<PAGE>
                               UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                              WASHINGTON, DC 20549

                                    FORM 10-Q


(Mark  One)

[X]  QUARTERLY  REPORT  PURSUANT  TO  SECTION  13  OR  15(d)  OF  THE SECURITIES
      EXCHANGE  ACT  OF  1934

For  the  quarterly  period  ended  March  31,  1999

                                       OR

[   ]  TRANSITION  REPORT  PURSUANT  TO  SECTION  13  OR 15(d) OF THE SECURITIES
       EXCHANGE  ACT  OF  1934

For  the  transition  period  from  _______  to  _______

                        COMMISSION FILE NUMBER 000-21673
                                               ---------

                         AUTOBOND ACCEPTANCE CORPORATION

             (Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>



<S>                                                 <C>

                           TEXAS                      75-2487218

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


             100 CONGRESS AVENUE, AUSTIN, TEXAS           78701

          (Address of principal executive offices)      (Zip Code)

</TABLE>


                                 (512) 435-7000

               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  _____

As  of  May  17,  1999,  there  were 6,531,311 shares of the registrant's Common
Stock,  no  par  value,  outstanding.

                                    -- i --
<PAGE>


<TABLE>
<CAPTION>

<S>                                                                                   <C>
TABLE OF CONTENTS


PART I - FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . .   3
Item 1.  Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . .   3
Item 2.  Management's Discussion And Analysis Of Financial Condition And  Results Of
         Operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  15
PART II.  OTHER INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . .  32
Item 1.  Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  32
Item 2.  Changes in Securities and Use of Proceeds . . . . . . . . . . . . . . . . .  34
Item 3.  Defaults Upon Senior Securities . . . . . . . . . . . . . . . . . . . . . .  34
Item 4.  Submission of Matters to a Vote of Security Holders . . . . . . . . . . . .  35
Item 5.  Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  35
Item 6.  Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . . . . . . . . .  36
EXHIBIT 27.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  39
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  40
</TABLE>
                                    -- ii --
<PAGE>


                         PART I - FINANCIAL INFORMATION

ITEM  1.  FINANCIAL  STATEMENTS
<TABLE>
<CAPTION>

                     AUTOBOND ACCEPTANCE CORPORATION AND SUBSIDIARIES
                                CONSOLIDATED BALANCE SHEETS

<S>                                                           <C>             <C>
                                                              DECEMBER 31,    MARCH 31
                                                                       1998          1999 
                                                              --------------  ------------
                                                                               (UNAUDITED)
ASSETS
------------------------------------------------------------                              

Cash and cash equivalents. . . . . . . . . . . . . . . . . .  $   5,170,969   $ 2,233,813 
Receivable from Dynex. . . . . . . . . . . . . . . . . . . .      6,573,107             - 
Finance contracts held for sale, net . . . . . . . . . . . .        867,070     7,047,660 
Collateral acquired, net . . . . . . . . . . . . . . . . . .         70,957             - 
Retained interest in securitizations - Trading . . . . . . .      4,586,908     4,035,814 
Retained interest in securitizations - Available for Sale. .      9,286,443     8,010,503 
Debt issuance costs. . . . . . . . . . . . . . . . . . . . .        729,206       637,558 
Due from affiliates. . . . . . . . . . . . . . . . . . . . .        396,015       416,187 
Property, plant, and equipment, net. . . . . . . . . . . . .      1,187,421     1,193,081 
Deferred income taxes. . . . . . . . . . . . . . . . . . . .              -     1,497,101 
Other assets . . . . . . . . . . . . . . . . . . . . . . . .      1,463,046     2,009,485 
                                                              --------------  ------------
Total assets . . . . . . . . . . . . . . . . . . . . . . . .  $  30,331,142   $27,081,202 
                                                              ==============  ============


LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------------------------------                              

Liabilities:
Notes Payable. . . . . . . . . . . . . . . . . . . . . . . .  $  10,166,969   $10,203,252 
Non-recourse debt. . . . . . . . . . . . . . . . . . . . . .      3,185,050     2,633,956 
Payables and accrued liabilities . . . . . . . . . . . . . .      1,324,951     1,152,293 
Deferred income taxes. . . . . . . . . . . . . . . . . . . .        101,800             - 
                                                              --------------  ------------
Total liabilities. . . . . . . . . . . . . . . . . . . . . .  $  14,778,770   $13,989,501 
                                                              --------------  ------------

Commitments and contingencies

Shareholders' equity:
Preferred stock, no par value; 5,000,000 shares authorized;.  $  10,856,000   $10,856,000 
1,125,000 shares of 15% Series A cumulative preferred
stock, $10 liquidation preference, issued and outstanding,
(Dividends in arrears of $421,875)
Common stock, no par value; 25,000,000 shares authorized;. .          1,000         1,000 
6,531,311 shares issued and outstanding
Capital in excess of stated capital. . . . . . . . . . . . .      8,291,481     8,291,481 
Due from shareholders. . . . . . . . . . . . . . . . . . . .        (10,592)      (10,592)
(Accumulated deficit). . . . . . . . . . . . . . . . . . . .     (3,057,602)   (5,518,273)
Investment in common stock agreement . . . . . . . . . . . .       (527,915)     (527,915)
                                                              --------------  ------------
Total shareholders' equity . . . . . . . . . . . . . . . . .  $  15,552,371   $13,091,701 
                                                              --------------  ------------

Total liabilities and shareholders' equity . . . . . . . . .  $  30,331,142   $27,081,202 
                                                              ==============  ============

<FN>

   The accompanying notes are an integral part of the consolidated financial statements.


</TABLE>



                                    -- 1 --
<PAGE>
<TABLE>
<CAPTION>



                         AUTOBOND ACCEPTANCE CORPORATION AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
                                            (UNAUDITED)



                                                      THREE MONTHS ENDED MARCH 31,
                                                                  1998                   1999
                                                     ------------------------------  -------------
<S>                                                  <C>                             <C>

Revenues:
Interest income . . . . . . . . . . . . . . . . . .  $                   1,138,498   $    463,986 
Gain on sale of finance contracts . . . . . . . . .                      3,867,941      1,539,187 
Servicing income. . . . . . . . . . . . . . . . . .                        506,593      1,005,774 
Other income. . . . . . . . . . . . . . . . . . . .                        126,149        775,992 
                                                     ------------------------------  -------------
Total revenues. . . . . . . . . . . . . . . . . . .                      5,639,181      3,784,939 
                                                     ------------------------------  -------------
Expenses:
Provision for credit losses . . . . . . . . . . . .                        100,000         60,465 
Interest expense. . . . . . . . . . . . . . . . . .                      1,290,405        713,370 
Salaries and benefits . . . . . . . . . . . . . . .                      2,397,765      3,149,032 
General and administrative. . . . . . . . . . . . .                      1,084,264      1,869,323 
Impairment of retained interest in securitizations.                        288,023      1,051,457 
Other operating expenses. . . . . . . . . . . . . .                        649,054      1,000,864 
                                                     ------------------------------  -------------
Total expenses. . . . . . . . . . . . . . . . . . .                      5,809,511      7,844,511 
                                                     ------------------------------  -------------
Loss before income taxes. . . . . . . . . . . . . .                       (170,330)    (4,059,572)
Benefit from income taxes . . . . . . . . . . . . .                        (49,192)    (1,598,901)
                                                     ------------------------------  -------------
Net loss. . . . . . . . . . . . . . . . . . . . . .                       (121,138)    (2,460,671)

Preferred stock dividend in arrears . . . . . . . .                              -       (421,875)
                                                     ------------------------------  -------------

Net loss attributable to common shareholders. . . .  $                    (121,138)  $ (2,882,546)
                                                     ==============================  =============

Weighted average number of common shares:
            Basic . . . . . . . . . . . . . . . . .                      6,531,311      6,531,311 
            Diluted . . . . . . . . . . . . . . . .                      6,531,311      6,531,311 
Loss per common share:
           Basic. . . . . . . . . . . . . . . . . .                         ($0.03)        ($0.44)
           Diluted. . . . . . . . . . . . . . . . .                         ($0.03)        ($0.44)

Net loss. . . . . . . . . . . . . . . . . . . . . .                      ($121,138)   ($2,882,546)
Other comprehensive income, net of tax:
            Unrealized loss on retained interest in
            Securitizations . . . . . . . . . . . .                        (38,381)             - 
                                                     ------------------------------  -------------
            Comprehensive loss. . . . . . . . . . .                     ( $159,519)   ($2,882,546)
                                                     ==============================  =============

<FN>

        The  accompanying  notes  are  an  integral part of the consolidated financial statements.

</TABLE>



                                    -- 2 --
<PAGE>


<TABLE>
<CAPTION>


                AUTOBOND ACCEPTANCE CORPORATION AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                   (UNAUDITED)

                                  THREE MONTHS ENDED
                                    MARCH 31, 1999
                                    --------------

<S>                                    <C>        <C>
                                       SHARES     AMOUNT
Preferred stock:
Beginning balance . . . . . . . . . .  1,125,000  $10,856,000 
Ending Balance. . . . . . . . . . . .  1,125,000   10,856,000 

Common stock:
Beginning balance . . . . . . . . . .  6,531,311        1,000 
Ending balance. . . . . . . . . . . .  6,531,311        1,000 

Capital in excess of stated capital:
Beginning balance . . . . . . . . . .          -    8,291,481 
Ending balance. . . . . . . . . . . .          -    8,291,481 


Due (from) shareholders:
Beginning balance . . . . . . . . . .          -      (10,592)
Ending balance. . . . . . . . . . . .          -      (10,592)

Accumulated Deficit:
Beginning balance . . . . . . . . . .          -   (3,057,602)
Net loss. . . . . . . . . . . . . . .          -   (2,460,671)
                                                  ------------
Ending balance. . . . . . . . . . . .          -   (5,518,273)

Investment in common stock agreement:
Beginning balance . . . . . . . . . .          -  $  (527,915)
Ending Balance. . . . . . . . . . . .          -     (527,915)

Total shareholders' equity. . . . . .          -  $13,091,701 
                                                  ============



<FN>

The  accompanying  notes  are  an  integral  part  of the consolidated financial
statements.
</TABLE>



                                    -- 3 --
<PAGE>


<TABLE>
<CAPTION>


                    AUTOBOND ACCEPTANCE CORPORATION AND SUBSIDIARIES
                          CONSOLIDATED STATEMENTS OF CASH FLOWS
                                       (UNAUDITED)


                                                             THREE MONTHS ENDED
                                                                 MARCH 31,

<S>                                                          <C>            <C>
                                                                     1998          1999 
                                                             -------------  ------------
OPERATING ACTIVITIES:
Net loss. . . . . . . . . . . . . . . . . . . . . . . . . .  $   (121,138)  $(2,460,671)
Reconcile net loss to net cash from operating activities:
Amortization of debt issuance costs and discounts
Depreciation and amortization . . . . . . . . . . . . . . .       465,019       272,364 
Provision for credit losses . . . . . . . . . . . . . . . .       100,000        60,465 
Provision for loss on collateral acquired . . . . . . . . .             -        70,957 
Accretion of retained interest in securitizations . . . . .      (127,980)            - 
Impairment of retained interest in securitizations. . . . .       288,023     1,051,457 
Gain on sale of finance contracts . . . . . . . . . . . . .    (3,867,941)   (1,539,187)
      Deferred income taxes . . . . . . . . . . . . . . . .        49,192    (1,598,901)
  Changes in operating assets and liabilities:
      Restricted funds. . . . . . . . . . . . . . . . . . .    (5,634,807)            - 
Receivable from Dynex . . . . . . . . . . . . . . . . . . .             -     6,573,107 
Finance contracts held for sale . . . . . . . . . . . . . .     1,942,222    (4,701,868)
Retained interest in securitizations. . . . . . . . . . . .    (3,943,688)      224,484 
Due to(from) affiliate. . . . . . . . . . . . . . . . . . .       (22,500)      (20,172)
Prepaids and other assets . . . . . . . . . . . . . . . . .       311,063      (546,439)
   Accounts payable and accrued liabilities . . . . . . . .    (1,877,414)     (172,658)
      Payable to affiliates . . . . . . . . . . . . . . . .     1,897,942             - 
                                                             -------------  ------------
             Cash used by operating activities. . . . . . .   (10,542,007)   (2,787,062)
INVESTING ACTIVITIES:
    Proceeds from disposal of collateral acquired . . . . .        13,517             - 
    Purchases of property, plant and equipment. . . . . . .             -      (144,522)
                                                             -------------  ------------
             Cash provided (used) by investing activities .        13,517      (144,522)
FINANCING ACTIVITIES:
Net payments on revolving credit facilities . . . . . . . .    (2,959,461)            - 
Payments for debt issuance costs. . . . . . . . . . . . . .    (2,263,829)            - 
Proceeds from notes payable . . . . . . . . . . . . . . . .     7,650,000             - 
Payments on notes payable . . . . . . . . . . . . . . . . .    (2,253,315)       (5,572)
Decrease in bank overdraft. . . . . . . . . . . . . . . . .       231,268             - 
Proceeds from public offering of preferred stock, net . . .     9,631,407             - 
Dividends paid on preferred stock . . . . . . . . . . . . .             -             - 
Proceeds from issuance of common stock warrants . . . . . .       394,000             - 
                                                             -------------  ------------
               Cash provided (used) by financing activities    10,430,070        (5,572)
                                                             -------------  ------------
Decrease in cash. . . . . . . . . . . . . . . . . . . . . .       (98,420)   (2,937,156)
Beginning cash balance. . . . . . . . . . . . . . . . . . .       159,293     5,170,969 
                                                             -------------  ------------
ENDING CASH BALANCE . . . . . . . . . . . . . . . . . . . .  $     60,873   $ 2,233,813 
                                                             =============  ============

<FN>

  The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>


                                    -- 4 --
<PAGE>

                AUTOBOND ACCEPTANCE CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


1.     Basis  of  Presentation

     The  consolidated  financial  statements of AutoBond Acceptance Corporation
(the  "Company")  included  herein  are  unaudited  and  have  been  prepared in
accordance  with  generally  accepted accounting principles ("GAAP") for interim
financial  reporting and Securities and Exchange Commission ("SEC") regulations.
Certain  information  and  footnote  disclosures  normally included in financial
statements  prepared  in  accordance  with  GAAP  have been condensed or omitted
pursuant  to regulations. In the opinion of management, the financial statements
reflect all adjustments (consisting only of a normal and recurring nature) which
are  necessary  to  present fairly the financial position, results of operations
and  cash  flows  for  the  interim periods. Results for interim periods are not
necessarily  indicative of the results for a full year. For further information,
refer  to the audited financial statements and footnotes thereto included in the
Company's  Annual Report on Form 10-K for the year ended December 31, 1998, (SEC
File  Number  000-21673). Certain data from the prior year has been reclassified
to  conform  to  the  1999  presentation.


2.     Earnings  per  Share

     Basic  earnings  per  share excludes potential dilution of potential shares
and  is  computed  by  dividing  income  available to common shareholders by the
weighted-average  number  of  common  shares outstanding for the period. Diluted
earnings  per  share  reflects  the  potential  dilution  that  could  occur  if
securities  or other contracts to issue common stock were exercised or converted
into  common  stock or resulted in the issuance of common stock that then shared
in  the  earnings  of  the  Company unless such issuance would be anti-dilutive.


3.     Finance  Contracts  Held  for  Sale

<TABLE>
<CAPTION>

     The  following  amounts  are included in finance contracts held for sale as
of:


                                 December 31, 1998    March 31, 1999
                                -------------------  ----------------
<S>                             <C>                  <C>
Unpaid principal balance . . .  $          944,830   $     7,519,770 
Accrued interest . . . . . . .                   -            82,407 
Contract acquisition discounts             (64,067)         (538,813)
Allowance for credit losses. .             (13,693)          (15,704)
                                $          867,070   $     7,047,660 
                                ===================  ================

</TABLE>



4.     Retained  Interest  In  Securitizations

     The  Company's  retained interests in securitizations represent the present
value  of  expected  future  cash  flows  to  the  Company from sales of finance
contracts.  The  amount  of  these  retained  interests  may  be  increased  by
additional sales or securitizations.  The amount of these retained interests may
decrease  in  the case of impairments caused by a revaluation of the future cash
flows.  Retained  interests  in  securitizations  will  also decrease due to the
Company's  receipt  of  cash  flows  from  their  investment.

