<PAGE>   1



                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

   
                                   FORM 10-QA
    

                  QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)

                         OF THE SECURITIES ACT OF 1934



         For the quarter ended:         Commission File Number:
           December 31, 1995                    0-9539
           -----------------                    ------


                 S E A R C H  C A P I T A L  G R O U P, I N C.
                 ---------------------------------------------
             (Exact name of Registrant as specified in its charter)




                 Delaware:                                41-1356819:
                 ---------                                -----------
(State or other jurisdiction of organization)  (IRS Employer Identification No.)

         

 700 North Pearl, Suite 400, Plaza of the Americas, North Tower, Lock Box 401,
 -----------------------------------------------------------------------------
                              Dallas, Texas  75201
                              --------------------
             (Address and zip code of principal executive offices)


                                 (214) 965-6000
              ----------------------------------------------------
              (Registrant's telephone number, including area code)


Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                            Yes [X]     No [ ]


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


           Class                               Number of Shares Outstanding:
           -----                                     February 15, 1996 
Common Stock, $.01 par value                              8,706,981    
                                                          


<PAGE>   2

                          PART I-FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                  SEARCH CAPITAL GROUP, INC. AND SUBSIDIARIES
                          CONSOLIDATING BALANCE SHEETS




   
<TABLE>   
<CAPTION> 
                                                                      December 31, 1995 (unaudited)                  
                                                           ---------------------------------------------------
(all numbers in thousands)                                                       Fund                               
                                                                             Subsidiaries &                         
                                                             Search &         Eliminations                          
                                                           Unrestricted       (Debtors in                           
                                                           Subsidiaries       Possession)         Consolidated      
                                                           ---------------------------------------------------
<S>                                                        <C>                <C>                 <C>               
ASSETS                                                                                                              
------                                                                                                              
Gross contract receivables                                      $3,609            $44,966            $48,575        
Unearned interest                                                 (480)            (8,392)            (8,872)        
                                                           ---------------------------------------------------
Net contract receivables                                         3,129             36,574             39,703        
Allowance for credit losses                                     (1,434)           (13,540)           (14,974)        
Loan origination costs                                             591              3,337              3,928        
Amortization of loan origination costs                            (545)            (2,661)            (3,206)        
                                                           ---------------------------------------------------
Net contract receivables after allowance for credit                                                                 
  losses & loan origination costs                                1,741             23,710             25,451        
                                                           ---------------------------------------------------
Cash and equivalents                                               855                  -                855        
Restricted cash                                                      -             12,573             12,573        
Vehicles held for resale                                           220              1,133              1,353        
Deferred note offering costs                                        42              9,011              9,053        
Accumulated amortization                                           (42)            (6,687)            (6,729)        
                                                           ---------------------------------------------------
Deferred note offering cost, net                                     -              2,324              2,324        
                                                           ---------------------------------------------------
Property and equipment                                           2,236                  -              2,236        
Accumulated depreciation                                          (942)                 -               (942)        
                                                           ---------------------------------------------------
Property and equipment, net                                      1,294                  -              1,294        
                                                           ---------------------------------------------------
Inter-company balance                                              428               (428)                 -        
Other assets, net                                                  103                  8                111        
                                                           ---------------------------------------------------
Total assets                                                    $4,641            $39,320            $43,961 
                                                           ===================================================
LIABILITIES AND SHAREHOLDERS' EQUITY (CAPITAL DEFICIT)                                                      
------------------------------------------------------                                                       
Liabilities  Not Subject to Compromise                                                                              
--------------------------------------                                                                     
Lines of credit                                                 $2,280                 $-             $2,280 
Accrued  settlement                                              2,912                  -              2,912  
Accrued  restructuring                                             260                  -                260 
Accounts payable and other liabilities                           3,050                252              3,302   
Accrued interest                                                     1                  -                  1   
                                                           ---------------------------------------------------
Liabilities not subject to compromise                            8,503                252              8,755        
                                                           ---------------------------------------------------
Liabilities  Subject to Compromise                                                                                  
----------------------------------                                                                                  
Prepetition notes  payable and accrued                                                                              
interest - subject to compromise                                     -             69,320             69,320        
                                                           ---------------------------------------------------
Shareholders' Equity (Capital Deficit)                                                                              
--------------------------------------                                                                              
Preferred stock - 12% senior convertible $.01 par value,                                                            
  cumulative, 400,000 shares issued and outstanding,                                                                  
  liquidation preference of $2,000,000 plus accrued                                                                   
  dividends                                                          4                  -                  4        
Common stock, $.01 par value, 20,000,000 shares                                                                     
  authorized, 11,733,370 shares issued                             117                  -                117        
Additional paid-in-capital                                      26,776                  -             26,776        
Accumulated deficit                                            (29,609)           (30,252)           (59,861)       
Treasury stock at cost 3,026,389 shares                         (1,150)                 -             (1,150)       
                                                           ---------------------------------------------------
Total shareholders' equity (capital deficit)                    (3,862)          $(30,252)          $(34,114)       
                                                           ===================================================
Total Liabilities and Shareholders' Equity                                                                          
   (Capital Deficit)                                            $4,641            $39,320            $43,961        
                                                           ===================================================

                                                                         September 30, 1995
                                                           ---------------------------------------------------
(all numbers in thousands)                                                       Fund                               
                                                                             Subsidiaries &                         
                                                             Search &         Eliminations                          
                                                           Unrestricted       (Debtors in                           
                                                           Subsidiaries       Possession)         Consolidated      
                                                           ---------------------------------------------------
ASSETS                                          
------                                                                                                                     
Gross contract receivables                                       $7,365           $59,312              $66,677             
Unearned interest                                                (1,300)          (11,806)             (13,106)             
                                                           ---------------------------------------------------
Net contract receivables                                          6,065            47,506               53,571             
Allowance for credit losses                                      (2,862)          (15,761)             (18,623)             
Loan origination costs                                              591             3,163                3,754 
Amortization of loan origination costs                             (506)           (2,431)              (2,937)             
                                                           ---------------------------------------------------
Net contract receivables after allowance for credit                                                                           
  losses & loan origination costs                                 3,288            32,477               35,765             
Cash and equivalents                                                442                 -                  442             
Restricted cash                                                       -             8,105                8,105             
Vehicles held for resale                                             93               508                  601             
Deferred note offering costs                                         42             9,011                9,053             
Accumulated amortization                                            (41)           (5,950)              (5,991)             
                                                           ---------------------------------------------------
Deferred note offering cost, net                                      1             3,061                3,062             
                                                           ---------------------------------------------------
Property and equipment                                            2,126                 -                2,126             
Accumulated depreciation                                           (820)                -                (820)             
                                                           ---------------------------------------------------
Property and equipment, net                                       1,306                 -                1,306             
                                                           ---------------------------------------------------
Inter-company balance                                               646              (646)                   -             
Other assets, net                                                   650                (9)                 641             
                                                           ---------------------------------------------------
Total assets                                                     $6,426           $43,496              $49,922             
                                                           ===================================================
LIABILITIES AND SHAREHOLDERS' EQUITY (CAPITAL DEFICIT)
------------------------------------------------------
Liabilities  Not Subject to Compromise                                                                                     
--------------------------------------                                                                                     
Lines of credit                                                  $1,058                $-               $1,058                    
Accrued  settlement                                               2,912                 -                2,912                    
Accrued  restructuring                                              214                 -                  214                    
Accounts payable and other liabilities                            1,804               247                2,051                    
Accrued interest                                                      2                 -                    2                    
                                                           ---------------------------------------------------
Liabilities not subject to compromise                             5,990               247                6,237                    
                                                           ---------------------------------------------------
Liabilities  Subject to Compromise                                                                                                
----------------------------------                                                                                                
Prepetition notes  payable and accrued                                                                                            
interest - subject to compromise                                      -            69,320               69,320                    
                                                           ---------------------------------------------------
Shareholders' Equity (Capital Deficit)                                                                                            
--------------------------------------                                                                                            
Preferred stock - 12% senior convertible $.01 par
  value, cumulative, 400,000 shares issued and 
  outstanding, liquidation preference 
  of $2,000,000 plus accrued dividends                                  4               -                    4                    
Common stock, $.01 par value, 20,000,000 shares                                                                                   
  authorized, 11,733,370 shares issued                                117               -                  117                    
Additional paid-in-capital                                         26,766               -               26,766                    
Accumulated deficit                                               (25,301)        (26,071)             (51,372)                   
Treasury stock at cost 3,026,389 shares                            (1,150)              -               (1,150)                   
                                                           ---------------------------------------------------
Total shareholders' equity (capital deficit)                         $436        $(26,071)            $(25,635)                   
                                                           ===================================================
Total Liabilities and Shareholders' Equity                                                                                        
   (Capital Deficit)                                               $6,426         $43,496              $49,922                    
                                                           ===================================================
</TABLE>                                        
    

