<PAGE>

                         SECURITIES AND EXCHANGE COMMISSION
                               Washington, D.C. 20549
                                          
                                          
                                     FORM 10-Q

     [X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                          SECURITIES EXCHANGE ACT OF 1934
                   (For the Quarterly Period ended June 30, 1998)

                                          OR

     [   ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                          SECURITIES EXCHANGE ACT OF 1934
            For transition period from ________________to_______________

                           Commission File Number:  0-24286

                                 EAGLE FINANCE CORP.
                (Exact name of Registrant as specified in its charter)



            DELAWARE                          36-2464365    
(State or other jurisdiction of   (IRS Employer Identification Number)
incorporation or organization)

1425 TRI-STATE PARKWAY, GURNEE, ILLINOIS     60031-4060
(Address of principal executive offices)     (Zip Code)

                                    (847) 855-7150          
                 (Registrant's telephone number, including area code)



     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         No   X          


     Indicate the number of shares outstanding of each of the Issuer's classes
of common stock as of the latest practicable date:

10,000,000 shares of common stock, $0.01 par value per share, were authorized
and 4,228,690 shares were issued and outstanding as of May 31, 1998.


<PAGE>

                                 EAGLE FINANCE CORP.
                                          
                                     FORM 10-Q
                                          
                              ________________________
                                          
                                 TABLE OF CONTENTS
                              ________________________

<TABLE>
<CAPTION>

                                                                                 PAGE
                                                                               NUMBER
                           PART I - FINANCIAL INFORMATION

Item 1.   FINANCIAL STATEMENTS
     
<S>                                                                          <C>
          Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

          Statements of Income (Loss). . . . . . . . . . . . . . . . . . . . . . . .4

          Statements of Changes in Stockholders' Equity (Deficit). . . . . . . . . .5

          Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . .6

          Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . . . .7

Item 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL 
          CONDITION AND RESULTS OF OPERATIONS. . . . . . . . . . . . . . . . . . . .9

Item 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK . . . . . . . 22
                                          
                                          
                            PART II - OTHER INFORMATION

Item 1.   LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Item 2.   CHANGES IN SECURITIES AND USE OF PROCEEDS. . . . . . . . . . . . . . . . 24

Item 3.   DEFAULTS UPON SENIOR SECURITIES. . . . . . . . . . . . . . . . . . . . . 24

Item 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. . . . . . . . . . . 24

Item 5.   OTHER INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Item 6.   EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . . . . . . . . . . . . 25

SIGNATURES     . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .S-1
     
</TABLE>

                                          
                           PART I - FINANCIAL INFORMATION

ITEM 1.        FINANCIAL INFORMATION

     As more fully described in the notes to the Financial Statements, financial
information has been restated to conform the Company's quarterly reporting for
1997 and 1998 to the provisions of Financial Accounting Standards Board
Statement ("FASB") No. 125, "Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities" ("FASB 125").


                                         2

<PAGE>

                                EAGLE FINANCE CORP.
                                    BALANCE SHEETS
                  AS OF JUNE 30, 1998 AND 1997 AND DECEMBER 31, 1997
                                     (Unaudited)

<TABLE>
<CAPTION>
                                         ASSETS
                                                           JUNE 30,             DECEMBER 31,
                                                       1998          1997           1997
                                                   ------------  ------------  ---------------
<S>                                               <C>          <C>            <C>
Finance receivables, owned . . . . . . . . . . . .  $7,826,531    $39,753,660    $28,455,232
Nonrefundable acquisition discount . . . . . . . .     (98,617)      (796,936)    (1,179,708)
Allowance for credit losses. . . . . . . . . . . .  (1,284,039)    (4,296,219)    (2,986,419)
                                                   ------------  ------------  ---------------
Finance receivables, net owned . . . . . . . . . .   6,443,875     34,660,505     24,289,105
                                                   ------------  ------------  ---------------
Finance receivables, Installment Contract sales. .  18,553,340     28,804,642     27,060,820
Allowance for credit losses related to 
   Installment Contract sales. . . . . . . . . . .  (2,549,076)    (3,374,101)    (3,353,808)
Additional allowance represented on titled assets,
   Installment Contract sales. . . . . . . . . . .    (312,200)      (150,765)      (470,113)
                                                   ------------  ------------  ---------------
Finance receivables, net Installment Contract 
   sales . . . . . . . . . . . . . . . . . . . . .  15,692,064     25,279,776     23,236,899
                                                   ------------  ------------  ---------------
Excess servicing receivable. . . . . . . . . . . .        --          670,335           --  
Cash . . . . . . . . . . . . . . . . . . . . . . .     349,676      3,658,884      1,809,248
Money market investments . . . . . . . . . . . . .   3,000,000        552,863        552,521
Prepaid expenses and debt issuance costs . . . . .     543,843        896,718        834,674
Prepaid expenses other . . . . . . . . . . . . . .      84,983        221,615        195,296
Repossessed or titled assets . . . . . . . . . . .   1,073,972      2,008,584      2,091,011
Income tax receivable. . . . . . . . . . . . . . .     776,457      1,470,529      1,268,152
Other assets . . . . . . . . . . . . . . . . . . .     460,304      2,159,838        548,913
                                                   ------------  ------------  ---------------
                                                 $  28,425,174  $  71,579,647    $54,825,819
                                                   ------------  ------------  ---------------
                                                   ------------  ------------  ---------------
                   LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
   
Notes payable, Installment Contract Sales. . . . . $16,004,264    $25,430,541    $23,707,012
Senior debt. . . . . . . . . . . . . . . . . . . .        --       20,048,498     15,034,111
Subordinated debt. . . . . . . . . . . . . . . . .  17,543,768     17,631,728     17,543,768
Accrued interest . . . . . . . . . . . . . . . . .     496,818        502,991        162,370
Accounts payable and accrued liabilities . . . . .   1,002,832      2,100,272        694,577
Dealer reserves. . . . . . . . . . . . . . . . . .        --          273,590           --  
                                                   ------------  ------------  ---------------
Total liabilities. . . . . . . . . . . . . . . . .  35,047,682     65,987,620     57,141,838
Stockholders' equity (deficit):. . . . . . . . . .            
Preferred Stock, authorized 3,000,000 shares;
   none issued . . . . . . . . . . . . . . . . . .        --             --             --  
Common Stock:  $.01 par value, authorized 
   10,000,000 shares, issued and outstanding 
   4,228,690 shares. . . . . . . . . . . . . . . .      42,287         41,891         42,287
Additional paid-in capital . . . . . . . . . . . .  13,593,206     13,514,422     13,593,206
Retained earnings (deficit). . . . . . . . . . . . (20,258,001)    (7,964,286)   (15,951,512)
                                                   ------------  ------------  ---------------
Total stockholders' equity (deficit) . . . . . . .  (6,622,508)     5,592,027     (2,316,019)
                                                   ------------  ------------  ---------------
                                                 $  28,425,174   $ 71,579,647    $54,825,819
                                                   ------------  ------------  ---------------
                                                   ------------  ------------  ---------------
                                          
</TABLE>
                   See accompanying notes to financial statements.
                                          


                                          3
                                                                  

<PAGE>

                                     EAGLE FINANCE CORP.
                                    STATEMENTS OF INCOME
                      THREE AND SIX MONTHS ENDED JUNE 30, 1998 AND 1997
                                        (Unaudited)

<TABLE>
<CAPTION>

                                                    THREE MONTHS ENDED JUNE 30,   SIX MONTHS ENDED JUNE 30,
                                                         1998        1997            1998          1997
                                                   -----------    -----------    -----------    -----------
<S>                                              <C>          <C>            <C>            <C>
Interest income, owned:
   Interest and fee income, owned receivables . .   $  408,924   $  3,178,395   $  1,619,897   $  6,605,984
   Interest expense, owned receivables (senior
      and subordinated debt) . . . . . . . . . . .    (463,973)    (1,310,153)    (1,339,201)    (2,760,479)
                                                   -----------    -----------    -----------    -----------
Net interest income, owned receivables . . . . . .     (55,049)     1,868,242        280,696      3,845,505
Provision for credit losses, owned receivables . .    (725,600)    (2,793,321)      (725,600)    (3,168,321)
                                                   -----------    -----------    -----------    -----------
Net interest income after provision
   for credit losses, owned receivables. . . . . .    (780,649)      (925,079)       444,904        677,184
                                                   -----------    -----------    -----------    -----------
Interest income, Installment Contract sales:
   Interest income, Installment Contract sales . .   1,163,038      1,046,283      2,615,475      1,046,282
   Interest expense, Installment Contract sales
      (notes payable). . . . . . . . . . . . . . .    (435,800)      (350,441)      (953,492)      (350,441)
   Provision for credit losses, Installment
      Contract sales . . . . . . . . . . . . . . .    (440,559)      (896,020)    (1,160,345)      (896,020)
                                                   -----------    -----------    -----------    -----------
Net interest income after provision for credit
   losses, Installment Contract sales. . . . . . .     286,679       (200,178)       501,638       (200,179)
                                                   -----------    -----------    -----------    -----------
Other income:
   Service fee income. . . . . . . . . . . . . . .     923,275      1,722,442      1,748,987      2,502,897
   Commission and other. . . . . . . . . . . . . .        --            2,634           --            5,044
                                                   -----------    -----------    -----------    -----------
Total other income . . . . . . . . . . . . . . . .     923,275      1,725,076      1,748,987      2,507,941
                                                   -----------    -----------    -----------    -----------
Income before operating expenses . . . . . . . . .     429,305        599,819      1,805,721      2,984,946
Operating expenses:
   Salaries and related costs. . . . . . . . . . .   1,057,099      1,951,323      2,309,903      3,986,468
   Collection expenses . . . . . . . . . . . . . .     334,878        831,257        801,001        831,257
   Other operating expenses. . . . . . . . . . . .   1,868,082      1,024,931      3,001,306      2,882,933
                                                   -----------    -----------    -----------    -----------
Total operating expenses . . . . . . . . . . . . .   3,260,059      3,807,511      6,112,210      7,700,658
                                                   -----------    -----------    -----------    -----------
Loss before income taxes . . . . . . . . . . . . .  (2,830,754)    (3,207,692)    (4,306,489)    (4,715,712)
Applicable income taxes. . . . . . . . . . . . . .        --             --             --             --  
                                                   -----------    -----------    -----------    -----------
Net loss . . . . . . . . . . . . . . . . . . . . . $(2,830,754)   $(3,207,692)   $(4,306,489)   $(4,715,712)
                                                   -----------    -----------    -----------    -----------
                                                   -----------    -----------    -----------    -----------
Weighted average common shares outstanding:
   Basic . . . . . . . . . . . . . . . . . . . . .   4,228,690      4,189,100      4,228,690      4,189,100
   Diluted . . . . . . . . . . . . . . . . . . . .   4,228,690      4,189,100      4,228,690      4,189,100
Per share net income (loss) attributable to
   common shares:
   Basic . . . . . . . . . . . . . . . . . . . . .      $(0.67)        $(0.77)        $(1.02)        $(1.13)
   Diluted . . . . . . . . . . . . . . . . . . . .      $(0.67)        $(0.77)        $(1.02)        $(1.13)

</TABLE>

             See accompanying notes to financial statements.