     The  Company  utilizes  a  financial model to project the cash flows from a
pool  of  finance  contracts.  This  model  projects  cash flows for contractual
parties  including  investors,  trustees and servicers, as well as the Company's
retained  interests.  As  is  the  case  with  most  financial  models,  its
effectiveness  is  primarily 
                                    -- 5 --
<PAGE>
driven  by  the  performance  over  time  of  key  financial  model assumptions,
including:  default  rates; delinquency rates; prepayment rates; discount rates;
initial, ongoing and minimum cash reserve requirements; the interest rate earned
on  cash  reserves;  recovery  amounts  for repossessions; repossession recovery
lags;  insurance  claims recovery amounts; insurance recovery lags; and on-going
servicing/trustee fees. Periodically, the Company's financial models and related
assumptions  have been updated to reflect the actual performance characteristics
of the finance contracts. All valuations are conducted on a disaggregated basis.
Impairment  of retained interest in securitizations for the quarter endend March
31,  1999  was  $1,051,457.

     The  Company's  term  securitizations have involved the placement of excess
spread  backed  notes,  sometimes  referred  to as "B Pieces" with institutional
investors.  All  assumptions  used  to  size  and  sell  these  "B  Pieces" were
identical  to  the  initial  gain-on-sale  assumptions  the Company applied with
respect to retained interests. The discount rates applied for retained interests
ranged  from  15% to 17%.  The non-vector equivalent of annualized default rates
typically  ranged  from  10%  to 12%. The default rate assumptions are estimated
based  on the historical static pool results. Repossession recovery ratios, with
deficiency  insurance  proceeds  reflected,  typically  ranged  from 80% to 90%.

     Two  primary  causes led to  the impairment charges to retained interest in
securitizations.  The  Company  has  been engaged in litigation with Progressive
Northern  Insurance  Company  ("Progressive")  regarding  the  interpretation of
default  insurance  coverage the Company acquired to enhance recoveries.  During
the  earlier  stages  of  the  dispute,  Progressive  continued  to  pay claims.
However,  in April 1998 Progressive stopped paying claims. The loss of cash flow
from  Progressive  necessitated  drawing  funds  from  the applicable trust cash
reserves  to  pay  senior  security  holders.  The  Company  is  the  ultimate
beneficiary  of the cash reserves, and such reserves will need to be replenished
before  cash flows may resume to the other certificate holders and ultimately to
the  Company.  The  depletion  and expected delay in receiving any ultimate cash
flows reduced the value of the retained interests.  The Company has continued to
include the expected cash flows from Progressive in its cash flows models.  Even
though  the  Company  and its legal counsel are optimistic that the Company will
prevail  in its litigation, at this time, Progressive has not resumed payment of
claims.  Should  the  Company's  interpretation  be incorrect, the Company would
need  to reassess the carrying value of its retained interest in securitizations
under  new  assumptions  and  the  result of this revaluation could be material.

     The  second  primary  factor was the transfer of servicing functions to the
Company  from a third party service provider, Loan Servicing Enterprise ("LSE").
In  March  1998,  the  Company  commenced  litigation against LSE, pertaining to
breaches  of its servicing obligations.  As the Company assumed all servicing it
accelerated the rate of charge-offs as compared with prior periods.  Accelerated
charge-offs  resulted  in the diversion of any available cash flow to the senior
investors  that  otherwise would flow to subordinate investors or to the benefit
of  the  Company.  In attempting to resolve certain of these issues with Moody's
Investors  Service  ("Moody's"),  the  agency  rating the senior securities, the
Company committed to Moody's in May 1998 that it would not release monies to the
"B  Piece" investors until all charge-offs have been reflected in the cash flows
attributable to the senior investors.  The delay of payments to the subordinated
investors causes accretion of the principal amount of their high interest rate B
Pieces  and  a corresponding impairment of the Company's retained interest.  The
accelerated  charge-offs  and  the  Company's  decision in May 1998 to commit to
Moody's to withhold monies from the B Piece Holders, resulted in a direct impact
on  the  valuation  of the retained interests.  A total of eight securitizations
were  impacted  by  this  action.

     The  Company  has engaged counsel to perform a deal-by-deal analysis of the
structural  and  legal  integrity of these transactions and resolve the concerns
raised  by  Moody's.  In  the  meantime,  the  Company  has been notified by the
trustees  on  certain  of the securitizations that the action of Moody's and the
alleged  causes  constituted  events  of  servicer  termination  under  such
transactions.  The trustees have threatened to remove the Company as servicer on
certain  transactions,  and  have  withheld  administrator  fees and expenses of
approximately $ 1.3 million as of March 31, 1999, due to the Company.  Since the
Company is of the view that no events of servicing termination have occurred and
that the transactions documents did not intend for servicing compensation to the
Company  to  be  cut  off  where  the cause of an event of default is due to the
actions  of Progressive and LSE (the former servicer), the Company is seeking to
resolve  those 
                                    -- 6 --
<PAGE>
issues to the satisfaction of all parties.  See Note 8 below for a discussion of
further contingencies with respect to the Company's interests in 
securitizations.


5.     Revolving  Credit  Facilities

     On  June  10,  1998, the Company and Dynex Capital, Inc., ("Dynex") entered
into  an  arrangement  whereby  the  Company obtained a commitment from Dynex to
purchase  all  currently  warehoused  and  future  automobile  finance  contract
acquisitions through at least May 31, 1999 (the "Funding Agreement").  The terms
of  the  Funding Agreement were modified on June 30, October 20, and October 28,
1998.  Under  the  prior  terms of the Funding Agreement, the Company transfered
finance contracts to AutoBond Master Funding Corporation V ("Master Funding V"),
a qualified unconsolidated special purpose subsidiary, and Dynex provided credit
facilities  in  an  amount  equal to 104% of the unpaid principal balance of the
finance  contracts  (the  "Advance  Rate").  The proceeds of such facilities are
received by the Company.  Under the modified terms of the Funding Agreement, the
Advance  Rate  was  reduced from 104% to 88% for an interim period (the "Interim
Period")  ending  December  31,  1998.  At  the  end  of the Interim Period, the
Advance  Rate  reverted  to 104% and Dynex was to advance to Master Funding V an
additional  amount  equal  to  16%  of  the  unpaid principal balance of finance
contracts  financed  by Dynex during the Interim Period.  This additional amount
receivable  from  Dynex  totalled  $6.5  million  at  December 31, 1998, and was
collected in January and February 1999. Advances under the Funding Agreement are
evidenced  by  Class  A  and Class B Notes (collectively, the "Notes") issued by
Master  Funding  V to Dynex.  The Class A Notes are issued in a principal amount
equal  to  94.0% of the unpaid principal balance of the finance contracts (88.0%
for advances funded during the Interim Period) and bear interest at a rate equal
to  190  basis points over the corporate bond equivalent yield on the three-year
Treasury  note  on the closing date for each such advance. The Class B Notes are
issued  in  a principal amount equal to 10.0% of the unpaid principal balance of
the  finance  contracts (0.0% for advances funded during the Interim Period) and
bear  interest  at  a  rate  equal  to  16%  per  annum.  The  Company retains a
subordinated  interest  in  the  pooled finance contracts.  Transfers of finance
contracts  to the qualified special purpose entity have been recognized as sales
under  SFAS No. 125.  The Company transferred $12.6 million in finance contracts
during  the  quarter  ended March 31, 1999. At March 31, 1999, advances by Dynex
under  the  Funding Agreement totaled $ 169.2 million. See Note 8 for the status
of  the  Dynex  Funding  Agreement.


6.     Notes  Payable  and  Non-Recourse  Debt

<TABLE>
<CAPTION>

     The  following  amounts  are  included  in notes payable and non-recourse debt as of:


<S>                                                                <C>             <C>
                                                                    December 31,      March 31,
                                                                           1998           1999 
                                                                                    (Unaudited)
                                                                   -------------   ------------
Non-recourse notes payble, collateralized by Class B Certificates  $   3,185,050   $ 2,633,956 
Convertible Senior Notes. . . . . . . . . . . . . . . . . . . . .      3,000,000     3,000,000 
Convertible Subordinated Notes. . . . . . . . . . . . . . . . . .      7,500,000     7,500,000 
Other notes payable . . . . . . . . . . . . . . . . . . . . . . .         23,342        17,771 
Discount on subordinated notes payable. . . . . . . . . . . . . .       (356,373)     (314,519)
                                                                   --------------  ------------
                                                                   $  13,352,019   $12,837,208 

</TABLE>



                                    -- 7 --
<PAGE>
     On  June  10,  1998,  the  Company  sold  to Dynex at par $3 million of the
Company's  12% Convertible Senior Notes due 2003 (the "Senior Notes").  Interest
on  the  Senior Notes is payable quarterly in arrears, with the principal amount
due  on  June 9, 2003.  The Senior Notes may be converted at the option of Dynex
on  or  before  May  31,  1999  into  shares  of the Company's common stock at a
conversion price of $6.00 per share.  Demand and "piggyback" registration rights
with respect to the underlying shares of common stock were granted.  The Company
has  made  all interest payments due on the Senior Notes and expects to continue
to  meet  such  obligations.  Dynex  also has purported to accelerate the Senior
Notes.  The  Company  disputes  the  validity  of  such  acceleration.

     In  January 1998, the Company privately placed with BancBoston Investments,
Inc.  ("BancBoston")  $7,500,000 in aggregate principal amount of its 15% senior
subordinated  convertible  notes  (the  "Subordinated  Notes").  Interest on the
Subordinated  Notes is payable quarterly until maturity on February 1, 2001. The
Subordinated Notes are convertible at the option of the holder for up to 368,462
shares of common stock of the Company, at a conversion price of $3.30 per share,
subject  to adjustment under standard anti-dilution provisions. The Company also
granted BancBoston a warrant to purchase company stock exercisable to the extent
the  debt  is  not  converted (See Note 7).  In the event of a change of control
transaction,  the  holder  of  the Subordinated Notes may require the Company to
repurchase  the  Subordinated Notes at 100% of the principal amount plus accrued
interest.  The Subordinated Notes are redeemable at the option of the Company on
or  after  July  1,  1999 at redemption prices starting at 105% of the principal
amount,  with  such  premium reducing to par on and after November 1, 2000, plus
accrued  interest.  The Subordinated Notes were issued pursuant to an Indenture,
dated  as  of  January  30,  1998  (the  "Indenture")  between  the  Company and
BankBoston, N.A., as agent. The Indenture contains certain restrictive covenants
including:  (i)  a  consolidated leveraged ratio not to exceed 2 to 1 (excluding
non-recourse  warehouse  debt  and  securitization  debt);  (ii)  limitations on
payments  such  as  dividends (but excluding, so long as no event of default has
occurred  under the Indenture, dividends or distributions on the preferred stock
of the Company); (iii) limitations on sales of assets other than in the ordinary
course  of  business;  and (iv) certain financial covenants, including a minimum
consolidated  net  worth of $12 million (plus proceeds from equity offerings), a
minimum  ratio  of  EBITA  to  interest  of  1.5  to 1, and a maximum cumulative
repossession  ratio  of  27%.  Events  of  default  under  the Indenture include
failure  to  pay, breach of covenants, cross-defaults in excess of $1 million or
material  breach  of  representations  or covenants under the purchase agreement
with  BancBoston.  The  Company capitalized debt issuance costs of $594,688, and
recorded  a  discount  of  $507,763  on  the  debt representing the value of the
warrants  issued.  The  debt  issuance  cost  and discount is being amortized as
interest  expense  on  the  interest method through February 2001.  At March 31,
1999,  the  Company  did  not  meet  certain  of  its financial covenants, which
constitutes an event of default on the Subordinated Notes.  The Company has made
all  payments due on its Subordinated Notes and expects to continue to meet such
obligations.  The  Subordinated  Notes  have  not  been  formally accelerated by
BancBoston;  however,  if  such acceleration were made, BancBoston could declare
such  amounts  immediately  due.


7.  Stockholders'  Equity

Preferred  Stock
     In February 1998, the Company completed the underwritten public offering of
1,125,000  shares of its 15% Series A Cumulative Preferred Stock (the "Preferred
Stock"), with a liquidation preference of $10 per share. The price to the public
was $10 per share, with net proceeds to the Company of approximately $9,631,000.
Such net proceeds have been utilized for working capital purposes, including the
funding  of  finance  contracts. Dividends on the Preferred Stock are cumulative
and  payable quarterly on the last day of March, June, September and December of
each  year,  commencing  on  June  30, 1998, at the rate of 15% per annum. After
three  years  from  the date of issuance, the Company may, at its option, redeem
one-sixth of the Preferred Stock each year, in cash at the liquidation price per
share  (plus  accrued and unpaid dividends), or, if in common stock, that number
of  shares  equal to $10 per share of Preferred Stock to be redeemed, divided by
85%  of  the  average  closing sale price per share for the common stock for the
five  trading  days  prior  to  the redemption date.  The Preferred Stock is not
redeemable at the option of the holder and has no stated maturity. The Preferred
Stock  dividend  was  not  paid  for  the  first  quarter  of  1999.

                                    -- 8 --
<PAGE>
     Because  the Company is not in compliance with the certain of the financial
covenants  of  its  Subordinated  Notes,  the  Company did not pay the quarterly
dividend  on  its  Preferred  Stock,  otherwise  payable  on March 31, 1999.  If
dividends  on  the  Preferred  Stock  are  in arrears for two quarterly dividend
periods,  holders  of  the  Preferred  Stock  will  have  the right to elect two
additional  directors  to  serve  on the Company's Board of Directors until such
dividend  arrearage  is  eliminated.  In  addition,  certain  changes that could
materially  affect  the  holders  of  Preferred  Stock,  such as a merger of the
Company,  cannot  be  made  without  the  affirmative  vote  of  the  holders of
two-thirds  of  the  shares  of Preferred Stock, voting as a separate class. The
Preferred  Stock ranks senior to the common stock with respect to the payment of
dividends  and  amounts  upon  liquidation,  dissolution  or  winding  up.


Warrants
     In  connection  with  the  issuance of Preferred Stock, the Company sold to
Tejas  Securities  Group,  Inc.  ("Tejas"),  for  $100,  a  warrant  (the "Tejas
Warrant")  to  purchase up to 100,000 shares of the Company's common stock at an
exercise  price equal to $7.75 per share. The Tejas Warrant is exercisable for a
period of four years commencing February 17, 1999.  The Tejas Warrant includes a
net  exercise  provision  permitting the holder, upon consent of the Company, to
pay  the exercise price by cancellation of a number of shares with a fair market
value  equal  to  the  exercise  price  of  such Tejas Warrant. The value of the
warrant  of  $394,000  was recorded as additional issuance cost of the Preferred
Stock.

     In  connection  with  the  issuance  of the Company's Subordinated Notes in
January 1998, the Company issued to BancBoston a warrant (the "Subordinated Note
Warrant").  The Subordinated Note Warrant entities the holder, upon the exercise
thereof,  to  purchase  from  the Company that number of shares of the Company's
common stock, up to 368,462, which were available for conversion at the maturity
of the Subordinated Notes on February 1, 2001. The holder may either convert the
debt  represented  by  the  Subordinated Notes or exercise the Subordinated Note
Warrant  but  not  both.  The  Subordinated  Note  Warrant  contains  customary
anti-dilution provisions, as well as certain demand and "piggyback" registration
rights.  In  addition,  if  certain  major corporate events (such as a change in
control  or  major  stock offering) do not occur prior to February 1, 2001, then
the  holder  will  have  the  right  to put the Subordinated Note Warrant to the
Company  at  the  difference  between  the current market price and the exercise
price  of  the Subordinated Note Warrant. Based on the market price at March 31,
1999,  no  amount  would  be payable at such date. The Company has the option to
redeem  the  Subordinated  Note  Warrant  under  certain  circumstances.  The
Subordinated  Note  Warrant  expires  on January 31, 2005. The Subordinated Note
Warrant  was  valued  at  $375,831 which was recorded as a discount on the debt.

     In  connection  with  the  placement  of  the  Subordinated  Notes  and the
Subordinated  Note  Warrant,  the  Company,  William  O.  Winsauer  and  John S.
Winsauer, as principals (the "Principals") entered into a Shareholders Agreement
with  BancBoston  pursuant to which the Principals granted to BancBoston certain
"tag-along  rights"  in connection with sales of common stock by the Principals.
Also,  the  Company  paid  a  placement fee of 5% of the principal amount of the
Subordinated  Notes  to  Dresner  Investment  Services,  Inc.  and issued to the
placement  agent  a  warrant  to  purchase  65,313 shares of common stock of the
Company,  at  an  exercise  price  of  $6.30  per  share.

