AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 30, 1998.

REGISTRATION NO.
================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------

SUNBELT AUTOMOTIVE GROUP, INC.
(Exact name of registrant as specified in its charter)

GEORGIA 5511 58-2378292
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Classification Code Number) Identification No.)
Organization)

5901 PEACHTREE-DUNWOODY RD., SUITE 250B
ATLANTA, GEORGIA 30328
(678) 443-8100
(Address and Telephone Number of Principal Executive Offices)

STEPHEN C. WHICKER, ESQ.
GENERAL COUNSEL
5901 PEACHTREE-DUNWOODY RD., SUITE 250B
ATLANTA, GEORGIA 30328
(678) 443-8100
(Name, Address and Telephone Number of Agent for Service)
---------------------
COPIES TO:

DAVID S. COOPER, ESQ.
ROBERT B. MURPHY, ESQ.
THOMAS L. HANLEY, ESQ. JAMES L. SMITH, III, ESQ.
SCHNADER HARRISON SEGAL & LEWIS LLP TROUTMAN SANDERS LLP
SUITE 2800 / 303 PEACHTREE ST., N.E. 600 PEACHTREE STREET, N.E. / SUITE 5200
ATLANTA, GEORGIA 30308 ATLANTA, GEORGIA 30308-2216
(404) 215-8100 (404) 885-3000

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after the Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration number of earlier effective registration
statement for the same offering. [ ]

If this Form is a post-effective amendment pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration number of earlier effective registration statement for the same
offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

CALCULATION OF REGISTRATION FEE

==================================================================================================================
PROPOSED PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE MAXIMUM OFFERING AGGREGATE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1) PRICE PER SHARE(2) PRICE FEE
- ------------------------------------------------------------------------------------------------------------------

Common Stock, $0.001 par value.... 6,325,000 $11.00 $69,575,000 $20,525
==================================================================================================================

(1) Includes 825,000 shares reserved for over-allotment options granted to the
Underwriters.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 under the Securities Act of 1933.
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
2

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

[SUBJECT TO COMPLETION, DATED ,1998.]

PROSPECTUS

5,500,000 SHARES

SUNBELT AUTOMOTIVE GROUP, INC.

COMMON STOCK
(PAR VALUE $0.001 PER SHARE)
------------------------
All of the shares of common stock offered hereby are being sold by Sunbelt
Automotive Group, Inc. ("Sunbelt" or the "Company"). Prior to this offering (the
"Offering"), there has been no public market for the common stock of the
Company. It is currently estimated that the initial public offering price will
be between $ and $ per share. See "Underwriting" for a
discussion of the factors to be considered in determining the initial public
offering price of the common stock.

Application will be made to have the shares of common stock approved for
quotation on the Nasdaq National Market under the symbol "SBLT."
------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 9 FOR CERTAIN INFORMATION THAT
SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

=============================================================================================================
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
- -------------------------------------------------------------------------------------------------------------

Per Share......................... $ $ $
- -------------------------------------------------------------------------------------------------------------
Total(3).......................... $ $ $
=============================================================================================================

(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(2) Before deducting expenses estimated at $ , which are payable by the
Company.
(3) The Company has granted the Underwriters a 30-day option to purchase up to
additional shares of common stock on the same terms and conditions as
the common stock offered hereby solely to cover over-allotments, if any. If
the option is exercised in full, the total Price to Public, Underwriting
Discounts and Commissions and Proceeds to Company will be $ ,
$ and $ , respectively. See "Underwriting."
------------------------
The shares of common stock are offered by the Underwriters, subject to
prior sale, when, as and if delivered to and accepted by them, and subject to
other conditions, including the right of the Underwriters to withdraw, cancel,
modify or reject any order in whole or in part. It is expected that delivery of
the shares will be made on or about , 1998 at the offices of Raymond
James & Associates, Inc., 880 Carillon Parkway, St. Petersburg, Florida.
RAYMOND JAMES & ASSOCIATES, INC.

The date of this Prospectus is , 1998.
3

[DESCRIPTION OF GRAPHICS -- INSIDE FRONT COVER: MAP OF SOUTHEASTERN UNITED
STATES SHOWING COMPANY'S LOCATIONS AND PHOTOS OF COMPANY'S DEALERSHIPS]

[DESCRIPTION OF GRAPHICS -- INSIDE BACK COVER: COMPANY LOGO]

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

The Company intends to furnish its shareholders with annual reports
containing financial statements audited by its independent public accountants
and will make available copies of its quarterly reports for the first three
quarters of each fiscal year.

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN THE
COMMON STOCK AND THE IMPOSITION OF A PENALTY BID, IN CONNECTION WITH THE
OFFERING. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
------------------------

This Prospectus includes statistical data regarding the automotive
retailing industry. Unless otherwise indicated herein, such data is taken or
derived from information published by the Industry Analysis Division of the
National Automobile Dealers Association ("NADA") in its Industry Analysis and
Outlook, Automotive Executive Magazine and NADA Data 1997 publications. Sunbelt
Automotive Group and Collision Centers USA are service marks of the Company.
This Prospectus includes other trademarks and service marks of Sunbelt and of
companies other than Sunbelt, which trademarks are the property of their
respective holders.

No automobile manufacturer has been involved, directly or indirectly, in
the preparation of this Prospectus or in the Offering being made hereby. No
automobile manufacturer has made any statements or representations in connection
with this Offering or provided any information or materials that were used in
connection with this Offering, and no automobile manufacturer has any
responsibility for the accuracy or completeness of this Prospectus.
2
4

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information, including risk factors and
financial statements (including the notes thereto) appearing elsewhere in this
Prospectus. Unless otherwise indicated, the information in this Prospectus
assumes that (i) the Underwriters' over-allotment option has not been exercised,
and (ii) the Merger (as such term is defined herein; see "The Merger") and the
Acquisitions (as such term is defined herein; see "The Acquisitions") have
occurred. References in this Prospectus to "common stock" are to the common
stock of the Company, unless otherwise indicated or unless the context otherwise
requires. References in this Prospectus to "Sunbelt" or the "Company" (i) are to
Sunbelt Automotive Group, Inc. and, unless the context indicates otherwise, its
consolidated subsidiaries and their respective predecessors, (ii) give effect to
the Merger, and (iii) assume that the Company has consummated the Acquisitions.
See "The Merger" and "The Acquisitions." The Acquisitions will be consummated on
or before the closing of the Offering. Investors should carefully consider the
information set forth in "Risk Factors."

THE COMPANY

Sunbelt is one of the leading retailers of new and used vehicles in the
southeastern United States. The Company operates a total of 27 dealership
franchises in Georgia, North Carolina and Tennessee, as well as four collision
repair centers in metropolitan Atlanta, Georgia. Sunbelt sells 20 domestic and
foreign brands of automobiles, which consist of Buick, Cadillac, Chevrolet,
Chrysler, Dodge, Ford, GMC, Honda, Hummer, Isuzu, Jeep, Kia, Mazda, Mercury,
Mitsubishi, Nissan, Oldsmobile, Plymouth, Pontiac and Toyota. The Company
believes that in 1997, based on pro forma retail new vehicle unit sales, it
would have been one of the 15 largest franchised automotive dealer groups out of
a total of more than 15,000 franchised automotive dealer groups in the United
States. The Company intends to further diversify its product and service
offerings by adding more brands of vehicles, and by offering related finance and
insurance, replacement parts, collision repair, and other products and services
that are complementary to its core automotive retailing operations. The
Company's strategy is: (i) to become the leading operator of automotive
dealerships in small and medium-sized markets in the southeastern United States
through acquisitions of additional dealerships in these markets, and (ii) to
expand its collision centers and other complementary business operations.

The Company's executive management team has extensive experience in the
automotive retailing industry and the operation of automobile dealerships in the
southeastern United States. On average, the Company's executive officers have
over 15 years of direct industry experience. Between 1992 and 1997, the
Company's dealerships won many awards from various manufacturers measuring
quality and customer satisfaction. These awards include: the Five Star Award
from Chrysler, which is given to the top 25% of Chrysler dealers in the nation;
the NACE (North American Customer Excellence) Award, Ford Motor Company's
highest overall award for customer service; the Top 100 Club, which is awarded
to Ford's top 100 retailers or 2% of Ford dealers in the nation based on retail
volume and consumer satisfaction; the Cadillac Master Dealer award, a status
achieved by 1% of Cadillac dealers nationwide; the Oldsmobile Elite Award, which
is given by Oldsmobile Motor Division to the top 10% of Oldsmobile dealers in
the nation; and the President's Circle Award for performance, which is given by
Nissan Motor Corporation to the top 10% of Nissan dealers in the nation.

THE AUTOMOTIVE RETAILING INDUSTRY

The automotive retailing industry, with aggregate revenues of approximately
$491.1 billion in 1996 for franchised dealers alone, is the largest retail
market in the United States. Aggregate revenues for the southeastern United
States, which is the Company's primary area of operations and is comprised of
the states of Alabama, Florida, Georgia, North Carolina, South Carolina and
Tennessee, amounted to approximately $89.8 billion through franchised dealers in
1996 and accounted for approximately 18% of total franchised dealer revenues in
the United States. Since 1990, the industry has experienced growth in total
revenues, total gross profits and income before taxes. From 1990 to 1996, for
franchised dealers alone, total revenues increased 53.5% from $320.0 billion in
1990 to $491.1 billion in 1996, total gross profits increased 33.3% from
3
5

$46.9 billion in 1990 to $62.5 billion in 1996, and income before taxes
increased 131.3% from $3.2 billion in 1990 to $7.4 billion in 1996. The industry
has been experiencing a consolidation trend which has seen the number of
franchised dealerships in the United States decline from approximately 36,000 in
1960 to 22,750 in 1996. Despite this consolidation, fragmentation is still a
defining characteristic of the industry, with the largest 100 franchised
dealership groups generating less than 10% of 1996 total franchised dealer
revenue and controlling less than 5% of all franchised automotive dealerships.
The Company expects several economic and industry factors to lead to further
consolidation of the automotive retailing industry, including the increasing
capital requirements necessary to operate an automotive dealership, the
management succession planning concerns of many current dealers and the desire
of manufacturers to strengthen their dealer networks through consolidation.

BUSINESS STRATEGY

Sunbelt intends to establish itself as the leading operator of automotive
dealerships in small and medium-sized markets in the southeastern United States
through acquisitions of additional dealerships in these markets. The Company
believes that its diverse portfolio of brands and dealerships in several of
these markets and its experienced management team give it a competitive
advantage in achieving this goal.

OPERATING STRATEGY

The Company pursues an operating strategy based on the following key
elements:

- Offer a Diverse Range of Automotive Products and Services. The
Company offers a diverse range of automotive products and services,
including a wide selection of new and used vehicles, vehicle financing
and insurance programs, replacement parts, maintenance and repair
programs. The Company believes that its brand and product diversity
enables the Company to satisfy a variety of customers, reduces
dependence on any one manufacturer and reduces exposure to supply
problems and product cycles. The Company believes that its variety of
complementary products and services will allow the Company to generate
incremental revenue that will result in higher profitability and less
cyclicality for the Company than if it was solely dependent on
automobile sales.

- Institute Divisional Organization by Manufacturer. The Company has
instituted a corporate organizational form which the Company believes
differentiates it from most other automotive retailing companies. The
Company's corporate structure organizes its dealerships and dealership
groups by manufacturer, so that all dealerships which carry a
particular manufacturer's brands are grouped together in a single
division. Each division, in turn, is headed by a member of corporate
management who has extensive working experience with the applicable
manufacturer. The Company believes that organizing its dealerships by
manufacturer and having each division headed by a senior manager who
is experienced with that particular manufacturer -- and has
established and maintained long-standing business relationships with
the regional and corporate managers of that manufacturer -- will yield
numerous benefits to the Company. For example, the Company believes
that its relationships with each manufacturer will be enhanced;
management training within each division will be more efficient and
consistent; and managers within each division will benefit from a
shared experience base. The Company believes that these benefits will
provide a competitive advantage to the Company.

The Company also intends to create incentives for entrepreneurial
management teams at the dealer level through the use of stock options
and other programs in order to align local management's interests with
those of the Company's shareholders. In order to keep local management
focused on customer satisfaction, the Company also intends to include
certain customer satisfaction index ("CSI") results as a component of
its incentive compensation program. The Company believes that this is
important because some manufacturers offer specific performance
incentives, on a per vehicle basis, if certain CSI levels (which vary
by manufacturer) are achieved by a dealer.

- Centralize Administrative Functions. The Company believes that the
consolidation of certain dealership functions and requirements will
result in significant cost savings. The Company intends to consolidate
the floorplan financing of all of its dealerships, which the Company
anticipates will result in a reduced interest rate on such financing.
The Company is also negotiating a consolidated revolving credit
facility that it anticipates will result in a reduced interest rate on
such facility. Furthermore, the Company expects that significant cost
savings will be achieved through the consolidation of administrative
functions such as risk management, employee benefits and employee
training.

GROWTH STRATEGY

The Company plans to continue to grow its business using a strategy
comprised of the following principal elements:

- Acquire Dealerships. The Company's goal is to become the leading
operator of automotive dealerships in small and medium-sized markets
in the southeastern United States through acquisitions of additional
dealerships in these markets. The Company plans to pursue acquisitions
in markets where it does not currently own dealerships, as well as in
areas which are contiguous to its existing dealership markets. The
Company intends to focus on acquiring both dealer groups with multiple
franchises in a given market area and dealers with a single franchise
which possess significant market shares. Generally, the Company will
seek to retain the acquired dealerships' operational and financial
management, and thereby benefit from their market knowledge, name
recognition and local reputation.

- Expand Complementary Products and Services. The Company expects to
generate additional revenue and achieve higher profitability through
the sale of products and services which complement its dealership
operations. Examples of such opportunities include the following:

Collision Repair Centers. The Company owns four collision
repair facilities operated under the name Collision Centers
USA, which serve the Jonesboro, Duluth, Stockbridge and
Marietta, Georgia markets. The Company expects to expand this
business by increasing volumes at these four centers,
developing new centers and acquiring other existing centers.
The Company's collision repair business provides higher margins
than its core retailing operations and is generally not
significantly affected by economic cycles or consumer spending
habits.

Finance and Insurance. The Company offers its customers a wide
range of financing and leasing alternatives for the purchase of
vehicles, as well as credit life, accident and health and
disability insurance and extended service contracts. The
Company has recently entered into an agreement with a leading
insurance carrier to share in certain revenues generated by the
sale of extended warranty contracts. In addition, in January
1998, the Company acquired South Financial Corporation ("South
Financial"), which has been primarily engaged in the sub-prime
automotive lending business for the past eight years. The
Company expects its dealer network to provide additional loan
business opportunities to South Financial.

5
7

THE ACQUISITIONS

Since November 1997, the Company has consummated or signed definitive
agreements to acquire six dealerships or dealership groups, three collision
repair centers and one sub-prime automotive lending business for aggregate
consideration of approximately $66 million. These acquisitions consist of the
Collision Centers USA Acquisition (consummated December 18, 1997), the South
Financial Acquisition (consummated January 6, 1998), the Grindstaff Acquisition,
the Bill Holt Acquisition, the Robertson Acquisition, the Wade Ford Acquisition,
the Jay Automotive Group Acquisition, and the Day's Chevrolet Acquisition (each,
as hereinafter defined, and collectively the "Acquisitions"). The automotive
dealerships and related businesses comprising the Company had pro forma combined
total revenues of approximately $682 million for the year ended June 30, 1997
and $338 million for the six months ended December 31, 1997. See "The
Acquisitions."

PRINCIPAL OFFICE

The Company's principal executive office is located at 5901
Peachtree-Dunwoody Road, Suite 250B, Atlanta, Georgia 30328, and its telephone
number at that location is (678) 443-8100.

THE OFFERING

Common stock offered by the Company..... 5,500,000 shares

Common stock to be outstanding after the
Offering................................ 10,933,614 shares(1)

Use of proceeds......................... The net proceeds of the Offering
will be used to fund the
Acquisitions, including repaying
certain indebtedness incurred by
the Company in connection therewith
and to provide working capital for
the Company. See "The Acquisitions"
and "Use of Proceeds."

Proposed Nasdaq National Market
Symbol.................................. SBLT
- ---------------

(1) Excludes 2,250,000 shares of common stock reserved for future issuance to
Company employees under the Company's Incentive Stock Plan (as defined
herein) (including up to 1,597,000 shares of common stock reserved for
issuance upon exercise of options granted on or before the consummation of
the Offering pursuant to the Incentive Stock Plan). See
"Management -- Incentive Stock Plan." Also excludes 50,000 shares of common
stock reserved for issuance upon exercise of warrants granted to a
consulting firm for services rendered in connection with this Offering. See
"Description of Capital Stock -- Warrants."

RISK FACTORS

See "Risk Factors" beginning on page 9 for certain information that should
be considered by prospective investors.

6
8

SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA

The Company will acquire Boomershine Automotive Group, Inc. ("Boomershine
Automotive") via the Merger contemporaneously with the Offering. For financial
statement purposes, Boomershine Automotive has been identified as the accounting
acquiror. The following summary financial data presents (i) summary historical
consolidated financial data of Boomershine Automotive as of the dates and for
the periods indicated and (ii) summary pro forma financial data as of the dates
and for the periods indicated giving effect to the events described in the "Pro
Forma Combined and Condensed Financial Data" included elsewhere herein as though
they had occurred on the dates indicated therein. The following Summary
Historical and Pro Forma Financial Data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," the Consolidated Financial Statements of Boomershine Automotive and
the related notes and "Pro Forma Combined and Condensed Financial Data" included
elsewhere in this Prospectus. The Summary Historical and Pro Forma Combined
Financial Data below are not necessarily indicative of the results of operations
or financial position that would have resulted had the Merger, the Acquisitions
and the Offering occurred during the periods presented or that may be expected
for a full year or any other interim period.

YEAR ENDED JUNE 30, SIX MONTHS ENDED DECEMBER 31,
---------------------------------------------------------------- -------------------------------
HISTORICAL HISTORICAL
---------------------------------------------------- PRO FORMA ------------------- PRO FORMA
1993 1994 1995 1996 1997 1997(1) 1996 1997 1997(1)
-------- -------- -------- -------- -------- --------- -------- -------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AND OTHER OPERATING DATA)

STATEMENT OF OPERATIONS DATA:
Revenues:
Vehicle sales:
New...................... $ 73,912 $110,674 $156,955 $166,199 $152,625 $420,019 $ 75,650 $ 72,795 $210,877
Used..................... 35,747 46,207 57,047 64,652 61,811 177,925 30,349 25,758 84,371
Parts and service.......... 15,085 17,679 19,223 23,764 24,637 66,602 11,549 12,876 33,742
Finance, commissions and
other revenues, net...... 1,418 2,795 3,856 4,219 5,339 17,437 3,093 2,669 8,648
-------- -------- -------- -------- -------- -------- -------- -------- --------
126,162 177,355 237,081 258,834 244,412 681,983 120,641 114,098 337,638
Cost of sales................ 112,402 159,284 214,820 232,934 219,719 605,044 108,447 101,362 298,602
-------- -------- -------- -------- -------- -------- -------- -------- --------
Gross profit(2).............. 13,760 18,071 22,261 25,900 24,693 76,939 12,194 12,736 39,036
Selling, general and
administrative expenses.... 12,751 16,685 19,927 24,170 22,262 62,209 11,174 11,100 32,842
Depreciation and
amortization............... 428 410 406 600 890 2,575 452 439 1,326
-------- -------- -------- -------- -------- -------- -------- -------- --------
Income from operations....... 581 976 1,928 1,130 1,541 12,155 568 1,197 4,868
Interest expense, net........ 587 598 1,436 1,774 2,230 3,126 1,184 721 891
Interest income.............. 144 119 218 181 120 479 64 104 522
Other income (expense),
net........................ 98 (110) 60 13 44 (202) (43) (29) (41)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Income (loss) before income
taxes...................... 236 387 770 (450) (525) 9,306 (595) 551 4,458
Income tax (expense)
benefit.................... (89) (205) (292) 133 167 (3,963) 221 (215) (1,906)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net income (loss)(2)......... $ 147 $ 182 $ 478 $ (317) $ (358) $ 5,343 $ (374) $ 336 $ 2,552
======== ======== ======== ======== ======== ======== ======== ======== ========
Net income per share(3)...... $ .47 $ 0.22
======== ========
Weighted average shares
outstanding(3)............. 11,364 11,364
======== ========
OTHER OPERATING DATA:
Gross margin (FIFO)(2)....... 11.0% 10.5% 9.6% 10.5% 10.3% 11.3% 10.6% 11.2% 11.6%
Operating margin (FIFO)(2)... 0.6% 0.8% 0.9% 0.9% 0.8% 1.8% 0.9% 1.1% 1.4%
Pre-tax margin (FIFO)(2)..... 0.3% 0.5% 0.5% (0.3)% (0.0)% 1.4% (0.0)% 0.6% 1.3%
New vehicles sold............ 4,583 6,677 9,187 9,206 7,834 20,499 3,930 3,567 9,720
Used vehicles sold........... 4,770 6,378 6,753 7,453 6,908 19,355 3,558 2,831 9,043

AS OF DECEMBER 31, 1997
----------------------------
AS OF PRO FORMA
JUNE 30, 1997 HISTORICAL AS ADJUSTED(1)
------------- ---------- --------------
(IN THOUSANDS)

BALANCE SHEET DATA:
Working capital (deficit)................................... $ (77) $(1,488) $ 22,410
Inventories................................................. 33,591 36,957 115,506
Total assets................................................ 49,710 57,899 199,396
Total debt, including current portion....................... 40,618 48,578 113,793
Total shareholders' equity(2)............................... 4,199 4,535 70,650

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

7
9

offered hereby and the application of the net proceeds therefrom. To conform
with Boomershine Automotives' fiscal year end of June 30, the unaudited pro
forma statements of operations include financial data for each Acquisition
for the same periods presented for Boomershine Automotive. See "Pro Forma
Combined and Condensed Financial Data" and "Use of Proceeds."
(2) Boomershine Automotive currently utilizes the LIFO (Last In-First Out)
method of accounting for inventory ("LIFO Method"). See Note 1 to
Boomershine Automotive's Consolidated Financial Statements. Commencing July
1, 1998, the Company intends to file an election with the IRS to convert to
the specific identification method of accounting for vehicles and the FIFO
(First In-First Out) method of accounting for parts (herein collectively
referred to as the "FIFO Method") which is the industry standard for
publicly-traded automotive retailers and report its earnings for tax
purposes and in its financial statements on the FIFO Method (the "FIFO
Conversion"). If Boomershine Automotive had previously utilized the FIFO
Method, gross profit for the five years ended June 30, 1997 would have been
$12.9 million, $16.5 million, $22.7 million, $27.1 million, $25.1 million,
respectively, and $12.8 million for each of the six month periods ended
December 31, 1996 and 1997. Net income (loss) for the five years ended June
30, 1997 would have been approximately $247,000, $467,000, $734,600,
$502,200, $(85,400), respectively and $19,000 and $435,000 for the six
months ended December 31, 1996 and 1997, respectively. Shareholders' equity
would have been $8.3 million and $8.2 million, respectively at June 30, 1997
and December 31, 1997.
(3) Historical net income per share is not presented, as the historical capital
structure of Boomershine Automotive prior to the Merger, the FIFO
Conversion, the Acquisitions and the Offering is not comparable with the
capital structure that will exist subsequent to these events. The weighted
average shares outstanding was calculated taking into account these events
as if they had occurred at the beginning of each period.

8
10

RISK FACTORS

Prospective investors should carefully consider and evaluate all of the
information set forth in this Prospectus, including the risk factors set forth
below, prior to making an investment in the common stock offered hereby.

DEPENDENCE ON AUTOMOBILE MANUFACTURERS

Each of the Company's dealerships operates pursuant to a dealer sales and
service agreement, or a similar named agreement, between the applicable
automobile manufacturer (or authorized distributor thereof) and the subsidiary
of the Company that operates the automotive dealership ("Franchise Agreement").
The Company is dependent to a significant extent on its relationship with such
manufacturers and the terms and conditions of these Franchise Agreements.

After giving effect to the Merger and the Acquisitions, vehicles
manufactured or distributed by Ford Motor Company ("Ford"), General Motors
Corporation ("GM"), and Nissan Motor Co., Ltd. ("Nissan") accounted for 48.0%,
24.0%, and 10.5% respectively, of the Company's pro forma sales of new vehicles
for the year ended June 30, 1997, and accounted for 48.4%, 24.5% and 10.0%,
respectively, of the Company's pro forma sales of new vehicles for the six
months ended December 31, 1997. No other manufacturer accounted for more than
10% of the new vehicle sales of the Company during such period. See
"Business -- New Vehicle Sales," and "Business -- Relationships with
Manufacturers." Accordingly, a significant decline in the sale of Ford, GM, or
Nissan new cars could have a material adverse effect on the Company's business,
financial condition and results of operations.

Manufacturers exercise a great degree of control over the operations of the
Company's dealerships. Each of the Franchise Agreements generally provides for
termination or non-renewal for a variety of causes, including any unapproved
change in ownership or management and other material breaches of the Franchise
Agreements. The Company is currently seeking the approval of all manufacturers
of the Company's franchised dealers to the Acquisitions, the Merger and this
Offering. However, as of the date hereof, the Company has not obtained the
approval of any such manufacturers, and there can be no assurance that the
Company will be able to obtain such approval prior to the closing date of this
Offering.

The Company has no reason to believe that it will not be able to renew all
of its Franchise Agreements upon expiration, but there can be no assurance that
any of such agreements will be renewed or that the terms and conditions of such
renewals will be favorable to the Company. If a manufacturer terminates or
declines to renew one or more of the Company's significant Franchise Agreements,
or if the terms and conditions of the renewal of the Company's significant
Franchise Agreements are less favorable than the Company's current agreements,
such actions or events could have a material adverse effect on the Company's
business, financial condition and results of operations. See
"Business -- Relationships with Manufacturers."

The Company also depends on the manufacturers to provide it with a
desirable mix of the most popular new vehicles that produce the highest profit
margins and which may be the most difficult to obtain from the manufacturers. If
the Company is unable to obtain a sufficient allocation of the most popular
vehicles, such event could have a material adverse effect on the Company's
business, financial condition and results of operations. In some instances, in
order to obtain additional allocations of these vehicles, the Company purchases
a larger number of less desirable models than it would otherwise purchase which
could have a material adverse effect on the Company's business, financial
condition and results of operations. The Company's dealerships depend on the
manufacturers for certain sales incentives and other programs that are intended
to promote dealership sales or support dealership profitability. Manufacturers
have historically made many changes to their incentive programs during each
year. A reduction or discontinuation of, or other material change in, a
manufacturer's incentive programs may have a material adverse effect on the
Company's business, financial condition and results of operations.

The success of each of the Company's dealerships depends to a great extent
on the financial condition, marketing, vehicle design, production capabilities
and management of the manufacturers which the Company represents. Events such as
strikes and other labor actions by unions, or negative publicity concerning a

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particular manufacturer or vehicle model, could have a material adverse effect
on the Company's business, financial condition and results of operations.
Similarly, the delivery of vehicles from manufacturers later than scheduled,
which may occur particularly during periods when new products are being
introduced, can lead to reduced sales. Although the Company has attempted to
lessen its dependence on any one manufacturer by establishing dealer
relationships with a number of different domestic and foreign automobile
manufacturers, adverse conditions affecting Ford, GM or Nissan, in particular,
could have a material adverse affect on the Company's business, financial
condition and results of operations. See "Business -- New Vehicle Sales" and
"Business -- Relationships with Manufacturers."

MANUFACTURERS' RESTRICTIONS ON THE MERGER, THE ACQUISITIONS AND FUTURE
ACQUISITIONS

The Company is required to obtain the consent of the applicable
manufacturer prior to any transfer or change in ownership of the dealership
franchises. Consequently, the Merger, the Acquisitions, the Offering and all
future acquisitions will require the prior approval by the applicable
manufacturers. There can be no assurance that manufacturers will grant such
approvals. Obtaining the consent of the manufacturers for acquisitions of
dealerships could also take a significant amount of time. Obtaining the
approvals of the manufacturers for the Merger, the Acquisitions and the Offering
is an ongoing process and will continue through the date of the Offering. The
Company is currently seeking the approval of all manufacturers of the Company's
franchised dealers to the Acquisitions, the Merger and this Offering. However,
as of the date hereof, the Company has not obtained the approval of any such
manufacturers, and there can be no assurance that the Company will be able to
obtain such approvals prior to the closing date of this Offering. If the Company
fails to obtain any manufacturer's approval, the Company may be required to
discontinue its Franchise Agreement with such manufacturer and sell the
franchise back to the manufacturer or to some other third party. The Company's
growth strategy is predicated in part on the ability of the Company to acquire
additional automotive dealerships. If the Company experiences delays in
obtaining, or fails to obtain, approvals of the manufacturers for acquisitions
of dealerships, the Company's growth strategy could be materially adversely
affected. In determining whether to approve the Merger and the Acquisitions and
any future mergers or acquisitions, the manufacturers may consider many factors,
including the moral character, business experience, financial condition and
ownership structure of the Company and its management, along with the consumer
satisfaction experiences of the Company's customers. Moreover, under an
applicable Franchise Agreement or under state law, a manufacturer may have a
right of first refusal to acquire a dealership in the event the Company seeks to
acquire a dealership franchise.

Several automotive manufacturers presently limit the number of such
manufacturers' dealerships that may be owned by a single public company or the
number that may be owned in a particular geographic area. For example, Ford's
current national policy limits a public company to the lesser of (i) 15 Ford and
15 Lincoln Mercury dealerships or (ii) that number of Ford and Lincoln Mercury
dealerships accounting for 2% of the preceding year's retail sales of those
brands in the United States. It also limits a public company to owning only one
Ford dealership in any market area, as defined by Ford, having three or fewer
Ford dealerships in it and no more than 25% of the Ford dealerships in a market
area having four or more Ford dealerships. In recent discussions with Ford, the
Company has been informed that Ford will prohibit the Company from making
additional acquisitions of Ford dealerships for 12 months after the close of the
Offering. GM's current national policy on public companies limits the number of
GM dealerships that a public company may acquire during a two-year period to
five additional GM dealership locations, which number may be increased on a
case-by-case basis. In addition, GM limits the maximum number of GM dealerships
that a public company may acquire to 50% of the GM dealerships, by franchise
line, in a GM-defined geographic market area having multiple GM dealers. GM may
also limit further acquisitions of GM franchises by a single public company
until all existing GM franchises of that public company meet certain GM criteria
for sales, market penetration, CSI and other GM standards. Chrysler may ask the
Company to limit its acquisitions, or to defer any further acquisitions, of
Chrysler or Chrysler division dealerships until it has established a proven
performance record with the Chrysler dealerships it owns or is acquiring in the
Acquisitions. Moreover, Chrysler has recently announced its general policy of
limiting ownership by public companies to 10 Chrysler dealerships in the United
States, six Chrysler dealerships in the same sales zone, as determined by
Chrysler, and two dealerships in the same market (but no more than one like
vehicle line brand in the same market). It
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is the Company's understanding that Toyota currently limits the number of
dealerships which may be owned by any one group to seven Toyota and three Lexus
dealerships nationally and restricts the number of dealerships that may be owned
to (i) the greater of one dealership, or 20% of the Toyota dealer count in a
"Metro" market (as defined by Toyota), (ii) the lesser of five dealerships or 5%
of the Toyota dealerships in any Toyota region (currently 12 geographic
regions), and (iii) two Lexus dealerships in any one of the four Lexus
geographic areas. In addition, the Company understands that Toyota has required
that at least nine months elapse between acquisitions. Similarly, it is the
current policy of American Honda Co., Inc. ("Honda") to restrict any company
from holding more than seven Honda or more than three Acura franchises
nationally and to restrict the number of franchises to (i) one Honda dealership
in a "Metro" market (a metropolitan market represented by two or more Honda
dealers) with two to 10 Honda dealership points, (ii) two Honda dealerships in a
Metro market with 11 to 20 Honda dealership points, (iii) three Honda
dealerships in a Metro market with 21 or more Honda dealership points, (iv) no
more than 4% of the Honda dealerships in any one of the 10 Honda geographic
zones, (v) one Acura dealership in a Metro market (a metropolitan market with
two or more Acura dealership points), and (vi) two Acura dealerships in any one
of the six Acura geographic zones. Toyota and Honda also prohibit ownership of
contiguous dealerships and the coupling of a franchise with any other brand
without their consent.

Other automobile manufacturers, including Nissan, which accounted for 10.5%
of the Company's pro forma sales of new vehicles for the year ended June 30,
1997, are still developing their policies regarding public ownership of
dealerships. The Company believes that these policies will continue to change as
more dealership groups sell their stock to the public, and as the established,
publicly-owned dealership groups acquire more franchises. To the extent that new
or amended manufacturer policies restrict the number of dealerships which may be
owned by a dealership group, or the transferability of the Company's common
stock, such policies could have a material adverse effect on the Company.

As a condition to granting their consent to the Acquisitions, the Merger
and this Offering, a number of manufacturers may also impose certain other
restrictions on the Company. In addition to the restrictions described under
"-- Stock Ownership/Issuance Limits; Limitation on Ability to Issue Additional
Equity," these restrictions principally consist of restrictions on (i) certain
material changes in the Company or extraordinary corporate transactions such as
a merger, sale of a material amount of assets or change in the Board of
Directors or management of the Company which could have a material adverse
effect on the manufacturer's image or reputation or could be materially
incompatible with the manufacturer's interests; (ii) the removal of a dealership
general manager without the consent of the manufacturer; and (iii) the use of
dealership facilities to sell or service new vehicles of other manufacturers. If
the Company is unable to comply with these restrictions, the Company generally
must (i) sell the assets of the dealerships to the manufacturer or to a third
party acceptable to the manufacturer, or (ii) terminate the dealership
agreements with the manufacturer. Manufacturers may impose other and more
stringent restrictions in connection with future acquisitions.

The Company owns, after giving effect to the Merger and the Acquisitions,
four Ford dealerships, two dealerships each of Pontiac-Buick-GMC, Chevrolet,
Isuzu, Mazda, Mitsubishi and Mercury, and one dealership each of Cadillac,
Chrysler-Dodge-Plymouth-Jeep, Honda, Hummer, Kia, Nissan, Oldsmobile and Toyota.
Based on the manufacturers' restrictions known to the Company as of the date of
this Offering, the Company believes that it has significant opportunities to
acquire additional dealerships without exceeding the manufacturers' policies and
restrictions on acquisitions outlined above.

