<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549




                                    Form 10-Q


                Quarterly Report under Section 13 or 15(d) of the
                         Securities Exchange Act of 1934




For Quarter Ended March 31, 1998                   Commission File Number 1-9828



                                  GAINSCO, INC.
             (Exact name of registrant as specified in its charter)


          Texas                                                       75-1617013
(State or other jurisdiction of                                 (I.R.S. Employer
incorporation or organization)                               Identification No.)


500 Commerce Street   Fort Worth, Texas                                    76102
(Address of principal executive offices)                              (Zip Code)



Registrant's telephone number, including area code                (817) 336-2500




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 twelve (12) months, and (2) has been subject to such filing
requirements for the past 90 days.

                               Yes [X]   No [ ]


As of March 31, 1998, there were 20,857,024 shares outstanding of the
registrant's Common Stock, $.10 par value.
<PAGE>   2
                         GAINSCO, INC. AND SUBSIDIARIES

                                      INDEX

<TABLE>
<CAPTION>
                                                                           Page
                                                                           ----
<S>           <C>                                                           <C>
PART I.  FINANCIAL INFORMATION

    ITEM 1.   CONSOLIDATED FINANCIAL STATEMENTS:

              Consolidated Balance Sheets as of March 31, 1998
              (unaudited) and December 31, 1997                              3

              Consolidated Statements of Operations for the Three
              Months Ended March 31, 1998 and 1997 (unaudited)               5

              Consolidated Statements of Cash Flows for the Three
              Months Ended March 31, 1998 and 1997 (unaudited)               6

              Notes to Consolidated Financial Statements
              March 31, 1998 and 1997 (unaudited)                            8

    ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
              CONDITION AND RESULTS OF OPERATIONS                           12


PART II.  OTHER INFORMATION

    ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K.                             16

SIGNATURE                                                                   17
</TABLE>


                                       2
<PAGE>   3
                          PART I. FINANCIAL INFORMATION

                         GAINSCO, INC. AND SUBSIDIARIES

                           Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                                        March 31
                                                                          1998         December 31
                               Assets                                 (unaudited)         1997
                               ------                                 ------------     -----------
<S>                                                                   <C>              <C>
Investments
  Fixed maturities:
    Bonds held to maturity, at amortized cost (fair
         value: $82,510,321 - 1998, $90,527,669 - 1997)               $ 81,576,165      89,733,503

    Bonds available for sale, at fair value (Amortized cost:
         $121,646,141 - 1998, $122,022,184 - 1997)                     122,878,742     123,650,289

    Certificates of deposit, at cost (which approximates
         fair value)                                                       595,000         595,000
  Short-term investments, at cost (which approximates
    fair value)                                                          8,367,086       2,823,393
                                                                      ------------     -----------
                  Total investments                                    213,416,993     216,802,185

Cash                                                                       646,455         696,513

Accrued investment income                                                3,981,125       4,714,828

Premiums receivable (net of allowance for doubtful
  accounts: $81,000 - 1998 and 1997)                                    12,743,926      14,249,890

Reinsurance balances receivable                                          2,592,965       2,604,511

Ceded unpaid claims and claim adjustment expenses                       32,050,758      29,524,026

Ceded unearned premiums                                                 19,675,407      19,146,272

Deferred policy acquisition costs                                       10,588,297      11,618,136

Property and equipment (net of accumulated depreciation
  and amortization: $6,030,203 - 1998, $5,710,365 - 1997)                6,715,477       6,941,232

Current Federal income taxes recoverable (note 1)                        3,598,590         796,631

Deferred Federal income taxes recoverable (note 1)                       6,341,194       2,676,555

Management contract                                                      1,725,070       1,737,570

Other assets                                                             2,834,919       2,176,957
                                                                      ------------     -----------
            Total assets                                              $316,911,176     313,685,306
                                                                      ============     ===========
</TABLE>


See accompanying notes to consolidated financial statements.