     The  Company's  remaining  outstanding  warrants  are  a  warrant (expiring
January  12,  2000) held by an individual exercisable for 7,500 shares of common
stock  of  the  Company at a price of $4.00 per share, a warrant (expiring March
31,  2002)  held by Infinity Investors Limited exercisable for 100,000 shares of
common stock of the Company at a price of $8.73 per share , a warrant held by an
individual  to  purchase 30,000 shares of common stock of the Company at a price
of  $4.225, and a warrant held by Infinity Investors Limited to purchase 200,000
shares  of  common  stock  of  the  Company  at  a  price  of  $4.225.


Common  Stock  Investment  Agreement
     On  May  20,  1998,  the  Company  and  Promethean Investment Group, L.L.C.
("Promethean") entered into a common stock investment agreement (the "Investment
Agreement")  and related registration rights agreement whereby Promethean agreed
to  purchase from the Company, on the terms and conditions outlined below, up to
$20  million  (subject  to increase up to $25 million at Promethean's option) of
the
                                    -- 9 --
<PAGE>
Company's  common  stock.  The  Company must deliver a preliminary notice of its
intention  to  require Promethean to purchase its common shares at least ten but
not  more  than thirty days prior to the Company's delivery of its final notice.
The Company may only deliver such final notice if (i) the dollar volume-weighted
price  of  its common stock reported on the business day of such final notice is
at  least  $3.25 per share, (ii) at all times during the period beginning on the
date  of  delivery  of  the  preliminary  notice and ending on and including the
closing  date  (a)  a registration statement covering the resale of no less than
150%  of  the shares to be sold to Promethean under the Investment Agreement has
been declared and remains effective and (b) shares of the Company's common stock
are  at  such time listed on a major national securities exchange, and (iii) the
Company  has  not  delivered  another  final  notice  to  Promethean  during the
preceding  twenty-five  business  days  preceding delivery of such final notice.
Following receipt of a final notice, Promethean's purchase obligation will equal
the lowest of (i) the amount indicated in such final notice, (ii) $5,000,000 and
(iii)  20%  of  the  aggregate  of the daily trading dollar volume on the twenty
consecutive  business days following delivery of the put notice. Promethean may,
in  its  sole  discretion,  increase  the  amount  purchasable  in the preceding
sentence  by  125%.  Promethean  must  conclude all required purchases of common
shares  within  twenty-five  business  days  of receipt of the final notice. The
purchase price for the Company's shares will be equal to 95% of the lowest daily
dollar  volume-weighted  average  price  during the six consecutive trading days
ending  on  and  including the date of determination. Promethean's obligation to
purchase  shares under the Investment Agreement shall end either upon the mutual
consent  of  the  parties  or automatically upon the earliest of the date (a) on
which  total  purchases  by  Promethean  under  the  Investment  Agreement total
$20,000,000, (b) which is two years after the effective date of the registration
statement  relating  to the common stock covered by the Investment Agreement, or
(c)  which  is twenty-seven months from the date of the Investment Agreement. In
consideration  of  Promethean's  obligations under the Investment Agreement, the
Company  paid  $527,915  in  cash  on  August  19, 1998, which was treated as an
investment  in  a  common  stock  agreement.



8.  Commitments  and  Contingencies

     On  February 8, 1999, the Company, AutoBond Master Funding Corporation V, a
wholly-owned  subsidiary  of  the  Company  ("Master  Funding  V"),  William  O.
Winsauer,  the  Chairman  and  Chief  Executive  Officer of the Company, John S.
Winsauer,  a  Director  and  the  Secretary of the Company, and Adrian Katz, the
Vice-Chairman,  Chief  Financial  Officer  and  Chief  Operating  Officer of the
Company  (collectively,  the  "Plaintiffs")  commenced an action in the District
Court  of Travis County, Texas (250th Judicial District) against Dynex and James
Dolph  (collectively,  the "Defendants"). This action is hereinafter referred to
as  the "Texas Action". The Company and the other Plaintiffs assert in the Texas
Action  that  Dynex  breached  the  terms  of  the Credit Agreement (the "Credit
Agreement"),  dated June 9, 1998, by and among the Company, Master Funding V and
Dynex.  Such  breaches  include  delays  and  shortfalls in funding the advances
required  under the Credit Agreement and ultimately the refusal by Dynex to fund
any  further  advances  under  the Credit Agreement. Plaintiffs also allege that
Dynex  and Mr. Dolph conspired to misrepresent and mischaracterize the Company's
credit  underwriting  criteria  and  its  compliance with such criteria with the
intention  of  interfering  with  and  causing  actual  damage  to the Company's
business,  prospective business and contracts. The Plaintiffs assert that Dynex'
funding  delays  and  ultimate  breach  of the Credit Agreement were intended to
force  the  Plaintiffs to renegotiate the terms of their various agreements with
Dynex  and  related  entities.  Specifically,  the  Plaintiffs assert that Dynex
intended  to  force  the  Company  to  accept  something  less  than Dynex' full
performance  of  its  obligations  under  the  Credit  Agreement. Further, Dynex
intended  to  force the controlling shareholders of the Company to agree to sell
their  stock  in  the  Company  to  Dynex  or  an  affiliate  at  a  share price
substantially lower than the $6.00 per share price specified in the Stock Option
Agreement,  dated  as of June 9, 1998, by and among Messrs. William O. Winsauer,
John  S.  Winsauer  and Adrian Katz (collectively, the "Shareholders") and Dynex
Holding, Inc.  Plaintiffs in the Texas Action request declaratory judgement that
(a)  Dynex has breached and is in breach of its various agreements and contracts
with  the  Plaintiffs,  (b)  Plaintiffs  have not and are not in breach of their
various  agreements  and  contracts with Defendants, (c) neither the Company nor
Master  Funding  V  has  substantially  or  materially  violated or breached any
representation  or  warranty  made  to  Dynex,  including but not limited to the
representation  and  warranty  that  all  or substantially all finance contracts
funded  or  to be funded by Dynex comply in full with, and have been acquired by
the 
                                    -- 10 --
<PAGE>
Company  in accordance with, the Company's customary underwriting guidelines and
procedures,  and  (d)  Dynex  is  obligated  to fund the Company in a prompt and
timely  manner  as  required  by the parties' various agreements. In addition to
actual,  punitive  and  exemplary  damages,  the Plaintiffs also seek injunctive
relief  compelling  Dynex  to  fund  immediately all advances due to the Company
under  the  Credit  Agreement.

     On  February  9, 1999, Dynex commenced an action against the Company in the
United  States  District  Court  for  the Eastern District of Virginia (Richmond
District)  (the  "Virginia Action") seeking declaratory relief that Dynex is (a)
not  obligated  to  advance funds to Master Funding V under the Credit Agreement
because  the  conditions  to  funding set forth in the Credit Agreement have not
been  met,  and (b) entitled to access to all books, records and other documents
of  Master  Funding V, including all finance contract files. Specifically, Dynex
alleges  that  as  a  result of a partial inspection of certain finance contract
files  by  Mr.  Dolph  and  Virgil  Baker  &  Associates  in January 1999, Dynex
concluded  that  a  significant  number  of  such  contracts  contained material
deviations  from  the  applicable  credit  criteria  and procedures, an apparent
breach of the Credit Agreement. Dynex also alleges that on February 8, 1999, the
Company refused to permit Mr. Dolph and representatives from Dynex access to the
books,  records  and finance contract files of the Company. Dynex concludes that
as  a  result  of such alleged breaches, it is not obligated to provide advances
under  the  Credit Agreement. Dynex also seeks to recover damages resulting from
the  Company's  alleged breach of the partie's various agreements, which alleged
breach  the  Company vigorously denies.The Company, Messrs. William O. Winsauer,
John  S. Winsauer and Adrian Katz filed a responsive pleading on March 25, 1999.
The  Company has sought dismissal of the Virginia Action on the basis that these
matters  are  being  litigated  in  the  previously  filed  Texas  Action.

     On  February  22,  1999,  the same day that Dynex notified the Company of a
purported  servicing termination, Dynex filed another action against the Company
in  the  United States District Court for the Southern District of New York (the
"New  York  Action"),  seeking  damages  and injunctive relief for the Company's
alleged  breaches  under  the  servicing  agreement among the Company, Dynex and
Master  Funding  V.  The  Company  was not notified of the New York Action until
March  1,  1999,  when  Dynex  sought  a temporary restraining order against the
Company.  After  hearing  argument  from  counsel  for both sides, the temporary
restraining  order  was  denied.  On  March  23, 1999, the court issued an order
transferring the action to the Federal District Court in the Eastern District of
Virginia  without prejudice.  The Company remains the servicer and is performing
in  its  capacity  as  servicer.

     On March 1, 1999, the Company and the other Plaintiffs filed an application
in  the  Texas  Action  for  a  temporary  injunction  enjoining  Dynex (a) from
continuing  to suspend or withhold funding pursuant to the Credit Agreement, (b)
from  removing  or  attempting  to  remove the Company as servicer, and (c) from
making  any  further  false  or  defamatory  public  statements  regarding  the
Plaintiffs.  A hearing is scheduled for June 1999, to consider this application.

     Dynex  has  purportedly  accelerated  all amounts due under the Senior Note
Agreement  dated June 9, 1998, by and between Dynex and the Company. The Company
disputes  such  purported  acceleration.

     In  connection  with  the 1997-B and 1997-C securitization, $5.8 million in
Class  B  Notes are exchangeable (at a rate of 117.5% of the principal amount of
Class  B  Notes  exchanged) for the Company's 17% Convertible Notes, solely upon
the occurrence of a delinquency ratio trigger relating to the securitized pools.

     In  March  1998,  after  Progressive  Northern  Insurance  ("Progressive")
purported  to cancel the VSI and deficiency balance insurance policies issued in
favor  of  the  Company,  the  Company  sued  Progressive,  its affiliate United
Financial  Casualty  Co.  and their agent in Texas, Technical Risks, Inc. in the
District  Court  of  Harris  County,  Texas. The action seeks declaratory relief
confirming  the  Company's  interpretation of the policies as well as claims for
damages  based  upon  breach  of  contract, bad faith and fraud. The Company has
received the defendants' answers, denying the Company's claims, and discovery is
proceeding. Progressive stopped paying claims during the second quarter of 1998.
As  a  result  of  the  attempt by Progressive to cancel its obligations and its
refusal  to honor claims after March 1998, the Company has suffered a variety of
damages,  including  impairment of its retained interest in securitizations. The
Company is vigorously contesting the legitimacy of Progressive's actions through
litigation.  Although  a
                                    -- 11 --
<PAGE>
favorable  outcome cannot be assured, success in the litigation could restore at
least  some  of  the  value  of the Company's interests in such securitizations.
Conversely,  if  the  court  were  to  uphold  Progressive's  position,  further
impairment  of  the  Company's  interests  could  occur, resulting in an adverse
effect  on  the  Company's  results  of  operations.

     Also  in  March  1998,  the  Company  commenced an action in Travis County,
Texas,  against  Loan  Servicing  Enterprise ("LSE"), alleging LSE's contractual
breach  of its servicing obligations on a continuing basis. LSE has commenced an
action  against  the  Company  in  Texas  State  court seeking recovery from the
Company  of  putative  termination fees in connection with termination of LSE as
servicer. The Company expects the two actions to be consolidated. If the Company
prevails  against  LSE,  some  of  the  value  of  the  Company's  interest  in
securitizations  could  be  restored.

     The  Company's carrier for the credit deficiency insurance obtained through
1996,  Interstate  Fire & Casualty Co. ("Interstate") determined in late 1996 to
no  longer  offer  such  coverage  to  the  auto finance industry, including the
Company.  In  connection  with  Interstate's  attempt  to no longer offer credit
deficiency  coverage  for  contracts originated after December 1996, the Company
commenced an action in the United States District Court for the Western District
of  Texas,  Austin Division, seeking a declaratory judgment that (a) the Company
was  entitled  to  180 days' prior notice of cancellation and (b) Interstate was
not  entitled  to  raise  premiums  on  finance contracts for which coverage was
obtained  prior  to  the  effectiveness of such cancellation, as well as seeking
damages  for  Interstate's  alleged  deficiencies  in  paying  claims.  Prior to
receiving  the  Company's  complaint in the Texas action, Interstate commenced a
similar  action  for  declaratory  relief  in  the  United  States Court for the
Northern  District  of Illinois. Both suits have been voluntarily dismissed, and
Interstate  and  the  Company  have to date acted on the basis of a cancellation
date  of May 12, 1997 (i.e., no finance contracts presented after that date will
be  eligible for credit deficiency coverage by Interstate, although all existing
contracts  for which coverage was obtained will continue to have the benefits of
such  coverage),  no  additional  premiums  have  been demanded or paid, and the
claims-paying process has been streamlined. In particular, in order to speed the
claims-paying  process,  Interstate  has  paid  lump  sums  to the Company as an
estimate  of  claims  payable  prior  to  completion  of processing. Pending the
Company's determination of the appropriate beneficiary for such claims payments,
the  Company  has  deposited  and  will  continue  to  deposit such funds into a
segregated  account.

     The  Company is the plaintiff or the defendant in several legal proceedings
that  its  management  considers  to  be the normal kinds of actions to which an
enterprise  of  its  size and nature might be subject, and not to be material to
the  Company's overall business or financial condition, results of operations or
cash  flows.

     The  Company  has  taken actions to provide that their computer systems are
capable  of  processing  for  the periods in the year 2000 and beyond. The costs
associated  with  this  are  not expected to significantly affect operating cash
flow;  however, the nature of their business requires that they rely on external
vendors  and services who may not be year 2000 compliant. Therefore, there is no
assurance  that  the  Company's  actions  in  this  regard  will  be successful.

     On  April  6,  1999,  the  Company  and the controlling shareholders of the
Company,  as  defendants  (the  "Defendants"), were served with notice of a suit
filed  on  March  31,  1999  in the United States District Court for the Western
District  of Texas (Austin Division) by Bruce Willis (the "Plaintiff"), a holder
of  the  Preferred  Stock.  The  suit  alleges,  among  other  things,  that the
Defendants  violated  Section  10(b)  of the Securities and Exchange Act of 1934
(and Rule 10b-5 promulgated thereunder) in failing to disclose adequately and in
causing  misstatements  concerning  the  nature  and  condition of the Company's
financing  sources.  The  suit  also  alleges  that  such  actions  constituted
statutory  fraud  under the Texas Business Corporation Act, common law fraud and
negligent  misrepresentation.  The  Plaintiff  seeks class action certification.
The  Plaintiff  also  seeks, among other things, actual, special, consequential,
and  exemplary  damages  in  an  unspecified  sum, as well as costs and expenses
incurred in connection with pursuing the action against the Company. The Company
believes  that  it  has  consistently  and accurately informed the public of its
business and operations, including the viability of its funding sources, and, as
a  consequence  believes  the suit to be without merit and intends to vigorously
defend  against  this  action.

                                    -- 12 --
<PAGE>
ITEM  2.  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL  CONDITION  AND
RESULTS  OF  OPERATIONS


     The following analysis of the financial condition and results of operations
of  the  Company  should  be read in conjunction with the Company's Consolidated
Financial  Statements  and  Notes  thereto and the other financial data included
herein. Certain of the financial information set forth below has been rounded in
order  to  simplify  its  presentation.  However, the ratios and percentages set
forth below are calculated using the detailed financial information contained in
the  Financial Statements and the Notes thereto, and the financial data included
elsewhere  in  this  Form  10-Q.  For  further information, refer to the audited
consolidated  financial  statements  and  footnotes  thereto  included  in  the
Company's  Form  10-K  for  the  year  ended  December 31, 1998 (SEC File Number
000-21673).

     The  Company  is  a  specialty  consumer  finance  company  engaged  in
underwriting, acquiring, servicing and securitizing retail installment contracts
("finance  contracts") originated by franchised automobile dealers in connection
with  the  sale  of  used  and,  to  a  lesser  extent, new vehicles to selected
consumers  with  limited  access  to  traditional  sources of credit ("sub-prime
consumers").  Sub-prime  consumers generally are borrowers unable to qualify for
traditional  financing  due  to  one  or more of the following reasons: negative
credit  history  (which  may  include  late payments, charge-offs, bankruptcies,
repossessions or unpaid judgments); insufficient credit; employment or residence
histories;  or  high  debt-to-income  or  payment-to-income  ratios  (which  may
indicate  payment  or  economic  risk).

