<PAGE>


                                                 THE FOLLOWING ITEMS WERE THE 
                                                 SUBJECT OF A FORM 12b-25 AND 
                                                 ARE INCLUDED HEREIN:         
                                                 6, 7, 7A, 8, 9, 14(a)(1),    
                                                 14(a)(2) AND 14(d).  ITEMS 3,
                                                 10, 11, 12, 13 AND 14(a)(3), 
                                                 AS AMENDED, ARE ALSO INCLUDED
                                                 HEREIN.                      


                         SECURITIES AND EXCHANGE COMMISSION  
                               Washington, D.C. 20549        
                                                             
                                    FORM 10-K/A              
                                          
/X/  AMENDMENT NO. 1 TO ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
     SECURITIES EXCHANGE ACT OF 1934
                          For fiscal year ended December 31, 1997

                                            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          (I.R.S. Employer Identification Number)
incorporation or organization)

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

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

Securities registered pursuant to Section 12(b) of the Act: 
----------------------------------------------------------

                                                  Name of each Exchange
          Title of each class                      on which registered
          -------------------                      -------------------
                 NONE                                     NONE

Securities registered pursuant to Section 12(g) of the Act:
----------------------------------------------------------

                      COMMON STOCK, $0.01 PAR VALUE PER SHARE
                      ---------------------------------------
                                  (Title of Class)
                                          
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.  Yes      No   X 
                                       -----    -----

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

<PAGE>

The aggregate market value of voting common stock of Registrant held by
non-affiliates as of April 30, 1998 was $494,000.(1)  At April 30, 1998, the
total number of shares of common stock outstanding was 4,228,690.


                        DOCUMENTS INCORPORATED BY REFERENCE

     None.


















----------------------
(1)  Based on the closing price of Registrant's common stock on April 30, 1998
     on the Nasdaq National Market, and reports of beneficial ownership filed by
     directors and executive officers of Registrant and by beneficial owners of
     more than 5% of the outstanding shares of common stock of Registrant;
     however, such determination of shares owned by affiliates does not
     constitute an admission of affiliate status or beneficial interest in
     shares of common stock of Registrant.

<PAGE>

                                EAGLE FINANCE CORP.
                                          
                                          
                         1997 FORM 10-K/A - AMENDMENT NO. 1
                              ________________________
                                          
                                 TABLE OF CONTENTS
                              ________________________

                                                                         PAGE
                                                                        NUMBER
                                      PART II


ITEM 1.   BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . .  1


ITEM 2.   PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . .  1


ITEM 3.   LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . .  1


ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. . . . . . .  2


                                      PART II


ITEM 5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND
          RELATED STOCKHOLDER MATTERS. . . . . . . . . . . . . . . . . . .  2

ITEM 6.   SELECTED FINANCIAL DATA. . . . . . . . . . . . . . . . . . . . .  3

ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 
          AND RESULTS OF OPERATIONS. . . . . . . . . . . . . . . . . . . .  5

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK. . . . 18

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. . . . . . . . . . . 18

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON 
          ACCOUNTING AND FINANCIAL DISCLOSURE. . . . . . . . . . . . . . . 38

                                     PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT . . . . . . . 38

ITEM 11.  EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . 41

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
          AND MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . 43

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS . . . . . . . . . 45

                                      PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND 
          REPORTS ON FORM 8-K. . . . . . . . . . . . . . . . . . . . . . . 46

<PAGE>

                                       PART I


ITEM 1.   BUSINESS

          Included in the Form 10-K, as filed with the Securities and 
Exchange Commission on March 31, 1998 (the "Initial Form 10-K")

ITEM 2.   PROPERTIES

          Included in the Initial Form 10-K.
               

ITEM 3.   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.  The litigation is still in its initial stages 
although it has been pending for almost two years.  The parties have 
attempted to negotiate a settlement, but those attempts were unsuccessful. 
Discovery is scheduled to begin shortly, and a stipulation and order with 
regard to the composition of the class has been entered.  The Company intends 
to defend vigorously the claims made in the complaint.

     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 on the ground that Solarmar's 
claims are barred by the applicable statute of limitations.  The Court 
partially granted the motion by dismissing the three breach of contract 
claims.  All other causes of action were not dismissed.  The parties are 
currently engaged in discovery and no trial date has been set.  The Company 
intends to defend vigorously the claims made in the complaint.

     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 Company intends to defend vigorously the claims made in the 
complaint.

                                      1


<PAGE>

      4.   HALL V. EAGLE FINANCE CORP., is pending in the Circuit Court of 
Cook County, Illinois, and is designated as Case No. 97 CH 9328.  The class 
action Complaint alleges that the Company has violated the Illinois Wage 
Assignment Act by collecting wages after the assignments expired.  The 
parties have reached a settlement agreement, which the court has approved.  
Payments pursuant to the settlement must be made.

      5.   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 sales contract through which the plaintiffs 
purchased a used automobile.  The complaint is alleged as a class action, and 
includes unnamed, and still unknown, directors 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's ruling in a similar case.

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

               
        Included in the Initial Form 10-K.
               
                                          
                                      PART II
               

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

               
        Included in the Initial Form 10-K.




                                      2
<PAGE>



ITEM 6.        SELECTED FINANCIAL DATA

               
     The following selected financial data as of and for each of the years 
in the five-year period ended December 31, 1997 are derived from the 
financial statements of the Company.  The selected financial data should be 
read in conjunction with the Financial Statements, including the Notes 
thereto, and other financial data included elsewhere herein and the following 
"Management's Discussion and Analysis of Financial Condition and Results of 
Operations."

                    SELECTED FINANCIAL AND OPERATING INFORMATION

<TABLE>
<CAPTION>

                                                                       AS OF OR FOR THE YEARS ENDED DECEMBER 31,
                                                       ----------------------------------------------------------------------
                                                          1997          1996             1995        1994 (1)         1993 
                                                       ---------      -------         ---------     ---------       ---------
                                                                       (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<S>                                                    <C>            <C>              <C>          <C>             <C>
STATEMENT OF INCOME DATA:
Automobile portfolio interest and fee income, owned    $  11,436      $  26,326       $  26,779     $  12,328       $   5,278
                                                       ---------      ---------       ---------     ---------       ---------
Total interest and fee income.......................   $  11,752      $  26,653       $  27,100     $  12,723       $   5,517
Total interest expense..............................       5,476          9,060           8,093         2,712           1,232
                                                       ---------      ---------       ---------     ---------       ---------
Net interest income before provision for 
   credit losses....................................       6,276         17,593          19,007        10,011           4,285
Provision for credit losses.........................       6,251         13,184           9,538           254             455
                                                       ---------      ---------       ---------     ---------       ---------
Net interest income after provision for credit
losses..............................................          25          4,409           9,469         9,757          3,830
                                                       ---------      ---------       ---------     ---------       ---------
Interest income, Installment Contract sale..........       4,723             --              --            --              --
Interest expense, Installment Contract sale.........       1,597             --              --            --              --
                                                       ---------      ---------       ---------     ---------       ---------
Net interest income before provision for credit                                                               
  losses, Installment Contract sale..................      3,126             --              --            --              --
Provision for credit losses, Installment Contract                                  
  sale...............................................      2,883             --              --            --              --
                                                       ---------      ---------       ---------     ---------       ---------
Net interest income after provision for credit                                                                
  losses, Installment Contract sale..................        243             --              --            --              --
                                                       ---------      ---------       ---------     ---------       ---------
Servicing income....................................       1,629          5,107           2,119           841             586
Gain on securitization..............................         --             612              --            --              --
Insurance commissions...............................           6             66             255           147              65
Operating expenses..................................      14,485         16,202          11,321         5,627           2,795
Income tax expense (benefit)(2).....................         121           (659)            197         1,167              --
                                                       ---------      ---------       ---------     ---------       ---------
Net income (loss)...................................    $(12,703)     $  (5,349)      $     325     $   3,951       $   1,686
                                                       ---------      ---------       ---------     ---------       ---------
                                                       ---------      ---------       ---------     ---------       ---------
Earnings per common share...........................    $  (3.02)     $   (1.28)          $0.08         $0.93       $    0.37
Weighted average number of                                                                                              
   common shares outstanding(3).....................   4,204,394      4,189,100       4,183,490     3,377,973       2,800,000

OPERATING AND OTHER DATA:

Net finance receivables (owned or serviced).........    $ 98,961      $ 151,630       $ 184,882     $ 100,620       $  28,847
                                                    
Average interest rate on net finance receivables(5)..      24.90%         22.82%          22.43%        26.72%          23.94%
Average interest rate on interest bearing          
liabilities..........................................      12.08           9.23            9.17          8.56            7.82
                                                       ---------        -------       ---------     ---------       ---------
Net interest spread..................................      12.82%         13.59%          13.26%        18.16%          16.12%
Net interest margin..................................      13.30%         15.06%          15.73%        21.02%          18.60%
Total allowance for credit losses, dealer reserves                                                      
   and nonrefundable acquisition discount as a                                                          
   percentage of net finance receivables (owned)....       14.64          14.22           14.09         12.67           15.44
 Net charge-offs as a percentage of average net                                                      
   finance receivables (owned or serviced) (6).......      17.33          19.60           15.57         10.89           10.24
Operating expenses as a percentage of average net                                                    
   finance receivables (owned or serviced)...........      10.84           9.37            7.35         10.48           10.14
Ratio of earnings to fixed charges(7)................      (0.66)x         0.51x           1.06x         2.81x           2.22x
Return (loss) on average assets......................     (22.42)%        (5.03)%          0.29%         9.32%           8.18%
Return (loss) on average equity......................    (180.75)%       (34.85)%          1.86%        46.76%          42.57%
Net income (loss) as a percentage of revenues(8)         (108.09)        (22.88)           1.52         35.92           34.16

BALANCE SHEET DATA:
Finance receivables (owned), net (9).................  $   28,455     $  54,664        $145,719     $  78,864        $ 24,297
Nonrefundable acquisition discount...................      (1,180)       (1,443)         (9,428)       (8,671)         (2,749)
Allowance for credit losses..........................      (2,986)       (6,046)        (10,808)       (1,249)         (1,000)   
Total assets(10).....................................      54,826        63,768         139,058        71,245          20,998
Total debt(10).......................................      56,825        50,806         118,697        52,528          15,922
Dealer reserves......................................       --              287             293            74               2
Stockholders' equity (deficit).......................      (2,316)       10,308          15,656        15,209        $  4,088
</TABLE>

                                       3


<PAGE>

________________________












                                       4


<PAGE>

(1) The December 31, 1994 data reflect the effect of the Company's July, 1994
    initial public offering in which the Company sold 1,380,000 shares of its
    common stock.

(2) In connection with the Company's July 1994 initial public offering, the
    Company elected to terminate its election to be treated as a subchapter S
    corporation for tax purposes.  As a result of this change in tax status,
    1994 became the first year in which the Company recorded any income tax
    expense.

(3) Earnings per common share reflect a 38.8% income tax adjustment to
    subchapter S corporation earnings for the periods prior to July 21, 1994,
    the date the Company terminated its subchapter S corporation election. 
    Basic and fully diluted earnings per share is reflected, except that, for
    1994, fully diluted earnings per share was $0.91.

(4) Weighted average number of common shares outstanding for periods prior to
    April 14, 1994 reflect the effect of the Company's 11,666.667-for-1 stock
    split effected on that date.

(5) For the years ended December 31, 1994 and 1993, average interest rate
    earned includes the impact of the accretion to income from nonrefundable
    acquisition discount of $1.3 million and $580,000, respectively. 

(6) 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
    (120 days for certain securitized receivables) contractually delinquent. 
    SEE "Management's Discussion and Analysis of Financial Condition and
    Results of Operations -- Credit Loss Experience -- Allowance and Provision
    for Credit Losses/Charge-Offs." 

(7) For purposes of calculating the historical ratio of earnings to fixed
    charges, earnings consist of income before income taxes and fixed charges.
    Fixed charges consist of interest charges and one-third of rentals.

(8) Revenues consist of net interest income, gain on sale of finance
    receivables, servicing income and insurance commissions.

(9) Net of unearned finance charges.

(10)Includes Installment Contract sales of $23.2 million and related
    indebtedness of $23.7 million.  SEE Note 1 to the Company's Financial
    Statements.


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

       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 which could have a material adverse effect 
on the operations and future prospects of the Company include, but are not 
limited to, 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 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.  

       The following management's discussion and analysis provides 
information regarding the Company's financial condition as of December 31, 
1997 and 1996 and its results of operations for the years ended December 31, 
1997, 1996 and 1995. The management's discussion and analysis should be read 
in conjunction with the preceding "Selected Financial Data" and the Company's 
Financial Statements and the Notes thereto and the other financial data 
included elsewhere in this Annual Report on Form 10-K.  The financial 
information provided below has been rounded in order to simplify its 
presentation.  However, the ratios and percentages provided below are 
calculated using the detailed financial information contained in the 
Company's Financial Statements, the Notes thereto and the financial data 
included elsewhere herein.

                                        5

<PAGE>

       The Company experienced a significant deterioration in its financial 
condition primarily due to significant operating losses during 1997 and 1996 
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 its revolving credit agreement 
with a group of nine commercial banks (the "Revolving Credit Agreement"), 
that certain Asset Purchase Agreement dated as of June 25, 1996, as amended, 
between the Company and General Electric Capital Corporation (the "GECC 
Agreement") and the Indenture dated as of April 15, 1995, under a supplement 
to which $17 million of its outstanding subordinated notes were issued.  At 
December 31, 1997, the Company's funding was effectively limited to its 
internally generated cash.  The Company, among other actions, has 
restructured operations to reduce overhead.  During 1997, the Company adopted 
more conservative credit underwriting criteria, which resulted in a reduction 
in the volume of Installment Contracts purchased from dealers. The Company 
continues to seek a merger, sale or recapitalization.  There is no assurance 
that the Company will be successful in these efforts and the failure of such 
efforts would have a material adverse effect on the Company's financial 
condition and raise substantial doubt about the Company's ability to continue 
as a going concern.

RECENT EVENTS

SALES OF FINANCE RECEIVABLES/DEBT RETIREMENT 

       On February 23, 1998 and March 23, 1998 the Company sold net retail 
installment contracts ("Installment Contracts") to competitors for $12.5 
million and $471,000 in cash net of non-refundable acquisition discount and 
allowances for credit losses, respectively.  Proceeds were applied to payoff 
all outstanding amounts under the Company's Revolving Credit Agreement.  As a 
result, the Revolving Credit Agreement was terminated shortly after the March 
23, 1998 sale.  Any resulting gain or loss on this transaction was not 
material.

DELISTING OF COMMON STOCK FROM NASDAQ MARKET

       The Company's common stock, $0.01 per value par share (the "Common 
Stock"), ceased to be quoted on the NASDAQ National Market on May 13, 1998.  
Trading, if any, in the Company's Common Stock may now be conducted in the 
over-the-counter market through the so-called "pink sheets" published by the 
National Quotation Bureau or the OTC Bulletin Board of the National 
Association of Securities Dealers, Inc.  As a consequence of the delisting 
from the NASDAQ National Market, a shareholder will find it more difficult or 
impossible to sell, or to obtain quotations as to prices of, the Company's 
Common Stock.

FOURTH QUARTER ADJUSTMENTS

       During the fourth quarter, the Company reduced the amount of its 
Excess Servicing Receivable asset and restricted cash in connection with its 
1996 securitization of Installment Contracts to zero as a result of 
anticipated increased loss experience.  Additionally, the Company eliminated 
approximately $2.0 million that had initially been recorded as gain on sale  
during the second and third quarters with respect to Installment Contract 
sales to GECC pursuant to the GECC Agreement (the "1997 GECC Transactions") 
in order to reflect such transactions as financing transactions pursuant to 
the provisions of Statement of Accounting Standards No. 125, "Accounting for 
Transfers and Servicing of Financial Assets and Extinguishment of 
Liabilities" ("SFAS 125").

GENERAL

       The Company's outstanding balance of owned or serviced (i.e., managed) 
Installment Contracts declined $52.7 million during 1997 to $99.0 million 
(net). This decline reflects (i) the Company's emphasis on addressing credit 
losses (rather than portfolio growth), (ii) limited funding availability and 
(iii) the Company's suspension of Installment Contract purchases beginning in 
October 1997 until alternative funding sources become available.

                                       6

<PAGE>

               Finance receivables managed (owned or serviced) as of December 
31, 1997 and 1996 consisted of the following:

<TABLE>
<CAPTION>
                                                                   1997                1996
                                                              -------------       --------------
<S>                                                           <C>                 <C>
Total owned, net . . . . . . . . . . . . . . . . . . . . . .  $  28,455,232       $  54,663,926
                                                              -------------       -------------
Serviced:
   GECC Installment Contract sale (1997) (1) . . . . . . . .     27,060,820                  --
   GECC Installment Contract sale (1996 and prior) (1) . . .     28,798,501          66,717,919
   Securitization. . . . . . . . . . . . . . . . . . . . . .     14,646,770          30,247,885
                                                              -------------       -------------
Total serviced, net. . . . . . . . . . . . . . . . . . . . .     70,506,091          96,965,804
                                                              -------------       -------------
Total managed, net . . . . . . . . . . . . . . . . . . . . .  $  98,961,323       $ 151,629,730
                                                              -------------       -------------
                                                              -------------       -------------
</TABLE>
_______________
(1)  For 1995 and 1996, Installment Contract sales pursuant to the GECC
     Agreement were accounted for as off-balance sheet sales transactions
     pursuant to SFAS No. 77, "Reporting by Transferors for Transfers of
     Receivables with Recourse" ("SFAS 77"), and servicing and bonus servicing
     fee income is recognized as earned.  Effective January 1, 1997, sales
     pursuant to the GECC Agreement were accounted for as financing transactions
     pursuant to SFAS 125, and interest income is recognized on the Installment
     Contract balances under the interest method.  Interest expense is
     recognized at GECC's fixed spread and charge-off and related provisions for
     credit losses are reflected as transactions impacting the allowance for
     credit losses, Installment Contract sales.

     Interest and servicing income on the Company's portfolio of managed 
Installment Contracts accounts for most of the Company's revenue.  The net 
amount of Installment Contracts purchased declined to $57.2 million during 
the year ended December 31, 1997 from $105.9 million during the year ended 
December 31, 1996.  The Company began reducing its purchases of Installment 
Contracts during the fourth quarter of 1995.  This trend continued through 
1997 and 1996 as the Company sought to improve the quality of Installment 
Contracts purchased.  This decision was prompted by unacceptable credit 
performance trends on previously purchased Installment Contracts.

     As reflected in the following table, the finance receivables originated 
by the Company during the periods presented below consist primarily of 
Installment Contracts.

<TABLE>
<CAPTION>

                                                                        FOR THE YEARS ENDED DECEMBER 31,
                                                                  --------------------------------------------
                                                                     1997                1996           1995
                                                                  ---------          ----------     ----------
                                                                             (DOLLARS IN THOUSANDS)
<S>                                                               <C>                <C>            <C>
 Net Installment Contracts purchased(1). . . . . . . . . . .      $  57,204          $  105,906     $  186,162
 Net Other Loans originated(1) . . . . . . . . . . . . . . .            267                 528            417
                                                                  ---------          ----------     ----------
 Total . . . . . . . . . . . . . . . . . . . . . . . . . . .      $  57,471          $  106,434     $  186,579
                                                                  ---------          ----------     ----------
                                                                  ---------          ----------     ----------
</TABLE>
_______________________
(1)  Net of unearned finance charges.

     As part of its funding strategy, the Company sold $37.0 million and 
$64.8 million of net Installment Contracts to GECC, with servicing retained, 
during the years ended December 31, 1997 and 1996, respectively.  The Company 
accounted for the 1997 GECC Transactions as financing transactions pursuant 
to the provisions of SFAS 125, which is effective for Installment Contract 
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 SFAS 77, thereby 
removing the related receivables from the balance sheet while recognizing any 
subsequent servicing income as received.  SEE "-- Accounting Matters" and 
Note 1 to the Company's Financial Statements.  During 1997, the Company also 
sold $14.4 million of net Installment Contracts to competitors, for which 
servicing rights were relinquished.  (Additionally, during 1996, the Company 
sold $9.6 million of net Installment Contracts originated from dealers 
located in Texas to a competitor. This sale reflects the Company's decision 
to substantially reduce its business in Texas.)  There was no related gain or 
loss on sales of Installment Contracts to competitors.  If there was a gain 
or loss, it would have been recorded at the time the Installment Contracts 
were sold.  SEE "-- Liquidity and Capital Resources" and Notes 4 and 5 to the 
Company's Financial Statements.