                                          4

<PAGE>


                                EAGLE FINANCE CORP.

             STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
               THREE AND SIX MONTHS ENDED JUNE 30, 1998 AND 1997.
                                  (Unaudited)

<TABLE>
<CAPTION>

                                                    THREE MONTHS ENDED JUNE 30,    SIX MONTHS ENDED JUNE 30,
                                                        1998          1997          1998             1997
                                                   ------------  -----------   -------------   --------------
<S>                                              <C>            <C>            <C>            <C>
Common stock:
   Balance at beginning of period. . . . . . . . . $    42,287    $    41,891    $    42,287   $     41,891
         
Additional paid-in capital:
   Balance at beginning and end of period. . . . .  13,593,206     13,514,422     13,593,206     13,514,422
Retained earnings: . . . . . . . . . . . . . . . .            
   Balance at beginning of period. . . . . . . . . (17,427,247)    (4,756,594)   (15,951,512)    (3,248,575)
   Net income (loss) . . . . . . . . . . . . . . .  (2,830,754)    (3,207,692)    (4,306,489)    (4,715,711)
                                                   ------------  -----------   -------------   --------------
                                                   (20,258,001)    (7,964,286)   (20,258,001)    (7,964,286)
                                                   ------------  -----------   -------------   --------------
Total stockholders' equity (deficit) . . . . . . . $(6,622,508)    $5,592,027    $(6,622,508)    $5,592,027
                                                   ------------  -----------   -------------   --------------
                                                   ------------  -----------   -------------   --------------

</TABLE>

                    See accompanying notes to financial statements.


                                       5

<PAGE>

                             EAGLE FINANCE CORP.
                         STATEMENTS OF CASH FLOWS
              THREE AND SIX MONTHS ENDED JUNE 30, 1998 AND 1997
                               (Unaudited)

<TABLE>
<CAPTION>

                                                 THREE MONTHS ENDED JUNE 30,       SIX MONTHS ENDED JUNE 30,
                                                      1998            1997           1998            1997
                                                   ------------  -----------   -------------   --------------
<S>                                               <C>          <C>            <C>             <C>
Cash flows from operating activities:
   Net loss. . . . . . . . . . . . . . . . . . . . $(2,830,754)   $(3,207,692)   $(4,306,489)   $(4,715,711)
   Adjustments to reconcile net income to net cash
      provided by (used in) operating activities:.
         Provision for credit losses . . . . . . .     725,600      2,793,321        725,600      3,168,321
         Net finance receivable charge-offs 
            against allowance. . . . . . . . . . .    (691,185)    (2,887,052)    (2,427,980)    (4,917,616)
         Decrease  in: . . . . . . . . . . . . . .            
            Prepaid expenses . . . . . . . . . . .      55,716         80,438        110,313        151,574
            Excess servicing receivable. . . . . .        --          177,574           --          380,255
            Repossessed or titled assets . . . . .     340,233        903,764      1,017,039      2,240,859
            Other assets . . . . . . . . . . . . .     672,753        384,451         88,609         16,858
            Income tax receivable. . . . . . . . .      25,007      3,406,729        491,695      4,266,729
         Increase (decrease) in: . . . . . . . . .
            Accrued interest . . . . . . . . . . .     315,051        250,180        334,448         34,458
            Accounts payable and accrued 
               liabilities . . . . . . . . . . . .     331,551       (415,164)       308,255        201,377
            Dealer reserves. . . . . . . . . . . .        --           (3,091)          --          (13,193)
         Nonrefundable acquisition discount. . . .     (32,232)    (1,943,844)    (1,081,091)      (646,228)
                                                   ------------  -------------   -------------   --------------
Net cash provided by (used in) operating 
   activities. . . . . . . . . . . . . . . . . . .  (1,088,260)      (460,386)    (4,739,601)       167,683
                                                   ------------  -------------   -------------   --------------
Cash flows from investing activities:. . . . . . .            
   Proceeds from sale of investments . . . . . . .  (3,000,000)        (7,863)    (2,447,479)          (212)
   Proceeds from bulk sale of vehicle retail
      installment notes. . . . . . . . . . . . . .     163,463     30,750,043     14,516,615     30,750,043
   Principal collected on finance receivables,
      owned. . . . . . . . . . . . . . . . . . . .     894,200      3,786,113      3,120,687      9,949,907
   Principal new originations and repurchases 
      of finance receivables . . . . . . . . . . .    (971,610)   (12,855,876)    (1,139,310)   (31,364,741)
   Principal write-off on finance receivables, 
      owned. . . . . . . . . . . . . . . . . . . .   1,844,552      1,238,211      4,130,709      5,575,057
   Finance receivables, Installment Contract 
      sales. . . . . . . . . . . . . . . . . . . .        --      (30,750,043)          --      (30,750,043)
   Principal collected (net of write-offs), 
     Installment Contract sales. . . . . . . . . .   3,608,672      5,470,267      7,544,835      5,470,267
                                                   ------------  -------------   -------------   --------------
Net cash provided by (used in) investing 
     activities. . . . . . . . . . . . . . . . . .   2,539,277     (2,369,148)    25,726,057    (10,369,722)
                                                   ------------  -------------   -------------   --------------
Cash flows from financing activities:. . . . . . .            
   Proceeds from Installment Contract sales. . . .        --       30,750,043           --       30,750,043
   Repayments of borrowings, Installment Contract 
      sales. . . . . . . . . . . . . . . . . . . .  (3,672,148)    (5,319,502)    (7,702,748)    (5,319,502)
   Proceeds from draws on bank line of credit 
      agreements . . . . . . . . . . . . . . . . .        --       29,592,066           --       39,229,348
   Repayments of borrowings under bank line of 
      credit agreements. . . . . . . . . . . . . .        --      (51,092,066)   (14,997,499)   (51,092,066)
   Debt to affiliate . . . . . . . . . . . . . . .        --         (140,764)       (36,612)      (916,677)
   Proceeds from issuance of other debt. . . . . .        --            7,714           --           50,768
   Repayment of other debt . . . . . . . . . . . .     (23,409)        (4,217)          --         (396,760)
   Debt issuance costs . . . . . . . . . . . . . .     141,396         73,383        290,831        284,175
                                                   ------------  -------------   -------------   --------------
Net cash provided by (used in) financing 
   activities. . . . . . . . . . . . . . . . . . .  (3,554,161)     3,866,657    (22,446,028)    12,589,329
                                                   ------------  -------------   -------------   --------------
Cash, net change . . . . . . . . . . . . . . . . .  (2,103,144)     1,037,123     (1,459,572)     2,387,290
Cash at beginning of period. . . . . . . . . . . .   2,452,820      2,621,761      1,809,248      1,271,594
                                                   ------------  -------------   -------------   --------------
Cash at end of period. . . . . . . . . . . . . . .    $349,676     $3,658,884       $349,676     $3,658,884
                                                   ------------  -------------   -------------   --------------
                                                   ------------  -------------   -------------   --------------
Supplemental cash flow disclosures - cash paid
    during the period for:
    Interest . . . . . . . . . . . . . . . . . . .    $141,796     $1,094,431       $997,597     $2,760,479
    Income taxes and Illinois replacement tax. . .    $   --       $       15       $    595     $    1,925

</TABLE>

                  See accompanying notes to financial statements.



                                            6

<PAGE>

                                 EAGLE FINANCE CORP.

                            NOTES TO FINANCIAL STATEMENTS


1. The financial statements of Eagle Finance Corp., a Delaware corporation 
(the "Company"), are unaudited, but in the opinion of management reflect all 
necessary adjustments, consisting only of normal recurring accruals, for a 
fair presentation of results as of the dates and for the periods covered by 
the financial statements. The results for the interim periods are not 
necessarily indicative of the results of operations that may be expected for 
the fiscal year.  Management suggests that the unaudited interim financial 
statements contained herein be read in conjunction with the financial 
statements and the accompanying notes to the financial statements included in 
the Company's 1997 Annual Report on Form 10-K.

2. Net income (loss) per common share amounts are based on the weighted 
average number of common shares and common stock equivalents outstanding as 
reflected on Exhibit 11 to this Quarterly Report on Form 10-Q.

3. As of January 1, 1997, the Company adopted FASB 125.  FASB 125 provides 
accounting and reporting standards for transfers and servicing of financial 
assets and retirements of liabilities based on consistent application of a 
financial components approach that focuses on control.  It distinguishes 
transfers of financial assets that are sales from transfers that are secured 
borrowings.