     The Company acquires finance contracts generally from franchised automobile
dealers, makes credit decisions using its own underwriting guidelines and credit
personnel  and  performs the collection function for finance contracts using its
own  collections  department.  The  Company also acquires finance contracts from
third  parties  other  than  dealers,  for  which  the Company reunderwrites and
collects  such  finance  contracts  in  accordance  with  the Company's standard
guidelines.  The  Company  has securitized portfolios of these retail automobile
installment  contracts to efficiently utilize limited capital to allow continued
growth and to achieve sufficient finance contract volume to allow profitability.
The  Company markets a single finance contract acquisition program to automobile
dealers,  which  adheres  to  consistent  underwriting  guidelines involving the
purchase  of  primarily  late-model  used  vehicles.

     The  continued  acquisition and servicing of sub-prime finance contracts by
an  independent finance company under current market conditions is a capital and
labor intensive enterprise. Capital is needed to fund the acquisition of finance
contracts  and to effectively securitize them so that additional capital is made
available  for  acquisition activity. While a portion of the Company's financing
has  been  obtained  with  investment  grade  ratings at relatively low interest
rates, the remainder is difficult to obtain and requires the Company to pay high
coupons,  fees  and other issuance expenses, with a negative impact on earnings.
The underwriting and servicing of a growing sub-prime finance contract portfolio
requires  a  higher  level  of  experienced  personnel  than that required for a
portfolio  of  higher  credit-quality consumer loans. Accordingly, the Company's
growth  in  finance  contract  volume  since  inception  has corresponded with a
significant  increase  in  expenses  related  to  building  the  infrastructure
necessary for effective underwriting and servicing.  The Company's assumption of
all  servicing functions in late 1997 has increased servicing income. In view of
the Dynex situation and the high cost of capital, the Company does not expect to
see  profitability until alternate funding is obtained. The Company has begun to
strategically  reduce  staff  in  order  to  conserve  capital.


                                    -- 13 --
<PAGE>
REVENUES

     The  Company's  primary  sources  of  revenues consist of three components:
interest  income,  gain  on  sale of finance contracts and servicing fee income.


     Interest  Income.  Interest  income  consists  of  the  sum  of two primary
components: (i) interest income earned on finance contracts held for sale by the
Company and (ii) interest income earned on retained interest in securitizations.
Other  factors  influencing interest income during a given fiscal period include
(a)  the  annual  percentage  rate  of  the  finance contracts acquired, (b) the
aggregate principal balance of finance contracts acquired and funded through the
Company's warehouse and other credit facilities prior to securitization, and (c)
the  length  of time such contracts are funded by the warehouse and other credit
facilities.


     Gain  on  Sale of Finance Contracts. For transfers of financial assets that
result  in  the  recognition  of  a  sale, the newly created assets obtained and
liabilities  incurred  by  the  transferor  as a part of a transfer of financial
assets  are  initially  measured  at fair value. Interest in the assets that are
retained  are  measured by allocating the previous carrying amount of the assets
(e.g.  finance contracts) between the interest sold (e.g. investor certificates)
and  interest  retained  based  on their relative fair values at the date of the
transfer.  The  amounts  initially  assigned  to these financial components is a
determinant  of  the  gain  or  loss  from  a  securitization  transaction.

     The  retained interest in securitizations available for sale are carried at
estimated  fair  value  with unrealized gains (losses) recorded in stockholders'
equity as part of accumulated other comprehensive income and those classified as
trading  are  carried  at  estimated  fair  value  with unrealized gain (losses)
recorded  currently  in  income.  The  fair  value  of  the retained interest in
securitizations is determined by discounting expected cash flows at a rate based
on  assumptions  that  market  participants  would  use  for  similar  financial
instruments  subject  to prepayment, default, collateral value and interest rate
risks.  The  Company's  retained  interest  is  subordinated  to  other  trust
securities,  consequently  cash  flows are paid by the securitization trustee to
the  investor  security holders until such time as all accrued interest together
with  principal  have  been paid in full. Subsequently, all remaining cash flows
are  paid  to  the  Company.

     An  impairment  review  of  the  retained  interest  in  securitizations is
performed  quarterly by calculating the net present value of the expected future
excess  spread  cash  flows after giving effect to changes in assumptions due to
market  and  economic  changes  and  the  performance  of the loan pool to date.
Impairment  is  determined  on  a  disaggregated  basis consistent with the risk
characteristics  of  the underlying finance contracts as well as the performance
of  the  pool  to  date.  To  the  extent that the Company deems the asset to be
permanently  impaired,  the  Company  would record a charge against earnings and
write  down  the  asset  accordingly. The Company recorded a charge to income of
$1,051,457  during  the  three  months  ended  March 31, 1999 as a result of the
impairment  review.  See  Note  4  to  the  Consolidated  Financial  Statements.

     The  Company's  cost  basis  in  finance  contracts  sold  has  varied from
approximately  92% to 103% of the value of the principal balance of such finance
contracts. This portion of recognized gain on sale varies based on the Company's
cost  of insurance covering the finance contracts and the discount obtained upon
acquisition  of  the  finance  contracts.  Generally,  the  Company has acquired
finance contracts from dealers at a greater discount than with finance contracts
acquired  from  third parties. Additionally, costs of sale reduce the total gain
recognized.

     Further,  the retained interest component of recognized gain is affected by
various factors, including most significantly, the coupon on the senior investor
securities  and  the  age  of  the  finance contracts in the pool, as the excess
spread  cash  flow  from a pool of aged, as opposed to new, finance contracts is
less.  The  aging (capture of excess spread prior to securitization) necessarily
results  in  less  available  excess  spread  cash flow from the securitization.

                                    -- 14 --
<PAGE>

     The  gain  on  sale  of  finance  contracts  is  affected  by the aggregate
principal  balance  of  contracts  securitized  and the gross interest spread on
those  contracts.  The following table illustrates the gross interest spread for
each  of  the  Company's  securitizations:

<TABLE>
<CAPTION>


                                 Finance Contracts(1)     Senior Investor Certificates
                                 --------------------     ----------------------------

                                Principal    Weighted     Balance
                                  Amount      Average    March 31,               Gross
Securitization                 Securitized     Rate         1999       Rate    Spread(2)
-----------------------------  ------------  ---------  ------------  -------  ---------
<S>                            <C>           <C>        <C>           <C>      <C>
AutoBond Receivables
Trust 1995-A. . . . . . . . .  $ 26,261,009      18.9%  $  4,814,329     7.2%      11.7%

Trust 1996-A. . . . . . . . .    16,563,366      19.7%     4,413,527     7.2%      12.5%

Trust 1996-B. . . . . . . . .    17,832,885      19.7%     5,603,860     7.7%      12.0%

Trust 1996-C. . . . . . . . .    22,296,719      19.7%     8,635,377     7.5%      12.2%

Trust 1996-D. . . . . . . . .    25,000,000      19.5%    10,216,015     7.4%      12.1%

Trust 1997-A (4). . . . . . .    28,037,167      20.8%     9,858,358     7.8%      13.0%

Trust 1997-B. . . . . . . . .    34,725,196      19.9%    18,521,805     7.7%      12.2%

Trust 1997-C. . . . . . . . .    34,430,079      20.0%    19,516,364     7.6%      12.4%
AutoBond Master Funding
Corporation V Trust Dynex (3)   153,092,410      20.0%   130,926,926  7.4%(3)      12.6%
Total . . . . . . . . . . . .  $358,238,831             $212,506,561
                               ============             ============                    

----------------------------------------------------------------------------------------
<FN>

1  Refers  only  to  balances  on  senior  investor  certificates.
2  Difference  between  weighted  average  contract  rate  and  senior certificate rate.
3  Includes  $26  million  of  finance contracts from securitizations previously retired
4  Weighted  average  of  senior  investor  coupon  rates
</TABLE>




     Servicing  Income. The Company earns substantially all of its servicing fee
income  on  the  contracts  it  services  on  behalf  of  securitization trusts.
Servicing  fee  income consists of: (i) contractual administrative fees received
through  securitizations, equal to $7.00 per month per contract included in each
trust  (excluding  amounts  paid  to  third-party  servicers by the trust); (ii)
contractual  servicing fees received through securitizations, equal to $8.00 per
month  per  contract  included  in  each  trust;  and (iii) fee income earned as
servicer for such items as late charges and documentation fees, which are earned
whether  or  not  a  securitization  has  occurred.

                                    -- 15 --
<PAGE>

FINANCE  CONTRACT  ACQUISITION  ACTIVITY


<TABLE>
<CAPTION>

The  following table sets forth information about the Company's finance contract
acquisition  activity:

                                                  Three Months Ended
                                                      March  31,

<S>                                               <C>          <C>
                                                         1998         1999
                                                  -----------  -----------

Number of finance contracts acquired . . . . . .        2,637        1,586
Principal balance of finance contracts acquired.  $29,775,406  $20,336,852
Number of active dealerships (1) . . . . . . . .          578          466
Number of enrolled dealerships . . . . . . . . .        1,789        2,332
<FN>

(1)  Dealers  who  have sold at least one finance contract to the Company during
the  period.

</TABLE>



RESULTS  OF  OPERATIONS

     Period-to-period  comparisons  of  operating results may not be meaningful,
and  results  of  operations  from prior periods may not be indicative of future
results.  The  following  discussion  and analysis should be read in conjunction
with  the  Company's  Consolidated  Financial  Statements and the Notes thereto.



THREE  MONTHS ENDED MARCH 31, 1999 COMPARED TO THREE MONTHS ENDED MARCH 31, 1998

NET  LOSS

     In the three months ended March 31, 1999, the net loss was $2,460,671 which
represents  an  increase in loss of $2,339,533 over the three months ended March
31, 1998 net loss of $121,138.  The increase in loss primarily resulted from the
termination  by  Dynex  of  the  Funding  Agreement  which forced the Company to
discontinue acquisition of finance contracts as of February 9, 1999. The Company
continues to pursue alternative funding sources. Impairment of retained interest
for  the  three  months  ending  March  31,  1999  was  $1,051,457.


Total  Revenues

     Total  revenues  for  the  three  months ended March 31, 1999 of $3,784,939
represent  a  decrease  of $1,854,242 from the three months ended March 31, 1998
revenues  of  $5,639,181.  The  decrease  was  due primarily to the reduction in
volume  of  finance  contract  sales  activity  for  the  first  quarter.

     Interest Income.  Interest income for the three months ended March 31, 1999
of  $463,986 represents a decrease of $674,512 from the three months ended March
31,  1998  interest  income  of $1,138,498 due to the timing of finance contract
acquisitions  and  the  period  held  before  securitization.

     Gain  on  Sale  of  Finance  Contracts.  The  Company realized gain on sale
totaling  $1,539,187  (12.2%)  on  finance contracts of $12.6 million during the
three  months ended March 31, 1999.  Gain on sale amounted to $3,867,941 (15.8%)
on  finance  contracts  of  $24.5  million  in  the  comparable 1998 period. The
decrease  of $2,328,754 was primarily due to the reduction in volume of sales as
a  result  of  the  termination  of  the  Dynex  Funding  Agreement.

     Servicing  Fee  Income.  The Company reports servicing fee income only with
respect  to finance contracts that are securitized or sold. For the three months
ended  March  31,  1999  servicing  fee  income  was  $1,005,774,  consisting of
contractual  administrative  fees  and  servicer  fees.  Servicing  fee  income
increased  by  $499,181 from the three months ended March 31, 1998 servicing fee
income  of  $506,593  as  a  result  of  the increased volume of contracts being
serviced.

                                    -- 16 --
<PAGE>
     Other  Income.  For  the  three  months  ended March 31, 1999, other income
amounted to $775,992 compared with $126,149 for the comparable 1998 period.  The
increase was mainly attributable to settlement of litigation with Charlie Thomas
Ford,  Inc.  on  favorable  terms.  See  "Legal  Proceedings".


Total  Expenses

     Total  expenses  for  the  three  months ended March 31, 1999 of $7,844,511
represent  an  increase of $2,035,000 from the three months ended March 31, 1998
total  expenses of  $5,809,511, due primarily to impairment of retained interest
in  securitizations  of $1,051,457 during the three months ended March 31, 1999,
as  well  as  increases  in  loan  insurance, professional services and expenses
related  to  computer  software  enhancements.

     Provision  for  Credit  Losses.  Provision  for  credit  losses  on finance
contracts  for  the  three  months ended March 31, 1999  of $60,465 represents a
decrease  of  $39,535  from  the three months ended March 31, 1998 provision for
credit  losses  of $100,000.  The decrease is the result of an evaluation of the
finance  contract  portfolio.

     Interest  Expense.  Interest  expense  for the three months ended March 31,
1999  of  $713,370 represents a decrease of $577,035 from the three months ended
March  31,  1998  interest  expense  of  $1,290,405.  The decrease resulted from
elimination of borrowing under  to revolving credit facilities during the period

      Salaries  and  Benefits.  Salaries and benefits for the three months ended
March  31,  1999  of $3,149,032 represent an increase of $751,267 from the three
months ended March 31, 1998 salaries and benefits of $2,397,765.  Administrative
staff were added in the latter part of the first quarter of 1998.  All positions
were  filled  during  the  first  quarter  of  1999.

     General  and  Administrative  Expenses. General and administrative expenses
for the three months ended March 31, 1999 of $1,869,323 represent an increase of
$785,059  from  the three months ended March 31, 1998 general and administrative
expense  of  $1,084,264.  The  Company  continued  to  make  compter  software
enhancements  which  resulted  in higher computer expense. The Company relocated
its  headquarters  to  larger  offices  during  the second quarter of 1998 which
resulted  in  correspondingly  higher  facilities  expense.

     Impairment  of  Retained  Interest  in  Securitizations.  The  Company
periodically  reviews  the  carrying  value  of  the  retained  interest  in
securitizations.  The  Company recorded a charge against earnings for impairment
of  these  assets  of  $1,051,457  for  the three months ended March 31, 1999 as
compared  with  an  impairment  of $288,023 for the three months ended March 31,
1998.  This impairment reflects the revaluation of expected future cash flows to
the  Company  from  securitizations.  See  Note  4 to the Consolidated Financial
Statements  .

     Other  Operating Expenses. Other operating expenses (consisting principally
of  servicer  fees, credit bureau reports, communications and insurance) for the
three  months  ended  March  31,  1999  of  $1,000,864  represent an increase of
$351,810  from the three months ended March 31, 1998 other operating expenses of
$649,054.  This  increase  was  mainly due to increased loan insurance premiums.

     Income  tax.  Income  taxes  for  the  three months ended March 31, 1999 of
$1,598,901 represent an increase of $1,549,709 from the three months ended March
31,  1998 income tax benefit of $49,192 due to the increased loss for the period
ended  March  31,  1999  over  the  comparable  period  of  1998.

                                    -- 17 --
<PAGE>

FINANCIAL  CONDITION


     Cash  and  Cash Equivalents. Cash and cash equivalents decreased $2,937,156
to  $2,233,813  at  March  31,  1999  from  $5,170,969 at December 31, 1998. The
decrease  in  cash  and  cash equivalents was largely the result of an operating
loss  of  $2,460,671 primarily caused by the termination by Dynex of the Funding
Agreement.  Additionally  the Company used $144,522 to purchase equipment. Other
decreases  in  cash  and  cash  equivalents  were  the  result  of  payments  on
liabilities.

     Finance  Contracts  Held  for Sale. Finance contracts held for sale, net of
allowance for credit losses, increased $6.1 million to $7.0 million at March 31,
1999 from $0.9 million at December 31, 1998. The number and principal balance of
contracts  held  for  sale are largely dependent upon the timing and size of the
Company's  securitizations.  The  Company  securitized  finance  contracts  on a
regular  basis  through  the Dynex funding agreement. The balance outstanding at
March  31,  1999  consisted  of  loans  originated with intent to sell to Dynex.
Future  securitizations  and  sales  are  uncertain.

     The Company maintains an allowance for, and reports a provision for, credit
losses  on  finance  contracts  held  for  sale.  Management  evaluates  the
reasonableness  of the assumptions employed by reviewing credit loss experience,
delinquencies,  repossession  trends, the size of the finance contract portfolio
and  general  economic  conditions and trends. If necessary, assumptions will be
changed in the future to reflect historical experience to the extent it deviates
materially  from  that  which  was  assumed.

Other  Assets.  Other  assets increased $546,439 to $2,009,485 at March 31, 1999
from  $1,463,046  at  December 31, 1998. The trustees have continued to withhold
administrator fees and expenses and to deposit same into a separate bank account
earning interest. The total amount witheld and deposited into a separate account
is  approximately  $  1.3  million  as  of  March  31, 1999, due to the Company.