                                       7
<PAGE>

     During the fourth quarter of 1996, the Company completed the 
securitization of approximately $35.2 million (net) of Installment Contracts 
through a transaction agented by Greenwich Capital Markets, Inc. (the 
"Securitization"). The transaction was structured to create three classes of 
certificates, which were rated by Duff & Phelps Credit Rating Co. and Fitch 
Investors Service L.P. The Company recognized a gain on the transaction of 
approximately $612,000.  The Company capitalized the retained servicing 
rights on the Installment Contracts securitized.  The net amount of 
Installment Contracts serviced by the Company for third parties was $70.5 
million and $97.0 million at December 31, 1997 and 1996, respectively.  SEE 
"-- Liquidity and Capital Resources" and Notes 4 and 5 to the Company's 
Financial Statements.

PROFITABILITY AND RECENT TRENDS

     During 1997, several sub-prime automobile finance companies, including 
the Company, experienced poor finance receivables 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 
trend was the direct result of several factors including: (i) the increased 
levels of outstanding consumer debt and personal bankruptcies; (ii) the 
heightened demand created by the increased supply of capital and used 
automobile inventories; (iii) the need to attract consumers with lower credit 
qualifications to meet this additional demand; (iv) economic uncertainties 
and financial difficulties within the sub-prime automobile industry as well 
as management upheavals at certain industry leaders; and (v) the impact of 
increased levels of competition on Installment Contract yields.  These 
factors have 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 $6.6 million decline in 1997 earnings was primarily a result of 
reduced net interest income as a result of fewer Installment Contract 
purchases and fewer Installment Contracts owned due to additional sales of 
Installment Contracts and a $2.7 million valuation adjustment to previously 
recognized net assets related to the Securitization of Installment Contracts. 
The decrease in 1997 earnings was partially offset by a reduced provision for 
credit losses on owned receivables and reduced operating expenses. 

     The following table sets forth certain data relating to the Company's 
net income before provision for credit losses for the years ended December 
31, 1997, 1996 and 1995:

<TABLE>
<CAPTION>

                                                                          FOR THE YEARS ENDED DECEMBER 31,
                                                                  --------------------------------------------
                                                                     1997                1996           1995
                                                                  ----------           --------       --------
                                                                               (DOLLARS IN THOUSANDS)
<S>                                                                <C>                 <C>            <C>
Average owned finance receivables, net (1) . . . . . . . . .       $ 47,196            $116,797       $120,830
Average interest bearing liabilities . . . . . . . . . . . .         45,321              98,202         88,276
Total interest and fee income. . . . . . . . . . . . . . . .         11,752              26,653         27,100
Total interest expense . . . . . . . . . . . . . . . . . . .          5,476               9,059          8,093
                                                                   --------            --------       --------
Net interest income before provision for credit losses . . .       $  6,276            $ 17,594       $ 19,007
                                                                   --------            --------       --------
                                                                   --------            --------       --------
Average interest rate on owned finance receivables, net. . .          24.90%              22.82%         22.43%
Average interest rate on interest bearing liabilities. . . .          12.08%               9.23%          9.17%
                                                                   --------            --------       --------
Net interest spread. . . . . . . . . . . . . . . . . . . . .          12.82%              13.59%         13.26%
                                                                   --------            --------       --------
                                                                   --------            --------       --------
Net interest margin(2) . . . . . . . . . . . . . . . . . . .          13.30%              15.06%         15.73%
                                                                   --------            --------       --------
                                                                   --------            --------       --------
</TABLE>
________________________
(1)  Excludes average net finance receivables serviced (including 1997 GECC
     Transaction receivables) for third parties of $86.5 million, $56.0 million
     and $33.1 million for the years ended December 31, 1997, 1996 and 1995,
     respectively.  The 1997 GECC Transactions were accounted for as financing
     transactions.  SEE Note 1 to the Company's Financial Statements.

(2)  Net interest margin represents net interest income divided by average
     finance receivables, net owned.

                                       8
<PAGE>

     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 interest rates, fees, premiums and other 
charges at or near the maximum amounts 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 profitability is the 
servicing income earned by the Company on Installment Contracts sold or 
securitized.  Servicing income is derived from base servicing fees for 
finance receivables administration and collection services and bonus or 
excess servicing fees paid based on the performance of the Installment 
Contracts sold or securitized.  Net servicing income of $1.6 million was 
earned in 1997, reflecting a decline of $3.5 million from the $5.1 million 
earned in 1996. Although base servicing fees increased to $2.1 million in 
1997 from $1.7 million in 1996 (as a result of a greater level of average 
serviced assets), the 1997 base servicing fee increase was offset by a 
$740,000 increase to the amortization of the excess servicing receivable and 
a $1.7 million adjustment to reflect the outlook as of December 31, 1997 with 
respect to future credit losses, recoveries and prepayment rates on the 
Securitization and 1997 Installment Contract sales.  SEE Note 5 to the 
Company's Financial Statements.

     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 year ended December 31, 1997, the average interest rate earned 
on net finance receivables (owned) increased 2.08% over the comparable 1996 
period. Generally, it would be anticipated that improved margins would result 
in improved profitability; however, due to significant increases in funding 
costs resulting from actions taken by lenders that are party to the Revolving 
Credit Agreement, the average interest rate on interest bearing liabilities 
increased 2.85% for the year ended December 31, 1997 over the comparable 1996 
period.

     Pursuant to an October 1997 amendment to the Revolving Credit Agreement, 
the Company borrowed funds at an interest rate equal to the prime rate of the 
agent bank plus 3% (representing an increase from the prime rate, the 
previous interest rate on borrowings).  The Revolving Credit Agreement was 
retired subsequent to December 31, 1997.  SEE "-- Recent Developments" and 
Note 16 to the Company's Financial Statements.

     Another component of the Company's profitability is the level of its 
operating expenses.  Operating expenses decreased $1.7 million (10.6%) from 
the prior year, but it increased as a percentage of average managed 
receivables to 10.8% in 1997.  The increase as a percentage of average 
managed receivables is due to fewer Installment Contract purchases and the 
sale of Installment Contracts to competitors.  The Company has consolidated 
operations and reduced staffing to reduce operating expenses.

FINANCIAL CONDITION

     Total assets decreased $9.0 million (14.0%) to $54.8 million at December 
31, 1997 from $63.8 million at December 31, 1996 primarily due to decreases 
in owned finance receivables (net of dealer reserves, nonrefundable 
acquisition discount and allowance for credit losses) to $24.3 million at 
December 31, 1997 from $47.2 million at December 31, 1996.  The decrease in 
owned finance receivables was offset, in part, by an increase in finance 
receivables of $23.2 million (net) resulting from the 1997 GECC Transactions. 
During 1997, the Company sold Installment Contracts of approximately $37.0 
million to GECC. These Installment Contracts constituted the 1997 GECC 
Transactions and were accounted for as financing transactions.  The Company 
also sold approximately $14.4 million (net) of Installment Contracts to 
competitors during 1997.  The net amount of owned or serviced Installment 
Contracts decreased to $98.9 million at December 31, 1997 from $151.6 million 
at December 31, 1996.

                                       9
<PAGE>

     Total liabilities increased $3.7 million (6.9%) to $57.1 million at 
December 31, 1997 from $53.5 million at December 31, 1996 primarily due to 
the notes payable arising in connection with the 1997 GECC Transactions and 
the treatment of such transactions pursuant to SFAS 125.  The decrease in 
senior debt was primarily the result of decreased borrowings under the 
Revolving Credit Agreement to $15.0 million at December 31, 1997 from $32.8 
million at December 31, 1996 as a result of applying the proceeds of sales of 
Installment Contracts to the Revolving Credit Agreement.

RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

     The following table sets forth certain data relating to the Company's 
results of operations for the years ended December 31, 1997, 1996 and 1995:

<TABLE>
<CAPTION>
                                                                                                 FOR THE YEARS ENDED DECEMBER 31,
                                                                                             -------------------------------------
                                                                                              1997           1996           1995
                                                                                             -------        -------        -------
                                                                                                    (DOLLARS IN THOUSANDS)
<S>                                                                                         <C>            <C>            <C>

Automobile portfolio interest and fee income, owned receivables. . . . . . . . . . .         $11,436        $26,326        $26,779
                                                                                             -------        -------        -------
Total interest and fee income, owned receivables . . . . . . . . . . . . . . . . . .         $11,752        $26,653        $27,100
Total interest expense, senior and subordinated debt . . . . . . . . . . . . . . . .          (5,476)        (9,060)        (8,093)
                                                                                             -------        -------        -------
Net interest income before provision for credit losses . . . . . . . . . . . . . . .           6,276         17,594         19,007
Provision for credit losses, owned receivables . . . . . . . . . . . . . . . . . . .          (6,251)       (13,184)        (9,538)
                                                                                             -------        -------        -------
Net interest income after provision for credit losses, owned receivables . . . . . .              25          4,410          9,469
                                                                                             -------        -------        -------
Interest income, Installment Contract sales. . . . . . . . . . . . . . . . . . . . .           4,723             --             --
Interest expense, Installment Contract sales . . . . . . . . . . . . . . . . . . . .          (1,597)            --             --
Provision for credit losses, Installment Contract sales. . . . . . . . . . . . . . .          (2,883)            --             --
                                                                                             -------        -------        -------
Net interest income after provision for credit losses, Installment Contract 
       sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             243             --             --

Other income:
     Servicing income (from Installment Contracts) . . . . . . . . . . . . . . . . .           1,628          5,107          2,119
     Gain on sale of finance receivables (net) . . . . . . . . . . . . . . . . . . .              --            612           --  
     Insurance Products commissions. . . . . . . . . . . . . . . . . . . . . . . . .               6             66            255
                                                                                             -------        -------        -------
Total other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           1,634          5,785          2,374
                                                                                             -------        -------        -------
Salaries and related costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           7,434          8,011          5,745
Other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           7,050          8,191          5,576
                                                                                             -------        -------        -------
Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          14,484         16,202         11,321
                                                                                             -------        -------        -------
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             121           (659)           197
                                                                                             -------        -------        -------
Net income (loss). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        $(12,703)       $(5,349)       $   325
                                                                                             -------        -------        -------
                                                                                             -------        -------        -------
</TABLE>

     COMPARISON OF 1997 TO 1996.  The Company experienced a net loss of $12.7 
million for the year ended December 31, 1997 compared to net loss of $5.3 
million for the year ended December 31, 1996.

     The most significant factors in the Company's $7.4 million decline in 
earnings between 1997 and 1996 was (i) the $14.9 million reduction in 
interest and fee income due to reduced earning assets as a result of the 
purchase of fewer Installment Contracts and additional sales of Installment 
Contracts; (ii) the $4.2 million reduction (net) in other income; and (iii) 
higher effective costs for borrowed money for the financing of owned 
receivables.  SEE "-- Notes 4 and 5 to the Company's Financial Statements."

     Net interest income from owned receivables before the provision for 
credit losses decreased by 64.3% to $6.3 million for the year ended December 
31, 1997 from $17.6 million for the year ended December 31, 1996, primarily 
as the result of a decrease in Installment Contracts owned, thereby reducing 
the amount of interest income-producing assets.  

                                       10
<PAGE>

     Interest expense, excluding that relating to the 1997 GECC Transactions, 
decreased to $5.5 million for the year ended December 31, 1997 from $9.1 
million for the year ended December 31, 1996.  The decrease resulted from a 
decrease in the average amount of borrowed funds outstanding throughout the 
year.  The average debt outstanding during 1997, excluding that relating to 
the 1997 GECC Transactions, decreased to $45.3 million from $98.2 million 
during 1996, and the average interest rate paid for borrowed funds increased 
30.9% to 12.08% in 1997 from 9.23% in 1996, primarily as a result of 
subordinated debt representing a higher proportion of outstanding debt and 
actions taken by lenders that are party to the Revolving Credit Agreement.  
The effective rate of interest paid to Revolving Credit Agreement lenders 
increased to 15.5% in 1997, 74.6% above the comparable 1996 rate.

     The Company's financial presentation for sales of Installment Contracts 
to GECC changed in 1997 due to the implementation of SFAS 125 (which became 
effective January 1, 1997).  The 1997 GECC Transactions are reported as 
financing transactions, while those Installment Contract sales to GECC 
occurring in 1996 and prior periods are reported as sales transactions.  
Interest income in 1997 from the 1997 GECC Transaction of $4.7 million was 
reduced by related interest expense of $1.6 million and a related provision 
for credit losses of $2.9 million.  Net interest income, after provision for 
credit losses, on Installment Contract sales for the year ended December 31, 
1997 was $243,000. In 1996, GECC Installment Contract sales revenue was 
included in servicing fee income.

     There was no gain on sale in 1997 compared to $612,000 in the year ended 
December 31, 1996 due to the absence of securitization activity in 1997.

     Other income, primarily consisting of servicing income and bonus 
servicing income, decreased $4.2 million to $1.6 million for 1997.  Service 
fee income declined by $1.8 million to $3.3 million in 1997 from the $5.1 
million recorded in the year ended December 31, 1996.  The reduction in 
servicing income in 1997 is attributable to a $1.1 million decrease in 
servicing fees and a $740,000 increase in amortization expense resulting from 
the Securitization.  The Company recorded a ($2.7 million) adjustment to 
reflect the declining outlook on its Securitization with respect to future 
credit losses, recoveries and prepayment rates and recorded an adjustment of 
$1.7 million as of December 31, 1997.

     Operating expenses decreased 10.6% to $14.5 million for the year ended 
December 31, 1997 compared to $16.2 million for the year ended December 31, 
1996.  Salaries and related costs decreased 7.2% from the prior year to $7.4 
million for the year ended December 31, 1997, due primarily to reductions in 
the number of employees notwithstanding normal pay increases and increased 
benefits costs.  The Company's other operating expenses decreased 13.9% to 
$7.1 million for the year ended December 31, 1997 compared to the year ended 
December 31, 1996, due to a 22.6% reduction in average net finance 
receivables owned or serviced.  Operating expenses as a percentage of average 
net finance receivables owned or serviced increased to 10.84% for the year 
ended December 31, 1997 as compared to 9.37% for the year ended December 31, 
1996.  

     The Company had an income tax expense of $121,000 for the year ended 
December 31, 1997 compared to an income tax benefit of ($659,000) for the 
year ended December 31, 1996.  The 1997 expense related to a pretax loss of 
$12.6 million incurred in 1997 versus pretax loss of $6.0 million in 1996.  
The effective tax rates on income before income taxes was (11.0%) in 1996.

     COMPARISON OF 1996 TO 1995.  The Company experienced a net loss of $5.3 
million for the year ended December 31, 1996 compared to net income of 
$325,000 for the year ended December 31, 1995.

     Net interest income before the provision for credit losses decreased by 
7.4% to $17.6 million for the year ended December 31, 1996 from $19.0 million 
for the year ended December 31, 1995, primarily as the result of increased 
sales of Installment Contracts and the Securitization, thereby reducing the 
number of interest income-producing assets.  The negative effect on interest 
and fee income resulting from the sale and the Securitization,

                                       11
<PAGE>

with servicing retained, of $100 million of finance receivables (net) during 
1996, compared to $44.3 million in 1995, was partially offset by a 
significant increase in servicing income.

     Total interest expense increased to $9.1 million for the year ended 
December 31, 1996 from $8.1 million for the year ended December 31, 1995.  
The increase resulted from an increase in the average amount of borrowed 
funds outstanding throughout the year as well as increases in interest rates 
charged for borrowed funds.  The average debt outstanding during 1996 
increased to $98.2 million from $88.3 million during 1995, and the average 
interest rate paid for borrowed funds increased to 9.23% in 1996 from 9.17% 
in 1995.

     The most significant factor in the Company's $5.7 million decline in 
earnings between 1995 and 1996 was a $3.7 million increase in the provision 
for credit losses.  This increase was a function of deteriorating credit 
quality. Credit quality suffered due to higher charge-off rates for 
Installments Contracts purchased during the last half of 1995 and the first 
half of 1996. The Company believes that credit quality has also suffered, in 
part, due to historically high levels of consumer indebtedness nationally.  
SEE "-- Credit Loss Experience -- Allowance and Provision for Credit 
Losses/Charge-offs." As more fully discussed in " -- Accounting Matters," the 
increase in the provision for credit losses for 1996 is also due to the fact 
that, unlike in 1995 (and prior years), no contract interest was allocated to 
nonrefundable acquisition discount during 1996.

     Other income, including servicing income and commissions from the sale 
of Insurance Products, increased  141.7% to $5.8 million for the year ended 
December 31, 1996 from $2.4 million for the year ended December 31, 1995, 
primarily due to an increase in servicing income to $5.2 million for the year 
ended December 31, 1996 from $2.1 million for the year ended December 31, 
1995. This increase reflects the increased amount of servicing-retained sales 
of finance receivables and the Securitization by the Company in 1996.  The 
Company derives its servicing income from base servicing fees and bonus or 
excess servicing fees based on the performance of the finance receivables 
serviced by the Company.  Of the $5.1 million of servicing income earned in 
1996, $3.7 million represented bonus or a excess servicing fees.  Of the $2.1 
million of servicing income earned in 1995, $1.1 million represented bonus or 
excess servicing fees.  During 1996, the Company recognized a $612,000 gain 
from the sale of $35.2 million (net) of Installment Contracts to the Eagle 
Auto Trust 1996-A in October 1996 and the corresponding issuance to investors 
of automobile receivable-backed certificates.

     Operating expenses increased 43.4% to $16.2 million for the year ended 
December 31, 1996 compared to $11.3 million for the year ended December 31, 
1995.  Salaries and related costs increased 40.4% from the prior year to $8.0 
million for the year ended December 31, 1996, due primarily to an increase in 
the number of employees, normal pay increases and increased benefits costs.  
The Company's other operating expenses increased 46.4% to $8.2 million for 
the year ended December 31, 1996 compared to the year ended December 31, 
1995, due to higher collection expenses and higher professional fees.  
Operating expenses as a percentage of average net finance receivables owned 
or serviced increased to 9.37% for the year ended December 31, 1996 as 
compared to 7.35% for the year ended December 31, 1995.  The Company believes 
that it will not require an increase in the number of employees needed to 
operate the Company for the foreseeable future, although there can be no 
assurance in this regard.

     The Company recorded an income tax benefit of ($659,000) for the year 
ended December 31, 1996 as compared to an income tax expense of $197,000 for 
the year ended December 31, 1995.  This resulted from the pretax loss of $6.0 
million in 1996 versus pretax income of $523,000 in 1995.  The effective tax 
rates on income before income taxes were (11.0%) and 37.7% in 1996 and 1995, 
respectively.

CREDIT LOSS EXPERIENCE

     The Company's credit loss reserves are comprised of three components: 
nonrefundable acquisition discount; an allowance for credit losses; and, for 
non-Installment Contracts finance receivables, refundable dealer reserves.  
The total of allowance for credit losses, nonrefundable acquisition discount 
and dealer reserves equaled 14.64% and 14.22% of net owned finance 
receivables at December 31, 1997 and 1996, respectively.  At

                                       12
<PAGE>

December 31, 1997, the Company maintained credit loss reserves equal to 
14.13% of the net amount of the 1997 GECC Transactions to offset potential 
losses on the 1997 GECC Transactions.  The following discussion reflects the 
Company's increased emphasis on the allowance for credit losses and its 
reduced emphasis on nonrefundable acquisition discount in establishing credit 
loss reserves for the Company's owned portfolio of Installment Contracts.

     NONREFUNDABLE ACQUISITION DISCOUNT AND DEALER RESERVES.   In order 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 Company negotiates the amount of the discounts with 
dealers based upon various criteria, including the credit risk associated 
with the contracts being purchased and market pricing factors.  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 years ended December 31, 1997, 1996 and 1995:

<TABLE>
<CAPTION>
                                                                                               FOR THE YEARS ENDED DECEMBER 31,
                                                                                            --------------------------------------
                                                                                              1997           1996           1995
                                                                                            --------       --------       --------
                                                                                                    (DOLLARS IN THOUSANDS)
<S>                                                                                         <C>            <C>            <C>
Balance at January 1,. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        $  1,730       $  9,721       $  8,745
Additions applicable to new volume . . . . . . . . . . . . . . . . . . . . . . . . .           5,152         11,547         30,319
Payments to dealers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              --           (833)        (2,077)
Reductions applicable to accounts sold . . . . . . . . . . . . . . . . . . . . . . .          (5,175)        (8,439)        (5,524)
Losses charged, net of recoveries. . . . . . . . . . . . . . . . . . . . . . . . . .            (527)       (10,266)       (21,742)
                                                                                            --------       --------       --------
Balance at end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        $  1,180       $  1,730       $  9,721
                                                                                            --------       --------       --------
                                                                                            --------       --------       --------
Nonrefundable acquisition discount as a percentage of 
  net owned finance receivables at year-end  . . . . . . . . . . . . . . . . . . . .            4.15%          3.16%          6.67%
</TABLE>

     The substantial decrease in "additions applicable to new volume" from 
1996 to 1997 and 1996 to 1995 reflects the fact that purchases of Installment 
Contracts declined and that, unlike 1995, nonrefundable acquisition discount 
was not increased during 1996 or 1997 by allocations of contract interest 
that otherwise would have been recorded as unearned finance charges.  SEE 
"--Accounting Matters."