                                       3
<PAGE>   4
                         GAINSCO, INC. AND SUBSIDIARIES

                           Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                                   March 31
                                                                     1998          December 31
Liabilities and Shareholders' Equity                             (unaudited)          1997
------------------------------------                             ------------      -----------
<S>                                                              <C>               <C>
Liabilities:

  Unpaid claims and claim adjustment expenses                    $136,193,404      113,227,009

  Unearned premiums                                                60,486,824       64,004,507

  Commissions payable                                               2,201,237        2,207,421

  Accounts payable                                                  2,804,341        3,542,075

  Reinsurance balances payable                                      1,007,129          745,805

  Deferred revenue                                                  1,004,878          635,807

  Drafts payable                                                    3,810,530        9,393,375

  Dividends payable (note 3)                                          364,999          365,300

  Other liabilities                                                   599,166        1,001,747
                                                                 ------------      -----------
         Total liabilities                                        208,472,508      195,123,046
                                                                 ------------      -----------
Shareholders' Equity (note 3):

  Preferred stock ($100 par value, 10,000,000 shares
    authorized, none issued)                                             --               --

  Common stock ($.10 par value, 250,000,000 shares
       authorized, 21,701,118 issued at March 31, 1998
       and 21,701,118 issued at December 31, 1997)                  2,170,112        2,170,112

  Additional paid-in capital                                       87,697,754       87,697,754

  Accumulated other comprehensive income (note 1)                     801,191        1,058,268

  Retained earnings                                                25,464,136       35,188,460

  Treasury stock (844,094 shares at March 31, 1998 and
       826,894 shares at December 31, 1997)                        (7,694,525)      (7,552,334)
                                                                 ------------      -----------
         Total shareholders' equity                               108,438,668      118,562,260
                                                                 ------------      -----------
         Total liabilities and shareholders' equity              $316,911,176      313,685,306
                                                                 ============      ===========
</TABLE>


See accompanying notes to consolidated financial statements.


                                       4
<PAGE>   5
                         GAINSCO, INC. AND SUBSIDIARIES

                      Consolidated Statements of Operations
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                          Quarter ended March 31
                                                       -----------------------------
                                                           1998              1997
                                                       ------------      -----------
Revenues:
<S>                                                    <C>               <C>
  Premiums earned (note 2)                             $ 23,628,540       25,875,402
  Net investment income                                   2,407,622        2,286,976
  Net realized gains (note 1)                               140,710           41,511
  Insurance services                                        565,566          591,031
                                                       ------------      -----------
    Total revenues                                       26,742,438       28,794,920
                                                       ------------      -----------
Expenses:
  Claims and claim adjustment expenses
       (note 2)                                          31,560,149       15,207,636
  Commissions                                             5,905,330        4,734,804
  Change in deferred policy acquisition costs             1,029,839          742,635
  Underwriting and operating expenses                     3,934,616        3,884,358
                                                       ------------      -----------
    Total expenses                                       42,429,934       24,569,433
                                                       ------------      -----------
      Income (loss) before Federal income taxes         (15,687,496)       4,225,487

Federal income taxes:
  Current expense (benefit)                              (2,801,959)       1,000,831
  Deferred expense (benefit)                             (3,526,212)          60,619
                                                       ------------      -----------
    Total taxes                                          (6,328,171)       1,061,450
                                                       ------------      -----------
      Net income (loss)                                $ (9,359,325)       3,164,037
                                                       ============      ===========
      Earnings per share:
         Basic                                                 (.45)             .15
                                                       ============      ===========
         Diluted                                               (.44)             .15
                                                       ============      ===========
</TABLE>


See accompanying notes to consolidated financial statements.


                                       5
<PAGE>   6
                         GAINSCO, INC. AND SUBSIDIARIES

                      Consolidated Statements of Cash Flows
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                     Quarter ended March 31
                                                                  ----------------------------
                                                                     1998             1997
                                                                  -----------      -----------
<S>                                                               <C>             <C>
Cash flows from operating activities:

Net income (loss)                                                 $(9,359,325)       3,164,037

Adjustments to reconcile net income to cash provided by
    operating activities:

  Depreciation and amortization                                     1,253,090        1,217,568

  Change in deferred Federal income taxes recoverable              (3,526,212)          60,619

  Change in accrued investment income                                 733,703          743,821

  Change in premiums receivable                                     1,505,964        1,422,188

  Change in reinsurance balances receivable                            11,546       (1,011,019)

  Change in ceded unpaid claims and claim adjustment
       expenses                                                    (2,526,732)       1,495,858

  Change in ceded unearned premiums                                  (529,135)      (3,344,093)

  Change in deferred policy acquisition costs                       1,029,839          742,635

  Change in management contract                                        12,500           12,500