     Retained  Interest in Securitizations. An impairment review of the retained
interest  in  securitizations  is  performed  quarterly  by  calculating the net
present  value  of the expected future cash flows after giving effect to changes
in  assumptions  due  to  market and economic changes and the performance of the
loan pool to date. The discount rate used is an estimated market rate, currently
15%  to  17%.  To  the extent that the Company deems the asset to be permanently
impaired,  the Company records a charge against earnings. The Company recorded a
charge  against  earnings  of $1,051,457 during the three months ended March 31,
1999  as  a  result  of  the  impairment  review  of  the  retained  interest in
securitizations.

     Prior  to the Dynex funding agreement, at the time a securitization closed,
the  Company's  securitization  subsidiary  was  required to fund a cash reserve
account  within  the  trust  to provide additional credit support for the senior
investor  securities.  Additionally,  depending  on  the  structure  of  the
securitization,  a portion of the future excess spread cash flows from the trust
is  required to be deposited in the cash reserve account to increase the initial
deposit  to  a  specified  level.  A  portion  of  excess spread cash flows will
increase such reserves until they reach a target reserve level (initially 6%) of
the  outstanding  balance  of  the  senior  investor  certificates.  The  trust
receivables are ultimately payable to the Company as owner of retained interests
and  are  included  in the estimated cash flow of such retained interests. (i.e.
the  "cash  out"  method).


<TABLE>
<CAPTION>

<S>                                         <C>                 <C>
                                            December 31, 1998   March 31, 1999
                                            ------------------  ---------------
Trust receivable . . . . . . . . . . . . .  $        2,236,362  $     1,688,443
Class B notes receivable . . . . . . . . .           4,586,908        4,035,814
Interest only strip receivable . . . . . .           7,050,081        6,322,060
Total retained interest in securitizations  $       13,873,351  $    12,046,317
                                            ==================  ===============

         Trading . . . . . . . . . . . . .  $        4,586,908  $     4,035,814
         Available for sale. . . . . . . .           9,286,443        8,010,503
</TABLE>


                                    -- 18 --
<PAGE>

Notes  Payable  and  Non-Recourse  Debt


<TABLE>
<CAPTION>


     The  following  amounts  are  included  in  notes  payable and non-recourse debt as of:

                                                                   December 31,     March 31,
                                                                      1998            1999
                                                                   ------------     ---------

<S>                                                                 <C>          <C>
Non-recourse notes payable, collateralized by Class B Certificates  $ 3,185,050  $ 2,633,956
Convertible Senior Notes . . . . . . . . . . . . . . . . . . . . .    3,000,000    3,000,000
Convertible Subordinated Notes , net of discount . . . . . . . . .    7,143,628    7,185,481
Other notes payable. . . . . . . . . . . . . . . . . . . . . . . .       23,342       17,771
                                                                    $13,352,020  $12,837,208
                                                                    ===========  ===========
</TABLE>


DELINQUENCY  EXPERIENCE

<TABLE>
<CAPTION>


     The  following  table  reflects  the  delinquency experience of the Company's finance contract
portfolio:

                                                          December 31, 1998          March 31, 1999
                                                          -----------------          --------------

<S>                                                 <C>           <C>            <C>          <C>
Principal balance of finance contracts outstanding  $210,947,939                 $203,900,254 
Delinquent finance contracts (1):
Two payments past due. . . . . . . . . . . . . . .    20,689,671          9.81%   12,635,947  6.20%
Three payments past due. . . . . . . . . . . . . .     7,901,166          3.75%    3,837,154  1.88%
Four or more payments past due . . . . . . . . . .     5,214,162          2.47%    3,399,462  1.67%
                                                    ------------  -------------  -----------  -----
Total. . . . . . . . . . . . . . . . . . . . . . .  $ 33,804,999         16.03%  $19,872,563  9.75%
                                                    ============  =============  ===========  =====

<FN>

(1)  Percentage  based  upon outstanding balance. Delinquency balances outstanding excludes finance
contracts where the underlying vehicle is repossessed, where a dealer (seller) buyback is expected,
where  a  skip  claim  is  paid  and  where  a  primary  insurance  claim  is  filed.

</TABLE>



CREDIT  LOSS  EXPERIENCE

     If  a  delinquency  exists  and  a  default  is  deemed  inevitable  or the
collateral  is  in  jeopardy,  and  in  no  event  later  than  the  90th day of
delinquency, the Company's Collections Department will initiate the repossession
of  the financed vehicle. Bonded, insured outside repossession agencies are used
to  secure  involuntary  repossessions.  In  most  jurisdictions,  notice to the
borrower of the Company's intention to sell the repossessed vehicle is required,
whereupon  the  borrower  may exercise certain rights to cure his or her default
and  redeem  the  automobile.  Following  the expiration of the legally required
notice  period,  the repossessed vehicle is sold at a wholesale auto auction (or
in  limited  circumstances,  through  dealers),  usually  within  60 days of the
repossession.  The  Company  closely  monitors the condition of vehicles set for
auction,  and procures an appraisal under the relevant VSI policy prior to sale.
Liquidation  proceeds are applied to the borrower's outstanding obligation under
the  finance  contract  and  insurance  claims  under  the  VSI  policy  and, if
applicable,  the  deficiency  balance  policy  are  then  filed.

     Because  of  the  Company's limited operating history, its finance contract
portfolio  is somewhat unseasoned. This effect on the delinquency statistics can
be  observed  in  the  comparison  of  1999 versus 1998 delinquency percentages.
Accordingly,  delinquency  and  charge-off  rates in the portfolio may not fully
reflect  the  rates  that  may apply when the average holding period for finance
contracts  in  the  portfolio  is  longer.  Increases  in the delinquency and/or
charge-off  rates  in the portfolio would adversely affect the Company's ability
to  obtain  credit  or  securitize  its  receivables.

                                    -- 19 --
<PAGE>
REPOSSESSION  EXPERIENCE  -  STATIC  POOL  ANALYSIS


     Because  the Company's finance contract portfolio is unseasoned, management
does  not  manage  losses  on the basis of a percentage of the Company's finance
contract  portfolio,  because  percentages  can  be  favorably affected by large
balances  of  recently  acquired  finance  contracts. Management monitors actual
dollar  levels  of  delinquencies  and  charge-offs  and  analyzes the data on a
"static  pool"  basis.

     The following tables provide static pool repossession frequency analysis in
dollars  of  the  Company's portfolio from inception through March 31, 1999. All
finance  contracts  have  been  segregated  by  quarter  of  acquisition.  All
repossessions  have  been  segregated  by  the  quarter in which the repossessed
contract was originally acquired by the Company. Cumulative repossessions equals
the  ratio  of  repossessions  as a percentage of finance contracts acquired for
each segregated quarter. Annualized repossessions equals an annual equivalent of
the  cumulative  repossession  ratio  for  each  segregated  quarter. This table
provides  information regarding the Company's repossession experience over time.
For  example,  recently  acquired  finance  contracts  demonstrate  very  few
repossessions  because  properly  underwritten  finance  contracts  to sub-prime
consumers  generally  do  not  normally  default  during the initial term of the
contract.  Between  approximately one year and 18 months of seasoning, frequency
of  repossessions  on  an  annualized  basis appear to reach a plateau. Based on
industry  statistics  and  the  performance  experience of the Company's finance
contract  portfolio,  the  Company  believes  that finance contracts seasoned in
excess  of  approximately  18  months  will  start  to  demonstrate  declining
repossession  frequency.  The  Company believes this may be due to the fact that
the  borrower  perceives  that  he or she has equity in the vehicle. The Company
also  believes  that  the finance contracts generally amortize more quickly than
the  collateral  depreciates,  and  therefore  losses  and/or repossessions will
decline  over  time.


                                    -- 20 --
<PAGE>

<TABLE>
<CAPTION>

ALL  INCLUSIVE  (3)


                                             Repossession Frequency
                                             ----------------------


                             Principal Balance at
                              Default of Failed                                    Original Principal
     Year and                      Loans by          Cumulative      Annualized        Balance of
     Quarter of Acquisition    Quarter Acquired    Percentage (1)  Percentage (2)  Contracts Acquired
     ----------------------  --------------------  --------------  --------------  -------------------

<C>  <S>                     <C>                   <C>             <C>             <C>
     1994
  1  Q3 . . . . . . . . . .                22,046          21.79%           4.59%             101,161
  2  Q4 . . . . . . . . . .               631,460          25.90%           5.76%           2,437,674
     1995
  3  Q1 . . . . . . . . . .             1,893,669          30.01%           7.06%           6,310,421
  4  Q2 . . . . . . . . . .             1,820,416          29.41%           7.35%           6,190,596
  5  Q3 . . . . . . . . . .             2,242,632          30.98%           8.26%           7,239,813
  6  Q4 . . . . . . . . . .             4,261,678          34.96%           9.99%          12,188,863
     1996
  7  Q1 . . . . . . . . . .             5,282,258          34.17%          10.51%          15,460,823
  8  Q2 . . . . . . . . . .             6,810,555          36.77%          12.26%          18,520,410
  9  Q3 . . . . . . . . . .             7,701,430          27.41%           9.97%          28,098,899
 10  Q4 . . . . . . . . . .             8,585,481          35.13%          14.05%          24,442,500
     1997
 11  Q1 . . . . . . . . . .            11,835,888          33.94%          15.08%          34,875,869
 12  Q2 . . . . . . . . . .            11,021,173          31.22%          15.61%          35,305,817
 13  Q3 . . . . . . . . . .             9,240,514          26.68%          15.25%          34,629,616
 14  Q4 . . . . . . . . . .             8,951,240          20.29%          13.53%          44,120,029
     1998
 15  Q1 . . . . . . . . . .             4,792,368          16.16%          12.93%          29,650,808
 16  Q2 . . . . . . . . . .             3,144,462          13.72%          13.72%          22,911,290
 17  Q3 . . . . . . . . . .             1,514,612           6.44%           8.58%          23,528,924
 18  Q4 . . . . . . . . . .             1,094,779           2.55%           5.09%          43,006,049
     1999
 19  Q1 . . . . . . . . . .               132,669           0.65%           2.61%          20,336,852
-----------------------------------------------------------------------------------------------------
<FN>

(1)     For  each  quarter,  cumulative loss frequency equals the gross principal loss divided by the
gross  amount  financed  of  the  contracts  acquired  during  that  quarter.  Annualized loss 
frequency  converts cumulative loss frequency into an annual  equivalent (e.g. for Q4 1997, principal
balance of $8,951,240 in losses divided by $44,120,029 in amount financed of the  contracts acquired,
divided  by  6  quarters
(2)     outstanding  times  4  equals  an  annual  loss  frequency  of  13.53%).

(3)     Included  are  the loans that were repossessed, paid by customers' primary insurance, paid by
skip  claim,  paid  by  dealer  and  charged  off  due  to  certain  reasons.

</TABLE>



                                    -- 21 --
<PAGE>
<TABLE>
<CAPTION>

REPO  AND  SKIP  (3)

                                       Repossession Frequency
                                       ----------------------


     Year and       Principal Balance at                                    Original Principal
     Quarter of   Default of Failed Loans     Cumulative      Annualized        Balance of
     Acquisition    by Quarter Acquired     Percentage (1)  Percentage (2)  Contracts Acquired
     -----------  ------------------------  --------------  --------------  -------------------
<C>  <S>          <C>                       <C>             <C>             <C>
     1994
  1  Q3. . . . .  $                 22,046          21.79%           4.59%  $           101,161
  2  Q4. . . . .                   618,987          25.39%           5.64%            2,437,674
     1995
  3  Q1. . . . .                 1,722,482          27.30%           6.42%            6,310,421
  4  Q2. . . . .                 1,691,215          27.32%           6.83%            6,190,596
  5  Q3. . . . .                 2,017,088          27.86%           7.43%            7,239,813
  6  Q4. . . . .                 3,860,674          31.67%           9.05%           12,188,863
     1996
  7  Q1. . . . .                 4,906,589          31.74%           9.76%           15,460,823
  8  Q2. . . . .                 6,145,169          33.18%          11.06%           18,520,410
  9  Q3. . . . .                 6,851,537          24.38%           8.87%           28,098,899
 10  Q4. . . . .                 7,796,022          31.90%          12.76%           24,442,500
     1997
 11  Q1. . . . .                10,733.916          30.78%          13.68%           34,875,869
 12  Q2. . . . .                10,065,175          28.51%          14.25%           35,305,817
 13  Q3. . . . .                 8,351,956          24.12%          13.78%           34,629,616
 14  Q4. . . . .                 7,725,129          17.51%          11.67%           44,120,029
     1998
 15  Q1. . . . .                 4,212,679          14.21%          11.37%           29,650,808
 16  Q2. . . . .                 2,781,197          12.14%          12.14%           22,911,290
 17  Q3. . . . .                 1,292,337           5.49%           7.32%           23,528,924
 18  Q4. . . . .                   722,614           1.68%           3.36%           43,006,049
     1999
 19  Q1. . . . .                    71,684           0.35%           1.41%           20,336,852
-----------------------------------------------------------------------------------------------
<FN>

(1)     For  each quarter, cumulative loss frequency equals the gross principal loss divided by
the  gross  amount  financed  of  the  contracts  acquired  during  that  quarter.

(2)     Annualized loss frequency converts cumulative loss frequency into an annual  equivalent
(e.g.  for  Q4 1997, principal balance of $7,725,129 in losses divided by $44,120,029 in amount
financed of the contracts acquired, divided by 6 quarters  outstanding times 4 equals an annual
loss  frequency  of  11.67%).

(3)     Included  are  the  loans  that  were  repossessed,  and  paid  by  skip  claim.
</TABLE>



                                    -- 22 --
<PAGE>

NET  LOSS  PER  REPOSSESSION

     Upon  initiation of the repossession process, it is the Company's intent to
complete  the  liquidation  process  as  quickly  as  possible.  The majority of
repossessed  vehicles  are sold at wholesale auction. The Company is responsible
for  the  costs  of  repossession, transportation and storage. The Company's net
charge-off  per repossession equals the unpaid balance less the auction proceeds
(net  of  associated  costs) and less proceeds from insurance claims. As less of
the  Company's  finance contracts are acquired with credit deficiency insurance,
the  Company  expects  its  net loss per repossession to increase. The following
table  demonstrates  the  net  charge-off  per  repossessed  automobile  since
inception:




<TABLE>
<CAPTION>



                                                                                       Loans
                                                                     Loans with       Without
From August 1, 1994 (Inception) to March 31, 1999                      Default        Default
                                                                      Insurance      Insurance      All Loans
                                                                    -------------  -------------  -------------
<S>                                                                 <C>            <C>            <C>
Number of finance contracts acquired                                                                    34,967 
Number of vehicles repossessed . . . . . . . . . . . . . . . . . .         6,393          2,530          8,923 
Repossessed units disposed of. . . . . . . . . . . . . . . . . . .         3,724          1,868          5,592 
Repossessed units awaiting disposition (1) . . . . . . . . . . . .         2,669            662          3,331 
Cumulative gross charge-offs . . . . . . . . . . . . . . . . . . .  $ 37,435,138   $ 19,611,522   $ 57,046,660 
Costs of repossession. . . . . . . . . . . . . . . . . . . . . . .     1,747,100        779,348      2,526,448 
Recoveries:
  Proceeds from auction, physical damage insurance and refunds (2)   (21,036,302)   (11,430,534)   (32,466,836)
  Deficiency insurance settlement received . . . . . . . . . . . .    (9,621,781)             0     (9,621,781)
                                                                    -------------  -------------  -------------
Net charge-offs. . . . . . . . . . . . . . . . . . . . . . . . . .  $  8,524,155   $  8,960,336   $ 17,484,491 
                                                                    =============  =============  =============
Net charge-offs per unit disposed. . . . . . . . . . . . . . . . .  $      2,289   $      4,797   $      3,127 
Net charge-offs as a percentage of cumulative gross charge-offs. .          22.8%          45.7%          30.6%
Recoveries as a percentage of cumulative gross charge-offs . . . .          81.9%          58.3%          73.8%
------------------------------------------------------------------  -------------  -------------  -------------
<FN>

(1)  The  vehicles  may  have  been  sold at auction; however the Company might not have received all insurance
proceeds  as  of  March  31,  1999.
(2)  Amounts  are based on actual liquidation and repossession proceeds (including insurance proceeds) received
on  units  for  which  the  repossession  process  had  been  completed  as  of  March  31,  1999.
</TABLE>





LIQUIDITY  AND  CAPITAL  RESOURCES

     The  Company  requires access to significant sources and amounts of cash to
fund  its  operations  and  to  acquire  and  securitize finance contracts.  The
Company's  primary  operating  cash  requirements include the funding of (i) the
acquisition  of finance contracts prior to securitization, (ii) the initial cash
deposits  to  reserve  accounts  in  connection  with  the  warehousing  and
securitization  of contracts in order to obtain such sources of financing, (iii)
fees and expenses incurred in connection with the warehousing and securitization
of  contracts and (iv) ongoing administrative and other operating expenses.  The
Company  has  traditionally  obtained  these  funds in three ways: (a) loans and
warehouse  financing  arrangements,  pursuant  to  which  acquisition of finance
contracts  are  funded  on  a  temporary  basis; (b) securitizations or sales of
finance contracts, pursuant to which finance contracts are funded on a permanent
basis;  and  (c) general working capital, which if not obtained from operations,
may  be  obtained  through  the  issuance of debt or equity.  Failure to procure
funding  from  all  or  any  one  of these sources could have a material adverse
effect  on  the  Company.