     ALLOWANCE AND PROVISION FOR CREDIT LOSSES/CHARGE-OFFS.  The Company 
maintains an allowance for credit losses at a level that management believes 
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, 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 has experienced higher charge-off 
rates during 1996 than during 1995. SEE "-- Results of Operations for the 
Years Ended December 31, 1997, 1996 and 1995 -- Comparison of 1997 to 1996" 

     The following table reflects the Company's allowance for credit losses 
and provision for credit losses on its owned receivables for each of the 
years ended December 31, 1997, 1996 and 1995:

                                       13
<PAGE>
<TABLE>
<CAPTION>

                                                                                                FOR THE YEARS ENDED DECEMBER 31,
                                                                                            --------------------------------------
                                                                                              1997           1996           1995
                                                                                            --------      ---------       --------
                                                                                                      (DOLLARS IN THOUSANDS)
<S>                                                                                         <C>           <C>             <C>
 Balance at beginning of period. . . . . . . . . . . . . . . . . . . . . . . . . . .        $  6,046      $  10,808       $  1,249
 Provision charged to expense. . . . . . . . . . . . . . . . . . . . . . . . . . . .           6,251         13,184          9,538
 Finance receivables charged off, net of recoveries. . . . . . . . . . . . . . . . .          (9,311)       (17,946)           (21)
                                                                                            --------      ---------       --------
 Balance at end of period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        $  2,986      $   6,046       $ 10,808
                                                                                            --------      ---------       --------
                                                                                            --------      ---------       --------
 Allowance as a percentage of 
   net owned finance receivables at year-end . . . . . . . . . . . . . . . . . . . .           10.49%         11.06%          7.42%

</TABLE>

     The provision charged to expense as a percentage of average finance 
receivables (owned) was 13.3%, 11.3% and 7.9% for the years 1997, 1996 and 
1995, respectively.  The substantial increases in the provision for credit 
losses was due to higher credit losses and the Company not allocating during 
1996 or 1997 any contract interest to non-refundable acquisition discount.  
SEE "-- Results of Operations for the Years Ended December 31, 1997, 1996 and 
1995 -- Comparison of 1997 to 1996" and "--Accounting Matters."

     DELINQUENCIES.  The Company monitors delinquencies in the managed 
finance receivables portfolio to gauge overall credit trends.  Managed 
finance receivables (net of unearned finance charges) that were contractually 
delinquent by 30 days or longer were $14.0 million, $16.6 million and $15.2 
million, representing 14.1%, 11.0% and 8.2% of net managed finance 
receivables, as of December 31, 1997, 1996 and 1995, respectively.  The 
Company attributes the increase in delinquencies in 1997 to (i) the 
suspension of Installment Contract purchases, thereby eliminating the 
Company's ability to improve the credit quality of the portfolio by 
replenishing current accounts; (ii) the sale of Installment Contracts to 
third parties, including competitors, which accounts are disproportionately 
comprised of current accounts; and (iii) the adverse impact of consolidating 
Company operations with respect to collection activities.  SEE "Business -- 
Servicing and Collection."

     The following table reflects delinquencies experienced by the Company in 
its managed finance receivables portfolio as of December 31, 1997, 1996 and 
1995:

<TABLE>
<CAPTION>

                                                                                                       AS OF DECEMBER 31,
                                                                                           ---------------------------------------
                                                                                              1997           1996           1995
                                                                                           ---------       --------       --------
                                                                                                     (DOLLARS IN THOUSANDS)
<S>                                                                                        <C>             <C>            <C>
Net amount outstanding(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       $  98,961       $151,630       $184,882
                                                                                           ---------       --------       --------
Delinquencies
     30-59 days. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       $   9,935       $ 13,256       $ 11,701
     60-89 days. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           3,868          2,965          3,507
     90+ days (2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             164            396              1
                                                                                           ---------       --------       --------
        Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       $  13,967      $  16,617      $  15,209
                                                                                           ---------       --------       --------
                                                                                           ---------       --------       --------

Total delinquencies as a percentage of net managed 
     finance receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           14.11%         10.96%          8.18%
</TABLE>
________________________
(1)  Includes Installment Contracts sold or securitized, with servicing
     retained, by the Company and Other Loans, in each case net of unearned
     finance charges.

(2)  The Company charges off all Installment Contracts and Other Loans greater
     than 89 days delinquent.  The Company charges off all securitized
     Installment Contracts greater than 120 days delinquent.

     REPOSSESSIONS ON HAND AND CHARGE-OFF EXPERIENCE.  Repossessed collateral 
consists primarily of automobiles and is valued at the lower of cost or 
market. Repossessions on hand (including titled assets) were valued at $2.1 
million (2.3% of net managed Installment Contracts), $4.2 million (2.8% of 
net managed Installment Contracts), and $4.4 million (2.4% of net managed 
Installment Contracts) at December 31, 1997, 1996 and 1995, respectively.  
Titled assets included repossessed assets pending recovery (I.E., in respect 
of a charged-off account, but not yet in the Company's possession) which, 
effective December 31, 1995, are carried at

                                       14
<PAGE>

their estimated fair value, less the estimated costs of disposition.  
Additionally, accounts charged off as a result of bankruptcy filings are 
carried as a titled asset at a value based on the terms of the resolution of 
the bankruptcy.  At  December 31, 1997 and 1996, the value of titled assets 
was approximately $1.2 million and $1.6 million, respectively.

     The following table reflects charge-offs in the managed finance 
receivables portfolio as of and for the years ended December 31, 1997, 1996 
and 1995:

<TABLE>
<CAPTION>

                                                                                        AS OF OR FOR THE YEARS ENDED DECEMBER 31,
                                                                                        -----------------------------------------
                                                                                            1997           1996           1995
                                                                                        ----------     ----------     -----------
                                                                                                 (DOLLARS IN THOUSANDS)
<S>                                                                                     <C>            <C>            <C>
Net average managed principal amount outstanding(1). . . . . . . . . . . . . . . . . .    $  133,664     $  172,838     $  153,955
Number of accounts charged-off during period . . . . . . . . . . . . . . . . . . . . .         5,423          6,768          4,990
Net charge-offs during period. . . . . . . . . . . . . . . . . . . . . . . . . . . . .    $   23,169     $   33,878     $   23,978
Net charge-offs as a percentage of average net managed principal amount outstanding. .         17.33%         19.60%         15.57%
</TABLE>
_______________________
(1)  Includes Installment Contracts sold or securitized, with servicing
     retained, by the Company and Other Loans, in each case net of unearned
     finance charges.

LIQUIDITY AND CAPITAL RESOURCES

     During 1997, the Company financed its operations through cash flow from
operations, borrowings under the Revolving Credit Agreement (until terminated in
March 1998), and periodic sales of Installment Contracts and other finance
receivables. At December 31, 1997, the Company's funding was effectively limited
to internal cash generation.  The Company, among other actions, has restructured
operations to reduce overhead.  During 1997, the Company modified credit
underwriting criteria and reduced the volume of Installment Contracts purchased
from dealers.  The Company is exploring opportunities for a merger, sale or
recapitalization.  There is no assurance that the Company will be successful in
these efforts and the failure of such efforts would have a material adverse
effect on the Company's financial condition.

     Net cash provided by (used in) operating activities totaled ($8.3) million,
($23.7) million and $3.3 million during the years ended December 31, 1997, 1996
and 1995, respectively.  

     Net cash provided by (used in) investing activities totaled $3.0 million,
$91.0 million and ($67.4) million during the years ended December 31, 1997, 1996
and 1995, respectively.  

     Net cash provided by (used in) financing activities, primarily as a result
of borrowings and repayments under the Revolving Credit Agreement, totaled $5.9
million, ($68.1) million and $65.3 million during the years ended December 31,
1997, 1996 and 1995, respectively.  SEE the Statements of Cash Flows in the
Company's Financial Statements.

     During October 1997, the Company entered into an amendment to the Revolving
Credit Agreement that, among other things: immediately reduced the maximum
availability under the facility to $30 million; reduced availability to $20
million effective December 19, 1997 and $15 million effective January 20, 1998;
accelerated maturity to January 31, 1998 (the debt under the Revolving Credit
Agreement was retired on March 23, 1998); and modified certain other terms of
the revolving credit facility, including the cost of borrowings (which was
increased to prime plus 3% from prime and eliminated the availability of LIBOR
borrowings).  These changes were motivated by, among other things, the Company's
breach of financial covenants under the Revolving Credit Agreement and general
economic conditions in the sub-prime automobile finance industry.  

     The Company must comply with customary financial and other covenants under
the Indenture.  At December 31, 1997, the Company was in breach of the interest
coverage ratio and delinquency trigger covenant

                                       15

<PAGE>

under its agreements with GECC; and the leverage covenant under its 
subordinated debt indenture.  The Company is seeking waivers with respect to 
these breaches.  The Company expects to remain in violation of these 
covenants.  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 in response to the ongoing breaches of covenants. SEE 
"--Recent Events."

     At December 31, 1997, the Company had total debt of $32.6 million as 
compared to $50.8 million at December 31, 1996 and $118.7 million at December 
31, 1995.  At December 31, 1997, $5.0 million was available under the 
Revolving Credit Agreement.  SEE Note 8 to the Company's Financial 
Statements.  The following table presents the Company's debt instruments and 
the weighted average interest rates on such instruments at the dates 
indicated:

<TABLE>
<CAPTION>

                                                                        AT DECEMBER 31,
                                         -----------------------------------------------------------------
                                                 1997                    1996                    1995
                                         ------------------       -----------------      -----------------
                                         BALANCE       RATE       BALANCE      RATE      BALANCE      RATE
                                         ------------------       -----------------      -----------------
<S>                                      <C>          <C>       <C>           <C>        <C>          <C>
                                                               (DOLLARS IN THOUSANDS)
 SENIOR
   Revolving Credit Agreement. . . . .  $ 14,997      12.83%    $ 31,763       8.05%     $ 99,650      7.89%
   Loan from affiliated company. . . .        37       6.75%       1,065       6.75%        1,002      6.75%
 SUBORDINATED
   Notes payable . . . . . . . . . . .    17,543      12.21%      17,978      12.15%       18,045     12.14%
                                        --------                --------                 --------
   Total debt. . . . . . . . . . . . .  $ 32,577      12.08%    $ 50,806       9.47%     $118,697      8.52%
                                        --------                --------                 --------
                                        --------                --------                 --------
</TABLE>

     In May, 1995, through a public offering underwritten by Kemper 
Securities, Inc. (now EVEREN Securities, Inc.), The Chicago Corporation and 
Piper Jaffray Inc., the Company issued $17 million of subordinated notes, 
with a maturity date of May 2005.  Interest on the notes accrues at the rate 
of 10% from the date of their original issuance, and is payable monthly.  The 
rate at which interest accrues under the notes will increase, generally by 25 
basis points, each year beginning June 1, 1996.  The notes are redeemable by 
the Company, in whole or in part, beginning on their second anniversary date, 
with a 1% premium imposed if the notes are redeemed prior to their third 
anniversary.  The Company is required to redeem $750,000 (subject to certain 
adjustments) of aggregate principal amount of notes (or make corresponding 
contributions to a sinking fund) on each of the fourth through ninth 
anniversaries of the notes.  The notes were issued under the Indenture, which 
contains financial and operating covenants that restrict, among other things, 
the Company's ability to pay dividends, to incur additional indebtedness and 
to engage in certain extraordinary transactions. At December 31, 1997, the 
Company was in violation of the leverage covenants set forth in the indenture 
governing the notes.  The Company expects to remain in violation of that 
covenant for the near term.  No assurance can be given that the Company's 
subordinated lenders will not take adverse action in response to the ongoing 
breach of such covenant.

     The following table sets forth information with respect to maturities of 
senior and subordinated debt at December 31, 1997:

<TABLE>
<CAPTION>
                                                                     LOAN FROM                                
                                             SENIOR BANK             AFFILIATED            SUBORDINATED       
      YEAR                                 LINES OF CREDIT            COMPANY             NOTES PAYABLE               TOTAL
     ------                               -----------------          ----------           -------------              -------
                                                                     (DOLLARS IN THOUSANDS)
     <S>                                  <C>                        <C>                  <C>                       <C>
      1998 . . . . . . . . . . . . . . .        $14,997                $  37                 $  10                  $  15,044
      1999 . . . . . . . . . . . . . . .             --                   --                   813                        813
      2000 . . . . . . . . . . . . . . .             --                   --                   809                        809
      2001 . . . . . . . . . . . . . . .             --                   --                   875                        875
      2002 . . . . . . . . . . . . . . .             --                   --                   812                        812
      Thereafter . . . . . . . . . . . .             --                   --                14,224                     14,224
                                          -----------------          ----------           -------------            ----------
          Total. . . . . . . . . . . . .      $  14,997                $  37             $  17,543                  $  32,577
                                          -----------------          ----------           -------------            ----------
                                          -----------------          ----------           -------------            ----------

</TABLE>

     The Company has purchased interest rate caps and interest rate collars 
in an aggregate notional amount of $35 million.  The interest rate cap 
purchased by the Company in an aggregate notional amount of $15 million 


                                       16

<PAGE>

protects the Company against increases in the interest rate of a portion of 
its revolving debt if the three-month LIBOR rate exceeds 10.5%.  The interest 
rate cap expires in July 1998.

     The interest rate collars, in an aggregate notional amount of $20 
million, protect the Company against increases in the interest rate of its 
revolving debt when 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.

     In order to meet funding needs, in 1997 the Company sold approximately 
$36.9 million of net Installment Contracts to GECC under the GECC Agreement. 
SEE Note 1 to the Company's Financial Statements.  

     The GECC Agreement provides for the purchase by GECC of Installment
Contracts from the Company on a revolving basis of up to a maximum principal
amount of $80 million outstanding at any time through June 25, 1998; however,
GECC has verbally indicated to the Company that it would not make additional
Installment Contract purchases until an adequate replacement is found for the
Revolving Credit Agreement.  There is no assurance that a replacement will be
found.  The Company also sold $14.4 million of net Installment Contracts to
competitors in order to reduce indebtedness.

     Total stockholders' equity (deficit) at December 31, 1997 was ($2.3) 
million as compared to $10.3 million at December 31, 1996.  

YEAR 2000 COMPLIANCE

     Company operations are dependent on a proprietary information management 
system.  As a result of initiatives undertaken over a decade ago, all systems 
development has been formatted with a full, four-digit year code in the 
database.  Based on a comprehensive assessment of the year 2000 on its 
business, the Company believes that all critical financial and operational 
information is currently year 2000 compliant.

     The Company has a formalized program for testing communication 
equipment, vendor software, and non-critical ancillary programs for year 2000 
compliance. As of December 31, 1997, the Company's compliance efforts are 
substantially complete.  The Company does not expect the cost of ensuring 
year 2000 compliance to be material.

ACCOUNTING MATTERS

     Historically, the Company recorded, at the time it purchased Installment 
Contracts, a portion of contract interest (which would otherwise have been 
recorded as unearned finance charges) as nonrefundable acquisition discount 
when the credit risk and potential for future losses warranted such an 
allocation. For 1997 and 1996, however, the Company did not allocate any 
portion of contract interest from Installment Contracts purchased during the 
period to nonrefundable acquisition discount.  Instead, the Company 
established additional reserves for credit losses on its portfolio of 
Installment Contracts through the recognition of a provision for credit 
losses that supplemented the balance of nonrefundable acquisition discount.  
SEE "Credit Loss Experience."

     During 1996, the Financial Accounting Standards Board issued SFAS No. 
125, "Accounting for Transfers and Servicing of Financial Assets and 
Extinguishments of Liabilities."  SFAS 125 establishes accounting and 
reporting standards for transfers and servicing of financial assets and 
extinguishments of liabilities based on the application of a financial 
components approach which focuses on control of the assets and liabilities 
that exist after the transfer.  SFAS 125 prescribes the methodology for 
recognition of gain or loss upon the transfer of assets as well as the 
valuation of finance income receivable.  SFAS 125 is effective for 
transactions occurring after December 31, 1996, and is to be applied 
prospectively.  Retroactive application is not permitted.  The Company 
adopted SFAS 125 on January 1, 1997.  


                                       17

<PAGE>


     Effective December 31, 1997, the Company adopted SFAS No. 128, "Earnings 
per Share."  This statement replaces the previously reported primary and 
fully diluted earnings per share with basic and diluted earnings per share.  
Unlike primary earnings per share, basic earnings per share excludes any 
diluted effects of options.  Diluted earnings per share is very similar to 
the previously reported fully diluted earnings per share.  All earnings per 
share amounts have been restated to conform to the SFAS 128 requirements.

     In July 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive 
Income."  SFAS 130 establishes standards for reporting and display of 
comprehensive income and its components in a full set of general purpose 
financial statements.  SFAS 130 is effective for fiscal years beginning after 
December 15, 1997 with earlier application permitted.

     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, when adopted, will not 
have a material effect on the Company's financial statements.

ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURE 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 December 
31, 1997 and 1996, 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%.  At 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%.  SEE "-- Note 9 to the Company's Financial Statements."

     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

ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


DESCRIPTION:                                                         PAGE
 
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . .   17
 
Balance Sheets as of December 31, 1997 and 1996. . . . . . . . . . .   18
 
Statements of Income for the Years Ended December 31, 1997, 
     1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . . . .   19
 
Statements of Changes in Stockholders' Equity for the Years Ended 
     December 31, 1997, 1996 and 1995. . . . . . . . . . . . . . . .   20

Statements of Cash Flows for the Years Ended December 31, 1997, 
     1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . . . .   21

Notes to Financial Statements  . . . . . . . . . . . . . . . . . . .   22


                                       18

<PAGE>

                                   [LETTERHEAD]




                            INDEPENDENT AUDITORS' REPORT


The Board of Directors
Eagle Finance Corp.:

We have audited the accompanying balance sheets of Eagle Finance Corp. (the
Company) as of December 31, 1997 and 1996, and the related statements of income,
changes in stockholders' equity (deficit) and cash flows for each of the years
in the three-year period ended December 31, 1997.  These financial statements
are the responsibility of the Company's management.  Our responsibility is to
express an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Eagle Finance Corp. as of
December 31, 1997 and 1996, and the results of its operations and its cash flows
for each of the years in the three-year period ended December 31, 1997 in
conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming the Company
will continue as a going concern.  As discussed in Note 1 to the financial
statements, the Company has incurred significant operating losses, has failed to
comply with various debt covenants and is presently seeking to merge, sell or
recapitalize the Company all of which raise substantial doubt about its ability
to continue as a going concern.  Management's plans in regard to these matters
are also described in Note 1.  The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

Effective January 1, 1997 the Company adopted the Statement of Financial
Accounting Standard No. 125, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities".


                      KPMG PEAT MARWICK LLP


Chicago, Illinois
April 15, 1998


                                       19


<PAGE>


                                 EAGLE FINANCE CORP.
                                    BALANCE SHEETS
                           AS OF DECEMBER 31, 1997 AND 1996


                                      ASSETS

<TABLE>
<CAPTION>
                                                            DECEMBER 31,
                                                       ----------------------------
                                                       1997                1996
                                                      ------------     ------------
<S>                                                    <C>             <C>
Finance receivables, owned (note 2). . . . . . . .    $ 28,455,232     $ 54,663,926
Nonrefundable acquisition discount (note 3). . . .      (1,179,708)      (1,443,164)
Allowance for credit losses (note 3) . . . . . . .      (2,986,419)      (6,045,514)
                                                      ------------     ------------
Finance receivables, net owned . . . . . . . . . .      24,289,105       47,175,248
                                                      ------------     ------------
Finance receivables, Installment Contract sales. .      27,060,820             --
Allowance for credit losses related to
   Installment Contract sales    . . . . . . . . .      (3,353,808)            --
Additional allowance represented on title assets,
   Installment Contract sales    . . . . . . . . .        (470,113)            --
                                                      ------------     ------------
Finance receivables, net Installment Contract sales     23,236,899             --
                                                      ------------     ------------
Cash . . . . . . . . . . . . . . . . . . . . . . .       1,809,248        1,271,594
Money market investments . . . . . . . . . . . . .         552,521          552,651
Prepaid expenses and debt issuance costs . . . . .       1,029,970        1,554,082
Repossessed or titled assets . . . . . . . . . . .       2,091,011        4,249,443
Income tax receivable. . . . . . . . . . . . . . .       1,268,152        4,732,346
Deferred income tax benefit (note 7) . . . . . . .            --          1,004,912
Excess servicing receivable (note 6) . . . . . . .            --          1,050,590
Other assets . . . . . . . . . . . . . . . . . . .         548,913        2,176,696
                                                       -----------      -----------
                                                     $  54,825,819     $ 63,767,562
                                                       -----------      -----------
                                                       -----------      -----------
</TABLE>


                     LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>

<S>                                                  <C>               <C>
Notes payable, Installment Contract sales. . . . . . $  23,707,012     $      --
Senior debt (note 8) . . . . . . . . . . . . . . . .    15,034,111        32,827,893
Subordinated debt (note 8) . . . . . . . . . . . . .    17,543,768        17,977,720
Accrued interest payable . . . . . . . . . . . . . .       162,370           468,533
Accounts payable and accrued liabilities . . . . . .       694,577         1,893,737
Unearned insurance commissions . . . . . . . . . . .          --               5,158
Dealer reserves (note 3) . . . . . . . . . . . . . .          --             286,783
                                                       -----------      -----------
Total liabilities. . . . . . . . . . . . . . . . . .    57,141,838        53,459,824
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 and 4,189,100 shares in
   1997 and 1996, respectively . . . . . . . . . . .        42,287            41,891
Additional paid-in capital . . . . . . . . . . . . .    13,593,206        13,514,422
Retained earnings (deficit). . . . . . . . . . . . .   (15,951,512)       (3,248,575)
                                                       -----------      -----------
Total stockholders' equity (deficit) . . . . . . . .    (2,316,019)       10,307,738
                                                       -----------      -----------
                                                     $  54,825,819     $  63,767,562
                                                       -----------      -----------
                                                       -----------      -----------
</TABLE>

                   See accompanying notes to financial statements.


