanding at June 30, 1996                840,000    309,163    1,149,163
                                         ==========    =======   ==========
Exercisable at June 30, 1996                783,333         --      783,333
                                         ==========    =======   ==========

     In connection with the Greenwich  Capital  facilities,  the Company granted
warrants to Greenwich Capital to purchase 1,116,335 shares of common stock at an
exercise price of $6.50 per share (subject to adjustment).  The warrants vest at
the  occurrence of various  events  relating to the  facilities.  As of June 30,
1996, [675,526]warrants are exercisable and [217,542]of the remaining non-vested
warrants  vest over the  remaining  securitization  commitment  and  [223,  267]
warrants will remain unvested.

9.   EARNINGS PER SHARE

     Pro forma net  income and pro forma  earnings  per share for the year ended
June 30, 1995 is calculated assuming the Company's April 1995 IPO occurred as of
the  beginning  of  the  year  and  gives  effect  to  (i)  the   redemption  of
approximately  $2.5 million of the Company's  preferred stock and dividends paid
of $194,198, (ii) the termination of a consulting agreement providing consulting
fees of  $139,751,  net of taxes,  (iii) the  repayment  of  approximately  $5.0
million of  indebtedness  under the  Company's  revolving  credit  facility  and
related interest expense of $192,157, net of taxes.


                                      F-15
<PAGE>


                     The Aegis Consumer Funding Group, Inc.

                   Notes to Consolidated Financial Statements
                    Years Ended June 30, 1995, 1996 and 1997


9.   EARNINGS PER SHARE(CONTINUED)

     The  components  of the  Company's  earnings per share of common and common
equivalent share are as follows:

<TABLE>
<CAPTION>
                                                                            Year Ended June 30,   
                                                                  ------------------------------------
                                                                     1995         1996         1997
                                                                  ----------   ----------   ----------
<S>                                                               <C>          <C>          <C>
Primary earnings per share:                                       
 Historical basis:                                                
             Net income available, as adjusted                    $1,079,423   $9,288,615
                                                                  ==========   ==========
          Net income per common and common                        
             equivalent share                                     $     0.09   $     0.65
                                                                  ==========   ==========
                                                                  
            Weighted average common shares                        12,641,878   12,969,500
            Weighted average common equivalent shares                  9,968    1,359,130
                                                                  ----------   ----------
            Weighted average common and common                    
               equivalent shares                                  12,651,846   14,328,630
                                                                  ==========   ==========
                                                                  
   Pro forma basis:                                               
            Net income available to common stockholders           $1,605,529          N/A          N/A
                                                                  ==========   ==========   ==========
            Net income per common and common                      
               equivalent share                                   $     0.12          N/A          N/A
                                                                  ==========   ==========   ==========
                                                                  
            Weighed average common shares                         12,886,319          N/A          N/A
            Weighted average common equivalent shares                 32,917          N/A          N/A
                                                                  ----------   ----------   ----------
            Weighted average common and common                    
               equivalent shares                                  12,919,235          N/A          N/A
                                                                  ==========   ==========   ==========
                                                                  
   Fully diluted earnings per share:                              
        Historical basis:                                         
            Net income available, as adjusted                     $1,079,423   $9,288,615
                                                                  ==========   ==========
            Net income per common and common                      
               equivalent share                                   $     0.08   $     0.61
                                                                  ==========   ==========
                                                                  
            Weighted average common shares                        13,081,631   14,862,263
            Weighted average common equivalent shares                 10,661      328,430
                                                                  ----------   ----------
            Weighted average common and common                    
               equivalent shares                                  13,092,292   15,190,693
                                                                  ==========   ==========
                                                                  
        Pro forma basis:                                          
            Net income available to common stockholders           $1,605,529          N/A          N/A
                                                                  ==========   ==========   ==========
            Net income per common and common                      
               equivalent share                                   $     0.11          N/A          N/A
                                                                  ==========   ==========   ==========
                                                                  
            Weighted average common shares                        14,776,844          N/A          N/A
            Weighted average common equivalent shares                 35,887          N/A          N/A
                                                                  ----------   ----------   ----------
            Weighted average common and common                    
               equivalent shares                                  14,812,731          N/A          N/A
                                                                  ==========   ==========   ==========
</TABLE>


10.  RELATED PARTY TRANSACTIONS

     For the year ended June 30 1995, the Company provided consulting, financial
and structuring  services to an affiliated entity of one of its then significant
stockholders.  In  connection  with these  engagements,  the Company  earned and
$275,000 for the year ended June 30, 1995. For the years ended June 30, 1996 and
1997 and none of these services were provided.