     Since  early February 1999, the Company's management has been attempting to
procure  alternative  sources  of  funding  and other strategic alternatives, in
order  to  mitigate  the  situation  with  Dynex.  The  Company  is currently in
discussions  with  several  investment bankers and direct sources regarding such
                                    -- 23 --
<PAGE>
alternatives  which  may  include  joint  ventures, or changes in control of the
Company.  While  management  hopes  that  an  alternative  opportunity  will  be
consummated,  the  Company  has suspended origination of finance contracts until
alternative  funding  sources  are  obtained. However, there can be no assurance
that such funding will be obtained. As a consequence, the Company is reporting a
loss for the first quarter of 1999 and did not pay the quarterly dividend on its
Preferred  Stock  otherwise  payable on March 31, 1999. Until financing or other
strategic alternatives are consummated the Company is taking steps to reduce its
personnel  and  operating expenses associated with origination activities. Also,
parties  to the Company's various securitization transactions could request that
the  Company  surrender  servicing,  although  management  does not believe such
parties  have  the right to terminate servicing under the respective agreements.
The  Company  expects  to  continue  its  servicing  operations.

     Management  believes  the  Company  has  sufficient  liquidity  to meet its
current  obligations  and  continue  its  servicing  activities for a reasonable
period  of  time.


     Cash  Flows.  Significant  cash  flows  related  to the Company's operating
activities  include the use of cash for purchases of finance contracts, and cash
provided by payments on finance contracts, collections on retained interests and
sales  of  finance contracts. Net cash used by operating activities totaled $2.8
million  during  the  three months ended March 31, 1999.  Significant activities
comprising  cash  flows  used by  investing activities consisted of purchases of
property,  plant  and  equipment.  There  were  no  significant  cash flows from
financing  activities  during  the  three  months  ended  March  31,  1999.


     Revolving  Credit  Facilities.  The  Company  historically  obtained  a
substantial  portion  of  its  working  capital  for  the acquisition of finance
contracts  through  revolving credit facilities. Under a warehouse facility, the
lender generally advances amounts requested by the borrower on a periodic basis,
up to an aggregate maximum credit limit for the facility, for the acquisition of
finance  contracts or other similar assets. Until proceeds from a securitization
transaction are used to pay down outstanding advances, as principal payments are
received  on  the finance contracts, the principal amount of the advances may be
paid  down  incrementally  or  reinvested  in  additional finance contracts on a
revolving  basis.

     On  June  10,  1998, the Company and Dynex Capital, Inc., ("Dynex") entered
into  an  arrangement  whereby  the  Company obtained a commitment from Dynex to
purchase  all  currently  warehoused  and  future  automobile  finance  contract
acquisitions through at least May 31, 1999 (the "Funding Agreement").  The terms
of  the  Funding Agreement were modified on June 30, October 20, and October 28,
1998.  Under  the  prior terms of the Funding Agreement, the Company transferred
finance contracts to AutoBond Master Funding Corporation V ("Master Funding V"),
a qualified unconsolidated special purpose subsidiary, and Dynex provided credit
facilities  in  an  amount  equal to 104% of the unpaid principal balance of the
finance  contracts  (the  "Advance  Rate").  The proceeds of such facilities are
received by the Company.  Under the modified terms of the Funding Agreement, the
Advance  Rate  was  reduced from 104% to 88% for an interim period (the "Interim
Period")  ending  December  31,  1998.  At  the  end  of the Interim Period, the
Advance  Rate  reverted  to 104% and Dynex was to advance to Master Funding V an
additional  amount  equal  to  16%  of  the  unpaid principal balance of finance
contracts  financed  by Dynex during the Interim Period.  This additional amount
receivable  from  Dynex  totalled  $6.5  million  at  December 31, 1998, and was
collected in January and February 1999. Advances under the Funding Agreement are
evidenced  by  Class  A  and Class B Notes (collectively, the "Notes") issued by
Master  Funding  V to Dynex.  The Class A Notes are issued in a principal amount
equal  to  94.0% of the unpaid principal balance of the finance contracts (88.0%
for advances funded during the Interim Period) and bear interest at a rate equal
to  190  basis points over the corporate bond equivalent yield on the three-year
Treasury  note  on the closing date for each such advance. The Class B Notes are
issued  in  a principal amount equal to 10.0% of the unpaid principal balance of
the  finance  contracts (0.0% for advances funded during the Interim Period) and
bear  interest  at  a  rate  equal  to  16%  per  annum.  The  Company retains a
subordinated  interest  in  the  pooled finance contracts.  Transfers of finance
contracts  to the qualified special purpose entity have been recognized as sales
under  SFAS  No.  125.  At  March  31,  1999 advances by Dynex under the Funding
Agreement  totaled  $169.2  million.  See  "Legal  Proceedings.

                                    -- 24 --
<PAGE>
     William  O.  Winsauer, Chief Executive Officer and Chairman of the Board of
Directors  of  the  Company (the "Board"), Adrian Katz, Chief Operating Officer,
Chief  Financial  Officer  and  Vice Chairman of the Board and John S. Winsauer,
Secretary  and a member or the Board (collectively, the "Shareholders"), entered
into a Stock Option Agreement (the "Stock Option Agreement") with Dynex Holding,
Inc.("Dynex  Holding")  wherein  the  Shareholders  granted  to Dynex Holding an
option (the"Option") to purchase all of the shares of the Company's common stock
owned  by  the  Shareholders,  (approximately  85%  of  the  Company's  current
outstanding  common  stock)  at  a  price  of $6.00 per share. The Option may be
exercised in whole and not in part at anytime up to and including July 31, 1999.
If  the  Company  elects  to  exercise  its  option  to  extend  the  commitment
termination  date,  the expiration date of the Option shall be extended to match
the  commitment termination date.  In the event that Dynex Holding exercises its
Option,  the  exercise  price of the Option will be payable in shares of a newly
issued  series  of  convertible  preferred  stock  of Dynex Capital, Inc.("Dynex
Preferred").  The number of Dynex Preferred shares to be issued will be equal to
the product of the number of shares of the Company's common stock subject to the
Option and $6.00, divided by 115% of the average of the closing prices per share
of  the  common  stock  of  Dynex  Capital,  Inc.("Dynex  Common")  for  the ten
consecutive trading days ending immediately prior to the exercise of the Option.
Upon  exercise  of  the  Option,  Dynex  Holding  will  deliver  to  each of the
Shareholders  80%  of his pro rata share of the Dynex Preferred shares, with the
balance  to  be  held  by  Dynex Holding subject to certain terms and conditions
contained in the Option Agreement and in each Shareholder's employment agreement
with  Dynex.  The  Dynex  Preferred  will  pay  dividends at 9% per annum and be
convertible into shares of Dynex Common at an initial conversion rate of 1 to 1.
As  a  result  of  the termination by Dynex of its obligations under the Funding
Agreement,  the  Shareholders have terminated the Option granted under the Stock
Option  Agreement.  See  "Legal  Proceedings".

     In  January 1998, the Company privately placed with BancBoston Investments,
Inc.  ("BancBoston")  $7,500,000 in aggregate principal amount of its 15% senior
subordinated  convertible  notes  (the  "Subordinated  Notes").  Interest on the
Subordinated  Notes is payable quarterly until maturity on February 1, 2001. The
Subordinated Notes are convertible at the option of the holder for up to 368,462
shares of common stock of the Company, at a conversion price of $3.30 per share,
subject to adjustment under standard anti-dilution provisions. In the event of a
change  of control transaction, the holder of the Subordinated Notes may require
the Company to repurchase the Subordinated Notes at 100% of the principal amount
plus  accrued  interest.  The Subordinated Notes are redeemable at the option of
the  Company  on  or after July 1, 1999 at redemption prices starting at 105% of
the principal amount, with such premium reducing to par on and after November 1,
2000,  plus  accrued interest. The Subordinated Notes were issued pursuant to an
Indenture,  dated  as  of January 30, 1998 (the "Indenture") between the Company
and  BankBoston,  N.A.,  as  agent.  The  Indenture contains certain restrictive
covenants  including  (i)  a  consolidated  leveraged ratio not to exceed 2 to 1
(excluding  non-recourse  warehouse  debt  and  securitization  debt),  (ii)
limitations on payments such as dividends (but excluding, so long as no event of
default  has  occurred  under  the  Indenture, dividends or distributions on the
Preferred Stock of the Company), (iii) limitations on sales of assets other than
in  the  ordinary  course  of  business  and  (iv)  certain financial covenants,
including  a  minimum  consolidated net worth of $12 million (plus proceeds from
equity  offerings),  a  minimum  ratio  of EBITDA to interest of 1.5 to 1, and a
maximum  cumulative  repossession  ratio  of  27%.  Events  of default under the
Indenture  include failure to pay, breach of covenants, cross-defaults in excess
of  $1  million  or  material  breach  of representations or covenants under the
purchase  agreement  with  BancBoston.  Net  proceeds  from  the  sale  of  the
Subordinated  Notes  were used to pay short-term liabilities, with the remainder
available  to provide for the repayment of the Company's 18% Convertible Secured
Notes  and  for  working capital. The Company capitalized debt issuance costs of
$594,688, and recorded a discount of $507,763 on the debt representing the value
of  warrants issued in connection therewith. The debt issuance cost and discount
is  being  amortized as interest expense on the interest method through February
2001.

     At  March  31,  1999  the  Company  did  not  meet certain of its financial
covenants, which constitutes an event of default on the Subordinated Notes.  The
ability of the Company to meet such covenants is dependant upon future earnings.
The  Company  has made all payments due on its Subordinated Notes and expects to
continue  to  meet  such  obligations.  The  Subordinated  Notes  have  not been
formally  accelerated  by  BankBoston;  however  if such acceleration were made,
BankBoston  could  declare  such  amounts  immediately  due.

                                    -- 25 --
<PAGE>
     On  June  10,  1998,  the  Company  sold  to Dynex at par $3 million of the
Company's  12% Convertible Senior Notes due 2003 (the "Senior Notes").  Interest
on  the  Senior Notes is payable quarterly in arrears, with the principal amount
due on June 9, 2003. The Senior Notes may be converted at the option of Dynex on
or before May 31, 1999 into shares of the Company's common stock at a conversion
price  of  $6.00  per  share.  Demand  and  "piggyback" registration rights with
respect to the underlying shares of common stock were granted. Dynex claims that
the  Senior  Notes are now in default due, among other things, to the impairment
of  the  Stock Option, an assertion which the Company disputes.  The Company has
made  all  interest  payments due on the Senior Notes and expects to continue to
meet  such  obligations.


     Securitization Program.  In its securitization transactions through the end
of  1996,  the  Company  sold  pools  of  finance contracts to a special purpose
subsidiary, which then assigned the finance contracts to a trust in exchange for
cash  and  certain  retained  beneficial  interests in future excess spread cash
flows.  The  trust  issued  two  classes  of fixed income investor certificates:
"Class  A  Certificates"  which  were sold to investors, generally at par with a
fixed  coupon,  and  subordinated  excess  spread  certificates  ("Class  B
Certificates"),  representing a senior interest in excess spread cash flows from
the  finance  contracts,  which  were  typically  retained  by  the  Company's
securitization  subsidiary  and which collateralize borrowings on a non-recourse
basis.  The  Company  also  funded  a  cash reserve account that provides credit
support  to  the Class A Certificates. The Company's securitization subsidiaries
also  retained a "Transferor's Interest" in the contracts that is subordinate to
the  interest  of  the  investor  certificate  holders.

     In  the  Company's  March 1997, August 1997 and October 1997 securitization
transactions,  the Company sold a pool of finance contracts to a special purpose
subsidiary,  which  then assigned the finance contracts to an indenture trustee.
Under  the  trust indenture, the special purpose subsidiary issued three classes
of  fixed income investor notes, which were sold to investors, generally at par,
with  fixed  coupons.  The  subordinated  notes  represent  a senior interest in
certain  excess  spread  cash flows from the finance contracts. In addition, the
securitization  subsidiary  retained  rights to the remaining excess spread cash
flows. The Company also funded cash reserve accounts that provide credit support
to  the  senior  class  or  classes.

     The retained interests entitle the Company to receive the future cash flows
from  the  trust  after payment to investors, absorption of losses, if any, that
arise  from  defaults  on  the  transferred finance contracts and payment of the
other  expenses  and  obligations  of  the  trust.

     The  Company has relied significantly on a strategy of periodically selling
finance contracts through asset-backed securitizations. The Company's ability to
access  the  asset-backed  securities market is affected by a number of factors,
some  of  which  are  beyond  the Company's control and any of which could cause
substantial  delays  in  securitization  including,  among  other  things,  the
requirements  for  large cash contributions by the Company into securitizations,
conditions  in the securities markets in general, conditions in the asset-backed
securities  market  and  investor demand for sub-prime auto paper. Additionally,
gain  on  sale  of  finance  contracts  represents  a significant portion of the
Company's  total  revenues  and,  accordingly,  net  income. If the Company were
unable  to  sell  finance  contracts or account for any securitization as a sale
transaction  in  a  financial reporting period, the Company would likely incur a
significant  decline  in total revenues and net income or report a loss for such
period. Moreover, the Company's ability to monetize excess spread cash flows has
been an important factor in providing the Company with substantial liquidity. If
the  Company  were  unable  to  sell  its  finance  contracts  and  did not have
sufficient  credit  available,  either under warehouse credit facilities or from
other sources, the Company would have to sell portions of its portfolio directly
to  whole  loan  buyers  or curtail its finance contract acquisition activities.

     On  May  19,  1998,  Moody's  announced  that  the  ratings  on  the senior
securities  issued  in the Company's term securitization were reduced to Bal (B2
for  the  1997B  and  1997C transactions), expressing concerns including (1) the
alleged  non-adherence  to  the  transaction documents with regard to charge-off
policy  and  the calculation of delinquency and loss triggers, (2) the Company's
procedures  for  allocating prepaid insurance among the trusts, (3) instances of
the  Company  waiving  fees and making cash contributions to the transactions to
enhance their performance, and (4) "instances of commingled collections."  While
the Company was not requested by Moody's to provide legal guidance as to whether
or  not  these  factors  would
                                    -- 26 --
<PAGE>
as  a matter of law "increase the uncertainty" with respect to the transactions,
the  Company  does  note the following:  (1) with the transfer of servicing from
Loan Servicing Enterprise ("LSE") now completed, the Company believes that it is
servicing  in  accordance  with the documentation; (2) the transaction documents
did  not  contemplate  the  allocation of prepaid insurance claims, a phenomenon
brought  about  by  the  Company's  prevailing  upon  Interstate to speed up the
payment of claims for the benefit of the trusts in a manner the Company believes
is fair to the trusts; (3) the transaction documents do not prohibit fee waivers
and explicitly permit the Company to make voluntary capital contributions to the
trusts;  and  (4)  at  the  insistence  of the former servicer, collections have
always  been directed to omnibus lockboxes in the name of, and under the control
of, the former servicer and the transaction trustees and, the trustee is holding
cash  that is to be paid to certificate holders upon reconciliation instructions
from  LSE.