4. The Company has restated the financial statements for the three and six 
months ended June 30, 1997 to restate transactions recorded in prior periods 
as gain on sale in order to reflect such transactions as financing 
transactions pursuant to the provisions of FASB 125.  Such restatement 
affects the accounting treatment of Installment Contract (as defined below) 
sales to General Electric Capital Corporation ("GECC") pursuant to the Asset 
Purchase Agreement dated as of June 25, 1996, as amended, between the Company 
and GECC (including the related Servicing Agreement, the "GECC Agreements") 
(the "1997 GECC Transactions") that occurred during the second and third 
quarters of 1997.  The restatement resulted in the following increases 
(decreases) for the three and six months ended June 30, 1997:  

<TABLE>
<CAPTION>

                                                Three months ended      Six months ended
                                                   June 30, 1997         June 30, 1997
                                                -------------------    ----------------
<S>                                            <C>                   <C>
   Gain on securitization . . . . . . . . . . . .   $(2,621,232)        $(2,621,232)
   Interest income, Installment Contract sales. .     1,046,283           1,046,283
   Interest expense, Installment Contract sales .       350,441             350,441
   Provision for credit losses, Installment
     Contract sales . . . . . . . . . . . . . . .       896,020             896,020
   Service fee income . . . . . . . . . . . . . .       (63,325)            (63,325)
   Net income . . . . . . . . . . . . . . . . . .    (2,758,085)         (2,758,085)
   Retained earnings. . . . . . . . . . . . . . .    (2,758,085)         (2,758,085)
   Net income per share . . . . . . . . . . . . .   $     (0.66)        $     (0.66)

</TABLE>

5.   In February 1997, FASB Statement No. 128, "Earnings Per Share" ("FASB
128"), was issued. FASB 128 superseded APB Opinion No. 15, "Earnings Per Share"
and specifies the computation, presentation, and disclosure requirements for
earnings per share (EPS) for entities with publicly held common stock or
potential common stock.  FASB 128 was issued to simplify the computation of EPS


                                       7

<PAGE>

and to make the U.S. standard more compatible with the EPS standards of other
countries and that of the International Accounting Standards Committee.  It
replaced the presentation of primary EPS with a presentation of basic EPS and
fully diluted EPS with diluted EPS.  It also requires dual presentation of basic
and diluted EPS on the face of the income statement for all entities with
complex capital structures and requires a reconciliation of the numerator and
denominator of the basic EPS computation to the numerator and denominator of the
diluted EPS computation.

     Basic EPS, unlike primary EPS, excludes dilution and is computed by 
dividing income available to common stockholders by the weighted-average 
number of common shares outstanding for the period.  Diluted EPS reflects the 
potential dilution that could occur if securities or other contracts to issue 
common stock were exercised or converted into common stock or resulted in the 
issuance of common stock that then shared in the earnings of the entity.  
Diluted EPS is computed similarly to fully diluted EPS under APB 15.

     FASB 128 is effective for financial statements for both interim and 
annual periods ending after December 15, 1997.  Earlier application is not 
permitted (although pro forma EPS disclosure in the footnotes for periods 
prior to required adoption is permitted).  After adoption, all prior-period 
EPS data presented must be restated to conform with FASB 128.  Although no 
assurances can be provided, the Company does not expect adoption of FASB 128 
to have a significant impact on the Company's financial condition or results 
of operations.

     In June 1997, FASB issued FASB Statement No. 130, "Reporting 
Comprehensive Income", which is effective for fiscal years beginning after 
December 15, 1997 ("FASB 130").  The statement establishes standards for 
reporting and display of comprehensive income and its components (revenues, 
expenses, gains and losses) in a full set of general-purpose financial 
statements.  This statement requires that all items that are required to be 
recognized under accounting standards as components of comprehensive income 
be reported in a financial statement that is displayed with the same 
prominence as other financial statements.  

     In July 1997, the FASB issued SFAS No. 131, "Disclosures About Segments 
of an Enterprise and Related Information."  SFAS 131 requires disclosures for 
each segment that are similar to those required under current standards with 
the addition of quarterly disclosure requirements and a finer partitioning of 
geographic disclosures.  SFAS 131 is effective for fiscal years beginning 
after December 15, 1997 with earlier application permitted.

     In management's opinion, SFAS Nos. 130 and 131, did not have a material 
effect of the Company's financial statements.

THIS REPORT MAY CONTAIN CERTAIN FORWARD-LOOKING STATEMENTS WITHIN THE MEANING 
OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 21E OF 
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.  THE COMPANY INTENDS SUCH 
FORWARD-LOOKING STATEMENTS TO BE COVERED BY THE SAFE HARBOR PROVISIONS FOR 
FORWARD-LOOKING STATEMENTS CONTAINED IN THE PRIVATE SECURITIES REFORM ACT OF 
1995, AND IS INCLUDING THIS STATEMENT FOR PURPOSES OF INDICATING SUCH INTENT. 
FORWARD-LOOKING STATEMENTS THAT ARE BASED ON CERTAIN ASSUMPTIONS, AND 
DESCRIBE FUTURE PLANS, STRATEGIES AND EXPECTATIONS OF THE COMPANY, ARE 
GENERALLY IDENTIFIABLE BY USE OF THE WORDS "BELIEVE," "EXPECT," "INTEND," 
"ANTICIPATE," "ESTIMATE," "PROJECT" OR SIMILAR EXPRESSIONS.  THE COMPANY'S 
ABILITY TO PREDICT RESULTS OR THE ACTUAL EFFECT OF FUTURE PLANS OR STRATEGIES 
IS INHERENTLY UNCERTAIN. FACTORS THAT COULD HAVE A MATERIAL ADVERSE EFFECT ON 
THE OPERATIONS AND FUTURE PROSPECTS OF THE COMPANY INCLUDE, BUT ARE NOT 
LIMITED TO, ACTIONS BY CREDITORS OR OTHER THIRD PARTIES, THE RESOLUTION OF 
LEGAL PROCEEDINGS IN WHICH THE COMPANY IS (OR MAY BECOME) INVOLVED, CHANGES 
IN INTEREST RATES, GENERAL ECONOMIC CONDITIONS, LEGISLATIVE/REGULATORY 
CHANGES, MONETARY AND FISCAL POLICIES OF THE U.S. GOVERNMENT, INCLUDING 
POLICIES OF THE U.S. TREASURY AND THE FEDERAL RESERVE BOARD, THE QUALITY OR 
COMPOSITION OF THE COMPANY'S PORTFOLIO OF FINANCE RECEIVABLES, THE 

                                 8

<PAGE>


ABILITY OF THE COMPANY TO OBTAIN DEBT OR OTHER FINANCING, COMPETITION, DEMAND 
FOR FINANCIAL SERVICES IN THE COMPANY'S MARKET AREA AND ACCOUNTING 
PRINCIPLES, POLICIES AND GUIDELINES. THESE RISKS AND UNCERTAINTIES SHOULD BE 
CONSIDERED IN EVALUATING FORWARD-LOOKING STATEMENTS AND UNDUE RELIANCE SHOULD 
NOT BE PLACED ON SUCH STATEMENTS.  FURTHER INFORMATION CONCERNING THE COMPANY 
AND ITS BUSINESS, INCLUDING ADDITIONAL FACTORS THAT COULD MATERIALLY AFFECT 
THE COMPANY'S FINANCIAL RESULTS, IS INCLUDED IN OTHER COMPANY FILINGS WITH 
THE SECURITIES AND EXCHANGE COMMISSION.

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

     As more fully described in Note 4 to the Financial Statements, financial
information in this report as of, and for the three and six months ended, June
30, 1997 has been restated.

     The Company experienced a significant deterioration in its financial 
condition primarily due to significant operating losses during the first six 
months of 1998, and in prior years, that resulted from adverse changes in the 
sub-prime automobile finance industry and a significant deterioration in the 
quality of the Company's assets.  The Company has been unable to maintain 
adequate levels of income and net worth to satisfy the requirements of the 
GECC Agreements (as defined below) and the Indenture dated as of April 15, 
1995, under a supplement to which $17 million of its outstanding subordinated 
notes were issued (the "Indenture") and, as of June 30, 1998 was in default 
under the GECC Agreements and the Indenture.  At June 30, 1998, the Company's 
funding was effectively limited to its internally generated cash.  The 
Company, among other actions, has restructured operations to reduce overhead 
and suspended the acquisition of Installment Contracts.  As previously 
announced, the Company has been exploring strategic alternatives and is 
presently engaged in an orderly liquidation for the benefit of interested 
stakeholders that is expected to be completed during the second or third 
quarter of 1999.  SEE "--Recent Developments--Sale of Company Assets."

     The Company is a specialized financial services company currently 
engaged primarily in servicing automobile retail installment sales contracts 
("Installment Contracts") for purchases of late model used automobiles by 
"non-prime" consumers, who typically have limited access to traditional 
sources of consumer credit.  To a lesser extent, the Company services direct 
consumer loans and finance leases and other retail installment sale contracts 
(collectively "Other Loans") and offers, as agent, insurance and other 
products related to consumer finance transactions (collectively "Insurance 
Products").  The Company maintains its corporate headquarters and a regional 
office near Chicago in Gurnee, Illinois, and operates a regional office in 
Tampa, Florida.

     The following is management's discussion and analysis of the financial 
condition of the Company at June 30, 1998 (unaudited) as compared to June 30, 
1997 (unaudited) and December 31, 1997, and the results of operations for the 
three and six months ended June 30, 1998 and 1997 (unaudited).  This 
discussion should be read in conjunction with the Company's financial 
statements and notes thereto appearing elsewhere in this quarterly report. 
Data for the three and six months ended June 30, 1998 are not necessarily 
indicative of results expected for the full fiscal year.  The ratios and 
percentages provided below are calculated using the detailed financial 
information contained in the Company's financial statements and the financial 
data included elsewhere in this Form 10-Q.  References to "net" finance 
receivables or Installment Contracts shall mean finance receivables or 
Installment Contracts, as appropriate, net of unearned finance charges.