                                       20

<PAGE>

                                EAGLE FINANCE CORP.
                                STATEMENTS OF INCOME
                   YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995


<TABLE>
<CAPTION>
                                                                   YEAR ENDED DECEMBER 31,
                                                         ---------------------------------------
                                                             1997           1996           1995
                                                            ------         ------         ------
<S>                                                      <C>            <C>            <C>
Interest income, owned:
   Interest and fee income, owned receivables. . . .     $ 11,751,876   $ 26,653,260   $ 27,100,358
   Interest expense, owned receivables (senior and
      subordinated debt) . . . . . . . . . . . . . .       (5,475,730)    (9,059,458)    (8,092,984)
                                                         ------------   ------------   ------------
Net interest income, owned receivables . . . . . . .        6,276,146     17,593,802     19,007,374
Provision for credit losses (note 3),
      owned receivables  . . . . . . . . . . . . . .       (6,251,206)   (13,184,278)    (9,537,949)
                                                         ------------   ------------   ------------
Net interest income after provision for
      credit losses  . . . . . . . . . . . . . . . .           24,940      4,409,524      9,469,425
                                                         ------------   ------------   ------------
Interest income, Installment Contract Sales:
   Interest income, Installment Contract sales . . .        4,722,811           --             --
   Interest expense, Installment Contract sales
      (notes payable)  . . . . . . . . . . . . . . .       (1,597,319)          --             --
   Provision for credit losses, Installment
      Contract sales   . . . . . . . . . . . . . . .       (2,883,038)          --             --
                                                         ------------   ------------   ------------
Net interest income after provision for credit losses,
      Installment Contract sales . . . . . . . . . .          242,454           --             --
                                                         ------------   ------------   ------------
Other income:
   Service fee income (note 5) . . . . . . . . . . . .      3,309,660      5,107,585      2,119,374
   Gain on sale of finance receivables, net (note 4) .           --          611,796           --
   Losses related to securitization. . . . . . . . . .     (1,681,317)          --             --
   Commissions and other . . . . . . . . . . . . . . .          6,412         65,811        254,853
                                                         ------------   ------------   ------------
Total other income . . . . . . . . . . . . . . . . . .      1,634,755      5,785,192      2,374,227
                                                         ------------   ------------   ------------
Income before operating expenses . . . . . . . . . . .      1,902,149     10,194,716     11,843,652
Operating expenses:
   Salaries and related costs. . . . . . . . . . . . .      7,433,803      8,011,223      5,744,920
   Collection expenses . . . . . . . . . . . . . . . .      1,423,845      1,774,186           --
   Other operating expenses. . . . . . . . . . . . . .      5,626,762      6,416,781      5,576,100
                                                         ------------   ------------   ------------
Total operating expenses . . . . . . . . . . . . . . .     14,484,410     16,202,190     11,321,020
                                                         ------------   ------------   ------------
Income (loss) before income taxes. . . . . . . . . . .    (12,582,261)    (6,007,474)       522,632
Applicable income taxes (note 7) . . . . . . . . . . .        120,676       (658,875)       197,187
                                                         ------------   ------------   ------------
Net income (loss). . . . . . . . . . . . . . . . . . . $  (12,702,937)  $ (5,348,599)    $  325,445
                                                         ------------   ------------   ------------
                                                         ------------   ------------   ------------
Weighted average common shares outstanding:
   Basic . . . . . . . . . . . . . . . . . . . . . . .      4,204,394      4,189,100      4,183,490
   Diluted . . . . . . . . . . . . . . . . . . . . . .      4,204,394      4,189,100      4,309,612
Per share net income (loss) attributable to common 
      shares:
   Basic . . . . . . . . . . . . . . . . . . . . . . .         $(3.02)        $(1.28)         $0.08
   Diluted . . . . . . . . . . . . . . . . . . . . . .         $(3.02)        $(1.28)         $0.08
</TABLE>

                   See accompanying notes to financial statements.


                                       21

<PAGE>


                                 EAGLE FINANCE CORP.
               STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
                    YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995

<TABLE>
<CAPTION>
                                                                        ADDITIONAL             RETAINED
                                                 COMMON STOCK        PAID-IN CAPITAL      EARNINGS (DEFICIT)          TOTAL
                                                 ------------        ---------------      ------------------       ----------
<S>                                              <C>                 <C>                  <C>                      <C>
Balance at January 1, 1994 . . . . . . . . .        41,800              13,392,437             1,774,579            15,208,816
Stock options exercised. . . . . . . . . . .            91                  81,809                  --                  81,900
Tax benefit from stock option
  exercised. . . . . . . . . . . . . . . . .          --                    40,176                  --                  40,176
 Net income. . . . . . . . . . . . . . . . .          --                      --                 325,445               325,445
                                                 ------------        -------------        --------------          ------------
Balance at December 31, 1995. . . . . . . .         41,891              13,514,422             2,100,024            15,656,337
 Net loss. . . . . . . . . . . . . . . . . .          --                      --              (5,348,599)           (5,348,599)
                                                 ------------        -------------        --------------          ------------
Balance at December 31, 1996 . . . . . . . .        41,891           $  13,514,422        $   (3,248,575)         $ 10,307,738
 Stock grants. . . . . . . . . . . . . . . .           396                  78,784                  --                  79,180
 Net loss. . . . . . . . . . . . . . . . . .          --                      --             (12,702,937)          (12,702,937)
                                                 ------------        -------------        --------------          ------------
Balance at December 31, 1997 . . . . . . . .        42,287           $  13,593,206        $  (15,951,512)         $ (2,316,019)
                                                 ------------        -------------        --------------          ------------
                                                 ------------        -------------        --------------          ------------
</TABLE>


                   See accompanying notes to financial statements.


                                       22

<PAGE>


                                 EAGLE FINANCE CORP.
                               STATEMENTS OF CASH FLOWS
                    YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995

<TABLE>
<CAPTION>

                                                                    YEAR ENDED DECEMBER 31,
                                                          ------------------------------------------------
                                                               1997              1996           1995
                                                              ------            ------         ------
<S>                                                     <C>                 <C>              <C>
Cash flows from operating activities:
  Net income (loss). . . . . . . . . . . . . . . . . .  $ (12,702,937)      $ (5,348,599)    $  325,445
  Adjustments to reconcile net income to
    net cash provided by operating activities:
     Provision for credit losses . . . . . . . . . . .      6,251,206         13,184,278      9,537,949
     Net finance receivables (charge-offs)
       recoveries against allowance  . . . . . . . . .     (9,310,301)       (17,946,599)        21,086
     Decrease (increase) in:
       Prepaid expenses  . . . . . . . . . . . . . . .        177,893           (200,451)       (77,175)
       Repossessed or titled assets. . . . . . . . . .      2,158,432            179,697     (3,762,715)
       Excess servicing receivable . . . . . . . . . .      2,731,907         (1,050,590)          --
       Other assets. . . . . . . . . . . . . . . . . .        (53,534)          (923,650)      (953,062)
       Income tax receivable . . . . . . . . . . . . .      3,464,194         (4,732,346)          --
       Deferred tax benefit. . . . . . . . . . . . . .      1,004,912          3,131,358     (3,777,229)
     Increase (decrease) in:
       Accrued interest. . . . . . . . . . . . . . . .       (306,163)           (34,301)       383,405
       Accrued income tax. . . . . . . . . . . . . . .           --             (683,144)       442,839
       Accounts payable and accrued liabilities. . . .     (1,199,160)        (1,286,591)       209,724
       Unearned insurance commissions. . . . . . . . .         (5,158)           (40,957)       (57,782)
       Dealer reserves . . . . . . . . . . . . . . . .       (286,783)            (6,081)       218,936
       Nonrefundable acquisition discount. . . . . . .       (263,456)        (7,984,988)       757,032
                                                          -----------        -----------     ----------
 Net cash provided by operating activities . . . . . .     (8,338,948)       (23,742,964)     3,268,453
                                                          -----------        -----------     ----------
 Cash flows from investing activities:
  Purchase of Investments  . . . . . . . . . . . . . .            130             (7,651)      (545,000)
  Proceeds from bulk sale/securitization of
    vehicle retail installment notes   . . . . . . . .     14,385,397        109,329,697     39,869,544
  Principal collected on finance receivables, owned. .     27,583,158         44,570,359     37,299,405
  Finance receivables originated or acquired
    (net of write-offs)  . . . . . . . . . . . . . . .    (52,753,097)       (62,845,116)  (144,023,772)
  Finance receivables, Installment Contract sales. . .     36,993,236               --             --
  Finance receivables, principal collected
    (net of write-offs), Installment
    Contract sales   . . . . . . . . . . . . . . . . .    (23,236,899)              --             --
                                                          -----------        -----------     ----------
  Net cash provided by (used in) investing activities       2,971,925         91,047,289    (67,399,823)
                                                          -----------        -----------     ----------
  Cash flows from financing activities:
    Proceeds from draws on bank lines,
      Installment Contract sales . . . . . . . . . . .     36,993,236               --             --
    Repayments of borrowings, Installment
      Contract sales . . . . . . . . . . . . . . . . .    (13,286,224)
    Proceeds from draws on bank lines. . . . . . . . .     56,059,348         48,471,793    602,004,545
    Repayments of borrowings . . . . . . . . . . . . .    (72,824,567)      (116,359,075)  (553,144,545)
    Debt to affiliate. . . . . . . . . . . . . . . . .     (1,028,563)            63,618        555,745
    Proceeds from issuance of other debt . . . . . . .           --              103,731     17,140,482
    Repayment of other debt. . . . . . . . . . . . . .       (433,952)          (171,309)      (387,790)
    Debt issuance costs. . . . . . . . . . . . . . . .        346,219           (210,706)      (945,311)
    Paid in capital. . . . . . . . . . . . . . . . . .         78,784               --             --
    Stock grants . . . . . . . . . . . . . . . . . . .            396               --           81,900
    Tax benefit from stock options exercised . . . . .           --                 --           40,176
                                                          -----------        -----------     ----------
  Net cash provided by (used in)
     financing activities. . . . . . . . . . . . . . .      5,904,677        (68,101,948)    65,345,202
                                                          -----------        -----------     ----------
  Cash, net change . . . . . . . . . . . . . . . . . .        537,654           (797,623)     1,213,832
  Cash at beginning of period  . . . . . . . . . . . .      1,271,594          2,069,217        855,385
                                                          -----------        -----------     ----------
  Cash at end of period  . . . . . . . . . . . . . . .   $  1,809,248       $  1,271,594   $  2,069,217
                                                          -----------        -----------     ----------
                                                          -----------        -----------     ----------
  Supplemental disclosures of cash flow information -
    cash paid during the period for:
       Interest. . . . . . . . . . . . . . . . . . . .   $  5,781,893       $  9,093,759   $  7,712,731
       Income taxes and Illinois replacement tax . . .   $      1,960       $  1,625,282   $  3,260,500
</TABLE>

                  See accompanying notes to financial statements.

                                       23

<PAGE> 


                                EAGLE FINANCE CORP.
                                          
                           NOTES TO FINANCIAL STATEMENTS
                                          
                         DECEMBER 31, 1997, 1996, AND 1995
                                          
                                          
(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND BUSINESS

     Eagle Finance Corp. (the Company) provides consumer finance services 
under the name "Eagle Finance."  Since 1988 the Company has focused its 
activities on the business of purchasing installment contracts originated by 
franchised and independent car dealers, generally referred to as indirect 
consumer lending. Indirect auto financing currently represents approximately 
99% of the Company's receivables base.

     The Company has experienced a significant deterioration in its financial 
condition primarily due to significant operating losses during 1997 and 1996 
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 its Revolving Credit Agreement, 
the GECC Agreement and subordinated notes.  At December 31, 1997, the 
Company's funding was effectively limited to internal cash generation.  The 
Company, among other actions, has restructured operations to reduce overhead. 
During 1997, the Company modified credit underwriting criteria and reduced 
the volume of Installment Contracts purchased from dealers.  The Company is 
exploring opportunities for a merger, sale or recapitalization.  There is no 
assurance that the Company will be successful in these efforts and the 
failure of such efforts would have a material adverse effect on the Company's 
financial condition.

     These factors raise substantial doubt about the Company's ability to 
continue as a going concern.  The accompanying financial statements have been 
prepared assuming that the Company will continue as a going concern. 
Accordingly, the accompanying consolidated financial statements do not 
include any adjustments that might be necessary should the Company be unable 
to continue as a going concern, such as adjustments to finance receivables, 
repossessed or titled assets, prepaid expenses and debt issuance costs. 

INCOME ON FINANCE RECEIVABLES 

     The Company recognizes finance charges on the interest (actuarial) 
method for both owned receivables and 1997 Installment Contract sales. Under 
this method, interest is earned over the lives of the finance receivables to 
produce constant rates of interest (yields).  The accrual of interest income 
on finance receivables is suspended when no payments have been received for 
90 days or more.  Interest accrual on finance leases and retail installment 
notes is suspended when they become 90 days or more contractually delinquent.

SALE, SECURITIZATION AND SERVICING OF FINANCE RECEIVABLES

     The Company conducts sales and securitizations of finance receivables 
from time to time with and without recourse and with and without servicing 
retained.

     Under an existing agreement with GECC (the "GECC Agreement"), the 
Company periodically sells to GECC pools of finance receivables.  GECC in 
turn earns a fixed spread over the two-year U.S. Treasury Bill rate at the 
time of the individual pool sale while initially retaining 10% of the 
purchase price at the time of sale as a reserve for credit losses.  The 
Company receives an annual servicing fee equal to 3% of the receivables 
serviced and is eligible to receive additional bonus servicing fee income 
based upon favorable charge-off experience.

     For 1995 and 1996, Installment Contract sales pursuant to the GECC 
Agreement were accounted for as off-balance sheet sales transactions pursuant 
to SFAS No. 77 "Reporting by Transferors for Transfers of Receivables with 
Recourse," with servicing and bonus servicing fee income recognized as 
earned. Effective January 1, 1997, sales pursuant to the GECC Agreement were 
accounted for as financing transactions pursuant to SFAS No. 125, "Accounting 
for Transfers and Servicing of Financial Assets and Extinguishment of 
Liabilities," with interest income


                                       24

<PAGE>


recognized on the installment Contract balances under the interest method.  
Interest expense is recognized at GECC's fixed spread, and charge-off and 
related provisions for credit losses are reflected as transactions impacting 
the allowance for credit losses, Installment Contract sales.

     During 1996, the Company completed the securitization of Installment 
Contracts through a transaction agented by Greenwich Capital Markets, Inc. 
(the "Securitization").  The transaction was structured to create three 
classes of certificates, which were rated by Duff & Phelps Credit Rating Co. 
and Fitch Investors Service L.P.  A 4% cash reserve was established at the 
time of the sale as a reserve for losses.  The reserve builds to 9% as excess 
cash is available.

     The Company capitalized the excess servicing rights on the Installment 
Contracts securitized.  Servicing fees are reported as income when earned, 
net of related amortization of retained servicing rights.  The Company 
maintains servicing of the portfolios and receives an annualized base 
servicing fee equal to 3% of net outstandings from the seller.  The Company 
is eligible to receive additional excess servicing fees based on portfolio 
performance.

     At the closing of the Securitization, the Company removed from its 
balance sheet Installment Contracts sold and added to its balance sheet (i) 
the cash received and (ii) excess servicing receivable ("ESR").  The excess 
of the cash received and the assets retained by the Company over the carrying 
value of the Installment Contracts sold, less transaction costs, equals the 
net gain on securitization recorded by the Company.

     The Company periodically determines the estimated fair value of the ESR 
by discounting the expected cash flows using a discount rate which the 
Company believes is commensurate with the risks involved.

     The Annual Percentage Rate ("APR") on the Installment Contracts in the 
Securitization is relatively high in comparison to the pass-through rate on 
the certificates or notes, accordingly, the ESR described above is a 
significant asset of the Company.  In determining the value of the ESR 
described above, the Company must estimate the future rates of prepayments, 
delinquencies, default loss severity as they impact the amount and timing of 
the estimated cash flows. The Company estimates prepayments by evaluating 
historical prepayment performance of comparable contracts and the impact of 
trends in the industry. The Company has used a constant 5% monthly 
liquidation rate.  The Company estimates defaults and default loss severity 
using available historical loss data for comparable contracts and the 
specific characteristics of the contracts purchased by the Company.  The 
Company used default losses of 19.0% as a percentage of principal balance 
over the life of the Installment Contracts.

     In future periods, the Company will recognize additional revenue from 
the ESR if the actual performance of the Installment Contracts is higher than 
the original estimate or the Company may increase the estimated fair value of 
the ESR.  If the actual performance of the contracts is lower than the 
original estimate, then an adjustment to the carrying value of the ESR may be 
required if the estimated fair value of the ESR is less than its carrying 
value.

     The Company periodically sells to third party purchasers finance 
receivables without recourse and generally without servicing retained.

NONREFUNDABLE ACQUISITION DISCOUNT

     As part of the Company's financing of vehicle secured retail installment 
notes, the difference between (i) the total principal amount to be repaid 
under the notes and (ii) the net funds advanced to the dealer is recorded as 
a nonrefundable acquisition discount and is available to the Company to 
absorb charges related to repossession and reconditioning expenses and other 
losses of principal that may arise in connection with defaulted retail 
installment notes. Prior to 1996, the Company, based on its credit loss 
analysis, allocated to nonrefundable acquisition discount, at the time it 
purchased vehicle secured retail installment notes, amounts that would 
otherwise have been recorded as unearned finance charges.

DEALER RESERVES

     As part of the Company's financing of secured retail installment notes, 
refundable dealer reserves are established to protect the Company from 
potential losses associated with such notes.  A portion of the proceeds from 
these retail installment notes are retained by the Company and are available 
to the Company to charge losses on


                                       25

<PAGE>


related receivables against.  The amount of reserves is based upon various 
criteria, one of which is the credit risk associated with the secured retail 
installment notes. 

ALLOWANCE FOR CREDIT LOSSES

     The allowance for credit losses is maintained by direct charges to 
operations in amounts that are intended to provide adequate reserves on the 
Company's finance receivables portfolio to absorb possible credit losses in 
the foreseeable future in excess of the nonrefundable acquisition discount 
and refundable dealer reserves with respect to the Company's finance 
receivables.

     In connection with its periodic review of credit loss experience and 
delinquency trends using static pool analysis, management evaluates the 
adequacy of the allowance for credit losses.  If nonrefundable acquisition 
discount and refundable dealer reserves associated with an individual pool of 
installment contracts are deemed insufficient in comparison to the amount 
management believes necessary to absorb projected losses on that pool's 
vehicle secured installment notes that are expected to become impaired in the 
foreseeable future, a provision for credit losses would be charged against 
earnings.

     The Company's general policy is to charge-off delinquent finance 
receivables, retail or direct, and finance leases (net of unearned finance 
charges) when they are deemed uncollectible and, in any event, to charge-off 
monthly accounts prior to their becoming 90 days contractually delinquent. 

REPOSSESSED OR TITLED ASSETS

     Repossessed collateral and titled assets are valued at the lower of cost 
or estimated net realizable value. 

INSURANCE COMMISSIONS

     Commissions on credit life and credit accident and health insurance are 
taken into income over the average terms of the related policies on the sum 
of the digits method.  Property insurance, auto club, vehicle warranties, and 
other insurance commissions are taken into income when written.