                   See notes to condensed financial statement

                                       1


<PAGE>   3




                  SEARCH CAPITAL GROUP, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>
                                            Three Months Ended                                Three  Months Ended
                                       December 31, 1995 (unaudited)                     December 31, 1994 (unaudited)
                               ----------------------------------------------     -------------------------------------------------
(all dollars in thousands,                           Fund                                                 Fund     
except per share amounts)                        Subsidiaries &                                       Subsidiaries &
                                 Search &         Eliminations                         Search &        Eliminations 
                               Unrestricted       (Debtors in                         Unrestricted      (Debtors in 
                               Subsidiaries       Possession)   Consolidated          Subsidiaries      Possession)    Consolidated
                               ----------------------------------------------      -------------------------------------------------
<S>                            <C>               <C>              <C>             <C>                 <C>              <C>
Interest revenue                      $253           $2,336           $2,589                $1,283          $3,631           $4,914
Interest expense                        36              738              774                    83           3,271            3,354
                               ----------------------------------------------      -------------------------------------------------
Net interest income                    217            1,598            1,815                 1,200             360            1,560

Provision for credit losses            829            4,552            5,381                 1,772           4,283            6,055
                               ----------------------------------------------      -------------------------------------------------
Net interest loss after                                                                                                          
   provision for credit losses        (612)          (2,954)          (3,566)                 (572)         (3,923)          (4,495)
                               ----------------------------------------------      -------------------------------------------------
General and administrative                                                                                                        
   expense                           3,291            1,227            4,518                 2,442           1,365            3,807
Settlement expense                      94                -               94                     -               -                -
Reorganization expense                 250                -              250                     -               -                -
                               ----------------------------------------------      -------------------------------------------------
Operating and other expense          3,635            1,227            4,862                 2,442           1,365            3,807
                               ----------------------------------------------      -------------------------------------------------

Net loss                            (4,247)          (4,181)          (8,428)               (3,014)         (5,288)          (8,302)
                               ----------------------------------------------      -------------------------------------------------
                                                                                                               
Preferred stock dividends             (60)                -              (60)                  (60)               -             (60)
                               ----------------------------------------------      -------------------------------------------------

Net loss attributable to                                                                                                          
   common stockholders             (4,307)          $(4,181)         $(8,488)              $(3,074)        $(5,288)         $(8,362)
                               ==============================================      =================================================
Net loss per share                                                                                                               
   attributable to common
   shareholders                                                    $   (0.98)                                              $  (0.90)
                                                               ==============                                     ==================
Weighted average number of com                                                                                                
   outstanding                                                     8,685,000                                              9,296,000
                                                               ==============                                     ==================
</TABLE>

                  See notes to condensed financial statements

                                       2


<PAGE>   4




                  SEARCH CAPITAL GROUP, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS



   
<TABLE>
<CAPTION>      
                                                         Three Months Ending                Three Months Ending
           (all numbers in thousands)               December 31, 1995 (unaudited)      December 31, 1994 (unaudited)
                                                    -----------------------------      -----------------------------
<S>                                                        <C>                                 <C>  
OPERATING ACTIVITIES:
Net loss                                                    $ (8,428)                          $ (8,302)
Adjustments to reconcile net loss to cash used
   in operations:
   Provision for credit losses                                 5,381                              6.055
   Amortization of deferred offering costs                       738                                757
   Amortization  of loan  origination costs                      269                                198
   Depreciation and amortization                                 122                                 71
Changes is assets and liabilities:
   Increases (decreases) in accounts payable and
   accrued expense                                             1,305                               (622)
   Increases (decreases) in other assets, net                    529                                 53
                                                            --------                           --------
Cash  provided by (used in) operations                           (84)                            (1,790)
                                                            --------                           --------
INVESTING ACTIVITIES:
Purchase of contract receivables, including
   origination fees                                           (2,934)                            (6,162)
Principal payments on contract receivables                 
   including proceeds from sales of vehicles                   6,846                              9,737
Purchases of property and equipment                             (110)                              (181)
(Increases) decreases in restricted cash                      (4,469)                              (350)
                                                            --------                           --------
Cash provided by (used in) investing                            (667)                             3,044
                                                            --------                           --------
FINANCING ACTIVITIES:
Net borrowings (repayments)  under line of credit              1,222                               (402)
Notes payable proceeds                                            -                               1,779
Notes payable repayments - prepetition                            -                              (2,769)
Capital lease (repayments) financing                              (8)                                -
Notes payable offering costs                                      -                                (198)
Proceeds from sale of stock, net of  expense                      10
Payment of dividends                                             (60)                               (60)
                                                            --------                           --------
Cash provided by (used in) financing activities                1,164                             (1,650)
                                                            --------                           --------
Change in cash and cash equivalents                              413                               (396)
Cash and cash equivalents - beginning                            442                                939
                                                            --------                           --------
Cash and cash equivalents - ending                          $    855                           $    543
                                                            ========                           ========    
SUPPLEMENTAL INFORMATION                                   
   Cash paid for interest                                   $     36                           $  2,975
                                                            ========                           ========    
</TABLE>
    

NOTE - Certain subsidiaries, as discusses in Note 2, are debtors-in-possession.



                  See notes to condensed financial statements


                                       3


<PAGE>   5

                           SEARCH CAPITAL GROUP, INC.
                    NOTES TO CONDENSED FINANCIAL STATEMENTS
                                  (Unaudited)


1. GENERAL INFORMATION

     The information presented herein includes normal recurring adjustments
that Search Capital Group, Inc.  (herein called "Search" and together with its
consolidated subsidiaries called the "Company") believes are necessary for fair
presentation of its financial position and results of operation.  During the
three months ended December 31, 1995, the Company recorded $334,000 in
adjustments related to the closure of its retail lots and reorganization of
Fund Subsidiaries.  These adjustments are of a non-recurring nature.
Substantially all of the disclosures required for annual financial reports have
been omitted.  The interim financial statements and related notes are
unaudited, and should be read in conjunction with the Company's annual report
on Form 10-K for the year ended September 30, 1995.  The Company is an industry
specific financial services company specializing in the purchase, management,
and securitization of used motor vehicle receivables.  These receivables are
secured by medium-priced, used automobiles and light trucks which typically
have been purchased by consumers with substandard credit histories at retail
prices ranging from $5,000 to $10,000.  The Company purchases these receivables
from a network of unaffiliated new and used automobile dealers (the "Dealer
Network") at discounts ranging generally from 40% to 55% of total unpaid
installments, which installments include both principal and interest. The
members of the Dealer Network generate the receivables and offer them for sale
on a non-exclusive basis to the Company.  See "Principal Business."

     Prior to November 1994, the Company financed its receivables purchasing
business primarily through the private and public sale of securitized,
interest-bearing notes (the "Notes") issued by wholly owned subsidiaries
organized specifically for this purpose (the "Fund Subsidiaries") and through
reinvestment of operating cash flow.  Each offering of Notes was issued by a
newly organized subsidiary without recourse to Search or its other
subsidiaries.  See "Financing."  The Notes offered by each of the Fund
Subsidiaries were not rated by a national credit agency.

     After November 1994, due primarily to higher than expected losses in the
collection of its receivables, the Company temporarily abandoned its
securitization activities. In the first half of 1995, the Company developed a
reorganization strategy.  In August 1995, pursuant to that strategy, Search's
existing Fund Subsidiaries filed for protection and reorganization under
Chapter 11 of the Bankruptcy Code.  See "Subsidiary Bankruptcy Filings."  These
Fund Subsidiaries and Search, as a co-proponent are attempting to complete a
plan of reorganization in these bankruptcy proceedings.

     The accompanying consolidated financial statements include the accounts of
Search Capital Group, Inc. and its subsidiaries ("Search") as follows:

<TABLE>
<CAPTION>
                                                                        Ownership
                             Subsidiary                                 Percentage
--------------------------------------------------------------------  --------------
<C>                                                                   <C>
Automobile Credit Holdings, Inc. ("ACHI")                             100% (a, c)
Automobile Credit Acceptance Corp. ("ACAC") (100% owned by ACHI)      100% (a, c)
Consumer Dealer Autocredit Corporation ("CDAC") (100% owned by ACHI)  100% (a, b, c)
Eight Fund Subsidiaries and two previous Fund Subsidiaries -
debtors-in-possession                                                 100%
Newsearch, Inc.                                                       100% (b, c)
Search Funding Corp. ("SFC")                                          100% (c)
Automobile Wholesaling, Inc.                                          100% (b, c)
Search Automobile Leasing Corporation                                 100% (b, c)

(a)    Search had a 52% voting interest in these entities, resulting from ownership of
       50% of the common stock and 100% of the voting preferred stock of ACHI, until June
       30, 1993, at which time Search acquired the minority interest in ACHI.

(b)    Currently inactive. 

(c)    Unrestricted subsidiaries, which are not debtors-in-possession.
</TABLE>

2. SUBSIDIARY BANKRUPTCY FILINGS

     At Search's annual shareholders' meeting, held May 10, 1995, Search
announced a preliminary outline of a plan to convert the approximately $68
million debt owed by the Fund Subsidiaries into equity in the Parent Company
(Search).  Search engaged the investment banking firm of Alex. Brown & Sons to
develop a formal detailed plan of debt-to-equity conversion.  To facilitate the
development of this plan Search also formed an ad hoc committee of noteholders
in all eight of its Fund Subsidiaries to review the proposals of Alex. Brown &
Sons and provide input and recommendations for the plan.