                                            9

<PAGE>

RECENT DEVELOPMENTS

SALE OF COMPANY ASSETS

     
The Company has entered into a letter of intent (the "Letter of Intent") with 
Eagle Acquisition Services LLC ("Acquisition LLC") pursuant to which a 
subsidiary of Acquisition LLC ("New Eagle") has agreed, subject to certain 
conditions, to acquire certain assets from, and assume certain liabilities 
of, the Company.  New Eagle has agreed to acquire all of the assets of the 
Company except for cash, marketable securities, tax credits and NOL 
carryforwards, Company-owned finance receivables (including those that have 
been charged off) and repossessed vehicles. As part of the transaction and 
subject to the concurrence of certain third parties, the Company and New 
Eagle will enter into an arrangement whereby New Eagle will service the 
Company's finance receivables as well as assume certain servicing obligations 
to third parties including GECC. The sub-servicing arrangement is primarily 
intended to allow the stakeholders to enjoy the value of the GECC servicing 
relationship and to ensure that the Company's obligations under the GECC 
Agreements are performed.  

     The transaction with New Eagle is contingent on the completion of due 
diligence and a financial review by New Eagle, the execution of a definitive 
purchase agreement and ancillary documents, and the raising of equity capital 
by Acquisition LLC and/or New Eagle.  The parties presently believe that the 
transaction will be completed during late 1998. Persons that are presently 
affiliated with the Company (including certain executive officers and 
directors of the Company and their respective relatives and affiliated 
companies) are expected to be investors in, and affiliated with, 
Acquisition LLC and New Eagle.

WAIVER FROM GECC

     The Company has received a waiver from GECC with respect to all current 
and past defaults (as of the date of such waiver) under the GECC Agreements. 
Subject to the compliance with certain obligations including those set forth 
below, the waiver is effective through November 15, 1998.

     In connection with the waiver granted by GECC, (i) Eagle acknowledged the
right of GECC to terminate the servicing agreement, (ii) certain financial and
performance covenants were modified for the period ending November 15, 1998,
(iii) Eagle agreed to additional reporting obligations, (iv) the level and
structures of reserve accounts established under the GECC Agreements were
modified, (v) GECC agreed to pay to the Company under certain circumstances, a
one-time reserve refund fee in the event the servicing agreement is terminated
by GECC prior to January 14, 1999, (vi) Eagle's repurchase right was revised to
permit it to repurchase all contracts serviced pursuant to the GECC Agreements
when the principal balance thereon is no more than $1 million, and (vii) Eagle
agreed to waive and release GECC from any and all claims that Eagle may have
against GECC arising on or before August 3, 1998 with respect to the GECC
Agreements.

DEFAULT ON SUBORDINATED DEBT

     
The Company has suspended payments under its outstanding subordinated debt. 
Subordinated debt primarily consists of the Rising Interest Subordinated 
Redeemable Securities due 2005 (the "Notes").  At August 1, 1998, the Company 
had outstanding approximately $17.6 million of subordinated debt, including 
$17.0 million of Notes.  Scheduled monthly interest on the subordinated debt 
equals approximately $150,000, and the amount of interest due and owing as of 
the date of filing of this report is approximately $620,000, inclusive of 
penalty interest.  Scheduled monthly interest has been accrued although 
unpaid. The amount of such accrual approximated $464,000 for the three months 
ended June 30, 1998.  LaSalle National 


                                        10

<PAGE>

Bank, as Trustee, has notified the Company that a number of Event of Defaults 
have occurred under the Indenture between the Company and the Trustee.

RESOLUTION OF LITIGATION

     The Company has settled or otherwise resolved all outstanding non-ordinary
course litigation with the exception of certain ongoing litigation in the State
of Texas.  See "Other Information--Legal Proceedings."

GENERAL

     Installment Contracts represented 99% of the Company's net finance 
receivables at June 30, 1998.  The Company's outstanding balance of owned or 
serviced (i.e., managed) Installment Contracts declined to $52.3 million as 
June 20, 1998 from $99.0 million at December 31, 1997 and from $135.3 million 
at June 30, 1997.

     
The Company periodically sells net Installment Contracts to GECC, with 
servicing retained.  The Company accounted for Installment Contract sales to 
GECC during 1997 ("1997 GECC Transactions") as financing transactions 
pursuant to the provisions of SFAS 125, which is effective for loan sale 
transactions occurring after December 31, 1996.  Prior to 1997, the Company 
accounted for Installment Contract sales with GECC as off-balance sheet sales 
transactions pursuant to the provisions of Statement of Accounting Standards 
No. 77, "Reporting by Transferors for Transfers of Receivables with Recourse" 
("SFAS 77"), thereby removing the related receivables from the balance sheet 
while recognizing any subsequent servicing income as received.
     
     Interest and servicing income on managed Installment Contracts accounts 
for most of the Company's revenue.  The Company did not originate Installment 
Contracts during the six months ended June 30, 1998, as compared to the 
origination of $31.0 million of Installment Contracts during the six months 
ended June 30, 1997.  The Company began reducing its purchases of Installment 
Contracts during the fourth quarter of 1995.  

     As reflected in the following table, the Company did not originate any
finance receivables during the six months ended June 30, 1998:

<TABLE>
<CAPTION>

                               FOR THE THREE MONTHS ENDED JUNE 30,        FOR THE SIX MONTHS ENDED JUNE 30,
                           -----------------------------------------   ------------------------------------------
                                    1998                  1997               1998                  1997
                           -------------------  --------------------   -------------------  ---------------------
                                        % OF                   % OF                 % OF                    % OF
                            AMOUNT      TOTAL     AMOUNT       TOTAL     Amount     Total     Amount       Total
                          ----------   -------   ----------   -------   --------   -------  ---------    --------
                                                            (DOLLARS IN THOUSANDS)
<S>                      <C>         <C>     <C>            <C>         <C>       <C>    <C>          <C>
Net Installment
   Contracts
   purchased(1). . . . . . $   --        0%      $13,817        100%        $--       0%    $31,014        100%
Net Other
   Loans originated (1). .     --        0%           57          0%         --       0%        116          0%
                          ----------   -------   ----------   -------   --------   -------  ---------    --------
Total. . . . . . . . . . . $   --        0%      $13,874        100%        $--       0%    $31,130        100%
                          ----------   -------   ----------   -------   --------   -------  ---------    --------
                          ----------   -------   ----------   -------   --------   -------  ---------    --------

</TABLE>
___________________ 
(1) Net of unearned finance charges

     During the six months ended June 30, 1998, the Company sold net retail
installment contracts ("Installment Contracts") to competitors for $13.0 million
in cash, net of non-refundable acquisition 


                                      11

<PAGE>

discount and allowances for credit losses.  Most proceeds were applied to pay 
off all outstanding amounts under the Company's Revolving Credit Agreement.  
As a result, the Revolving Credit Agreement was terminated on March 26, 1998.

FINANCIAL OVERVIEW

     During 1997 and the first half of 1998, several sub-prime automobile
finance companies, including the Company, experienced poor loan performance,
higher delinquency rates and increased credit losses on their owned or serviced
receivables.  In addition, during the past several months, a number of finance
companies have made strategic decisions to exit the industry.  This has
contributed to a significant reduction in traditional and non-traditional
lending to the industry and a material decline in public market investment into
the sub-prime automobile industry through the sale of equity securities,
subordinated debt instruments and securitized notes.

     The following table sets forth certain data relating to the Company's net
income for the three and six months ended June 30, 1998 and 1997 and for the
year ended December 31, 1997:


<TABLE>
<CAPTION>

                                                            FOR THE THREE MONTHS         FOR THE SIX MONTHS
                                                               ENDED JUNE 30,                ENDED JUNE 30,      FOR THE YEAR ENDED
                                                           1998           1997           1998            1997     DECEMBER 31, 1997
                                                         ----------     -------       ----------     -----------  -----------------
                                                                                        (DOLLARS IN THOUSANDS)
<S>                                                   <C>            <C>            <C>            <C>           <C>
Average net finance receivables
   Total owned, net. . . . . . . . . . . . . . . . . .   $  8,717      $  49,121      $  14,435      $  52,586      $  47,196
   Serviced:
      GECC, Installment Contract
         sales (1997) (1). . . . . . . . . . . . . . .     20,619         21,910         22,688         21,910         18,651
      GECC, Installment Contract
         sales (1966 and prior) (1). . . . . . . . . .     19,327         49,998         22,328         55,534         46,095
      Securitization . . . . . . . . . . . . . . . . .     10,287         23,351         11,695         25,582         21,720
                                                         ----------     -------       ----------     -----------   ----------------
   Total serviced, net . . . . . . . . . . . . . . . .     50,233         95,259         56,711        103,026         86,466
                                                         ----------     -------       ----------     -----------   ----------------
   Total managed, net. . . . . . . . . . . . . . . . .     58,950        144,380         71,146        155,612        133,662
Average interest bearing
   liabilities (senior and
      subordinated debt and related to
      owned receivables) . . . . . . . . . . . . . . .     17,569         45,456         21,867         49,114         45,321
Total interest and fee income
   (owned) . . . . . . . . . . . . . . . . . . . . . .        409          3,178          1,620          6,606         11,752
Total interest expense (owned) . . . . . . . . . . . .        464          1,310          1,339          2,760          5,476
                                                         ----------     -------       ----------     -----------   ----------------
Net interest income (loss) before
   provision for credit losses
      (owned). . . . . . . . . . . . . . . . . . . . .   $    (55)     $   1,868      $     281      $   3,846      $   6,276
                                                         ----------     -------       ----------     -----------   ----------------
         

Average interest bearing liabilities
   (Installment Contract sales). . . . . . . . . . . .     17,893         19,524         19,752         19,524         23,687
Total interest and fee income
   (Installment Contract sales). . . . . . . . . . . .      1,163          1,046          2,615          1,046          4,723
Total interest expense (Installment
   Contract sales) . . . . . . . . . . . . . . . . . .        436            350            953            350          1,597
                                                         ----------     -------       ----------     -----------   ----------------
Net interest income before
      provision for credit losses
      (Installment Contract sales) . . . . . . . . . .   $    727      $     696      $   1,662      $     696      $   3,125
                                                         ----------     -------       ----------     -----------   ----------------


</TABLE>


                                             12

<PAGE>

<TABLE>
<CAPTION>

<S>                                                   <C>            <C>            <C>            <C>           <C>
Average interest rate earned on
   net finance receivables (owned) . . . . . . . . . .     18.77%         25.88%         22.44%         25.12%         24.90%