  Change in other assets                                             (657,962)        (741,390)

  Change in unpaid claims and claim adjustment
       expenses                                                    22,966,395        1,214,113

  Change in unearned premiums                                      (3,517,683)         114,821

  Change in commissions payable                                        (6,184)      (2,485,619)

  Change in accounts payable                                         (737,734)      (1,088,408)

  Change in reinsurance balances payable                              261,324        2,092,815

  Change in deferred revenue                                          369,071          370,203

  Change in drafts payable                                         (5,582,845)      (1,312,286)

  Change in other liabilities                                        (402,581)        (562,221)

  Change in current Federal income taxes                           (2,801,959)       1,000,831
                                                                  -----------       ----------
    Net cash provided by (used for) operating activities          $(1,504,920)       3,106,973
                                                                  -----------       ----------
</TABLE>


See accompanying notes to consolidated financial statements.
                                                                     (continued)


                                       6
<PAGE>   7
                         GAINSCO, INC. AND SUBSIDIARIES

                      Consolidated Statements of Cash Flows
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                               Quarter ended March 31
                                                            ----------------------------
                                                                1998             1997
                                                            ------------      -----------
<S>                                                         <C>               <C>
Cash flows from investing activities:

     Bonds held to maturity:
       Matured                                              $  7,830,046      $   432,052

     Bonds available for sale:
       Sold                                                    7,004,524        5,906,577
       Matured                                                 1,020,000        4,932,129
       Purchased                                              (8,254,441)     (11,030,559)

     Property and equipment purchased                            (94,083)        (296,754)

     Net change in short-term investments                     (5,543,693)         (20,912)
                                                            ------------      -----------
          Net cash provided by (used for)
               investing activities                            1,962,353          (77,467)
                                                            ------------      -----------
Cash flows from financing activities:

     Cash dividends paid                                        (365,300)        (316,312)

     Proceeds from exercise of stock options                        --             42,753

     Treasury stock acquired                                    (142,191)         (62,349)
                                                            ------------      -----------
          Net cash used for financing activities                (507,491)        (335,908)
                                                            ------------      -----------

Net increase (decrease) in cash                                  (50,058)       2,693,598

Cash at beginning of period                                      696,513        1,044,740
                                                            ------------      -----------
Cash at end of period                                       $    646,455      $ 3,738,338
                                                            ============      ===========
</TABLE>


See accompanying notes to consolidated financial statements.


                                       7
<PAGE>   8
                         GAINSCO, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                                   (Unaudited)


(1)    Summary of Accounting Policies

       (a)     Basis of Consolidation

               In the opinion of management, the accompanying consolidated
               financial statements contain all adjustments, consisting only of
               normal recurring adjustments, necessary to present fairly the
               financial position of GAINSCO, INC. and subsidiaries (the
               "Company") as of March 31, 1998, the results of operations and
               the statements of cash flows for the three months ended March 31,
               1998 and 1997, on the basis of generally accepted accounting
               principles. The December 31, 1997 balance sheet included herein
               is derived from the consolidated financial statements included in
               the Company's 1997 Annual Report to Shareholders.

               The accompanying consolidated financial statements are prepared
               in conformity with generally accepted accounting principles. The
               preparation of financial statements in conformity with generally
               accepted accounting principles requires management to make
               estimates and assumptions that affect the reported amounts of
               assets and liabilities and disclosure of contingent assets and
               liabilities at the date of the financial statements and the
               reported amounts of revenues and expenses during the reporting
               period. Actual results could differ from those estimates.

               Reference is made to the Company's annual consolidated financial
               statements for the year ended December 31, 1997 for a description
               of all other accounting policies. Certain reclassifications have
               been made to the 1997 amounts to conform to the 1998
               presentation.

       (b)     Investments

               Bonds held to maturity are stated at amortized cost, bonds
               available for sale are stated at fair value. Short-term
               investments are stated at cost. The "specific identification"
               method is used to determine costs of investments sold. Since
               investments not available for sale are held until maturity,
               provisions for possible losses are recorded only when the values
               have experienced impairment considered "other than temporary".
               The bonds available for sale had an unrealized gain of $801,191
               at March 31, 1998, net of the deferred tax expense of $431,410,
               and an unrealized gain at December 31, 1997 of $1,058,268 net of
               the deferred tax expense of $569,837.