TAXES

     The Company accounts for income taxes under the asset and liability 
method in which deferred tax assets and liabilities are recognized for the 
future tax consequences attributable to differences between the financial 
statement carrying amounts of existing assets and liabilities and their 
respective tax bases.  Deferred tax assets and liabilities are measured using 
enacted tax rates expected to apply to taxable income in the years in which 
those temporary differences are expected to be recovered or settled.  

USE OF ESTIMATES

     The preparation of financial statements in conformity with generally 
accepted accounting principles requires management to make estimates and 
assumptions that affect the amounts reported in the consolidated financial 
statements and accompanying notes.  The areas which are subject to estimation 
techniques most significantly include the allocation of unearned finance 
charges to nonrefundable acquisition discount (which allocations did not 
occur at all in 1997 or 1996), the computation of the gain on sale of 
Installment Contracts, the valuation of the impairment of excess servicing 
rights and the determination of the level of the allowance for credit losses. 
Actual results could differ from these estimates.

(LOSS) EARNINGS PER SHARE 

     In 1997, the Company adopted SFAS No. 128, "Earnings per Share," which 
replaced the calculation of primary and fully diluted earnings per share with 
basic and diluted earnings per share.  Unlike primary earnings per share, 
basic earnings per share excludes any dilutive effects of options, warrants 
and convertible securities.  Diluted earnings per share is very similar to 
the previously reported fully diluted earnings per share.  All earnings per 
share amounts for prior periods have been restated to conform to the new 
requirements.


                                       26

<PAGE>


     Basic (loss) earnings per share is based on net (loss) income divided by 
the weighted average number of common shares outstanding.  Common stock 
equivalents outstanding were antidilutive for the years ended December 31, 
1997 and 1996.

(2)  FINANCE RECEIVABLES 

     Finance receivables owned as of December 31, 1997 and 1996 consisted of 
the following:

<TABLE>
<CAPTION>
                                                      1997           1996
                                                   ----------     ---------
<S>                                              <C>             <C>
 Retail installment notes:
     Vehicle . . . . . . . . . . . . . . . .     $ 37,591,580    $ 73,038,666
     Other . . . . . . . . . . . . . . . . .           16,035          43,620
 Direct installment loans:
     Interest-bearing. . . . . . . . . . . .          227,562         317,218
     Discount-basis. . . . . . . . . . . . .           42,300         131,793
 Finance leases. . . . . . . . . . . . . . .           11,830          25,582
                                                 ------------   -------------
 Total . . . . . . . . . . . . . . . . . . .       37,889,307      73,556,879
                                                 ------------   -------------
 Unearned finance charges. . . . . . . . . .       (9,434,075)    (18,892,954)
                                                 ------------   -------------
 Finance receivables, net. . . . . . . . . .    $  28,455,232    $ 54,663,926
                                                 ------------   -------------
                                                 ------------   -------------
</TABLE>

     Finance receivables, Installment Contract sales reflected on the 
accompanying balance sheet at December 31, 1997 as part of a financing 
transaction (see Note 1) aggregated $27,060,820.  These Installment 
Contracts, for purposes of delinquency and servicing disclosures which 
follow, are treated as being serviced by the Company with actual title to the 
assets having been transferred to GECC.

     Finance receivables managed (owned or serviced) as of December 31, 1997 
and 1996 consisted of the following:

<TABLE>
<CAPTION>
                                                       1997                1996
<S>                                                <C>                <C>
                                                   ------------       ------------
 Total owned, net. . . . . . . . . . . . . .       $ 28,455,232       $ 54,663,926
                                                   ------------       ------------
 Serviced:
   GECC Installment Contract sales (1997). .         27,060,820              --
   GECC Installment Contract sales
     (1996 and prior)                                28,798,501         66,717,919
   Securitization  . . . . . . . . . . . . .         14,646,770         30,247,885
                                                   ------------      -------------
   Total serviced, net . . . . . . . . . . .         70,506,091         96,965,804
                                                   ------------      -------------
   Total managed, net. . . . . . . . . . . .       $ 98,961,323      $ 151,629,730
                                                   ------------      -------------
                                                   ------------      -------------
</TABLE>

     Direct installment loans are originated by the Company. Retail vehicle 
secured installment notes are purchased without recourse.  Certain retail 
secured installment notes are purchased on a recourse basis to the extent of 
available dealer reserve balances.  As a result of the Company's policy to 
charge-off accounts prior to their becoming 90 days (120 days in the case of 
the Securitization) past-due, no accounts were on nonaccrual status at 
December 31, 1997 or 1996.

     Direct installment loans are generally collateralized by household 
goods, vehicles, or real estate, with maximum terms of 60 months for 
interest-bearing loans and 84 months for discount-basis loans.  Finance 
leases, all discount basis, are generally collateralized by office and 
industrial equipment with maximum terms of 60 months.  Retail installment 
notes, discount basis and interest bearing, arise principally from the sale 
of new and used vehicles, and generally have a maximum term of 60 months. 

     The following table reflects delinquencies experienced by the Company in 
its owned finance receivables portfolio as of December 31, 1997, 1996 and 
1995:


                                       27

<PAGE>

<TABLE>
<CAPTION>

                                                                  AS OF DECEMBER 31,
                                                 --------------------------------------------------
                                                        1997           1996           1995
                                                       ------         ------         ------
<S>                                                <C>             <C>            <C>
  Net amount outstanding . . . . . . . . . .       $28,455,232     $54,663,926    $145,718,866
                                                   -----------     -----------    ------------
  Delinquencies 
     30-59 days. . . . . . . . . . . . . . .       $ 3,236,358     $ 5,900,287    $ 10,073,834
     60-89 days. . . . . . . . . . . . . . .         1,377,442         885,178       3,000,299
                                                   -----------     -----------    ------------
       Total . . . . . . . . . . . . . . . .       $ 4,613,800     $ 6,785,465    $ 13,074,133
                                                   -----------     -----------    ------------
                                                   -----------     -----------    ------------
 Total delinquencies as a percentage
  of net finance receivables, owned. . . . .             16.21%          12.41%           8.97%
</TABLE>

     The following table reflects delinquencies experienced by the Company in 
its serviced finance receivables portfolio as of December 31, 1997, 1996 and 
1995:

<TABLE>
<CAPTION>
                                                                  AS OF DECEMBER 31,
                                                 --------------------------------------------------
                                                        1997           1996           1995
                                                       ------         ------         ------
<S>                                                <C>             <C>            <C>
  Net amount outstanding . . . . . . . . . .       $70,506,091     $96,965,804    $40,096,243
                                                   -----------     -----------    -----------
  Delinquencies
     30-59 days. . . . . . . . . . . . . . .       $ 6,698,884     $ 7,355,517    $ 1,626,672
     60+ days. . . . . . . . . . . . . . . .         2,654,616       2,475,144        507,409
                                                   -----------     -----------    -----------
       Total . . . . . . . . . . . . . . . .       $ 9,353,500     $ 9,830,661    $ 2,134,081
                                                   -----------     -----------    -----------
                                                   -----------     -----------    -----------
 Total delinquencies as a percentage
   of net finance receivables, serviced  . .             13.27%          10.14%          5.32%
</TABLE>

     The following table reflects delinquencies experienced by the Company in
its managed (owned or serviced) finance receivables portfolio as of December 31,
1997, 1996 and 1995:

<TABLE>
<CAPTION>
                                                                  AS OF DECEMBER 31,
                                                 --------------------------------------------------
                                                        1997           1996           1995
                                                       ------         ------         ------
<S>                                                <C>             <C>            <C>
  Net amount outstanding . . . . . . . . . .       $98,961,323     $151,629,730   $185,815,109
                                                   -----------     -----------    -----------
  Delinquencies
     30-59 days. . . . . . . . . . . . . . .       $ 9,935,242     $ 13,255,803   $ 11,700,506
     60+ days. . . . . . . . . . . . . . . .         4,032,058        3,360,321      3,507,708
                                                   -----------     ------------   ------------
       Total . . . . . . . . . . . . . . . .       $13,967,300     $ 16,616,124   $ 15,208,214
                                                   -----------     ------------   ------------
                                                   -----------     ------------   ------------
 Total delinquencies as a percentage
  of net finance receivables,
  managed (owned or serviced)  . . . . . . .             14.11%           10.96%          8.18%
</TABLE>

     Contractual maturities of retail and direct installment finance 
receivables by year are not readily available.  The Company's experience has 
shown that the average life of the Company's finance receivables is 
substantially less than the average original contract term of such 
receivables due to the amount of payoffs and repossessions that occur prior 
to contract maturity.


                                       28

<PAGE>

     A summary of principal cash collections is provided below:

<TABLE>
<CAPTION>

                                                               1997            1996
                                                              ------          ------
<S>                                                        <C>               <C>
 Retail installment notes:
  Interest bearing loans:
     Principal cash collections. . . . . . . . . . . . . . $ 2,243,105       $ 2,160,046
     Principal cash collections as a percentage of
       average net outstanding balances. . . . . . . . . .          60%               46%
  Discount basis loans:
     Principal cash collections other. . . . . . . . . . . $14,544,138       $42,022,211
     Principal cash collections other as a percentage of
       average net outstanding balances  . . . . . . . . .          34%               38%
 Direct installment loans:
     Principal cash collections  . . . . . . . . . . . . . $   241,904       $   339,931
     Principal cash collections as a percentage of
       average net outstanding balances. . . . . . . . . .          66%               98%
 Finance leases:
     Principal cash collections  . . . . . . . . . . . . . $    19,975       $    48,171
     Principal cash collections as a percentage of
       average net outstanding balances  . . . . . . . . .         129%              111%
</TABLE>

     No dealer accounted for more than 9% of vehicle retail installment notes 
purchases during 1997. 


                                       29

<PAGE>


(3)  ALLOWANCE FOR CREDIT LOSSES, NONREFUNDABLE ACQUISITION DISCOUNT, AND DEALER
     RESERVES

     Changes in the allowance for credit losses, in the Company's owned 
finance receivables portfolio, for the years ended December 31, 1997, 1996, 
and 1995 were as follows:

<TABLE>
<CAPTION>

<S>                                                                   <C>
  Balance at January 1, 1995. . . . . . . . . . . . . . . . . . .      $ 1,248,800
    Provision for credit losses . . . . . . . . . . . . . . . . .        9,537,949
    Losses charged off  . . . . . . . . . . . . . . . . . . . . .         (174,841)
    Recoveries  . . . . . . . . . . . . . . . . . . . . . . . . .          195,927
                                                                        ----------
  Balance at December 31, 1995. . . . . . . . . . . . . . . . . .      $10,807,835
    Provision for credit losses . . . . . . . . . . . . . . . . .       13,184,278
    Losses charged off  . . . . . . . . . . . . . . . . . . . . .      (18,028,677)
    Recoveries  . . . . . . . . . . . . . . . . . . . . . . . . .           82,078
                                                                        ----------
  Balance at December 31, 1996  . . . . . . . . . . . . . . . . .      $ 6,045,514
    Provision for credit losses . . . . . . . . . . . . . . . . .        6,251,206
    Losses charged off  . . . . . . . . . . . . . . . . . . . . .       (9,368,475)
    Recoveries  . . . . . . . . . . . . . . . . . . . . . . . . .           58,174
                                                                        ----------
  Balance at December 31, 1997. . . . . . . . . . . . . . . . . .      $ 2,986,419
                                                                        ----------
                                                                        ----------
</TABLE>

     Changes in nonrefundable acquisition discount and dealer reserves, in 
the Company's owned finance receivable portfolio, for the years ended 
December 31, 1997, 1996 and 1995 were as follows:

<TABLE>
<CAPTION>

                                                      NONREFUNDABLE           REFUNDABLE
                                                       ACQUISITION              DEALER
                                                         DISCOUNT              RESERVES
                                                      -------------           -----------
<S>                                                   <C>                    <C>
  Balance at January 1, 1995. . . . . . . . . . . . .   $ 8,671,120          $   73,928
    Additions applicable to new volume  . . . . . . .    28,023,470           2,295,776
    Payments to dealers . . . . . . . . . . . . . . .          --            (2,076,840)
    Accounts sold . . . . . . . . . . . . . . . . . .    (5,524,932)               --
    Losses charged, net of recoveries . . . . . . . .   (21,741,506)               --
                                                      -------------           -----------
  Balance at December 31, 1995. . . . . . . . . . . .   $ 9,428,152          $  292,864
    Additions applicable to new volume  . . . . . . .    10,720,447             826,220
    Payments to dealers . . . . . . . . . . . . . . .          --              (832,301)
    Accounts sold . . . . . . . . . . . . . . . . . .    (8,439,100)               --
    Losses charged, net of recoveries . . . . . . . .   (10,266,335)               --
                                                      -------------           -----------
  Balance at December 31, 1996. . . . . . . . . . . .   $ 1,443,164          $  286,783
                                                      -------------           -----------
    Additions applicable to new volume  . . . . . . .     5,151,659                --
    Payments to dealers . . . . . . . . . . . . . . .       286,783            (286,783)
    Accounts sold . . . . . . . . . . . . . . . . . .    (5,175,487)               --
    Losses charged, net of recoveries . . . . . . . .      (526,411)               --
                                                      -------------           -----------
  Balance at December 31, 1997. . . . . . . . . . . .   $ 1,179,708          $     --
                                                      -------------           -----------
                                                      -------------           -----------
</TABLE>

     Additions applicable to new volume include allocations, at the time of 
Installment Contract purchases, of contract interest that would otherwise 
have been recorded as unearned finance charges of $9,815,829 for 1995.  No 
such allocations were made in either 1997 or 1996.

     Total net charge-offs as a percentage of average net owned finance 
receivables were 17.08%, 24.16% and 17.98% for 1997, 1996 and 1995, 
respectively.


                                       30

<PAGE>


     Changes in the allowance for credit losses, in the Company's Installment 
Contract sales portfolio, for the year ended December 31, 1997 were as 
follows:

<TABLE>
<CAPTION>
<S>                                                                           <C>
  Balance at January 1, 1997 . . . . . . . . . . . . . . . . . . . . . . .    $    --
    Allowance for credit losses attributable to reserve holdback . . . . .     3,853,029
    Charge-offs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    (3,382,259)
    Recoveries less expenses . . . . . . . . . . . . . . . . . . . . . . .     2,883,038
                                                                             -----------
  Balance at December 31, 1997 . . . . . . . . . . . . . . . . . . . . . .    $3,353,808
                                                                             -----------
                                                                             -----------
</TABLE>

     Total charge-offs as a percentage of average net Installment Contract 
sales (annualized) was 15.51% for 1997.

(4)  SALE OF RECEIVABLES

     During 1997, the Company sold portfolios of vehicle retail installment 
notes aggregating approximately $37.0 million (net) to GECC pursuant to the 
GECC Agreement in three transactions all accounted for as financing 
transactions (See Note 1).  Additionally, during the fourth quarter 1997, the 
Company sold, servicing released, approximately $14.4 million (net) of 
vehicle retail installment notes to competitors in three separate 
transactions.  There was no significant gain or loss on the sales to 
competitors.

     During 1996 the Company sold portfolios of vehicle retail installment 
notes aggregating $64.9 million (net) to GECC pursuant to the GECC Agreement 
in six Installment Contract sale transactions.  These transactions were 
reflected off-balance sheet.  On October 25, 1996, the Company completed the 
securitization of approximately $35.2 million (net) of Installment Contracts. 
The Company recognized a gain on the transaction of $611,796, net of related 
transactions costs of $749,487.  The Company capitalized the excess servicing 
rights on the Installment Contracts securitized.  Servicing fees are reported 
as income when earned, net of related amortization of retained servicing 
rights.

     On September 27, 1996, the Company sold approximately $9.6 million (net) 
of Texas-originated Installment Contracts to a competitor.  No gain was 
recorded as the sales price approximated book value.

     During 1995, the Company sold portfolios of net vehicle retail 
installment notes aggregating $34.3 million to GECC pursuant to the GECC 
Agreement in two transactions.

(5)  SERVICING

     Servicing fees are reported as income when earned, net of related 
amortization of excess servicing and valuation of present value and losses. 
Servicing costs are charged to expense as incurred.  Servicing fees for the 
periods shown included the following components:

<TABLE>
<CAPTION>

                                                                   YEAR ENDED DECEMBER 31,
                                                            ----------------------------------
                                                            1997           1996           1995
                                                           -----          ------         ------
<S>                                                       <C>            <C>            <C>
Base servicing fees. . . . . . . . . . . . . . . . .      $2,108,397     $1,712,437     $1,009,560
Bonus/excess servicing fees. . . . . . . . . . . . .       2,251,853      3,705,841      1,109,814
Amortization of ESR. . . . . . . . . . . . . . . . .      (1,050,590)      (310,693)          --
Adjustment to ESR. . . . . . . . . . . . . . . . . .      (1,681,317)          --             --
                                                          ----------     ----------     ----------
Net servicing fees . . . . . . . . . . . . . . . . .      $1,628,343     $5,107,585     $2,119,374
                                                          ----------     ----------     ----------
                                                          ----------     ----------     ----------
</TABLE>

     During 1997, the Company reduced the carrying value of ESR and 
restricted cash in connection with the Securitization to zero as a result of 
actual and anticipated losses.  The Company assumes receipt of only 3% base 
servicing fee in future periods.  Losses and the reduction in carrying value 
on the Securitization totaled $1,681,317.

     At December 31, 1997, the Company was in violation of certain covenants 
relating pursuant to the GECC Agreement.  The Company obtained waivers for 
the covenant breaches through November 30, 1997.  Should the Company remain 
in violation of these covenants beyond November 30, 1997, GECC, at its 
option, could terminate the agreement, which would result in a loss of future 
servicing and bonus servicing income.


                                       31

<PAGE>


(6)  EXCESS SERVICING RECEIVABLE (ESR)

     The following table summarizes ESR activity related to the 
Securitization for the periods shown:

<TABLE>
<CAPTION>

                                                                YEAR ENDED DECEMBER 31,
                                                           -----------------------------------
                                                             1997         1996           1995
                                                            ------       ------         ------
<S>                                                         <C>          <C>             <C>

Balance at beginning of period . . . . . . . . . . . . . .  $ 1,050,590   $    --        $   --
Additions to ESR . . . . . . . . . . . . . . . . . . . . .         --      1,361,283         --
Amortization and write-off of ESR. . . . . . . . . . . . .   (1,050,590)    (310,693)        --
                                                            -----------   ----------    ---------
Balance, end of period . . . . . . . . . . . . . . . . . .  $      --     $1,050,590     $   --
                                                            -----------   ----------    ---------
                                                            -----------   ----------    ---------
</TABLE>

(7)  INCOME TAXES

    Total income tax expense (benefit) reported in the statements of income 
for the years ended December 31, 1997, 1996 and 1995 included the following 
components:

<TABLE>
<CAPTION>
                                                          1997           1996           1995
                                                         ------         ------         ------
<S>                                                      <C>            <C>            <C>
  Current:
     Federal . . . . . . . . . . . . . . . . . . . . .  $ (784,857)    $(3,368,177)    $ 3,466,929
     State . . . . . . . . . . . . . . . . . . . . . .     (99,379)       (422,056)        507,487
                                                        ----------     -----------     -----------
     Total . . . . . . . . . . . . . . . . . . . . . .    (884,236)     (3,790,233)      3,974,416
                                                        ----------     -----------     -----------
  Deferred:
     Federal . . . . . . . . . . . . . . . . . . . . .     878,781       2,624,758      (3,303,132)
     State . . . . . . . . . . . . . . . . . . . . . .     126,131         506,600        (474,097)
                                                        ----------     -----------     -----------
     Total . . . . . . . . . . . . . . . . . . . . . .   1,004,912       3,131,358      (3,777,229)
                                                        ----------     -----------     -----------
  Total income tax expense (benefit) . . . . . . . . .  $  120,676      $ (658,875)    $   197,187
                                                        ----------     -----------     -----------
                                                        ----------     -----------     -----------
</TABLE>

     Temporary differences, which represent the difference between the 
amounts reported in the financial statements and the tax bases of assets and 
liabilities, result in deferred taxes.  Deferred tax assets and liabilities 
at December 31, 1997 and 1996, were as follows:


<TABLE>
<CAPTION>
                                                             1997             1996
                                                            ------           ------
<S>                                                       <C>              <C>
Gross deferred tax assets:
  Allowances for credit losses . . . . . . . . . . . . .  $  2,647,860     $ 2,350,496
  Alternative minimum tax credit . . . . . . . . . . . .       252,113           --
  Deferred income. . . . . . . . . . . . . . . . . . . .         --              2,005
  Net operating loss . . . . . . . . . . . . . . . . . .     3,657,077         129,870
  Other. . . . . . . . . . . . . . . . . . . . . . . . .        90,344         148,023
                                                          ------------     -----------
Gross deferred tax assets  . . . . . . . . . . . . . . .     6,647,394       2,630,394
Valuation allowance. . . . . . . . . . . . . . . . . . .    (6,647,394)     (1,563,826)
                                                          ------------     -----------
Subtotal . . . . . . . . . . . . . . . . . . . . . . . .         --          1,066,568
                                                          ------------     -----------
Gross deferred tax liabilities:
  Accrued finance charges. . . . . . . . . . . . . . . .         --             61,184
  Other. . . . . . . . . . . . . . . . . . . . . . . . .         --                472
                                                          ------------     -----------
Gross deferred tax liabilities . . . . . . . . . . . . .         --             61,656
                                                          ------------     -----------
Net deferred tax assets  . . . . . . . . . . . . . . . .  $      --        $ 1,004,912
                                                          ------------     -----------
                                                          ------------     -----------
</TABLE>

     A valuation allowance of ($6.6) million has been established at December 
31, 1997 against the deferred tax assets because of the uncertainty 
surrounding the realization of these tax assets.