Average interest rate on interest
    bearing liabilities (owned). . . . . . . . . . . .     10.56%         11.53%         12.25%         11.24%         12.08%
                                                         ----------     -------       ----------     -----------   ------------
Net interest spread (owned). . . . . . . . . . . . . .      8.20%         14.35%         10.20%         13.88%         12.82%
                                                         ----------     -------       ----------     -----------   ------------
Net interest margin (owned) (2). . . . . . . . . . . .     (2.53)%        15.21%          3.89%         14.63%         13.30%
                                                         ----------     -------       ----------     -----------   ------------

Average interest rate earned on net
      owned finance receivables
      (Installment Contract sales) . . . . . . . . . .     22.56%         19.10%         23.06%         19.10%         25.32%

Average interest rate on interest
      bearing liabilities (Installment
      Contract sales). . . . . . . . . . . . . . . . .      9.74%          7.18%          9.65%          7.18%          6.74%
                                                         ----------     -------       ----------     -----------   ------------

Net interest spread (Installment
      Contract sales). . . . . . . . . . . . . . . . .     12.82%         11.92%         13.40%         11.92%         18.58%
                                                         ----------     -------       ----------     -----------   ------------

Net interest margin (Installment
      Contract sales) (2). . . . . . . . . . . . . . .     14.11%         12.70%         14.65%         12.70%         16.76%
                                                         ----------     -------       ----------     -----------   ------------


</TABLE>

---------------------------------
(1)  Prior to January 1, 1997, loan sales pursuant to the GECC Agreements were
     accounted for as off-balance sheet sales transactions pursuant to SFAS No.
     77 "Accounting for Sales with Recourse" with servicing and bonus servicing
     fee income recognized or earned.  Effective January 1, 1997, sales pursuant
     to the GECC Agreements were accounted for as financing transactions 
     pursuant to FASB 125 with interest income recognized on the loan balances 
     under the interest method; interest expense recognized at GECC's fixed 
     spread and charge-off and related provisions for loan losses reflected as 
     transactions impacting the allowance for loan losses, Installment Contract 
     sales.

(2)  Net interest margin represents net interest income on an annualized basis
     divided by average net finance receivables.

     A principal component of the Company's net income is its net interest
spread.  Net interest spread represents the difference between interest earned
on finance receivables and interest paid for borrowed funds.  The laws of
certain states establish the maximum interest rates, and prescribe the types and
maximum amounts of fees, insurance premiums and other amounts that consumers may
be charged.  As is common in its market segment, the Company's Installment
Contracts generally bear the maximum allowable interest rates, fees, premiums
and other charges permitted under state law.  As a result, the Company has
limited ability to offset increases in its cost of funds.

     An increasingly larger component of the Company's revenue is the servicing
income earned by the Company on Installment Contracts sold or securitized. 
Servicing income is derived from base servicing fees for loan administration and
collection services and bonus or excess servicing fees paid based on the
performance of the Installment Contracts sold or securitized.  The increase in
servicing income was due to higher levels of bonus servicing fees earned in 1998
as a percentage of average serviced receivables and the absence of excess
servicing amortization expense.  The following table sets forth certain data
relating to servicing fees for the periods shown:


                                           13

<PAGE>

<TABLE>
<CAPTION>


                                     FOR THE THREE MONTHS ENDED JUNE 30,    FOR THE SIX MONTHS ENDED JUNE 30,   FOR THE YEAR ENDED
                                         1998        1997                    1998             1997               DECEMBER 31, 1997
                                     ----------------------------------   -----------------------------------  --------------------
<S>                                 <C>         <C>                    <C>            <C>                    <C>
Base Servicing fees(1)  . . . . . .    $231,451   $  566,746              $  570,759      $1,252,785              $2,108,397
Bonus/excess servicing fees . . . .     691,824    1,333,271               1,178,228       1,630,367               2,251,853
Amortization of excess servicing 
  rights. . . . . . . . . . . . . .          --     (177,575)                     --        (380,255)             (1,050,590)
Adjustment to excess servicing 
  rights. . . . . . . . . . . . . .          --           --                      --              --              (1,681,317)
                                       ---------  ------------           ------------    ---------------         ------------
Net servicing fees. . . . . . . . .    $923,275   $1,722,442              $1,748,987      $2,502,897              $1,628,343
                                       ---------  ------------           ------------    ---------------         ------------
                                       ---------  ------------           ------------    ---------------         ------------


</TABLE>

(1)  Servicing Fees in respect of pre-1997 GECC Transactions are recorded as
     income when received (I.E., on a cash-flow basis).  A Portion of the
     bonus/excess servicing fees reflects cash flows from pre-1997 GECC
     Transactions.  GECC Transactions occurring after January 1, 1997 were
     accounted for as financing transactions and have no corresponding servicing
     income.  

     The Company maintains credit loss reserves to absorb potential losses in
its finance receivables portfolio.  Credit loss reserves for the Company's
Installment Contracts portfolio are comprised of nonrefundable acquisition
discount and allowance for credit losses.  SEE "--Credit Loss Experience."

     For the six months ended June 30, 1998, the average interest rate earned on
net finance receivables (owned) decreased by 2.68 percentage points over
comparable 1997 periods.  The effective cost of borrowings increased 8.99% to
12.25% for the six months ended June 30, 1998 compared to 11.24% in the 1997
period.  

     Another significant component of the Company's financial performance is 
the level of its operating expenses.  Operating expenses are influenced by 
the level of volume and delinquency in the Company's Installment Contracts.  
The Company is attempting to reduce the number of its employees and operating 
expenses.

FINANCIAL CONDITION

     Total assets decreased $26.4 million (48.2%) to $28.4 million at June 30,
1998 from $54.8 million at December 31, 1997 primarily due to a decrease in net
finance receivables (net of dealer reserves, nonrefundable acquisition discount
and allowance for credit losses) to $6.4 million at June 30, 1998 from $24.3
million at December 31, 1997.  This decline in assets and finance receivables
is, in part, attributable to the sale of Installment Contracts in order to
extinguish indebtedness due under the Revolving Credit Agreement.  The net
amount of owned or serviced Installment Contracts decreased to $52.3 million at
June 30, 1998 from $99.0 million at December 31, 1997.  The net amount of owned
or serviced Installment Contracts was $135.3 million at June 30, 1997. 

     Total liabilities decreased $22.1 million (38.7%) to $35.0 million at June
30, 1998 from $57.1 million at December 31, 1997, primarily due to a decrease in
senior and subordinated debt to $17.5 million at June 30, 1998 from $32.6
million at December 31, 1997.  The decrease in senior and subordinated debt was
primarily the result of the Company extinguishing all borrowings under the

                                     14
<PAGE>


Revolving Credit Agreement (as a result of Installment Contract sales) from a 
$15.0 million balance at December 31, 1997.  SEE "--Liquidity and Capital 
Resources." Total liabilities and stockholders' equity (deficit) decreased 
$26.4 million (48.5%) to $28.4 million at June 30, 1998 from $54.8 million at 
December 31, 1997.

RESULTS OF OPERATIONS

     The following table sets forth certain data relating to the Company's
results of operations for the three and six months ended June 30, 1998 and 1997:
<TABLE>
<CAPTION>



                                                 FOR THE THREE MONTHS ENDED JUNE 30,       FOR THE SIX MONTHS ENDED JUNE 30,
                                                        1998          1997                      1998            1997
                                                        ----          ----                      ----            ----
                                                                              (DOLLARS IN THOUSANDS)
<S>                                                  <C>              <C>                      <C>              <C>
Automobile portfolio interest and fee 
  income, owned receivables. . . . . . . . .         $   355          $ 3,110                  $ 1,507          $ 6,460
                                                     -------          -------                  -------          -------
Total interest and fee income, owned 
  receivables. . . . . . . . . . . . . . . .         $   409          $ 3,178                  $ 1,620          $ 6,606
Total interest expense, senior and 
  subordinated debt. . . . . . . . . . . . .             464            1,310                    1,339            2,760
                                                     -------          -------                  -------          -------
Net interest income (loss) before provision for 
  credit losses. . . . . . . . . . . . . . .             (55)           1,868                      281            3,846
Provision for credit losses, owned portfolio             726            2,793                      726            3,168
                                                     -------          -------                  -------          -------
Net interest income (loss) after provision for 
  credit losses, owned receivables . . . . .            (781)            (925)                    (445)             678
                                                     -------          -------                  -------          -------

Interest income, Installment Contract sales.           1,163            1,046                    2,615            1,046
Interest expense, Installment Contract sales             436              350                      953              350
Provision for credit losses, Installment 
  Contract sales . . . . . . . . . . . . . .             441              896                    1,160              896
                                                     -------          -------                  -------          -------
Net interest income (loss) after provision for
  credit losses, Installment Contract sales (1)          286             (200)                     502             (200)
                                                     -------          -------                  -------          -------

Other Income:
  Servicing income (from Installment
       Contracts). . . . . . . . . . . . . .             923            1,722                    1,749            2,503
  Insurance products commissions . . . . . .              --                3                       --                5
                                                     -------          -------                  -------          -------
Total other income . . . . . . . . . . . . .             923            1,725                    1,749            2,508
                                                     -------          -------                  -------          -------
Salaries and related costs . . . . . . . . .           1,057            1,951                    2,310            3,986
Collection expenses. . . . . . . . . . . . .             335              831                      801              831
Other operating expenses . . . . . . . . . .           1,867            1,026                    3,001            2,885
                                                     -------          -------                  -------          -------
Total operating expenses . . . . . . . . . .           3,259            3,808                    6,112            7,702
                                                     -------          -------                  -------          -------
Loss before taxes. . . . . . . . . . . . . .          (2,831)          (3,208)                  (4,306)          (4,716)
Taxes  . . . . . . . . . . . . . . . . . . .              --               --                       --               --
                                                     -------          -------                  -------          -------
Net loss . . . . . . . . . . . . . . . . . .         $(2,831)         $(3,208)                 $(4,306)         $(4,716)
                                                     -------          -------                  -------          -------
                                                     -------          -------                  -------          -------

</TABLE>

(1)  1997 data available only for the three months ended June 30, 1997,
     annualized quarterly.
     