               Proceeds from the sale of bond securities totaled $7,004,524 and
               $5,906,577 for the three months ended March 31, 1998 and 1997,
               respectively. Realized gains were $149,189 and $50,884 for the
               three months ended March 31, 1998 and 1997, respectively.
               Realized losses were $8,479 and $9,373 for the three months ended
               March 31, 1998 and 1997, respectively.

       (c)     Federal Income Taxes

               The Company and its subsidiaries file a consolidated Federal
               income tax return. Deferred income tax items are accounted for
               under the deferred method which provides for timing 


                                       8
<PAGE>   9
                         GAINSCO, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                                   (Unaudited)


        differences between the reporting of earnings for financial statement
        purposes and for tax purposes, primarily deferred policy acquisition
        costs, the discount on unpaid claims and claim adjustment expenses and
        the nondeductible portion of the change in unearned premiums. The
        Company paid no income taxes during the three months ended March 31,
        1998 and March 31, 1997.

(d)     Earnings Per Share

        In February 1997, the Financial Accounting Standards Board (FASB) 
        issued Statement 128, "Earnings Per Share". The Statement was effective 
        for financial statements issued for periods ending after December 15, 
        1997 and was implemented by the Company in the fourth quarter of 1997. 
        Earnings per share for prior periods presented in these financial 
        statements have been restated to comply with Statement 128.

        The following table sets forth the computation of basic and diluted
        earnings per share:

<TABLE>
<CAPTION>
                                                    1998              1997
                                                ------------      ------------
        <S>                                     <C>               <C>
        Numerator:
          Net income (loss)                     $ (9,359,325)        3,164,037
                                                ------------      ------------
        Denominator:
          Denominator for basic
             earnings per share-
             weighted average shares              20,864,374        21,087,144

        Effect of dilutive securities:
           Employee stock options                    234,106           249,225
                                                ------------      ------------
        Denominator for diluted
           earnings per share-
           weighted average shares
           and assumed conversions                21,098,480        21,336,369
                                                ============      ============
        Basic earnings per share                $       (.45)     $        .15
                                                ============      ============
        Diluted earnings per share              $       (.44)     $        .15
                                                ============      ============
</TABLE>

(e)     Accumulated Comprehensive Income

        In June 1997, the FASB issued Statement of Financial Accounting 
        Standards No. 130, "Reporting Comprehensive Income" (Statement 130). 
        Statement 130 requires that a company include in accumulated 
        comprehensive income certain amounts which were previously recorded 
        directly to shareholders' equity. The other comprehensive income 
        amounts included in accumulated comprehensive income consisted of


                                        9
<PAGE>   10
                         GAINSCO, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                                   (Unaudited)

                net unrealized gains on fixed maturities of $801,191 and
                $1,058,268 at March 31, 1998 and 1997, respectively.

(2)      Reinsurance

         The amounts deducted in the Consolidated Statements of Operations for
         reinsurance ceded for the three months ended March 31, 1998 and 1997,
         respectively, are set forth in the following table.

         Premiums and claims ceded to the commercial automobile plans of
         Arkansas, California, Louisiana, Mississippi and Pennsylvania are
         designated as "plan servicing".

<TABLE>
<CAPTION>
                                                         Three months
                                                        ended March 31
                                                ------------------------------
                                                    1998               1997
                                                -----------         ----------
         <S>                                    <C>                 <C> 
         Premiums earned                        $   400,980            407,566

         Premiums earned - plan
            servicing                           $   870,724          1,091,317

         Premiums earned -
            fronting arrangements               $ 9,112,570          7,186,843

         Claims and claim
            adjustment expenses                 $ 1,575,663         (1,294,952)

         Claims and claim
            adjustment expenses -
            plan servicing                      $ 1,509,638          1,023,773

         Claims and claim
            adjustment expenses -
            fronting arrangements               $ 9,300,032          4,676,189
</TABLE>


         The amounts included in the Consolidated Balance Sheets for reinsurance
         ceded to the commercial automobile plans of Arkansas,


                                       10
<PAGE>   11
                         GAINSCO, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                                   (Unaudited)


        California, Louisiana, Mississippi and Pennsylvania and the fronting
        arrangements as of March 31, 1998 and December 31, 1997 were as follows:

<TABLE>
<CAPTION>
                                                   1998                1997
                                               ------------        -----------
        <S>                                    <C>                 <C>
        Unearned premiums                      $  1,652,239          1,552,654