     The differences between the statutory federal income tax rate of 34% and 
the effective tax rate for the year ended December 31, 1997, 1996 and 1995 
are as follows:


                                       32

<PAGE>

<TABLE>
<CAPTION>
                                                               1997           1996           1995
                                                             --------       --------       --------
<S>                                                           <C>            <C>             <C>
Statutory federal income tax rate. . . . . . . . . . . . . .  (34.0%)        (34.0%)         34.0%
Change in valuation allowance for deferred tax assets  . . .   40.4%          26.0%            --
State income taxes, less benefit of federal
  income tax deduction . . . . . . . . . . . . . . . . . . .   (3.9%)         (2.4%)          4.2%
Other, net . . . . . . . . . . . . . . . . . . . . . . . . .   (1.5%)         (0.6%)         (0.5%)
                                                              ------         ------          -----
Effective tax rate . . . . . . . . . . . . . . . . . . . . .    1.0%         (11.0%)         37.7%
                                                              ------         ------          -----
                                                              ------         ------          -----
</TABLE>

     At December 31, 1997, the Company has a net operating loss carryforward 
of $9,109,475 which expires December 31, 2012.  The Company also has a 
minimum tax credit carryforward of $252,113.

(8)  DEBT

     Debt on December 31, 1997 and 1996 consisted of the following: 

<TABLE>
<CAPTION>
                                                                  1997           1996
                                                                 ------         ------
<S>                                                             <C>            <C>
Notes payable, Installment Contract sales. . . . . . . . . . .  $23,707,012    $   --
                                                                -----------    -----------
Senior debt:
  Revolving credit facility, expiring January 31, 1998 . . . .   14,997,499     31,762,718
  Debt to affiliate. . . . . . . . . . . . . . . . . . . . . .       36,612      1,065,175
                                                                -----------    -----------
       Total senior debt . . . . . . . . . . . . . . . . . . .   15,034,111     32,827,893
                                                                -----------    -----------
Subordinated debt:
     10.25%, "RISRS" due June 1, 2005 (0.25% increase
        per year through maturity) . . . . . . . . . . . . . .   16,955,000     16,990,000
     8.00% to 10.75% Private Placement Notes with various
        maturities through August 1, 2004. . . . . . . . . . .      457,405        781,159
     10.50% to 11.00% Long Term Notes with various maturities
        through August 1, 2006 . . . . . . . . . . . . . . . .      131,363        206,561
                                                                -----------    -----------
     Total subordinated debt . . . . . . . . . . . . . . . . .   17,543,768     17,977,720
                                                                -----------    -----------
       Total debt. . . . . . . . . . . . . . . . . . . . . . .  $56,284,891    $50,805,613
                                                                -----------    -----------
                                                                -----------    -----------
</TABLE>

     Notes payable to GECC under the Installment Contract sale transactions 
occurring during 1997 bear fixed rates of interest.  The weighted average 
interest rate paid on outstanding borrowing to GECC was 8.99% at December 31, 
1997.  These notes are reduced in proportion to the liquidation of the 
related finance receivables. 

     The senior and subordinated debt agreements contain provisions relating 
to the maintenance of consolidated net worth, as defined in such agreements, 
limitations on borrowings, the payment of cash dividends, and acquisitions of 
the Company's capital stock.  At December 31, 1997, consolidated net worth 
was ($2,316,019).  Additionally, the Company was in violation of other 
covenants, including interest coverage and subordinated debt limitations.  
The Company expects to remain in violation of the consolidated net worth and 
subordinated debt limitation covenants for the near term. 

     The revolving credit agreement ("Credit Agreement") is an agented 
facility with nine banks.  The total available under the revolving credit 
agreement was $20,000,000 (which amount declines to $0, unless amended, on 
January 31, 1998) of which $14,997,499 was outstanding at December 31, 1997.  
The credit facility provides for interest at floating rates, at the reference 
bank's prime rate plus 3%.  The weighted average interest rate paid on 
outstanding borrowings were 12.08% and 8.05% at December 31, 1997 and 1996, 
respectively. Substantially all of the Company's finance receivables have 
been pledged to secure debt outstanding under the revolving credit agreement. 
 The Credit Agreement was terminated as of March, 1998.  See Note 16 to the 
Company's Financial Statements.  The Company has pledged its $552,521 money 
market investments as cash collateral at December 31, 1997 in accordance with 
the requirements of the revolving credit agreement.  

     The unsecured debt to affiliate is due on demand and bore a 6.75% 
interest rate on December 31, 1997.


                                       33

<PAGE>

     On May 5, 1995, the Company completed a public offering of $17,000,000 
of its Subordinated Notes due 2005 (the "Notes").  The Notes were priced at 
par and the net proceeds to the Company were approximately $16.3 million.  
The Notes, known as Rising Interest Subordinated Redeemable Securities 
("RISRS"), bear an interest rate, payable monthly, of 10% per annum, which 
rate increased 0.25% on June 1, 1996 and will increase 0.25% each June 1 
thereafter through June 1, 2003.  During the last year of their term, 
following a 0.50% increase in the interest rate on June 1, 2004, the Notes 
will bear an interest rate of 12.50% per annum.  The Company may at its 
option redeem the RISRS, in whole or in part, on or after June 1, 1997.  From 
June 1, 1997 through May 31, 1998 the redemption price would be 101% of the 
principal amount, and on or after June 1, 1998, the redemption price would be 
100% of the principal amount.  Annual interest on the notes is expensed using 
the level yield method.  In 1997, the effective rate on the notes was 12.21%. 
At December 31, 1997, the Company was in violation of the leverage covenants 
set forth in the indenture governing the notes.  The Company expects to 
remain in violation of that covenant for the near term.  No assurance can be 
given that the Company's subordinated lenders will not take adverse reaction 
in response to the ongoing breach of such covenant.

     The Company has periodically offered subordinated debt pursuant to a 
private placement which was intended to qualify as a non-public offering 
under Regulation D promulgated by the SEC under the Securities Act of 1933.  
The total subordinated notes issued pursuant to the private placement and 
outstanding on December 31, 1997 was $457,405; these notes have interest 
rates from 8.00% to 10.75% with various maturities through August 1, 2004.  
The Company has other subordinated long term notes outstanding at December 
31, 1997 totaling $131,363; these notes have interest rates from 10.50% to 
11.00% with various maturities through August 1, 2006.

     The subordinated notes are subordinate to the Company's senior debt and 
rank equally with "RISRS" issued during 1995. 

     The aggregate minimum annual maturities of subordinated debt at December 
31, 1997 are:

<TABLE>
<CAPTION>
               YEAR                                          AMOUNT
               <S>                                          <C>
               1998. . . . . . . . . . . . . . . . . . .    $ 10,000
               1999. . . . . . . . . . . . . . . . . . .     812,841
               2000. . . . . . . . . . . . . . . . . . .     809,484
               2001. . . . . . . . . . . . . . . . . . .     875,034
               2002. . . . . . . . . . . . . . . . . . .     812,444
               2003 and beyond . . . . . . . . . . . . .  14,223,965
                                                         -----------
                   Total . . . . . . . . . . . . . . . . $17,543,768
                                                         -----------
                                                         -----------
</TABLE>

(9)  DERIVATIVE FINANCIAL INSTRUMENTS

     In connection with its asset/liability management program and in the 
normal cause of business, the Company enters into transactions involving 
derivative financial instruments.  These instruments are used to manage the 
Company's exposure to fluctuations in interest rates.  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.

     Interest rate cap and collar agreements are used to reduce the potential 
impact of increases in interest rates on floating-rate, short-term debt.  At 
December 31, 1997 and 1996, 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%.  At 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.


                                       34

<PAGE>


Interest expense will be reduced (increased) on a current basis if payments 
are received (paid) under these instruments.


(10) DIVIDEND RESTRICTIONS

     Payment of dividends by the Company are subject to certain limitations 
in the various debt agreements and the revolving credit facility.  Under the 
most restrictive provisions of these agreements, no amount of retained 
earnings of the Company were available for distribution at December 31, 1997. 

(11) STOCK OPTIONS

     Prior to January 1, 1996, the Company accounted for its stock option 
plan in accordance with the provisions of Accounting Principles Board ("APB") 
Opinion No. 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES, and related 
interpretations. As such, compensation expense would be recorded on the date 
of grant only if the current market price of the underlying stock exceeded 
the exercise price.  On January 1, 1996, the Company adopted SFAS No. 123, 
ACCOUNTING FOR STOCK-BASED COMPENSATION, in the manner that allows the 
Company to continue to apply the provisions of APB Opinion No. 25 and provide 
pro forma net income and pro forma earnings per share disclosures for 
employee stock option grants as if the fair-value-based method defined in 
SFAS No. 123 had been applied.

     Under the terms of the Company's 1994 Stock Incentive Plan, as amended, 
600,000 shares of Common Stock were reserved for future granting of options 
to key individuals providing services to the Company as well as non-employee 
directors.  The plan generally provides for options to be granted, become 
exercisable, and terminate upon terms established by a committee of the Board 
of Directors.  Options granted to non-employee directors have ten year terms 
and vest and became fully exercisable at the end of two years of service.  
Options granted to personnel with beneficial ownership of more than 5% of the 
Company's common stock have five year terms and vest and become fully 
exercisable at the end of three to four years of service.  Options granted to 
remaining personnel have ten year terms and vest and become fully exercisable 
at the end of three to five years of service.  Options are issued at fair 
value on the date of grant and, accordingly, no compensation cost is 
recognized for stock options in the accompanying financial statements.

     At December 31, 1997, there were 218,975 additional shares available for 
grant under the Plan.  The per share weighted-average fair value of stock 
options granted during 1997 and 1996 was $2.37 and $2.92, respectively, on 
the date of the grant using the Black Scholes option-pricing model with the 
following weighted-average assumptions:  1997 - expected dividend yield 0%, 
risk-free interest rate of 6.35%, a volatility factor of the expected market 
price of the Company's common stock of .463 and an expected life of 4.0 
years; 1996 - expected dividend yield 0%, risk-free interest rate of 6.29%, a 
volatility factor of the expected market price of the Company's common stock 
of .463 and an expected life of 4.6 years; 1995 - expected dividend yield 0%, 
risk-free interest rate of 6.52%, a volatility factor of the expected market 
price of the Company's common stock of .463 and an expected life of 4.5 years.

     Had the Company determined compensation cost based on the fair value at 
the grant date for its stock options under SFAS No. 123, the Company's net 
income (loss) would have been reduced to the pro forma amounts indicated 
below:

<TABLE>
<CAPTION>

                                                   1997             1996
                                               ------------     -----------
 <S>                       <C>                 <C>              <C>
 Net loss                  As reported         $(12,702,937)    $(5,348,599)
                           Pro forma           $(12,702,937)    $(5,367,766)

 Loss per share            As reported               $(3.02)         $(1.28)
                           Pro forma                 $(3.02)         $(1.28)
</TABLE>


     Pro forma net income reflects only options granted in 1997, 1996 and 
1995. Therefore, the full impact of calculating compensation cost for stock 
options under SFAS No. 123 is not reflected in the pro forma net income 
amounts presented above because compensation cost is reflected over the 
options' vesting periods detailed above and compensation cost for options 
granted prior to January 1, 1995 is not considered.


                                       35

<PAGE>

     Stock option activity during the periods indicated is as follows:

<TABLE>
<CAPTION>

                                  Number of Shares   Weighted-Average Exercise Price
<S>                               <C>                          <C>
Balance at July 1, 1994. . . . .         --                         --
     Granted . . . . . . . . . .      233,000                      $9.49
Balance at December 31, 1994 . .      233,000                       9.49
     Granted . . . . . . . . . .      215,000                      14.94
     Exercised . . . . . . . . .       (9,100)                      9.00
     Forfeited / Surrendered . .       (2,000)                     14.25
     Expired . . . . . . . . . .         --                          --
                                     --------                     ------
Balance at December 31, 1995 . .      436,900                      12.16
     Granted . . . . . . . . . .      248,000                       6.63
     Exercised . . . . . . . . .         --                          --
     Forfeited / Surrendered . .     (207,000)                     14.64
     Expired . . . . . . . . . .         --                          --
                                     --------                     ------
Balance at December 31, 1996 . .      479,900                      $8.25
     Granted . . . . . . . . . .      311,925                       2.37
     Exercised . . . . . . . . .         --                          --
     Forfeited / Surrendered . .     (399,900)                      7.74
     Expired . . . . . . . . . .         --                          --
                                     --------                     ------
Balance at December 31, 1997 . .      391,925                      $4.08
                                     --------                     ------
                                     --------                     ------
</TABLE>

     At December 31, 1997, the range of exercise prices and the 
weighted-average remaining contractual life of outstanding options was $2.00 
to $14.50 and 7.45 years, respectively.

     At December 31, 1997 and 1996, the number of options exercisable was 
86,900 and 157,162, respectively, and the weighted-average exercise price of 
those options was $9.93 and $10.12, respectively.

(12) EARNINGS (LOSS) PER SHARE

     Earnings (loss) per share for the years ended December 31 were as 
follows:

<TABLE>
<CAPTION>
                                                 1997              1996           1995
                                             -----------       -----------     ----------
<S>                                          <C>               <C>             <C>
Numerator:
Net income (loss). . . . . . . . . . . . . . $  (12,703)       $   (5,349)     $      325
Denominator:
Denominator for basic earnings (loss) per
   share-weighted-average shares . . . . . .  4,204,394         4,189,100       4,183,490
Effect of dilutive securities:
Employee stock options . . . . . . . . . . .       --                --           126,122
                                              ---------         ---------       ---------
   Dilutive potential common shares  . . . .       --                --           126,122
                                              ---------         ---------       ---------
Denominator for diluted earnings (loss)
   per share-adjusted weighted-average
   shares and assumed conversions  . . . . .  4,204,394         4,189,100       4,309,612
                                              ---------         ---------       ---------
                                              ---------         ---------       ---------
Basic earnings (loss) per share. . . . . . . $    (3.02)       $    (1.28)     $     0.08
                                              ---------         ---------       ---------
                                              ---------         ---------       ---------
Diluted earnings (loss) per share. . . . . . $    (3.02)       $    (1.28)     $     0.08
                                              ---------         ---------       ---------
                                              ---------         ---------       ---------
</TABLE>

(13) COMMITMENTS AND CONTINGENCIES

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

                                       36

<PAGE>

<TABLE>
<CAPTION>
                                                  EQUIPMENT AND
                                                    LEASEHOLD
                                                   IMPROVEMENTS      OFFICE LEASES      TOTAL
<S>                                               <C>                <C>                <C>
 1998. . . . . . . . . . . . . . . . . . . .      $  655,832          $  431,811         $1,087,643
 1999. . . . . . . . . . . . . . . . . . . .          65,510             428,336            493,846
 2000. . . . . . . . . . . . . . . . . . . .            --               428,336            428,336
 2001. . . . . . . . . . . . . . . . . . . .            --               263,609            263,609
 2002. . . . . . . . . . . . . . . . . . . .            --                  --                 --
 2003 and beyond . . . . . . . . . . . . . .            --                  --                 --
                                                  ----------          ----------         ----------
                                                  $  721,342          $1,552,092         $2,273,434
                                                  ----------          ----------         ----------
                                                  ----------          ----------         ----------
</TABLE>

     It is expected that, in the normal course of business, leases that 
expire will be renewed or replaced by leases on other properties; therefore, 
it is believed that future minimum annual rental commitments will not be less 
than the amount of rental expense incurred.  Office space and equipment 
rental expenses for the years ended December 31, 1997, 1996, and 1995 were 
$1,549,771, $1,495,471 and $1,199,046, respectively.

     The Company is involved in litigation in the normal course of business. 
The Company believes that the resolution of such 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.

(14) EMPLOYEE BENEFITS

     The Company offers no post-retirement or post-employment benefits to its 
employees other than those available under its Section 401(k) Profit Sharing 
Plan.  The Company's 401(k) Plan was terminated effective June 30, 1997.  The 
total expense for the plans for the years ended December 31, 1997, 1996 and 
1995 was $0, $95,395 and $94,476, respectively.

(15) RELATED-PARTY TRANSACTIONS

     Effective January 1, 1994, the Company and certain affiliates entered 
into an Intercompany Services Agreement, as amended.  The agreement provides 
for the Company to render specified accounting and administrative services to 
the affiliates for a monthly fee which approximates the Company's cost of 
rendering such services.  For the year ended December 31, 1997, 1996 and 
1995, fees totaling $82,600, $137,588 and $157,252, respectively, are 
included in interest and fee income in the statement of income.

     The Company terminated the lease agreement without penalty on October 6, 
1995, for space in an office building owned by Upland Farms, a general 
partnership (an affiliate).  The total rent paid by the Company to Upland 
Farms during each of the years 1997, 1996 and 1995 was $0, $0 and $55,758, 
respectively, for 9,733 total square feet of space (average $10 per square 
foot).

     The Company had outstanding senior debt in the amount of $36,612 and 
$1,065,175 at December 31, 1997 and 1996, respectively, held by Prominent 
Mortgage (an affiliate) as discussed in footnote (8), Debt.

     The Company leases furniture and computer equipment from Wonderlic 
Personnel Test, Inc. (an affiliate), pursuant to a Master Lease Agreement. 
Payments under that agreement (and any related predecessor agreements) were 
$1,106,939, $1,075,340 and $850,293 for the years ending December 31, 1997, 
1996 and 1995, respectively.

     The Company paid a total of $56,750 and $77,015 during 1997 and 1996, 
respectively, to Wonderlic Personnel Test, Inc. (an affiliate) to develop a 
proprietary credit scoring model.

     The Company's Chief Executive Officer and Vice Chairman, members of 
their families and certain of the Company's affiliates have outstanding 
principal amounts of subordinated notes at December 31, 1997, approximating, 
for the Chief Executive Officer and Vice Chairman or members of their 
families, $641,715 (including $550,000 of publicly offered subordinated notes 
known as RISRS). Such subordinated notes currently bear interest at various 
rates between 10.5% and 11% and mature at various times through June 2005, 
although they are callable.


                                       37

<PAGE>


(16) SUBSEQUENT EVENTS

SALES OF FINANCE RECEIVABLES/DEBT RETIREMENT 

     On February 23, 1998 and March 23, 1998 the Company sold net retail 
installment contracts ("Installment Contracts") to competitors for $12.5 
million and $471,000 in cash net of non-refundable acquisition discount and 
allowances for credit losses, respectively.  Proceeds were applied to payoff 
all outstanding amounts under the Company's Revolving Credit Agreement.  As a 
result, the Revolving Credit Agreement was terminated shortly after the March 
23, 1998 sale.  Any resulting gain or loss on this transaction was not 
material.

DELISTING OF COMMON STOCK FROM NASDAQ MARKET

     The Company's common stock, $0.01 per value par share (the "Common 
Stock"), ceased to be quoted on the NASDAQ National Market on May 13, 1998.  
Trading, if any, in the Company's Common Stock may now be conducted in the 
over-the-counter market through the so-called "pink sheets" published by the 
National Quotation Bureau or the OTC Bulletin Board of the National 
Association of Securities Dealers, Inc.  As a consequence of the delisting 
from the NASDAQ National Market, a shareholder will find it more difficult or 
impossible to sell, or to obtain quotations as to prices of, the Company's 
Common Stock.

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

     None.

                                       PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The directors of the Company and their ages and positions are as follows:

      NAME                    AGE     PRESENT POSITION WITH THE COMPANY
      Charles F. Wonderlic    59   Chairman, Chief Executive Officer and
                                   Director
      Ronald B. Clonts        65   Vice Chairman and Director
      E. Bruce Fredrikson     60   Director
      Robert H. Arnold        54   Director
      Walter J. O'Brien       63   Director
      Robert L.  Jooss        58   Director
      Richard E. Wonderlic    32   Executive Vice President and Director

DIRECTOR BIOGRAPHICAL DATA

     The principal occupation of each director, other directorships, his or 
her employment history and other relevant information are set forth below.