     COMPARISON OF SIX MONTHS ENDED JUNE 30, 1998 TO SIX MONTHS ENDED JUNE 30,
1997.  The Company experienced a net loss of $4.3 million for the six months
ended June 30, 1998 reflecting a $410,000

                                       15

<PAGE>

improvement over the $4.7 million loss for the comparable 1997 
period.  Comparisons between the 1998 and 1997 periods are heavily influenced 
by the Company's reduced operating scale in 1998 as compared to 1997.

     Interest and fee income from owned receivables decreased 75.5% to $1.6 
million from $6.6 million as a result of a 72.6% reduction in average net 
finance receivables owned.  Total interest expense decreased 51.5% to $1.3 
million for the six months ended June 30, 1998 from $2.8 million for the six 
months ended June 30, 1997.  The reduction resulted from a decrease in the 
amount of average debt outstanding relating to owned receivables.  Total debt 
outstanding at June 30, 1998 decreased to $17.5 million from total debt 
outstanding of $37.7 million at June 30, 1997.  This decrease is a result of 
the retirement of senior secured indebtedness during 1998.  The average debt 
outstanding for the six months ended June 30, 1998 decreased to $21.9 million 
from $49.1 million for the six months ended June 30, 1997.  The weighted 
average interest rate paid for borrowed funds increased to 12.25% for the six 
months ended June 30, 1998 from 11.24% for the six months ended June 30, 
1997.  

     Provision for credit losses decreased to $726,000 for the six months 
ended June 30, 1998 compared to a provision of $3.2 million for the six 
months ended June 30, 1997.  The decline in the provision for credit losses 
was due, in part, to the decline in the outstanding balance of net finance 
receivables owned by the Company.  SEE "--Credit Loss Experience."

     The Company's presentation for GECC Installment Contract sales changed 
as a result of the Company's adoption of FASB 125, effective January 1, 1997. 
The Company reports 1997 loan sales as financing transactions, while loan 
sales occurring in 1996 and prior periods are reported as receivables sold.  
Interest income in 1998 from Installment Contract sales increased $1.6 
million to $2.6 million for the six months ended June 30, 1998 from the $1.0 
million earned during the comparable 1997 period.  Interest income in 1998 
from Installment Contract sales was reduced by debt related interest expense 
of $953,000 for the six months ended June 30, 1998 compared to $350,000 in 
the comparable 1997 period.  For the six months ended June 30, 1998, the 
provision for credit losses on Installment Contract sales increased $264,000 
to $1.2 million from $896,000 in the comparable 1997 period.  Net interest 
income on Installment Contract sales, after provision for credit losses, for 
the six months ended June 30, 1998 was $502,000 compared to a $200,000 loss 
in the comparable 1997 period.  For all periods prior to the January 1, 1997 
effective date of FASB 125, GECC Installment Contract sales revenue was 
included in service fee income.

     Other income, consisting primarily of income from servicing fees and net 
interest income on Installment Contract sales, decreased to $1.7 million for 
the six months ended June 30, 1998 from $2.5 million for the six months ended 
June 30, 1997, primarily as a result of lower outstanding receivables 
serviced for third parties.

     Total operating expenses decreased 20.8% to $6.1 million for the six 
months ended June 30, 1998 compared to $7.7 million for the six months ended 
June 30, 1997.  The number of full time equivalent employees decreased 54.2% 
at June 30, 1998 when compared to June 30, 1997.  The full financial impact 
of staffing reductions will be reflected in future periods.  The Company's 
other operating expenses increased 2.4% to $3.8 million for the six months 
ended June 30, 1998 compared to $3.7 million the six months ended June 30, 
1997.  Other operating expenses for the six months ended June 30, 1998 were 
impacted by professional fees and costs associated with ongoing litigation.

     No income tax expense was recorded for the six months ended June 30, 
1998 or for the six months ended June 30, 1997. 


                                       16

<PAGE>


     COMPARISON OF THREE MONTHS ENDED JUNE 30, 1998 TO THREE MONTHS ENDED 
JUNE 30, 1997.  The Company experienced a net loss of $2.8 million for the 
three months ended June 30, 1998 reflecting a $377,000 improvement over 
the $3.2 million loss for the comparable 1997 period.  Comparisons between 
the 1998 and 1997 periods are heavily influenced by the Company's reduced 
operating scale in 1998 as compared to 1997.

     Interest and fee income from owned receivables decreased 87.1% to 
$409,000 from $3.2 million as a result of an 82.3% reduction in average net 
finance receivables owned.  Total interest expense decreased 64.6% to 
$464,000 for the three months ended June 30, 1998 from $1.3 million for the 
three months ended June 30, 1997.  The reduction resulted from a decrease in 
the amount of average debt outstanding relating to owned receivables.  The 
total subordinated debt outstanding at June 30, 1998 decreased to $17.5 
million from the total senior and subordinated debt outstanding of $37.7 
million at June 30, 1997.  The average debt outstanding for the three months 
ended June 30, 1998 decreased to $17.6 million from $45.5 million for the 
three months ended June 30, 1997.  The weighted average interest rate paid 
for borrowed funds decreased to 10.56% for the three months ended June 30, 
1998 from 11.53% for the three months ended June 30, 1997.  

     Provision for credit losses decreased to $726,000 for the three months 
ended June 30, 1998 compared to a provision of $2.8 million for the three 
months ended June 30, 1997.  The decline in the provision for credit losses 
was due, in part, to the decline in the outstanding balance of net finance 
receivables owned by the Company.  SEE "--Credit Loss Experience."

     The Company's presentation for GECC Installment Contract sales changed 
as a result of the Company's adoption of FASB 125, effective January 1, 1997. 
The Company reports 1997 loan sales as financing transactions, while loan 
sales occurring in 1996 and prior periods are reported as receivables sold.  
Interest income in 1998 from Installment Contract sales increased $117,000 to 
$1.2 million for the three months ended June 30, 1998 from the $1.0 million 
earned during the comparable 1997 period.  Interest income in 1998 from 
Installment Contract sales was reduced by debt related interest expense of 
$436,000 for the three months ended June 30, 1998 compared to $350,000 in the 
comparable 1997 period.  For the three months ended June 30, 1998, the 
provision for credit losses on Installment Contract sales decreased $455,000 
to $441,000 from $896,000 in the comparable 1997 period.  Net interest income 
on Installment Contract sales, after provision for credit losses, for the 
three months ended June 30, 1998 was $286,000 compared to a $200,000 loss in 
the comparable 1997 period.  For all periods prior to the January 1, 1997 
effective date of FASB 125, GECC Installment Contract sales revenue was 
included in service fee income.

     Other income, consisting primarily of income from servicing fees and net 
interest income on Installment Contract sales, decreased $802,000 for the 
three months ended June 30, 1998 from $1.7 million to $923,000 million for 
the three months ended June 30, 1997 primarily as a result of lower 
Securitization and GECC (1996 and prior) outstandings.  

     Total operating expenses decreased 14.4% to $3.3 million for the three 
months ended June 30, 1998 compared to $3.8 million for the three months 
ended June 30, 1997. The Company's other operating expenses increased 82.0% 
to $1.9 million for the three months ended June 30, 1998 compared to $1.0 
million the three months ended June 30, 1997.  Other operating expenses for 
the three months ended June 30, 1998 were impacted by professional fees and 
costs associated with ongoing  litigation.

No income tax expense was recorded for the three months ended June 30, 1998 
or for the three months ended June 30, 1997. 


                                       17

<PAGE>


CREDIT LOSS EXPERIENCE

     The Company's credit loss reserves are comprised of three components: 
nonrefundable acquisition discount, allowance for credit losses and 
refundable dealer reserves.  The total of allowance for credit losses, 
nonrefundable acquisition discount and dealer reserves equaled 17.7% and 
12.8% of net owned finance receivables at June 30, 1998 and 1997, 
respectively.  At June 30, 1998, the Company maintained credit loss reserves 
equal to 13.7% for potential losses on 1997 GECC Installment Contract sale 
transactions.

     NONREFUNDABLE ACQUISITION DISCOUNT AND DEALER RESERVES.  In an effort to 
achieve an acceptable rate of return and appropriately reflect credit risks 
generally associated with the Company's automobile finance business, the 
Company purchases Installment Contracts from dealers at a discount from their 
principal amount.  The discount is nonrefundable, is equal to the difference 
between (a) the total principal amount to be repaid under the Installment 
Contract and (b) net funds paid to the dealer, and is allocated to the 
nonrefundable acquisition discount account.  As part of the Company's 
financing of retail installment sales contracts (other than Installment 
Contracts), refundable dealer reserves may be established to protect the 
Company from losses associated with such contracts, and are shown as a 
liability of the Company. 