     During the year ended  June 30,  1996,  the  Company  recorded a  valuation
allowance  of  $600,000,  the full  amount on a note  receivable  it received in
connection  with  the  sale  of  certain   retained   interests  in  securitized
receivables.  The note



                                      F-16
<PAGE>


                     The Aegis Consumer Funding Group, Inc.

                   Notes to Consolidated Financial Statements
                    Years Ended June 30, 1995, 1996 and 1997


10.  RELATED PARTY TRANSACTIONS (CONTINUED)


accrued  interest ar 8.5% per annum and matures in August 2000.  The Company has
filed a claim in the Bankruptcy filing of the debtor and as of June 30, 1997 has
[need working from Skadden Arps].

     The Company had a consulting agreement with another significant stockholder
whereby it  provided  advisory  services  to the  Company  for the  development,
implementation  and marketing of consumer product lines. In connection with this
agreement,  the Company  paid  approximately  $ _________  and  $350,000 to such
stockholder  during the year ended June 30, 1995.  This  agreement  was canceled
effective April 6, 1995.

     In March  1996,  the  Company  entered  into a  consulting  agreement  (the
"Consulting  Agreement")  with Whitehall  Financial Group,  Inc.  ("Whitehall"),
whereby  Whitehall  was  engaged to provide  consulting  services to the Company
relating to  operations,  management,  financing and  marketing.  The Consulting
Agreement  was renewed or its  anniversary  date of on February 5, 1997,  for an
additional  one-year  term and  provides an annual fee to  Whitehall of $300,000
(subject to adjustment in certain  circumstances)  plus reasonable and necessary
expenses.  For the year ended June 30, 1996 and 1997,  the  Company  incurred an
expense  of  $125,000  and  [$300,000],   respectively,   under  the  Consulting
Agreement.

11.  INCOME TAXES

     At June 30, 1997, the Company had a federal net operating loss carryforward
of approximately  [$34.0] million which will expire no sooner than September 30,
2005.  Future  utilization  of  approximately  [$30.0]  million of the total net
operating  losses are subject to an annual  limitation  under Section 382 of the
Internal Revenue Code. The Company has recorded a deferred tax asset relating to
the  future  benefit  of  the  carryforward.  As  discussed  in the  summary  of
significant accounting policies, the Company underwent a quasi-reorganization in
1992.  Accordingly,  any benefit  relating  to the use of [$1.8]  million of the
Section 382 loss carryforward generated prior to the  quasi-reorganization  will
be  reflected  as an  adjustment  to  stockholders'  equity.  A  full  valuation
allowance  has been  established  against this [$1.8]  million  Section 382 loss
carryforward.

     The Company's income tax provisions consist of the following:

                                                     Year Ended June 30,  
                                           ------------------------------------
                                              1995         1996         1997 
                                           ----------   ----------   ----------
Current provision
    Federal                                $       --   $       -- 
    State and local                           221,484    1,553,988
                                           ----------   ----------
      Total current                           221,484    1,553,988
                                           ----------   ----------
Deferred (benefit) provision
    Federal                                 1,475,000    5,639,763
    State and local                            71,540      278,271
                                           ----------   ----------
      Total deferred                        1,546,540    5,918,034
                                           ----------   ----------
        Total provision for income taxes   $1,768,024   $7,472,022
                                           ==========   ==========

     Deferred  taxes  have  been  provided  for  temporary  differences  in  the
recognition of revenues and expenses for tax and financial  statement  purposes.
The  significant  components of the Company's  deferred tax liability,  which is
included in income taxes payable, are as follows:


                                      F-17
<PAGE>


                     The Aegis Consumer Funding Group, Inc.