     The  Company  has  engaged  counsel  who  is  presently  performing  the
deal-by-deal  analysis  of  the  structural  and  legal  integrity  of  these
transactions  and  resolve the concerns raised by Moody's.  In the meantime, the
Company has been notified by the trustees on certain of the securitizations that
the  action  of  Moody's  and  the alleged causes constituted events of servicer
termination under such transactions.  The trustees have threatened to remove the
Company  as  servicer  on certain transactions, and have withheld servicing fees
due  to  the  Company.  Since  the  Company  is  of  the  view that no events of
servicing  termination have occurred and that the transactions documents did not
intend  for  servicing compensation to the Company to be cut off where the cause
of  an event of default is due to the actions of Progressive and LSE (the former
servicer), the Company is seeking to resolve those issues to the satisfaction of
all  parties.


     Equity Offerings.  In February 1998, the Company completed the underwritten
public  offering  of  1,125,000  shares of its 15% Series A Cumulative Preferred
Stock  (the  "Preferred Stock"), with a liquidation preference of $10 per share.
The  price  to the public was $10 per share, with net proceeds to the Company of
approximately  $9,631,000.  Such  net  proceeds  have  been utilized for working
capital  purposes,  including the funding of finance contracts. Dividends on the
Preferred  Stock  are cumulative and payable quarterly on the last day of March,
June,  September  and December of each year, commencing on June 30, 1998, at the
rate  of 15% per annum. After three years from the date of issuance, the Company
may,  at  its option, redeem one-sixth of the Preferred Stock each year, in cash
at  the  liquidation price per share (plus accrued and unpaid dividends), or, if
in Common Stock, that number of shares equal to $10 per share of Preferred Stock
to  be  redeemed, divided by 85% of the average closing sale price per share for
the  Common  Stock  for  the  5  trading  days prior to the redemption date. The
Preferred  Stock is not redeemable at the option of the holder and has no stated
maturity.

     If  dividends  on  the  Preferred  Stock  are  in arrears for two quarterly
dividend  periods,  holders  of the Preferred Stock will have the right to elect
two  additional  directors  to  serve on the Company's Board until such dividend
arrearage  is  eliminated.  In  addition,  certain changes that could materially
affect  the  holders of Preferred Stock, such as a merger of the Company, cannot
be  made without the affirmative vote of the holders of two-thirds of the shares
of Preferred Stock, voting as a separate class. The Preferred Stock ranks senior
to  the  Common  Stock with respect to the payment of dividends and amounts upon
liquidation,  dissolution  or  winding up.  The Preferred Stock dividend was not
paid  for  the  first  quarter  of  1999.

     On  May  20,  1998,  the  Company  and  Promethean Investment Group, L.L.C.
("Promethean") entered into a common stock investment agreement (the "Investment
Agreement")  and related registration rights agreement whereby Promethean agreed
to  purchase from the Company, on the terms and conditions outlined below, up to
$20  million  (subject  to increase up to $25 million at Promethean's option) of
the Company's common stock. The Company must deliver a preliminary notice of its
intention  to  require Promethean to purchase its common shares at least ten but
not  more  than thirty days prior to the Company's delivery of its final notice.
The Company may only deliver such final notice if (i) the dollar volume-weighted
price  of  its common stock reported on the business day of such final notice is
at  least  $3.25 per share, (ii) at all times during the period beginning on the
date  of  delivery  of  the  preliminary  notice and ending on and including the
closing  date  (a)  a registration statement covering the resale of no less than
150%  of  the shares to be sold to Promethean under the Investment Agreement has
been declared and remains effective and (b) shares of the Company's common stock
are  at  such time listed on a major national securities exchange, and (iii) the
Company  has  not  delivered  another  final  notice  to  Promethean
                                    -- 27 --
<PAGE>
during  the preceding twenty-five business days preceding delivery of such final
notice.  Following  receipt  of a final notice, Promethean's purchase obligation
will  equal  the  lowest of: (i) the amount indicated in such final notice, (ii)
$5,000,000  and (iii) 20% of the aggregate of the daily trading dollar volume on
the  twenty  consecutive  business  days  following  delivery of the put notice.
Promethean  may,  in its sole discretion, increase the amount purchasable in the
preceding  sentence  by 125%. Promethean must conclude all required purchases of
common  shares  within twenty-five business days of receipt of the final notice.
The  purchase  price for the Company's shares will be equal to 95% of the lowest
daily  dollar  volume-weighted  average price during the six consecutive trading
days  ending on and including the date of determination. Promethean's obligation
to  purchase  shares  under  the  Investment Agreement shall end either upon the
mutual consent of the parties or automatically upon the earliest of the date (a)
on  which  total  purchases  by  Promethean under the Investment Agreement total
$20,000,000, (b) which is two years after the effective date of the registration
statement  relating  to the common stock covered by the Investment Agreement, or
(c)  which  is twenty-seven months from the date of the Investment Agreement. In
consideration  of  Promethean's  obligations under the Investment Agreement, the
Company  paid  $527,915  in  cash  on  August  19, 1998, which was treated as an
investment  in  a  common  stock  agreement.


IMPACT  OF  INFLATION  AND  CHANGING  PRICES

     Although  the  Company  does  not  believe  that  inflation  directly has a
material  adverse  effect  on  its financial condition or results of operations,
increases in the inflation rate generally are associated with increased interest
rates.  Because  the  Company  borrows funds on a floating rate basis during the
period  leading  up  to  a  securitization,  and in many cases purchases finance
contracts  bearing  a fixed rate nearly equal but less than the maximum interest
rate  permitted  by law, increased costs of borrowed funds could have a material
adverse  impact  on  the  Company's  profitability. Inflation also can adversely
affect  the  Company's  operating  expenses.


IMPACT  OF  NEW  ACCOUNTING  PRONOUNCEMENTS

     In  June  1998,  FASB  issued  SFAS  No.  133,  "Accounting  for Derivative
Instruments  and  Hedging  Activities"  ("SFAS No. 133").  SFAS No. 133 requires
than  an entity recognize all derivatives as either assets or liabilities in its
balance  sheet  and  that  it  measure  those  instruments  at  fair value.  The
accounting  for  changes  in  the fair value of a derivative (that is, gains and
losses)  is  dependent upon the intended use of the derivative and the resulting
designation.  SFAS No. 133 generally provides for matching the timing of gain or
loss  recognition  on  the  hedging  instrument  with the recognition of (1) the
changes in the fair value of the hedged asset or liability that are attributable
to  the  hedged  risk  or  (2)  the  earnings  effect  of  the  hedged  forecast
transaction.  SFAS  No. 133 is effective for all fiscal quarters of fiscal years
beginning  after June 15, 1999, although earlier application is encouraged.  The
Company plans to comply with the provisions of SFAS No. 133 upon its initial use
of derivative instruments.  As of March 31, 1999, no such instruments were being
utilized by the Company. The Company does not believe the implementation of SFAS
No.  133  will  have a material effect on its consolidated financial statements.


YEAR  2000  COMPLIANCE

     The  Year 2000 issue is the result of computer programs being written using
two  digits  rather  than  four to define the applicable year. Computer programs
containing  date-sensitive  code  could  recognize a date ending with the digits
"00"  as  the year 1900 instead of the year 2000.  This could result in a system
failure  or  in  miscalculations  causing  disruptions of operations, including,
among  other  things,  a  temporary  inability  to  process  transactions,  send
invoices,  or  engage  in  similar  normal  activities.

     As  a specialty consumer finance company, the Company substantially depends
on  its  computer systems and proprietary software applications in underwriting,
acquiring,  servicing  and  securitizing  finance  contracts.  As  a  result  of
initiatives  undertaken  in the development of its proprietary software systems,
all  of the Company's systems and software applications have been formatted with
a full, four-digit date code in the database management and cash flow evaluation
software.  The  efficacy  of  certain  of  the  Company's
                                    -- 28 --
<PAGE>
systems  and  software  applications  in  handling  Year  2000  issues  has been
demonstrated  repeatedly  in  the system's ability to calculate payments streams
accurately  on finance contracts with maturity dates that extend beyond December
31,  1999.  Based  on  its  review  of the likely impact of the Year 2000 on its
business,  the  Company believes that it is working constructively toward making
its  critical  and  operational  applications  Year  2000  compliant.

     Nevertheless,  the  Company  may  be exposed to the risk that other service
providers may not be in compliance.  While the Company does not foresee that the
Year  2000  will  pose  significant  operational  problems,  the  failure of its
vendors, customers or financial institutions to become Year 2000 compliant could
have  a  material  adverse effect on the Company's business, financial condition
and  results  of  operations.  To  date,  the  Company  has  not  formulated any
contingency  plans  to  address  such  consequences.


QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT  MARKET  RISK

     Market  risk generally represents the risk of loss that may result from the
potential  change  in  the  value  of  a  financial  instrument  as  a result of
fluctuations in interest and currency exchange rates and in equity and commodity
prices.  Market risk is inherent to both derivative and non-derivative financial
instruments.  The Company's market risk management procedures include all market
risk  sensitive  financial instruments.  The Company has no derivative financial
instruments,  exposure  to  currency exchange rates nor commodity risk exposure.

     The  Company's  debt  is all fixed rate and the Company's earnings and cash
flows from retained interests in securitization and finance contracts, which are
at  fixed  rates,  are  not  impacted  by  changes in market interest rates. The
Company  manages  market  risk  by  striving  to  balance  its  finance contract
origination activities with its ability to sell such contracts in a short period
of time. Changes in market value of its finance contracts and retained interests
may  increase or decrease due to pre-payments and defaults influenced by changes
in  market  conditions  and  the  borrowers'  financial  condition.


RISKS  ASSOCIATED  WITH  FORWARD  LOOKING  STATEMENTS

     The statements contained in this document that are not historical facts are
forward  looking  statements.  Actual results may differ from those projected in
the  forward  looking statements. These forward looking statements involve risks
and  uncertainties,  including  but  not  limited  to  the  following  risks and
uncertainties:  changes  in  the  performance  of  the financial markets, in the
demand  for and market acceptance of the Company's loan products, and in general
economic  conditions,  including  interest  rates,  presence of competitors with
greater  financial resources and the impact of competitive products and pricing;
the  effect  of  the  Company's  policies; and the continued availability to the
Company  of adequate funding sources. Investors are also directed to other risks
discussed  in  documents  filed  by the Company with the Securities and Exchange
Commission.


                                    -- 29 --
<PAGE>
                           PART II.  OTHER INFORMATION



ITEM  1.  LEGAL  PROCEEDINGS


     In the normal course of its business, the Company is from time to time made
a  party  to  litigation  involving  consumer-law claims. These claims typically
allege  improprieties on the part of the originating dealer and name the Company
and/or  its  assignees  as subsequent holders of the finance contracts. To date,
none  of  these actions have resulted in the payment of damages or any judgments
therefor,  by  the Company or its assignees, nor have any actions been certified
as  eligible  for  class-action  status.

     On  February 8, 1999, the Company, AutoBond Master Funding Corporation V, a
wholly-owned  subsidiary  of  the  Company  ("Master  Funding  V"),  William  O.
Winsauer,  the  Chairman  and  Chief  Executive  Officer of the Company, John S.
Winsauer,  a  Director  and  the  Secretary of the Company, and Adrian Katz, the
Vice-Chairman,  Chief  Financial  Officer  and  Chief  Operating  Officer of the
Company  (collectively,  the  "Plaintiffs")  commenced an action in the District
Court  of Travis County, Texas (250th Judicial District) against Dynex and James
Dolph  (collectively,  the "Defendants"). This action is hereinafter referred to
as  the "Texas Action". The Company and the other Plaintiffs assert in the Texas
Action  that  Dynex  breached  the  terms  of  the Credit Agreement (the "Credit
Agreement"),  dated June 9, 1998, by and among the Company, Master Funding V and
Dynex.  Such  breaches  include  delays  and  shortfalls in funding the advances
required  under the Credit Agreement and ultimately the refusal by Dynex to fund
any  further  advances  under  the Credit Agreement. Plaintiffs also allege that
Dynex  and Mr. Dolph conspired to misrepresent and mischaracterize the Company's
credit  underwriting  criteria  and  its  compliance with such criteria with the
intention  of  interfering  with  and  causing  actual  damage  to the Company's
business,  prospective business and contracts. The Plaintiffs assert that Dynex'
funding  delays  and  ultimate  breach  of the Credit Agreement were intended to
force  the  Plaintiffs to renegotiate the terms of their various agreements with
Dynex  and  related  entities.  Specifically,  the  Plaintiffs assert that Dynex
intended  to  force  the  Company  to  accept  something  less  than Dynex' full
performance  of  its  obligations  under  the  Credit  Agreement. Further, Dynex
intended  to  force the controlling shareholders of the Company to agree to sell
their  stock  in  the  Company  to  Dynex  or  an  affiliate  at  a  share price
substantially lower than the $6.00 per share price specified in the Stock Option
Agreement,  dated  as of June 9, 1998, by and among Messrs. William O. Winsauer,
John  S.  Winsauer  and Adrian Katz (collectively, the "Shareholders") and Dynex
Holding,  Inc. Plaintiffs in the Texas Action request declaratory judgement that
(a)  Dynex has breached and is in breach of its various agreements and contracts
with  the  Plaintiffs,  (b)  Plaintiffs  have not and are not in breach of their
various  agreements  and  contracts with Defendants, (c) neither the Company nor
Master  Funding  V  has  substantially  or  materially  violated or breached any
representation  or  warranty  made  to  Dynex,  including but not limited to the
representation  and  warranty  that  all  or substantially all finance contracts
funded  or  to be funded by Dynex comply in full with, and have been acquired by
the  Company in accordance with, the Company's customary underwriting guidelines
and  procedures;  and (d) Dynex is obligated to fund the Company in a prompt and
timely  manner  as  required  by the parties' various agreements. In addition to
actual,  punitive  and  exemplary  damages,  the Plaintiffs also seek injunctive
relief  compelling  Dynex  to  fund  immediately all advances due to the Company
under  the  Credit  Agreement.

     On March 1, 1999, the Company and the other Plaintiffs filed an application
in the Texas Action for a temporary injunction joining Dynex (a) from continuing
to  suspend  or  withhold  funding  pursuant  to  the Credit Agreement, (b) from
removing  or  attempting  to remove the Company as servicer, and (c) from making
any  further  false  or defamatory public statements regarding the Plaintiffs. A
hearing  was held in April 1999.  However, no decision has been rendered on this
application.

     On  February  9, 1999, Dynex commenced an action against the Company in the
United  States  District  Court  for  the Eastern District of Virginia (Richmond
District)  (the  "Virginia Action") seeking declaratory relief that Dynex is (a)
not  obligated  to  advance  funds  to Master Funding under the Credit Agreement
because  the  conditions  to  funding set forth in the Credit Agreement have not
been  met,  and (b) entitled to access to all books, records and other documents
of  Master  Funding,  including all finance contract files.  Specifically, Dynex
alleges  that  as  a  result of a partial inspection of certain finance contract
files  by  Mr. 
                                    -- 30 --
<PAGE>
Dolph  and  Virgil  Baker  &  Associates in January 1999, Dynex concluded that a
significant  number  of  such  contracts  contained material deviations from the
applicable  credit  criteria  and  procedures,  an apparent breach of the Credit
Agreement.  Dynex  also alleges that on February 8, 1999, the Company refused to
permit Mr. Dolph and representatives from Dynex access to the books, records and
finance  contract files of the Company. Dynex concludes that as a result of such
alleged  breaches,  it  is  not  obligated  to provide advances under the Credit
Agreement.  Dynex  also  seeks  to  recover damages resulting from the Company's
alleged  breach  of  the  partie's  various agreements, which alleged breach the
Company  vigorously  denies.  The  Company, Messrs. William O. Winsauer, John S.
Winsauer  and  Adrian  Katz  filed  a responsive pleading on March 25, 1999. The
Company  has  sought  dismissal  of  the Virginia Action on the basis that these
matters  are  being  litigated  in  the  previously  filed  Texas  Action.

     On  February  22,  1999,  the same day that Dynex notified the Company of a
purported  servicing termination, Dynex filed another action against the Company
in  the  United States District Court for the Southern District of New York (the
"New  York  Action"),  seeking  damages  and injunctive relief for the Company's
alleged  breaches  under  the  servicing  agreement among the Company, Dynex and
Master  Funding  V.  The  Company  was not notified of the New York Action until
March  1,  1999,  when  Dynex  sought  a temporary restraining order against the
Company.  After  hearing  argument  from  counsel  for both sides, the temporary
restraining  order  was  denied.  On  March  23, 1999, the court issued an order
transferring the action to the Federal District Court in the Eastern District of
Virginia.  The Company remains the servicer and is performing in its capacity as
servicer.