     The following table presents a reconciliation of the changes in 
nonrefundable acquisition discount and dealer reserves on its owned 
receivables for the three and six months ended June 30, 1998 and 1997:

<TABLE>
<CAPTION>


                                               FOR THE THREE MONTHS ENDED JUNE 30,   FOR THE SIX MONTHS ENDED JUNE 30,
                                                       1998          1997                 1998             1997 
                                                       ----          ----                 ----             ----
                                                                        (DOLLARS IN THOUSANDS)
<S>                                                  <C>          <C>                 <C>              <C>
Balance at beginning of period. . . . .              $  131         $3,017              $1,180           $1,730
Additions applicable to new volume. . .                  --          1,432                  --            3,102
Additions/Reductions applicable to 
  accounts sold . . . . . . . . . . . .                   5         (3,104)             (1,232)          (3,104)
Gross charge-off. . . . . . . . . . . .              (1,141)        (1,002)             (1,682)          (3,293)
Recoveries. . . . . . . . . . . . . . .               1,104            727               1,833            2,635
                                                    -------        -------             -------          -------
Balance at end of period. . . . . . . .              $   99         $1,070              $   99           $1,070
                                                    -------        -------             -------          -------
                                                    -------        -------             -------          -------
Balance at end of period as a percentage
  of net finance receivables (owned) at 
  end of period . . . . . . . . . . . .                1.26%          2.69%               1.26%            2.69%

</TABLE>


     ALLOWANCE AND PROVISION FOR CREDIT LOSSES/CHARGE-OFFS.  The Company
maintains an allowance for credit losses at a level that management believes is
adequate to absorb potential losses in its finance receivables portfolio. 
Management evaluates the adequacy of the allowance for credit losses by
reviewing credit loss experience and delinquency trends using static pool
analysis, probable loan impairment, the value of the underlying collateral and
general economic conditions and trends.  If the amount of nonrefundable
acquisition discount associated with a specific pool of Installment Contracts is
determined to be insufficient, in the opinion of management, to absorb projected
losses for that pool, a provision for credit losses would be charged against
earnings.  The Company's general policy is to charge-off delinquent accounts
when they are deemed uncollectible, and in any event prior to their becoming 90
days contractually delinquent.  The Company's charge-offs through nonrefundable

                                       18

<PAGE>

acquisition discount and allowance for credit losses, as a percentage of average
owned finance receivables (net) annualized, was $2.3 million, or 31.6%, during
the six months ended June 30, 1998, and $5.6 million, or 21.2%, during the
corresponding period in 1997.  The annualized percentage for 1998 losses is
distorted as a result of Installment Contract sale transactions undertaken in
order to retire senior secured indebtedness and the repurchase of bankrupt
accounts previously sold to GECC.  Installment Contract sales and replacements
generally exclude delinquent accounts, thereby leaving a disproportionate number
of delinquent accounts in the remaining owned receivables pool.

     The following table reflects the Company's allowance and provision for
credit losses on its owned portfolio (excluding Installment Contract sales) for
the three and six months ended June 30, 1998 and 1997: 

<TABLE>
<CAPTION>

                                          FOR THE THREE MONTHS ENDED JUNE 30,   FOR THE SIX MONTHS ENDED JUNE 30,
                                                  1998          1997                   1998           1997
                                                  ----          ----                   ----           ----
                                                                    (DOLLARS IN THOUSANDS)
<S>                                              <C>           <C>                    <C>             <C>
Balance at beginning of period. . . . .          $1,250        $4,390                 $2,986          $6,046
Provision charged to expense. . . . . .             726         2,793                    726           3,169
Gross charge-off. . . . . . . . . . . .            (700)       (2,902)                (2,449)         (4,959)
Recoveries. . . . . . . . . . . . . . .               8            15                     21              40
                                                 ------        ------                 ------          ------
Balance at end of period. . . . . . . .          $1,284        $4,296                 $1,284          $4,296
                                                 ------        ------                 ------          ------
                                                 ------        ------                 ------          ------
Allowance as a percentage of net
  finance receivables (owned) at end of 
  period. . . . . . . . . . . . . . . .           16.41%        10.81%                 16.41%          10.81%
</TABLE>

     Changes in the allowance for credit losses, in the Company's Installment 
Contract sales portfolio (1997 GECC Transactions), for the three and six 
months ended June 30, 1998 and 1997 were as follows:


<TABLE>
<CAPTION>
                                          FOR THE THREE MONTHS ENDED JUNE 30,  FOR THE SIX MONTHS ENDED JUNE 30,
                                                   1998          1997                1998            1997
                                                   ----          ----                ----            ----
                                                                  (DOLLARS IN THOUSANDS)
<S>                                              <C>             <C>               <C>                <C>
Balance at beginning of period. . . . .          $ 2,890          $    --           $ 3,353            $    --
  Original allowance for credit losses.               --            3,104                --              3,104
  Additional funding to allowance for 
    credit losses . . . . . . . . . . .              440              896             1,160                896
  Gross losses run thru allowance . . .           (1,141)            (671)           (2,849)              (671)
  Recoveries (less expenses & other 
    charges). . . . . . . . . . . . . .              360               45               885                 45
                                                 -------          -------           -------            -------
Balance at end of period. . . . . . . .          $ 2,549          $ 3,374           $ 2,549            $ 3,374
                                                 -------          -------           -------            -------
                                                 -------          -------           -------            -------
Allowance as a percentage of net 
  Installment Contract sales at end of
    period. . . . . . . . . . . . . . .           13.74%        11.71%              13.74%          11.71%
</TABLE>

     Total charge-off as a percentage of average net Installment Contract 
sales finance receivables (annualized) was 15.16% and 17.32% for the three 
and six months ended June 30, 1998.

                                       19

<PAGE>


DELINQUENCIES

     The Company monitors delinquencies in the managed finance receivables 
portfolio to gauge overall credit trends.  Managed finance receivables that 
were 30 days and greater contractually delinquent (net of unearned finance 
charges) were $5.4 million, $14.0 million and $11.8 million, representing 
10.5%, 14.2% and 8.7% of net managed finance receivables, as of June 30, 
1998, December 31, 1997, and June 30, 1997, respectively.  Managed finance 
receivables that were 60 days and greater contractually delinquent (net of 
unearned finance charges) were $1.4 million, $4.0 million and $3.1 million, 
representing 2.7%, 4.1% and 2.3% of net managed finance receivables as of 
June 30, 1998, December 31, 1997, and June 30, 1997, respectively.

LIQUIDITY AND CAPITAL RESOURCES

     The Company finances its operations through cash flow from operations 
and from the periodic sales of finance receivables.

     Net cash provided by (used in) operating activities totaled ($1.1) 
million and ($460,000) during the three months ended June 30, 1998 and 1997, 
respectively.  For the six months ended June 30, 1998 and 1997, net cash 
provided by (used in) operating activities totaled ($4.7) million and 
$168,000 respectively.  Net cash used in operating activities for the three 
and six months ended June 30, 1998 and 1997 was affected by net operating 
losses, decreased income tax receivables, decreased repossessed or titled 
assets and the net change in the allowance for credit losses.  For the six 
months ended June 30, 1998, a significant decline in the nonrefundable 
acquisition discount occurred.

     Net cash provided by (used in) investing activities represents the net 
investment in, or liquidation of, finance receivables, which for the 
three-month period ended June 30, 1998 and 1997 was $2.5 million and ($2.4) 
million, respectively.  For the six months ended June 30, 1998 and 1997, net 
cash provided by (used in) investing activities was $25.7 million and ($10.4) 
million, respectively.  During the six months ended June 30, 1998, cash 
provided from the sale of Installment Contracts was $14.5 million.

     Net cash provided by (used in) financing activities for the three months 
ended June 30, 1998 and the comparable 1997 period primarily reflects 
borrowings and repayments under the Revolving Credit Agreement.  Net cash 
provided by (used in) financing activities for the three months ended June 
30, 1998 was ($3.6) million and net cash provided by financing activities for 
the three months ended June 30, 1997 was $3.9 million.  Net cash provided by 
financing activities for the six months ended June 30, 1998 and 1997 was 
($22.4) million ($15.0 million of which was used to retire senior secured 
indebtedness) and $12.6 million, respectively.  

     Although no assurances can be provided in this regard, the Company 
intends to meet its short-term liquidity needs with cash flow from 
operations. As evidenced by the Letter of Intent, the Company is undertaking 
an orderly liquidation for the benefit of its interested stakeholders, which 
the Company currently believes will be completed during 1999.  Accordingly, 
the Company presently expects to have limited long-term liquidity needs.

     The Company must comply with customary financial and other covenants under
the Indenture.  At June 30, 1998, the Company was in breach of the 

                                       20

<PAGE>



Indenture.  The Company negotiated and received during August 1998, a waiver 
with GECC with respect to certain breaches under the GECC Agreement.  The 
Company expects to remain in violation of the Indenture.  No assurance can be 
given that either or both of the Company's subordinated lenders (or trustee 
under the Indenture) and GECC will not take adverse action.  SEE "--Recent 
Developments."

     At June 30, 1998, the Company had total subordinated debt of $17.5 
million as compared to total senior and subordinated debt of $32.6 million at 
December 31, 1997 and $17.6 million at June 30, 1997.  The Company has 
suspended payments owing under all outstanding subordinated notes.

The following table presents the Company's debt instruments and the weighted 
average interest rates on such instruments for the periods indicated:


<TABLE>
<CAPTION>

                                                        FOR THE SIX MONTHS ENDED JUNE 30,     FOR THE TWELVE MONTHS
                                                              1998               1997        ENDED DECEMBER 31, 1997
                                                        BALANCE   RATE     BALANCE   RATE      BALANCE        RATE
                                                        -------   ----     -------   ----      -------        ----
                                                                               (DOLLARS IN THOUSANDS)
<S>                                                    <C>       <C>       <C>       <C>       <C>            <C>
SENIOR:
  Revolving Credit Agreement   . . . . .                $    --    0.00%    $19,900   8.59%     $14,997        12.83%
  Loan from Commonly Controlled
     Company   . . . . . . . . . . . . .                     --    0.00%        148   6.75%          37         6.75%
SUBORDINATED:
  Notes payable  . . . . . . . . . . . .                 17,543   12.25%     17,632  12.18%      17,543        12.21%
                                                         ------             -------              ------
Total debt   . . . . . . . . . . . . . .                $17,543   12.25%    $37,680  11.24%     $32,577        12.08%
                                                         ------             -------              ------
                                                         ------             -------              ------

The following table sets forth information with respect to maturities of 
senior and subordinated debt at June 30, 1998:



                                                                      LOANS FROM
                                                                       COMMONLY
                                                      SENIOR BANK      CONTROLLED       SUBORDINATED
YEAR                                                LINES OF CREDIT     COMPANY         NOTES PAYABLE          TOTAL
----                                                ---------------   -----------       -------------          -----
                                                                         (DOLLARS IN THOUSANDS)
<S>                                                      <C>              <C>              <C>                  <C>
1998. . . . . . . . . . . . . . . . . . . . . . . . .    $     0          $    0           $    10              $    10
1999. . . . . . . . . . . . . . . . . . . . . . . . .         --              --               813                  813
2000. . . . . . . . . . . . . . . . . . . . . . . . .         --              --               809                  809
2001. . . . . . . . . . . . . . . . . . . . . . . . .         --              --               875                  875
2002. . . . . . . . . . . . . . . . . . . . . . . . .         --              --               812                  812
Thereafter  . . . . . . . . . . . . . . . . . . . . .         --              --            14,224               14,224
                                                         -------          ------           -------              -------
  Total . . . . . . . . . . . . . . . . . . . . . . .    $     0          $    0           $17,543              $17,543
                                                         -------          ------           -------              -------
                                                         -------          ------           -------              -------
</TABLE>

     The Company has purchased interest rate caps and interest rate collars 
in an aggregate notional amount of $35 million.  SEE "Quantitative and 
Qualitative Disclosures About Market Risk."  The interest rate cap purchased 
by the Company in an aggregate notional amount of $15 million provides a 
return to the Company if the three-month LIBOR rate exceeds 10.5%.  The 
interest rate cap expired in July 1998.

