To Our Stockholders:

The Aegis Consumer Funding Group, Inc., a Delaware  corporation  (Referred to as
either the "Company" or "Aegis"),  is a sub-prime  finance company that has been
involved in purchasing loans from automobile dealers,  nationally,  for the past
five  years.  In  fiscal  year  1995,  the  Company's  loan  portfolio   rapidly
accelerated as the sub-prime automobile finance market swelled. Aegis emerged as
a market leader,  acquiring over 12,000 retail  installment  sales  contracts in
fiscal  year 1995 with a face value in excess of $160  million.  As Aegis'  loan
volume continued to expand Aegis, experienced  increased  competition from other
lenders in the sub-prime finance market. Beginning in 1996, a variety of factors
impacted  Aegis,  as well as the  sub-prime  industry in general,  resulting  in
substantial  deterioration  to Aegis' loan  portfolio.  In response,  Aegis took
substantial write downs on its retained yield assets in securitized  receivables
which adversely affected its financial condition.

As a  result,  and in  direct  response  to the  Company's  substantial  loss in
earnings,  the Company  underwent a massive  restructuring of its operations and
programs,  beginning  in late  October  1997.  I was  offered  the  position  of
President and Chief Executive Officer,  and along with my newly appointed senior
management  team,  set  about to  restructure  the  Company  and  restore  it to
profitability  while producing quality loans. My senior management team consists
of:  Cyril  Means as  General  Counsel  and  Executive  Vice  President,  Robert
Micalizzi as Vice  President in charge of Production  and Troy Cavallaro as Vice
President in charge of New Business Development.

Senior  management  immediately  set about  implementing  plans to cut  existing
overhead  and create a profitable  platform  for the future of the  Company.  In
order to accomplish  these goals,  it was necessary to downsize and  consolidate
the operations of the Company.  By November  1997,  the  production  facility in
California  was  closed  while  the  production   facility  in  New  Jersey  was
consolidated  to the  Company's  existing  production  facility in  Georgia.  In
December  1997,  the  executive   offices   located  in  New  Jersey  were  also
consolidated  with the  Company's  facility in  Georgia.  By January  1998,  the
Company had reduced  personal by 66% and no longer had any presence in the State
of New Jersey. The Company continues to retain a small office in California from
which collections on certain older securitizations are carried out and an office
in Kansas where the Company's state of the art computer networks are maintained.

The changes I have implemented  with the help of my senior  management team have
resulted in savings to the  Company of roughly  $2.6  million per month.  Today,
operating  expenses  run at  approximately  $1.2  million  per  month,  of which
$900,000 is for actual current  operating  overhead (the remaining  $300,000 per
month is used to satisfy past  creditors  inherited by senior  management).  The
Company has revamped its programs  with a strong  emphasis on producing  quality
loans while retaining a competitive position in the marketplace.  The tightening
of the program's  underwriting  guidelines  has had the effect of  significantly
reducing loan acquisition volume,  although the loans that are purchased perform
at  levels  superior  to the  loans  produced  prior to 1998.  It is now  senior
management's   task  to  focus  the  Company  on  the   reaffirmation   of  past
relationships   with  good  automobile   dealers  and  the  development  of  new
relationships  with  other  dealers  along  the lines of the  Company's  current
philosophy of purchasing only quality loans.





in the past two years,  twelve of the fourteen major sub-prime finance companies
have suffered losses from  overstated  retained yield  valuations.  These losses
have prompted some finance  companies to leave the  sub-prime  field (i.e.,  The
Money Store),  while others have declared  bankruptcy (i.e.,  Jayhawk Acceptance
Corp., Mercury Finance,  First Enterprise Financial Group, Inc., First Merchants
Acceptance, Corp.).

The Company continues to see opportunities in the sub-prime  automobile  finance
industry.  Senior  management  believes  that the hasty  retreat  of many of its
competitors  from the  sub-prime  market  should  restore  the market  share and
profits of those few  Companies  that  remain.  Secondly,  there are a number of
portfolios  originated  by companies  that have left the  industry  that are now
available  at a discount.  The Company has begun to explore the  possibility  of
purchasing some of the better portfolios currently available with the assistance
of its credit source.

I  believe  that a  great  deal is owed to our  main  credit  source,  warehouse
provider  and  primary  shareholder  for its  continuing  support of the Company
through  these  tumultuous  times and for  continuing to share our vision of the
Company's  future.  I also want to  extend,  on behalf  of the  Company,  senior
management and employees,  our thanks for your continued support in our struggle
to restore Aegis as a leader in the sub-prime finance arena.

There is still much that needs to be  accomplished in order to turn around Aegis
and make it a  profitable  platform to carry it into the next  century.  In this
endeavor,  I believe we will succeed.  There is a feeling that permeates through
Aegis'  workforce  which has not existed for some time;  that  feeling is one of
hope and  aspirations and a communal drive to work as a well organized team. For
the first time in a long time we can see the future and it looks bright.



Sincerely,

/s/ Matthew B. Burns

Matthew B. Burns
President and Chief Executive Officer