RISKS ASSOCIATED WITH ACQUISITIONS

The automotive retailing industry is considered a mature industry in which
minimal growth is expected in unit sales of new vehicles. Accordingly, the
Company's future growth will depend in large part on its ability to acquire
additional dealerships, profitably expand its complementary businesses, manage
its expansion, control costs in its operations and consolidate acquisitions,
including the Acquisitions, into existing operations. For each acquisition, the
Company will have to review the acquired entity's operations, management
infrastructure and systems and financial controls, and make appropriate
adjustments or complete reorganizations as appropriate. Unforeseen capital and
operating expenses, or other difficulties, complications and delays
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frequently encountered in connection with the expansion and integration of
acquired operations could inhibit the Company's growth. The full benefits of a
significant acquisition, including the Acquisitions, will require the
integration of operational, administrative, finance, sales and marketing
organizations, as well as the implementation of appropriate operational,
financial and management systems and controls. There can be no assurance that
the management group will be able to effectively and profitably integrate in a
timely manner each of the businesses included in the Acquisitions or any future
acquisitions, or to manage the combined entity without substantial costs, delays
or other operational or financial problems. The inability of the Company to do
so could have a material adverse effect on the Company's business, financial
condition and results of operations. Additionally, any acquisition, including
the Acquisitions, and the integration of such acquisitions will require
substantial attention from the Company's senior management team. The diversion
of management attention required by the acquisition and integration of multiple
companies, including the Acquisitions, as well as other difficulties that may be
encountered in the transition and integration process, could have an adverse
effect on the revenue and operating results of the Company. There can be no
assurance that the Company will identify suitable acquisition candidates, that
acquisitions will be consummated on acceptable terms or that the Company will be
able to successfully integrate the operations of any acquisitions.

Acquisitions may also result in significant goodwill and other intangible
assets that are amortized in future years and reduce future stated earnings.
With respect to the Acquisitions and any future acquisitions, if future facts
and circumstances suggest that some or all of the goodwill has been impaired, a
write-off of the applicable goodwill and corresponding charge to earnings would
be recognized in the quarter in which the impairment is identified. See "The
Acquisitions," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business -- Growth Strategy."

In addition, the Company's future growth as a result of its acquisition of
automobile dealerships will depend on its ability to obtain the requisite
manufacturer approvals. There can be no assurance that it will be able to obtain
such consents in the future. See "-- Manufacturers' Restrictions on the Merger,
the Acquisitions and Future Acquisitions" and "Business -- Relationships with
Manufacturers."

In certain cases, the Company may be required to file applications and
obtain clearances under applicable federal antitrust laws before consummation of
an acquisition. These regulatory requirements may restrict or delay the
Company's acquisitions, and may increase the cost of completing such
transactions.

STOCK OWNERSHIP/ISSUANCE LIMITS; LIMITATION ON ABILITY TO ISSUE ADDITIONAL
EQUITY

Standard automobile Franchise Agreements limit transfers of any ownership
interests of a dealership and its parent, and therefore often do not by their
terms accommodate public trading of the common stock of a dealership or its
parent. Even if all of the manufacturers of which Company subsidiaries are
franchisees agree to permit the Offering and trading in the common stock, a
number of manufacturers may continue to impose restrictions upon the
transferability of the common stock. For example, Ford may cause the Company to
sell or resign from one or more of its Ford franchises if any person or entity
acquires 15% or more of the Company's voting securities without Ford's approval.
Likewise, GM and Toyota may force the sale of their respective franchises if 20%
or more of the Company's voting securities are so acquired by any one person or
entity without their approval. Honda may force the sale of the Company's Honda
franchise if any person or entity acquires 5% or more of the common stock (10%
if such entity is an institutional investor), and Honda deems such person or
entity to be unsatisfactory. See "Business -- Relationships with Manufacturers."

Any transfer of shares of the common stock, including a transfer by any of
the shareholders of the target companies of the Acquisitions who received the
common stock pursuant to the Acquisitions and shareholders of Boomershine
Automotive who received the Company's common stock pursuant to the Merger, will
be outside the control of the Company. If one or more of such transfers cause a
change in control of the Company, the manufacturers may have the right to
terminate or not renew one or more of the Franchise Agreements. Moreover, these
issuance limitations are likely to impede the Company's ability to raise capital
through additional equity offerings or to issue common stock as consideration
for, and therefore, to consummate, future acquisitions. Such restrictions also
may prevent or deter prospective acquirors from gaining control of the Company
and, therefore, may adversely impact the Company's equity value.

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COMPETITION

The automotive retailing industry is highly competitive with respect to
price, service, location and selection. The Company's competition includes
franchised automotive dealerships selling the same or similar makes of new and
used vehicles offered by the Company in the same markets as the Company and
sometimes at lower prices than those of the Company. These dealer competitors
may be larger and have greater financial and marketing resources than the
Company. Additional competitors include other franchised dealers, private market
buyers and sellers of used vehicles, used vehicle dealers (including regional
and national rental car companies which sell their used rental cars), service
center chains and independent service and repair shops. The used car market
faces increasing competition from non-traditional outlets such as the Internet
and used car "superstores," which use sales techniques such as one-price
shopping. Several groups have begun to establish nationwide networks of used
vehicle superstores, and car superstores operate in several of the Company's
existing markets. "No negotiation" sales methods are also being tried for new
cars by at least one of these superstores and by Saturn and other dealerships.
Some of the Company's competitors may have greater financial, marketing and
personnel resources than the Company. In addition, certain manufacturers, such
as Ford, have publicly announced that they may directly enter the retail market
in the future, and certain other manufacturers, such as GM, have publicly
announced that they may consolidate many of their dealerships in a given market
area into a single large dealership to serve that particular market. Such
actions by the manufacturers could have a material adverse effect on the
Company. The increased popularity of vehicle leasing also has resulted, as these
leases expire, in a large increase in the number of late model vehicles
available in the market, which puts added pressure on new vehicle prices. As the
Company seeks to acquire dealerships in new markets, it may face increasingly
significant competition (including from other large dealer groups and dealer
groups that have publicly-traded equity) as it strives to gain market share
through acquisitions or otherwise.

The Company's Franchise Agreements do not give the Company the exclusive
right to sell a manufacturer's product within a given geographic area. The
Company could be materially adversely affected if any of its manufacturers award
franchises to others in the same markets where the Company is operating. A
similar adverse effect could occur if existing competing franchised dealers
increase their market share in the Company's markets. The Company's gross
margins may decline over time if it expands into markets where it does not have
a leading position. These and other competitive pressures could have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Business -- Competition."

REGIONAL CONCENTRATION

Local economic, competitive and other conditions may affect the performance
of automotive dealerships. As such, the Company's results of operations may be
substantially dependent upon general economic conditions, and consumer spending
habits and preferences in the southeastern United States, as well as various
factors specific to that area, such as tax rates and state and local regulation.
Additionally, since the Company's growth strategy contemplates acquisitions in
small- and medium-sized markets, any adverse business developments experienced
by businesses which have a disproportionately large presence in, and influence
on, such small- and medium-sized markets could have a material adverse effect on
the Company's business, financial condition and results of operations.

ACQUISITION FINANCING; FUTURE CAPITAL REQUIREMENTS; POSSIBLE DILUTION THROUGH
ISSUANCE OF STOCK

The Company currently intends to finance future acquisitions in part by
issuing shares of its common stock as full or partial consideration for acquired
dealerships. The extent to which the Company will be able or willing to issue
common stock for acquisitions will depend on the market value of the common
stock from time to time, the willingness of potential acquisition candidates to
accept common stock as part of the consideration for the sale of their
businesses, and the ability of the Company to obtain any necessary
manufacturers' consents. It is possible that the Company will issue, in the
aggregate, a significant number of additional shares of common stock in
connection with such acquisitions in the future, and the number of shares of
common stock could be as much as, or more than, the number of outstanding shares
of common stock following the Offering. Using stock to consummate acquisitions
may result in significant dilution of
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shareholders' percentage interest in the Company. To the extent the Company is
unable or unwilling to issue common stock as consideration for future
acquisitions, the Company may be required to use available cash or other sources
of debt or equity financings to finance future acquisitions. The Company is
negotiating a credit facility with various lenders and anticipates that such a
credit facility will provide the Company with a line of credit of up to $50
million which may be used for future acquisitions. However, there can be no
assurance that other sources of debt or equity financing, including this credit
facility, would be available to the Company on acceptable terms, or at all, or
that the Company's available cash or other sources of financing will be
sufficient to finance such acquisitions. If the Company is unable or unwilling
to issue shares of common stock as consideration for future acquisitions, or is
unable to obtain additional financing in a timely manner on satisfactory terms,
it may be required to postpone or reduce its acquisition plans, which may have a
material adverse effect on the Company's business, financial condition and
results of operation.

FLOORPLAN FINANCING

The Company depends to a significant extent on its ability to finance the
purchase of inventory, which in the automotive retailing industry involves
significant sums of money in the form of floorplan financing. The Company
intends to replace the existing floorplan financing of its dealerships with
floorplan financing from a single source. As such, the Company is negotiating an
arrangement letter for a bank credit floorplan facility with various lenders.
The floorplan facility is anticipated to provide the Company with a secured
revolving line of credit up to $120 million which may be used for floorplan
financing. No assurance can be given that the Company's working capital, the
floorplan facility, and other resources will be sufficient to fund the Company's
floorplan financing needs, or that the Company will be able to obtain adequate
additional capital from other sources. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Company's Credit and
Financing Arrangements" and "Business -- Growth Strategy." The Company
anticipates that such a consolidation of its floorplan financing, and the
Company's size and market presence, will provide it with an opportunity to
negotiate more favorable terms for its floorplan financing. However, there can
be no assurance that the Company will be able to obtain more favorable floorplan
financing, or that such financing will be implemented in a timely manner. Even
if such more favorable floorplan financing is obtained, there can be no
assurance that such will not be adversely modified, or that other sources of
floorplan financing will be available to the Company in the future.
Additionally, substantially all the assets of the Company's dealerships are
pledged to secure floorplan indebtedness, which may impede the Company's ability
to borrow from other sources, and the Company must obtain new floorplan
financing or obtain consents to assume existing financing in connection with its
acquisition of dealerships. See "-- Dependence on Automobile Manufacturers."

SUB-PRIME AUTOMOBILE FINANCE SUBSIDIARY

The sub-prime consumer automobile finance market is comprised of customers
who are deemed to be relatively high credit risks due to various factors,
including, among other things, the manner in which they have handled previous
credit, the absence or limited extent of their prior credit history and/or their
limited financial resources. Consequently, the loans made by South Financial
have a higher probability of delinquency and default and have greater servicing
costs than loans made to consumers who pose lesser credit risks. South
Financial's profitability depends in part upon its ability to properly evaluate
the creditworthiness of sub-prime consumers and efficiently service its loans.
There can be no assurance that satisfactory credit performance of a sub-prime
consumer will be maintained or that the rate of future defaults and/or losses
will be consistent with prior experience or at levels that will allow South
Financial to maintain profitability. The ability of most borrowers to remit
payments in accordance with the terms of the loans is dependent on their
continued employment. An economic downturn resulting in increased unemployment
could cause a significant rise in delinquencies and defaults, which could
materially adversely affect South Financial's business, financial condition and
results of operations. Moreover, increases in the delinquency and/or loss rates
in South Financial's loan portfolio could adversely affect South Financial's
ability to obtain or maintain its financing resources.

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South Financial requires substantial borrowings to fund the purchase of
retail installment contracts from automobile dealerships. Consequently, South
Financial's profitability is affected by the difference, or "spread," between
the rate of interest paid on the funds it borrows and the rate of interest
charged on the installment contracts it purchases, which rate in most states is
limited by law. In addition, because the interest rate at which South Financial
borrows is variable and the interest rate at which South Financial purchases the
retail installment contracts is fixed, South Financial assumes the risk of
interest rate increases prior to the time contracts either mature or are sold.
There can be no assurance that South Financial will be able to extend its
present revolving credit facility or enter into new credit facilities on
reasonable terms in the future or that interest rate increases will not
adversely affect its ability to maintain profitability with respect to the
retail installment contracts it holds.

South Financial is subject to regulation under various federal, state and
local laws and in some jurisdictions is required to be licensed by the state
banking and insurance authorities. States in which South Financial operates
limit the interest rate, fees and other charges that may be imposed by, or
prescribe certain other terms of, the contracts that South Financial purchases
and restrict its right to repossess and sell collateral. An adverse change in
those laws or regulations could have a material adverse effect on South
Financial's business, financial condition and results of operations by, among
other things, limiting the states in which South Financial may operate or the
interest rate that may be charged on retail installment contracts or restricting
South Financial's ability to realize the value of the collateral securing the
contracts.

COLLISION REPAIR CENTERS

The Company anticipates that much of the growth of its collision repair
business will be achieved through the development of new locations for its
collision repair business; however, the Company to date has not established any
start-up locations of the type anticipated, and there can be no assurance that
the Company will successfully establish any such locations in the near term or
at all. The Company expects that start-up locations may initially have a
negative impact on its results of operations and margins due to several factors,
including: (i) start-up collision repair centers typically require a significant
investment of capital to acquire the necessary equipment and materials and to
establish each start-up location; and (ii) it will generally take some time
following commencement of operations at a start-up location before profitability
can be achieved. There can be no assurance that any start-up location will
become profitable within the first several years of operations, if at all.

The collision repair industry is highly fragmented and is comprised
primarily of independent operators of collision repair centers, against which
the Company expects to compete and among which the Company anticipates
identifying acquisition candidates. The Company also expects its competitors in
the collision repair industry to include franchised operators of collision
repair centers and other companies which operate multiple company-owned
collision repair centers. Some of these competitors may be significantly larger
and have greater financial resources than the Company.

OPERATING CONDITION OF ACQUIRED BUSINESSES

Although the Company has conducted what it believes to be a prudent level
of investigation regarding the operating condition of the assets to be purchased
in the Acquisitions in light of the circumstances of each transaction, certain
unavoidable levels of risk remain regarding the actual operating condition of
these assets. The same risk regarding the actual operating condition of
businesses to be acquired will also apply to future acquisitions by the Company.
In addition, in connection with the Acquisitions, the Company has executed
certain acquisition agreements which contain limited or qualified
representations and warranties by the target companies and/or the selling
shareholders, monetary and duration limitations on any indemnifications made by
the target companies and/or selling shareholders, or, in some instances, no
indemnifications at all. Moreover, some of the former owners of the businesses
acquired pursuant to the Acquisitions have or will become executive officers
and/or members of the Board of Directors of the Company. See "Management --
Executive Officers and Directors; Key Personnel." Consequently, the Company may
have little or no recourse against the prior owners of the companies acquired in
the Acquisitions in the event of breach of a representation, warranty or
covenant in such acquisition agreements. Any material misrepresentations,
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omissions or breaches of covenants could have a material adverse effect on the
Company's business, financial condition or results of operations.

DEPENDENCE ON KEY PERSONNEL AND LIMITED MANAGEMENT AND PERSONNEL RESOURCES

The Company's success depends to a significant degree upon the continued
contributions of its management team and service and sales personnel.
Additionally, the Franchise Agreements require the prior approval of the
applicable manufacturer before any change is made in franchise general managers.
Consequently, the loss of the services of one or more of these key employees
could have a material adverse effect on the Company. Although the Company has
employment agreements with some of its key employees, the Company will not have
employment agreements in place for all of its key personnel. The Company does
not currently maintain any key-man life insurance on any member of its
management team. In addition, as the Company expands it may need to hire
additional managers and will likely be dependent on the senior management of any
businesses acquired. The market for qualified employees in the industry and in
the regions in which the Company operates, particularly for general managers and
sales and service personnel, is highly competitive and may subject the Company
to increased labor costs in periods of low unemployment. The loss of the
services of key employees or the inability to attract additional qualified
managers could have a material adverse effect on the Company. In addition, the
lack of qualified management or employees of potential acquisition candidates
may limit the Company's ability to consummate future acquisitions. See
"Business -- Growth Strategy," "Business -- Competition" and "Management."

FAILURE TO MEET MANUFACTURER CSI SCORES

Many manufacturers attempt to measure customer satisfaction with dealership
sales, warranty and repair service through a customer satisfaction index which
varies by manufacturer. These manufacturers may use a dealership's CSI scores as
a factor in evaluating applications for additional dealership acquisitions and
other matters such as vehicle inventory allocations. The components of CSI have
been modified from time to time in the past, and there is no assurance that such
components will not be further modified or replaced by different systems in the
future. To date, the Company has not been adversely affected by these standards.
There can be no assurance that the Company will be able to comply with such
standards in the future. Failure of the Company's dealerships to comply with the
standards imposed by manufacturers at any given time may have a material adverse
effect on the growth and operating strategies of the Company.

HOLDING COMPANY STRUCTURE; RELIANCE ON DIVIDENDS AND OTHER PAYMENTS FROM
OPERATING SUBSIDIARIES

The Company is a holding company, the principal assets of which are the
shares of the capital stock of its subsidiaries. As a holding company without
independent means of generating operating revenue, the Company depends on
dividends and other payments, including payments of management fees and pursuant
to tax sharing arrangements, from its subsidiaries to fund its obligations and
meet its cash needs.

YEAR 2000 COMPLIANCE

The Company has taken steps to evaluate the extent of its potential year
2000 problems. Some older, or "legacy" computer programs still in use today use
two-digit fields to represent the year in computer records. Such programs may
not properly recognize date-sensitive information when the year changes to 2000
and the systems' two-digit year code changes to "00." Systems that do not
properly recognize such information could generate erroneous data or cause a
system to fail. The Company uses financial reporting software that is standard
to the automotive retailing industry and the Company is not certain of the total
exposure it may have as a result of the year 2000 problem. The Company's
software vendors have indicated to the Company that their software is year 2000
compliant. Accordingly, the Company currently does not expect that it will incur
significant operating expenses or be required to invest heavily in computer
system improvements to be year 2000 compliant. However, there can be no
assurance that such software will operate properly once the year 2000 arrives,
and significant uncertainty exists concerning the potential costs and effects
associated with any year 2000 compliance. Any year 2000 compliance problem of
either the Company or its outside vendors, third-party payors or customers could
have a material adverse effect on the Company's business, financial condition
and results of operations.
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CYCLICALITY

Sales of automotive vehicles, particularly new vehicles, historically have
been subject to substantial cyclical variation. The Company believes that the
industry is affected by many factors, including general economic conditions,
consumer confidence, the level of personal discretionary spending, prevailing
interest rates and credit availability. There can be no assurance that the
industry will not experience sustained periods of decline in vehicle sales,
particularly new vehicle sales, in the future. Any such decline could have a
material adverse effect on the Company's growth strategy and financial
condition.

IMPORTED PRODUCT RESTRICTIONS AND FOREIGN TRADE RISKS

Certain motor vehicles sold by the Company, as well as certain major
components of vehicles retailed by the Company, are of foreign origin.
Accordingly, the Company is subject to the import and export restrictions of
various jurisdictions and is dependent to some extent upon general economic
conditions in and political relations with a number of foreign countries,
particularly Japan. Additionally, fluctuations in currency exchange rates may
adversely affect the Company's sales of vehicles produced by foreign
manufacturers. Imports into the United States may also be adversely affected by
increased transportation costs and tariffs, quotas or duties.

ADVERSE EFFECT OF GOVERNMENTAL REGULATION; ENVIRONMENTAL REGULATION COMPLIANCE
COSTS

The Company is subject to a wide range of federal, state and local laws and
regulations, such as local licensing requirements and consumer protection laws.
See "-- Sub-Prime Automobile Finance Subsidiary" for a discussion of some of the
laws and regulations which impact the operations of South Financial. The
violation of these laws and regulations can result in civil and criminal
penalties being levied against the Company or in a cease and desist order
against Company operations that are not in compliance. Future acquisitions by
the Company may also be subject to regulation, including antitrust reviews. The
Company believes that it complies in all material respects with all laws and
regulations applicable to its business, but future regulations may be more
stringent and require the Company to incur significant additional costs to
achieve compliance.

The Company's facilities and operations are also subject to federal, state
and local laws and regulations relating to environmental protection and human
health and safety, including those governing wastewater discharges, air
emissions, the operation and removal of underground storage tanks, the use,
storage, treatment, transportation and disposal of solid and hazardous materials
and the remediation of contamination associated with such disposal. Certain of
these laws and regulations may impose joint and several liability on certain
statutory classes of persons for the costs of investigation or remediation of
contaminated properties, regardless of fault or the legality of the original
disposal. These persons include the present or former owner or operator of a
contaminated property and companies that generated, disposed of or arranged for
the disposal of hazardous substances found at the property. Past and present
business operations of the Company subject to such laws and regulations include
the use, storage, handling and contracting for recycling or disposal of
hazardous or toxic substances or wastes, including environmentally sensitive
materials such as motor oil, waste motor oil and filters, transmission fluid,
antifreeze, Freon, waste paint and lacquer thinner, batteries, solvents,
lubricants, degreasing agents, gasoline and diesel fuels. The Company is subject
to other laws and regulations as a result of the past or present existence of
underground storage tanks at many of the Company's properties. The Company, like
many of its competitors, has incurred, and will continue to incur, capital and
operating expenditures and other costs in complying with such laws and
regulations.

Certain laws and regulations, including those governing air emissions and
underground storage tanks, have been amended so as to require compliance with
new or more stringent standards as of future dates. The Company cannot predict
what other environmental legislation or regulations will be enacted in the
future, how existing or future laws or regulations will be administered or
interpreted or what environmental conditions may be found to exist in the
future. Compliance with new or more stringent laws or regulations, stricter
interpretation of existing laws or the future discovery of environmental
conditions may require additional

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expenditures by the Company, some of which may be material. See
"Business -- Governmental Regulations and Environmental Matters."

ANTI-TAKEOVER PROVISIONS

Certain provisions of the Company's Articles of Incorporation ("Articles")
and Bylaws may make it more difficult for shareholders of the Company to effect
certain corporate actions. For example, the Company's Articles and Bylaws
provide that special meetings of the shareholders may only be called by the
Chairman or Chief Executive Officer of the Company, or by a majority vote of the
Board of Directors, and the Company's Bylaws provide that shareholders seeking
to bring business before an annual meeting of shareholders, or to nominate
candidates for election as directors at annual or special meetings of
shareholders, must provide timely notice thereof in writing. Additionally, the
Company's Bylaws incorporate the fair-price protections promulgated by Sections
14-2-1110 through 14-2-1113 and 14-2-1131 through 14-2-1133 of the Georgia
Business Corporation Code, which provide certain protections to minority
shareholders by imposing certain requirements on business combinations of the
Company with any interested shareholders of the Company beneficially holding
more than 10% of the Company's voting shares. See "Description of Capital
Stock -- Georgia Law, Certain Articles and Bylaw Provisions and Certain
Franchise Agreement Provisions." The agreements, corporate documents and laws
described above, as well as provisions of the Franchise Agreements described in
"-- Dependence on Automobile Manufacturers" and "-- Stock Ownership/Issuance
Limits; Limitation on Ability to Issue Additional Equity" above (permitting
manufacturers to terminate such agreements upon a change of control) and
provisions of the Company's lending arrangements described in "-- Stock
Ownership/Issuance Limits; Limitation on Ability to Issue Additional Equity"
above (creating an event of default thereunder upon a change in control), may
have the effect of delaying or preventing a change in control of the Company or
preventing shareholders from realizing a premium on the sale of their shares of
common stock upon an acquisition of the Company.

The Articles authorize the Board of Directors of the Company to issue,
without shareholder approval, up to 50 million shares of "blank check" preferred
stock with such designations, rights and preferences as may be determined from
time to time by the Board of Directors. The issuance of such preferred stock
could adversely affect the voting power or other rights of the holders of the
common stock. Under certain circumstances, the Company could also issue such
preferred stock as a method of discouraging, delaying or preventing a change in
control of the Company. The issuance of preferred stock could also prevent
shareholders from realizing a premium upon the sale of their shares of common
stock upon an acquisition of the Company. Although the Company has no present
intention to issue any shares of its preferred stock, there can be no assurance
that the Company will not do so in the future. See "Description of Capital
Stock -- Preferred Stock." Additionally, the Company's Articles and Bylaws
provide that the Board of Directors is divided into three classes serving
staggered terms. These and other provisions may impair the shareholders' ability
to influence or control the Company or to effect a change in control of the
Company, and may prevent shareholders from realizing a premium on the sale of
their shares of common stock upon an acquisition of the Company. See
"Description of Capital Stock."

POTENTIAL CONFLICTS OF INTEREST

The Company has in the past and will likely in the future enter into
transactions with entities controlled by affiliates of the Company. The Company
believes that most of these arrangements are favorable to the Company and were
entered into on terms that, taken as a whole, reflect arm's-length negotiations.
However, the consideration paid by the Company to the Boomershine Automotive
shareholders in connection with the Merger may have exceeded the fair market
value of those shares. At the time of the Merger, Mr. Walter M. Boomershine, Jr.
was a director, officer and shareholder of both Sunbelt and Boomershine
Automotive and Mr. Charles K. Yancey was a director and officer of both Sunbelt
and Boomershine Automotive. Since no independent appraisals evaluating the
Merger were obtained, there can be no assurance that the Merger is on terms that
could have been obtained from unaffiliated third parties. Certain of these
existing arrangements will continue after the Offering. Potential conflicts of
interest could also arise in the future between the Company and these affiliated
parties in connection with the enforcement, amendment or termination of these

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arrangements. The Company anticipates renegotiating its leases with all related
parties at lease expiration at fair market rentals, which may be higher than
current rents. See "Certain Transactions."

NO PRIOR PUBLIC MARKET FOR COMMON STOCK AND POSSIBLE VOLATILITY OF STOCK PRICE

Prior to the Offering, there has been no public market for the common
stock. The initial public offering price of the common stock will be determined
by negotiations among the Company and representatives of the Underwriters. See
"Underwriting" for a discussion of factors considered in determining the initial
public offering price. There can be no assurance that the market price of the
common stock prevailing at any time after this Offering will equal or exceed the
initial public offering price or that an active trading market will be developed
after the Offering or, if developed, that it will be sustained. Quarterly and
annual operating results of the Company, variations between such results and the
results expected by investors and analysts, changes in local or general economic
conditions or developments affecting the automotive retailing industry, the
Company or its competitors, as well as other factors common to initial public
offerings, could cause the market price of the common stock to fluctuate
substantially. In addition, the stock market has, from time to time, experienced
extreme price and volume fluctuations, which could adversely affect the market
price for the common stock without regard to the financial performance of the
Company.

DILUTION

Purchasers of common stock in the Offering will experience immediate and
substantial dilution in the amount of $8.66 per share in net tangible book value
per share from the initial offering price. See "Dilution."

DIVIDENDS

The Company has no present intention to declare or pay cash dividends after
the Offering. The Company intends to retain any earnings that it may realize in
the future to finance its acquisitions and operations. The payment of any future
dividends will be subject to the discretion of the Board of Directors of the
Company and will depend upon the Company's results of operations, financial
position and capital requirements, general business conditions, restrictions
imposed by financing arrangements, if any, legal restrictions on the payment of
dividends, and other factors the Board of Directors deems relevant. The
Company's franchise dealer agreements with vehicle manufacturers generally
require the Company, or its subsidiary operating a particular dealership, to
maintain adequate levels of capitalization, which also could restrict the
Company's ability to pay dividends. See "Dividend Policy."

POTENTIAL EFFECT OF SHARES ELIGIBLE FOR FUTURE SALE ON PRICE OF COMMON STOCK

Sales of substantial amounts of common stock into the public market
subsequent to the Offering could have a material adverse effect on the market
price of the common stock. Upon consummation of the Merger, the Acquisitions and
the Offering, the Company will have 10,933,614 shares of common stock
outstanding (11,758,614 shares if the Underwriters' over-allotment option is
exercised in full). Of these shares, the 5,500,000 shares offered hereby will be
freely tradable without restriction or further registration under the Securities
Act, except for shares held by persons deemed to be "affiliates" of the Company
or acting as "underwriters," as those terms are defined in the Securities Act.
Of the remaining shares of common stock outstanding, the approximately 4,251,139
shares to be issued to the Boomershine Automotive shareholders upon consummation
of the Merger, 249,202 shares issued to executive officers of the Company and
6,000 shares issued to the founders of the Company, will be "restricted
securities" within the meaning of Rule 144 under the Securities Act and will be
eligible for resale subject to volume, manner of sale, holding period and other
limitations of Rule 144. The approximately 927,273 shares of common stock to be
issued upon consummation of the Acquisitions will likewise be subject to Rule
144, but the holders of some of the shares have been granted piggyback
registration rights under the terms of the applicable Acquisition agreements.

The Company has also made certain commitments to issue additional shares of
common stock. The Company may be required to issue shares to the former
shareholders of Wade Ford and Day's Chevrolet under price protection provisions
set forth in the applicable Acquisition agreements. See "Description of Capital

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Stock -- Registration Rights and Stock Price Protection." Upon issuance, all of
said shares will be subject to Rule 144. The Company has also reserved 1,592,000
shares of common stock for issuance under stock options granted under the
Incentive Stock Plan prior to or contemporaneously with the completion of the
Offering, 653,000 shares of common stock for issuance under stock options which
may be granted under the Incentive Stock Plan subsequent to this Offering and
50,000 shares of common stock for issuance upon exercise of warrants granted to
a consulting firm for services rendered in connection with this Offering. In
addition, the Company has reserved 5,000 shares of common stock for issuance
under stock options granted in connection with the Collision Centers USA
acquisition. See "Management -- Incentive Stock Plan," "Shares Eligible for
Future Sale" and "Description of Capital Stock -- Warrants." The Company intends
to file a registration statement on Form S-8 with the Securities and Exchange
Commission (the "Commission") following completion of the Offering to register
the shares of common stock issuable under the Incentive Stock Plan.

No prediction can be made as to the effect that resale of shares of common
stock, or the availability of shares of common stock for resale, will have on
the market price of the common stock prevailing from time to time. The resale of
substantial amounts of common stock, or the perception that such resales may
occur, could materially and adversely affect prevailing market prices for the
common stock and the ability of the Company to raise equity capital in the
future. The Company has agreed, subject to certain exceptions, not to issue, and
all executive officers of the Company and all current holders of common stock
have agreed not to resell, any shares of common stock or other equity securities
of the Company for 180 days after the date of this Prospectus without the prior
written consent of the representatives of the Underwriters. See "Management --
Incentive Stock Plan," "Shares Eligible for Future Sale" and "Underwriting."

FORWARD-LOOKING STATEMENTS

This Prospectus contains certain forward-looking statements relating to,
among other things, future results of operations, growth plans, sales, capital
requirements and general industry and business conditions applicable to the
Company. These forward-looking statements are based largely on the Company's
current expectations and are subject to a number of risks and uncertainties
which include, but are not limited to, those set forth above. Actual results
could differ materially from those implied by these forward-looking statements.
Important factors to consider in evaluating such forward-looking statements
include, but are not limited to, changes in external competitive market factors,
changes in the Company's business strategy or an inability to execute its
strategy due to unanticipated changes in the Company's industry or the economy
in general and various competitive factors that may prevent the Company from
competing successfully in existing or new markets.

THE MERGER

Sunbelt Automotive Group, Inc. was incorporated under the Georgia Business
Corporation Code ("GBCC") on December 17, 1997. Contemporaneously with the
closing date of the Offering, Boomershine Automotive will merge into the Company
via a tax-free reorganization under Section 368(a)(1)(A) of the Internal Revenue
Code and the GBCC (the "Merger"). Upon consummation of the Merger: (i)
Boomershine Automotive will be merged with and into the Company; and (ii) the
Boomershine Automotive shareholders will receive 4,251,139 shares of
unregistered common stock of the Company in exchange for the issued and
outstanding capital stock of Boomershine Automotive.

Boomershine Automotive was formed in 1992 as a holding company to own and
operate the various Boomershine Automotive dealerships throughout the
metropolitan Atlanta area. Prior to the Merger, Boomershine Automotive owned and
operated nine franchised automobile dealerships in the metropolitan Atlanta
area, including Pontiac, Buick, GMC and Hummer franchises located in Smyrna,
Georgia; Nissan, Ford and Isuzu dealerships in the Gwinnett Mall area of Duluth,
Georgia; a Honda dealership in Cartersville, Georgia; and a Mitsubishi
dealership in Kennesaw, Georgia (North Atlanta). Boomershine Automotive also
owned a collision repair center which served the Gwinnett County area and the
Boomershine Ford and Isuzu dealerships and which is now one of the four
collision repair centers of the Company's Collision Centers USA subsidiary.

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THE ACQUISITIONS

Since November 1997, the Company or Boomershine Automotive, as the
Company's predecessor in interest, has consummated or signed definitive
agreements to purchase six additional dealerships or dealership groups, three
collision repair centers and one automotive sub-prime finance company for an
aggregate purchase price of approximately $66 million. These Acquisitions
consist of the Collision Centers USA Acquisition (consummated December 18,
1997), the South Financial Acquisition (consummated January 6, 1998), the
Grindstaff Acquisition, the Bill Holt Acquisition, the Robertson Acquisition,
the Wade Ford Acquisition, the Jay Automotive Group Acquisition, and the Day's
Chevrolet Acquisition (the "Acquisitions"). The closing of the Offering is
contingent upon the Company consummating the Grindstaff, Bill Holt, Robertson,
Wade Ford, Jay Automotive and Day's Chevrolet Acquisitions, and the Company
intends to use the proceeds from the Offering to pay a portion of the cash
purchase prices of these remaining Acquisitions. See "Use of Proceeds."

The Jay Automotive Group Acquisition. On January 5, 1998, the Company
entered into a definitive agreement to acquire from James G. Stelzenmuller, III,
all of the outstanding stock of Jay Automotive Group, Inc., which owns and
operates Toyota, Mazda, Pontiac, Buick, GMC and Mitsubishi dealerships in
Columbus, Georgia. The Jay Automotive Group Acquisition is expected to be
consummated simultaneously with the closing of this Offering. The Company will
pay approximately $16.0 million in consideration for the Jay Automotive Group
Acquisition. At the closing, the Company will pay approximately $12.0 million in
cash and approximately $4.0 million in the form of a ninety-day promissory note
(the "Jay Note") with an interest rate equal to eight percent per annum. Jay
Automotive Group, Inc. will continue to lease the real properties on which its
facilities are located from the respective landlords of each property. See
"Business -- Facilities."

The Wade Ford Acquisition. On November 21, 1997, the Company entered into
a definitive agreement to acquire from Alan K. Arnold, Gary R. Billings and
certain other shareholders all of the outstanding common stock of Wade Ford,
Inc. and Wade Ford Buford, Inc. (the "Wade Ford Dealerships"), located in Smyrna
and Buford, Georgia, respectively. The Wade Ford Acquisition is expected to be
consummated simultaneously with the closing of this Offering. The Company will
pay approximately $15.5 million in consideration for the Wade Ford Acquisition.
At the closing, the Company will pay to the selling shareholders approximately
$11.5 million in cash and approximately $3.5 million in the form of unregistered
common stock of the Company. In addition, approximately $367,000 of cash and
approximately $133,000 of common stock will be held in escrow until the
expiration of certain indemnification provisions made by the selling
shareholders of the Wade Ford Dealerships. The Company will also provide certain
piggyback registration rights to the selling shareholders of the Wade Ford
Dealerships, along with certain stock price protection pursuant to which the
Company will compensate the shareholders for any deficiencies in the price of
the stock consideration on the first anniversary of the Offering. See
"Description of Capital Stock -- Registration Rights and Stock Price
Protection." In connection with the Wade Ford Acquisition, Mr. Arnold and Mr.
Billings will each execute non-competition and confidentiality agreements. Mr.
Arnold, who has over 20 years of experience in the automotive retailing
industry, will continue to serve as the Executive Manager of Wade Ford pursuant
to an employment agreement and will join the Company as a director and as the
Vice President in charge of the Ford Division. Mr. Billings, who has over 35
years of experience in the automotive retailing industry, will continue to serve
as the Executive Manager of Wade Ford Buford. The Wade Ford Dealerships will
continue to lease the real properties on which their facilities are located from
the respective landlords of each property. See "Business -- Facilities" and
"Certain Transactions -- Certain Dealership Leases."