     The interest rate collars, in an aggregate notional amount of $20 
million, provides a return to the Company if the three-month LIBOR rate 
exceeds 8%.  The Company must make payments to the counterparties to the 
interest rate collars if three-month LIBOR falls below 5%.  The interest rate 
collar expires in September 2000.

                                       21

<PAGE>


     Total stockholders' equity (deficit) at June 30, 1998 was ($6.6) million as
compared to ($2.3) million at December 31, 1997 and $5.6 million at June 30,
1997.


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The Company has only limited involvement with derivative financial 
instruments (consisting of interest rate caps, collars and floors ranging in 
maturity from three to five years, and totaling $35 million in notional 
principal amount) and does not use them for trading purposes.  At June 30, 
1998 and at December 31, 1997, the Company was a party to a $15 million 
interest rate cap agreement which entitles the Company to receive payments 
from a counterparty whenever, and based upon the amount by which, the 
three-month LIBOR rate exceeds 10.5%.  The interest rate cap expired in July 
1998.  At June 30, 1998 and December 31, 1997, the Company was a party to an 
interest rate collar agreement of $20 million. This agreement entitles the 
Company to receive payments from the counterparty whenever, and based upon 
the amount by which, the three-month LIBOR rate exceeds 8%.  The interest 
rate collar agreement requires the Company to make payments to the 
counterparty whenever, and based upon the amount by which, the three-month 
LIBOR rate is less than 5%.

     The Company is exposed to credit-related losses in the event of 
nonperformance by counterparties to financial instruments, but it does not 
expect any counterparties to fail to meet their obligations given their high 
credit ratings.  Premiums paid for interest rate caps and collars are 
amortized into interest expense over the term of the instrument.  Interest 
expense will be reduced (increased) on a current basis if payments are 
received (paid) under these instruments.

                                       22

<PAGE>


                                          
                            PART II - OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

     In addition to the lawsuits described below, the Company is involved in
litigation in the normal course of business.  The Company believes that the
resolution of such normal-course-of-business matters will not have a material
adverse effect on its financial position or results of operations.  The Company
regularly initiates legal proceedings as a plaintiff in connection with its
routine collection activities. 

     1.   REHM V. EAGLE FINANCE CORP. is pending in the United States 
District Court for the Northern District of Illinois and is designated by 
case number 96 C 2455.  The plaintiff has filed a class action complaint 
alleging that the Company and three of its directors and officers have 
violated Section 10(b) of the Securities and Exchange Act and Rule 10b-5 
promulgated thereunder.  During July, 1998, a verbal agreement regarding 
settlement was reached among the parties and the Company accrued its expected 
settlement expense as of June 30, 1998.

     2.   SOLARMAR SYSTEMS CORP V. EAGLE FINANCE CORP., RONALD B. CLONTS ET 
AL. was filed on September 14, 1995 in Circuit Court of the Eleventh Judicial 
Circuit, Dade County, Florida, and is designated as Case No. 95-18056-CA-01. 
This suit arose out of a settlement agreement entered in 1988 between the 
plaintiff and the predecessor to the Company (the "Settlement Agreement"), 
following the plaintiff's bankruptcy.  The Company (E.F. Wonderlic & 
Associates, Inc.) purchased promissory notes from the plaintiff that the 
plaintiff had received in connection with the sale of hot water heating 
systems to Florida homeowners.  The complaint filed against the Company 
alleges that the Company breached the Settlement Agreement and fraudulently 
induced the plaintiff to enter into it.  The plaintiff's complaint was 
dismissed in June, 1996, with leave to amend, primarily on the grounds that 
the claims were time-barred by the applicable Florida statute of limitations. 
The plaintiff filed an amended complaint in June, 1996, which asserted 
essentially the same claims of fraud, violations of the Federal Racketeer 
Influenced and Corrupt Organizations Act and fraud in the inducement.  The 
Company filed a motion for summary judgment which the Court fully granted 
during July, 1998.

     3.   DRAKE AND MITCHELL V. EAGLE FINANCE CORP., is pending in the 
Circuit Court of Cook County, Illinois, and is designated as Case No. 97 L 
6521.  The plaintiffs have filed a class action complaint alleging that the 
Company has violated the Illinois Uniform Commercial Code and the Illinois 
Sales Finance Agency Act arising out of the repossession of cars purchased by 
the plaintiffs. The Company has responded to the written discovery initiated 
by the plaintiffs and has filed its answer, affirmative defenses and 
counterclaim to the plaintiffs' second amended complaint.  In its 
counterclaim, the Company asserts that it is entitled to a set-off due to the 
plaintiffs' failures to comply with the terms of their respective retail 
installment sales contracts.  The plaintiffs have withdrawn their motion for 
class certification without prejudice, and have represented that they would 
be interested in discussing the settlement of the remaining individual 
claims.  The parties have agreed to settle the individual claims for a total 
of $3,000.00.  Settlement occurred in August, 1998.

     4.   CLEVELAND V. WALLACE AUTO SALES, INC., ET AL., was filed on 
September 19, 1997, in the United States District Court for the Northern 
District of Illinois and is designated by case number 96 C 6045.  The 
complaint alleges that the Company has violated the Illinois Consumer Fraud 
Act, the Illinois Sales Finance Agency Act and the Federal Racketeer 
Influenced and Corrupt Organizations Act arising out of the Company's 
purchase of retail installment contracts through which the plaintiffs 
purchased a used automobile.  The complaint is alleged as a class action, and 
includes unnamed, and still unknown, directors

                                       23

<PAGE>



and officers of the Company.  The Company filed a Motion to Dismiss, and the 
court has dismissed all counts and all defendants with prejudice.  The 
plaintiff's appealed the court's decision to the Seventh Circuit Court of 
Appeals.  Briefing of the appeal has been stayed pending the Seventh Circuit 
Court's ruling in a similar case.

     5.   DELAUGHTER V. SOLARMAR SYSTEMS CORP., a class action complaint by 
Robert DeLaughter and Mozell Engram, was filed on May 13, 1998, in the 
Circuit Court of the 11th Judicial Circuit in Dade County, Florida and is 
designated by case number 98-10887 CA 22.  The class action complaint by 
Robert DeLaughter and Mozell Engram names the Company and Solarmar Systems 
Corp. as defendants.  The putative class of plaintiffs are consumers who 
entered into home improvement contracts with Solarmar, and, in connection 
with those contracts, executed promissory notes and mortgages as payment and 
collateral for the cost of the home improvements. The Company purchased the 
notes and mortgages from Solarmar and subsequently re-sold them to Solarmar. 
The complaint seeks, in count I, a declaratory judgment concerning the 
validity of the notes and mortgages, and, in count II, a ruling ordering the 
Company and Solarmar to issue satisfactions of the notes and mortgages. The 
only monetary relief sought is statutory attorneys' fees in connection with 
count II.  The Company is incapable of satisfying the notes and mortgages due 
to prior reassignment to Solarmar.  The Company has moved for an order of 
summary judgment on all asserted claims and the awarding of attorneys' fees.

     6.   TRINITY LITIGATION, the Company is presently a party to 
approximately fifteen legal actions arising in connection with installment 
contracts purchased from Trinity Acceptance Group, Inc.  Counsel for the 
plaintiffs in these actions has advised the Company that he represents more 
than 100 other individuals for whom legal actions have not been filed.  The 
Company is presently attempting to reach a global settlement with the counsel 
for the plaintiff.  No assurances can be given that the Company will be 
successful in settling these actions or that any settlement, if reached, 
would not have an adverse material effect on the Company.


ITEM 2.   CHANGES IN SECURITIES AND USE OF PROCEEDS - None

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES 

     The Company is in default under the terms of its subordinated 
indebtedness. This is more fully disclosed in "Management's Discussion and 
Analysis of Financial Condition and Results of Operations -- Recent 
Developments". 

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - None

ITEM 5.   OTHER INFORMATION - None


                                       24

<PAGE>


ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

          (a)  Exhibits

<TABLE>
<CAPTION>
           Exhibit
              No.            Description
           -------           -----------
             <S>             <C>
             10.1            Letter of Intent dated August 6, 1998 between
                             the Company and Eagle Acquisition Services L.L.C.

             10.2            Waiver letter from General Electric Capital
                             Corporation, dated August 3, 1998.

             11              Statement re computation of per share earnings

             27              Financial Data Schedule
</TABLE>

          (b)  Reports on Form 8-K - The Company did not file any reports on
               Form 8-K during the three months ended June 30, 1998

                                       25

<PAGE>


                                     SIGNATURES


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

                                                 EAGLE FINANCE CORP.


Date: August 20, 1998                            /s/  Robert J. Braasch
                                                      -----------------
                                                      Robert J. Braasch
                                                      President and Chief
                                                         Financial Officer
                                                      (Duly Authorized Officer
                                                         and Principal
                                                         Financial Officer)

                                       S-1

<PAGE>


                                EXHIBIT INDEX


EXHIBIT
  NO.          DESCRIPTION
        
10.1      Letter of Intent dated August 6, 1998 between the Company and Eagle
          Acquisition Services L.L.C.

10.2      Waiver letter from General Electric Capital Corporation, dated
          August 3, 1998.

11        Statement re computation of per share earnings

27        Financial Data Schedule