     In  March  1998,  after  Progressive  Northern  Insurance  ("Progressive")
purported  to cancel the VSI and deficiency balance insurance policies issued in
favor  of  the  Company,  the  Company  sued  Progressive,  its affiliate United
Financial  Casualty  Co.  and their agent in Texas, Technical Risks, Inc. in the
District  Court  of  Harris  County,  Texas. The action seeks declaratory relief
confirming  the  Company's  interpretation of the policies as well as claims for
damages  based  upon  breach  of  contract, bad faith and fraud. The Company has
received the defendants' answers, denying the Company's claims, and discovery is
proceeding. Progressive stopped paying claims during the second quarter of 1998.
As  a  result  of  the  attempt by Progressive to cancel its obligations and its
refusal  to honor claims after March 1998, the Company has suffered a variety of
damages,  including  impairment of its retained interest in securitizations. The
Company is vigorously contesting the legitimacy of Progressive's actions through
litigation.  Although  a  favorable  outcome  cannot  be assured, success in the
litigation  could  restore at least some of the value of the Company's interests
in  such securitizations.  Conversely, if the court were to uphold Progressive's
position,  further  impairment of the Company's interests could occur, resulting
in  an  adverse  effect  on  the  Company's  results  of  operations.

     Also  in  March  1998,  the  Company  commenced an action in Travis County,
Texas,  against  Loan  Servicing  Enterprise ("LSE"), alleging LSE's contractual
breach  of its servicing obligations on a continuing basis. LSE has commenced an
action  against  the  Company  in  Texas  State  court seeking recovery from the
Company  of  putative  termination fees in connection with termination of LSE as
servicer. The Company expects the two actions to be consolidated. If the Company
prevails  against  LSE,  some  of  the  value  of  the  Company's  interest  in
securitizations  could  be  restored.

     The  Company's carrier for the credit deficiency insurance obtained through
1996,  Interstate  Fire & Casualty Co. ("Interstate") determined in late 1996 to
no  longer  offer  such  coverage  to  the  auto finance industry, including the
Company.  In  connection  with  Interstate's  attempt  to no longer offer credit
deficiency  coverage  for  contracts originated after December 1996, the Company
commenced an action in the United States District Court for the Western District
of  Texas,  Austin Division, seeking a declaratory judgment that (a) the Company
was  entitled  to  180 days' prior notice of cancellation and (b) Interstate was
not  entitled  to  raise  premiums  on  finance contracts for which coverage was
obtained  prior  to  the  effectiveness of such cancellation, as well as seeking
damages  for  Interstate's  alleged  deficiencies  in  paying  claims.  Prior to
receiving  the  Company's  complaint in the Texas action, Interstate commenced a
similar  action  for  declaratory  relief  in  the  United  States Court for the
Northern  District  of Illinois. Both suits have been voluntarily dismissed, and
Interstate  and  the  Company  have to date acted on the basis of a cancellation
date  of May 12, 1997 (i.e., no finance contracts presented after that date will
be  eligible for credit deficiency coverage by Interstate, although all existing
contracts  for  which  coverage  was  obtained 
                                    -- 31 --
<PAGE>
will  continue  to  have  the benefits of such coverage), no additional premiums
having  been  demanded  or  paid,  and  the  claims-paying  process  having been
streamlined.  In  particular,  in  order  to  speed  the  claims-paying process,
Interstate  has  paid  lump sums to the Company as an estimate of claims payable
prior  to  completion  of processing. Pending the Company's determination of the
appropriate  beneficiary for such claims payments, the Company has deposited and
will  continue  to  deposit  such  funds  into  a  segregated  account.

     In February 1997 the Company discovered certain breaches of representations
and  warranties by certain dealers with respect to finance contracts sold into a
securitization.  The Company honored its obligations to the securitization trust
and  repurchased  finance contracts totaling $619,520 from that trust during the
three  months  ended  March  31,  1997.  Of  the  total  amount of these finance
contracts,  $190,320  were  purchased  from one dealer. Although the Company has
requested that this dealer repurchase such contracts, the dealer  refused. After
such  dealer's  refusal  to  repurchase,  the Company commenced an action in the
157th  Judicial  District  Court for Harris County, Texas against Charlie Thomas
Ford,  Inc.  to  compel  such  repurchase.  On  favorable terms, the Company has
reached  a  settlement  agreement with Charlie Thomas Ford, Inc. The Company has
received  funds  related  to  such  settlement.

     On  March  31,  1999,  a  suit  naming the Company and William O. Winsauer,
Adrian  Katz  and  John  S.  Winsauer  (in  their  capacities  as  controlling
shareholders  of  the Company) as defendants (the "Defendants") was filed in the
United States District Court for the Western District of Texas (Austin Division)
by  Bruce  Willis  (the  "Plaintiff"),  a  holder  of the Company's 15% Series A
Cumulative  Preferred  Stock.  The  suit  alleges,  among other things, that the
Defendants  violated  Section  10(b)  of the Securities and Exchange Act of 1934
(and Rule 10b-5 promulgated thereunder) in failing to disclose adequately and in
causing  misstatements  concerning  the  nature  and  condition of the Company's
financing  sources.  The  suit  also  alleges  that  such  actions  constituted
statutory  fraud  under the Texas Business Corporation Act, common law fraud and
negligent  misrepresentation.  The  Plaintiff  seeks class action certification.
The  Plaintiff  also  seeks, among other things, actual, special, consequential,
and  exemplary  damages  in  an  unspecified  sum, as well as costs and expenses
incurred in connection with pursuing the action against the Company. The Company
believes  that  it  has  consistently  and accurately informed the public of its
business and operations, including the viability of its funding sources, and, as
a  consequence  believes  the suit to be without merit and intends to vigorously
defend  against  this  action.



ITEM  2.  CHANGES  IN  SECURITIES  AND  USE  OF  PROCEEDS


     None



ITEM  3.  DEFAULTS  UPON  SENIOR  SECURITIES


     At  March  31,  1999  the  Company  did  not  meet certain of its financial
covenants,  which  failure  constitutes  an  event of Default on the Subordinate
Notes.  The  ability  of  the  company  to meet such covenants is dependant upon
future  earnings.  The  Company  has  made  all payments due on its Subordinated
Notes  and  expects  to  continue  to meet such obligations.  BankBoston has not
formally  accelerated  the Subordinated Notes, however if such acceleration were
made,  BankBoston  could  declare  such  amounts  immediately  due.

     Dynex  has  purportedly  accelerated  all amounts due under the Senior Note
Agreement  dated June 9, 1998, by and between Dynex and the Company. The Company
disputes  such  purported  acceleration.

     If  dividends  on  the  Preferred  Stock  are  in arrears for two quarterly
dividend  periods,  holders  of the Preferred Stock will have the right to elect
two  additional  directors  to  serve  on  the  Company's  Board  of 
                                    -- 32 --
<PAGE>
Directors  until  such  dividend  arrearage  is eliminated. In addition, certain
changes  that  could materially affect the holders of Preferred Stock, such as a
merger  of  the  Company,  cannot  be  made  without the affirmative vote of the
holders  of  two-thirds  of  the shares of Preferred Stock, voting as a separate
class.   The  Preferred  Stock  ranks senior to the Common Stock with respect to
the  payment  of  dividends and amounts upon liquidation, dissolution or winding
up.  The  dividend  was  not  paid  March  31,  1999.



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


     None.



ITEM  5.  OTHER  INFORMATION


     None.

                                    -- 33 --
<PAGE>


ITEM  6.  EXHIBITS  AND  REPORTS  ON  FORM  8-K

<TABLE>
<CAPTION>


(A)     EXHIBITS

                                EXHIBIT NO.     DESCRIPTION OF EXHIBIT
                                -----------     ----------------------

<C>        <S>

  3.1 (1)  Restated Articles of Incorporation of the Company
  3.2 (1)  Amended and restated Bylaws of the Company
  4.1 (1)  Specimen Common Stock Certificate
 10.1 (1)  Amended and Restated Loan Origination, Sale and Contribution Agreement dated as of
           December 15, 1995 by and between the Company and AutoBond Funding Corporation I
 10.2 (1)  Security Agreement dated as of May 21, 1996 among AutoBond Funding Corporation II,
           the Company and Norwest Bank Minnesota, National Association
 10.3 (1)  Credit Agreement and Side Agreement, dated as of May 21, 1996 among AutoBond
           Funding Corporation II, the Company and Peoples Life Insurance Company
 10.4 (1)  Servicing  Agreement dated as of May 21, 1996 among AutoBond Funding Corporation II,
           CSC Logic/MSA L.L.P., doing business  as "Loan  Servicing  Enterprise", the Company
           and Norwest Bank Minnesota, National Association
 10.5 (1)  Loan Acquisition Sale and Contribution Agreement dated as of May 21, 1996 by and
           between the Company and AutoBond Funding Corporation II
 10.6 (1)  Second Amended and Restated Secured Revolving Credit Agreement dated as of July 31,
           1995 between Sentry Financial Corporation and the Company
 10.7 (1)  Management Administration and Services Agreement dated as of January 1, 1996 between
           the Company and AutoBond, Inc.
 10.8 (1)  Employment Agreement dated November 15, 1995 between Adrian Katz and the Company
 10.9 (1)  Employment Agreement effective as of May 1, 1996 between William O. Winsauer and the
           Company
10.10 (1)  Vender's Comprehensive Single Interest Insurance Policy and Endorsements, issued by
           Interstate Fire & Casualty Company
10.11 (1)  Warrant to Purchase Common Stock of the Company dated March 12, 1996
10.12 (1)  Employee Stock Option Plan
10.13 (1)  Dealer Agreement dated November 9, 1994, between the Company and Charlie Thomas
           Ford, Inc.
10.14 (1)  Automobile Loan Sale Agreement, dated as of September 30, 1996, among the Company,
           First Fidelity Acceptance Corp., and Greenwich Capital Financial Products, Inc.
10.15 (2)  Servicing Agreement, dated as of January 29, 1997, between CSC LOGIC/MSA L.P.P.,
           doing business as "Loan Servicing Enterprise" and the Company
10.16 (2)  Credit Agreement, dated as of February 1, 1997, among AutoBond Funding Corporation II,
           the Company and Daiwa Finance Corporation
10.17 (2)  Security Agreement, dated as of February 1, 1997, by and among AutoBond Funding
           Corporation II, the Company and Norwest Bank Minnesota, National Association
10.18 (2)  Automobile Loan Sale Agreement, dated as of March 19, 1997, by and between Credit
           Suisse First Boston Mortgage Capital L.L.C., a Delaware limited liability company, and the
           Company
10.19 (3)  Automobile Loan Sale Agreement, dated as of March 26, 1997, by and between Credit
           Suisse First Boston Mortgage Capital L.L.C., a Delaware limited liability company, and the
           Company
10.20 (4)  Credit Agreement, dated as of June 30, 1997, by and among AutoBond Master Funding
           Corporation, the Company and Daiwa Finance Corporation
10.21 (4)  Amended and Restated Trust Indenture, dated as of June 30, 1997, among AutoBond
           Master Funding Corporation, AutoBond Acceptance Corporation and Norwest Bank
           Minnesota, National Association.
10.22 (4)  Securities Purchase Agreement, dated as of June 30, 1997, by and among the Company,
           Lion Capital Partners, L.P. and Infinity Emerging Opportunities Limited.
10.23 (6)  Credit Agreement, dated as of December 31, 1997, by and among AutoBond Master Funding
           Corporation II, the Company and Credit Suisse First Boston Mortgage Capital  L.L.C
10.24 (6)  Trust Indenture, dated as of December 31, 1997, among AutoBond Master Funding
           Corporation II, the Company and Manufacturers & Traders Trust Company
10.25 (6)  Receivables Purchase Agreement, dated as of December 31, 1997, between Credit Suisse
           First Boston Mortgage Capital L.L.C and the Company
10.26 (6)  Servicing Agreement, dated as of December 31, 1997, among the Company, AutoBond
           Master Funding Corporation II and Manufacturers & Traders Trust Company
10.27 (6)  Indenture and Note, dated January 30, 1998, between the Company and Bank Boston, N.A.
10.28 (6)  Warrant, dated January 30, 1998, issued to BancBoston Investments, Inc.
10.29 (6)  Purchase Agreement, dated January 30, 1998, between the Company and BancBoston
           Investments, Inc.
10.30 (5)  Warrant, dated February 2, 1998, issued to Dresner Investments Services, Inc.
10.31 (5)  Warrant Agreement, dated February 2, 1998, issued to Tejas Securities Group, Inc.
10.32 (5)  Consulting and Employment Agreement, dated as of January 1, 1998 between Manuel A.
           Gonzalez and the Company
10.33 (5)  Severance Agreement, dated as of February 1, 1998 between Manuel A. Gonzalez and the
           Company
10.34 (7)  1998 Stock Option Plan
10.35 (7)  Third Amendment to the Secured Revolving Credit Agreement dated May 5, 1998 between
           Sentry Financial Corporation and the Company
10.36 (7)  Warrant, dated March 31, 1998, issued to Infinity Investors Limited
10.37 (7)  Credit Agreement, dated as of June 9, 1998, by and among AutoBond Master Funding
           Corporation V, the Company, and Dynex Capital, Inc.
10.38 (8)  Servicing Agreement, dated as of June 9, 1998, by and among AutoBond Master Funding
           Corporation V, the Company, and Dynex Capital, Inc.
10.39 (8)  Trust Indenture, dated as of June 9, 1998, by and among AutoBond Master Funding
           Corporation V, the Company and Dynex Capital, Inc.
10.40 (9)  Letter Agreement, dated June 30, 1998 by and between the Company and Dynex Capital,
           Inc.
10.41 (9)  Letter Agreement dated October 20, 1998 by and between the Company and Dynex Capital,
           Inc.
10.42 (9)  Letter Agreement dated October 28, 1998 by and between the Company, Dynex Holding,
           Inc., and Dynex Capital, Inc.
 21.1 (4)  Subsidiaries of the Company
 21.2 (6)  Additional Subsidiaries of the Company
21.3 (10)  Additional Subsidiaries of the Company
    27.1   Financial Data Schedule
---------  
<FN>

1  Incorporated  by reference from the Company's Registration Statement on Form S-1 (Registration No.
333-05359).
2  Incorporated  by  reference  to  the  Company's 1996 annual report on Form 10-K for the year ended
December  31,  1996.
3  Incorporated  by  reference  to  the Company's quarterly report on Form 10-Q for the quarter ended
March  31,  1997.
4 Incorporated by reference to the Company's quarterly report on Form 10-Q for the quarter ended June
30,  1997.
5  Incorporated  by  reference  to  the  Company's 1997 annual report on Form 10-K for the year ended
December  31,  1997
6  Incorporated  by reference from the Company's Registration Statement on Form S-1 (Registration No.
333-41257).
7  Incorporated  by  reference  to  the Company's quarterly report on Form 10-Q for the quarter ended
March  31,  1998
8  Incorporated  by  reference  to  the  Company's  report  on  Form  8-K  filed  on  June  24,  1998
9  Incorporated  by  reference  to  the Company's quarterly report on form 10-Q for the quarter ended
September  30,  1998
10  Incorporated  by  reference  to  the Company's 1998 annual report on Form 10-K for the year ended
December  31,  1998
----------------------------------------------------------------------------------------------------
</TABLE>
                                    -- 34 and 35--
<PAGE>


(B)     Reports  of  Form  8-K

The  Company  filed  Form  8-K  on  March  8,  1999 advising investors and other
interested  parties  as to the status of its current dispute with Dynex Capital,
Inc.  ("Dynex").

                                    -- 36 --
<PAGE>

SIGNATURES


Pursuant  to  the  requirements  of  the  Securities  Exchange  Act of 1934, the
registrant  has  duly  caused  this  report  to  be  signed on its behalf by the
undersigned  thereunto  duly  authorized  on  May  17,  1999.



                     AUTOBOND ACCEPTANCE CORPORATION
                     -------------------------------


                                                   BY:  /S/ WILLIAM O. WINSAUER
                                   --------------------------------------------
                                     WILLIAM O. WINSAUER, CHAIRMAN OF THE BOARD
                                          AND CHIEF EXECUTIVE OFFICER

                                                           BY:  /S/ ADRIAN KATZ
                                   --------------------------------------------
                                       ADRIAN KATZ, VICE CHAIRMAN OF THE BOARD,
                                          CHIEF OPERATING OFFICER AND
                                          CHIEF FINANCIAL OFFICER


                                    -- 37 --

<PAGE>