Day's Chevrolet Acquisition. On March 3, 1998, the Company entered into a
definitive agreement to acquire from Calvin Diemer and Alvin Diemer all of the
outstanding common stock of Day's Chevrolet, Inc., located in Acworth, Georgia.
The Day's Chevrolet Acquisition is expected to be consummated simultaneously
with the closing of this Offering. The Company will pay approximately $10.8
million in consideration for the Day's Chevrolet Acquisition. At the closing,
the Company will pay to the selling shareholders approximately $5.6 million in
cash and approximately $5.2 million in the form of unregistered common stock of
the Company. The Company will also provide certain stock price protection to the
selling shareholders of Day's Chevrolet pursuant to which the Company will
compensate the selling shareholders for any deficiencies in the
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price of the stock consideration on the second anniversary of the Offering. See
"Description of Capital Stock -- Registration Rights and Stock Price
Protection." In connection with the Day's Chevrolet Acquisition, Mr. Calvin
Diemer, who has over 20 years of experience in the automotive retailing
industry, will execute a non-competition and confidentiality agreement and will
continue to serve as the Executive Manager of Day's Chevrolet pursuant to an
employment agreement. Day's Chevrolet will continue to lease the real property
on which its facilities are located from the landlord of said property. See
"Business -- Facilities."

The Grindstaff Acquisition. On December 27, 1997, the Company entered into
a definitive agreement to acquire from Steve E. Grindstaff, Wes Hambrick and
trusts for the benefit of Amie Pearson and Renee Mullins all of the outstanding
common stock of Grindstaff, Inc., a Tennessee corporation, which operates
Chevrolet, Chrysler, Plymouth, Dodge, Jeep and Kia dealerships in Elizabethton,
Tennessee. The Grindstaff Acquisition is expected to be consummated
simultaneously with the closing of this Offering. The Company will pay
approximately $9.1 million in consideration for the Grindstaff Acquisition,
which amount is subject to adjustment if the consolidated net worth of
Grindstaff, Inc. at the time of closing is less than or greater than $1.5
million. The Company expects to receive $1.2 million in repayment of a note
receivable from the selling shareholders at the closing. At the closing, the
Company will pay to the selling shareholders approximately $8.6 million in cash
and approximately $500,000 will be held in escrow until the expiration of
certain indemnification provisions made by the selling shareholders of the
Grindstaff dealerships. In connection with the Grindstaff Acquisition, Mr.
Grindstaff will execute a non-competition and confidentiality agreement. Mr. Wes
Hambrick, who has over 15 years of experience in the automotive retailing
industry, will continue to serve as the Executive Manager of Grindstaff, Inc.
pursuant to an employment agreement. Grindstaff, Inc. will continue to lease the
real property on which its facilities are located from the landlord of said
property. See "Business -- Facilities."

The Robertson Acquisition. On March 1, 1998, the Company entered into a
definitive agreement to acquire from E. Moss Robertson, Jr. all of the
outstanding common stock of Robertson Oldsmobile-Cadillac, Inc. ("ROC"), which
operates Oldsmobile, Cadillac, Isuzu and Mazda dealerships in Gainesville,
Georgia. The Robertson Acquisition is expected to be consummated simultaneously
with the closing of this Offering. The Company will pay approximately $4.7
million in consideration for the Robertson Acquisition plus the closing-date
FIFO net worth of ROC (estimated to be $3.4 million), as defined by the
definitive agreement. At the closing, the Company will pay to Mr. Robertson
approximately $360,000 in the form of unregistered common stock of the Company,
and the balance of the purchase price will be paid by the Company to Mr.
Robertson in cash. Mr. Robertson is the son-in-law of Mr. Walter M. Boomershine,
Jr. (the Senior Vice President and Chairman of the Company) and the spouse of a
shareholder of Boomershine Automotive, which is the target entity of the Merger.
See "The Merger." The Company will also provide certain piggyback registration
rights to the selling shareholder with respect to the unregistered common stock.
See "Description of Capital Stock -- Registration Rights and Stock Price
Protection." In connection with the Robertson Acquisition, Mr. Robertson, who
has over 20 years of experience in the automotive retailing industry, will
execute a non-competition and confidentiality agreement and will continue to
serve as the Executive Manager of ROC pursuant to an employment agreement. ROC
will continue to lease the real property on which its facilities are located
from the landlord of said property, and the Company will guaranty said lease.
See "Business -- Facilities" and "Certain Transactions -- Certain Dealership
Leases."

The Bill Holt Acquisition. On December 11, 1997, the Company entered into
a definitive agreement to acquire substantially all of the operating assets, and
assume certain liabilities, of Hones, Inc. d/b/a Bill Holt Ford Mercury, a North
Carolina corporation which operates Ford and Mercury dealerships in Franklin,
North Carolina. The Bill Holt Acquisition is expected to be consummated
simultaneously with the closing of this Offering. The Company will pay for the
Bill Holt Acquisition consideration in an amount equal to approximately $750,000
in cash and will assume the outstanding balance of the floorplan liability for
new vehicles of Hones, Inc. actually acquired by the Company, as determined in
accordance with the terms of the definitive agreement. The Company has paid Bill
Holt $100,000 in earnest money, which will be credited against the purchase
price at the time of the closing. In connection with the Bill Holt Acquisition,
Mr. Bill Holt, who was the sole shareholder of Hones, Inc. prior to this
Offering, will execute a non-competition and

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confidentiality agreement. The Company anticipates that an unrelated third party
will acquire the real property on which its facilities are located, and the
Company will continue to lease said real property from such landlord. See
"Business -- Facilities."

The South Financial Acquisition. On January 6, 1998, the Company acquired
from Thomas F. Murphy, Jr. all of the outstanding capital stock of South
Financial Corporation, a Florida corporation that owns and operates five
standalone sub-prime automotive finance offices located in Florida, Tennessee
and North Carolina. The purchase price of South Financial Corporation was
approximately $4.65 million, which was paid in cash at the time of closing. In
connection with the South Financial Acquisition, Mr. Murphy executed a
non-competition and confidentiality agreement. Upon the consummation of this
transaction, R. Glynn Wimberly became chief executive officer of South Financial
Corporation pursuant to an employment agreement between Mr. Wimberly and South
Financial Corporation. Mr. Wimberly has 24 years of experience in the consumer
finance industry and has served as the president and general manager of an
automotive sub-prime finance company for the past five years. The Company
anticipates that future sites for South Financial Corporation's outlets will be
located in or near existing and future Company-owned dealerships. The South
Financial Acquisition further implements the Company's growth strategy by adding
a higher-margin complementary business to its core automotive retailing
operations.

The Collision Centers USA Acquisition. On December 18, 1997, the Company
acquired from James L. Peters all of the outstanding capital stock of Southlake
Collision Center, Inc., Southlake Collision Henry County, Inc. and Southlake
Collision Cobb Parkway, Inc. (collectively, the "Collision Centers"), which own
and operate stand-alone automobile collision repair centers located in Clayton
County, Henry County and Cobb County, Georgia, respectively. The purchase price
for the Collision Centers, in the aggregate, was approximately $1.7 million,
one-half of which was paid in cash, and the balance of which was paid in the
form of promissory notes (each, the "Collision Note," and collectively, the
"Collision Notes") with an interest rate equal to eighteen percent (18%) per
annum. One of the Collision Notes has been paid and satisfied and the other will
mature on June 30, 1998, at which time the Company intends to satisfy the
remaining Collision Note with funds from its working capital. In connection with
the Collision Center Acquisition, Mr. Peters executed a non-competition and
confidentiality agreement, and Mr. Peters and Collision Centers USA entered into
an employment agreement pursuant to which Mr. Peters became Vice President of
Collision Centers USA. In addition, Mr. Peters has received options to purchase
5,000 shares of common stock of the Company. See "Management -- Incentive Stock
Plan." Collision Centers USA will continue to lease the real properties on which
its facilities are located from the respective landlords of each property. See
"Business -- Facilities" and "Certain Transactions -- Certain Dealership
Leases." All collision centers owned by the Company are operated by the
Company's subsidiary, Collision Centers USA, Inc. under the name "Collision
Centers USA." The acquisition of these three companies, along with the Company's
acquisition of an additional collision repair center by virtue of the Merger,
further implements the Company's growth strategy by adding a higher-margin
complementary business with geographic proximity to the Company's existing
automobile dealerships. Additionally, the acquisition of the Collision Centers
will enhance the Company's cross-selling capabilities by ensuring a continued
demand for, and increased sales of, parts and supplies from nearby Company-owned
dealerships.

USE OF PROCEEDS

The net proceeds to the Company from the sale of 5,500,000 shares of common
stock offered hereby are estimated to be approximately $53 million
(approximately $62 million if the Underwriters' over-allotment option is
exercised in full), assuming an initial public offering price of $11.00 per
share and after deducting the underwriting discount and estimated expenses of
the Offering. The net proceeds will be used to pay a portion of the purchase
price for the Acquisitions in the aggregate amount of approximately $47 million,
and the balance of the proceeds, if any, will be used as working capital and to
reduce the balance outstanding on the Company's floorplan facility. The Company
regularly reviews opportunities to further its business strategy through
acquisitions of automotive dealerships and other businesses that it believes are
complementary to the Company's current and planned operations. The Company,
however, has no present commitments, agreements or understandings with respect
to any acquisitions other than the Acquisitions.
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DIVIDEND POLICY

The Company intends to retain all of its earnings to finance the growth and
development of its business, including future acquisitions, and does not
anticipate paying any cash dividends on its common stock for the foreseeable
future. Any future change in the Company's dividend policy will be made at the
discretion of the Board of Directors of the Company and will depend upon the
Company's operating results, financial condition, capital requirements, general
business conditions and such other factors as the Board of Directors deems
relevant. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources" and "Description of
Capital Stock."

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CAPITALIZATION

The following table sets forth, as of December 31, 1997, the capitalization
of the Company (i) on an actual basis, including the Merger as if it occurred on
December 31, 1997, (ii) on a pro forma basis, as adjusted to reflect the FIFO
Conversion and the Acquisitions, and (iii) on a pro forma as adjusted basis to
reflect the Offering and the application of net proceeds thereof to be received
by the Company. See "The Acquisitions" and "Use of Proceeds." This table should
be read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Pro Forma Combined and Condensed
Financial Data" included elsewhere in this Prospectus.

AS OF DECEMBER 31, 1997
------------------------------------------
PRO FORMA AS
ACTUAL(1)(2) PRO FORMA(3) ADJUSTED(4)
------------ ------------ ------------
(IN THOUSANDS)

Short-term debt:
Floorplan notes payable................................ $43,588 $110,434 $ 91,319
Notes payable and other................................ 2,834 19,584 19,584
Current maturities of long-term debt................... 1,278 1,502 1,502
------- -------- --------
Total short-term debt.................................... 47,700 131,520 112,405
Long-term debt, less current maturities.................. 878 1,388 1,388
Shareholders' equity:
Common stock, $0.001 par value,
450,000,000 shares authorized, 4,506,341 shares issued
and outstanding actual, 5,433,614 shares issued and
outstanding pro forma and 10,933,614 shares issued and
outstanding pro forma as adjusted(5)................... 5 6 11
Preferred stock, $0.001 par value,
50,000,000 shares authorized, no shares issued or
outstanding............................................ -- -- --
Additional paid-in capital............................... 5,966 15,122 68,382
Note receivable.......................................... (1,994) (1,994) (1,994)
Retained earnings........................................ 561 4,251 4,251
------- -------- --------
Total shareholders' equity..................... 4,538 17,385 70,650
------- -------- --------
Total capitalization........................... $53,116 $150,293 $184,443
======= ======== ========

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

(1) Boomershine Automotive currently utilizes the LIFO Method of accounting for
financial statement and tax reporting (see Note 1 to Boomershine
Automotive's Consolidated Financial Statements). Commencing July 1, 1998,
the Company intends to file an election with the IRS to convert to the FIFO
Method and change its method of accounting to the FIFO Method for financial
statement and tax reporting, which is the industry standard among
publicly-traded automotive retailing companies. Had Boomershine Automotive
used the FIFO Method at December 31, 1997, total shareholders' equity on an
actual basis would have been $3.7 million higher.
(2) Adjusted to give effect to 249,202 shares of common stock issued to certain
executive officers prior to the effective date of the Offering and 4,251,139
shares of common stock issued in connection with the Merger. Consideration
for the common stock issued to executive officers was in the form of notes
payable to the Company.
(3) Adjusted to give effect to the items in (2) above, the FIFO Conversion and
the Acquisitions. See "Pro Forma Combined and Condensed Financial Data."
(4) Adjusted to give effect to the items in (3) above and the Offering. See "Pro
Forma Combined and Condensed Financial Data."
(5) Does not reflect the possible exercise of options to purchase 2,250,000
shares of common stock reserved for issuance under the Company's Incentive
Stock Plan, including options to purchase 1,597,000 shares of common stock
that were granted subsequent to December 31, 1997. See
"Management -- Incentive Stock Plan." Also does not reflect the possible
exercise of 50,000 shares of common stock reserved for issuance under
warrants granted to a consulting firm for services rendered in connection
with this Offering.

25
27

DILUTION

The pro forma net tangible book value of the Company (after giving effect
to the Merger and the FIFO Conversion) as of December 31, 1997 was $1.06 per
share of common stock. Pro forma net tangible book value per share is determined
by dividing the pro forma tangible net worth of the Company (pro forma total
assets less goodwill less pro forma total liabilities) by the total number of
outstanding shares of common stock. After giving effect to the Acquisitions and
the sale of the 5,500,000 shares of common stock offered hereby and the receipt
of an assumed $53 million of net proceeds from the Offering (based on an assumed
Offering price of $11.00 per share and net of the underwriting discounts and
estimated offering expenses), pro forma net tangible book value of the Company
at December 31, 1997 would have been $25.6 million, or $2.34 per share. This
represents an immediate increase in pro forma net tangible book value of $1.28
per share to existing shareholders and an immediate dilution of $8.66 per share
to the new investors purchasing shares of common stock in the Offering. The
following table illustrates the per share dilution:

Initial public offering price per share..................... $11.00
Pro forma net tangible book value per share before
giving effect to the Acquisitions and the Offering.... $ 1.06
Increase in pro forma tangible book value per share
attributable to the Acquisitions and the Offering..... 1.28
------
Pro forma as adjusted net tangible book value per share
after the Offering........................................ 2.34
------
Dilution per share to new investors......................... $ 8.66
======

The following table sets forth, on a pro forma basis as of December 31,
1997, the number of shares of common stock purchased from the Company, the total
consideration paid to the Company and the average price per share paid to the
Company by existing shareholders and new investors purchasing shares from the
Company in the Offering (before deducting underwriting discounts and commissions
and estimated offering expenses):

TOTAL AVERAGE
SHARES PURCHASED CONSIDERATION PRICE
---------------------- --------------------- PER
NUMBER PERCENT AMOUNT PERCENT SHARE
---------- ------- ----------- ------- -------

Existing shareholders(1)............ 4,251,139 38.9% $ 3,979,704 5.2% $ 0.94
Inside shareholders(2).............. 255,202 2.3 1,996,616 2.6 7.82
Acquisition shareholders(3)......... 927,273 8.5 10,200,000 13.3 11.00
New investors(4).................... 5,500,000 50.3 60,500,000 78.9 11.00
---------- ----- ----------- -----
10,933,614 100.0% $76,676,320 100.0% $ 7.01
========== ===== =========== =====

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

(1) Includes shares issued in connection with the Merger. Does not reflect the
possible exercise of options to purchase 2,250,000 shares of common stock
reserved for issuance under the Company's Incentive Stock Plan, including
options to purchase 1,280,000 shares of common stock that were granted
subsequent to December 31, 1997 and options to purchase 317,000 shares of
common stock that will be granted immediately before the completion of the
Offering with an exercise price equal to the initial public offering price.
See "Management -- Incentive Stock Plan" and "The Merger." Also excludes
50,000 shares of common stock reserved for issuance upon exercise of
warrants granted to a consulting firm for services rendered in connection
with this Offering. See "Description of Capital Stock -- Warrants."
(2) Includes 6,000 shares of common stock issued to the founders of the Company
and 249,202 shares of common stock issued to executive officers of the
Company.
(3) Includes shares issued in connection with the Acquisitions. See "The
Acquisitions."
(4) Assumes that the Underwriters' over-allotment option is not exercised. Sales
pursuant to the full exercise by the Underwriters of the over-allotment
option will cause the total number of shares purchased by new investors,
total consideration paid by new investors and percent of total consideration
paid by new investors to increase to 6,325,000, $69,575,000 million and
81.1%, respectively.

26
28

SELECTED FINANCIAL DATA

The Company will acquire six automotive dealerships or dealership groups
simultaneously with the consummation of the Offering. See "The Acquisitions."
For financial statement presentation purposes, Boomershine Automotive has been
identified as the accounting acquiror. The following selected historical
consolidated financial data of Boomershine Automotive as of June 30, 1996 and
1997 and for each of the three years in the period ended June 30, 1997, have
been derived from the audited financial statements of Boomershine Automotive
included elsewhere in this Prospectus. The following selected historical
financial data for Boomershine Automotive as of June 30, 1993, 1994 and 1995 and
for each of the two years in the period ended June 30, 1994 and as of and for
the six months ended December 31, 1996 and December 31, 1997, have been derived
from the unaudited financial statements of Boomershine Automotive, which have
been prepared on the same basis as the audited financial statements and, in the
opinion of Boomershine Automotive, reflect all adjustments, consisting only of
normal recurring adjustments, necessary for a fair presentation of such data.
The results of operations for interim periods are not necessarily indicative of
results that may be expected for a full year or any other interim periods. The
pro forma data for the year ended June 30, 1997 and the six months ended
December 31, 1997 give effect to the Merger, the FIFO Conversion, the
Acquisitions and the Offering. See "Pro Forma Combined and Condensed Financial
Data." The following selected financial data should be read in conjunction with
the Consolidated Financial Statements of Boomershine Automotive, including the
notes thereto, and "Management's Discussion and Analysis of Financial Condition
and Results of Operations," appearing elsewhere herein.

SIX MONTHS ENDED
YEAR ENDED JUNE 30, DECEMBER 31,
---------------------------------------------------------------- -------------------------------
HISTORICAL HISTORICAL
---------------------------------------------------- PRO FORMA ------------------- PRO FORMA
1993 1994 1995 1996 1997 1997(1) 1996 1997 1997(1)
-------- -------- -------- -------- -------- --------- -------- -------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)

INCOME STATEMENT DATA:
Revenues:
Vehicle sales:
New..................... $ 73,912 $110,674 $156,955 $166,199 $152,625 $420,019 $ 75,650 $ 72,795 $210,877
Used.................... 35,747 46,207 57,047 64,652 61,811 177,925 30,349 25,758 84,371
Parts and service......... 15,085 17,679 19,223 23,764 24,637 66,602 11,549 12,876 33,742
Finance, commission and
other revenues, net..... 1,418 2,795 3,856 4,219 5,339 17,437 3,093 2,669 8,648
-------- -------- -------- -------- -------- -------- -------- -------- --------
126,162 177,355 237,081 258,834 244,412 681,983 120,641 114,098 337,638
Cost of sales............... 112,402 159,284 214,820 232,934 219,719 605,044 108,447 101,362 298,602
-------- -------- -------- -------- -------- -------- -------- -------- --------
Gross profit(2)............. 13,760 18,071 22,261 25,900 24,693 76,939 12,194 12,736 39,036
Selling, general and
administrative expenses... 12,751 16,685 19,927 24,170 22,262 62,209 11,174 11,100 32,842
Depreciation and
amortization.............. 428 410 406 600 890 2,575 452 439 1,326
-------- -------- -------- -------- -------- -------- -------- -------- --------
Income from operations...... 581 976 1,928 1,130 1,541 12,155 568 1,197 4,868
Interest expense, net....... 587 598 1,436 1,774 2,230 3,126 1,184 721 891
Interest income............. 144 119 218 181 120 479 64 104 522
Other income (expense),
net....................... 98 (110) 60 13 44 (202) (43) (29) (41)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Income (loss) before income
taxes..................... 236 387 770 (450) (525) 9,306 (595) 551 4,458
Income tax (expense)
benefit................... (89) (205) (292) 133 167 (3,963) 221 (215) (1,906)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net income (loss)(2)........ $ 147 $ 182 $ 478 $ (317) $ (358) $ 5,343 $ (374) $ 336 $ 2,552
======== ======== ======== ======== ======== ======== ======== ======== ========
Net income per share(3)..... $ 0.47 $ 0.22
======== ========
Weighted average shares
outstanding(3)............ 11,364 11,364
======== ========

27
29

AS OF JUNE 30, AS OF DECEMBER 31, 1997
----------------------------------------------- -------------------------
1993 1994 1995 1996 1997 HISTORICAL PRO FORMA(1)
------- ------- ------- ------- ------- ---------- ------------
(IN THOUSANDS)

BALANCE SHEET DATA:
Working capital (deficit)......................... $ 2,374 $ 2,524 $ 1,474 $ 26 $ (77) $(1,488) $ 22,410
Inventories....................................... 18,852 21,566 42,009 44,669 33,591 36,957 115,506
Total assets...................................... 27,322 31,998 60,865 64,086 49,710 57,899 199,396
Total debt, including current portion............. 20,204 24,152 50,106 53,520 40,618 48,578 113,793
Total shareholders' equity(2)..................... 4,121 4,303 4,782 4,557 4,199 4,535 70,650

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

(1) Adjusted to give pro forma effect to (i) the Merger, (ii) Boomershine
Automotive's conversion from the LIFO Method of inventory accounting to the
FIFO Method of inventory accounting, and (iii) the Acquisitions. See "Pro
Forma Combined and Condensed Financial Data." Also gives effect to the sale
of the shares offered hereby and the application of the net proceeds
therefrom. See "Use of Proceeds."
(2) Boomershine Automotive currently utilizes the LIFO Method of inventory
accounting. See Note 1 to Boomershine Automotive's Consolidated Financial
Statements. Commencing July 1, 1998, the Company intends to file an election
with the IRS to convert to the FIFO Method and change its method of
accounting to the FIFO Method for financial statement and tax reporting
which is the industry standard for publicly traded automotive retailers. If
Boomershine Automotive had previously utilized the FIFO Method, gross profit
for the five years ended June 30, 1997 would have been $12.9 million, $16.5
million, $22.7 million, $27.1 million, $25.1 million, respectively, and
$12.8 million for the each of the six month periods ended December 31, 1996
and 1997. Net income (loss) for the five years ended June 30, 1997 would
have been approximately $247,000, $467,000, $734,600, $502,200, $(85,400),
respectively and $19,000 and $435,000 for the six months ended December 31,
1996 and 1997, respectively. Shareholders' equity would have been $8.3
million and $8.2 million, respectively at June 30, 1997 and December 31,
1997.
(3) Historical net income per share is not presented, as the historical capital
structure of Boomershine Automotive prior to the Merger, the FIFO
Conversion, the Acquisitions and the Offering is not comparable with the
capital structure that will exist subsequent to these events. The weighted
average shares outstanding was calculated taking into account these events
as if they had occurred at the beginning of each period.

28
30

PRO FORMA COMBINED AND CONDENSED FINANCIAL DATA

The following unaudited pro forma combined and condensed statements of
operations for the year ended June 30, 1997 and for the six months ended
December 31, 1997 reflect the historical accounts of the Company and Boomershine
Automotive for those periods, adjusted to give pro forma effect to the Merger,
the FIFO Conversion (to be effective July 1, 1998), the Acquisitions and the
Offering, as if these events had occurred at July 1, 1996. The following
unaudited pro forma consolidated balance sheet as of December 31, 1997 reflects
the historical accounts of the Company and Boomershine Automotive as of that
date adjusted to give pro forma effect to the Merger, the FIFO Conversion (to be
effective July 1, 1998), the Acquisitions and the Offering as if these events
had occurred on December 31, 1997. The Acquisitions will be consummated on or
before the closing of the Offering and are conditions precedent to the closing
of the Offering. The pro forma combined and condensed financial data and
accompanying notes should be read in conjunction with the financial statements
and related footnotes of Sunbelt Automotive Group, Inc.; Boomershine Automotive
Group, Inc.; Jay Automotive Group, Inc.; Grindstaff, Inc.; Wade Ford, Inc. and
Wade Ford Buford, Inc.; Robertson Oldsmobile-Cadillac, Inc.; Day's Chevrolet,
Inc.; and South Financial Corporation, all of which are included elsewhere in
the Prospectus. The Company believes that the assumptions used in the following
statements provide a reasonable basis on which to present the pro forma
financial data. The pro forma combined financial data are provided for
informational purposes only and should not be construed to be indicative of the
Company's financial condition or results of operations had the transactions and
events described above been consummated on the dates assumed, and are not
intended to project the Company's financial condition on any future date or its
results of operation for any future period.
PRO FORMA COMBINED AND CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1997

THE MERGER THE ACQUISITIONS(10)
------------------------- ---------------------------------------------
WADE FORD,
SUNBELT BOOMERSHINE JAY INC. AND
AUTOMOTIVE AUTOMOTIVE AUTOMOTIVE WADE FORD
GROUP, INC. GROUP, INC. GROUP, INC. GRINDSTAFF, INC. BUFORD, INC.
----------- ----------- ----------- ---------------- ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)

Revenues:
Vehicle sales:
New.................................... $-- $152,625 $56,365 $33,525 $118,324
Used................................... -- 61,811 28,425 19,500 25,634
Parts and service........................ -- 24,637 11,667 3,681 8,988
Finance, commission and other revenues,
net.................................... -- 5,339 2,092 1,544 1,238
--- -------- ------- ------- --------
244,412 98,549 58,250 154,184
Cost of sales............................. -- 219,719 86,959 51,118 141,842
--- -------- ------- ------- --------
Gross profit.............................. -- 24,693 11,590 7,132 12,342
Selling, general and administrative
expenses................................. -- 22,262 9,289 6,329 10,433
Depreciation and amortization............. -- 890 245 86 154
--- -------- ------- ------- --------
Income from operations.................... -- 1,541 2,056 717 1,755
Interest expense, net..................... -- 2,230 434 516 260
Interest income........................... -- 120 97 103 23
Other income (expense), net............... -- 44 -- (532) 242
--- -------- ------- ------- --------
Income (loss) before income taxes......... -- (525) 1,719 (228) 1,760
Income tax (expense) benefit.............. -- 167 (653) 14 --
--- -------- ------- ------- --------
Net income (loss)......................... $-- $ (358) $ 1,066 $ (214) $ 1,760
=== ======== ======= ======= ========
Net income per share(9)...................
Weighted average shares outstanding(9)....

THE ACQUISITIONS(10)
---------------------------------------------------

ROBERTSON DAY'S SOUTH
OLDSMOBILE- CHEVROLET, FINANCIAL PRO FORMA
CADILLAC, INC. INC. CORPORATION OTHER ADJUSTMENTS PRO FORMA
-------------- ---------- ----------- ------- ----------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)

Revenues:
Vehicle sales:
New.................................... $11,157 $27,415 $ -- $20,608 $ -- $420,019
Used................................... 6,914 23,308 -- 12,333 -- 177,925
Parts and service........................ 2,581 10,034 -- 5,014 -- 66,602
Finance, commission and other revenues,
net.................................... 195 920 5,437 672 -- 17,437
------- ------- ------ ------- ------- --------
20,847 61,677 5,437 38,627 681,983
Cost of sales............................. 17,969 55,286 -- 33,922 (1,771)(1)(2) 605,044
------- ------- ------ ------- ------- --------
Gross profit.............................. 2,878 6,391 5,437 4,705 1,771 76,939
Selling, general and administrative
expenses................................. 2,034 4,947 3,407 4,080 (572)(3) 62,209
Depreciation and amortization............. 59 140 63 139 799(4)(5) 2,575
------- ------- ------ ------- ------- --------
Income from operations.................... 785 1,304 1,967 486 1,544 12,155
Interest expense, net..................... 61 133 1,521 306 (2,335)(6)(7) 3,126
Interest income........................... 134 2 -- -- -- 479
Other income (expense), net............... 36 8 -- -- -- (202)
------- ------- ------ ------- ------- --------
Income (loss) before income taxes......... 894 1,181 446 180 3,879 9,306
Income tax (expense) benefit.............. -- -- (376) -- (3,115)(8) (3,963)
------- ------- ------ ------- ------- --------
Net income (loss)......................... $ 894 $ 1,181 $ 70 $ 180 $ 764 $ 5,343
======= ======= ====== ======= ======= ========
Net income per share(9)................... $ 0.47
========
Weighted average shares outstanding(9).... 11,364
========

29
31

PRO FORMA COMBINED AND CONDENSED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1997

Revenues:
Vehicle sales:
New........................................ $-- $ 72,795 $27,191 $16,340 $62,240
Used....................................... -- 25,758 15,557 8,523 12,377
Parts and service............................ -- 12,876 5,749 2,005 4,662
Finance, commission and other revenues,
net........................................ -- 2,669 1,059 820 730
--- -------- ------- ------- -------
114,098 49,556 27,688 80,009
Cost of sales................................. -- 101,362 43,830 23,938 73,711
--- -------- ------- ------- -------
Gross profit.................................. -- 12,736 5,726 3,750 6,298
Selling, general and administrative
expenses..................................... -- 11,100 4,582 3,687 5,190
Depreciation and amortization................. -- 439 105 152 68
--- -------- ------- ------- -------
Income from operations........................ -- 1,197 1,039 (89) 1,040
Interest expense, net......................... -- 721 142 181 42
Interest income............................... -- 104 53 3 99
Other income (expense), net................... -- (29) -- 110 49
--- -------- ------- ------- -------
Income (loss) before income taxes............. -- 551 950 (157) 1,146
Income tax (expense) benefit.................. -- (215) (361) 9 --
--- -------- ------- ------- -------
Net income (loss)............................. $-- $ 336 $ 589 $ (148) $ 1,146
=== ======== ======= ======= =======
Net income per share(9).......................
Weighted average shares outstanding(9)........

THE ACQUISITIONS(10)
---------------------------------------------------

Revenues:
Vehicle sales:
New........................................ $ 6,925 $15,354 $ -- $10,032 $ -- $210,877
Used....................................... 4,221 9,779 -- 8,156 -- 84,371
Parts and service............................ 1,488 4,531 -- 2,431 -- 33,742
Finance, commission and other revenues,
net........................................ 255 449 2,321 345 -- 8,648
------- ------- ------ ------- ------- --------
12,889 30,113 2,321 20,964 -- 337,638
Cost of sales................................. 11,339 26,979 -- 18,420 (977)(1)(2) 298,602
------- ------- ------ ------- ------- --------
Gross profit.................................. 1,550 3,134 2,321 2,544 977 39,036
Selling, general and administrative
expenses..................................... 923 2,576 2,303 2,487 (6)(3) 32,842
Depreciation and amortization................. 37 73 34 40 378(4)(5) 1,326
------- ------- ------ ------- ------- --------
Income from operations........................ 590 485 (16) 17 605 4,868
Interest expense, net......................... 34 38 749 153 (1,169)(6)(7) 891
Interest income............................... 262 1 -- -- -- 522
Other income (expense), net................... (178) 7 -- -- -- (41)
------- ------- ------ ------- ------- --------
Income (loss) before income taxes............. 640 455 (765) (136) 1,774 4,458
Income tax (expense) benefit.................. -- -- 279 -- (1,618)(8) (1,906)
------- ------- ------ ------- ------- --------
Net income (loss)............................. $ 640 $ 455 $ (486) $ (136) $ 156 $ 2,552
======= ======= ====== ======= ======= ========
Net income per share(9)....................... $ 0.22
========
Weighted average shares outstanding(9)........ 11,364
========

30
32

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

(1) Reflects the conversion of Boomershine Automotive from the LIFO Method of
inventory accounting to the FIFO Method. Under the FIFO Method, cost of
sales would have been lower by $400,000 and $87,000 for the year ended June
30, 1997 and the six months ended December 31, 1997, respectively. The
Company intends to convert to the FIFO Method effective July 1, 1998
conditioned and effective upon the closing of the Offering.
(2) Reflects the conversion of Jay Automotive, Grindstaff, Wade Ford,
Robertson, Day's Chevrolet and Bill Holt from the LIFO Method of inventory
accounting to the FIFO Method. Under the FIFO Method, cost of sales would
have been lower by $1,371,000, and $890,000 for the year ended June 30,
1997, and the six months ended December 31, 1997, respectively. The Company
intends to convert all acquisitions to the FIFO Method conditioned and
effective upon the closing of the Offering.
(3) Reflects the Company's estimate of the net deductions from selling, general
and administrative expenses and reductions in interest expense which would
have occurred if the Acquisitions and the Offering had been effected as of
the beginning of each period and consists of the following:

YEAR ENDED SIX MONTHS ENDED
JUNE 30, 1997 DECEMBER 31, 1997
------------- -----------------
(IN THOUSANDS)

(i) Elimination of salaries to owners and other officers whose
positions and salaries will be eliminated in conjunction
with the Offering........................................... $(919) $(434)
(ii) Increase in salaries of existing and new officers who have
entered into employment agreements with the Company,
effective prior to or upon consummation of the Offering..... 673 371
(iii) Additional costs related to the real estate, on which
certain of the dealerships are located...................... 373 156
(iv) Elimination of certain expenses of the previous owners of
certain dealerships, and expenses of certain dealerships,
not relating to the entity being acquired, which were
reflected in the historical financial statements............ (99) (99)
(v) Elimination of lease termination payment made to a previous
owner in conjunction with being acquired.................... (600) --
----- -----
$(572) $ (6)
===== =====

(4) Reflects amortization as if Jay Automotive, Grindstaff, Wade Ford,
Robertson, Day's Chevrolet, Bill Holt, Collision Centers and South
Financial had been acquired as of July 1, 1996. The pro forma amortization
for the year ended June 30, 1997, and the six months ended December 31,
1997 reflects additional amortization of approximately $1,024,000 and
$507,000, respectively, associated with intangible assets resulting from
the Acquisitions. Such costs are being amortized over a 40-year period.
(5) Reflects the reduction of depreciation related to the elimination of
certain assets that will not be acquired in connection with the
Acquisitions. The pro forma depreciation expense for the year ended June
30, 1997, and the six months ended December 31, 1997 reflects a reduction
$225,000 and $129,000, respectively.
(6) The net reduction in interest expense was calculated based on the
elimination of debt that will not be acquired in connection with the
Acquisitions. The pro forma interest expense for the year ended June 30,
1997, and the six months ended December 31, 1997 reflects a reduction
$121,000 and $63,000, respectively.
(7) Reflects the reduction in interest expense associated with: (i) the paydown
of $19 million of floorplan notes payable and (ii) the reduction of
interest rate on the floorplan notes of several of the Acquisitions from
their contractual rates to the contractual rate of Boomershine Automotive,
which will become effective in conjunction with the Offering.
(8) Certain of the Acquisitions are S-Corporations and accordingly not subject
to federal and certain state income taxes during the periods indicated.
This adjustment reflects the federal and state income taxes as if all
entities were C-Corporations based on a 43% effective rate assumed during
the period. The assumed effective tax rate reflects, as additional pro
forma permanent differences, non-taxable goodwill amortization.
(9) Pro forma net income per share is based upon the assumption that 11,363,635
shares of common stock are outstanding for each period. This amount
represents the 5,500,000 shares to be issued in the Offering, the 4,506,341
shares of common stock owned by the Company's shareholders immediately
following the Merger, the 927,273 shares of common stock to be issued in
connection with the Acquisitions and 430,022 shares of common stock
equivalents for options granted after December 31, 1997.
(10) The historical accounts and related footnotes of the Acquisitions included
elsewhere in the Prospectus were prepared based on a fiscal year end of
December 31. To conform with Boomershine Automotives' fiscal year end of
June 30, the unaudited pro forma statements of operations include financial
data for each acquisition for the same periods presented for Boomershine
Automotive.