     CHARLES F. WONDERLIC has been the Chief Executive Officer of the Company 
since 1980 and Chairman since 1984.  He has served the Company in various 
capacities since 1962, including President, Chief Financial Officer, Vice 
President and Treasurer.  He was named a Director in 1962.  Prior to joining 
the Company, he was employed by General Finance Loan Company.  Mr. Wonderlic 
currently is a member of the Executive Committee of the American Financial 
Services Association and Chairman of its Auto Finance Division.  Mr. 
Wonderlic received his M.B.A. degree from Northwestern University, Evanston, 
Illinois.


     RONALD B. CLONTS was named Vice Chairman of the Company in July 1996 and 
has served in various capacities since 1962 including President, Executive 
Vice President and Vice President.  He has been a Director of the Company 
since 1994. He was previously employed by General Finance Loan Company.  Mr. 
Clonts received his degree from Northwestern University, Evanston, Illinois.  
Mr. Clonts is the brother-in-law of Charles F. Wonderlic.

                                       38

<PAGE>

     RICHARD E. WONDERLIC formally joined the Company in May 1988 following 
graduation from the University of Iowa and was named as a Director of the 
Company in 1994.  The son of Charles F. Wonderlic, he became the Executive 
Vice President of the Company in April 1994.  Mr. Wonderlic supervises the 
Company's operations serviced from its Gurnee, Illinois location.  Mr. 
Wonderlic has served in various Company locations as Assistant Supervisor, 
Manager and Vice President and was instrumental in the development of the 
Company's automobile finance program.

     ROBERT JOOSS became a physician in 1967, and served in the United States 
Navy for six years as a general medical officer and anesthesiologist.  
Following his honorable discharge as a Lieutenant Commander in 1974, he 
became a partner in Suburban Anesthesiologists, SC of LaGrange, Illinois.  
Dr. Jooss is a member of several professional medical societies, including 
the American Medical Association, American Society of Anesthesiologists and 
the Illinois Medical Society.  Throughout his career he has been active in 
several civic and professional organizations, including service on the Audit 
Committee for LaGrange Memorial Hospital.  Mr. Jooss received his M.D. from 
the University of Wisconsin, Madison, Wisconsin.  

     ROBERT H. ARNOLD was named as a Director of the Company in 1994.  Mr. 
Arnold is President of R.H. Arnold & Co., Inc. ("Arnold & Co."), a New York 
investment banking firm he founded in 1989, and the brother-in-law of Charles 
F. Wonderlic.  Arnold & Co. specializes in providing financial advisory 
services on corporate mergers, acquisitions, divestitures and restructuring, 
and in assisting emerging and medium-sized companies in the private placement 
of equity and debt securities.  Prior to forming Arnold & Co., Mr. Arnold was 
Executive Vice President of Cambrian Capital Corporation, an investment 
banking firm he co-founded in 1987.  Before establishing Cambrian Capital, 
Mr. Arnold held various positions at Merrill Lynch & Co. in its Capital 
Markets Group, in both the investment banking and the institutional sales 
areas, and at the senior corporate level, including Treasurer of Merrill 
Lynch & Co.  Mr. Arnold received his B.S., M.S. and Ph.D. degrees from 
Northwestern University, Evanston, Illinois, with majors in finance and 
accounting.  Mr. Arnold serves as a trustee of the Kiewit Mutual Funds and is 
a director of the Phoenix Four Inc. investment fund.  Mr. Arnold is also an 
independent general partner of Fiduciary Capital Partners, L.P. and Fiduciary 
Capital Pension Partners, L.P.

     WALTER J. O'BRIEN was named a Director of the Company in 1994.  Mr. 
O'Brien has been President of the National Advertising Review Council, Inc., 
an organization established for the voluntary self regulation of national 
advertising since 1995.  He previously served (1994-1995) as Chief Operating 
Officer of OO Management Partners, Inc., a management consulting firm focused 
on brand development.  Previously he served as Executive Client Service 
Director for Ogilvy & Mather Advertising (1992-1994) and has held executive 
positions involving advertising management and strategic consulting with The 
Promotion Network, Inc. (1990-1991), Hill Holiday Advertising (1988-1989) and 
O'Reilly O'Brien Clow/RSCG (1987-1988).  Prior to that, he served as Vice 
Chairman of the Board of Directors of J. Walter Thompson, where he was a 
member of the Worldwide Operating Committee following service as President 
and Chief Operating Officer of J. Walter Thompson/USA.  Mr. O'Brien is a 
graduate of Marquette University, Milwaukee, Wisconsin.

     E. BRUCE FREDRIKSON was appointed as Director of the Company on March 4, 
1997.  Dr. Fredrikson is a Professor of Finance at Syracuse University's 
School of Management.  He has taught finance at Syracuse since 1966 and has 
previously served as chairman of the Finance Department.  Dr. Fredrikson 
earned an A.B. in economics degree from Princeton University and MBA and 
Ph.D. degrees from Columbia University.  He is an Independent General Partner 
of both Fiduciary Capital Partners, L.P. and Fiduciary Capital Pension 
Partners, L.P.  He is a director of Innodata Corporation, a global electronic 
publishing services company; and of Track Data Corp., which provides 
real-time financial market data and analytic services.  

BOARD COMMITTEES AND MEETINGS

     The Board of Directors of the Company has established an Executive and 
Strategic Planning Committee.  The members of the Executive and Strategic 
Planning Committee are Charles F. Wonderlic, Walter J. O'Brien, E. Bruce 
Fredrikson and Robert H. Arnold.  The Executive and Strategic Planning 
Committee did not meet in 1997 as all actions were taken at Board meetings.  
The Executive and Strategic Planning Committee is authorized, except as 
otherwise set forth in the authorizing Board resolutions, to exercise all of 
the authority of the Board of Directors that may be delegated to a committee 
of the Board under the General Corporation Law of the State of Delaware (the


                                       39

<PAGE>


"DGCL").  Pursuant to the DGCL, committees of a board of directors are denied 
the authority to authorize dividends and other distributions (unless the 
Board of Directors expressly provides otherwise), to amend, adopt or repeal 
charter or bylaw provisions, to adopt an agreement of merger or consolidation 
or to recommend to stockholders (i) the sale, lease or exchange of all or 
substantially all of the corporation's assets or (ii) a dissolution of the 
corporation.  The term "all or substantially all of the corporation's assets" 
has not been interpreted under Sections 141(c) and 271 of the DGCL to 
represent a specific quantitative test.  As a consequence, there can be no 
assurance as to how a court would interpret the phrase under Delaware law.  
The purpose of the Executive and Strategic Planning Committee is to 
facilitate management decisions between regular Board meetings that would 
otherwise require action by the full Board.

     The Board of Directors also has established a Compensation Committee.  
The members of the Compensation Committee are Walter J. O'Brien, Robert H. 
Arnold and Robert J. Jooss.  The Compensation Committee met twice in 1997.  
The Compensation Committee is responsible, to the extent provided in the 
authorizing Board resolutions or in the Company's bylaws, for establishing 
the compensation, benefits and perquisites for the executive officers, 
directors and other employees of the Company.  The members of the 
Compensation Committee also administer the Eagle Finance Corp. 1994 Stock 
Incentive Plan (the "Stock Incentive Plan") and the 1996 Director Stock 
Incentive Plan (the "1996 Director Plan")

     The Board of Directors also has established an Audit Committee.  The 
members of the Audit Committee are E. Bruce Fredrikson, Robert H. Arnold and 
Robert J. Jooss.  The Audit Committee held four meetings in 1997.  The Audit 
Committee is responsible, to the extent provided in the authorizing Board 
resolutions or in the Company's bylaws, for retaining the independent auditor 
for the Company and for reviewing with such auditor the Company's financial 
statements, audit reports, internal financial controls and internal audit 
procedures, and for making recommendations with respect to those matters to 
the Board of Directors.

     The Board of Directors of the Company held five meetings during 1997. 
During their terms of office in 1997, all of the directors attended at least 
75% of the Board of Directors meetings and meetings for committees on which 
they served.

COMPENSATION OF DIRECTORS

     The Company pays its non-employee directors an annual fee in the form of 
an award of options to purchase 2,500 shares of Common Stock under the Stock 
Incentive Plan.  Subject to certain conditions, the awards vest over a 
three-year period or upon termination of service as a director.  In addition, 
the non-employee directors receive compensation for services performed in the 
amount of $1,000 per Board or Committee meeting attended.  The Company 
reimburses each Director for out-of-pocket expenses incurred in attending 
meetings of the Board of Directors or any of its committee meetings are 
reimbursed.  

EXECUTIVE OFFICERS

     The executive officers of the Company and their ages and positions are 
as follows:

<TABLE>
<CAPTION>

      NAME                     AGE  POSITION WITH THE COMPANY
     --------------------      ---  -------------------------
   <S>                         <C>   <C>
   Charles F. Wonderlic         59   Chairman, Chief Executive Officer and
                                     Director
   Ronald B. Clonts             65   Vice Chairman and Director
   Robert J. Braasch            51   President and Chief Financial Officer      
   Samuel M. Keith              51   Chief Operating Officer
   Richard E. Wonderlic         32   Exec. Vice President and Director
</TABLE>

     ROBERT J. BRAASCH joined the Company in January 1994 as Chief Financial 
Officer and Treasurer and was named Senior Vice President in April 1994.  He 
was elected President of the Corporation in 1996.  Prior to joining the 
Company, Mr. Braasch spent seven years with USA Financial Services, Inc. as 
Chief Financial Officer and subsequently Chief Executive Officer.  In the 
preceding twelve years he held various positions with Household Finance 
Corporation including six years as Treasurer.  Mr. Braasch graduated from 
DePaul University, Chicago, Illinois.

                                       40
<PAGE>

     SAMUEL M. KEITH joined the Company in September 1996 as Chief Operating
Officer.  Prior to joining the Company, Mr. Keith spent 24 years with General
Electric Credit Corporation.  Mr. Keith held management positions in the sales
and marketing, credit administration, customer service, operations and
collection functions.  Mr. Keith graduated from the University of Mississippi,
Oxford, Mississippi.

     Biographies for Messrs. Charles F. Wonderlic, Ronald B. Clonts and Richard
E. Wonderlic are located above under "Director Biographical Data."

ITEM 11.  EXECUTIVE COMPENSATION
                                           
     The following table sets forth information concerning the compensation paid
or granted to the Company's Chairman and Chief Executive Officer and to each of
the other executive officers of the Company during 1997, 1996 and 1995.

<TABLE>
<CAPTION>
                                                     SUMMARY COMPENSATION TABLE
----------------------------------------------------------------------------------------------------------------------------------
                                                                                                     LONG TERM
                                                          ANNUAL COMPENSATION                      COMPENSATION
                                                                                                      AWARDS
----------------------------------------------------------------------------------------------------------------------------------
<S>                          <C>          <C>            <C>           <C>                      <C>               <C>
                (a)                (b)          (c)               (d)               (e)                 (f)               (g)
                                                                                                    SECURITIES         ALL OTHER
 NAME AND                                                                      OTHER ANNUAL         UNDERLYING        COMPENSATION
 PRINCIPAL POSITION               YEAR       SALARY($)         BONUS($)     COMPENSATION($)(1)      OPTIONS(#)            ($)
----------------------------------------------------------------------------------------------------------------------------------
 Charles F. Wonderlic, Chairman   1997       $ 165,006      $         ---        $     ---            60,000              ---
 and Chief Executive Officer      1996       $ 161,830                ---        $   4,500            40,000              ---
                                  1995       $ 154,214                ---        $   5,250            40,000
----------------------------------------------------------------------------------------------------------------------------------
 Ronald B. Clonts, Vice Chairman  1997        $  77,409     $          ---       $    ---             45,000              ---
                                  1996        $ 134,860(2)             ---       $    4,046           30,000              ---
                                  1995        $ 128,512                ---       $    6,369           30,000
----------------------------------------------------------------------------------------------------------------------------------
 Robert J. Braasch, President,    1997        $ 150,010     $          ---       $    ---             45,000              ---
 Chief Financial Officer and      1996        $ 130,966(3)             ---       $    3,929           30,000              ---
 Treasurer                        1995        $ 102,810                ---       $    4,485           30,000
----------------------------------------------------------------------------------------------------------------------------------
 Richard E. Wonderlic, Executive  1997        $  90,002     $          ---       $    ---             24,000              ---
 Vice President                   1996        $  81,545                ---       $    2,446           16,000              ---
                                  1995        $  61,547                ---       $    4,495           16,000
----------------------------------------------------------------------------------------------------------------------------------
 Samuel M. Keith, Chief Operating 1997        $ 121,723     $          ---       $    ---             15,000              ---
 Officer                          1996        $  45,244(4)             ---            ---             20,000              ---

</TABLE>
--------------------------------

(1)  Represents contributions made by its Company to the qualified, tax-exempt
     retirement plan it had adopted (the "401(k) Plan") that qualified under
     Section 401(k) of the Internal Revenue Code of 1986, as amended (the
     "Code").  The 401(k) Plan was terminated as of June 30, 1997.  Does not
     include the cost to the Company of certain benefits, the aggregate of which
     did not exceed, for each executive officer, 10% of his annual salary and
     bonus.

(2)  Mr. Clonts was named Vice Chairman, effective July 1, 1996, having
     previously served as President.

(3)  Mr. Braasch was named to the additional position of President, effective
     July 1, 1996.

(4)  Mr. Keith joined the Company on August 19, 1996 and was named Chief
     Operating Officer effective September 1, 1996.

     The following tables set forth certain information concerning the number
and value of stock options at December 31, 1997 held by the executive officers
reflected in the Summary Compensation 

                                       41
<PAGE>

Table.  Although the Stock Incentive Plan
also provides for the grant of stock appreciation rights and restricted stock,
as of December 31, 1997, only stock options had been granted under the Stock
Incentive Plan.

<TABLE>
<CAPTION>
                                            AGGREGATED OPTION GRANTS IN LAST FISCAL YEAR
----------------------------------------------------------------------------------------------------------------------------------
                                                                                                       POTENTIAL REALIZABLE VALUE
                                                                                                        AT ASSUMED ANNUAL RATES
                                                                                                      OF STOCK PRICE APPRECIATION
                                                                                                           FOR OPTION TERM(f)
                                                                                                ----------------------------------
                                              PERCENT OF TOTAL                                                       
                                OPTIONS        OPTIONS GRANTED      EXERCISE                                         
                                GRANTED         TO EMPLOYEES          PRICE          EXPIRATION                      
            NAME                  (#)          IN FISCAL YEAR       ($/SHARE)           DATE                         
            (a)                   (b)                (c)               (d)              (e)              5% ($)          10% ($)
<S>                       <C>                <C>               <C>           <C>                   <C>              <C>
----------------------------------------------------------------------------------------------------------------------------------
 Charles F. Wonderlic            60,000            19.23%             $2.20       August 18, 2002       $36,469          $80,587

----------------------------------------------------------------------------------------------------------------------------------
 Ronald B. Clonts                45,000            14.43%             $2.20       August 18, 2002       $27,352          $60,440

----------------------------------------------------------------------------------------------------------------------------------
 Robert J. Braasch               45,000            14.43%             $2.00       August 18, 2006       $56,268         $141,508

----------------------------------------------------------------------------------------------------------------------------------
 Richard E. Wonderlic            24,000             7.69%             $2.20       August 18, 2002       $14,588          $32,235
----------------------------------------------------------------------------------------------------------------------------------
 Samuel M. Keith                 15,000             4.81%             $2.00       August 18, 2007       $18,756          $47,169

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

</TABLE>


<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
                                                                  
                                    AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
                                                FISCAL YEAR-END OPTION VALUES

----------------------------------------------------------------------------------------------------------------------------------
                                                                      NUMBER OF SECURITIES              VALUE OF UNEXERCISED
                                                                    UNDERLYING UNEXERCISED              IN-THE-MONEY OPTIONS
                                                                 OPTIONS AT FISCAL YEAR-END (#)         AT FISCAL YEAR-END ($)
                                                                              (d)                                (e)
                                                               -------------------------------------------------------------------
                                SHARES                                                                             
                             ACQUIRED ON          VALUE                                                            
                               EXERCISE          REALIZED                                                          
           NAME                  (#)                ($)                                                            
            (a)                  (b)                (c)           EXERCISABLE     UNEXERCISABLE      EXERCISABLE     UNEXERCISABLE
----------------------------------------------------------------------------------------------------------------------------------
<S>                       <C>               <C>                <C>             <C>               <C>              <C>
 Charles F. Wonderlic            ---                ---               --             60,000              ---              ---
----------------------------------------------------------------------------------------------------------------------------------
 Ronald B. Clonts                ---                ---               --             45,000              ---              ---
----------------------------------------------------------------------------------------------------------------------------------
 Robert J. Braasch               ---                ---               --             45,000              ---              ---
----------------------------------------------------------------------------------------------------------------------------------
 Richard E. Wonderlic            ---                ---               --             24,000              ---              ---
----------------------------------------------------------------------------------------------------------------------------------
 Samuel M. Keith                 ---                ---               --             15,000              ---              ---
----------------------------------------------------------------------------------------------------------------------------------

</TABLE>

                                                   42
<PAGE>


EMPLOYMENT AGREEMENTS 

     
The Company has entered into employment agreements with Charles F. Wonderlic,
Ronald B. Clonts and Robert J. Braasch (the "Executives").  The agreements are
intended to secure the continuing employment of the Executives.  The employment
agreements generally are identical except for differences in the cash
compensation and incentive payments of the Executives and the fact that Messrs.
Wonderlic's and Clonts' agreements permit them to be employed by, and to devote
an unspecified amount of time to, certain Commonly Controlled Companies (as
defined below).  Messrs. Wonderlic and Clonts have each indicated, however, that
they regard their duties to the Company as primary and expect to devote as much
time as is required to fulfill the obligations of their respective offices with
the Company.

     The employment agreements provide for:  (i) an initial annual base salary
for 1994 equal to $150,000, $125,000 and $100,000 for Messrs. Wonderlic, Clonts
and Braasch, respectively (which salaries were prorated during 1994), which may
be increased but not decreased unless amended; and (ii) eligibility for Company
sponsored employee benefits.  Mr. Clonts and the Company mutually agreed to
amend his employment agreement to provide an annual base salary of $50,000 in
1998.  Messrs. Wonderlic and Clonts are entitled to an additional bonus amount
provided the Company reaches specific after-tax goals.  No bonuses were paid
during 1997 or 1996.  The employment agreements have an initial one-year term,
with one-year extensions thereafter unless any employment agreement is
terminated, amended, or the Company or an Executive has provided a notice of
non-renewal at least 180 days prior to the anniversary thereof.  Each employment
agreement will terminate upon the Executive's death or disability.  The Company
is obligated to pay or provide to the Executive continued salary and benefits
until the earlier of the expiration of the term of the agreement or the
Executive's termination for "cause," which is defined to include, without
limitation, the death or permanent disability of the Executive, a material
violation by the Executive of any applicable material law or regulation with
respect to the Company's business, the conviction of the Executive of a felony,
and the willful or negligent failure of the Executive to perform his duties
under the employment agreement.

     In the event of termination of an Executive's employment following a
"change in control" of the Company, as defined under the employment agreement,
either by the Company, or its successor, during the remaining term of the
employment agreement or by the Executive within one year following the change in
control, the Company, or its successor, is obligated to make a lump sum payment
equal to three times the sum of:  (i) his current annual base salary; (ii) the
value of bonus or incentive payments that the Executive would have received had
he remained employed; and (iii) the value of the contributions that would have
been made or credited by the Company under all retirement plans for the benefit
of the Executive.  The lump sum payment is subject to reduction in order to
avoid such payment being treated as a nondeductible, taxable "golden parachute"
payment under Section 280G of the Code.  In addition, the Company successor must
continue insurance benefits for the Executive for three years following such
termination.

     The employment agreements include a covenant which will limit the ability
of each Executive to compete with the Company, except for services performed for
affiliates, for a period of one year following the termination of such
individual's employment with the Company.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock at April 1, 1998 by each
person known by the Company to be the beneficial owner of more than 5% of the
outstanding Common Stock, by each director or nominee, by each executive officer
named in the Summary Compensation Table, and by all directors and executive
officers of the Company as a group.  


                                       43

<PAGE>

<TABLE>
<CAPTION>


                                          SHARES BENEFICIALLY        PERCENT
 BENEFICIAL OWNER                             OWNED(1)(2)          OF CLASS(3) 
<S>                                     <C>                     <C> 

 Charles F. Wonderlic(4)                        884,584              20.919%
 2029 E. Lake Shore Drive
 Twin Lakes, WI  53181

 Ronald B. Clonts(5)                            674,582              15.953%
 2014 West Burr Oak Drive
 Glenview, IL 60025

 Charles F. Wonderlic, Jr.(6)                   323,708               7.655%
 34241 Horse Shoe Lane
 Gurnee, IL 60031


 Richard E. Wonderlic(7)                        315,708               7.466%
 4750 North Kingsway
 Gurnee, IL 60031

 Robert J. Braasch(8)                            10,900                 *


 Robert H. Arnold(9)                             19,400                 *

 Walter J. O'Brien(10)                           18,500                 *


 E. Bruce Fredrikson                              1,700                 *

 Robert L. Jooss(11)                                  2,700                 *


 Samuel M. Keith                                  1,100                 *


 All directors and executive officers         2,252,882              52.774%
 as a group (ten persons) (12)

</TABLE>

______________________

*   Less than 1%

(1)  The nature of beneficial ownership for shares shown in this column is sole
     voting and investment power, except as set forth in the footnotes below. 
     Inclusion of shares shall not constitute an admission of beneficial
     ownership or voting and investment power over such shares.