                                       4


<PAGE>   6

     In order to consummate the debt-to-equity conversion plan proposed by
Alex. Brown & Sons, it was necessary for each of the Fund Subsidiaries to file
for reorganization under Chapter 11 of the U. S. Bankruptcy Code.  These cases
have been consolidated as one case for administration.  Search and its
unrestricted subsidiaries have not sought protection under the Code but Search
is a proponent of a joint plan of reorganization of the Fund Subsidiaries
("Joint Plan").  On August 25, 1995 an organizational meeting was held by the
U. S. Bankruptcy Trustee to select a committee (the "Committee") to represent
the noteholders ("Creditors") during the bankruptcy proceedings.  On December
19, 1995, Search, the Fund Subsidiaries and the Committee agreed to a
consensual plan of reorganization (Joint Plan) which was approved by the Court
on December 22, 1995.

     Final effectiveness of the Joint Plan as to each Fund Subsidiary is
dependent on its confirmation by the Court, which will occur, if at all, after
a vote of the holders ("Noteholders") of outstanding notes issued by the Fund
Subsidiaries ("Notes"). There can be no assurance that the Joint Plan as to
each Fund Subsidiary will become effective or that the Joint Plan as to each
Fund Subsidiary will be confirmed on essentially the same terms as fully
described in the Disclosure Statement. The final terms of the Joint Plan, if
they differ in any material fashion from the proposed terms, will be contingent
on, among other things, approval by Search's Board of Directors and a vote of
Search's shareholders to approve the increase in the authorized number of
shares of Common Stock and Preferred Stock to levels adequate to meet the
requirements of the proposed Joint Plan.

     If confirmed with respect to a particular Fund Subsidiary, the Joint Plan,
as currently proposed, provides that Noteholders voting to accept the Joint
Plan may choose one of two options (the "Plan Options").  Under the First Plan
Option (the "Search Equity Option"), the Noteholders would essentially exchange
their Notes for the issuance by Search of a combination of shares of Common
Stock, shares of a new series of Convertible Preferred Stock ("New Preferred
Stock") and dividends accrued at 9% on the New Preferred Stock from July 1,
1995 until the effective date of the Joint Plan.  Under the Second Plan Option,
the Noteholders could choose the continued collection or the sale of the
collateral securing their Notes and the distribution to the Noteholders of the
resulting cash proceeds (the "Collateral Option").  As to any one Fund
Subsidiary, the selection by the Noteholders of either Plan Option would be
implemented on a Noteholder-by-Noteholder basis. Noteholders who vote against
the Joint Plan will not be entitled to select between the Search Equity Option
and the Collateral Option but will receive treatment under the Search Equity
Option.  A pro rata share of the assets of the Fund Subsidiaries attributable
to Noteholders electing the Collateral Option will be transferred to the
trustee of a newly established trust to be held for the benefit of such
Noteholders.  The trustee will collect the motor vehicle receivables held by
the trust and make regular distributions to the Noteholders.  In the
alternative, the motor vehicle receivables will be sold by the trustee to the
highest bidder, assuming a sale price greater than the liquidation value of the
receivables.  The pro-rata portion of the assets of the Fund Subsidiaries
attributable to Noteholders electing the Search Equity Option will be
transferred to Search. In addition to the New Preferred Stock, the Common Stock
and dividends, the Noteholders will receive with respect to the unsecured
portion of their claims, a pro-rata share of five year warrants to purchase an
aggregate of 5,000,000 shares of Common Stock (the "Warrants").  The exercise
price of the Warrants will be $2.00 during the first year and increase by $.25
per year during the term of the Warrants.  All Warrants not exercised prior to
the expiration will be redeemed at a price of $.25 per Warrant.

     The Joint Plan also contemplates establishment of a trust ("Litigation
Trust") for the benefit of holders of unsecured claims of Fund Subsidiaries for
which the Joint Plan is approved.  The trust will be established with a total
funding of $350,000 prorated among the confirming Fund Subsidiaries.  The
Litigation Trust will be authorized to pursue any claims and causes of action
of each Fund Subsidiary for which the Joint Plan is approved.  The Litigation
Trust will automatically terminate if the Common Stock trades at an average
price of $2.50 per share for 30 consecutive trading days during the first year
following the effective date of the Joint Plan.

     As a consequence of the consummation of the Joint Plan as to any Fund
Subsidiary, the former Noteholders of that Fund Subsidiary who elect the Search
Equity Option would ultimately own shares of Search's Common Stock and New
Preferred Stock.  The Notes and the Noteholders constitute essentially all of
the indebtedness and creditors, respectively, of the Fund Subsidiaries.  If the
Joint Plan is confirmed, as currently proposed, with respect to each of the
Fund Subsidiaries, an aggregate of approximately $69,320,000 of indebtedness of
the Fund Subsidiaries represented by the Notes would be canceled.  The total
assets to be transferred to Search as opposed to a transfer to the Noteholders
Trust will depend on the relative amounts of indebtedness of Noteholders
electing the Search Equity Option or the Collateral Option.

     The Joint Plan and Disclosure Statement describing the terms of the Joint
Plan, Search, the Fund Subsidiaries, the terms of the New Preferred Stock and
the rights of the Noteholders and other claimholders are subject to review and
approval by the Court prior to being mailed to the Noteholders.  On December
22, 1995, the Court approved the Joint Plan and Disclosure Statement for
mailing to the Noteholders and other claimholders, together with ballots for
registering their votes for acceptance or rejection of the Joint Plan.  The
Noteholders of each Fund Subsidiary will be entitled to vote for or against the
Joint Plan, with respect to claims represented by their Notes, as a separate
creditor class.  The Disclosure Statement was mailed to Noteholders on December
29 and 30, 1995, the final date for receipt of ballots on the Plan is January
29, 1996.

                                       5


<PAGE>   7
     Voting for the Joint Plan ended on January 29, 1996.  In an affidavit
submitted to the Bankruptcy Court, the tabulating agent provided a preliminary
tabulation which indicated that approximately 71% of the Noteholders
representing approximately 80% of the principal amount of the Notes outstanding
had voted on the Joint Plan.  Of the ballots received, 99% voted to accept the
Joint Plan.  Of the $55.5 million of Notes voted, $10.2 million, representing
18% of the Noteholders and 15% of the Notes outstanding, elected the Collateral
Option.  Under the terms of the Joint Plan, the remaining 82% of the
Noteholders and 85% of the Notes outstanding would receive the Search Equity
Option.  Such a significant percentage receiving the Search Equity Option would
provide Search with adequate cash, contracts receivable and equity to continue
operations and to provide for future growth.

     As a condition precedent to confirmation of the Joint Plan, either a
dismissal or approval by "final order" of the settlement agreement for the
O'Shea shareholder class action litigation (the "Shareholder Class Action") had
to be entered by the U.S. District Court.  In February 1996, the U.S. District
Court issued a "Preliminary Order Approving the Proposed Class Settlement".
The Court has preliminarily approved the settlement as "fair, reasonable, and
adequate" and set a date, April 26, 1996, for a further hearing to determine
whether the preliminary order should become final.  Since the proponents of the
Joint Plan did not wish to delay the confirmation of the Joint Plan until after
April 26, 1996, they have amended the Joint Plan to replace the requirement for
a final order approving the settlement with a requirement for a preliminary
order approving the settlement.  In the event that the Noteholders who have
voted to accept the Joint Plan might wish to change their election of an Option
under the Joint Plan, new ballots were sent in February 1996 to those
Noteholders to give them an opportunity to change their election of a Plan
Option.  Additionally, second ballots have been sent to those Noteholders who
did not vote by the January 29, 1996, deadline and to those Noteholders who
voted but did not elect a Plan Option.  While the ballots for the amendment and
the second ballots will change the results of the preliminary tabulation,
Search does not anticipate a significant change in the amount of cash,
contracts receivable and equity that it will receive when the Joint Plan is
finalized.

     A confirmation hearing for the Joint Plan is scheduled for March 1, 1996.
The Joint Plan could be effective as early as March 12, 1996.  While the date
for filing written objections has passed without any objections being filed, if
there are other significant objections to the Joint Plan, confirmation could be
delayed beyond that date.

     The primary adverse effect of the confirmation of the Joint Plan on
existing shareholders would be the dilution of their voting power from issuance
of the shares of the New Preferred Stock, Common Stock and Common Stock
equivalents.  The shares of New Preferred Stock would be convertible into
30,063,296 shares of Common Stock.  Search's existing shareholders would own
none of the newly issued shares of New Preferred Stock, and the Noteholders
would own none of the outstanding shares of the 12% Preferred Stock.  In
addition, the annual dividend requirements on the shares of New Preferred Stock
would be substantially less than the aggregate debt service requirements of the
Notes and would be reduced or disappear upon any conversion of the New
Preferred Stock into Common Stock.

     The accompanying financial statements include the cost associated with the
Company's Fund Subsidiaries bankruptcy proceedings and these costs have been
separately disclosed in the statement of operations as a reorganization
expense.

     The Fund Subsidiaries, which are debtors in possession, have accounted for
all transactions related to the reorganization proceedings in accordance with
SOP 90-7.  Accordingly, all prepetition liabilities of the Fund Subsidiaries
that are expected to be impaired under the joint plan of reorganization
ultimately approved by the Bankruptcy Court are reported separately in the
consolidating balance sheet as liabilities subject to compromise (see Note 5
for a description of such liabilities).  Expenses, primarily professional fees,
resulting from the reorganization proceedings, are reported separately in the
consolidating statement of operations as reorganization expense.  Contractual
interest obligations which are relieved from payment as a result of the Chapter
11 proceedings are not accrued.