        Unearned premiums -
           fronting arrangements               $ 17,500,901         17,160,782

        Unpaid claims and claim
           adjustment expenses                 $  9,344,670          9,431,814
 
        Unpaid claims and claim
           adjustment expenses -
           fronting arrangements               $ 11,211,804          8,623,890
</TABLE>

        The Company remains directly liable to its policyholders for all policy
        obligations and the reinsuring companies are obligated to the Company to
        the extent of the reinsured portion of the risks. The Company does not
        have a provision for uncollectible reinsurance and does not feel one is
        warranted since all of the reinsurers on its working treaties are rated
        "A- (Excellent)" or better by A. M. Best Company and/or the Company is
        adequately collateralized on existing and anticipated claim recoveries.

        The Company has not and does not intend to utilize retrospectively rated
        reinsurance contracts with indefinite renewal terms. This form of
        reinsurance is commonly known as a "funded cover". Under a funded cover
        reinsurance arrangement, an insurance company essentially deposits money
        with a reinsurer to help cover future losses and records the "deposit"
        as an expense instead of as an asset; or, the insurance company can
        borrow from a reinsurer recording the "loan" as income instead of as a
        liability with the future "loan" payments recorded as expense as the
        payments are made over time.

(3)     Shareholders' Equity

        As of March 31, 1998 there were 337,640 options, at an average exercise
        price of $2.49 per share, that have been granted to officers and
        directors of the Company under the 1990 Stock Option Plan and 1,040,863
        options at an average exercise price of $10.22 per share, that have been
        granted to officers and directors of the Company under the 1995 Stock
        Option Plan.

        As of December 31, 1997, the Company had purchased 714,634 shares at a
        cost of $6,539,742. During the first quarter of 1998, the Company
        purchased 17,200 shares at a cost of $142,191. The Company has no plans
        to purchase additional shares.

        The Company's policy is to pay a quarterly cash dividend of $.0175 per
        share every quarter until further action is taken by the Board of
        Directors. A cash dividend of $364,999 was paid on April 15, 1998.


                                       11
<PAGE>   12
                         GAINSCO, INC. AND SUBSIDIARIES
                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations


Results of Operations

Gross premiums written for the first quarter of 1998 were approximately
$20,072,000 versus $23,020,000 for the comparable period of 1997 representing a
decrease of 13% that was largely attributable to continued intense competition.
The following table presents, for each major product line, gross premiums
written for the periods indicated.

<TABLE>
<CAPTION>
                                            Three months
                                           ended March 31
                           --------------------------------------------------
                                   1998                         1997
                           --------------------        ----------------------
                                        (Amounts in thousands)
<S>                        <C>              <C>          <C>             <C>
Commercial auto            $ 11,685         58%          $ 13,758         60%
Auto garage                   4,436         22%             5,112         22%
General liability             3,663         18%             3,871         17%
Other lines                     288          2%               279          1%
                           --------        ---           --------        ---
     Total                 $ 20,072        100%          $ 23,020        100%
                           ========        ===           ========        ===
</TABLE>

COMMERCIAL AUTO is down 15% for the first quarter of 1998 largely due to the
run-off of the Kentucky coal truck business. AUTO GARAGE is down 13% in the
first quarter of 1998 because of continued intense competition in Kentucky and
Pennsylvania. GENERAL LIABILITY is down 5% for the first quarter of 1998
primarily as a result of continuing competition in the larger states. For the
first quarter of 1998, gross premium written percentages by state/product line
are as follows: Texas commercial auto (25%), Texas general liability (7%),
Kentucky commercial auto (6%), Pennsylvania commercial auto (6%), and Florida
auto garage (6%) with no other state/product line comprising 5% or more. The
persistency rate increased from 44% to 45% in 1998. Premiums earned decreased 9%
as a result of the decrease in premiums written.