(2)  Includes shares held directly and shares which beneficial owners may
     acquire on or before March 31, 1998 pursuant to the exercise of stock
     options; as well as shares held in retirement accounts in a fiduciary
     capacity or by certain family members.

(3)  Based upon 4,228,690 shares outstanding plus, with respect to each
     beneficial owner, the shares which such beneficial owner has the right to
     acquire on or before March 31, 1998 pursuant to the exercise of stock
     options.

(4)  Includes 265,417 shares held of record by The Charles F. Wonderlic
     Declaration of Trust dated May 10, 1991, 100,000 shares held in Mr.
     Wonderlic's IRA and 519,167 shares held of record by The Mary Lyn Wonderlic
     Declaration of Trust dated May 10, 1991.  Mary Lyn Wonderlic is the wife of
     Charles F. Wonderlic.

(5)  All such shares are held of record by The Ronald B. and Sally A. Clonts
     Trust dated October 11, 1997, with respect to which shares Ronald B.
     Clonts, as Co-Trustee, shares voting and investment power with his wife and
     Co-Trustee, Sally Clonts.

                                         44
<PAGE>

(6)  Includes 307,708 shares held of record by The Charles F. Wonderlic, Jr.
     Declaration of Trust dated May 10, 1991, 13,000 shares held in a 401(k)
     Plan and 3,000 shares held as custodian for his children.  Mr. Wonderlic
     disclaims beneficial interest in shares held as custodian for his children.

(7)  Includes 307,708 shares held of record by The Richard E. Wonderlic
     Declaration of Trust dated May 10, 1991, 6,000 shares held through Mr.
     Wonderlic's IRA and 2,000 shares held as custodian for his son.  Mr.
     Wonderlic disclaims beneficial interest in shares held as custodian for his
     son.

(8)  Includes 9,100 shares held of record by Mr. Braasch's IRA, and 1,500 shares
     held jointly with Mr. Braasch's wife, of which Mr. Braasch has shared
     voting and investment power.  Also includes 200 shares held as custodian
     for his son and 100 shares held by Mr. Braasch's wife.  Mr. Braasch
     disclaims beneficial interest in shares held as custodian for his son and
     by his wife.

(9)  Includes 1,000 shares held of record by Robert H. Arnold's wife.  Mr.
     Arnold disclaims beneficial interest in such shares.

(10) Includes 100 shares held of record by Walter J. O'Brien's wife.  Walter J.
     O'Brien disclaims beneficial interest in such shares.

(11) Includes 1,000 shares of record held by Mr. Jooss's IRA.
     
(12) Includes 40,200 shares which may be acquired on or before May 31, 1998
     pursuant to the exercise of stock options.


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

GENERAL

     The Company has entered into a number of transactions with certain
companies and partnerships in which Charles F. Wonderlic or Ronald B. Clonts or
members of their immediate families own a direct or indirect controlling
interest (any or all of such companies and partnerships are referred to herein
as the "Commonly Controlled Companies").  The Company has generally sought to
treat each transaction with a Commonly Controlled Company as an arms-length
transaction.  The Company has adopted a formal policy requiring all transactions
with its principal stockholders, executive officers and directors, or their
affiliates (including the Commonly Controlled Companies), to be on terms no less
favorable to the Company than could be obtained from unrelated parties, and any
material transactions with its affiliates (including the Commonly Controlled
Companies) that are outside the ordinary course of business to be presented for
the approval of the Company's disinterested directors.

     The Company leases furniture and computer equipment from a Commonly
Controlled Company, Wonderlic Personnel Test, Inc. ("WPT"), pursuant to a Master
Lease Agreement.  Payments under that agreement (and any related predecessor
agreements) were approximately $1.1 million during 1997, and are believed by the
Company to be no less favorable than could have been obtained from unrelated
parties in comparable transactions.  The primary reason for these transactions
is that leased assets, as opposed to owned assets, do not reduce the borrowing
base under the Company's revolving credit facility.  In 1997, the Company paid
approximately $57,000 to WPT for the development of a proprietary credit scoring
model.  Management believes that the cost to the Company of these services was
no less favorable than the Company could have obtained from unrelated parties in
comparable transactions.

SUBORDINATED DEBENTURES AND OTHER DEBT

     Charles F. Wonderlic and Ronald B. Clonts, members of their families and
certain of the Commonly Controlled Companies have from time to time made loans
to the Company evidenced by subordinated notes.  At December 31, 1997, the
approximate outstanding principal amount of such subordinated notes in which
such persons or members of their families had a direct or indirect pecuniary
interest was $682,560.  Such subordinated notes 


                                   45

<PAGE>

currently bear interest at various rates between 10% and 11% and mature at 
various times through June 2005, although they are callable.

     The Company had an outstanding debt obligation to Prominent Mortgage 
Corp., a Commonly Controlled Company, in the amount of $36,612 on at 
December 31, 1997. This debt is governed by a Master Note Agreement, as 
amended, between Prominent Mortgage Corp. and the Company (the "Master Note 
Agreement").  The Master Note Agreement provides that advances made from time
to time by Prominent Mortgage Corp. to the Company are to be evidenced by a 
promissory note with a term not to exceed nine months.  Borrowed amounts are 
generally payable on demand and may be prepaid without penalty.  Interest is 
generally set at slightly below the prime rate prevailing at the time of 
advances thereunder.

INTERCOMPANY SERVICES AGREEMENT

     The Company and certain Commonly Controlled Companies (the "Services
Agreement Companies") are parties to an Intercompany Services Agreement, as
amended (the "Services Agreement"), which provides that the Company will render
specified services to the Services Agreement Companies, including services
relating to accounting, information systems, technical support, insurance
management, payroll and tax return preparation.  The Services Agreement
Companies pay a monthly fee to the Company which is approximately equivalent to
the Company's cost of rendering such services and is calculated based on: (i) a
percentage of the monthly salary of certain Company employees; (ii) a fee for
any tax return prepared and filed by the Company on behalf of the Services
Agreement Companies during the preceding month; and (iii) an additional amount
equal to the allocable share of fees for professional services and insurance
premiums and deductibles paid by the Company during the preceding month, less
the Company's share of any such fees paid by the Services Agreement Companies
during the preceding month.  The Services Agreement continues until terminated
by the Company or the Services Agreement Companies upon 30 days prior written
notice.  For the year ended December 31, 1997, the Company was paid
approximately $82,600 under the Services Agreement.

     The following Commonly Controlled Companies are parties to the Services
Agreement and comprise the Services Agreement Companies: Upland Farms; WPT;
Wonderlic Companies, Inc.; Richmond Bancorp, Inc.: Richmond Financial Services,
Inc.; Richmond Bank; Richmond Hunt Club, Inc. and Prominent Mortgage Corp.


                                           
                                     PART IV

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

                                                                            PAGE
(a)  1.   Financial Statements:                                                 

          Report of Independent Public Accountants                           18 

          Balance Sheets-                                                    19 
          As of December 31, 1997 and 1996

          Statements of Income-                                              20 
          For the Years Ended December 31, 1997, 1996 and 1995

          Statements of Changes in Stockholders' Equity-                     21 
          For the Years Ended December 31, 1997, 1996 and 1995

          Statements of Cash Flows-                                          22 
          For the Years Ended December 31, 1997, 1996 and 1995                  

          Notes to the Financial Statements                                  23 


                                          46

<PAGE>

     2.   The following financial schedules for the years 1997, 1996 and 1995
               are submitted herewith:  

          None.

     3.   Exhibits.

     The following list sets forth the exhibits to this Form 10-K as required by
Item 601 of Regulation S-K.  Certain exhibits are filed herewith, while the
remaining exhibits are hereby incorporated by reference to documents previously
filed with the Securities and Exchange Commission.  Exhibits hereto incorporated
by reference to such other filed documents are indicated by an asterisk (*).  


    EXHIBIT   
     NO.                                 DESCRIPTION                           

     3.1*     Restated Certificate of Incorporation of the Company

     3.2*     Restated Bylaws of the Company

     4.1*     Form of certificate evidencing Common Stock of the Company

     4.2*     Indenture dated as of April 15, 1995 between the Company and
              LaSalle National Bank, as Trustee

     4.3*     First Supplemental Indenture dated as of April 28, 1995 between
              the Company and LaSalle National Bank, as Trustee, including form
              of note

    10.1*     Lease Agreements dated June 1, 1993 between Upland Farms and
              Wonderlic & Associates, Inc.

    10.2*     Intercompany Services Agreement dated as of January 1, 1994

    10.3*     Tax Indemnification Agreement

    10.4*     Servicing Agreement dated February 26, 1993 between Wonderlic &
              Associates, Inc. and General Electric Capital Corporation

    10.5*     Amendment No. 1 to Servicing Agreement dated March 22, 1993
              between Wonderlic & Associates, Inc. and General Electric Capital
              Corporation

    10.6*     Interest Rate Protection Agreement dated July 1, 1992 between the
              Company and Harris Trust and Savings Bank

    10.7*     Eagle Finance Corp. 1994 Stock Incentive Plan

    10.8*     Form of Stock Option Agreement

    10.9*     Form of Employment Agreement of Charles F. Wonderlic

    10.10*    Form of Employment Agreement of Ronald B. Clonts

    10.10(a)* Amendment to Employment Agreement of Ronald B. Clonts, dated
              January 1, 1997.

    10.11*    Form of Employment Agreement of Robert J. Braasch

    10.12*    Form of Indemnification Agreement

    10.13*    Computer System Lease dated July 31, 1993 between Wonderlic
              Personnel Test, Inc. and Wonderlic & Associates, Inc.

    10.14*    Master Note Agreement dated as of January 1, 1994 between
              Wonderlic & Associates, Inc. and Prominent Mortgage Corp.


                                     47

<PAGE>

    EXHIBIT   
     NO.                                 DESCRIPTION                           

    10.15*    First Amendment to Master Note Agreement dated as of August 1,
              1994 between Eagle Finance Corp. and Prominent Mortgage Corp.

    10.16*    Form of Debenture Agreement

    10.17*    Form of Subordinated Debentures

    10.18*    Form of Subordinated Notes

    10.19*    Form of Dealer Agreement

    10.20*    Form of Company Credit Application

    10.21*    Asset Purchase Agreement dated as of September 27, 1994 between
              General Electric Capital Corporation and Eagle Finance Corp.

    10.22*    Amendment No. 1 to Asset Purchase Agreement, dated as of March
              31, 1995, between General Electric Capital Corporation and Eagle
              Finance Corp.

    10.23*    Form of Master Lease Agreement

    10.24*    Assignment and Assumption Agreement dated as of August 1, 1994
              between Wonderlic Personnel Test, Inc. and Eagle Finance Corp.

    10.25*    Asset Purchase Agreement dated as of June 25, 1996 between
              General Electric Capital Corporation and Eagle Finance Corp.

    10.26*    Amended and Restated Servicing Agreement dated as of June 25,
              1996 between General Electric Capital Corporation and Eagle
              Finance Corp.

    10.27*    Pooling and Servicing Agreement dated as of September 1, 1996
              among Eagle Auto Funding Corp., Eagle Finance Corp. and Harris
              Trust and Savings Bank

    10.28*    Loan Sale and Contribution Agreement dated as of September 1,
              1996 between Eagle Finance Corp. and Eagle Auto Funding Corp.

    10.29*    Waiver Letter from General Electric Capital Corporation dated
              March 26, 1997

    10.30*    Waiver Letter from General Electric Capital Corporation dated
              January 29, 1998

      11      Statement Regarding Computation of Net Earnings Per Share. 

      12      Statement Regarding Computation of Ratio of Earnings to Fixed
              Charges. 

      23      Consent of KPMG Peat Marwick LLP.

      27      Financial Data Schedule. 


(b)  The Company did not file any Current Report on Form 8-K during the fourth
     quarter of 1997.

(c)  Exhibits - those exhibits listed above without an asterisk are filed
     herewith.

(d)  There are no financial statement schedules required by Regulation S-X that
     are excluded from the Financial Statements included under Item 8 or this
     report.


                                         48


<PAGE>

                                      SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on June 16, 1998.

                              EAGLE FINANCE CORP.


                              By:  CHARLES F. WONDERLIC    
                                  -------------------------------------
                                   Charles F. Wonderlic 
                                   Chairman and Chief Executive Officer




                                       49

<PAGE>


                                   EXHIBIT INDEX


 Exhibit   
   No.                                  Description

3.1        Restated Certificate of Incorporation of the Company (incorporated
           by reference to Exhibit No. 3.1 to Registration Statement on Form S-
           1, File No. 33-77828)

3.2        Restated Bylaws of the Company (incorporated by reference to Exhibit
           No. 3.2 to Registration Statement on Form S-1, File No. 33-77828)

4.1        Form of certificate evidencing Common Stock of the Company
           (incorporated by reference to Exhibit No. 4.1 to Registration
           Statement on Form S-1, File No. 33-77828)

4.2        Indenture dated as of April 15, 1995 between the Company and LaSalle
           National Bank, as Trustee (incorporated by reference to Exhibit No.
           2 to Current Report on Form 8-K, dated May 5, 1995)

4.3        First Supplemental Indenture dated as of April 28, 1995 between the
           Company and LaSalle National Bank, as Trustee, including form of
           note (incorporated by reference to Exhibit No. 3 to Current Report
           on Form 8-K, dated May 5, 1995)

10.1       Lease Agreements dated June 1, 1993 between Upland Farms and
           Wonderlic & Associates, Inc. (incorporated by reference to Exhibit
           No. 10.1 to Registration Statement on Form S-1, File No. 33-77828)

10.2       Intercompany Services Agreement dated as of January 1, 1994
           (incorporated by reference to Exhibit No. 10.2 to Registration
           Statement on Form S-1, File No. 33-77828)

10.3       Tax Indemnification Agreement (incorporated by reference to Exhibit
           No. 10.3 to Registration Statement on Form S-1, File No. 33-77828)

10.4       Servicing Agreement dated February 26, 1993 between Wonderlic &
           Associates, Inc. and General Electric Capital Corporation
           (incorporated by reference to Exhibit No. 10.4 to Registration
           Statement on Form S-1, File No. 33-77828)

10.5       Amendment No. 1 to Servicing Agreement dated March 22, 1993 between
           Wonderlic & Associates, Inc. and General Electric Capital
           Corporation (incorporated by reference to Exhibit No. 10.5 to
           Registration Statement on Form S-1, File No. 33-77828)

10.6       Interest Rate Protection Agreement dated July 1, 1992 between the
           Company and Harris Trust and Savings Bank (incorporated by reference
           to Exhibit No. 10.11 to Registration Statement on Form S-1, File No.
           33-77828)

10.7       Eagle Finance Corp. 1994 Stock Incentive Plan (incorporated by
           reference to Exhibit No. 10.12 to Registration Statement on Form S-
           1, File No. 33-77828)

10.8       Form of Stock Option Agreement (incorporated by reference to Exhibit
           No. 4.4 to Registration Statement on Form S-8, File No. 33-89132)

10.9       Form of Employment Agreement of Charles F. Wonderlic (incorporated
           by reference to Exhibit No. 10.13 to Registration Statement on Form
           S-1, File No. 33-77828)

10.10      Form of Employment Agreement of Ronald B. Clonts (incorporated by
           reference to Exhibit No. 10.14 to Registration Statement on Form S-
           1, File No. 33-77828)


10.10(a)   Amendment to Employment Agreement of Ronald B. Clonts, dated January
           1, 1997 (incorporated by reference to Exhibit No. 10.11(a) to Form
           10-K for the 


                                              50


<PAGE>


           Year Ended December 31, 1996)

10.11      Form of Employment Agreement of Robert J. Braasch (incorporated by
           reference to Exhibit No. 10.15 to Registration Statement on Form S-
           1, File No. 33-77828)    

10.12      Form of Indemnification Agreement (incorporated by reference to
           Exhibit No. 10.16 to Registration Statement on Form S-1, File No.
           33-77828)

10.13      Computer System Lease dated July 31, 1993 between Wonderlic
           Personnel Test, Inc. and Wonderlic & Associates, Inc. (incorporated
           by reference to Exhibit No. 10.17 to Registration Statement on Form
           S-1, File No. 33-77828)

10.14      Master Note Agreement dated as of January 1, 1994 between Wonderlic
           & Associates, Inc. and Prominent Mortgage Corp. (incorporated by
           reference to Exhibit No. 10.18 to Registration Statement on Form S-
           1, File No. 33-77828)

10.15      First Amendment to Master Note Agreement dated as of August 1, 1994
           between Eagle Finance Corp. and Prominent Mortgage Corp.
           (incorporated by reference to Exhibit No. 10.18(a) to the Quarterly
           Report on Form 10-Q for the Quarterly Period Ended September 30,
           1994)

10.16      Form of Debenture Agreement (incorporated by reference to Exhibit
           No. 10.19 to Registration Statement on Form S-1, File No. 33-77828)

10.17      Form of Subordinated Debentures (incorporated by reference to
           Exhibit No. 10.20 to Registration Statement on Form S-1, File No.
           33-77828)

10.18      Form of Subordinated Notes (incorporated by reference to Exhibit No.
           10.21 to Registration Statement on Form S-1, File No. 33-77828)

10.19      Form of Dealer Agreement (incorporated by reference to Exhibit No.
           10.22 to Registration Statement on Form S-1, File No. 33-77828)

10.20      Form of Company Credit Application (incorporated by reference to
           Exhibit No. 10.23 to Registration Statement on Form S-1, File No.
           33-77828)

10.21      Asset Purchase Agreement dated as of September 27, 1994 between
           General Electric Capital Corporation and Eagle Finance Corp.
           (incorporated by reference to Exhibit No. 10.26 to the Quarterly
           Report on Form 10-Q for the Quarterly Period ending September 30,
           1994)

10.22      Amendment No. 1 to the Asset Purchase Agreement, dated as of March
           31, 1995, between General Electric Capital Corporation and Eagle
           Finance Corp. (incorporated by reference to Exhibit No. 10.25(a) to
           Registration Statement on Form S-1, File No. 33-90754)

10.23      Form of Master Lease Agreement (incorporated by reference to Exhibit
           No. 10.26 to the Annual Report on Form 10-K for the Year ended
           December 31, 1994)

10.24      Assignment and Assumption Agreement dated as of August 1, 1994
           between Wonderlic Personnel Test, Inc. and Eagle Finance Corp.
           (incorporated by reference to Exhibit No. 10.27 to the Annual Report
           on Form 10-K for the Year Ended December 31, 1994)

10.25      Asset Purchase Agreement dated as of June 25, 1996 between General
           Electric Capital Corporation and Eagle Finance Corp. (incorporated
           by reference to Exhibit No. 10.3 to the Quarterly Report on Form 10-
           Q for the Quarterly 


                                       51

<PAGE>


           Period Ended June 30, 1996)

10.26      Amended and Restated Servicing Agreement dated as of June 25, 1996
           between General Electric Capital Corporation and Eagle Finance Corp.
           (incorporated by reference to Exhibit No. 10.4 to the Quarterly
           Report on Form 10-Q for the Quarterly Period Ended June 30, 1996)

10.27      Pooling and Servicing Agreement dated as of September 1, 1996 among
           Eagle Auto Funding Corp., Eagle Finance Corp. and Harris Trust and
           Savings Bank (incorporated by reference to Exhibit No. 10.32 to Form
           10-K for the Year Ended December 31, 1996)

10.28      Loan Sale and Contribution Agreement dated as of September 1, 1996
           between Eagle Finance Corp. and Eagle Auto Funding Corp.
           (incorporated by reference to Exhibit No. 10.33 to Form 10-K for the
           Year Ended December 31, 1996)

10.29      Waiver Letter from General Electric Capital Corporation dated March
           26, 1997 (incorporated by reference to Exhibit No. 10.34 to Form 10-
           K for the Year Ended December 31, 1996)

10.30      Waiver Letter from General Electric Capital Corporation dated
           January 29, 1998 (incorporated by reference to Exhibit No. 10.30 to
           the Initial Form 10-K)

11         Statement Regarding Computation of Net Earnings Per Share. 

12         Statement Regarding Computation of Ratio of Earnings to Fixed
           Charges. 

23         Consent of KPMG Peat Marwick LLP.

27         Financial Data Schedule. 



                                             52