3. CONTRACTS RECEIVABLE, ALLOWANCE FOR CREDIT LOSSES AND INTEREST INCOME

     In the fourth quarter of fiscal 1994, Search elected early adoption of
Statements of Financial Accounting Standards Nos. 114 and 118 ("SFAS 114"),
which address the accounting by creditors for impairment of a loan and related
income recognition and disclosures. In accordance with SFAS 114, contracts
receivable are analyzed on a loan-by-loan basis. Search evaluates the
impairment of loans based on contractual delinquency, as well as other factors
specific to the notes receivable. When a concern exists as to the
collectibility of an account, interest income ceases to be recognized. The
notes receivable, once impaired, are collateral dependent; that is once a note
receivable is in default Search looks to the underlying collateral for
repayment of the note receivable. Therefore at impairment Search records an
allowance for credit losses to record the note receivable at the fair value of
the collateral. If the measure of the impaired note receivable is less than the
net recorded investment in the note receivable, Search recognizes an impairment
by creating an additional allowance for credit losses in excess of the initial
allowance provided, with a corresponding charge to provision for credit losses.
The provision for credit losses is adjusted for any differences between the
final net proceeds of an impaired note receivable and its net carrying value.
     



                                       6


<PAGE>   8
     The Company records contract purchases at cost. Contractual finance
charges are recorded as unearned interest and amortized to interest income
using the interest method.   Amortization of interest income ceases upon
impairment. An initial allowance for credit losses is recorded at the
acquisition of a note receivable equal to the unearned discount, the difference
between the amount financed and the acquisition cost.

     The recorded investment and related allowance for credit losses, excluding
net loan origination costs, are summarized below for Search and Unrestricted
Subsidiaries:

<TABLE>
<CAPTION>
                                                As of December 31, 1995
                             -----------------------------------------------------------
                              Number of           Total
                               Active            Unpaid        Unearned          Net
                             Receivables      Installments     Interest      Receivables
                             -----------      ------------    ----------     -----------
<S>                          <C>              <C>              <C>            <C>       
Impaired contracts                   150          $546,000        $80,000       $466,000
Unimpaired contracts                 859         3,063,000        400,000      2,663,000
                             -----------      ------------    -----------     ----------
Total                              1,009        $3,609,000       $480,000     $3,129,000
                             ===========      ============    ===========
Allowance for credit losses                                                    1,434,000
                                                                              ----------
Contract receivables, net
of allowance for credit
   losses                                                                     $1,695,000
                                                                              ==========
</TABLE>

<TABLE>
<CAPTION>
                                              As of September 30, 1995
                             -----------------------------------------------------------
                              Number of           Total
                               Active            Unpaid        Unearned          Net
                             Receivables      Installments     Interest      Receivables
                             -----------      ------------    ----------     -----------
<S>                          <C>              <C>             <C>            <C>       
Impaired contracts                   562        $2,658,000      $658,000      $2,000,000
Unimpaired contracts               1,116         4,707,000       642,000       4,065,000
                             -----------      ------------    ----------     -----------
Total                              1,678        $7,365,000    $1,300,000      $6,065,000
                             ===========      ============    ==========     
Allowance for credit losses                                                    2,862,000
Contract receivables, net                                                     ----------
of allowance for credit
   losses                                                                     $3,203,000
                                                                              ==========
</TABLE>

     The recorded investment and related allowance for credit losses, excluding
net loan origination costs, are summarized below for Fund Subsidiaries:

<TABLE>
<CAPTION>
                                               As of December 31, 1995
                             -----------------------------------------------------------
                              Number of           Total
                               Active            Unpaid        Unearned          Net
                             Receivables      Installments     Interest      Receivables
                             -----------      ------------    ----------     -----------
<S>                          <C>              <C>              <C>           <C>       
Impaired contracts                   707        $3,665,000      $672,000      $2,993,000          
Unimpaired contracts               7,714        41,301,000     7,720,000      33,581,000          
                             -----------      ------------    ----------     -----------
Total                              8,421       $44,966,000    $8,392,000     $36,574.000          
                             ===========      ============    ==========     
Allowance for credit losses                                                   13,540,000          
                                                                             -----------
Contract receivables, net                                                                         
of allowance for credit                                                                           
losses                                                                       $23,034,000          
                                                                             ===========
</TABLE>

<TABLE>
<CAPTION>
                                               As of September 30, 1995
                             -----------------------------------------------------------
                              Number of           Total
                               Active            Unpaid        Unearned          Net
                             Receivables      Installments     Interest      Receivables
                             -----------      ------------    ----------     -----------
<S>                          <C>              <C>            <C>             <C>       
Impaired contracts                 1,761       $10,165,000    $2,744,000      $7,421,000          
Unimpaired contracts               8,689        49,147,000     9,062,000      40,085,000          
                             -----------      ------------    ----------     -----------
Total                             10,450       $59,312,000   $11,806,000     $47,506,000          
                             ===========      ============    ==========
Allowance for credit losses                                                   15,761,000          
                                                                             -----------
Contract receivables, net                                                                         
of allowance for credit                                                                           
losses                                                                       $31,745,000          
                                                                             ===========
</TABLE>

                                       7


<PAGE>   9







     At December 31, 1995, contractual maturities of contracts receivables for
Search and unrestricted subsidiaries were as follows:


<TABLE>
<CAPTION>
                           1996         1997       1998       Total     
                        ----------    --------    ------    ----------  
<S>                     <C>           <C>         <C>       <C>         
Future Payments                                                         
Receivable              $3,071,000    $534,000    $4,000    $3,609,000  
Less Unearned Interest     429,000      51,000         0       480,000  
                        ----------    --------    ------    ----------  
                        $2,642,000    $483,000    $4,000    $3,129,000  
                        ==========    ========    ======    ==========
</TABLE>

     At December 31, 1995, contractual maturities of contracts receivable for
     Fund Subsidiaries were as follows:


<TABLE>
<CAPTION>
                           1996           1997           1998          Total    
                        -----------    -----------    ----------    ----------- 
<S>                     <C>            <C>            <C>           <C>         
Future Payments                                                                 
Receivable              $28,522,000    $13,853,000    $2,591,000    $44,966,000 
Less Unearned Interest    6,386,000      1,877,000       129,000      8,392,000 
                        -----------    -----------    ----------    ----------- 
                        $22,136,000    $11,976,000    $2,462,000    $36,574,000 
                        ===========    ===========    ==========    =========== 
</TABLE>

     In the opinion of management, a portion of the contracts receivable will
be repaid or extended either before or past the contractual maturity date.  In
addition, some contracts will default before maturity.  The above tabulation,
therefore, is not to be regarded as a forecast of future cash collections.

     Management has determined that the net cash flow from the Fund
Subsidiaries will not be sufficient to fully retire the related Fund
Subsidiaries notes payable as discussed in Note 2, and as part of the Plan of
Reorganization discussed above, the Fund Subsidiaries filed for protection
under Chapter 11.

     The change in the allowance for credit losses is summarized as follows:


<TABLE>
<CAPTION>
                                          Search and
                                         Unrestricted
                                         Subsidiaries   Fund Subsidiaries     Total
                                         ------------   -----------------  -----------
<S>                                      <C>            <C>                <C>
Balance, at September 30, 1995             $2,862,000        $15,761,000   $18,623,000
Allowance recorded upon acquisition of
loans                                          24,000          1,489,000     1,513,000
Increase in allowance for credit losses       829,000          4,552,000     5,381,000
Loans charged off against allowance        (2,281,000)        (8,262,000)  (10,543,000)
                                         ------------   -----------------  -----------
Balance, at December 31, 1995              $1,434,000        $13,540,000   $14,974,000
                                         ============   =================  ===========
</TABLE>

     Most of Search's contracts receivable are due from individuals in large
metropolitan areas of Texas and other southern and western states.  To some
extent, realization of the receivables will be dependent on local economic
conditions.  Search and the Trustee for the Fund Subsidiaries hold vehicle
titles as collateral for all contracts receivable until such contracts are paid
in full.

                                       8


<PAGE>   10



4.   PREPETITION NOTES PAYABLE AND ACCRUED INTEREST SUBJECT TO COMPROMISE

        Notes payable of the Fund Subsidiaries are non-recourse to Search and
its affiliated non-fund subsidiaries.  Related terms and interest rates for the
Fund Subsidiaries, all of which are in bankruptcy and default (See Note 2),
consisted of the following:


<TABLE>
<CAPTION>
                                                                                     December 31, 1995
                                                                                     -----------------
        <S>                                                                             <C>
        Notes payable by ACF 91-III, bearing interest at 21%, require
        monthly interest payments at 15% through March 31, 1995, at which time
        principal and the remaining deferred interest accrued at 6% was due -
        in default at maturity date.                                                     $590,000

        Notes payable by ACP, bearing interest at 21%, require monthly interest 
        payments of 15% through April 30, 1995 at which time principal and the 
        remaining deferred interest accrued at 6% was due - in default at maturity 
        date.                                                                             610,000

        Notes payable by ACF, bearing interest at 18%, require monthly interest
        payments at 15% through December 31, 1994, at which time principal and the
        remaining deferred interest accrued at 3% was due - in default at maturity 
        date.                                                                           1,506,000 

        Notes payable by ACF 92-II, bearing interest at 15% due monthly, require
        payment of principal in full on December 31, 1995.                             10,000,000 

        Notes payable by ACF III, bearing interest at 15% due monthly, require 
        payment of principal in full on April 30, 1996.                                15,000,000 

        Notes payable by ACF IV, bearing interest at 3% until October 15, 1993 
        and 14% thereafter due monthly, require payment of principal quarterly 
        from September 30, 1995 to December 31, 1996.                                  10,000,000 

        Notes payable by ACF V, bearing interest at 12% due monthly, require 
        payment of principal quarterly from October 1, 1996 to December 31, 1997.      19,872,000 

        Notes payable by ACF VI, bearing interest at 12% due monthly, require 
        payment of principal quarterly from July 1, 1997 to June 30, 1998.             10,675,000 
                                                                                      -----------
                                                                                       68,253,000 
        Accrued Interest                                                                1,067,000
                                                                                      ----------- 
                                                                                      $69,320,000
                                                                                      =========== 

</TABLE>

        Contracts receivable owned by each Fund Subsidiary are pledged as
collateral for the respective notes payable of each entity.