                   Notes to Consolidated Financial Statements
                    Years Ended June 30, 1995, 1996 and 1997


                                                             June 30,           
                                                  ------------------------------
                                                      1996              1997 
                                                  ------------      ------------
 Liabilities:
   Securitization transactions                    $ 17,628,762     
   Leases                                              534,990
                                                  ------------
       Total deferred tax liability                 20,163,752
                                                  ------------
Assets:
   Net operating loss carryforward                  11,956,095
   Allowance for credit losses                       1,236,491
   State taxes                                         193,375
   Rent expense                                        130,217
                                                  ------------
       Total deferred tax asset                     13,516,178
                                                  ------------
   Valuation allowance                                (661,000)
                                                  ------------
       Net deferred tax asset                       12,855,178
                                                  ------------
Net deferred tax liability                        $  7,308,574
                                                  ============

11.  INCOME TAXES (CONTINUED):

The reconciliation of the federal statutory rate to the effective tax rate is as
follows:

                                                           Year Ended June 30, 
                                                         ----------------------
                                                         1995     1996     1997 
                                                         ----     ----     ----
  Statutory federal rate                                    4%      35%      
State taxes, net of federal benefit                         2%       7%
Permanent difference resulting from charge for
   release of Escrowed shares                               0%       2%
Warrants                                                             1%
Other                                                       2%      --
                                                         ----     ----
                                                            8%      45%
                                                         ====     ====

12.  QUARTERLY FINANCIAL DATA (UNAUDITED):

     Summarized  financial data is as follows (dollars in thousands,  except for
per share amounts):

<TABLE>
<CAPTION>
                                                                                 Quarter Ended                  
                                      ----------------------------------------------------------------------------------------------
                                      Sept. 30,     Dec. 31,     March 31,   June 30    Sept. 30,   Dec. 31,   March 31,    June 30,
                                        1995         1995         1996         1996       1996       1996        1997         1997 
                                       -------      -------      -------     -------     -------    -------     -------     -------
<S>                                    <C>          <C>          <C>         <C>        <C>          <C>          <C>         <C>   
Revenues                               $ 9,158      $ 9,405      $13,064     $14,700
                                       -------      -------      -------     -------
Interest expense                         2,124        2,459        2,723       2,784
Other expenses                           3,386        3,720        5,824       6,547
                                       -------      -------      -------     -------
Total expenses                           5,511        6,179        8,547       9,331
                                       -------      -------      -------     -------

Net income before income taxes           3,647        3,227        4,517       5,369
Provision for income taxes               1,641        1,384        1,988       2,460
                                       -------      -------      -------     -------

Net income                             $ 2,006      $ 1,844      $ 2,529     $ 2,909
                                       =======      =======      =======     =======
Net income available to shareholders   $ 2,006      $ 1,844      $ 2,529     $ 2,768
                                       =======      =======      =======     =======
Net income per common share:
          Primary                      $  0.15      $  0.13      $  0.17     $  0.19
                                       =======      =======      =======     =======
          Fully Diluted                $  0.14      $  0.12      $  0.16     $  0.18
                                       =======      =======      =======     =======
</TABLE>



                                      F-18
<PAGE>



                     The Aegis Consumer Funding Group, Inc.

                   Notes to Consolidated Financial Statements
                    Years Ended June 30, 1995, 1996 and 1997


     The  quarters  ended  December 31,  1995,  March 31,  1996,  June 30, 1996,
September  30, 1996 and  December  31,  1996  included  write-downs  on retained
interests in securitized  receivables of $1.5 million, $2.5 million,$3.5 million
$2.0 million and $29.0 million, respectively.

     The quarter  ended June 30,  1996,  included a non-cash  charge of $807,000
from the  release  of  escrowed  shares  which  was  offset  by an  increase  in
paid-in-capital.  There was no impact on total stockholders'  equity as a result
of the escrow share release and the resultant non-cash charge.

13.  SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

     Interest and income taxes paid during the year were as follows:

                                             Year Ended June 30,    
                            ----------------------------------------------------
                                1995                1996                1997 
                            ------------        ------------        ------------
Interest ...........        $  4,098,195        $ 10,369,296        
                            ============        ============        
Income taxes .......        $  1,070,513        $    141,623
                            ============        ============


                                      F-19