31
33

PRO FORMA CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1997

THE MERGER THE ACQUISITIONS
---------------------------------------------- ---------------------------------------------
PRO FORMA
ADJUSTMENTS FOR WADE FORD
SUNBELT BOOMERSHINE THE MERGER JAY INC. AND
AUTOMOTIVE AUTOMOTIVE AND THE AUTOMOTIVE WADE FORD
GROUP, INC. GROUP, INC.(5) FIFO CONVERSION GROUP, INC. GRINDSTAFF, INC. BUFORD, INC.
----------- -------------- --------------- ----------- ---------------- ------------
(IN THOUSANDS)

ASSETS
Current Assets:
Cash and cash equivalents....... $ 3 $ 6,349 $ -- $ 3,758 $ 293 $ 4,662
Accounts receivable, net........ 5,116 1,053 749 4,113
Finance receivables, net........
Notes receivable................ 298 502
Inventories..................... 36,957 6,049(3) 12,023 7,849 25,951
Refundable income taxes......... 28
Deferred income taxes........... 754 (590)(3) 7
Prepaid expenses and other
current assets................ 1,485 382 39 13
--- ------- ------- ------- ------- -------
Total Current Assets....... 3 50,689 5,459 17,514 8,937 35,241
Property and equipment, net...... 4,252 889 1,226 531
Other Assets:
Intangible assets, net.......... 2,481 318 25
Notes receivable shareholder.... 1,259
Deferred income taxes........... 24 (24)(3)
Other assets.................... 453 17 107 71
--- ------- ------- ------- ------- -------
Total Assets............... $ 3 $57,899 $ 5,435 $18,738 $11,529 $35,868
=== ======= ======= ======= ======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Floor plan notes payable........ $-- $43,588 $ -- $ 9,019 $ 8,953 $30,714
Senior debt.....................
Current maturities of long-term
debt.......................... 1,278 60 164
Dealer finance reserves.........
Notes payable -- other.......... 2,834 993
Deferred income taxes...........
Accrued liabilities............. 2,208 694 663 1,231
Accounts payable................ 2,269 897 538 426
--- ------- ------- ------- ------- -------
Total Current
Liabilities.............. -- 52,177 -- 10,670 10,318 33,364
Long-term debt, less current
maturities...................... 878 131 326 53
Deferred income taxes............ 1,745(3)
Other liabilities................ 309
Shareholders' Equity:
Common stock.................... 3,974 (3,969)(6) 100 179
Additional paid-in capital...... 3 5,963(6) 948 99
Owner's equity.................. 7,937
Note receivable................. (1,994)(6)
Retained earnings............... 561 3,690(3) (163) 2,173
--- ------- ------- ------- ------- -------
Total Shareholders'
Equity................... 3 4,535 3,690 7,937 885 2,451
--- ------- ------- ------- ------- -------
Total Liabilities and
Shareholders' Equity..... $ 3 $57,899 $ 5,435 $18,738 $11,529 $35,868
=== ======= ======= ======= ======= =======

THE ACQUISITIONS
--------------------------------------------------

PRO FORMA
ROBERTSON DAY'S SOUTH PRO FORMA ADJUSTMENTS
OLDSMOBILE- CHEVROLET, FINANCIAL ADJUSTMENTS FOR THE
CADILLAC, INC. INC. CORPORATION OTHER FOR THE ACQUISITIONS OFFERING
-------------- ---------- ----------- ------ -------------------- -----------
(IN THOUSANDS)

ASSETS
Current Assets:
Cash and cash equivalents....... $2,169 $ 1,287 $ 64 $ 683 $(51,156)(1) $ 34,150(4)
Accounts receivable, net........ 258 850 38 964 (964)(1)
Finance receivables, net........ 12,847
Notes receivable................
Inventories..................... 2,767 8,114 6,455 9,341(2)
Refundable income taxes.........
Deferred income taxes........... (171)(2)(3)
Prepaid expenses and other
current assets................ 42 6 310 122 (122)(1)
------ ------- ------- ------ -------- --------
Total Current Assets....... 5,236 10,257 13,259 8,224 (43,072) 34,150
Property and equipment, net...... 46 250 226 1,331 (1,121)(1)
Other Assets:
Intangible assets, net.......... 108 42,125(1)(2)
Notes receivable shareholder.... (1,259)(1)
Deferred income taxes...........
Other assets.................... 104 20 40
------ ------- ------- ------ -------- --------
Total Assets............... $5,390 $10,611 $13,505 $9,595 $ (3,327) $ 34,150
====== ======= ======= ====== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Floor plan notes payable........ $2,391 $ 9,103 $ -- $6,666 $ -- $(19,115)(4)
Senior debt..................... 11,462
Current maturities of long-term
debt..........................
Dealer finance reserves......... 727
Notes payable -- other.......... 295 4,000(1)
Deferred income taxes........... 346(2)(3)
Accrued liabilities............. 54 310 244 (244)(1)
Accounts payable................ 291 334 94 40 (40)(1)
------ ------- ------- ------ -------- --------
Total Current
Liabilities.............. 2,736 9,747 12,578 6,950 4,062 (19,115)
Long-term debt, less current
maturities...................... 2,135 (2,135)(1)
Deferred income taxes............ 266 1,551(2)(3)
Other liabilities................
Shareholders' Equity:
Common stock.................... 5 110 320 (713)(1) 5(4)
Additional paid-in capital...... 145 32 1 7,931(1) 53,260(4)
Owner's equity.................. (7,937)(1)
Note receivable.................
Retained earnings............... 2,504 722 660 190 (6,086)(1)(2)(3)
------ ------- ------- ------ -------- --------
Total Shareholders'
Equity................... 2,654 864 661 510 (6,805) 53,265
------ ------- ------- ------ -------- --------
Total Liabilities and
Shareholders' Equity..... $5,390 $10,611 $13,505 $9,595 $ (3,327) $ 34,150
====== ======= ======= ====== ======== ========

PRO FORMA
---------
(IN THOUSANDS)

ASSETS
Current Assets:
Cash and cash equivalents....... $ 2,262
Accounts receivable, net........ 12,177
Finance receivables, net........ 12,847
Notes receivable................ 800
Inventories..................... 115,506
Refundable income taxes......... 28
Deferred income taxes...........
Prepaid expenses and other
current assets................ 2,277
--------
Total Current Assets....... 145,897
Property and equipment, net...... 7,630
Other Assets:
Intangible assets, net.......... 45,057
Notes receivable shareholder....
Deferred income taxes...........
Other assets.................... 812
--------
Total Assets............... $199,396
========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Floor plan notes payable........ $ 91,319
Senior debt..................... 11,462
Current maturities of long-term
debt.......................... 1,502
Dealer finance reserves......... 727
Notes payable -- other.......... 8,122
Deferred income taxes........... 346
Accrued liabilities............. 5,160
Accounts payable................ 4,849
--------
Total Current
Liabilities.............. 123,487
Long-term debt, less current
maturities...................... 1,388
Deferred income taxes............ 3,562
Other liabilities................ 309
Shareholders' Equity:
Common stock.................... 11
Additional paid-in capital...... 68,382
Owner's equity..................
Note receivable................. (1,994)
Retained earnings............... 4,251
--------
Total Shareholders'
Equity................... 70,650
--------
Total Liabilities and
Shareholders' Equity..... $199,396
========

32
34

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

(1) Reflects the preliminary allocation of the aggregate purchase price of the
Acquisitions based on the estimated fair value of the net assets acquired.
Because the carrying amount of the net assets acquired, which primarily
consist of accounts receivable, inventory, property, plant and equipment and
floorplan indebtedness, approximates their fair value, management believes
the application of purchase price accounting will not result in an
adjustment to the carrying amount of those net assets. Under the acquisition
agreements, the negotiated purchase prices for the Acquisitions will be
adjusted to the extent that the fair value of the tangible net assets as of
the closing is different than an agreed upon amount. The holders of
restricted stock issued in payment of the Acquisitions have agreed not to
offer, sell or otherwise dispose of any of those shares for a period of one
year after the Offering. The fair value of these shares reflects this
restriction. The amount of goodwill and the corresponding amortization
actually recorded may ultimately be different from the amounts estimated
here, depending upon the actual fair value of tangible net assets acquired
at closing of the Acquisitions. The estimated purchase price allocation
consists of the following (in thousands):

JAY WADE FORD, INC. ROBERTSON SOUTH
AUTOMOTIVE GRINDSTAFF, AND WADE OLDSMOBILE- DAY'S FINANCIAL
GROUP, INC. INC. FORD BUFORD, INC. CADILLAC, INC. CHEVROLET CORPORATION
----------- ----------- ----------------- -------------- --------- -----------

Estimated total consideration:
Cash............................ $12,000 $ 9,127 $11,904 $ 7,711 $ 5,589 $4,650
Promissory note issued.......... 4,000 -- -- -- -- --
Restricted stock issued......... -- -- 3,600 360 5,198 --
------- ------- ------- ------- ------- ------
Total..................... 16,000 9,127 15,504 8,071 10,787 4,650
Less tangible net assets
acquired........................ (8,646) (2,050) (6,052) (2,923) (1,957) (661)
------- ------- ------- ------- ------- ------
Excess of purchase price over
fair value of tangible net
assets acquired................. $ 6,900 $ 7,077 $ 9,452 $ 5,148 $ 8,830 $3,989
======= ======= ======= ======= ======= ======

OTHER TOTAL
----- --------

Estimated total consideration:
Cash............................ $ 750 $ 51,731
Promissory note issued.......... -- 4,000
Restricted stock issued......... -- 9,158
----- --------
Total..................... 750 64,889
Less tangible net assets
acquired........................ (475) (22,764)
----- --------
Excess of purchase price over
fair value of tangible net
assets acquired................. $ 275 $ 42,125
===== ========

Also, reflects the elimination of certain assets and liabilities of the Bill
Holt Acquisition that will not be acquired by the Company.

The difference between the purchase price and the fair market value of the
net assets acquired will be allocated to goodwill and amortized over 40
years.

(2) Reflects the conversion from the LIFO Method of accounting to the FIFO
Method of inventory accounting at acquired entities including: Day's
Chevrolet, Inc., Grindstaff, Inc., Hones, Inc., the Jay dealerships, the
Robertson dealerships, and the Wade dealerships and the Boomershine
dealerships in the amounts of $1,792,000, $1,909,000, $438,000, $1,163,000,
$438,000, $3,601,000 and $6,049,000, respectively. The Company intends to
convert to the FIFO Method effective July 1, 1998 conditioned and effective
upon the closing of the Offering. See "Management's Discussion and Analysis
of the Financial Condition and Results of Operations -- Overview."
(3) In connection with the Merger, the Acquisitions and the Offering, the
Company will convert from the LIFO Method of inventory accounting to the
FIFO Method of inventory accounting. The accompanying pro forma combined and
condensed balance sheet includes $4,427,000 representing an additional tax
liability, which will result from this conversion. The tax liability will be
paid over a four year period.
(4) Reflects the Offering and the application of net proceeds thereof to be
received by the Company. See "Use of Proceeds."
(5) Reflects the Collision Centers USA Acquisition on December 18, 1997. The
purchase price for the Collision Centers was approximately $1.7 million,
one-half of which was paid in cash, and the balance of which was paid in the
form of promissory notes. The Collision Centers have been consolidated with
Boomershine Automotive as of the date of the acquisition. The excess of
purchase price over fair value of tangible net assets acquired of
approximately $1.9 million was allocated to goodwill to be amortized over 40
years.
(6) Reflects the Merger and the issuance of 249,202 shares of common stock to
executive officers of the Company subsequent to December 31, 1997.
Consideration for the common stock issuance was in the form of promissory
notes to the Company. The notes bear interest at a rate of 8% per annum and
are due and payable in five years. See "Certain Transactions -- Promissory
Notes."

33
35

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The following discussion of the results of operations and financial
condition should be read in conjunction with (i) the financial statements of
certain of the entities acquired in the Acquisitions and involved in the Merger,
and the related notes thereto, (ii) the "Pro Forma Combined and Condensed
Financial Data" and the related notes thereto, and (iii) "Selected Financial
Data," all included elsewhere in this Prospectus. Certain statements contained
herein are not based on historical facts, but are forward-looking statements
that are based upon numerous assumptions about future conditions that could
prove not to be accurate. Such forward-looking statements include, without
limitation, the statements regarding the trends in the industry set forth in the
Prospectus Summary and under this caption regarding the Company's anticipated
future financial results and position. Although the Company believes that the
expectations reflected in such forward-looking statements are reasonable, it can
give no assurance that such expectations will prove to have been correct.
Important factors that could cause actual results to differ materially from the
Company's expectations are disclosed in this Prospectus, including but not
limited to the matters described in "Risk Factors."

OVERVIEW

Sunbelt is one of the leading retailers of new and used vehicles in the
southeastern United States. The Company operates a total of 27 dealership
franchises in Georgia, North Carolina and Tennessee. The Company also operates
four collision repair centers in metropolitan Atlanta, Georgia, and a sub-prime
automotive finance company with operations in Florida, North Carolina and
Tennessee. Sunbelt sells 20 domestic and foreign brands of automobiles, which
consist of Buick, Cadillac, Chevrolet, Chrysler, Dodge, Ford, GMC, Honda,
Hummer, Isuzu, Jeep, Kia, Mazda, Mercury, Mitsubishi, Nissan, Oldsmobile,
Plymouth, Pontiac and Toyota. The Company intends to further diversify its
product and service offerings by including more brands of vehicles and by
offering related finance and insurance, replacement parts, collision repair, and
other products and services that are complementary to its core automotive
retailing operations. In several of its markets, the Company has significant
market share for the manufacturer type sold. Pro forma for the Merger and the
Acquisitions, the Company had total revenues of approximately $682 million and
retail unit sales of 20,499 new and 9,913 used vehicles for the year ended June
30, 1997, and revenues of $338 million and retail unit sales of 9,720 new and
5,040 used vehicles for the six months ended December 31, 1997. The Company
believes that in 1997, based on pro forma retail new vehicle unit sales, it
would have been one of the 15 largest automotive dealer groups out of a total of
more than 15,000 automotive dealer groups in the United States. The Company's
strategy is: (i) to become the leading operator of automotive dealerships in
small- and medium-sized markets in the southeastern United States through
acquisitions of additional dealerships in these markets; and (ii) to expand its
collision centers and other complementary business operations.

The Company has diverse sources of revenues, including: new car sales, new
truck sales, used car sales, used truck sales, manufacturer remarketed vehicles
sales, parts sales, service sales, collision repair services, finance fees,
insurance commissions, extended service contract sales, and documentary fees.
Sales revenues include sales to retail customers, other dealers and wholesalers.
Other dealership revenue includes revenue from the sale of financing, insurance
and extended service contracts, net of a provision for anticipated chargebacks
and documentary fees charged to customers.

The Company's leasing expenses, salary expense, employee benefits costs and
advertising expenses comprise the majority of its selling, general and
administrative expenses. The Company's interest expense primarily results from
the Company's floorplan financing of its new and used vehicle inventory.

The Company has historically accounted for all of its dealership
acquisitions using the purchase method of accounting and, as a result, does not
include in its financial statements the results of operations of these
dealerships prior to the date they were acquired by the Company. The financial
statements of the Company discussed below reflect the combined and consolidated
results of operations, financial position and cash flows of the Company's
dealerships. As a result of the effects of the Merger, the Acquisitions and the
Offering, the historical financial information described herein is not
necessarily indicative of the results of operations,

34
36

financial position and cash flows of the Company in the future or the results of
operations, financial position and cash flows which would have resulted had the
Merger and the Acquisitions and the Offering occurred at the beginning of the
periods presented in the historical financial statements.

Contemporaneously with the effective date hereof, the Company will effect
the Merger pursuant to which (i) Boomershine Automotive will be merged with and
into the Company and (ii) the Boomershine Automotive shareholders will receive
unregistered common stock of the Company in exchange for the capital stock in
Boomershine Automotive. From November 1997 through March 1998, the Company
consummated or signed definitive agreements to purchase six additional
dealerships or dealership groups, three collision repair businesses, and a
sub-prime automotive finance company for an aggregate consideration of
approximately $66 million. See "The Acquisitions." In connection with the
Acquisitions, the Company will book approximately $42 million of goodwill which
will be amortized over forty years.

COMPANY'S CREDIT AND FINANCING ARRANGEMENTS

The Company is negotiating a $120 million floorplan financing line of
credit and a $50 million acquisition and general corporate and working capital
line of credit for operations subsequent to the closing of this Offering
(collectively the "Credit Facility"). As of December 31, 1997, the Company had
approximately $110 million of floorplan debt outstanding. Currently, the
Combined Companies' (as defined below) floorplan financing is provided by six
different sources. The Company anticipates that all of the floorplan debt will
be refinanced at more favorable terms by the Credit Facility, but there can be
no assurance that the Company will be able to obtain such more favorable
financing. See "Risk Factors -- Floorplan Financing." South Financial has a
revolving credit agreement with General Electric Capital Corporation with a
maximum borrowing capacity of $15 million with advances permitted under formulas
based on percentages of eligible collateral. Management of the Company does not
currently anticipate replacing this facility after this Offering.

The Company believes its cash resources, including the Credit Facility and
the net proceeds of this Offering, will be adequate to fund its anticipated
operations and growth for the foreseeable future.

PRO FORMA COMPANY'S DATA

The pro forma combined financial data of the Company for 1995, 1996 and
1997 and the six months ended December 31, 1996 and December 31, 1997, do not
purport to present any or all of the combined companies involved in the
Acquisitions and the Merger (the "Combined Companies") in accordance with
generally accepted accounting principles, but represent a summation of certain
data of the individual Combined Companies on a historical basis. The financial
statements of Hones, Inc. d/b/a Bill Holt Ford-Mercury and Collision Centers USA
have not been separately included within this Prospectus because said entities
do not qualify as significant subsidiaries under the Commission's Staff
Accounting Bulletin (SAB) No. 80 and, accordingly, are not required to be
presented. The data presented in this section may not be comparable to and may
not be indicative of the Company's post-combination results of operations
because (i) the Combined Companies were not under common control of management
and had different tax structures (S-Corporations and C-Corporations) during the
periods presented, and (ii) the Company will use the purchase method to
establish a new basis of accounting to record the Acquisitions.

The selected historical financial information presented in the tables below
is derived from the respective audited financial statements of the individual
Combined Companies included elsewhere herein. The following discussion should be
read in conjunction with the financial statements of all of the Combined
Companies and the notes thereto appearing elsewhere in the Prospectus.

For financial statement presentation purposes, as required by the rules and
regulations of the Commission, Boomershine Automotive has been identified as the
accounting acquiror.

35
37

The following table sets forth pro forma revenues and cost of sales for the
Combined Companies' for the year ended June 30, 1997 and the six months ended
December 31, 1997. Revenue items are shown as a percent of total revenues while
cost of sales items are shown as a percent of the corresponding revenue item.

Operations Data

YEAR ENDED JUNE 30, SIX MONTHS ENDED DECEMBER 31,
------------------------------------------------------ -----------------------------------
1995 1996 1997 1996 1997
---------------- ---------------- ---------------- ---------------- ----------------
AMT. PCT. AMT. PCT. AMT. PCT. AMT. PCT. AMT. PCT.
-------- ----- -------- ----- -------- ----- -------- ----- -------- -----
(DOLLARS IN THOUSANDS)

REVENUES:
New vehicle sales........... $357,221 63.2% $403,877 62.2% $420,019 61.6% $201,445 61.1% $210,877 62.5%
Used vehicle sales.......... 142,801 25.3 166,976 25.7 177,925 26.1 86,252 26.2 84,371 25.0
Parts and service........... 53,625 9.5 61,682 9.5 66,602 9.8 32,162 9.8 33,742 10.0
Finance, commission and
other revenues, net....... 11,254 2.0 16,713 2.6 17,437 2.5 9,597 2.9 8,648 2.5
-------- ----- -------- ----- -------- ----- -------- ----- -------- -----
Total revenues........ $564,901 100.0% $649,248 100.0% $681,983 100.0% $329,456 100.0% $337,638 100.0%
-------- ----- -------- ----- -------- ----- -------- ----- -------- -----
COST OF SALES:
New vehicle sales........... $338,458 94.7% $383,997 95.1% $399,003 95.0% $190,602 94.6% $199,740 94.7%
Used vehicle sales.......... 132,305 92.6 154,638 92.6 164,736 92.6 80,298 93.1 78,270 92.8
Parts and service........... 32,315 60.3 34,896 56.6 41,305 62.0 19,671 61.2 20,592 61.0
Finance, commission and
other revenues, net....... -- -- -- -- -- -- -- -- -- --
-------- ----- -------- ----- -------- ----- -------- ----- -------- -----
Total cost of sales... $503,078 89.1% $573,531 88.3% $605,044 88.7% $290,571 88.2% $298,602 88.4%
-------- ----- -------- ----- -------- ----- -------- ----- -------- -----
GROSS PROFIT.................. $ 61,823 10.9% $ 75,717 11.7% $ 76,939 11.3% $ 38,885 11.8% $ 39,036 11.6%
======== ===== ======== ===== ======== ===== ======== ===== ======== =====

The following tables set forth certain pro forma information with regard to
the Combined Companies' vehicle and parts and services sales for the periods
indicated.

New Vehicle Data

SIX MONTHS
YEAR ENDED JUNE 30, ENDED DECEMBER 31,
-------------------------------- --------------------
1995 1996 1997 1996 1997
-------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)

Retail unit sales................... 19,493 21,694 20,499 9,875 9,720
Retail sales........................ $357,221 $403,877 $420,019 $201,445 $210,877
Gross profit........................ $ 18,763 $ 19,880 $ 21,017 $ 10,843 $ 11,137
Gross margin........................ 5.3% 4.9% 5.0% 5.4% 5.3%
Average gross profit per retail unit
sold.............................. $ 963 $ 916 $ 1,025 $ 1,098 $ 1,146

Used Vehicle Data

SIX MONTHS
YEAR ENDED JUNE 30, ENDED DECEMBER 31,
-------------------------------- ------------------
1995 1996 1997 1996 1997
-------- -------- -------- ------- -------
(DOLLARS IN THOUSANDS)

Retail unit sales..................... 9,073 10,205 9,913 4,931 5,040
Retail sales.......................... $100,563 $122,464 $120,534 $59,299 $61,749
Gross profit.......................... $ 8,858 $ 11,281 $ 11,635 $ 5,426 $ 5,429
Gross margin.......................... 8.8% 9.2% 9.7% 9.2% 8.8%
Average gross profit per retail unit
sold................................ $ 976 $ 1,105 $ 1,174 $ 1,100 $ 1,077
Wholesale unit sales.................. 8,033 8,665 9,442 4,533 4,003
Wholesale sales....................... $ 42,238 $ 44,512 $ 57,391 $26,953 $22,622
Gross profit.......................... $ 1,638 $ 1,057 $ 1,554 $ 528 $ 672
Gross margin.......................... 3.9% 2.4% 2.7% 2.0% 3.0%

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38

Parts and Service Data

SIX MONTHS
YEAR ENDED JUNE 30, ENDED DECEMBER 31,
----------------------------- ------------------
1995 1996 1997 1996 1997
------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS)

Sales.................................... $53,625 $61,682 $66,602 $32,162 $33,742
Gross profit............................. $21,310 $26,786 $25,297 $12,491 $13,150
Gross margin............................. 39.7% 43.4% 38.0% 38.8% 39.0%

Six Months Ended December 31, 1997 Compared to Six Months Ended December 31,
1996

Revenues. Total revenues increased by $8.2 million, or 2.5%, from $329.5
million for the six months ended December 31, 1996 to $337.6 million for the six
months ended December 31, 1997. New vehicle sales increased $9.4 million, or
4.7% from $201.4 million for the six months ended December 31, 1996 to $210.9
million for the six months ended December 31, 1997. This increase was primarily
attributable to higher sales at the Boomershine Ford and Wade Ford locations and
the addition of the Buick dealership by Jay Automotive Group. These increases
were partially offset by lower sales at the Boomershine Nissan and Pontiac
locations. Used vehicle revenues decreased $1.9 million, or 2.2%, from $86.3
million for the six months ended December 31, 1996 to $84.4 million for the six
months ended December 31, 1997. This decrease resulted from reduced wholesale
revenues at the Day's Chevrolet and Boomershine Automotive dealerships. These
reductions were partially offset by increased used vehicle sales by Bill Holt
Ford Mercury and the Jay Automotive Group. Parts and service sales increased
$1.6 million, or 4.9%, from $32.2 million for the six months ended December 31,
1996 to $33.7 million for the six months ended December 31, 1997. This increase
resulted from higher service income at the Boomershine Ford and Pontiac
locations. Other dealership revenues decreased $949,000, or 9.9%, from $9.6
million for the six months ended December 31, 1996 to $8.6 million for the six
months ended December 31, 1997. This decrease was primarily due to the reduced
finance income of South Financial.

Gross Profit. Gross profit increased by $151,000, or 0.4%, from $38.9
million for the six months ended December 31, 1996 to $39.0 million for the six
months ended December 31, 1997. This increase was attributable to higher new
vehicle sales at Boomershine Ford and Wade Ford and higher used vehicle sales at
Holt Ford. This increase was partially offset in part by a reduction in gross
profit contribution by the operations of South Financial.

Year Ended June 30, 1997 Compared to Year Ended June 30, 1996

Revenues. Total revenues increased by $32.7 million, or 5.0%, from $649.2
million for the year ended June 30, 1996 to $682.0 million for the year ended
June 30, 1997. New vehicle sales increased $16.1 million, or 4.0% from $403.9
million for the year ended June 30, 1996 to $420.0 million for the year ended
June 30, 1997. This increase was primarily attributable to higher sales of Ford
products at the Wade Ford and Bill Holt Ford-Mercury dealerships coupled with
the addition of the Buick dealership by the Jay Automotive Group in December
1996. These improvements were partially offset by lower sales at the Boomershine
Nissan and Pontiac locations and the Robertson Oldsmobile-Cadillac dealership.
Used vehicle revenues increased $10.9 million, or 6.6%, from $167.0 million for
the year ended June 30, 1996 to $177.9 million for the year ended June 30, 1997.
This increase resulted from higher wholesale sales at Day's Chevrolet and higher
retail sales at the various Jay Automotive Group locations. These increases were
offset by reductions in retail used vehicle sales at the Boomershine Pontiac and
Nissan dealerships. Parts and service sales increased $4.9 million, or 8.0%,
from $61.7 million for the year ended June 30, 1996 to $66.6 million for the
year ended June 30, 1997. This increase resulted from the growing customer base
at Boomershine Automotive Group and Jay Automotive Group. Other dealership
revenues increased $724,000, or 4.3%, from $16.7 million for the year ended June
30, 1996 to $17.4 million for the year ended June 30, 1997. This increase was
due primarily to higher finance and insurance income at the Boomershine
Automotive dealerships coupled with the higher revenues of South Financial.

37
39

Gross Profit. Gross profit increased by $1.2 million, or 1.6%, from $75.7
million for the year ended June 30, 1996 to $76.9 million for the year ended
June 30, 1997. This increase was attributable to higher new and used vehicle
sales levels at the Jay Automotive Group dealerships coupled with higher income
from the South Financial business. These factors were offset by lower gross
profit contributions by the Boomershine Automotive dealerships resulting from
lower new vehicle sales and a higher proportion of wholesale units among used
vehicle sales.

Year Ended June 30, 1996 Compared to Year Ended June 30, 1995

Revenues. Total revenues increased by $84.3 million, or 14.9%, from $564.9
million for the year ended June 30, 1995 to $649.2 million for the year ended
June 30, 1996. New vehicle sales increased $46.7 million, or 13.1% from $357.2
million for the year ended June 30, 1995 to $403.9 million for the year ended
June 30, 1996. This increase was primarily attributable to dealership additions
and higher sales at Bill Holt Ford-Mercury and both Wade Ford locations. The
dealership additions included the Buick, Honda and Mitsubishi dealerships by
Boomershine Automotive and the Mazda dealership by Jay Automotive Group. Used
vehicle revenues increased $24.2 million, or 16.9%, from $142.8 million for the
year ended June 30, 1995 to $167.0 million for the year ended June 30, 1996.
This increase resulted from dealership additions and the expansion of the used
vehicle facility at Robertson Oldsmobile-Cadillac. Parts and service sales
increased $8.1 million, or 15.0%, from $53.6 million for the year ended June 30,
1995 to $61.7 million for the year ended June 30, 1996. This increase resulted
from the dealership additions coupled with expanded customer base and parts
sales at Day's Chevrolet. Other dealership revenues increased $5.5 million, or
48.5%, from $11.2 million for the year ended June 30, 1995 to $16.7 million for
the year ended June 30, 1996. This increase was due primarily to the dealership
additions at Boomershine Automotive coupled with higher finance income from
South Financial.

Gross Profit. Gross profit increased by $13.9 million, or 22.5%, from
$61.8 million for the year ended June 30, 1995 to $75.7 million for the year
ended June 30, 1996. This increase was attributable to dealership additions at
the Boomershine Automotive and Jay Automotive along with higher income from
South Financial.

INDIVIDUAL MERGER AND ACQUISITION COMPANIES

BOOMERSHINE AUTOMOTIVE GROUP, INC.

Results of Operations

Prior to the Offering, Boomershine Automotive Group, Inc. was one of the
largest automotive dealership groups in Georgia and consisted of nine automotive
dealerships serving the greater Atlanta metropolitan market. The dealerships
included Pontiac, Buick, GMC, Hummer, Nissan, Ford, Isuzu, Honda and Mitsubishi.
Executive management of this group includes Mr. Walter M. Boomershine, Jr., who
has over 40 years of experience in the automotive retailing industry, and Mr.
Charles K. Yancey who joined the company in 1974. Six of the group's nine
dealerships have been added under this executive leadership since 1992.

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40

The following table sets forth selected financial data and such data as a
percentage of total revenues for the Boomershine Automotive dealerships for the
periods indicated on a consolidated basis:

YEAR ENDED JUNE 30, SIX MONTHS ENDED DECEMBER 31,
-------------------------------------------------------- ------------------------------------
1995 1996 1997 1996 1997
---------------- ---------------- ---------------- ---------------- ----------------
AMOUNT PCT. AMOUNT PCT. AMOUNT PCT. AMOUNT PCT. AMOUNT PCT.
-------- ----- -------- ----- -------- ----- -------- ----- -------- -----
(DOLLARS IN THOUSANDS)

Revenues:
New vehicle sales..... $156,955 66.2% $166,199 64.2% $152,625 62.4% $ 75,650 62.7% $ 72,795 63.8%
Used vehicle sales.... 57,047 24.1 64,652 25.0 61,811 25.3 30,349 25.2 25,758 22.6
Parts and service
sales............... 19,223 8.1 23,764 9.2 24,637 10.1 11,549 9.6 12,876 11.3
Other revenues, net... 3,856 1.6 4,219 1.6 5,339 2.2 3,093 2.6 2,669 2.3
-------- ----- -------- ----- -------- ----- -------- ----- -------- -----
237,081 100.0 258,834 100.0 244,412 100.0 120,641 100.0 114,098 100.0
Cost of sales........... 214,820 90.6 232,934 90.0 219,719 89.9 108,447 89.9 101,362 88.8
-------- ----- -------- ----- -------- ----- -------- ----- -------- -----
Gross profit............ 22,261 9.4 25,900 10.0 24,693 10.1 12,194 10.1 12,736 11.2
Selling, general and
administrative
expenses.............. 20,333 8.6 24,770 9.6 23,152 9.5 11,626 9.6 11,539 10.1
-------- ----- -------- ----- -------- ----- -------- ----- -------- -----
Income from
operations............ 1,928 0.8 1,130 0.4 1,541 0.6 568 0.5 1,197 1.0
Other income and
expense:
Interest expense,
net................. 1,218 0.5 1,593 0.6 2,110 0.9 1,120 0.9 617 0.5
Other income
(expense)........... 60 0.0 13 0.0 44 0.0 (43) 0.0 (29) 0.0
-------- ----- -------- ----- -------- ----- -------- ----- -------- -----
Income (loss) before in-
come taxes............ 770 0.3 (450) (0.2) (525) (0.2) (595) (0.5) 551 0.5
Income tax (expense)
benefit............... (292) (0.1) 133 0.1 167 0.1 221 0.2 (215) (0.2)
-------- ----- -------- ----- -------- ----- -------- ----- -------- -----
Net income (loss)....... $ 478 0.2% $ (317) (0.1)% $ (358) (0.1)% $ (374) (0.3)% $ 336 0.3%
======== ======== ======== ======== ========

Six Months Ended December 31, 1997 Compared to Six Months Ended December 31,
1996

Revenues. Total revenues decreased by $6.5 million, or 5.4%, from $120.6
million for the six month period ended December 31, 1996 to $114.1 million for
the six months period ended December 31, 1997. New vehicle sales revenues
decreased $2.9 million, or 3.8% from $75.7 million for the six months ended
December 31, 1996 to $72.8 million for the six months ended December 31, 1997.
This decrease was primarily attributable to declines in the sales of Nissan and
Pontiac products which was partially offset by higher sales demand for Ford
products -- particularly fleet sales and trucks. Used vehicle revenues decreased
$4.6 million, or 15.1%, from $30.3 million for the six months ended December 31,
1996 to $25.7 million for the six months ended December 31, 1997. This decrease
resulted from reductions in unit sales at the Boomershine Nissan and Ford
dealerships. The decreases at Boomershine Nissan resulted from reduced trade-in
availability and the decrease at Boomershine Ford resulted from reduced
wholesale activity. These decreases were partially offset by a sales increase at
the Boomershine Mitsubishi dealership due to additional investments in space and
personnel. Parts and service sales increased $1.3 million, or 11.5%, from $11.5
million for the six months ended December 31, 1996 to $12.8 million for the six
months ended December 31, 1997. This increase resulted from higher bodywork
revenue and increased service revenue at the Boomershine Nissan dealership.
Other Boomershine Automotive dealership revenues decreased $424,000, or 13.7%,
from $3.1 million for the six months ended December 31, 1996 to $2.7 million for
the six months ended December 31, 1997. This decrease was due primarily to
reduced finance and insurance income generated at the Boomershine Nissan
dealership.