        As of their maturity ACF, ACF 91-III and ACP stopped accruing interest 
on the remaining unpaid principal.  As these Fund Subsidiaries are in default, 
it is currently management's position that the accrual of interest is not
warranted since each Fund Subsidiary will not have sufficient assets to fully
retire the principal portion of the notes.

        The August 14, 1995 bankruptcy filing of the individual Fund 
Subsidiaries was an event of default for all of the Fund Subsidiaries under 
the terms of their indenture agreements.  In accordance with SOP 90-7, 
contractual interest obligations which are relieved from payment as a result of 
the Chapter 11 proceedings are not accrued. Management has presented the 
noteholders a proposal for a debt-to-equity exchange more fully described in 
Note 2 and in the Joint Disclosure Statement filed with the Bankruptcy Court.

        On the December 31, 1994 maturity date for ACF there was $3,175,000 in
the ACF sinking fund to be applied to obligations of $5,406,000.  ACF's
insufficient cash balance constituted a default under its indenture agreement
with Search and Texas Commerce Bank National Association ("Trustee").  As of
December 31, 1995, ACF has $128,000 in remaining principal and interest on
receivables.

        On the March 31, 1995 maturity date for ACF 91-III, there was $538,000
in cash to be applied to obligations of $1,195,000.  ACF 91-III's insufficient
cash balance constituted a default under its indenture agreement with the
Trustee.  As of December 31, 1995, ACF 91-III has $96,000 in remaining principal
and interest on contract receivables.

        On April 30, 1995 maturity date for ACP, there was $525,000 in cash to
be applied to obligations of $1,180,000.  ACP's insufficient cash balance
constituted a default under its indenture agreement with the Trustee.  At
December 31, 1995, ACP has $103,000 in remaining  principal and interest on
contracts receivable.

                                       9


<PAGE>   11
     On December 31, 1995, maturity date for ACF 92-II, there was $4,502,000 in
cash to be applied to obligations of $10,000,000.  ACF 92-II's insufficient
cash balance constituted a default under its indenture agreement with Search
and Texas Commerce Bank National Association ("Trustee").  As of December 31,
1995, ACF 92-II has $2,381,000 in remaining principal and interest on contracts
receivable.

     The filing of bankruptcy created a default in each Fund subsidiary not
currently in default at August 14, 1995.  The U.S. Bankruptcy Court has granted
the continued use of cash collateral.  Under the cash collateral motions, the
Fund subsidiaries continue to pay service and management fee revenue to Search.
Servicing and management fee revenue for Search was $715,000, and $741,000 for
the three months ended December 31, 1995 and 1994, respectively, and is
included as a reduction of general administrative expenses in the accounts of
Search.

     As of December 22, 1995, the consensual joint plan of reorganization was
approved by the U.S. Bankruptcy Court for distribution to noteholders.
Confirmation of the joint plan will be sought from the court after tallying of
the noteholders votes.  (See Note 2 for further discussion of the Joint Plan of
Reorganization).

5.   LINES OF CREDIT

     On June 17, 1994, SFC entered into an agreement for a line of credit with
General Electric Capital Corporation ("GECC").  The line of credit initially
had a maximum borrowing commitment of $20,000,000 and was limited to a
percentage of eligible contracts held by SFC.  The line of credit is secured by
all SFC assets and is guaranteed by Search.

     In January 1995, SFC signed an agreement with GECC to revise the existing
restrictive covenants and to eliminate any future advances under the line of
credit.  On March 22, 1995, GECC advised Search that it and SFC were in default
of various provisions of the original loan agreement and the January 1995
agreement.  As a result of these defaults, GECC declared the outstanding
balance, as of that date, due and payable.  Search, SFC and GECC established a
pay-out plan which requires a minimum payment of $500,000 per quarter.  SFC is
required to remit cash receipts of all pledged contracts to GECC until the line
of credit is repaid.  As of December 31, 1995, the line had a balance of
$580,000.  Interest is accrued daily at the average of the one month London
Interbank Offered Rates ("LIBOR") for the preceding month plus 5.1% (10.98% at
December 31, 1995). SFC recorded $22,000 interest expense to GECC during the
three months ended December 31, 1995.

     On November 30, 1995, Search and certain of its non-fund subsidiaries and
affiliates entered into a funding agreement ("Funding Agreement") with Hall
Financial Group, Inc. ("HFG").  Under the terms of the Funding Agreement, HFG
agreed to loan to Search up to $3,000,000, obtained Warrants to purchase up to
3,000,000 shares of Search Common Stock for $2.00 per share, and agreed,
subject to certain limitations and restrictions, to a plan funding commitment
under which HFG would loan the Fund Subsidiaries funds for a cash-out option
under a plan to be proposed by Search at an amount equal to 80% of Present
Value of the Notes.

     The loan is comprised of three notes.  Note I is in the amount of
$1,284,487.  Note II is in the amount of $715,513.  Note III is in the amount
of $1,000,000.  Notes I and II bear interest at the rate of 12% and mature on
the earlier of the Effective Date or 90 days after their execution unless
extended for 60 days by Search in which case the interest rate increased to
14%.  Note III bears interest at the rate of 6% and matures in one year.  Note
I has been fully funded, Note II will only be funded if necessary to payoff the
GECC Line of Credit, and Note III has been fully funded.  Notes I and III are
convertible into Search Common Stock up to a total of 2,500,000 shares
including any shares converted in payment of Note III.  Note III can be repaid
entirely with Search Common Stock.  Search and its non-fund subsidiaries
recorded $14,000 in interest expense to HFG in the three months ended December
31, 1995.

     As of December 31, 1995, the Notes are secured by approximately $3,600,000
in auto receivables owned by Search and Search Funding Corp., 2,250,000 shares
of Search Common Stock currently held as treasury stock, and 100% of the stock
of Search Funding Corp., Automobile Credit Acceptance Corp., Automobile Credit
Holdings, Inc., and Newsearch, Inc.  HFG is entitled to elect one director to
Search's board upon conversion of Note III and one additional director upon
purchase of $1,000,000 in Net Present Value of Notes under the plan funding
commitment.

     The Funding Agreement originally required HFG to make certain loans to the
Bankrupt Subsidiaries upon completion of the Joint Plan.  Search and the
Committee have determined not to include any funding of the Bankrupt
Subsidiaries in the latest version of the Joint Plan.  Search and HFG have
agreed to an amendment to the Funding Agreement that provides HFG the option to
purchase, in its sole discretion, Common Stock, New Preferred Stock, and
Warrants for a purchase price equal to 80% of the Present Value attributable to
such securities for purpose of their issuance to Noteholders under the Joint
Plan, less an amount equal to the accrued dividends attributable to the New
Preferred Stock that is received by HFG.  HFG would be entitled to purchase
securities in an amount up to a maximum of $6,000,000 in Present Value, which
the Company estimates would represent a purchase price payable by HFG of
approximately $4,426,000.  The proceeds of any shares so purchased will be paid
to Search. Under the Funding Agreement, as amended, Search will give HFG the
right to elect another director if HFG purchases $1,000,000 Present Value of
such securities.  HFG will also have registration rights for such securities
similar to those provided by the HFG Warrants.


                                       10


<PAGE>   12

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


GENERAL

     The Company is an industry specific financial services company
specializing in the purchase, management, and securitization of used motor
vehicle receivables.  These receivables are secured by medium-priced, used
automobiles and light trucks which typically have been purchased by consumers
with substandard credit histories at retail prices ranging from $5,000 to
$10,000.  The Company purchases these receivables from a network of
unaffiliated new and used automobile dealers (the "Dealer Network") at
discounts ranging generally from 40% to 55% of total unpaid installments, which
installments include both principal and interest.  The members of the Dealer
Network generate the receivables and offer them for sale on a non-exclusive
basis to the Company.  Members forego some future profit on each receivable
sold to the Company in exchange for an immediate return of their invested
capital.  The Company administers its receivables purchasing, servicing and
management activities utilizing its proprietary Auto Note Management System
software, developed and maintained by full-time Company systems personnel.
The Company commenced its used motor vehicle receivables purchasing and
servicing business  in 1991.