Net investment income increased 5% in the first quarter of 1998 as a result of
growth in the portfolio from March 31, 1997. At March 31, 1998, 80% of the
Company's investments were in investment grade tax-exempt bonds with an average
maturity of approximately 3 years. Since the majority of the Company's
investments are tax-exempt, the yields appear lower than those of the industry;
however, the industry as a whole has a significantly greater percentage of its
investments in taxable securities with substantially longer maturities. On a
taxable equivalent basis the return on average investments is 6.1% for 1998 and
6.3% for 1997. The Company has the ability to hold its bond securities until
their maturity date. The Company does not actively trade its bonds, however, it
does classify certain bond securities as available for sale. At March 31, 1998,
16% of the Company's investments were in U.S. Treasury securities and 4% were in
short-term money market funds. The Company has not invested and does not intend
to invest in derivatives or high-yield ("junk") securities, nor in equity
securities of "junk" debt issuers. The Company does not have any non-performing
fixed maturity securities.


                                       12
<PAGE>   13
The Company recorded net realized capital gains of $140,710 during the first
quarter of 1998 versus $41,511 for the comparable 1997 period. All of these
gains were generated from the bonds available for sale category of the fixed
maturity portfolio.

Insurance service revenues in the first quarter of 1998 were $25,465 below the
first quarter of 1997. The following table presents the components.

<TABLE>
<CAPTION>
                                                 Three months
                                                ended March 31
                                        ----------------------------
                                            1998             1997
                                        ------------     -----------
<S>                                     <C>              <C>
Plan servicing                          $    229,680         269,313

Fee income                                   161,630         142,216

Computer software                            118,437          92,838

Premium finance                               53,020          79,794

Other income                                   2,799           6,870
                                        ------------     -----------
     Total                              $    565,566         591,031
                                        ============     ===========
</TABLE>


Plan servicing revenues from commercial automobile plans decreased 15% from the
comparable 1997 period with the Pennsylvania plan accounting for most of the
decrease. The Company is continuing to pursue management contracts with other
states to administer their commercial automobile plans and is attempting to
increase its participation in existing plans. Fee income increased 14% in the
fronting operation. Revenues in the computer software operation are 28% above
the comparable 1997 period and are expected to show moderate increases for the
year. Revenues from the premium finance operation in the first quarter of 1998
are 34% below the comparable 1997 period as a result of the decision to offer an
interest free payment plan on the policies of the affiliated insurance
companies.

Claims and claim adjustment expenses (C & CAE) increased 108% to $31,560,149 in 
the first quarter of 1998 from the first quarter of 1997. This included
approximately $16,700,000 in development from prior accident years. The C & CAE
ratio was 133.6% in the first quarter of 1998 versus 58.8% in the first quarter
of 1997. The increase in the C & CAE ratio was the result of unfavorable claim
development from prior accident years which surfaced in the first quarter of
1998, unfavorable claim adjustment expense development from prior accident
years and implementation of a more conservative reserving approach for the
current accident year. The unfavorable claim development on prior years was
primarily attributable to large claims (in excess of $100,000) for both
commercial auto and general liability. The unfavorable claim adjustment expense
development from prior years is related to increasing trends in expenses due to
the Company's reliance on outside claim adjusters and legal support. The
Company has increased its internal claims staff and is striving to reduce its
reliance on outside support. During the first quarter of 1998 outstanding
claims were reduced approximately 15%.

The ratio of commissions to gross premiums written is 29.4% and 20.6% for the
first quarter of 1998 and 1997, respectively. Commissions increased in the 1998
period from the 1997 period primarily due to a decrease in commission income of
approximately $1,644,000 as a result of reducing previously accrued reinsurance
commission. The reinsurance commission had been accrued based on a lower
ultimate C & CAE ratio.


                                       13
<PAGE>   14
The change in deferred policy acquisition costs (DAC) resulted in a net decrease
to income of $1,029,839 and $742,635 for the first quarter of 1998 and 1997,
respectively. The change in the amount of the increase or decrease in DAC
between comparable periods is directly related to the rate at which unearned
premiums are increasing or decreasing as a result of premium writings. Since DAC
(asset) is a function of unearned premiums (liability) the change in unearned
premiums correlates to the change in DAC. The ratio of DAC to net unearned
premiums was 26% at March 31, 1998 and 1997, respectively.

Underwriting and operating expenses increased slightly in the first quarter of
1998 from the first quarter of 1997, as a result of a decrease in contingent
compensation largely offsetting expected increases in the other expenses. The
ratio to operating revenues increased to 16.3% in the first quarter of 1998 from
14.7% in the first quarter of 1997 primarily due to the decrease in earned
premiums.

The Company generated a current tax benefit in the first quarter of 1998 as a 
result of the loss recorded during the period. The deferred tax benefit is the 
result of the tax discounting of the large increase to C & CAE reserves 
recorded during the period.