Gross Profit. Gross profit increased by $542,000, or 4.4%, from $12.2
million for the six months ended December 31, 1996 to $12.7 million for the six
months ended December 31, 1997. This increase was attributable to improved
margins on new vehicle sales (particularly at the Boomershine Ford dealership)
due to a higher average sales price per unit. Gross margin percentage on used
vehicle sales improved due to a lower average cost per unit. The percentage
gross profit margin improved from 10.1% for the six months ended December 31,
1996 to 11.2% for the six months ended December 31, 1997.

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41

Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased $87,000, or 0.7%, from $11.6 million for the
six months ended December 31, 1996 to $11.5 million for the six months ended
December 31, 1997. This decrease was primarily due to lower compensation charges
at the Boomershine Nissan and Pontiac dealerships which were offset in part by
higher compensation charges at the Boomershine Ford and Mitsubishi dealerships.

Interest Expense, net. Interest expense, net decreased $503,000, or 44.9%,
from $1.1 million for the six months ended December 31, 1996 to $617,000 for the
six months ended December 31, 1997. This decrease was attributable to lower
floorplan interest charges resulting from smaller investments in inventory at
Boomershine Pontiac and faster inventory turns at Boomershine Ford.

Year Ended June 30, 1997 Compared to Year Ended June 30, 1996

Revenues. Total revenues decreased by $14.4 million, or 5.6%, from $258.8
million for the year ended June 30, 1996 to $244.4 million for the year ended
June 30, 1997. New vehicle sales revenues decreased $13.6 million, or 8.2% from
$166.2 million for the year ended June 30, 1996 to $152.6 million for the year
ended June 30, 1997. This decrease was primarily attributable to reduced unit
sales of fleet vehicles at both the Boomershine Pontiac and Ford dealerships and
a 14% reduction in retail unit sales at the Boomershine Nissan dealership. Used
vehicle revenues decreased $2.8 million, or 4.4%, from $64.7 million for the
year ended June 30, 1996 to $61.8 million for the year ended June 30, 1997. This
decrease resulted from reduced used vehicle trade-in availability at the
Boomershine Nissan and Pontiac dealerships and reduced wholesale activity at the
Boomershine Ford dealership. These were partially offset by the increase in used
vehicle sales at the Boomershine Mitsubishi dealership that was owned for a
partial year in the year ended June 30, 1996. Parts and service sales increased
$873,000, or 3.7%, from $23.8 million for the year ended June 30, 1996 to $24.6
million for the year ended June 30, 1997. This increase resulted from higher
revenues from service and bodywork at the Boomershine Pontiac, Mitsubishi and
Ford locations and the overall economic strength of the markets served. Other
Boomershine Automotive dealership revenues increased $1.1 million, or 26.5%,
from $4.2 million for the year ended June 30, 1996 to $5.3 million for the year
ended June 30, 1997. This increase was due primarily to increased finance and
insurance income and a generally competitive lending environment.

Gross Profit. Gross profit decreased by $1.2 million, or 4.7%, from $25.9
million for the year ended June 30, 1996 to $24.7 million for the year ended
June 30, 1997. This decrease was attributable to lower overall revenue levels
and profit contribution at the Boomershine Nissan location and was offset in
part by higher average new and used margins at the Boomershine Ford dealership.
The margins were also increased by the effect of having the Boomershine
Mitsubishi dealership for an entire year in the year ended June 30, 1997.
Overall, the percentage gross margin improved from 10.0% for the year ended June
30, 1996 to 10.1% for the year ended June 30, 1997.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased $1.6 million, or 6.5%, from $24.8 for the year
ended June 30, 1996 to $23.2 million for the year ended June 30, 1997. This
decrease was primarily due to expense rationalization and lower incentive
compensation charges at the Boomershine Nissan dealership. These were partially
offset by increases in personnel costs at the Boomershine Pontiac, Ford and
Mitsubishi dealerships.

Interest Expense, net. Interest expense, net increased $517,000, or 32.5%,
from $1.6 million for the year ended June 30, 1996 to $2.1 million for the year
ended June 30, 1997. This increase was attributable primarily to slower
inventory turns at Boomershine Pontiac and Nissan locations.

Year Ended June 30, 1996 Compared to Year Ended June 30, 1995

Revenues. Total revenues increased by $21.8 million, or 9.2%, from $237.1
million for the year ended June 30, 1995 to $258.8 million for the year ended
June 30, 1996. New vehicle sales revenues increased $9.2 million, or 5.9% from
$157.0 million for the year ended June 30, 1995 to $166.2 million for the year
ended June 30, 1996. This increase was primarily attributable to Boomershine
Automotive's addition of the Honda and Mitsubishi dealerships in the Cobb
County, Georgia market area and higher average per unit sales at the Boomershine
Ford and Nissan dealerships. Used vehicle revenues increased $7.6 million, or
13.3%, from $57.0

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42

million for the year ended June 30, 1995 to $64.6 million for the year ended
June 30, 1996. This increase resulted from the addition of the Boomershine Honda
and Mitsubishi dealerships and higher wholesale revenues at the Boomershine Ford
dealership. These factors were partially offset by lower used vehicle sales at
the Boomershine Pontiac/GMC location. Parts and service sales increased $4.5
million, or 23.6%, from $19.2 million for the year ended June 30, 1995 to $23.7
million for the year ended June 30, 1996. This increase resulted from the
Boomershine Honda and Mitsubishi dealership additions and higher service
revenues at the Boomershine Pontiac dealership. Other Boomershine Automotive
dealership revenues increased $363,000, or 9.4%, from $3.9 million for the year
ended June 30, 1995 to $4.2 million for the year ended June 30, 1996. This
increase was due primarily to the Boomershine Buick and Mitsubishi dealership
additions and increased unit sales.

Gross Profit. Gross profit increased by $3.6 million, or 16.3%, from $22.3
million for the year ended June 30, 1995 to $25.9 million for the year ended
June 30, 1996. This increase was attributable to the addition of the Boomershine
Buick and Mitsubishi dealerships and the impact of higher revenues and average
sales per unit, particularly at the Boomershine Ford dealership.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $4.4 million, or 21.8%, from $20.3 million for
the year ended June 30, 1995 to $24.7 million for the year ended June 30, 1996.
This increase was primarily due to the addition of the Boomershine Honda and
Mitsubishi dealerships as well as added personnel charges for the Boomershine
Ford and Pontiac locations.

Interest Expense, net. Interest expense, net increased $375,000 from $1.2
million for the year ended June 30, 1995 to $1.6 million for the year ended June
30, 1996. This increase was attributable to increased inventory levels at the
Boomershine Ford location and slow-moving conversion van inventory at the
Boomershine Pontiac dealership.

Liquidity and Capital Resources

The Company considers liquidity to be its ability to meet its long- and
short-term cash requirements. Boomershine Automotive's principal sources of
liquidity are cash on hand, cash from operations and floorplan financing.

The following table sets forth historical selected information from
Boomershine Automotive's statements of cash flows for the periods indicated:

SIX MONTHS ENDED
YEAR ENDED JUNE 30, DECEMBER 31,
------------------------- -----------------
1995 1996 1997 1996 1997
------- ------- ----- ------ --------
(IN THOUSANDS)

Net cash provided by (used in) operating
activities.................................... $ 4,197 $ 3,513 $ 429 $ 795 $ 3,143
Net cash provided by (used in) investing
activities.................................... (2,740) (4,238) (612) (581) (868)
Net cash provided by (used in) financing
activities.................................... 799 9 (259) 38 (482)
------- ------- ----- ----- -------
Net increase (decrease) in cash and cash
equivalents................................... $ 2,256 $ (716) $(442) $ 252 $ 1,793
======= ======= ===== ===== =======

Cash Flows

Total cash and cash equivalents at December 31, 1997 were $6.3 million.

For the three years ended June 30, 1997, Boomershine Automotive generated
$1.7 million in cash flow from net income (loss) plus depreciation and
amortization. If the FIFO Method had been used during the three years ended June
30, 1997, such measure would have been greater by $1.2 million. Net cash flow
from operating activities is significantly impacted by changes in inventory
levels reflecting strategic and marketing decisions. Inventory levels increased
by $19.5 million and $577,000 for the fiscal years ended June 30, 1995 and 1996,
respectively. During the year ended June 30, 1997, the aggregate inventory level
decreased by $11.1 million.

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43

Changes in the outstanding balance under the floorplan arrangements also
serve to influence the net cash flow from operations. During the years ended
June 30, 1995 and 1996 the notes payable balance owed to floorplan lenders
increased $25.2 million and $2.8 million, respectively. For the year ended June
30, 1997, such notes payable balances decreased as a result of a repayment of
$12.6 million.

For the six months ended December 31, 1997, the Boomershine Automotive
dealerships generated net cash flow of $775,000 from net income plus
depreciation and amortization compared to $77,000 in the six months ended
December 31, 1996. This resulted from the improvement in net earnings.

The change in net cash used in investing activities for the three years
ended June 30, 1997 amounted to $7.6 million. This was primarily attributable to
capital expenditures for the acquisition of the Boomershine Honda, Mitsubishi
and Buick dealerships, expansion of the rental car program, renovation of
showroom facilities and construction of a collision repair center.

The change in net cash used in investing activities for the six months
ended December 31, 1997 resulted from the payment of the cash component of the
Collision Centers USA Acquisition and routine capital expenditures.

The change in net cash related to financing activities was primarily
attributable to borrowings and repayments under long-term debt. For the years
ended June 30, 1995 and 1996, the increase in these notes payable amounted to
$799,000 and $9,000, respectively. For the year ended June 30, 1997, the amount
owed under these notes decreased by $259,000.

Floorplan Financing

Boomershine Automotive currently obtains floorplan financing for its
dealerships' vehicle inventories primarily through Ford Motor Credit and
NationsBank Credit. As of December 31, 1997, the Boomershine Automotive
dealerships had approximately $43.6 million of outstanding floorplan financing.
The debt bears interest at LIBOR plus 200 to 225 basis points. Interest expense
on floorplan notes payable, before manufacturers' interest assistance, totaled
approximately $3.6 million, $4.5 million and $3.8 million for the years ended
June 30, 1995, 1996 and 1997, respectively. Manufacturers' interest assistance,
which is recorded as a reduction to interest expense, amounted to $2.7 million,
$2.9 million and $2.0 million for the years ended June 30, 1995, 1996 and 1997,
respectively.

Leases

The Boomershine Automotive dealerships lease their primary operating
facilities under operating leases, including leases with related parties, which
expire at various dates through 2017. Certain of the leases contain automatic
renewal provisions that require the lessee to affirmatively state its intention
to vacate. Management believes that the terms and provisions of the related
party leases approximate those available from third parties.

JAY AUTOMOTIVE GROUP

Results of Operations

Prior to the Offering, Jay Automotive Group, Inc. consisted of eight retail
automotive dealerships serving the Columbus, Georgia market. The dealerships
included Toyota, Mazda, Pontiac, Buick, GMC and Mitsubishi. Mr. James G.
Stelzenmuller, III, who has over 15 years of experience in the automotive
retailing industry and has managed this business since 1983, owned Jay
Automotive immediately prior to the Offering.

Certain related businesses (e.g. leasing and insurance subsidiaries) that
were subsidiaries of Jay Automotive were also divested prior to the Offering.
Accordingly, the financial results of those related businesses are not included
in the accompanying financial statements and are excluded from the discussion
below.

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44

The following table sets forth selected financial data and such data as a
percentage of total revenues for the combined Jay Automotive Group dealerships
for the periods indicated:

YEAR ENDED DECEMBER 31,
------------------------------------------------------------
1995 1996 1997
----------------- ----------------- ------------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
------- ------- ------- ------- -------- -------
(DOLLARS IN THOUSANDS)

Revenues:
New vehicle sales................... $46,763 58.8% $56,329 59.0% $ 54,899 54.6%
Used vehicle sales.................. 21,990 27.7 26,358 27.6 31,562 31.4
Parts and service sales............. 9,009 11.3 10,636 11.2 11,869 11.8
Other revenues, net................. 1,721 2.2 2,066 2.2 2,184 2.2
------- ----- ------- ----- -------- -----
79,483 100.0 95,389 100.0 100,514 100.0
Cost of sales......................... 70,135 88.2 84,106 88.2 88,543 88.1
------- ----- ------- ----- -------- -----
Gross profit.......................... 9,348 11.8 11,283 11.8 11,971 11.9
Selling, general and administrative
expenses............................ 7,134 9.0 8,952 9.4 9,588 9.5
------- ----- ------- ----- -------- -----
Income from operations................ 2,214 2.8 2,331 2.4 2,383 2.4
Other income and expense:
Interest expense, net............... 360 0.5 301 0.3 261 0.3
Other income (expense).............. -- -- -- -- -- --
------- ----- ------- ----- -------- -----
Income before income taxes............ 1,854 2.3 2,030 2.1 2,122 2.1
Income tax expense.................... (703) (0.9) (775) (0.8) (806) (0.8)
------- ----- ------- ----- -------- -----
Net income............................ $ 1,151 1.4% $ 1,255 1.3% $ 1,316 1.3%
======= ======= ========

Year Ended December 31, 1997 Compared to Year Ended December 31, 1996

Revenues. Total revenues increased by $5.1 million, or 5.4%, from $95.4
million for the year ended December 31, 1996 to $100.5 million for the year
ended December 31, 1997. New vehicle sales decreased $1.4 million, or 2.5% from
$56.3 million for the year ended December 31, 1996 to $54.9 million for the year
ended December 31, 1997. This decrease was primarily attributable to reductions
in the availability of Toyota vehicles from the distributor and a decline in
demand for Pontiac vehicles. These factors were partially offset by the impact
of the addition of the Buick dealership to Jay Automotive in December 1996. Used
vehicle sales increased $5.2 million, or 19.7%, from $26.4 million for the year
ended December 31, 1996 to $31.6 million for the year ended December 31, 1997.
This increase resulted from the implementation of a market segmentation strategy
and more management focus in this area. Parts and service sales increased $1.2
million, or 11.6%, from $10.6 million for the year ended December 31, 1996 to
$11.8 million for the year ended December 31, 1997. This increase resulted from
the addition of the Buick dealership. Other dealership revenues increased
$118,000, or 5.7%, from $2.1 million for the year ended December 31, 1996 to
$2.2 million for the year ended December 31, 1997. This minor increase was due
primarily to higher finance and documentation income.

Gross Profit. Gross profit increased by $688,000, or 6.1%, from $11.3
million for the year ended December 31, 1996 to $12.0 million for the year ended
December 31, 1997. This increase was attributable to higher overall unit sales
and the addition of the Buick dealership to Jay Automotive in December 1996 and
its related service and parts income.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $636,000, or 7.1%, from $8.9 million for the
year ended December 31, 1996 to $9.6 million for the year ended December 31,
1997. This increase was primarily due to the addition of personnel to the Jay
Automotive Toyota body shop operations and the Jay Automotive Buick dealership.
These additions were partially offset by a reduction in sales incentive
compensation related to the reduction in new unit sales.

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45

Interest Expense, net. Interest expense, net decreased $40,000, or 13.3%,
from $301,000 for the year ended December 31, 1996 to $261,000 for the year
ended December 31, 1997.

Year Ended December 31, 1996 Compared to Year Ended December 31, 1995

Revenues. Total revenues increased by $15.9 million, or 20.0%, from $79.5
million for the year ended December 31, 1995 to $95.4 million for the year ended
December 31, 1996. New vehicle sales increased $9.6 million, or 20.5% from $46.7
million for the year ended December 31, 1995 to $56.3 million for the year ended
December 31, 1996. This increase was primarily attributable to the addition of
the Mazda dealership to Jay Automotive in November 1995. Used vehicle sales
increased $4.4 million, or 19.9%, from $22.0 million for the year ended December
31, 1995 to $26.4 million for the year ended December 31, 1996. This increase
resulted from the addition of the Mazda dealership to Jay Automotive and the
dealership's favorable location for used car sales. This increase was partially
offset by reductions in used vehicle sales from the Jay Automotive Toyota and
Pontiac dealership locations. Parts and service sales increased $1.6 million, or
18.1%, from $9.0 million for the year ended December 31, 1995 to $10.6 million
for the year ended December 31, 1996. This increase resulted from the Mazda
dealership addition. Other dealership revenues increased $345,000, or 20.0%,
from $1.7 million for the year ended December 31, 1995 to $2.1 million for the
year ended December 31, 1996. This minor increase was due primarily to
documentation and insurance commission income.

Gross Profit. Gross profit increased by $1.9 million, or 20.7%, from $9.3
million for the year ended December 31, 1995 to $11.3 million for the year ended
December 31, 1996. This increase was attributable to overall increased unit
sales led by the addition of the Mazda dealership to Jay Automotive in November
1995.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $1.8 million, or 25.5%, from $7.1 million for
the year ended December 31, 1995 to $8.9 million for the year ended December 31,
1996. This increase was primarily due to the increase in personnel that resulted
from the addition of the Mazda dealership and increased employee benefit costs
and increased support staff compensation at the Toyota dealership.

Interest Expense, net. Interest expense, net decreased $59,000, or 16.4%,
from $360,000 for the year ended December 31, 1995 to $301,000 for the year
ended December 31, 1996. This decrease was attributable to additional
manufacturer support under floorplan financing arrangements.

Liquidity and Capital Resources

The Company considers liquidity to be its ability to meet its long- and
short-term cash requirements. Jay Automotive Group's principal sources of
liquidity are cash on hand, cash from operations and floorplan financing.

The following table sets forth historical selected information from the
combined Jay Automotive Group dealership's statements of cash flows for the
periods indicated:

YEAR ENDED DECEMBER 31,
-----------------------
1995 1996 1997
------- ---- ------
(IN THOUSANDS)

Net cash provided by (used in) operating activities......... $ 1,895 $669 $1,424
Net cash provided by (used in) investing activities......... (1,819) (90) (74)
Net cash provided by (used in) financing activities......... 73 37 2
------- ---- ------
Net increase (decrease) in cash and cash equivalents........ $ 149 $616 $1,352
======= ==== ======

Cash Flows

Total cash and cash equivalents at December 31, 1997 were $3.8 million.

For the three years ended December 31, 1997, the Jay Automotive Group
dealerships generated $4.4 million in cash flow from net income plus
depreciation and amortization. Net cash flow from operating activities ranged
during this period from a high of $1.9 million in 1995 to a low of $669,000 in
1996. The

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46

primary factors influencing these results are net income, change in investment
in inventories and the net borrowing or net repayment on the floorplan
arrangements.

The change in net cash used in investing activities for the three years
ended December 31, 1997 was primarily attributable to capital expenditures, the
purchase of the Mazda dealership in 1995 and the purchase of the Buick franchise
in 1996.

The change in net cash related to financing activities was primarily
attributable to reductions in amounts owed to unconsolidated subsidiaries which
were partially offset by repayments on long-term debt.

Floorplan Financing

Jay Automotive Group currently obtains floorplan financing for its vehicle
inventory primarily through General Motors Acceptance Corporation ("GMAC"),
World Omni Finance and a commercial bank. As of December 31, 1997, Jay
Automotive Group had approximately $9.0 million of outstanding floorplan
financing. The debt bears interest at various rates which generally fluctuate
with the prime rate or LIBOR and which ranged from 7.2% to 10.25% at December
31, 1997. The floorplan lenders generally provide for rebate reductions in
interest expense based on volume and other factors as well as manufacturers'
assistance based on an agreed-upon amounts which vary by model. Interest expense
on floorplan notes payable, before manufacturers' interest assistance, totaled
approximately $1.0 million, $1.4 million and $864,000 for the years ended
December 1995, 1996 and 1997, respectively. Manufacturers' interest assistance,
which is recorded as a reduction to interest expense, amounted to $530,000, $1.1
million and $608,000 for the years ended December 31, 1995, 1996 and 1997,
respectively.

Leases

The real estate and buildings housing the Jay Automotive Pontiac, GMC,
Buick, Mitsubishi and Mazda dealerships and a major used car facility are leased
from a company owned and controlled by James G. Stelzenmuller, the former sole
shareholder of Jay Automotive Group, Inc. This facility is pledged as collateral
to an Industrial Revenue Bond used to finance its construction. Certain other
facilities used in the business operations of Jay Automotive are leased on a
month to month basis and the lease understandings are not in writing. Management
believes these leases and informal arrangements contain terms and rates that are
comparable to those which are available on the open market.

WADE FORD, INC. AND WADE FORD BUFORD, INC. -- COMBINED

Results of Operations

Wade Ford, Inc. and Wade Ford Buford, Inc. operate Ford dealerships located
in Smyrna and Buford, Georgia, respectively both suburban locations which are
part of the greater metropolitan Atlanta market. Prior to the Offering, both
dealerships were owned by Mr. Alan K. Arnold and several other minority
shareholders. Mr. Arnold has over 20 years of automotive retailing experience in
the greater Atlanta area. The Smyrna-based dealership was originally founded in
the early 1950's and the Buford-based dealership was added in 1990.

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47

The following table sets forth selected financial data and such data as a
percentage of total revenues for the combined Wade Ford dealerships for the
periods indicated:

YEAR ENDED DECEMBER 31,
------------------------------------------------------------
1995 1996 1997
------------------ ------------------ ------------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
-------- ------- -------- ------- -------- -------
(DOLLARS IN THOUSANDS)

Revenues:
New vehicle sales......................................... $ 83,408 71.6% $105,581 73.5% $129,833 78.5%
Used vehicle sales........................................ 22,812 19.6 28,236 19.7 24,482 14.8
Parts and service sales................................... 9,297 8.0 8,426 5.9 9,603 5.8
Other revenues, net....................................... 1,023 0.8 1,351 0.9 1,424 0.9
-------- ----- -------- ----- -------- -----
116,540 100.0 143,594 100.0 165,342 100.0
Cost of sales............................................... 106,587 91.5 131,462 91.6 152,680 92.3
-------- ----- -------- ----- -------- -----
Gross profit................................................ 9,953 8.5 12,132 8.4 12,662 7.7
Selling, general and administrative expenses................ 9,504 8.1 11,261 7.8 10,467 6.3
-------- ----- -------- ----- -------- -----
Income from operations...................................... 449 0.4 871 0.6 2,195 1.4
Other income and expense:
Interest expense, (income) net............................ 120 0.1 209 0.2 (5) (0.0)
Other income (expense), net............................... 230 0.2 252 0.2 95 0.0
-------- ----- -------- ----- -------- -----
Income before income taxes.................................. 559 0.5 914 0.6 2,295 1.4
Income tax expense.......................................... -- -- -- -- -- --
-------- ----- -------- ----- -------- -----
Net income.................................................. $ 559 0.5% $ 914 0.6% $ 2,295 1.4%
======== ======== ========

Year Ended December 31, 1997 Compared to Year Ended December 31, 1996

Revenues. Total revenues increased by $21.7 million, or 15.1%, from $143.6
million for the year ended December 31, 1996 to $165.3 million for the year
ended December 31, 1997. New vehicle sales increased $24.3 million, or 23.0%
from $105.6 million for the year ended December 31, 1996 to $129.8 million for
the year ended December 31, 1997. This increase was primarily attributable to
strong regional growth near the Wade Ford Buford location and increased emphasis
on fleet sales at the Wade Ford Smyrna location. Used vehicle sales decreased
$3.8 million, or 13.3%, from $28.2 million for the year ended December 31, 1996
to $24.5 million for the year ended December 31, 1997. This decrease resulted
from increased competition near the Wade Ford Smyrna location. Parts and service
sales increased $1.2 million, or 14.0%, from $8.4 million for the year ended
December 31, 1996 to $9.6 million for the year ended December 31, 1997. This
increase resulted from the higher retail demand at the Wade Ford Buford location
resulting in higher new vehicle unit sales. Other dealership revenues increased
$73,000, or 5.4%, from $1.4 million for the year ended December 31, 1996 to $1.4
million for the year ended December 31, 1997. This increase was due primarily to
higher documentation fee income.

Gross Profit. Gross profit increased by $530,000, or 4.4%, from $12.1
million for the year ended December 31, 1996 to $12.6 million for the year ended
December 31, 1997. This increase was attributable to higher overall revenues at
both Wade Ford locations. The gross profit as a percent of sales decreased from
8.4% in 1996 compared to 7.7% in 1997 due to the generally lower returns on
fleet sales.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased $794,000, or 7.1%, from $11.3 million for the
year ended December 31, 1996 to $10.5 million for the year ended December 31,
1997. This decrease was primarily due to lower charges for advertising, rents,
bad debts and professional fees.

Interest Expense, net. Interest expense, net decreased $214,000, or
102.4%, from $209,000 (expense) for the year ended December 31, 1996 to $5,000
(income) for the year ended December 31, 1997. This decrease was attributable
primarily to greater manufacturer credits which were partially offset by higher
charges incurred for larger average inventory levels.

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48

Year Ended December 31, 1996 Compared to Year Ended December 31, 1995

Revenues. Total revenues increased by $27.1 million, or 23.2%, from $116.5
million for the year ended December 31, 1995 to $143.6 million for the year
ended December 31, 1996. New vehicle sales increased $22.2 million, or 26.6%
from $83.4 million for the year ended December 31, 1995 to $105.6 million for
the year ended December 31, 1996. This increase was primarily attributable to
expanded fleet sales and overall economic growth in the Buford area. Used
vehicle sales increased $5.4 million, or 23.8%, from $22.8 million for the year
ended December 31, 1995 to $28.2 million for the year ended December 31, 1996.
This increase resulted from the strategic decision by the Wade Ford Buford
management team to carry larger used car inventories. Parts and service sales
decreased $871,000, or 9.4%, from $9.3 million for the year ended December 31,
1995 to $8.4 million for the year ended December 31, 1996. This decrease
resulted from lower parts and service sales at the Smyrna-based dealership.
Other dealership revenues increased $328,000 or 32.1%, from $1.0 million for the
year ended December 31, 1995 to $1.4 million for the year ended December 31,
1996. This increase was due primarily to higher documentation fee income.

Gross Profit. Gross profit increased by $2.2 million, or 21.9%, from $9.9
million for the year ended December 31, 1995 to $12.1 million for the year ended
December 31, 1996. This increase was attributable to higher overall revenues.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $1.8 million, or 18.5%, from $9.5 million for
the year ended December 31, 1995 to $11.3 million for the year ended December
31, 1996. This increase was primarily due to higher variable incentive pay
stemming from increased retail sales and higher charges for rents, bad debts and
professional fees.

Interest Expense, net. Interest expense, net increased $89,000, or 74.2%,
from $120,000 for the year ended December 31, 1995 to $209,000 for the year
ended December 31, 1996. This increase was attributable to the increased
inventory of vehicles, principally used, at the Wade Ford Buford location.

Liquidity and Capital Resources

The Company considers liquidity to be its ability to meet its long- and
short-term cash requirements. The Wade Ford dealerships' principal sources of
liquidity are cash on hand, cash from operations and floorplan financing.

The following table sets forth historical selected information from the
Wade Ford dealerships' statements of cash flows for the periods indicated:

YEAR ENDED DECEMBER 31,
---------------------------
1995 1996 1997
------- ------- -------
(IN THOUSANDS)

Net cash provided by (used in) operating activities....... $(2,232) $ 2,447 $ 2,472
Net cash provided by (used in) investing activities....... 2,583 294 (185)
Net cash provided by (used in) financing activities....... (46) (60) (2,260)
------- ------- -------
Net increase (decrease) in cash and cash equivalents...... $ 305 $ 2,681 $ 27
======= ======= =======

Cash Flows

Total cash and cash equivalents at December 31, 1997 were $4.7 million.

For the three years ended December 31, 1997, the dealership generated $4.3
million in cash flow from net income plus depreciation and amortization. Net
cash flow from operating activities increased from a use of funds of $2.2
million to a source of funds of $2.5 million during the three year period. The
increase is due primarily to positive net earnings and increased floorplan
balances offset by the effect of additions to inventory needed to support
expanding sales -- principally in new vehicles at both the Wade Ford Buford and
Wade Ford Smyrna locations.

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49

The change in net cash used in investing activities for the three years
ended December 31, 1997 was primarily attributable to capital expenditures for
renovations to the Wade Ford Smyrna showroom and service facility as well as
purchases of servicing equipment for both Wade Ford dealership sites. In
addition, the dealership's rental car fleet was sold resulting in proceeds
amounting to $3.9 million in 1995 and 1996.

The change in net cash related to financing activities was primarily
attributable to increases in and repayments of long-term debt. In addition,
distributions to former shareholders (consistent with S-Corporation ownership)
aggregated $2.2 million for the three years ended December 31, 1997.

Floorplan Financing

The Wade Ford dealerships currently obtain floorplan financing for their
vehicle inventory primarily through Ford Motor Credit Corporation. As of
December 31, 1997, these dealerships had approximately $30.7 million of
outstanding floorplan financing. The debt bears interest at the prime rate plus
100 basis points. This interest can be reduced if the dealerships meet certain
goals for overall sales volume and retail contracts with Ford Motor Credit. Ford
Motor Company provides interest assistance to the dealerships including a
specified allowance for a vehicle's in-transit period and an amount that varies
by vehicle model.

Interest expense on floorplan notes payable, before manufacturer interest
assistance, totaled approximately $1.1 million, $2.4 million and $2.7 million
for the years ended December 1995, 1996 and 1997, respectively. Manufacturers'
interest assistance, which is recorded as a reduction to interest expense,
amounted to $749,000, $2.1 million and $2.5 million for the years ended December
31, 1995, 1996 and 1997, respectively.

Leases

The Wade Ford dealerships lease certain office equipment and the facilities
comprising their retail and service locations, including leases with related
parties, under long-term operating leases and on a month to month basis.
Management believes the lease terms approximate those that would be available
from third parties. Certain of the leases permit the lessee to cancel the lease
by giving notice for periods ranging from 60 to 180 days.

DAY'S CHEVROLET, INC.

Results of Operations

Day's Chevrolet consists of a Chevrolet dealerships in Acworth, Georgia, a
city located in the suburbs of Atlanta. The dealership has served Acworth and
northeast Georgia since 1959. Mr. Calvin Diemer and Mr. Alvin Diemer, who owned
Day's Chevrolet prior to the Offering, have worked in the automotive retailing
industry for over 20 years and succeeded to the ownership of Day's Chevrolet in
a series of transactions ending in 1993. Mr. Calvin Diemer will continue to
serve as the Executive Manager of Day's Chevrolet following the Offering.

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50

The following table sets forth selected financial data and such data as a
percentage of total revenues for the Day's Chevrolet dealership for the periods
indicated:

YEAR ENDED DECEMBER 31,
-------------------------------------
1996 1997
----------------- -----------------
AMOUNT PERCENT AMOUNT PERCENT
------- ------- ------- -------
(DOLLARS IN THOUSANDS)

Revenues:
New vehicle sales......................................... $27,924 46.9% $28,806 47.4%
Used vehicle sales........................................ 21,073 35.4 21,781 35.8
Parts and service sales................................... 9,525 16.0 9,340 15.4
Other revenues, net....................................... 998 1.7 856 1.4
------- ----- ------- -----
59,520 100.0 60,783 100.0
Cost of sales............................................... 52,746 88.6 54,545 89.7
------- ----- ------- -----
Gross profit................................................ 6,774 11.4 6,238 10.3
Selling, general and administrative expenses................ 5,076 8.5 5,178 8.5
------- ----- ------- -----
Income from operations...................................... 1,698 2.9 1,060 1.8
Other income and expense:
Interest expense, net..................................... 123 0.2 100 0.2
Other income (expense), net............................... 7 0.0 6 0.0
------- ----- ------- -----
Income before income taxes.................................. 1,582 2.7 966 1.6
Income tax expense.......................................... -- -- -- --
------- ----- ------- -----
Net income.................................................. $ 1,582 2.7% $ 966 1.6%
======= =======

Year Ended December 31, 1997 Compared to Year Ended December 31, 1996

Revenues. Total revenues increased by $1.3 million, or 2.1%, from $59.5
million for the year ended December 31, 1996 to $60.8 million for the year ended
December 31, 1997. New vehicle sales increased $882,000, or 3.2% from $27.9
million for the year ended December 31, 1996 to $28.8 million for the year ended
December 31, 1997. This increase was primarily attributable to higher sales of
truck, sport utility and sports car vehicles. Used vehicle sales increased
$708,000, or 3.4%, from $21.1 million for the year ended December 31, 1996 to
$21.8 million for the year ended December 31, 1997. This increase resulted from
an increase in personnel and a continuing emphasis on the wholesale component of
used car sales. Parts and service sales decreased $185,000, or 1.9%, from $9.5
million for the year ended December 31, 1996 to $9.3 million for the year ended
December 31, 1997. This minor decrease resulted from a decrease in parts sales.
Other dealership revenues decreased $142,000, or 14.2%, from $1.0 million for
the year ended December 31, 1996 to $856,000 for the year ended December 31,
1997. This decrease is due primarily to a reduction in finance and insurance
related income.

Gross Profit. Gross profit decreased by $536,000, or 7.9%, from $6.8
million for the year ended December 31, 1996 to $6.2 million for the year ended
December 31, 1997. This decrease was attributable to increases in costs greater
than the dealership's ability to raise its new car prices and a small decrease
in the margin realized in the parts and service area.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $102,000, or 2.0%, from $5.1 million for the
year ended December 31, 1996 to $5.2 million for the year ended December 31,
1997. This increase was primarily due to increased compensation charges for
incentive pay and expanded participation by employees in the dealership's 401(k)
plan.

Interest Expense, net. Interest expense, net decreased $23,000, or 18.7%,
from $123,000 for the year ended December 31, 1996 to $100,000 for the year
ended December 31, 1997. This decrease was attributable to faster inventory
turnover.

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Liquidity and Capital Resources

The Day's Chevrolet dealership's principal sources of liquidity are cash on
hand, cash from operations and floorplan financing.

The following table sets forth historical selected information from the Day
dealership's statements of cash flows for the periods indicated:

YEAR ENDED
DECEMBER 31,
-----------------
1996 1997
------- -------
(IN THOUSANDS)

Net cash provided by (used in) operating activities......... $ 1,493 $ 2,216
Net cash provided by (used in) investing activities......... (144) (21)
Net cash provided by (used in) financing activities......... (1,241) (1,825)
------- -------
Net increase (decrease) in cash and cash equivalents........ $ 108 $ 370
======= =======

Cash Flows

Total cash and cash equivalents at December 31, 1997 amounted to $1.3
million.

For the two years ended December 31, 1997, the Day's Chevrolet dealership
generated $3.0 million in cash flow from net income plus depreciation and
amortization. Net cash flow from operating activities increased from $1.5
million in 1996 to $2.2 million in 1997 due principally to the increase in the
outstanding balance under the floorplan arrangement offset by a smaller increase
in inventory balances.

The change in net cash used in investing activities for the two years ended
December 31, 1997 amounted to an aggregate of $165,000 and was primarily
attributable to capital expenditures for a sales and administration facility and
certain items of service equipment.

The change in net cash used in financing activities increased from $1.2
million in 1996 to $1.8 million in 1997 due to an increase in dividend
distributions to former shareholders.