RESULTS OF OPERATIONS

     Since September 1994, the Company has purchased receivables only for the
Fund Subsidiaries.  In November 1995, the Company's new interim management
determined to sharply reduce all receivables purchasing activities for the
Company while attempting to evaluate and, if necessary, modify or remedy
purchasing and collection procedures.  In January 1995, the Company's new
President caused the Company to resume normal levels of receivables purchasing
activities but at the same time tightened certain purchasing procedures where
permitted.  Management was constrained from any substantial changes in
purchasing criteria for receivables purchased for its public Fund Subsidiaries
due to restrictions set forth in the trust indentures governing the
indebtedness of those subsidiaries.

     The indentures established specific criteria with respect to the price,
purchase discount, term, downpayment, installments and interest rate for the
receivables it purchases and also with respect to price, cost to the dealer,
average wholesale value, age, mileage and make of the motor vehicles securing
such receivables.  The Company believes that the most significant of these
criteria are as follows:

     *    The average purchase price of a receivable may not exceed
          53% of the total remaining unpaid installments of the
          receivables;
     *    The average purchase price for a receivable may not
          significantly exceed the approximate average wholesale value
          and/or the dealer's actual cost for the underlying financed
          vehicle;
     *    The receivable generally must have an original term of 36
          months or less;
     *    The age of each financed vehicle may not generally exceed
          eight years for automobiles or nine years for trucks;
     *    The obligor on the receivable is required to make a down
          payment in cash plus a net trade-in allowance of at least 25%
          of the dealer's cost in the financed vehicle;
     *    The interest rate on the receivable must not violate any applicable 
          usury laws; and
     *    The dealer's actual cost for a financed vehicle generally must be 
          greater than $2,000 and less than $6,200.


     Generally, to satisfy these credit criteria, an obligor must provide
verifiable personal references, must have a valid driver's license, must have
been a resident of the local area of receivable origination for a minimum of
one year, must have verifiable current employment and credit history and must
be at least 18 years of age.

     During 1995, the Company tightened its purchasing procedures and the
application of the criteria beyond that required by the indentures.  For
example, the Company has commenced to adjust the purchase prices offered to
dealers for receivables based on the perceived credit risk of the obligor and
the wholesale vehicle value, to verify directly with obligors customer purchase
satisfaction, downpayment amounts and credit information, to monitor through
the ANMS receivable transactions from dealers whose receivables have
historically lower collection rates and to reject receivables from known credit
abusers.  In addition, the Company commenced more strictly to apply the
foregoing credit criteria.  The Company intends to maintain the same level of
underwriting criteria to its current operations until confirmation of the Joint
Plan of Reorganization.

                                       11


<PAGE>   13



     The Company's receivables purchasing personnel review each receivable for
compliance with the foregoing criteria, utilizing standard and supporting
documentation provided via facsimile by the selling dealer and national
computerized databases that automatically interact with the Company's
proprietary Auto Note Management System Software ("ANMS").  The Company
verifies, by reference to published wholesale vehicle value guides, the average
wholesale prices of the underlying vehicles.  In most instances, the Company
performs this pre-purchase due diligence and processes purchases within one
hour, thereby assisting the dealer in the timely sale of the underlying
vehicle.  This one hour turnaround time is considered by the Company to be an
important competitive factor, and the Company constantly monitors its
turnaround time through its ANMS.  The Company acquires less than half of the
receivables offered by dealers in the Dealer Network.  In a typical receivable
purchase by the Company, a dealer will make a profit of approximately $900 on a
vehicle which cost the dealer $4,000 and was held in its inventory less than 30
days.

     The tightened purchasing criteria coupled with decreases in funds
available for reinvestment in contracts caused the volume of contracts
purchased to decrease.  The Company ceased additional securitization activities
during the first fiscal quarter of 1995.  As of December 31, 1995, only ACF V
and ACF VI were purchasing additional contracts from excess cash flow.

     While the Company purchases groups of receivables, it typically purchases
individually selected receivables.  Purchasing receivables from dealers on an
individual basis in accordance with the Company's purchasing criteria enables
the Company to more readily control conformity to collateral and credit
requirements and compliance with applicable laws and regulations.

     The Company's underwriting strategy differs markedly from many of its
competitors.  Many of the Company's competitors usually make only bulk
purchases of receivables and/or retain recourse against the selling dealer for
mere non-payment of the receivable through quasi-loan arrangements, dealer
holdbacks or reserve accounts or other collection collateral or guaranties.  As
a result of the assumption from the dealer of more collection risk and its
purchase of individual receivables, the Company is able to purchase receivables
at greater discounts than these competitors.  The purchase and credit criteria
and verification procedures also differ from competitor to competitor, although
the variations are smaller for those competitors directly competing with the
Company in its market niche.  Unlike the Company, certain other competitors
will only purchase "seasoned" receivables, i.e. receivables that have existed
and performed in an acceptable manner for a period of time.

     Receivables Servicing and Collections.  Upon purchase of each receivable,
the Company instructs each obligor to remit payments directly to the Company's
post office box, utilizing preprinted payment coupon booklets. Payments may
also be made in person at the Company's offices or via Western Union Quick
Collect service or through Ace Cash Express.  Though the Company's collections
operations are based at the Company's home office in Dallas, Texas, the Company
operates branch collections offices in the following cities:  Garland, Texas;
Arlington, Texas; Houston, Texas; Memphis, Tennessee.

     The Company has a staff of collection personnel that monitor payments of
the receivables and contacts obligors via telephone when payments are
delinquent.  Collections personnel generally have (i) a minimum of one year
collection experience, (ii) the ability to obtain corrective action on
delinquent accounts and (iii) knowledge and ability to comply with state and
federal debt collection laws.  Generally, if at least three semi-monthly
payments are past due and the obligor fails to make any payments, including
partial payments, for a period of 30 days, the receivable is subject to
enhanced collection efforts, including intensified telephone and written
contacts aimed at identifying the likelihood and expected amount of payment on
the receivable.  At any time thereafter, the Company may (i) contract with an
independent third party repossession company to locate and peacefully repossess
the motor vehicle securing the receivable or (ii) seek and obtain an order of a
court of competent jurisdiction for turnover of the motor vehicle.  The
decision to repossess a motor vehicle is made on a case-by-case basis by a
collections unit manager.  Factors considered by these unit managers include
recent payments and willingness on the part of the obligor to commit to payment
upon a date certain. Any delays in repossession expose the Company to the risk
of reduced resale value for the vehicle due to additional mileage and the
possibility of damage or lack of necessary maintenance or repairs to the
vehicle.

     The Company's collection and repossession activities are administered
through its ANMS.  The Company's ability through the ANMS to relationally
cross-reference receivable collection statistics against vehicle, dealer,
customer and geographic data enables the Company to monitor receivables and
adjust purchase procedures and prices.

     Following repossession, the Company sells each repossessed vehicle on a
wholesale basis to dealers at an unaffiliated motor vehicle auction at the
highest available bid.  During the period from October 1994 until December
1995, the Company sold many of its repossessed vehicles directly to consumers
at used car lots operated by the Company.  The sale of the vehicles in this
manner, rather than on a wholesale basis, created another receivable with
associated risks of default and payment delays.  Because the profits generated
by these lots was not  sufficient to justify their existence, the Company had
closed all three of its retail lots as of December 31, 1995, which will result
in reduction of direct costs and general and administrative expenses in future
periods.  The Company currently holds approximately 726 receivables originated
through these retail lots.


                                       12


<PAGE>   14




     The Company, in the past, subcontracted with LSI Financial Group ("LSI")
to provide collection and repossession services with respect to approximately
5% of the Company's motor vehicle receivables.  In September 1995, the Company
transferred all collection and repossession services previously performed by
LSI to its own collections department and now services all receivables itself.

     Expansion into Other Credit Markets.  Following completion of the Joint
Plan, the Company anticipates implementation of a program that would expand its
operations into higher credit-rated receivables.  This expansion would continue
to target borrowers with sub-standard credit histories; however, it would focus
on borrowers with increased job and residence stability, higher income, and
re-established positive credit.  If implemented, receivables purchased under
the new program would carry interest rates ranging from approximately 18% to
25%.  The receivables purchased would be secured primarily by automobiles up to
6 years in age, having been driven no more than (i) an average of 25,000 miles
per year and (ii) having 80,000 total miles.  Participating dealers would be
primarily franchised dealers and some independent dealers.

     The Auto Note Management System (ANMS).  Since its inception, the Company
has pursued a strategy of developing in-house, receivable purchase and
collection operating systems utilizing personal computer-based software and
hardware. The Company's current ANMS and related systems are connected with
outside databases, such as national credit bureaus, wholesale vehicle valuation
guides, and major dealers.  These systems contribute to the Company's ability
to satisfy the Dealer Network's needs by enhancing the Company's ability to
meet its targeted one-hour receivable processing commitment.  In addition, the
Company's ability to relationally cross-reference receivable collection
statistics against vehicle, dealer, customer and geographic data enables the
Company to monitor receivables and adjust purchasing activities and criteria
according to such comparative statistics.  The Company maintains a full-time
staff of personnel who develop and maintain the ANMS.