Liquidity and Capital Resources

The primary sources of the Company's liquidity are funds generated from
insurance premiums, net investment income and maturing investments. The
short-term investments and cash are intended to provide adequate funds to pay
claims without selling the fixed maturity investments. At March 31, 1998 the
Company held short-term investments and cash of $9,013,541 which the Company
believes is adequate liquidity for the payment of claims and other short-term
commitments.

With regard to long term liquidity, the average duration of the investment
portfolio is approximately 3 years which closely matches the average payout
period of claims. The fair value of the fixed maturity portfolio at March 31,
1998 was $2,166,757 above amortized cost.

Investments decreased because cash was needed in operations as a result of the
decrease in premiums written and the high level of claims and claim adjustment
expenses paid during the period. Accrued investment income is lower at March,
1998, than it was at December, 1997, because the semi-annual interest payment
dates of the securities in the portfolio are skewed toward January and July. The
decrease in premiums receivable is a result of a larger level of premium
writings in the fourth quarter of 1997 than in the first quarter of 1998. Ceded
unpaid claims and claim adjustment expenses increased due to increases in the
fronting reinsurance operation. Ceded unearned premiums increased because of the
fronting reinsurance operation. Deferred policy acquisition costs (DAC)
decreased as a direct result of the decrease in unearned premiums. DAC was 26%
of net unearned premiums at March 31, 1998 and at December 31, 1997. Current
Federal income taxes recoverable increased as a result of the loss recorded
during the first quarter of 1998. Deferred Federal income taxes recoverable
increased for the reasons mentioned previously.

Unpaid claims and claim adjustment expenses increased as a result of
unfavorable claim and claim adjustment expense development from prior accident
years and a more conservative reserving approach for the current accident year.
Unearned premiums decreased as a result of the decline in gross premiums
written. The decrease in accounts payable relates to annual contingent
incentive payments which were paid during the first quarter of 1998. Drafts
payable decreased because an unusually large amount of drafts were issued late
in the fourth quarter of 1997 and cleared or reversed during the first quarter
of 1998.


                                       14
<PAGE>   15
Accumulated other comprehensive income of $801,191 was recorded at March 31,
1998 as a result of the net unrealized gains on the bonds available for sale.

The Company purchased 17,200 shares of its common stock during the first quarter
of 1998 at a cost of $142,191 or $8.27 per share which accounts for the increase
in Treasury stock. The Company has no plans to purchase additional shares.

The Company is not aware of any current recommendations by the regulatory
authorities, which if implemented, would have a material effect on the Company's
liquidity, capital resources or results of operations.

Forward Looking Statements

This Form 10-Q Report contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. Investors are cautioned
that all forward-looking statements involve certain risks and uncertainties that
could cause actual results to differ materially from those contained in the
forward-looking statements. Important factors include, but are not limited to,
(i) heightened competition, including price competition from existing
competitors, from newly formed competitors and from the entry into the Company's
markets of standard insurance companies which historically have not competed in
the Company's specialty markets, (ii) contraction of the markets for the
Company's various lines of business, (iii) development and performance of new
specialty programs, (iv) the ongoing level of claims and claims-related
expenses, (v) adequacy of claim reserves, and (vi) general economic conditions.


                                       15
<PAGE>   16
                           PART II. OTHER INFORMATION

                         GAINSCO, INC. AND SUBSIDIARIES


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

         None.

Item 6.  Exhibits and Reports on Form 8-K

         (a)    Exhibits

                The statement re computation of per share earnings is included
                in the notes to consolidated financial statements.

         (b)    Reports on Form 8-K

                No reports on Form 8-K were filed during the quarter.



                                       16
<PAGE>   17
                                    SIGNATURE


         Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized to sign on behalf of the Registrant as
well as in his capacity as Chief Financial Officer.

                                      GAINSCO, INC.



Date:  May 13, 1998
                                      By  /s/ Daniel J. Coots
                                          ------------------------------------
                                          Daniel J. Coots
                                          Senior Vice President, Treasurer and
                                          Chief Financial Officer


                                       17
<PAGE>   18
                               INDEX TO EXHIBITS


     EXHIBIT
     NUMBER                        EXHIBIT
     -------                       -------

       27                  Financial Data Schedule