Floorplan Financing

The Day's Chevrolet dealership currently obtains floorplan financing for
its vehicle inventory primarily through GMAC. As of December 31, 1997, the
dealership had approximately $9.1 million of outstanding floorplan financing.
The debt bears interest at prime plus 100 basis points and can be reduced
through a rebate program based on retail financing activity. In addition, the
floorplan interest charge is reduced by a manufacturer's support program based
on the cost and model of each vehicle purchased from the franchiser. Interest
expense on floorplan notes payable, before manufacturer interest assistance,
totaled approximately $614,000, $640,000 and $643,000 for the years ended
December 1995, 1996 and 1997, respectively. Manufacturers' interest assistance,
which is recorded as a reduction to interest expense, amounted to $558,000,
$551,000 and $587,000 for the years ended December 31, 1995, 1996 and 1997,
respectively.

Leases

In September 1997, the dealership declared a dividend of its land and
buildings to its shareholders and executed a lease of such land and buildings
from partnerships owned by Messrs. Diemer and Diemer. The lease is for an
initial term expiring in February 2008. The lease terms provide for cancellation
of the lease by either the lessee or lessor upon 60 days notice.

GRINDSTAFF, INC.

Results of Operations

Grindstaff, Inc. consists of Chrysler-Dodge-Plymouth-Jeep, Chevrolet and
Kia dealerships located in Elizabethton, Tennessee serving the northeast portion
of that state, including the Tri-Cities area, which consists of Bristol, Johnson
City, and Kingsport, Tennessee. Prior to the Offering, Grindstaff, Inc. was

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52

majority-owned and managed by Mr. Steve Grindstaff and Mr. Wes Hambrick since
1987 and the business and its predecessors have served the east Tennessee market
area since the late 1950's. Mr. Hambrick has over 15 years of experience in the
automotive retailing industry and will continue to serve as the Executive
Manager of Grindstaff, Inc. following the Offering.

The following table sets forth selected financial data and such data as a
percentage of total revenues for the Grindstaff, Inc. dealerships for the
periods indicated:

YEAR ENDED DECEMBER 31,
---------------------------------------------------------
1995 1996 1997
----------------- ----------------- -----------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
------- ------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS)

Revenues:
New vehicle sales......................................... $29,499 57.7% $31,714 57.3% $34,098 59.2%
Used vehicle sales........................................ 16,974 33.2 18,671 33.7 18,277 31.7
Parts and service sales................................... 2,868 5.6 3,388 6.2 3,898 6.8
Other revenues, net....................................... 1,778 3.5 1,552 2.8 1,357 2.3
------- ----- ------- ----- ------- -----
51,119 100.0 55,325 100.0 57,630 100.0
Cost of sales............................................... 44,859 87.8 49,008 88.6 50,055 86.9
------- ----- ------- ----- ------- -----
Gross profit................................................ 6,260 12.2 6,317 11.4 7,575 13.1
Selling, general and administrative expenses................ 5,391 10.5 5,864 10.6 6,972 12.1
------- ----- ------- ----- ------- -----
Income from operations...................................... 869 1.7 453 0.8 603 1.0
Other income and expense:
Interest expense, net..................................... 168 0.3 421 0.6 432 0.6
Other income (expense).................................... (18) (0.0) (509) (0.9) 55 (0.0)
------- ----- ------- ----- ------- -----
Income (loss) before income taxes........................... 683 1.4 (477) (0.8) 226 0.4
Income tax (expense) benefit................................ (40) (0.1) 32 0.1 (13) (0.0)
------- ----- ------- ----- ------- -----
Net income (loss)........................................... $ 643 1.3% $ (445) (0.8)% $ 213 0.4%
======= ======= =======

Year Ended December 31, 1997 Compared to Year Ended December 31, 1996

Revenues. Total revenues increased by $2.3 million, or 4.2%, from $55.3
million for the year ended December 31, 1996 to $57.6 million for the year ended
December 31, 1997. New vehicle sales increased $2.4 million, or 7.5% from $31.7
million for the year ended December 31, 1996 to $34.1 million for the year ended
December 31, 1997. This increase was primarily attributable to higher sales at
the Grindstaff Chevrolet dealership and the impact of having the Kia dealership
for an entire year, and was offset partially by reduced sales of Plymouth and
Chrysler products. Used vehicle sales decreased $394,000, or 2.1%, from $18.7
million for the year ended December 31, 1996 to $18.3 million for the year ended
December 31, 1997. This decrease resulted from lower wholesale sales of used
automobiles. Parts and service sales increased $510,000, or 15.1%, from $3.4
million for the year ended December 31, 1996 to $3.9 million for the year ended
December 31, 1997. This increase continued a long-range trend and resulted from
increased wholesale sales to local body shops and mechanics as well as strong
customer acceptance of the dealership's service capabilities. Other Grindstaff
dealership revenues decreased $195,000, or 12.6%, from $1.6 million for the year
ended December 31, 1996 to $1.4 million for the year ended December 31, 1997.
This decrease resulted from lower finance and insurance income.

Gross Profit. Gross profit increased by $1.3 million, or 19.9%, from $6.3
million for the year ended December 31, 1996 to $7.6 million for the year ended
December 31, 1997. This increase was attributable to higher parts and service
sales, which generally has a higher margin and less reliance on wholesale sales
of used cars.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $1.1 million, or 18.9%, from $5.9 million for
the year ended December 31, 1996 to $7.0 million for the year ended December 31,
1997. This increase was primarily due to renovations to the used car facility
and increased incentive compensation based on gross profit performance.

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53

Interest Expense, net. Interest expense, net increased $11,000, or 2.6%,
from $421,000 for the year ended December 31, 1996 to $432,000 for the year
ended December 31, 1997. This increase was attributable to lower average
inventory balances and reduced interest income from investments.

Year Ended December 31, 1996 Compared to Year Ended December 31, 1995

Revenues. Total revenues increased by $4.2 million, or 8.2%, from $51.1
million for the year ended December 31, 1995 to $55.3 million for the year ended
December 31, 1996. New vehicle sales increased $2.2 million, or 7.5% from $29.5
million for the year ended December 31, 1995 to $31.7 million for the year ended
December 31, 1996. This increase was primarily attributable to increased sales
of Chevrolet truck and sport utility van products and the addition of the Kia
dealership to Grindstaff, Inc. in October 1996. This increase was partially
offset by a reduction in unit sales of Chrysler and Plymouth products. Used
vehicle sales increased $1.7 million, or 10.0%, from $16.9 million for the year
ended December 31, 1995 to $18.7 million for the year ended December 31, 1996.
This increase resulted from the opening of a used car facility in Johnson City
and added wholesale sales. Parts and service sales increased $520,000, or 18.1%,
from $2.9 million for the year ended December 31, 1995 to $3.4 million for the
year ended December 31, 1996. This increase resulted from an expanded base of
customers and aggressive marketing by Grindstaff, Inc. in this area. Other
Grindstaff, Inc. dealership revenues decreased $226,000, or 12.7%, from $1.8
million for the year ended December 31, 1995 to $1.6 million for the year ended
December 31, 1996. This decrease was due primarily to reduced finance and
insurance commission revenue.

Gross Profit. Gross profit increased by $57,000, or 0.9%, from $6.3
million for the year ended December 31, 1995 to $6.3 million for the year ended
December 31, 1996. Gross profit as a percent of sales decreased from 12.2% in
1995 to 11.4% in 1996. This was attributable to increased wholesale sales of
used vehicles, reduction in finance and insurance revenues and soft demand for
Chrysler new vehicle sales.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $473,000, or 8.8%, from $5.4 million for the
year ended December 31, 1995 to $5.9 million for the year ended December 31,
1996. This increase was primarily due to higher facility rent charges and
increased personnel costs associated with personnel additions.

Interest Expense, net. Interest expense, net increased $253,000, or 150%,
from $168,000 for the year ended December 31, 1995 to $421,000 for the year
ended December 31, 1996. This increase was attributable to lower inventory
turnover and the addition of the Kia dealership, which did not offer a
manufacturers' support program.

Liquidity and Capital Resources

The Company considers liquidity to be its ability to meet its long- and
short-term cash requirements. Grindstaff Inc.'s principal sources of liquidity
are cash on hand, cash from operations and floorplan financing.

The following table sets forth historical selected information from the
Grindstaff dealerships' statements of cash flows for the periods indicated:

YEAR ENDED DECEMBER 31,
------------------------
1995 1996 1997
------ ----- -------
(IN THOUSANDS)

Net cash provided by (used in) operating activities......... $2,021 $(142) $ (944)
Net cash provided by (used in) investing activities......... (390) (116) (158)
Net cash provided by (used in) financing activities......... (124) (297) (38)
------ ----- -------
Net increase (decrease) in cash and cash equivalents........ $1,507 $(555) $(1,140)
====== ===== =======

Cash Flows

Total cash and cash equivalents at December 31, 1997 amounted to $293,000.

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54

For the three years ended December 31, 1997, the Grindstaff dealerships
generated $1.1 million in cash flow from net income plus depreciation and
amortization. Net cash flow from operating activities declined from $2.0 million
in 1995 to $(944,000) in 1997. This decline is due primarily to the reduction in
net income during that period and smaller balances outstanding under the
floorplan, offset partially by reduced inventory levels.

The change in net cash used in investing activities for the three years
ended December 31, 1997 was primarily attributable to capital additions to the
management information system and certain items of service equipment.

The change in net cash related to financing activities was primarily
attributable to principal payments on long-term debt obligations and
transactions in the dealership's capital stock.

Floorplan Financing

Grindstaff Inc. currently obtains floorplan financing for its dealerships'
vehicle inventories primarily through GMAC and Chrysler Financial Corporation.
As of December 31, 1997, the dealership had approximately $8.9 million of
outstanding floorplan financing. The debt bears interest at rates ranging from
9.0% to 9.5% that are subject to reduction if the dealership meets certain
incentive benchmarks for retail financing contracts. In addition, the
dealerships receive manufacturers' interest support which varies by vehicle
model.

Interest expense on floorplan notes payable, before manufacturers' interest
assistance, totaled approximately $892,000, $1.0 million and $937,000 for the
years ended December 1995, 1996 and 1997, respectively. Manufacturers' interest
assistance, which is recorded as a reduction to interest expense, amounted to
$592,000, $483,000 and $486,000 for the years ended December 31, 1995, 1996 and
1997, respectively.

Leases

The dealership leases its primary operating facilities under operating
leases which require the dealership to pay for maintenance, ad valorem taxes and
insurance. The leases do not contain cancellation or renewal options. Management
believes the rates and terms of all such leases are comparable to those that
would be available on an arm's-length basis. Certain items of equipment used in
the operations of Grindstaff, Inc.'s dealerships are leased under a master
operating lease arrangement and contain renewal and fair value purchase options.

ROBERTSON OLDSMOBILE-CADILLAC, INC.

Results of Operations

Robertson Oldsmobile-Cadillac, Inc. consists of four automotive dealerships
located in Gainesville, Georgia, a suburban city north of Atlanta. The
dealerships include Cadillac, Oldsmobile, Isuzu and Mazda, and the dealership
and its predecessors have served the Gainesville and north Georgia markets
continuously for more than five decades. Prior to the Offering, Mr. Moss
Robertson, who has over 20 years of experience in the automotive retailing
industry, had owned and managed this dealership group since 1982. Mr. Robertson
will remain as the Executive Manager of ROC subsequent to the Offering.

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55

The following table sets forth selected financial data and such data as a
percentage of total revenues for ROC dealership for the periods indicated:

YEAR ENDED DECEMBER 31,
--------------------------------------
1996 1997
----------------- -----------------
AMOUNT PERCENT AMOUNT PERCENT
------- ------- ------- -------
(DOLLARS IN THOUSANDS)

Revenues:
New vehicle sales......................................... $11,339 52.8% $12,145 51.8%
Used vehicle sales........................................ 7,443 34.6 8,114 34.6
Parts and service sales................................... 2,500 11.6 2,778 11.9
Other revenues, net....................................... 216 1.0 387 1.7
------- ----- ------- -----
21,498 100.0 23,424 100.0
Cost of sales............................................... 18,447 85.8 20,449 87.3
------- ----- ------- -----
Gross profit................................................ 3,051 14.2 2,975 12.7
Selling, general and administrative expenses................ 2,196 10.2 1,957 8.4
------- ----- ------- -----
Income from operations...................................... 855 4.0 1,018 4.3
Other income and expense:
Interest income, net...................................... 107 0.5 108 0.5
Other income (expense), net............................... 3 0.0 (4) (0.0)
------- ----- ------- -----
Income before income taxes.................................. 965 4.5 1,122 4.8
Income tax expense.......................................... -- -- -- --
------- ----- ------- -----
Net income.................................................. $ 965 4.5% $1,122 4.8%
======= =======

Year Ended December 31, 1997 Compared to Year Ended December 31, 1996

Revenues. Total revenues increased by $1.9 million, or 9.0%, from $21.5
million for the year ended December 31, 1996 to $23.4 million for the year ended
December 31, 1997. New vehicle sales increased $806,000, or 7.1% from $11.3
million for the year ended December 31, 1996 to $12.1 million for the year ended
December 31, 1997. This increase was primarily attributable to higher sales of
Cadillac products, whose unit sales increased by over 35%. This increase was
partially offset by lower sales of Mazda and Isuzu products. Used vehicle sales
increased $671,000, or 9.0%, from $7.4 million for the year ended December 31,
1996 to $8.1 million for the year ended December 31, 1997. This increase
resulted from additional investments in space and personnel. Parts and service
sales increased $278,000, or 11.1%, from $2.5 million for the year ended
December 31, 1996 to $2.8 million for the year ended December 31, 1997. This
increase resulted from the overall increase in unit sales coupled with a
marketing emphasis on Cadillac service in the north Georgia area. Other
dealership revenues increased $171,000, or 79.2%, from $216,000 for the year
ended December 31, 1996 to $387,000 for the year ended December 31, 1997. This
increase was due primarily to higher finance and insurance related income.

Gross Profit. Gross profit decreased by $76,000, or 2.5%, from $3.1
million for the year ended December 31, 1996 to $3.0 million for the year ended
December 31, 1997. This minor decrease was attributable to the changing mix
among new retail sales and a strategic decision to expand the array of used
vehicles held for sale.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased $239,000, or 10.9%, from $2.2 million for the
year ended December 31, 1996 to $2.0 million for the year ended December 31,
1997. This decrease was primarily due to a realignment of incentive pay plans
and the availability of a more attractive co-op advertising program with General
Motors.

Interest Income, net. Interest income, net increased $1,000, or 0.9%, from
$107,000 for the year ended December 31, 1996 to $108,000 for the year ended
December 31, 1997. This increase was attributable to higher returns on invested
cash and cash equivalents.

Liquidity and Capital Resources

The Company considers liquidity to be its ability to meet its long- and
short-term cash requirements. ROC's principal sources of liquidity are cash on
hand, cash from operations and floorplan financing.

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The following table sets forth historical selected information from ROC's
statements of cash flows for the periods indicated:

YEAR ENDED
DECEMBER 31,
-----------------
1996 1997
------ -------
(IN THOUSANDS)

Net cash provided by (used in) operating activities......... $1,232 $ 1,060
Net cash provided by (used in) investing activities......... (48) (30)
Net cash provided by (used in) financing activities......... (430) (1,416)
------ -------
Net increase (decrease) in cash and cash equivalents........ $ 754 $ (386)
====== =======

Cash Flows

Total cash and cash equivalents at December 31, 1997 were $2.2 million.

For the two years ended December 31, 1997, the ROC dealerships generated
$2.2 million in cash flow from net income plus depreciation and amortization.
Net cash flow from operating activities decreased from 1996 to 1997 by $173,000.
This decrease is due primarily to higher inventory levels offset in part by
higher earnings.

The change in net cash used in investing activities for the two years ended
December 31, 1997 was primarily attributable to capital expenditures for service
equipment, expanded used vehicle facilities and renovations to the principal
showroom facility.

The change in net cash related to financing activities was primarily
attributable to fluctuations in the outstanding balances under the floorplan
arrangement (which mirror the investment in inventory levels) as well as amounts
paid out as dividends consistent with S-Corporation ownership.

Floorplan Financing

The ROC dealership currently obtains floorplan financing for vehicle
inventory primarily through GMAC. As of December 31, 1997, ROC had approximately
$2.4 million of outstanding floorplan financing. The debt bears interest at a
rate calculated using a formula based on the prime rate (ranging from 8.25% to
8.5% at December 31, 1997) and is subject to a rebate based on annual amounts of
principal outstanding. Interest expense on floorplan notes payable, before
manufacturer interest assistance, totaled approximately $336,000, $199,000 and
$261,000 for the years ended December 1995, 1996 and 1997, respectively.
Manufacturers' interest assistance, which is recorded as a reduction to interest
expense, amounted to $219,000, $155,000 and $194,000 for the years ended
December 31, 1995, 1996 and 1997, respectively.

Leases

The ROC dealership leases its land and real estate facilities under a
long-term operating lease from Mr. Robertson at rates and terms which were
negotiated at arm's-length and management believes approximate those that would
result from negotiations with an unrelated third party. The lease expires in
March 2005, contains renewal options and is non-cancelable.

SOUTH FINANCIAL CORPORATION

Results of Operations

South Financial is engaged in the purchase and servicing of installment
contract receivables from selected automotive dealers in three southeastern
states. The receivables are collateralized by security interests in the financed
automobiles and are due from individuals who are generally considered sub-prime
credit risks. South Financial's loan portfolio contains loans which were made
both with recourse to the originating dealership (30%) and without recourse
(70%) and have terms not exceeding 48 months. The business was founded in

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1989 and was sold to the Company in January 1998. Mr. Glynn Wimberly, who has 24
years of relevant experience in this industry, serves as the chief executive
officer of South Financial.

Revenues are realized for interest income, fees, loan discount income and
credit life insurance commissions. Operating funds are obtained under a
revolving credit agreement with a commercial lender.

The following table sets forth selected financial data and such data as a
percentage of total revenues for South Financial for the periods indicated:

Revenues:
New vehicle sales......................................... $ -- --% $ -- --% $ -- --%
Used vehicle sales........................................ -- -- -- -- -- --
Parts and service sales................................... -- -- -- -- -- --
Other revenues, net....................................... 3,187 100.0 5,723 100.0 4,743 100.0
------ ----- ------ ----- ------- -----
3,187 100.0 5,723 100.0 4,743 100.0
Cost of sales............................................... -- -- -- -- -- --
------ ----- ------ ----- ------- -----
Gross profit................................................ 3,187 100.0 5,723 100.0 4,743 100.0
Selling, general and administrative expenses................ 1,780 55.9 3,566 62.3 3,704 78.1
------ ----- ------ ----- ------- -----
Income from operations...................................... 1,407 44.1 2,157 37.7 1,039 21.9
Other income and expense:
Interest expense.......................................... 978 30.7 1,416 24.7 1,420 29.9
Other income (expense).................................... -- -- -- -- -- --
------ ----- ------ ----- ------- -----
Income (loss) before income taxes........................... 429 13.5 741 12.9 (381) (8.0)
Income tax (expense) benefit................................ (150) (4.7) (307) (5.4) 139 2.9
------ ----- ------ ----- ------- -----
Net income (loss)........................................... $ 279 8.8% $ 434 7.6% $ (242) (5.1)%
====== ====== =======

Year Ended December 31, 1997 Compared to Year Ended December 31, 1996

Revenues. Total revenues decreased by $1.0 million, or 17.1%, from $5.7
million for the year ended December 31, 1996 to $4.7 million for the year ended
December 31, 1997. This decrease was primarily attributable to the introduction
of a dealer program in February 1997 involving smaller advance rates and the
elimination of recourse obligation by the dealers. This program resulted in a
22% decline in the outstanding loan balance and a smaller average loan balance
(from $5,606 at December 31, 1996 to $5,230 at December 31, 1997) and an
approximate 4% drop in the number of contracts being serviced (from 4,100 at
December 31, 1996 to 3,940 at December 31, 1997).

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $138,000, or 3.9%, from $3.6 million for the
year ended December 31, 1996 to $3.7 million for the year ended December 31,
1997. This increase was primarily due to a provision for credit losses in 1997
stemming from the elimination of recourse liability from dealers from whom the
contracts were purchased offset in part by savings generated by office and
personnel realignments.

Interest Expense. Interest expense increased by a nominal amount, or 0.3%,
from $1.4 million for the year ended December 31, 1996 to $1.4 million for the
year ended December 31, 1997. This minor increase reflects the consistent level
of borrowing outstanding under the revolving credit agreement.

Year Ended December 31, 1996 Compared to Year Ended December 31, 1995

Revenues. Total revenues increased by $2.5 million, or 79.6%, from $3.2
million for the year ended December 31, 1995 to $5.7 million for the year ended
December 31, 1996. This increase was primarily attributable to the expansion of
the business into new markets (North Carolina and Tennessee) made possible by
obtaining the revolving credit facility in June 1994, and the increase in
borrowings available under the facility in August 1995.

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Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $1.8 million, or 100.3%, from $1.8 million or
the year ended December 31, 1995 to $3.6 million for the year ended December 31,
1996. This increase was primarily due to added field offices, establishing a
centralized underwriting function and additional rent charges associated with an
expanded data and accounting system.

Interest Expense. Interest expense increased $438,000, or 44.8%, from $1.0
million for the year ended December 31, 1995 to $1.4 million for the year ended
December 31, 1996. This increase was attributable to an increase in the
principal amount outstanding under the revolving credit agreement from $8.2
million at December 31, 1995 to $11.6 million at December 31, 1996.

Liquidity and Capital Resources

The Company considers liquidity to be its ability to meet its long- and
short-term cash requirements. South Financial's principal sources of liquidity
are cash on hand, cash from operations and a revolving credit facility with
General Electric Credit Corporation. The revolving credit facility has a maximum
borrowing capacity of $15 million with advances permitted under formulas based
on percentages of eligible collateral.

The following table sets forth historical selected information from South
Financial's statements of cash flows for the periods indicated:

YEAR ENDED DECEMBER 31,
---------------------------
1995 1996 1997
------- ------- -------
(IN THOUSANDS)

Net cash provided by (used in) operating activities....... $ 1,909 $ 1,155 $(1,785)
Net cash provided by (used in) investing activities....... (7,819) (4,858) 2,353
Net cash provided by (used in) financing activities....... 5,955 3,643 (508)
------- ------- -------
Net increase (decrease) in cash and cash equivalents...... $ 45 $ (60) $ 60
======= ======= =======

Cash Flows

Total cash and cash equivalents at December 31, 1997 amounted to $64,000.
Unused availability at that date under the revolving credit facility amounted to
$780,000.

For the three years ended December 31, 1997, the South Financial generated
$1.9 million in cash flow from net income plus depreciation and provision for
credit losses. Net cash flow from operating activities declined during this
three-year period from $1.9 million in 1995 to ($1.8 million) in 1997. The
decline is due primarily to the decrease in net earnings and the reduction in
the amount owed to dealers for contractual obligations. The amount owed dealers
for contractual obligations decreased due to the introduction of dealer programs
that do not have a recourse obligation.

The change in net cash used in investing activities for the three years
ended December 31, 1997 aggregated $10.3 million and ranged from a use of cash
of $7.8 million in 1995 to a source of cash amounting to $2.4 million in 1997.
The primary factors affecting this area are disbursements to vehicle dealerships
for originating contracts and principal payments received from borrowers. The
1997 dealer programs have resulted in a smaller average disbursement per loan
generated. Disbursements for capital expenditures have been minor.

The change in net cash related to financing activities was primarily
attributable to activity under the revolving credit facility. The aggregate
amount advanced under the facility for the three years ended December 31, 1997
amounted to $8.6 million and ranged from a net borrowing of $5.3 million in 1995
to a net repayment of $185,000 in 1997.

Credit Losses

South Financial maintains a reserve for potential credit losses ($2.0
million at December 31, 1997, or 20.7% of the outstanding principal balance as
of that date) based on pertinent factors including past experience, underlying
collateral, recourse provisions and economic conditions. South Financial staff
members

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and agents follow up on delinquent accounts with appropriate actions including
correspondence and repossession of the applicable collateral. South Financial
charges potential credit losses back to the originating used auto dealership if
the contracts were purchased on a recourse basis and sells repossessed
collateral at auction. Proceeds from the sale of collateral are credited to the
loss reserve.

Leases

South Financial leases its operating facilities and equipment under various
operating leases, including leases with related parties. Certain of the leases
may be renewed at the option of the lessee. All of South Financial's leases were
negotiated at arm's-length, and the Company's management believes that the terms
and conditions of all of South Financial's leases are comparable to those that
result from negotiations with unrelated third parties.

CYCLICALITY

The Company's operations, like the automotive retailing industry in
general, can be affected by a number of factors relating to general economic
conditions, including consumer business cycles, consumer confidence, economic
conditions, availability of consumer credit and interest rates. Although the
above factors, among others, can impact the Company's business, the Company
believes the impact of cyclicality on its operations will be mitigated as the
Company continues to expand its product offerings, its geographic diversity and
the number of its vehicle brands.

EFFECTS OF INFLATION

Due to the relatively low levels of inflation in 1995, 1996 and 1997 and
the first three months of 1998, inflation did not have a significant effect on
the Company's results of operations for those periods.

NEW ACCOUNTING STANDARDS

In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings Per Share." This Statement
specifies the computation, presentation and disclosure requirements for earnings
per share. The Company believes that the adoption of such Statement would not
result in earnings per share materially different from pro forma earnings per
share presented in the accompanying statements of income.

In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income." This
standard establishes standards of reporting and display of comprehensive income
and its components in a full set of general-purpose financial statements. This
Statement will be effective for the Company's fiscal year ending June 30, 1998,
and the Company does not intend to adopt this statement prior to said effective
date.

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BUSINESS

OVERVIEW

Sunbelt is one of the leading retailers of new and used vehicles in the
southeastern United States. The Company operates a total of 27 dealership
franchises in Georgia, North Carolina and Tennessee and four collision repair
centers in metropolitan Atlanta, Georgia. Sunbelt sells 20 domestic and foreign
brands of automobiles, which consist of Buick, Cadillac, Chevrolet, Chrysler,
Dodge, Ford, GMC, Honda, Hummer, Isuzu, Jeep, Kia, Mazda, Mercury, Mitsubishi,
Nissan, Oldsmobile, Plymouth, Pontiac and Toyota. The Company believes that in
1997, based on pro forma retail new vehicle unit sales, it would have been one
of the 15 largest franchised automotive dealer groups out of a total of more
than 15,000 franchised automotive dealer groups in the United States. The
Company intends to further diversify its product and service offerings by
including more brands of vehicles and by offering related finance and insurance,
replacement parts, collision repair, and other products and services that are
complementary to its core automotive retailing operations. The Company's
strategy is: (i) to become the leading operator of automotive dealerships in
small and medium-sized markets in the southeastern United States through
acquisitions of additional dealerships in these markets; and (ii) to expand its
collision center and other complementary business operations.

The Company's executive management team has extensive experience in the
automotive retailing industry and the operation of automobile dealerships in the
southeastern United States. On average, the Company's executive officers have
over 15 years of direct industry experience. Between 1992 and 1997, the
Company's dealerships have won many awards from various manufacturers measuring
quality and customer satisfaction. These awards include: the Five Star Award
from Chrysler, which is given to the top 25% of Chrysler dealers in the nation;
the NACE (North American Customer Excellence) Award, Ford Motor Company's
highest overall award for customer service; the Top 100 Club, which is awarded
to Ford's top 100 retailers or 2% of Ford dealers in the nation based on retail
volume and consumer satisfaction; the Cadillac Master Dealer award, a status
achieved by 1% of Cadillac dealers nationwide; the Oldsmobile Elite Award, which
is given by Oldsmobile Motor Division to the top 10% of Oldsmobile dealers in
the nation; and the President's Circle Award for performance, which is given by
Nissan Motor Corporation to the top 10% of Nissan dealers in the nation.

INDUSTRY OVERVIEW

The automotive retailing industry, with aggregate revenues of approximately
$491.1 billion in 1996 for franchised dealers alone, is the largest retail
market in the United States. Aggregate revenues for the southeastern United
States, which is the Company's primary area of operations and is comprised of
the states of Alabama, Florida, Georgia, North Carolina, South Carolina and
Tennessee equalled approximately $89.8 billion through franchised dealers in
1996 and accounted for approximately 18% of total franchised dealer revenues in
the United States. Nationally, between 1990 and 1996, the industry has
experienced growth in total revenues, total gross profits and income before
taxes. From 1990 to 1996, for franchised dealers alone, total revenues increased
53.5% from $320.0 billion in 1990 to $491.1 billion in 1996, total gross profits
increased 33.3% from $46.9 billion in 1990 to $62.5 billion in 1996, and income
before taxes increased 131.3% from $3.2 billion in 1990 to $7.4 billion in 1996.

The industry has been experiencing a consolidation trend which has seen the
number of franchised dealerships in the United States decline from approximately
36,000 in 1960 to 22,750 in 1996. Despite the trend toward consolidation in the
industry, fragmentation is still a defining characteristic of the industry, with
the largest 100 franchised dealership groups generating less than 10% of 1996
total franchised dealership revenue and controlling less than 5% of all
franchised automotive dealerships in 1996. The Company expects several economic
and industry factors to lead to further consolidation of the automotive
retailing industry, including the increasing capital requirements necessary to
operate an automotive dealership, the management succession planning concerns of
many current dealers and the desire of manufacturers to strengthen their dealer
networks through consolidation.

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BUSINESS STRATEGY

Sunbelt intends to establish itself as the leading operator of automotive
dealerships in small and medium-sized markets in the southeastern United States
through acquisitions of additional dealerships in these markets. The Company
believes that its diverse portfolio of brands and dealerships in several of
these markets and its experienced management teams give it a competitive
advantage in achieving this goal.

Operating Strategy

The Company's operating strategy is based on the following key elements:

- Offer a Diverse Range of Automotive Products and Services. The Company
offers a diverse range of automotive products and services, including a
wide selection of new and used vehicles, vehicle financing and insurance
programs, replacement parts, and maintenance and repair programs. The
Company believes that its brand and product diversity enables the Company
to satisfy a variety of customers, reduces dependence on any one
manufacturer and reduces exposure to supply problems and product cycles.
The Company believes that its variety of complementary products and
services will allow the Company to generate incremental revenue that will
result in higher profitability and less cyclicality for the Company than
if it was solely dependent on automobile sales.

- Institute Divisional Organization by Manufacturer. The Company has
instituted a corporate organizational form which the Company believes
differentiates it from most other automotive retailing companies. The
Company's corporate structure organizes its dealerships and dealership
groups by manufacturer, so that all dealerships which carry a particular
manufacturer's brands are grouped together in a single division. Each
division, in turn, is headed by a member of corporate management who has
extensive working experience with the applicable manufacturer. The
Company believes that organizing its dealerships by manufacturer and
having each division headed by a senior manager who is experienced with
that particular manufacturer -- and has established and maintained
long-standing business relationships with the regional and corporate
managers of that manufacturer -- will yield numerous benefits to the
Company. For example, the Company's relationships with each manufacturer
will be enhanced; management training within each division will be more
efficient and consistent; and managers within each division will benefit
from a shared experience base. The Company believes that these benefits
will provide a competitive advantage to the Company.

- Decentralize Marketing Strategies; Achieve High Levels of Customer
Satisfaction; Utilize Incentive-Based Compensation Programs. The Company
believes that many customers purchase automotive vehicles based on an
established long-term business relationship with a particular dealership.
Therefore, the Company intends to empower its experienced local
management -- who have a better in-depth knowledge of local customer
needs and preferences -- to establish marketing, advertising and other
policies that foster these long-term relationships and result in superior
customer service. The Company's strategy emphasizes the retention of the
local management of acquired dealerships, which the Company believes will
help make it an attractive acquiror of other dealerships. The Company
also intends to create incentives for entrepreneurial management teams at
the dealer level through the use of stock options and other programs in
order to align local management's interests with those of the Company's
shareholders. In order to keep local management focused on customer
satisfaction, the Company also intends to include certain CSI results as
a component of its incentive compensation program. The Company believes
that this is important because some manufacturers offer specific
performance incentives, on a per vehicle basis, if certain CSI levels
(which vary by manufacturer) are achieved by a dealer.

- Centralize Administrative Functions. The Company believes that
consolidation of certain dealership functions and requirements will
result in significant cost savings. The Company intends to consolidate
the floorplan financing of all of its dealerships, which the Company
anticipates will result in a reduced interest rate on such financing. The
Company is also negotiating a consolidated revolving credit facility that
it anticipates will result in a reduced interest rate on such facility.
Furthermore, the Company

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expects that significant cost savings will be achieved through the
consolidation of administrative functions such as risk management,
employee benefits and employee training.

Growth Strategy

The Company plans to continue to grow its business using a strategy
comprised of the following principal elements:

- Acquire Dealerships. The Company's goal is to become the leading
operator of automotive dealerships in small and medium-sized markets in
the southeastern United States through acquisitions of additional
dealerships in these markets. The Company plans to pursue acquisitions in
markets where it does not currently own dealerships, as well as in areas
which are contiguous to its existing dealership markets. The Company
intends to focus on acquiring both dealer groups with multiple franchises
in a given market area and dealers with a single franchise which possess
significant market shares. Generally, the Company will seek to retain the
acquired dealerships' operational and financial management, and thereby
benefit from their market knowledge, name recognition and local
reputation.

- Expand Complementary Products and Services. The Company intends to
pursue opportunities that it expects will result in additional revenue
and higher profitability through the sale of products and services which
complement its dealership operations. Examples of such opportunities
include the following:

Collision Repair Centers. The Company owns four collision repair
facilities operated under the name Collision Centers USA, which serve
the Jonesboro, Duluth, Stockbridge and Marietta, Georgia markets. The
Company expects to expand this business by increasing volumes at
these four centers, developing new centers and acquiring new existing
centers. The Company's collision repair business provides higher
margins than its core automotive retailing operations and is
generally not significantly affected by economic cycles or consumer
spending habits.

Finance and Insurance. The Company offers its customers a wide range
of financing and leasing alternatives for the purchase of vehicles,
as well as credit life, accident and health and disability insurance
and extended service contracts. The Company has entered into an
agreement with a leading insurance carrier to share in certain
revenues generated by the sale of extended warranty contracts. In
addition, in January 1998, the Company acquired South Financial,
which has been primarily engaged in the sub-prime automotive lending
business for the past eight years. The Company expects its dealer
network to provide additional loan business opportunities to South
Financial.

DEALERSHIP OPERATIONS

The Company has established a management structure that promotes and
rewards entrepreneurial spirit, individual pride and responsibility and the
achievement of team goals. Each dealership's general manager is ultimately
responsible for the operation, personnel and financial performance of the
dealership. The general manager ("Executive Manager") is typically complemented
with a management team consisting of a new vehicle sales manager, used vehicle
sales manager, service and parts manager and finance manager. Each dealership is
operated as a distinct profit center in which the Executive Manager is given a
high degree of operating autonomy. A controller who is dedicated to each
dealership provides financial oversight and control. The Company believes that
the Executive Manager and the other members of the dealership management team,
who in many cases are long-time members of their local communities, are best
able to judge how to conduct day-to-day operations based on the team's
experience in and familiarity with its local market.