     Total contract collections over the life of a group of loans are primarily
dependent on repossession rates, number of payments received prior to
repossession and repossession proceeds.  While eventual repossession rates can
only be forecast during the life of a group of contracts, the percentage of
contracts that have not made their first payment ("first payment defaults"), is
a good indication of the quality of receivable purchased within a specific
period.  The individual contracts purchased and related first payment default
rates are shown below:

<TABLE>
<CAPTION>
                                                      First Payment
             Period                Contract Quantity  Default Rate
---------------------------------  -----------------  -------------
<S>                                <C>                <C>
Year Ended December 31, 1991                     331           2.4%
Year Ended December 31, 1992                   3,170           7.0%
Quarter Ended March 31, 1993                   1,945           6.8%
Quarter Ended June 30, 1993                    1,728           5.9%
Quarter Ended  September 30, 1993              2,474           9.0%
Quarter Ended December 31, 1993                3,361          11.7%
Quarter Ended March 31, 1994                   4,884           9.1%
Quarter Ended June 30, 1994                    4,604          11.3%
Quarter Ended September 30, 1994               4,122          12.5%
Quarter Ended December 31, 1994                1,334           9.3%
Quarter Ended March 31, 1995                   1,083           5.0%
Quarter Ended June 30, 1995                    1,491           3.0%
Quarter Ended September 30, 1995               1,235           3.2%
Quarter Ended December 31, 1995                  764           4.1%
</TABLE>

     The first payment default rates suggests that when contract purchasing
volume increased in 1994, the quality of the contracts being purchased may have
deteriorated.  After analysis of these contracts, the Company realized that the
high number of first payment defaults were due, in part, to (i) Dealers
overstating to the Company the amount of the downpayment made by obligors on
the receivable and (ii) Dealers overstating the value of the automobile
securing the receivable.  Obligors, because they had little downpayment
invested in the automobile or because they felt they had paid too high a price
for the automobile, were willing to allow the automobile to be repossessed
rather begin making payments.  After year end September 1994, the Company was
able to reduce first payment defaults by being more selective in the contracts
purchased and initiating personal interviews in order to verify amount of
downpayments.


                                       13


<PAGE>   15



Comparison of Three Month Periods Ended December 31, 1995, and 1994

     During the three months ended December 31, 1995, the Company purchased 764
contracts at a cost of $3,418,000 or $4,474 per contract compared to $6,162,000
or $4,619 per contract in the same period of 1994.  The Company purchased no
bulk contracts in either three month period.

     During the three months ended December 31, 1995, the Company recorded
interest revenue of $2,589,000 compared to $4,914,000 for the same period in
1994.  The 47% decrease in interest revenue is due to a decrease in interest
earning gross accounts receivable from $79,445,000 to $44,364,000 at December
31, 1995.

     Interest expense decreased from $3,354,000 to $774,000 for the three
months ended December 31, 1994 compared to the three months ended December 31,
1995.  This 77% decrease was due to the fund subsidiaries bankruptcy filings at
which time these funds ceased accruing interest expense.  For the three months
ended December 31, 1995, only amortization of deferred offering cost was
recorded in the statement of operations.

     The provision for credit losses decreased from $6,055,000 to $5,381,000
for the three months ended December 31, 1994 and 1995, respectfully.  This
decrease of $674,000 represents a 11% decrease over the three months period
ending December 31, 1994, and is necessary due to continued deterioration of
the Company's loan portfolio.

     General and Administrative expenses increased from $3,807,000 to
$4,518,000.  The increase in general and administrative  expenses reflects
increases in car lot and retail facilities operating expenses opened for three
months in December 31,1995 compared to one month in the same period in 1994.
Subsequent to December 31,1995, the Company closed all remaining car lots and
related facilities.  The Company recorded $250,000 of special charge related to
termination of leases, employment and other costs related to these operations.

     Net loss increased from $8,302,000 to $8,488,000 for the three months
ended December 31, 1994 compared to December 31, 1995.  This increase of
$186,000 is due to decreased interest revenue of $2,325,000 offset by decreases
in interest expense of $2,580,000 and provision for credit losses of $674,000.


LIQUIDITY AND CAPITAL RESOURCES

Operating Activities

     During the three months ended December 31, 1995, the Company incurred a
cash loss of $84,000 in its operations as compared to a cash loss of $1,790,000
from operations during the three months ended December 31, 1994.  Although the
cash operating loss for the three months ending December 31, 1995 decreased
$1,706,000 from a net loss of $1,790,000 for the same three months in 1994, a
significant portion of the 1995 decrease resulted from increases in accrued
expenses and accounts payable, which are non-cash charges against earnings.

     Neither Search nor any subsidiary or affiliate of Search has guaranteed
repayment of the Fund Subsidiaries' Notes.  Proceeds from each Fund
Subsidiary's receivables are restricted to repayment of that Fund Subsidiary's
Notes, the payment of certain allowed expenses, including servicing fees, and
the purchase of additional receivables.  Interest on the Fund Subsidiaries'
Notes has not been paid since June 1995 due to the Bankruptcy Proceedings.
During the Bankruptcy Proceedings, the Bankrupt Subsidiaries have continued to
operate under an order from the Bankruptcy Court authorizing the use of
cash-collateral for normal expenditures including servicing fees payable to
ACAC.  Upon Confirmation of the Joint Plan, the restricted cash balances of the
Fund Subsidiaries, which approximated $15 million as of January 31, 1996, would
be apportioned to Search and to the Noteholders Trust (based on ballots
electing the Collateral Option), net of administrative expenses of the
bankruptcy proceedings and $350,000 funding for the Litigation Trust.

     With respect to each Bankrupt Subsidiary, the Joint Plan of the Bankrupt
Subsidiaries provides that if the Joint Plan is approved, the Noteholders that
vote for the Joint Plan may elect one of two methods that deal with the
collateral securing their Notes.  The Search Equity Option generally allows the
Noteholder to receive Search securities in exchange for the release of liens on
collateral and transfer to Search of a proportionate share of the assets of the
Bankrupt Subsidiaries.  The Collateral Option allows the Noteholder to have a
proportionate share of assets of the Bankrupt Subsidiaries transferred to a
trust that will collect the remaining receivables and distribute the resulting
cash to the Noteholders.  Under this option, a servicer may continue collecting
the receivables or the receivables may be sold.  If ACAC is not selected as
servicer, it will not receive servicing fees for the collection of the
remaining receivables.

                                       14


<PAGE>   16


Financing Activities

     During the three months ended December 31, 1995, $1,164,000 of cash was
provided by financing activities compared to $1,650,000 of cash being utilized
during the same period in 1994.  This increase of cash of $2,814,000 is due to
net borrowings under HFG agreements exceeding payments to GECC by $1,222,000
compared to net payments to GECC of $402,000 during the same period in 1994.
Additionally, the Company's payment of notes payable, prepetition, exceeded its
notes payable proceeds by $990,000 during the same three months ending December
31, 1994.

     If a sufficient number of the Noteholders elect the Search Equity Option
and the Joint Plan is confirmed by the Bankruptcy Court, the amount of
unrestricted cash, contracts receivable and equity available to Search would be
adequate to allow Search to continue operating as a going concern.  If an
insufficient number of the Noteholders elect the Search Equity Option or if the
Joint Plan is not confirmed by the Bankruptcy Court, the lack of sufficient
equity would reduce the availability of new financing and result in lower
interest revenues to support Search's current level of operations.
Consequently, operations would have to be reduced or, in the extreme, Search's
ability to continue as a going concern would be jeopardized.  Based upon voting
through January 29, 1996 on the Joint Plan, Search believes that the Joint Plan
will be confirmed on the March 1, 1996, the confirmation date set by the
Bankruptcy Court, and that a sufficient number of Noteholders will elect the
Search Equity Option to allow Search to continue operations as a going concern.

     A confirmation hearing for the Joint Plan is scheduled for March 1, 1996.
The Joint Plan could be effective as early as March 12, 1996.  While the date
for filing written objections has passed without any objections being filed, if
there are other significant objections to the Joint Plan, confirmation could be
delayed beyond that date.

     Search obtained liquidity financing from HFG in November 1995.  Repayment
of the HFG financing is due on the earlier of February 27, 1996 or the
effective date of the Joint Plan.  The effective date of the Joint Plan will
not occur before the maturity date of the HFG notes; however, the maturity date
can be extended for an additional 60 days at the request of Search.  It is not
likely that further sources of liquidity financing will be available pending
confirmation of the Joint Plan.  Delays in confirmation of the Joint Plan or
discontinuance or reduction of servicing and management fees currently allowed
under interim cash-collateral orders granted by the Bankruptcy Court beyond the
60 day extension period of the HFG notes would have severe liquidity effects
for Search.  If the effective date of the Joint Plan is delayed beyond the 60
day extension period, Search would require further extension of the maturity
date of the HFG notes and would require additional working capital financing to
continue day-to-day operations and servicing of  contract receivables.

     Upon confirmation of the Joint Plan, HFG has an option to purchase, in its
sole discretion, Common Stock, New Preferred Stock and Warrants in Search for a
price up to $4.4 million.  The proceeds of any shares so purchased would be
paid to Search.  HFG also has the option to convert a portion of the financing
that HFG provided Search in November 1995 into a maximum of 2.5 million shares
of Common Stock of Search.  Search has an option to repay up to $1 million of
the HFG financing in Common Stock of Search.  Any such conversion by HFG or
Search would reduce Search's current notes payable liability to HFG.


Investing Activities

   
     During the three months ended December 31, 1995, the Company utilized
$667,000 of cash compared to $3,044,000 of cash being provided by investing
activities during the same three month period in 1994.  This decrease in cash
from investing activities of $3,711,000 is due to an increase in  restricted
cash of $4,119,000 partially offset by an increase in net purchases and
principal and repossession proceeds of $337,000.
    

     Search has obtained tentative financing commitments for a warehouse line
and a securitization line of credit subject to confirmation of the Joint Plan,
due diligence to be performed by the lender and completion of definitive
documentation.  This financing would be utilized for the purchase of contract
receivables after the confirmation of the Joint Plan.  The financing as
contemplated would be adequate to fund anticipated future operations of Search.
If the Joint Plan is not confirmed or if the confirmation is delayed, the
lender may decide to withdraw its commitment.  Search may be unable to obtain
alternative financing if the Joint Plan is not confirmed.







                                       15


<PAGE>   17



General

     The consolidated financial statements have been prepared on a going
concern basis, which contemplates continuity of operations, realization of
assets and liquidation of liabilities in the ordinary course of business.
However, as a result of the Bankruptcy proceedings, and the reliance by Search
on the cash flows derived from the Fund Subsidiaries, such realization of
assets and liquidation of liabilities are subject to significant uncertainty.


Effective Interest Rates

     Interest expense is derived from the Notes issued by the Fund Subsidiaries
and consists of both stated and effective rates.  The stated rate reflects the
interest due to be paid to the noteholder while the effective rate includes the
amortization of offering costs.  The Company's weighted average stated interest
rates and weighted average effective cost of borrowing, after considering the
amortization of offering costs, has been:


<TABLE>
<CAPTION>
                                          Year Ended        9 Months Ended        Year Ended          Year Ended
                                       December 31, 1992  September 30, 1993  September 30, 1994  September 30, 1995
                                       -----------------  ------------------  ------------------  ------------------
<S>                                        <C>                <C>                 <C>                 <C>
Weighted average stated interest rate         17.9%               15.6%               14.7%               11.7%
Weighted average effective
 cost of borrowing                            24.8%               21.5%               20.2%               16.1%
</TABLE>

     The stated and effective rates reflect a reduction in interest rate due to
interest expense not recorded since the date of filing for bankruptcy and
current defaults by the Fund Subsidiaries as discussed in Note 2 of the
accompanying consolidated financial statements.


Unrestricted Cash Flow Activity

     For the three months ended December 31, 1995, the Company collected
$715,000 in fund servicing fees, loan origination fees, and other fees.  This
cash flow along with interest and principal from receivables owned by the
Company, is used to fund the general and administrative expenses excluding
those of the funds.


INFLATION

     Historical statistics indicate that collateral value, vehicle sales
prices, and receivable interest rates are relatively stable within the
Company's market segment.  However, significantly changing prices could impact
the Company's ability to acquire receivables at favorable prices.  Changes in
the Company's interest rates can affect Company interest expense.


                                       16


<PAGE>   18



                           PART II -OTHER INFORMATION


ITEM 1. Legal Proceedings

     On August 14, 1995, Automobile Credit Finance, Inc., Automobile Credit
Finance 1991-III, Inc., Automobile Credit Finance 1992-II, Inc., Automobile
Credit Finance III, Inc., Automobile Credit Finance IV, Inc., Automobile Credit
Finance V, Inc., Automobile Credit Finance VI, Inc. and Automobile Credit
Partners, Inc., which are wholly-owned subsidiaries of Search, each filed, on
August 14, 1995, a petition in the U.S. Bankruptcy Court in the Northern
District of Texas, Dallas Division ("Court"), seeking protection under Chapter
11 of the U.S. Bankruptcy Code ("Code").  These cases have been consolidated as
one case for administration (Case No. 395-34981-RCM-11) (See Note 4 for
additional discussion).

     On July 7, 1994, a class action civil lawsuit was filed against Search,
certain of its officers and directors, one of its former accounting firms and
the lead underwriter and one of its principals involved in the issuance of
Search's Common Stock.  This action was filed in the United States District
Court for the Northern District of Texas, Dallas Division, and is styled Ellen
O'Shea, et al v. Search Capital Group, Inc., et al.  Civil Action No.
3:94-CV-1428-J.  On July 11, 1994, and on July 13, 1994, similar actions in
John R. Boyd, Jr., et al. v. Search Capital Group, Inc., et al., Civil Action
No. 3:94-CV-1452-J; and Gary Odom v. Search Capital Group, Inc., et al,. Civil
Action No. 3:94-CV-1494-J, respectively, were also filed.  The above cases were
consolidated in September 1994 under Civil Action No. 3:94-CV-1428-J (the
"Class Action Suit").

     The Class Action Suit was filed on behalf of all purchasers of Search's
Common Stock during the period beginning December 10, 1993 and ending through
July 5, 1994, which was the date that Search made a public announcement
regarding lower earnings.  The Class Action Suit contends that Search made
misstatements in its registration statements concerning Search's computerized
system, accounting methodologies used by Search, collectibility of its
receivables and repossession rates of autos that secured its receivables.  The
plaintiffs also complained of allegedly false public filings, press releases
and reports issued during 1994.  The plaintiffs sought damages, rescission ,
punitive damages, pre-judgment interest, fees, costs, equitable relief and/or
injunctive relief and such other relief as the court may deem just and proper.

     Search's management and counsel for the plaintiffs have entered into a
stipulation of settlement (the "Settlement") of the Class Action Suit.  This
Settlement was initially filed with the court on August 4, 1995, and an amended
version of the Settlement was filed on November 13, 1995.  No objections to the
Settlement have been received to date.  The Settlement provides for the payment
by Search of $287,500 upon approval of the Settlement ($100,000 has already
been deposited in an escrow account maintained by the plaintiff's lawyers), and
the issuance by Search of its Common Stock with a value of $2,612,500 or cash.
The settlement provides that the number of shares of Common Stock to be issued
to the Class shall be computed using the average of the bid/ask price of the
last 30 days ending generally on the date that the Settlement becomes final
prior to the date of distribution of the shares.

     Final effectiveness of the Settlement is conditioned upon court
certification of the class of plaintiffs for the Settlement and court approval
of the fairness of the Settlement.  Search believes that the Settlement is fair
and equitable to the class of plaintiffs and will ultimately be approved.  A
final, non-appealable order approving the Settlement is a condition precedent
to the implementation of the Search Equity Option under the Joint Plan.  In
February 1996, the U.S. District Court issued a "Preliminary Order Approving
the Proposed Class Settlement".   The Court has preliminarily approved the
settlement as "fair, reasonable, and adequate" and set a date, April 26, 1996,
for a further hearing to determine whether the preliminary order should become
final.

     In December 1993, Automobile Credit Acceptance Corp. ("ACAC"), a
subsidiary of Search, was joined as a defendant in a pending civil action filed
in the 153rd Judicial District Court, Tarrant County, Texas, styled Autostar
Solutions, Inc. v. Tim Clothier and Automobile Credit Acceptance Corporation,
Cause No. 153-144940.  The plaintiff in this action alleges the existence of a
partnership between the plaintiff and another defendant and seeks damages,
actual and exemplary, and an injunction for alleged conversion and
misappropriation of certain property, including computer programs, allegedly
owned by Autostar.  In the petition, the plaintiff alleges that ACAC wrongfully
assisted its co-defendant and tortiously interfered with the plaintiff's
contracts and business and has claimed, as damages, $250,000.  ACAC believes
that these allegations are without merit because it did not interfere with the
plaintiff's contracts and business and did not obtain in an improper manner any
property belonging, at least in part, to Autostar.  ACAC has filed a general
denial and has pending a motion for partial summary judgment.  Discovery in
this case is ongoing and no opinion can be given as to the final outcome of the
lawsuit.


                                       17


<PAGE>   19



     Search received notice from plaintiffs that a suit had been filed on
December 21, 1995 against Search, certain of its former officers and
directors, and certain underwriters of three of the Fund Subsidiaries.  The
case is styled Janice and Warren Bowe, et. al. vs. Search Capital Group, Inc.,
et. al., Cause No. 1:95CV 649GR and was filed in the Federal District Court for
the Southern District of Mississippi.  The plaintiffs allege violations of the
securities laws by  the defendants and seeks unspecified damages, rescission,
punitive damages and other relief.  The plaintiffs also seek establishment of a
class of plaintiffs consisting of all persons who have purchased Notes issued
by three of the Fund Subsidiaries.  The Company has been unable to evaluate the
merit of these claims.



ITEM 6 (B).  Reports on Form 8-K.
             --------------------

        None.


                                       18


<PAGE>   20






                                   SIGNATURES



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


                              SEARCH CAPITAL GROUP, INC.







    DATE:  February 20, 1996
                              BY:  /s/ George C. Evans
                                   -----------------------------------------
                                   George C. Evans
                                   Chairman, President, Chief Executive
                                   Officer and Director


    DATE:  February 20, 1996
                              BY:  /s/ Robert D. Idzi
                                   -----------------------------------------
                                   Robert D. Idzi
                                   Executive Vice President, Chief Financial
                                   Officer and Treasurer


    DATE:  February 20, 1996
                              BY:  /s/ Andrew D. Plagens
                                   -----------------------------------------
                                   Andrew D. Plagens
                                   Vice President and Controller


                                       19