The Vice Presidents of each manufacturer Division of the Company (the
"Division VP"), who report to the Company's Chief Operating Officer, support and
oversee the Executive Managers. All Executive Managers will report to the
Company's Division VP on a regular basis and prepare a comprehensive monthly
financial and operating statement of their dealership. In addition, the Division
VPs will meet on a monthly

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basis with their Executive Managers to address changing customer preferences and
operational concerns and to share best practices.

NEW VEHICLE SALES

The Company sells 20 domestic and foreign brands of economy, family, sports
and luxury cars and light trucks and sport utility vehicles. The Company intends
to pursue an acquisition strategy that will continue to enhance its brand
diversity. The following table sets forth for the year ended June 30, 1997 and
the six months ended December 31, 1997, certain pro forma combined information
relating to the brands of new vehicles sold by the Company:

NEW VEHICLE SALES BY MANUFACTURER
- ---------------------------------------------------------------------------------------------
YEAR ENDED SIX MONTHS ENDED
JUNE 30, 1997 DECEMBER 31, 1997
--------------------- ---------------------
MANUFACTURER SALES % OF SALES SALES % OF SALES
- ------------ -------- ---------- -------- ----------
(DOLLARS IN THOUSANDS)

Ford(1)....................................... $201,508 48.0% $102,118 48.4%
General Motors(2)............................. 97,973 23.3 49,743 23.6
Nissan........................................ 44,261 10.5 21,111 10.0
Toyota........................................ 17,473 4.2 8,429 4.0
Mitsubishi.................................... 11,013 2.6 5,271 2.5
Mazda......................................... 10,469 2.5 5,251 2.5
Isuzu......................................... 9,434 2.2 4,869 2.3
Chrysler/Dodge/Plymouth....................... 8,717 2.1 4,249 2.0
Kia........................................... 7,040 1.7 3,431 1.6
Honda......................................... 6,105 1.5 2,912 1.4
Jeep/Eagle.................................... 3,353 0.8 1,634 0.8
Hummer........................................ 2,673 0.6 1,859 0.9
-------- ----- -------- -----
$420,019 100.0% $210,877 100.0%
======== ===== ======== =====

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

(1) Ford includes both the Ford division and the Mercury division.
(2) General Motors includes the divisions of Buick, Cadillac, Chevrolet, GMC,
Oldsmobile and Pontiac.

The Company's new vehicle sales include traditional new vehicle retail
sales and retail lease transactions which are arranged by the Company. New
vehicle leases generally have short terms, which bring the consumers back to the
market sooner than if the vehicles were purchased. In addition, leases can
provide the Company with a steady source of late-model, off-lease vehicles for
its used vehicle inventory. Generally, leased vehicles remain under factory
warranty for the term of the lease, which allows the Company to provide repair
service to the lessee throughout the lease term.

The Company seeks to provide customer-oriented service designed to
establish lasting relationships that will result in repeat and referral
business. For example, the Company's dealerships strive to: (i) employ more
efficient selling approaches; (ii) utilize computer technology that decreases
the time necessary to purchase a vehicle; (iii) engage in extensive follow-up
after a sale in order to develop long-term relationships with customers; and
(iv) train their sales staffs to be able to meet the needs of the customers. The
Company continually evaluates ways to improve the buying experience for its
customers and believes that its ability to share best practices among its
dealerships gives it an advantage over smaller dealership group.

The Company acquires substantially all its new vehicle inventory from
manufacturers. Manufacturers allocate a limited inventory among their dealers
based on sales volume and input from dealers. The Company finances its inventory
purchases through revolving credit arrangements known in the industry as
floorplan facilities.

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The following table presents combined pro forma information with respect to
the Company's new vehicle sales for the years ended June 30, 1995, 1996 and
1997, and the six months ended December 31, 1996 and 1997, respectively.

SIX MONTHS
YEAR ENDED JUNE 30, ENDED DECEMBER 31,
New Vehicle Data -------------------------------- --------------------
1995 1996 1997 1996 1997
-------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)

USED VEHICLE SALES

The Company sells used vehicles at each of its dealerships. Consumer demand
for used vehicles has increased as prices of new vehicles have risen and as more
high quality used vehicles have become available. Furthermore, used vehicles
typically generate higher gross margins than new vehicles because of their
limited comparability and the somewhat subjective nature of their valuation. The
Company intends to continue growing its used vehicle sales operations by
maintaining a high quality inventory, providing competitive prices and extended
service contracts for its used vehicles and continuing to promote used vehicle
sales.

Profits from sales of used vehicles are dependent primarily on the ability
of the Company's dealerships to obtain a high quality supply of used vehicles
and effectively manage that inventory. The Company's new vehicle operations
provide the Company's used vehicle operations with a large supply of high
quality trade-ins and off-lease vehicles, which are the best sources of high
quality used vehicles. The Company supplements its used vehicle inventory with
used vehicles purchased at auctions.

The Company generally maintains a 60- to 90-day supply of used vehicles and
disposes of used vehicles that the Company does not retail to customers by
selling them at auctions or offering them to wholesalers. Trade-ins may be
transferred among dealerships to provide balanced inventories of used vehicles
at each of the Company's dealerships. The Company believes that acquisitions of
additional dealerships will expand its internal market for transfers of used
vehicles among its dealerships and increase the ability of each of the Company's
dealerships to offer the same brand of used vehicles as it sells new and to
maintain a balanced inventory of used vehicles. The Company intends to develop
integrated computer inventory systems that will allow it to coordinate vehicle
transfers among its dealerships.

The Company believes that dealership strengths in offering used vehicles
include: (i) access to trade-ins on new vehicle purchases, which are typically
lower mileage and higher quality relative to trade-ins on used car purchases,
(ii) access to late-model, low mileage off-lease vehicles, and (iii) the
availability of manufacturer certification and extended manufacturer warranties
for the Company's higher quality used vehicles. This supply of high quality
trade-ins and off-lease vehicles reduces the Company's dependence on auction
vehicles, which are typically a higher cost source of used vehicles.

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The following table represents pro forma information with respect to the
Company's used vehicle sales for the years ended June 30, 1995, 1996 and 1997,
and the six months ended December 31, 1996 and 1997, respectively:

SIX MONTHS
YEAR ENDED JUNE 30, ENDED DECEMBER 31,
Used Vehicle Data -------------------------------- ------------------
1995 1996 1997 1996 1997
-------- -------- -------- ------- -------
(DOLLARS IN THOUSANDS)

PARTS AND SERVICE SALES

The Company provides parts and service at each of its dealerships primarily
for the vehicle makes sold by its dealerships. The Company provides maintenance
and repair services at each of its dealerships and collision repair centers. The
Company performs both warranty and customer-paid service work.

Historically, the automotive repair industry has been highly fragmented.
However, the Company believes that the increased use of advanced technology in
vehicles has made it more difficult for independent repair shops to retain the
expertise to perform major or technical repairs. Additionally, manufacturers
permit warranty work to be performed only at dealerships. Hence, unlike
independent service stations, or independent and superstore used car dealerships
with service operations, the Company's dealerships are qualified to perform work
covered by manufacturer warranties. Given the increasing technological
complexity of motor vehicles and the trend toward extended manufacturer and
dealer warranty periods for new vehicles, the Company believes that an
increasing percentage of repair work will be performed at dealerships.

The Company seeks to retain each purchaser of a vehicle as a customer of
the Company's service and parts departments. The Company's dealerships have
systems in place that track their customers' maintenance records and notify
owners of vehicles purchased at the dealerships when their vehicles are due for
periodic services. The Company regards its service and repair activities as an
integral part of its overall approach to customer service, providing an
opportunity to foster ongoing relationships with the Company's customers and
deepen customer loyalty.

The dealerships' parts departments support their respective sales and
service divisions. Each of the Company's dealerships sells factory-approved
parts for vehicle makes and models sold by that dealership. These parts are
either used in repairs made by the dealerships or sold at retail to its
customers or at wholesale to independent repair shops and/or other franchised
dealerships. Currently, each of the Company's dealerships employs its own parts
manager and independently controls its parts inventory and sales.

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The following table sets forth information regarding the Company's parts
and service sales for the years ended June 30, 1995, 1996 and 1997, and the six
months ended December 31, 1996 and 1997, respectively:

SIX MONTHS
YEAR ENDED JUNE 30, ENDED DECEMBER 31,
----------------------------- ------------------
PARTS AND SERVICE DATA 1995 1996 1997 1996 1997
- ---------------------- ------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS)

COLLISION REPAIR

The Company operates four standalone collision repair centers under the
service mark "Collision Centers USA." The Company began operating the first of
these centers in September 1996 and acquired three additional centers in
November 1997 as part of the Collision Centers USA Acquisition. The Company
believes that the primary source of Collision Centers USA's customers will be
the automobile insurance companies which award "preferred status" to Collision
Centers USA. As of December 31, 1997, 10 insurance companies had awarded such
"preferred status" to Collision Centers USA. The Company believes that these
insurance companies -- by virtue of the customers they refer to Collision
Centers USA -- will be the primary source of the Company's collision repair
center business, and that its ongoing relationship with these insurance
companies will help ensure a continuous and increasing source of customers for
Collision Centers USA. The Company believes that its collision repair business
will provide favorable margins and will not be significantly affected by
business cycles or consumer preferences. The Company also believes that its
development and operation of collision repair centers will provide incremental
parts business to its dealerships.

FINANCE AND INSURANCE

The Company will offer its customers a wide range of financing and leasing
alternatives for the purchase of vehicles. In addition, as part of each sale,
the Company offers customers credit life, accident and health and disability
insurance to cover the financing cost of their vehicles, as well as warranty or
extended service contracts. The Company's pro forma revenue from financing,
insurance and extended warranty transactions was $24.1 million for the year
ended June 30, 1997 and $10.2 million for the six months ended December 31,
1997.

The Company believes that its customers' ability to obtain financing at its
dealerships significantly enhances the Company's ability to sell new and used
vehicles. The Company provides a variety of financing and leasing alternatives
in order to meet the specific needs of each potential customer. The Company
believes its ability to obtain customer-tailored financing on a "same day" basis
provides it with an advantage over many of its competitors, particularly smaller
competitors which do not generate sufficient volume to attract the diversity of
financing sources that are available to the Company. Each dealership will then
be able to provide a customer with a broader array of lease payment alternatives
and, consequently, appeal to a term buyer who is trying to purchase a vehicle of
choice at or below a specific monthly payment.

In January 1998, the Company acquired a sub-prime automotive finance
company, South Financial, a Florida corporation with offices in Florida,
Tennessee and North Carolina. The Company expects that its dealership network
will provide South Financial with a steady source of loan business opportunities
and that South Financial will provide each of the Company's dealerships an
ongoing sub-prime financing source.

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The following tables set forth information regarding South Financial's
operations:

AS OF DECEMBER 31,
----------------------
1996 1997
--------- ---------
(DOLLARS IN THOUSANDS)

Principal balance of outstanding loans...................... $17,141 $14,883
Number of outstanding loans................................. 4,100 3,940
Average portfolio yield..................................... 29.9% 28.1%
Periods of delinquency:
31 to 60 days............................................. 5.5% 5.6%
61 to 90 days............................................. 4.3% 3.1%
91 days or more........................................... 9.8% 8.7%
------- -------
Total delinquencies as a percentage of the current principal
balance of outstanding loans(1)........................... 19.6% 17.4%
======= =======

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

(1) The portfolio balance in 1996 was on a full recourse basis. Starting in
March 1997 all loans were purchased on a non-recourse basis.

FOR THE YEAR ENDED
DECEMBER 31,
----------------------
1996 1997
--------- ---------
(DOLLARS IN THOUSANDS)

Number of loans purchased................................... 3,982 4,122
Principal balance of loans purchased........................ $19,910 $22,671
Average principal balance of loans purchased................ $ 5.0 $ 5.5

In addition to its financing activities, the Company offers extended
service contracts in connection with the sale of new and used vehicles. Extended
service contracts on new vehicles supplement the warranties offered by the
vehicle manufacturers, and on used vehicles, such contracts supplement any
remaining manufacturer warranty or serve as the primary service contract on the
vehicle. The Company has recently entered into an agreement with a leading
insurance carrier to share in certain revenues generated by the sale of extended
warranty contracts. The Company also offers its customers credit life, health
and accident insurance when they finance an automobile purchase, and receives a
commission on each policy sold.

SALES AND MARKETING

The Company's marketing and advertising activities vary among its
dealerships and among its markets. The Company advertises primarily through
newspapers, radio, television and direct mail and regularly conducts special
promotions designed to focus vehicle buyers on its product offerings. The
Company intends to continue tailoring its marketing efforts to the relevant
marketplace in order to reach the Company's targeted customer base. The Company
also employs computer technology to aid salespeople in identifying potential new
customers. Under arrangements with each of the manufacturers, the Company
receives a subsidy for a portion of its advertising expenses incurred in
connection with a manufacturer's vehicles. Because of the Company's leading
market presence in certain markets, the Company believes it has been able to
realize cost savings on its advertising expenses due to volume discounts and
other concessions from media, and the Company expects such cost savings to
continue in the future.

RELATIONSHIPS WITH MANUFACTURERS

Each of the Company's dealerships operates under a separate Franchise
Agreement which governs the relationship between the dealership and the
manufacturer. In general, each Franchise Agreement specifies the location of the
dealership for the sale of vehicles and for the performance of certain approved
services in a specified market area. The designation of such areas generally
does not guarantee exclusivity within a specified territory. In addition, most
manufacturers allocate vehicles on a "turn and earn" basis which rewards high
volume. A Franchise Agreement typically requires the dealer to meet specified
standards regarding show-

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rooms, the facilities and equipment for servicing vehicles, inventories, minimum
net working capital, personnel training, and other aspects of the business. The
Franchise Agreement with each dealership also gives each manufacturer the right
to approve the dealership's general manager and any material change in
management or ownership of the dealership. Each manufacturer may terminate a
Franchise Agreement under certain circumstances, such as a change in control of
the dealership without manufacturer approval, the impairment of the reputation
or financial condition of the dealership, the death, removal or withdrawal of
the dealership's general manager, the conviction of the dealership or the
dealership's owner or general manager of certain crimes, a failure to adequately
operate the dealership or maintain wholesale financing arrangements, insolvency
or bankruptcy of the dealership or a material breach of other provisions of the
Franchise Agreement. In connection with the Offering, the Company is amending
its Franchise Agreements which would have prohibited the Company from selling
its common stock to the public. See "Description of Capital Stock -- Georgia
Law, Certain Articles and Bylaw Provisions and Certain Franchise Agreement
Provisions."

Most automobile manufacturers are still developing their policies regarding
public ownership of dealerships. The Company believes that these policies will
continue to change as more dealership groups sell their stock to the public, and
as the established, publicly-owned dealership groups acquire more franchises. To
the extent that new or amended manufacturer policies restrict the number of
dealerships which may be owned by a dealership group, or the transferability of
the Company's common stock, such policies could have a material adverse effect
on the Company. See "Risk Factors -- Dependence on Automobile Manufacturers,"
"Risk Factors -- Manufacturers' Restrictions on the Merger, the Acquisitions and
Future Acquisitions," "Risk Factors -- Stock Ownership/Issuance Limits;
Limitation on Ability to Issue Additional Equity" and "Risk
Factors -- Anti-Takeover Provisions."

Ford's present public company policy requires public companies to deliver
to Ford all Commission filings made by the public company or third-parties with
respect to the public company, including Schedules 13D and 13G. If any such
filing shows that (a) any person or entity would acquire 15% or more of the
public company's voting securities, (b) any person or entity that owns or
controls 15% or more of the Company's voting securities (or other securities
convertible into such voting securities) intends or may intend to acquire
additional voting securities of the public company, (c) an extraordinary
corporate transaction, such as a merger or liquidation, involving the public
company or any of its subsidiaries is anticipated, (d) a material asset sale
involving the public company or any of its subsidiaries is anticipated, (e) a
change in the public company's Board of Directors or management is planned or
has occurred, or (f) any other material change in the public company's business
or corporate structure is planned or has occurred, then the public company must
give Ford notice of such event. If Ford reasonably determines that such an event
would have a material adverse effect on its reputation in the marketplace or is
otherwise not in its interest, Ford's policy may require the public company to
sell or resign from one or more of its Ford franchises. Should the public
company or any of its Ford franchisee subsidiaries enter into an agreement to
transfer the assets of a Ford franchisee subsidiary to a third party, the right
of first refusal described in the Ford Franchise Agreement may apply.

The following sets forth some additional provisions of Ford's present
announced public company policy: (a) each dealership must be owned by a separate
company that meets Ford's capitalization guidelines; (b) the day-to-day
management control is to be delegated to the General Manager of each dealership,
whose appointment is subject to Ford's prior written approval; (c) certain
compensation plans must be implemented at each dealership; (d) each dealership
must meet reasonable performance criteria; (e) should a dealership fail to
maintain for a twelve month period substantially the same level of CSI as the
CSI reported for that dealership as of the date of its acquisition, the parent
company shall not apply for another Ford authorized dealership until such time
as the CSI level is restored to Ford's reasonable satisfaction; (f) the parent
company may not acquire more than two Ford and two Lincoln Mercury dealerships
within any single twelve month period; (g) unless otherwise agreed by Ford, the
parent company shall not apply for a Ford authorized dealership if, once owning
such dealership, the parent company would own or control the lesser of (i) 15
Ford and 15 Lincoln Mercury Dealerships or (ii) that number of Ford authorized
dealerships with total retail sales in the preceding calendar year of more than
2% of the total Ford and Lincoln Mercury branded vehicles sold at retail in the
United States; (h) in no event, however, shall the parent company apply for a
Ford authorized dealership in any market area that would result in the parent
company owning or controlling more than one

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Ford authorized dealership in those market areas having three or less such
dealerships or with the parent company owning or controlling more than 25% of
the Ford authorized dealerships in market areas have four or more such
dealerships; (i) the preceding limitations shall apply separately to Ford and
Lincoln Mercury dealerships; (j) should the preceding limits be reached, Ford
will consider extending the limitations; and (k) each dealership shall operate
as an exclusive fully-dedicated Ford and/or Mercury and/or Lincoln dealership.

In addition to these general policies, Ford has specifically indicated to
the Company that as a condition to Ford's approval of the Offering, the Merger
and the Acquisitions, Ford will require the Company to relocate its existing
Duluth, Georgia Ford dealership and potentially construct a new Ford dealership
facility at the new Duluth location. Ford has also indicated that said Duluth
dealership will operate pursuant to a "Term Agreement" for a period of no less
than 24 months. Such a "Term Agreement" allows Ford to terminate the Company's
Duluth Ford Franchise Agreement at the end of said 24-month term if the
Company's Duluth Ford dealership does not meet certain sales quotas, market
penetration and CSI performance goals.

Under the general terms of GM's public company agreement, the public
company must deliver to GM copies of all Schedules 13D and 13G, and all
amendments thereto and terminations thereof, received by the public company,
within five days of receipt of such Schedules. If the public company is aware of
any ownership of its stock that should have been reported to it on Schedule 13D
but that is not reported in a timely manner, it will promptly give GM written
notice of such ownership, with any relevant information about the owner that the
public company possesses.

The general terms of GM's public company agreement further provide that if
the public company, through its Board of Directors or through shareholder
action, proposes or if any person, entity or group sends the public company a
Schedule 13D, or any amendments thereto, disclosing (a) an agreement to acquire
or the acquisition of aggregate ownership of more than 20% of the voting stock
of the public company and (b) the public company, through its Board of Directors
or through shareholder action, proposes or if any plans or proposals which
relate to or would result in the following: (i) the acquisition by any person of
more than 20% of the voting stock of the public company other than for the
purposes of ordinary passive investment; (ii) an extraordinary corporate
transaction, such as a material merger, reorganization or liquidation, involving
the public company or a sale or transfer of a material amount of assets of the
public company and its subsidiaries; (iii) any change which, together with any
changes made to the Board of Directors within the preceding year, would result
in a change in control of the then current Board of the public company; or (iv)
in the case of an entity that produces motor vehicles or controls or is
controlled by or is under common control with an entity that either produces
motor vehicles or is a motor vehicle franchisor, the acquisition by any person,
entity or group of more than 20% of the voting stock of the public company and
any proposal by any such person, entity or group, through the public company
Board of Directors or shareholders action, to change the Board of Directors of
the public company, then, if such actions in GM's business judgment could have a
material or adverse effect on its image or reputation in the GM dealerships
operated by the public company or be materially incompatible with GM's interests
(and upon notice of GM's reasons for such judgment), the public company may be
required to take one of the remedial actions set forth in the next paragraph
within a specified time period of receiving such Schedule 13D or such amendment.

If the public company is obligated under GM's public company policy to take
remedial action, it may be required to transfer the dealership to GM or its
designee. Alternatively, GM or its designee may acquire the assets, properties
or business associated with any GM dealership operated by the public company at
fair market value as determined in accordance with GM's Dealership Agreement
with the public company, or provide evidence to GM that such person, entity or
group no longer has such threshold level of ownership interest in the public
company.

Should the public company or its GM franchisee subsidiary enter into an
agreement to transfer the assets of the GM franchisee subsidiary to a third
party, the right of first refusal described in the GM Dealer Agreement may apply
to any such transfer.

The following sets forth some additional provisions of GM's proposed policy
on public company ownership: (a) under the agreement each GM dealership will be
owned by a separate public company that

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meets GM net working capital standards; (b) each public company will comply with
GM's brand strategy and will participate in the dealer marketing groups for its
GM lines and non-GM automotive operations will not be jointly advertised with GM
operations; (c) each public company will have complete dealership operations
(sales, service, parts, used car), and will comply with the channel strategy
including divisional alignment, locations and image requirements; (d) the
dealerships will be exclusive so that no GM sales, service or parts operations
will be combined with non-GM representation and each dealer company will
relocate any non-GM lines within one year of acquiring the dealership; (e) if a
public company acquires a dealership which is not on channel, it will bring it
into compliance within 12 months, or GM may require that off-channel GM
representation be discontinued in exchange for compensation based upon an agreed
upon formula; (f) GM generally limits the number of acqusitions a single public
company may consummate, and each acquisition must be submitted to GM for prior
approval; (g) there will be an Executive Manager for each GM dealership who
meets the GM requirements for a dealer operator, except the 15% ownership
requirement, and any change in the Executive Manager must be approved by GM; (h)
the public company will comply with GM's multiple dealer investor/multiple
dealer operator policies and will not acquire more than 50% of the GM
dealerships for any division (Chevrolet, Pontiac-GMC, Oldsmobile, Buick,
Cadillac) within a multiple dealer area, and in the event a multiple dealer area
has one dealer in an area that has multiple dealers for other divisions, the
public company may acquire that one dealership as long as the total does not
exceed 50% of the GM dealerships; (i) semi-annually, GM, the public company and
each dealer company will review the dealer company's performance for sales
performance, CSI and branding, and if for two consecutive evaluation periods the
dealer company is not meeting its requirements, GM can request a change in
management within six months; (j) GM has a right of first refusal if the assets
of a dealer company are to be transferred to a third party; (k) if a dealer
agreement is terminated, if dealership operations are discontinued, if the
public company discontinues GM representation in a multiple dealer area, or if
dealership assets are transferred to GM under the remedial provisions, then GM
has the right to purchase the dealership facilities or assume the leases for the
facilities, and GM will also receive the right of quiet possession for the
facilities for 10 years if this right is exercised within 10 years of the Dealer
Agreement; and (l) the public company must agree to use the GM dispute
resolution process as the exclusive source of resolution of any dispute
regarding the Dealer Agreement, the Public Ownership Agreement or acquisition of
additional GM dealerships.

Toyota's general public ownership policy provides that Toyota has the right
to approve any ownership or voting rights of the Company of 20% or greater by
any individual or entity. In addition, no single entity shall hold an ownership
interest, directly or through an affiliate, in more than: (a) the greater of one
dealership or 20% of the Toyota dealer count in a "Metro" market; (b) the lesser
of five dealerships or 5% of the Toyota dealerships in any "Toyota Region;" and
(c) seven Toyota dealerships nationally. Additional provisions of Toyota's
general public ownership policy provide: an entity may not acquire any
additional Toyota dealership within nine months of its prior acquisition of a
Toyota dealership; the public company shall not own contiguous dealerships with
common boundaries; the public company shall create a separate legal entity for
each Toyota dealership which it owns; and the public company shall provide
Toyota with copies of all information and materials filed with the Commission.
Toyota, however, has deviated from this general policy with respect to certain
public companies and there can be no assurance that these policies will be the
same policies with which the Company will have to agree.

It is the current policy of Honda to restrict any company from holding more
than seven Honda or more than three Acura franchises nationally and to restrict
the number of franchises to: (a) one Honda dealership in a "Metro" market (a
metropolitan market represented by two or more Honda dealers) with two to 10
Honda dealership points; (b) two Honda dealerships in a Metro market with 11 to
20 Honda dealership points; (c) three Honda dealerships in a Metro market with
21 or more Honda dealership points; (d) no more than 4% of the Honda dealerships
in any one of the 10 Honda geographic zones; (e) one Acura dealership in a Metro
market (a metropolitan market with two or more Acura dealership points); and (f)
two Acura dealerships in any one of the six Acura geographic zones.

While Chrysler evaluates each acquisition or appointment on an individual
basis, it has published policy regarding multiple dealer ownership which
provides that no person or entity may hold an ownership interest in more than 10
Chrysler Motors dealerships in the United States, six dealerships in the same
Sales Zone, and

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two dealerships in the same market, but in no event two like vehicle line makes
in the same market. Any exception to this policy requires Chrysler approval.
Chrysler has not finalized its agreement with the Company as of this date.

Certain state statutes, including Georgia, limit manufacturers' control
over dealerships. Georgia law provides that no manufacturer may arbitrarily
reject a proposed change of control or sale of an automobile dealership, and any
manufacturer challenging such a transfer of a dealership must provide written
reasons for its rejection to the dealer. Manufacturers bear the burden of proof
to show that any disapproval of a proposed transfer of a dealership is not
arbitrary. If a manufacturer terminates a franchise agreement due to a proposed
transfer of the dealership or for any other reason not considered to constitute
good cause under Georgia law, such termination will be ineffective. As an
alternative to rejecting or accepting a proposed transfer of a dealership or
terminating the franchise agreement, Georgia law provides that a manufacturer
may offer to purchase the dealership on the same terms and conditions offered to
the prospective transferee.

Under Tennessee law, a manufacturer may not modify, terminate or refuse to
renew a franchise agreement with a dealer except for good cause, as defined in
the governing Tennessee statutes. Further, a manufacturer may be denied a
Tennessee license, or have an existing license revoked or suspended if the
manufacturer modifies, terminates, or suspends a franchise agreement due to an
event not constituting good cause. Good cause includes material shortcomings in
the character, financial condition or business experience of the dealer. A
manufacturer's Tennessee license may also be revoked if the manufacturer
prevents or attempts to prevent the sale or transfer of the dealership by
unreasonably withholding consent to the transfer.

Under North Carolina law, notwithstanding the terms of any franchise
agreement between the manufacturer and the dealer, the manufacturer may not
prevent or refuse to approve: (i) the sale or transfer of the ownership of the
dealer by the sale of the business, stock transfer, or otherwise; (ii) the
transfer, sale or assignment of a dealer franchise; (iii) a change in the
executive management or principal operator of the dealership; or (iv) the
relocation of the dealership to another site within the dealer's relevant market
area, unless the manufacturer can show that the proposed transfer, sale,
assignment, relocation or change is unreasonable. In addition, under North
Carolina law, dealerships may challenge manufacturer's attempts to establish new
dealerships in or to relocate dealerships into the dealer's relevant market
area, and state regulators can prevent the proposed establishment or relocation
upon a finding that there is good cause for not permitting such addition or
relocation. North Carolina law limits the ability of a manufacturer to
terminate, cancel or fail to renew a franchise unless there is good cause for
such termination, cancellation or renewal and the manufacturer acted in good
faith.

COMPETITION

The automotive retailing industry in which the Company operates is highly
competitive. The industry is fragmented and characterized by a large number of
independent operators, many of whom are individuals, families and small groups.
In the sale of new vehicles, the Company principally competes with other new
automotive dealers in the same general vicinity of the Company's dealership
locations. Such competing dealerships may offer the same or different models and
makes of vehicles that the Company sells. In the sale of used vehicles, the
Company principally competes with other used automobile dealers and with new
automobile dealers that operate used automobile lots in the same general
vicinity of the Company's dealership locations. In each of its markets, the
Company competes with numerous other new automobile dealers selling other brands
and a large number of other used automobile stores. In addition, certain
regional and national car rental companies operate retail used car lots to
dispose of their used rental cars. See "Risk Factors -- Competition."

The Company also may face increased competition from certain used
automobile "superstores," such as CarMax, AutoNation USA and Driver's Mart
Worldwide Inc. Such used automobile superstores have emerged recently in various
areas of the United States and are beginning to expand nationally. Such
"superstores" have recently opened in certain markets in which the Company
competes. In addition, the Company competes with independent leasing companies,
and, to a lesser extent, with an increasing number of

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automobile dealers that sell vehicles through nontraditional methods, such as
through direct mail, the Internet or warehouse clubs.

The Company believes that the principal competitive factors in vehicle
sales are the marketing campaigns conducted by manufacturers, the ability of
dealerships to offer a wide selection of the most popular vehicles, the location
of dealerships and the quality of customer service. In the Company's "main
street" markets, competition tends to be interbrand rather than intrabrand. This
has the effect of eliminating brand saturation within a given market. Other
competitive factors include customer preference for particular brands of
automobiles, pricing (including manufacturer rebates and other special offers)
and warranties. The Company believes that its dealerships are competitive in all
of these areas. However, as it enters other markets, the Company may face
competitors that are more established or have access to greater financial
resources. The Company, however, does not have any cost advantage in purchasing
new vehicles from manufacturers and typically relies on advertising and
merchandising, sales expertise, service reputation and location of its
dealerships to sell new vehicles.

The Company competes against other franchised dealers to perform warranty
repairs and against other automobile dealers, franchised and independent service
center chains and independent garages for customer-paid repair and routine
maintenance business. The Company competes with other automobile dealers,
service stores and auto parts retailers in its parts operations. The Company
believes that the principal competitive factors in parts and service sales are
price, the use of factory-approved replacement parts, the familiarity with a
manufacturer's brands and models and the quality of customer service. A number
of regional or national chains offer selected parts and services at prices that
may be lower than the Company's prices.

GOVERNMENTAL REGULATIONS AND ENVIRONMENTAL MATTERS

A number of regulations affect the Company's business of marketing,
selling, financing and servicing automobiles. The Company also is subject to
laws and regulations relating to business corporations generally. Under North
Carolina, Tennessee, and Georgia law, as well as the laws of other states into
which the Company may expand, the Company must obtain a license in order to
establish, operate or relocate a dealership or operate an automotive repair
service. Under Florida law, the Company must also obtain applicable insurance
and financing-related licenses in order to operate its sub-prime finance
business. These laws also regulate the Company's conduct of business, including
its advertising and sales practices. Other states may have similar requirements.

The Company's operations are also subject to laws governing consumer
protection. Automobile dealers and manufacturers are subject to so-called "Lemon
Laws" that require a manufacturer or the dealer to replace a new vehicle or
accept it for a full refund within one year after initial purchase if the
vehicle does not conform to the manufacturer's express warranties and the dealer
or manufacturer, after a reasonable number of attempts, is unable to correct or
repair the defect. Federal laws require certain written disclosures to be
provided on new vehicles, including mileage and pricing information.

The Company's financing activities with its customers are subject to
federal truth-in-lending, consumer leasing and equal credit opportunity
regulations as well as state and local motor vehicle finance laws, installment
finance laws, usury laws and other installment sales laws. Some states regulate
finance fees that may be paid as a result of vehicle sales. State and federal
environmental regulations, including regulations governing air and water quality
and the storage and disposal of gasoline, oil and other materials, also apply to
the Company.

The Company believes that it complies in all material respects with the
laws affecting its business. Possible penalties for violation of any of these
laws include revocation of the Company's licenses and fines. In addition, many
laws may give customers a private cause of action.

As with automotive dealerships generally, and service, parts and body shop
operations in particular, the Company's business involves the use, storage,
handling and contracting for recycling or disposal of hazardous or toxic
substances or wastes, including environmentally sensitive materials such as
motor oil, waste motor oil and filters, transmission fluid, antifreeze, Freon,
waste paint and lacquer thinner, batteries, solvents, lubricants, degreasing
agents, gasoline and diesel fuels. The Company's business also involves the past
and current operation and/or removal of aboveground and underground storage
tanks containing such substances or

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wastes. Accordingly, the Company is subject to regulation by federal, state and
local authorities establishing health and environmental quality standards, and
liability related thereto, and providing penalties for violations of those
standards. The Company is also subject to laws, ordinances and regulations
governing remediation of contamination at facilities it operates or to which it
sends hazardous or toxic substances or wastes for treatment, recycling or
disposal. The Company believes that it does not have any material environmental
liabilities and that compliance with environmental laws and regulations will
not, individually or in the aggregate, have a material adverse effect on the
Company's results of operations or financial condition. Furthermore,
environmental laws and regulations are complex and subject to frequent change.
There can be no assurance that compliance with amended, new or more stringent
laws or regulations, stricter interpretations of existing laws or the future
discovery of environmental conditions will not require additional expenditures
by the Company, or that such expenditures will not be material. See "Risk
Factors -- Adverse Effect of Governmental Regulation; Environmental Regulation
Compliance Costs."

FACILITIES

The Company's principal executive offices are located at 5901
Peachtree-Dunwoody Rd., Suite 250B, Atlanta, Georgia 30328, and its telephone
number is (678) 443-8100. These executive offices are located on the premises
owned by Laing Properties, Inc. The following table identifies, for each of the
properties to be utilized by the Company's operations, the location, use and
expiration date of the Company's lease for such property:

LEASE/ EXPIRATION
BUSINESS UNIT OWN LOCATION USE DATE
- ------------- ------ -------- --- ----------

Robertson Oldsmobile-Cadillac, Lease 2355 Browns Bridge Road New and used vehicle 2005; renewable
Inc......................... Gainesville, GA sales; service; F&I for five-year
period
Grindstaff, Inc............... Lease 2224 West Elk Avenue New vehicle sales; 2001
Elizabethton, TN service; F&I
Hones, Inc. d/b/a/ Bill Holt Lease 4910 Sylva Highway New and used vehicle 2016
Ford/Mercury................ Franklin, NC sales; service; F&I
Day's Chevrolet, Inc.......... Lease 4461 S. Main St. New and used vehicle 2008
Acworth, GA sales; service; F&I
Wade Ford, Inc................ Lease 3860 South Cobb Drive New and used vehicle 2008
Smyrna, GA sale; service; F&I
Lease 3860 South Cobb Drive Fleet sales; vehicle 2005
Smyrna, GA storage
Wade Ford Buford, Inc......... Lease 4525 Highway 20 New and used vehicle Month-to-Month
Buford, GA sales; service; F&I
South Financial Corporation... Lease 3500 Blanding Blvd. Consumer Lending 2003
Jacksonville, FL Administration
Jay Automotive Group, Inc..... Lease 1661 Whittlesey Road New and used vehicle 2017
Columbus, GA sales; service; F&I
Lease Veterans Parkway New and used vehicle Month-to-Month
Columbus, GA sales; service; F&I
Lease Victory Drive Used vehicle sales; Month-to-Month
Columbus, GA F&I
Lease 1801 Box Road Used vehicle sales; 1999
Columbus, GA F&I
Boomershine Automotive Group, Lease 2150 Cobb Parkway New and used vehicle 1999
Inc......................... Smyrna, GA sales; service; F&I
Lease 3280 Commerce Ave. New and used vehicle Month-to-Month
Duluth, GA sales; service; F&I
Lease 3230 Satellite Blvd. New and used vehicle 2017
Duluth, GA sales; service; F&I
Lease 595 East Main St. New and used vehicle 2006
Cartersville, GA sales; service; F&I
Lease 964 Barrett Parkway New and used vehicle 2000
Kennesaw, GA sales; service; F&I
Lease 2970 Old Norcross Rd. Collision Center 2016
Duluth, GA

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LEASE/ EXPIRATION
BUSINESS UNIT OWN LOCATION USE DATE
- ------------- ------ -------- --- ----------

Collision Centers USA......... Lease 5548 Old Dixie Highway Collision Center 2009
Forest Park, GA
Lease 1715 Cobb Parkway Collision Center Month-to-Month
Marietta, GA
Lease 1110 Highway 155 South Collision Center 2012
McDonough, GA
Lease 205 Corporate Center Dr. Collision Center 2002
Stockbridge, GA Administration
Sunbelt Automotive Group, Lease 5901 Peachtree-Dunwoody Rd. Corporate 1999
Inc......................... Atlanta, GA Administration

All of the properties utilized by the Company's operations are leased as
set forth in the foregoing table. The Company believes that its facilities are
adequate for its current needs. In connection with its acquisition strategy, the
Company intends to lease the real estate associated with a particular business
unit whenever practicable. Under the terms of its franchise agreements, the
Company must maintain an appropriate appearance and design of its facilities and
is restricted in its ability to relocate its dealerships. See "-- Relationships
with Manufacturers."

EMPLOYEES

As of December 31, 1997, pro forma for the Merger and the Acquisitions, the
Company employed 1,268 people, of whom approximately 194 were employed in
managerial positions, 427 were employed in non-managerial sales positions, 490
were employed in non-managerial parts and service positions and 157 were
employed in administrative support positions.

The following table sets forth information regarding the number of
employees employed by Sunbelt and its subsidiaries, pro forma for the Merger and
the Acquisition, as of December 31, 1997:

PERCENT
BUSINESS UNIT EMPLOYEES OF SUNBELT
- ------------- --------- ----------

Boomershine Automotive Group, Inc........................... 382 30.13%
Day's Chevrolet, Inc........................................ 90 7.10
Grindstaff, Inc............................................. 211 16.64
Hones, Inc.................................................. 36 2.84
Jay Automotive Group, Inc................................... 219 17.27
Robertson Oldsmobile-Cadillac, Inc.......................... 39 3.08
Sunbelt Automotive Group, Inc. (Corporate).................. 11 0.87
Wade Ford, Inc. and Wade Ford Buford, Inc................... 183 14.43
South Financial Corporation................................. 42 3.31
Collision Centers USA....................................... 55 4.34
----- -------
1,268 100.00%
===== =======

The Company believes that many dealerships in the automotive retailing
industry have had difficulty in attracting and retaining qualified personnel for
a number of reasons, including the historical inability of dealerships to
provide employees with a liquid equity interest in the profitability of the
dealerships. The Company intends, upon completion of the Offering, to provide
certain executive officers, managers and other employees with stock options and
all employees with a stock purchase plan and believes those types of equity
incentives will be attractive to existing and prospective employees of the
Company. See "Management -- Incentive Stock Plan" and "Risk
Factors -- Dependence on Key Personnel and Limited Management and Personnel
Resources."

The Company believes that its relationship with its employees is good. None
of the Company's employees is represented by a labor union. Because of its
dependence on the manufacturers, however, the Company may be affected by labor
strikes, work slowdowns and walkouts at the manufacturers' manufacturing
facilities. See "Risk Factors -- Dependence on Automobile Manufacturers."

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LEGAL PROCEEDINGS AND INSURANCE

From time to time, the Company is named in claims involving the
manufacture, servicing and/or repair of automobiles, contractual disputes and
other matters arising in the ordinary course of the Company's business.
Currently, no legal proceedings are pending against or involve the Company that,
in the opinion of management, could reasonably be expected to have a material
adverse effect on the business, financial condition or results of operations of
the Company. Because of their vehicle inventory and nature of business,
automotive dealerships generally require significant levels of insurance
covering a broad variety of risks. The Company's insurance includes an umbrella
policy as well as insurance on its buildings, comprehensive coverage for its
vehicle inventory, general liability insurance, employee dishonesty coverage and
errors and omissions insurance in connection with its vehicle sales and
financing activities.

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MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS; KEY PERSONNEL

The executive officers and Directors of the Company and certain key
employees of the Company are as follows:

NAME AGE POSITION(S) WITH THE COMPANY
- ---- --- ----------------------------

Walter M. Boomershine, Jr.*.... 69 Chairman of the Board and Senior Vice President
Robert W. Gundeck*............. 54 Chief Executive Officer and Director
Charles K. Yancey*............. 59 President, Chief Operating Officer and Director
Stephen C. Whicker*............ 49 Executive Vice President of Corporate Development; General
Counsel, Secretary and Director
Ricky L. Brown*................ 45 Chief Financial Officer, Vice President of Finance and
Treasurer
Alan K. Arnold................. 42 Vice President of Ford Division and Director
George D. Busbee............... 70 Director
Lee M. Sessions, Jr. .......... 51 Director
Jack R. Altherr................ 72 Director
R. Glynn Wimberly.............. 47 Chief Executive Officer, South Financial Corporation

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

* Executive Officer

WALTER M. BOOMERSHINE, JR. has been Chairman of the Board and President of
the Company since December 1997, and will continue to serve as Chairman of the
Board and Senior Vice President following the Offering. Prior to the Merger, Mr.
Boomershine was the Chairman of the Board, President and the controlling
shareholder of Boomershine Automotive. Mr. Boomershine became associated with
Boomershine Automotive in 1953 and has served in various capacities as an
employee and officer since that date. Mr. Boomershine received a Bachelor of
Science degree in industrial management from the Georgia Institute of Technology
in 1951 and received a certificate for completing the program for Management
Development at Harvard University's Graduate School of Business Administration
in 1973. Mr. Boomershine's initial term as a director of the Company will expire
at the annual meeting of the shareholders of the Company to be held in 2001.

ROBERT W. GUNDECK has been the Chief Executive Officer and a director of
the Company since April 1998 and will continue to serve in that capacity
following the Offering. During the five year period preceding the Offering, Mr.
Gundeck was employed by American Business Products, Inc., a publicly traded
corporation, as Chief Executive Officer and President from 1995 to 1998, Chief
Operating Officer and President from 1992 to 1995 and Vice President of
Corporate Development from 1988 to 1992. Mr. Gundeck received a Bachelor of
Science degree from Rollins College in 1965 and a Masters of Business
Administration degree in Marketing and Finance from American University in 1968.
Mr. Gundeck's initial term as a director of the Company will expire at the
annual meeting of the shareholders of the Company to be held in 2000.

CHARLES K. YANCEY served as interim Chief Executive Officer and director of
the Company from December 1997 through March 1998, and will serve as the
President, Chief Operating Officer and director of the Company following the
Offering. During the five year period preceding the Merger, Mr. Yancey served as
Chief Executive Officer, Secretary and a director of Boomershine Automotive. Mr.
Yancey received a Masters in Business Administration degree in Finance and
Accounting and a Bachelor of Arts degree in Accounting from Georgia State
University in 1970 and 1968, respectively. Mr. Yancey also has been licensed as
a certified public accountant by the State of Georgia. Mr. Yancey's initial term
as a director of the Company will expire at the annual meeting of the
shareholders of the Company to be held in 2001.

STEPHEN C. WHICKER has been Executive Vice President of Corporate
Development, General Counsel, Secretary and director of the Company since
December 1997. During the five-year period prior to the Offering, Mr. Whicker
was a principal of The Whicker Law Firm, a private law practice in Atlanta,

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Georgia. Mr. Whicker received a Bachelor of Science degree in Business
Administration from the University of North Carolina in 1971 and a Juris Doctor
degree from Samford University in 1974. Mr. Whicker's initial term as a director
of the Company will expire at the annual meeting of the shareholders of the
Company to be held in 2001.

RICKY L. BROWN has been Chief Financial Officer, Vice President of Finance
and Treasurer of the Company since December 1997. Prior to the Merger, Mr. Brown
served as Controller and Chief Financial Officer of Boomershine Automotive from
1996 to 1998, as Chief Financial Officer of Peachtree Nissan, Inc. (f/k/a
Hickman Nissan, Inc.) from 1990 to 1996 and as Chief Financial Officer and
part-owner of Peachtree Acceptance Corporation from 1990 to 1996. Mr. Brown
received an Associate of Applied Science degree from Gadsden State College in
1973, and a Bachelor of Science degree in Accounting from Jacksonville State
University in 1975. Mr. Brown also has been licensed as a certified public
accountant by the State of Alabama.

ALAN K. ARNOLD, who is a key employee of the Company, will serve as Vice
President of Ford Division and director of the Company upon the consummation of
the Offering. During the five year period preceding the Offering, Mr. Arnold was
the President and controlling shareholder of Wade Ford, Inc. and Wade Ford
Buford, Inc. Mr. Arnold's initial term as a director of the Company will expire
at the annual meeting of the shareholders of the Company to be held in 2000.

GEORGE D. BUSBEE will serve as a director of the Company upon the
consummation of the Offering. Mr. Busbee has been of counsel to the law firm of
King & Spalding since January 1993 and was a partner of King & Spalding from
January 1983 to December 1993. Mr. Busbee was Governor of the State of Georgia
from 1975 until 1983. He is currently a director of Union Camp Corporation and
Weeks Corporation and served as a director of Delta Air Lines, Inc. from January
1983 to November 1997. Mr. Busbee received a Bachelor of Arts degree in Business
and a Juris Doctor degree from the University of Georgia in 1949 and 1952,
respectively. Mr. Busbee's initial term as a director of the Company will expire
at the annual meeting of the shareholders of the Company to be held in 1999.

LEE M. SESSIONS, JR. will serve as a director of the Company upon the
consummation of the Offering. Mr. Sessions was the Principal Operating Officer
of Bank South Corporation from August 1991 to March 1996. Currently, Mr.
Sessions is working as a private investor and consultant to various business and
non-profit organizations. Mr. Sessions received a Bachelor of Arts degree in
English/History from Vanderbilt University in 1968 and received a certificate
for completing the program for Management Development at Harvard University's
Graduate School of Business Administration in 1980. Mr. Session's initial term
as a director of the Company will expire at the annual meeting of the
shareholders of the Company to be held in 1999.

JACK R. ALTHERR will serve as a director of the Company upon the
consummation of the Offering. Mr. Altherr served QMS, Inc. (formerly Quality
Micro Systems, Inc.) in various graduating capacities from April 1984 to October
1995, including Chief Operating Officer/Chief Financial Officer, Executive Vice
President of Sales and Marketing and director. Mr. Altherr received a Bachelor
of Science degree in Accounting from Indiana University in 1951. Mr. Altherr
also has been licensed as a certified public accountant by the State of Indiana.
Mr. Altherr's initial term as a director of the Company will expire at the
annual meeting of the shareholders of the Company to be held in 1999.

R. GLYNN WIMBERLY, who is a key employee of the Company, became the Chief
Executive Officer of South Financial Corporation upon the consummation of the
South Financial Acquisition in January of 1998. From August 1992 until January
1998, Mr. Wimberly served as the President and Chief Operating Officer of U.S.
Auto Credit Corp., a sub-prime automotive finance company, from 1992 to 1997.
Mr. Wimberly has been employed in various positions in the consumer finance
industry for 24 years at such companies as General Motors Acceptance
Corporation, where he worked in various capacities, including Credit Manager for
Hollywood, Florida operations and World Omni Financial Corporation, where he
worked in various capacities, including Manager of Branch Operations. Mr.
Wimberly received a Bachelor of Arts degree in Business Administration from
Valdosta State College in 1973.

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CLASSIFIED BOARD OF DIRECTORS

The Board of Directors of the Company is divided into three classes, each
of which, after a transitional period, will serve for a term of three years,
with one class being elected each year. The executive officers are elected
annually by, and serve at the discretion of, the Company's Board of Directors.
Classification of the Board of Directors increases the time required to change
the composition of a majority of directors and may tend to discourage a takeover
bid for the Company. See "Description of Capital Stock -- Georgia Law, Certain
Articles and Bylaw Provisions and Certain Franchise Payment Provisions."

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Since the Company's organization in 1997, all matters concerning executive
officer compensation have been addressed by the entire Board of Directors,
including directors who serve as executive officers of the Company. Upon
consummation of the Offering, Mr. Busbee, Mr. Sessions and Mr. Altherr will
serve on the Company's Compensation Committee.

COMMITTEES OF THE BOARD

The Board of Directors will establish a Finance Committee, a Compensation
Committee and an Audit Committee consisting of independent directors as soon as
practicable after the completion of the Offering. The Finance Committee will
oversee the Company's budgetary process and the Company's relations with its
lenders. The Compensation Committee, all of whose members will be independent
directors, will review and approve compensation for the executive officers, and
administer, and determine awards under, the Incentive Stock Plan and any other
incentive compensation plans for employees of the Company. See "Management --
Incentive Stock Plan." The Audit Committee, the majority of whose members will
consist of independent directors, will recommend the selection of auditors for
the Company and will review the results of the audit and other reports and
services provided by the Company's independent auditors. The Company has not
previously had any of these committees.

DIRECTOR COMPENSATION

Members of the Board of Directors who are not employees of the Company will
receive options to purchase 5,000 shares of common stock upon initially joining
the Board of Directors, will be compensated for their services at a rate of
$12,000 per annum plus $1,000 per meeting attended and will be eligible to
participate in the Company's Incentive Stock Plan. The Company will also
reimburse all directors for their expenses incurred in connection with their
activities as directors of the Company. Directors who are also employees of the
Company receive no additional compensation for serving on the Board of
Directors.

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EXECUTIVE COMPENSATION

The Company was incorporated on December 17, 1997 and did not conduct any
operations prior to that time. Neither the Chief Executive Officer, nor any
other executive officer of the Company, received any compensation in 1997 from
the Company.

Set forth below is information for the years ended June 30, 1997, 1996 and
1995 with respect to the executive officers of Boomershine Automotive, as the
predecessor of the Company.

SUMMARY ANNUAL COMPENSATION

ANNUAL COMPENSATION
--------------------------
NAME AND PRINCIPAL POSITIONS YEAR SALARY BONUS
- ---------------------------- ---- -------- --------

Walter M. Boomershine, Jr.,................................. 1997 $ 49,200 $ --
Chairman and Senior Vice 1996 49,200 680,400
President 1995 49,200 766,931
Charles K. Yancey,.......................................... 1997 $102,033 $ --
President, Chief Operating 1996 102,033 403,297
Officer and Director 1995 102,033 398,466
Ricky L. Brown,............................................. 1997 $ 62,000 $ --
Chief Financial Officer and Controller 1996 -- --
1995 -- --

EXECUTIVE EMPLOYMENT AGREEMENTS

The Company has entered or will enter into employment agreements with
Messrs. Walter M. Boomershine, Jr., Robert W. Gundeck, Charles K. Yancey,
Stephen C. Whicker and Ricky L. Brown (the "Employment Agreements"), each of
which will be effective upon the effective date of this Offering. The Employment
Agreements provide for an annual base salary, potential fiscal year end bonuses
and certain other benefits. Each Employment Agreement generally provides for a
level annual increase of the base salary throughout the term of the agreement
and provides that any annual bonuses will be based upon certain
performance-related objectives of the Company that will be ultimately
established by the Compensation Committee. Certain terms of the Employment
Agreements are summarized in the table below:

FIRST YEAR
TERM BASE STOCK
EMPLOYEE POSITION/TITLE (YEARS) COMPENSATION OPTIONS(1)
- -------- -------------- ------- ------------ ----------

Walter M. Boomershine,
Jr........................ Chairman and Senior Vice President 3 $200,000 25,000
Robert W. Gundeck........... Chief Executive Officer 5 300,000 350,000
Charles K. Yancey........... Chief Operating Officer and President 5 250,000 540,000
Stephen C. Whicker.......... Executive V.P. of Corporate Development, 5 200,000 540,000
General Counsel and Secretary
Ricky L. Brown.............. Chief Financial Officer, Vice President 5 135,000 120,000
of Finance and Treasurer

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

(1) As of the effective date of this Offering, pursuant to employee's
participation in the Company's Incentive Stock Plan. See
"Management -- Incentive Stock Plan."

Each of the Employment Agreements of Messrs. Gundeck, Whicker and Brown are
for a term of generally five years and may be renewed for terms of one to three
years thereafter. Mr. Boomershine's Employment Agreement provides that he will
serve as Senior Vice President for a term ending December 31, 2000 and as a
consultant to the Company for a term of 10 years thereafter. Mr. Boomershine's
base salary during the consultation period will be $200,000 for the first two
years and $100,000 each year thereafter. Mr. Yancey's Employment Agreement
provides that he will serve as Chief Operating Officer and President of the
Company for a term of five years and as a consultant to the Company for a term
of generally five years. Mr. Yancey's base salary during said consultation
period will be $50,000 per year.

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All of the Employment Agreements provide that the Company may terminate the
executive officer with or without cause. The Employment Agreements provide that
if the Company terminates an executive officer without cause or forces the
executive officer to resign for what is considered a "Good Reason" pursuant to
the applicable Employment Agreement, the Company must continue to pay the
executive officer's base salary and his annual average bonus for a period of no
less than the remaining term of the applicable Employment Agreement.

Each of the Employment Agreements contains similar confidentiality and
non-competition provisions. These provisions provide that during the term of the
Employment Agreement, during a period of three years after the termination
thereof with respect to confidentiality provisions and during a period of one
year after the termination thereof with respect to non-competition provisions,
the executive officer shall not (i) use or disclose any confidential information
of the Company, (ii) become employed by or obtain any ownership interest in any
competitor of the Company that is located within a territory that is specified
in the applicable Employment Agreement, or (iii) interfere with the Company's
relationships with any of its customers, vendors or employees. Said geographic
restrictions generally apply to territories that are within a 100-mile radius of
the city of Atlanta, Georgia or within a 100-mile radius of any automobile or
truck dealership or ancillary business in which the Company has a controlling
interest.

In addition, each Employment Agreement provides that if there is a "Change
of Control," the executive will receive the following benefits: (1) base salary
for a period of time generally no less than the term of the applicable
Employment Agreement plus consulting compensation for a certain period to the
extent the executive officer's Employment Agreement provides for any
consultation periods; (2) a pro-rata portion of the bonus applicable to the
fiscal year in which the termination occurs plus a bonus payment for the
three-year period thereafter; (3) participation in all employee retirement plans
maintained by the Company as of the date of termination for the three-year
period following the termination, or, if no such plans exist, the Company will
pay to the executive officer the then present value of the excess of (i) the
benefit the executive would have been paid under such plan had the executive
continued to be covered for said three-year period (less required contribution
amount) with assumed earnings of eight percent over (ii) the benefit actually
payable under said plan; and (4) medical, dental and hospitalization insurance
coverage for the executive and the executive's dependents until the date on
which the executive is employed by, and becomes eligible for medical, dental and
hospitalization coverage through the plan of, another employer.

Each Employment Agreement provides that a "Change in Control" shall be
deemed to have occurred if (A) prior to the Offering, the shareholders of the
Company or its affiliates sell or otherwise transfer to persons or entities who
are not affiliates of the Company 75% or more of the voting stock of the Company
or its affiliates; (B) any person becomes a beneficial owner or 50% or more of
the voting stock of the Company or its Affiliates prior to the Offering or 40%
or more of the voting stock of the Company or its Affiliates after the Offering;
(C) the majority of the Board of Directors of the Company consists of
individuals other than directors who are incumbent as of the date of the
applicable Employment Agreement or that directors that become directors by a
majority vote of the directors who are incumbent as of said date; (D) all or
substantially all of the assets or business of the Company or its affiliates is
disposed of pursuant to a merger, consolidation or other transaction other than
to an affiliate of the Company (unless the Company's shareholders, immediately
prior to such merger, consolidation or other transaction, beneficially own 50%
or more of the voting stock or other ownership interest of any entity or
entities that succeed to the business of the Company; (E) the consummation of a
merger, consolidation or other business combination of the Company with any
other person or affiliate thereof, other than a merger, consolidation or
business combination which would result in the outstanding common stock of the
Company immediately prior thereto continuing to represent at least 50% of the
outstanding common stock of the Company or such surviving entity or parent or
affiliate thereof immediately after such merger, consolidation or business
combination, or the consummation of a plan of complete liquidation of the
Company; or (F) the occurrence of any other event or circumstance which the
Board of Directors of the Company determines, by resolution, affects the control
of the Company and therefore constitutes a "Change of Control."

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INCENTIVE STOCK PLAN

The Board of Directors of the Company adopted the Company's 1997 & 1998
Incentive Stock Plan (the "Incentive Stock Plan") on December 18, 1997, and said
Incentive Stock Plan was approved by the shareholders of the Company on January
8, 1998, in order to attract and retain key personnel. The following discussion
of the material features of the Incentive Stock Plan is qualified by reference
to the text of such Plan filed as an exhibit to the Registration Statement of
which this Prospectus is a part.

Under the Incentive Stock Plan, options to purchase up to an aggregate of
2,250,000 shares of common stock of the Company may be granted to directors,
officers, consultants and employees of the Company and/or any of its
subsidiaries and other individuals providing services to the Company. Members of
the Board of Directors who serve on the Compensation Committee must qualify as
"non-employee directors," as that term is defined in Rule 16b-3 promulgated
under the Securities Exchange Act of 1934, as amended. In addition, the Company
may issue incentive stock options ("ISOs") to officers and directors who are
employees of the Company.

The Compensation Committee of the Board of Directors of the Company, which
is comprised of independent directors, will administer the Incentive Stock Plan
and will determine, among other things, the persons who are to receive options,
the number of shares to be subject to each option and the vesting schedule of
options. Options granted under the Incentive Stock Plan that are not ISOs must
be granted no later than January 1, 2008 and must be exercised within 10 years
of the grant, but in no event later than December 31, 2017. ISOs must be granted
no later than ten years after the adoption of the Incentive Stock Plan and must
be exercised no later than ten years after the particular ISO is granted.

Options generally may not be transferred other than by will or the laws of
descent and distribution and, during the lifetime of an optionee, options may be
exercised only by the optionee. The exercise price of options that are not ISOs
will be determined at the discretion of the Compensation Committee. The exercise
price of the ISOs may not be less than the market value of the common stock on
the date of grant of the option. In the case of ISOs granted to any holder who
on the date of grant of the ISOs holds more than ten percent of the total
combined voting power of all classes of stock of the Company and its
subsidiaries, the exercise price may not be less than 110% of the market value
per share of the common stock on the date of grant. Unless designated as
"incentive stock options" intended to qualify under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), options granted under the
Incentive Stock Plan are intended to be "nonstatutory stock options" ("NSOs").
The exercise price may be paid in cash, in shares of common stock owned by the
optionee, in other property deemed acceptable by the Compensation Committee, or
in any combination of cash, shares or other such acceptable property.

The Incentive Stock Plan provides that, in the event of changes in the
corporate structure of the Company or certain events affecting the shares of the
Company, adjustments will automatically be made in the number and kind of shares
available for issuance and in the number and kind of shares covered by
outstanding options. It further provides that, in connection with any merger or
consolidation or other business combination in which the Company is not the
surviving corporation, the Compensation Committee shall pay, in cash, the excess
of the fair market value of all options over the exercise price of such options
on the date of such business combination or, alternatively, shall grant
substitute options on such terms and conditions which substantially preserve the
value, rights and benefits of options being substituted.

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The Board of Directors of the Company has granted or will grant
contemporaneously with the closing of this Offering options to purchase an
aggregate of 1,592,000 shares of common stock under the Incentive Stock Plan to
executive officers, other employees and directors of the Company. All of these
options will vest and become exercisable from time to time over the ten-year
period following the date each option is granted in accordance with the terms of
the individual option grants. The following table sets forth the date on which
such grants were made, the names of the recipients, the number of shares
underlying the grants, the type of options granted and the price at which such
grants may be exercised:

SHARES
NAME OF RECIPIENT UNDERLYING GRANT TYPE DATE OF GRANT(1) EXERCISE PRICE(2)
- ----------------- ---------------- ---- ---------------- -----------------

Walter M. Boomershine, Jr.*.............. 25,000 ISO IPO Date IPO Price
Robert W. Gundeck*....................... 300,000 ISO 4/22/98 $ 8.00
50,000 ISO IPO Date IPO Price
Charles K. Yancey*....................... 200,000 ISO 1/8/98 $ 6.27
240,000 ISO 4/22/98 $ 8.00
100,000 ISO IPO Date IPO Price
Stephen C. Whicker*...................... 200,000 ISO 1/8/98 $ 6.27
240,000 ISO 4/22/98 $ 8.00
100,000 ISO IPO Date IPO Price
Ricky L. Brown*.......................... 25,000 ISO 1/8/98 $ 6.27
70,000 ISO 4/22/98 $ 8.00
25,000 ISO IPO Date IPO Price
George D. Busbee**....................... 5,000 NSO IPO Date IPO Price
Lee M. Sessions, Jr.**................... 5,000 NSO IPO Date IPO Price
Jack R. Altherr**........................ 5,000 NSO IPO Date IPO Price
Michael F. O'Neill....................... 2,000 ISO IPO Date IPO Price
----------------
Total.......................... 1,592,000

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

* Executive officer of the Company.
** Director of the Company.
(1) "IPO Date" means the completion date of this Offering.
(2) "IPO Price" means the price of the common stock listed on the cover page of
this Prospectus.

In addition to such grants, the Company has granted to James E. L. Peters,
Jr., in connection with the Collision Centers USA Acquisition, NSOs to purchase
5,000 shares of common stock, each of which are exercisable at $7.00 per share
and vest six months following the completion of this Offering.

The issuance and exercise of ISOs have no federal income tax consequences
to the Company. While the issuance and exercise of ISOs generally have no
ordinary income tax consequences to the holder, upon the exercise of an ISO, the
holder will treat the excess of the fair market value on the date of exercise
over the exercise price as an item of tax adjustment for alternative minimum tax
purposes. If the holder of common stock acquired upon the exercise of an ISO
disposes of such stock before the later of (i) two years following the grant of
the ISO and (ii) one year following the exercise of the ISO (a "Disqualifying
Disposition"), the holder will recognize ordinary income for federal income tax
purposes in an amount equal to the lesser of (i) the excess of the common
stock's fair market value on the date of exercise over the option exercise
price, and (ii) the excess of the amount realized on disposition of the common
stock over the option exercise price. Any additional gain upon the disposition
will be taxed as capital gains. The disposition of common stock acquired from
the exercise of an ISO other than in a Disqualifying Disposition will ordinarily
result in capital gains or loss to the holder for federal income tax purposes
equal to the difference between the amount realized on disposition of the common
stock and the option exercise price. Any capital gain will be subject to reduced
rates of tax if such shares were held more than twelve months, and will be
subject to further reduced rates if such shares were held more than eighteen
months. The Company will be entitled to a compensation expense

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deduction for the Company's taxable year in which the disposition occurs equal
to the amount of ordinary income recognized by the holder.

The issuance of NSOs has no federal income tax consequences to the Company
or the holder. Upon the exercise of an NSO, the Company generally will be
allowed a federal income tax deduction equal to the amount by which the fair
market value of the underlying shares on the date of exercise exceeds the
exercise price. NSO holders will recognize ordinary income for federal income
tax purposes at the time of option exercise in the same amount. In the event of
a sale of shares acquired by exercise of a NSO, any appreciation or depreciation
after the exercise date generally will be taxed as capital gain or loss;
provided that any gain will be subject to reduced rates of tax if such shares
were held for more than twelve months and will be subject to further reduced
rates if such shares were held for more than eighteen months. The disposition of
shares acquired by exercise of a NSO will result in capital gains or losses to
the holder.

The Company intends to register the shares underlying the Incentive Stock
Plan as soon as practicable on Form S-8. If such registration is not required,
such shares may be issued upon option exercise in reliance upon the private
offering exemption codified in Section 4(2) of the Securities Act and/or Rule
701 promulgated thereunder.

LIMITATIONS OF DIRECTORS LIABILITY

The Articles of the Company include a provision that effectively eliminates
the liability of directors to the Company or to the Company's shareholders for
monetary damages for breach of the fiduciary duties of a director, except for
any appropriation, in violation of the director's duties, of any business
opportunity of the Company, acts or omissions which involve intentional
misconduct or a knowing violation of law, certain actions with respect to
unlawful distributions and any transaction from which the director derived an
improper personal benefit. This provision does not prevent shareholders from
seeking nonmonetary remedies covering any such action, nor does it affect
liabilities under the federal securities laws. The Articles of Incorporation
further provide that the Company shall indemnify each of its directors and
officers against any liability (including counsel fees) which is allowed to be
paid or reimbursed by the Company under the laws of the State of Georgia and
which is actually and reasonably incurred in connection with any proceeding in
which such director or officer may be involved by reason of his or her having
been a director or officer of the Company. Georgia Law currently authorizes a
corporation to indemnify its directors and officers against the obligation to
pay a judgment, settlement, penalty, fine (including an excise tax assessed with
respect to an employee benefit plan), or reasonable expenses (including
counsels' fees) reasonably incurred by them in connection with any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative, arbitrative or investigative and whether formal or informal, if
such officers or directors conducted themselves in good faith and they
reasonably believed to be in, or not opposed to, the best interests of the
corporation and, with respect to any criminal proceeding, had no reasonable
cause to believe their conduct was unlawful. Indemnification is permitted in
more limited circumstances with respect to derivative actions. The Company
believes that these provisions of the Articles of Incorporation and the Bylaws
are necessary to attract and retain qualified persons to serve as directors and
officers. In addition, the Company anticipates carrying directors and officers
liability insurance as soon as practicable following the closing of the
Offering.

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PRINCIPAL SHAREHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of the Company's common stock as of April 30, 1998, after giving
effect to the Merger and the Acquisitions, by (i) each shareholder who is known
by the Company to own beneficially more than 5% of the outstanding common stock,
(ii) each director of the Company, (iii) each of the executive officers of the
Company, and (iv) all directors and executive officers of the Company as a
group, and as adjusted to reflect the sale by the Company of the shares of
common stock in this Offering. Holders of Common Stock are entitled to one vote
per share on all matters submitted to a vote of the shareholders of the Company.
See "Description of Capital Stock."

PERCENTAGE OF
OUTSTANDING
AMOUNT AND COMMON STOCK OWNED
NATURE OF ----------------------
BENEFICIAL BEFORE AFTER
NAME OF BENEFICIAL OWNER(1) OWNERSHIP(2)(3) OFFERING OFFERING
- --------------------------- --------------- -------- --------

Walter M. Boomershine, Jr.(4).......................... 639,671 11.8% 5.9%
Charles K. Yancey...................................... 113,081 2.1 1.0
Robert M. Gundeck...................................... 63,640 1.2 *
Stephen C. Whicker..................................... 66,465 1.2 *
Ricky L. Brown......................................... 10,016 * *
Alan K. Arnold......................................... 309,091 5.7 2.8
George D. Busbee(5).................................... 5,000 * *
Lee M. Sessions, Jr.(5)................................ 5,000 * *
Jack R. Altherr(5)..................................... 5,000 * *
Walter M. Boomershine, III(4)(6)....................... 779,376 14.3 7.1
Renee B. Jochum(4)(7).................................. 708,523 13.0 6.5
Jacquelyn B. Thompson(4)(8)............................ 708,523 13.0 6.5
Patrice B. Mitchell(4)(9).............................. 708,523 13.0 6.5
Lindsey B. Robertson(4)(10)............................ 744,887 13.7 6.8
All directors and executive officers as a group (9
persons)............................................. 1,216,964 22.3% 11.1%

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

* Represents beneficial ownership of less than 1% of the total outstanding
shares of the Company.
(1) Unless otherwise noted, the address of all persons listed is c/o Sunbelt
Automotive Group, Inc., 5901 Peachtree-Dunwoody Rd., Suite 250B, Atlanta,
GA 30328.
(2) Beneficial ownership is determined in accordance with the rules of the
Commission. Shares of common stock subject to options, warrants or other
rights to purchase which are currently exercisable or are exercisable
within 60 days after the completion of the Offering are deemed outstanding
for computing the percentage ownership of the persons holding such options,
warrants or rights, but are not deemed outstanding for computing the
percentage ownership of any other person. Unless otherwise indicated, each
person possesses sole voting and investment power with respect to the
shares identified as beneficially owned.
(3) The numbers with respect to Alan K. Arnold and Lindsey B. Robertson (with
respect to the shares to be issued to E. Moss Robertson, Jr.) assume that
the Offering price is $11.00 per share.
(4) Walter M. Boomershine, III, Renee B. Jochum, Jacquelyn B. Thompson, Patrice
B. Mitchell and Lindsey B. Robertson are all adult children of Walter M.
Boomershine, Jr. Each of said persons disclaims beneficial ownership
pursuant to the rules under the Exchange Act of the common stock attributed
to the others.
(5) Consists of 5,000 shares of common stock issuable upon the exercise of
options granted to each of Mr. Busbee, Mr. Sessions and Mr. Altherr as a
non-employee Director, pursuant to the Company's Incentive Stock Plan. See
"Director Compensation."
(6) Includes 141,705 shares to be issued to The WMB, III Family Trust, for
which Mr. Boomershine, III serves as the sole Trustee.
(7) Includes 599,883 shares to be issued to The RBJ Family Trust, for which Ms.
Jochum serves as the sole Trustee. The address of Ms. Jochum is 6 Starlight
Ct., Potomac, MD 20854.

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(8) Includes 599,883 shares to be issued to The JBT Family Trust, for which Ms.
Thompson serves as the sole Trustee. The address of Ms. Thompson is 219
Bates Rd., Cartersville, GA 30120.
(9) Includes 599,883 shares to be issued to The PBM Family Trust, for which Ms.
Mitchell serves as the sole Trustee. The address of Ms. Mitchell is 2074
Shillingwood Dr., Kennesaw, GA 30144.
(10) Includes 599,883 shares to be issued to The LBR Family Trust, for which Ms.
Robertson serves as the sole Trustee, and 36,364 pro forma shares to be
issued to E. Moss Robertson, Jr., who is Ms. Robertson's husband, upon
consummation of the ROC Acquisition. Ms. Robertson disclaims beneficial
ownership under the rules of the Exchange Act of the shares owned by Mr.
Robertson. The address of Ms. Robertson is c/o Robertson
Oldsmobile-Cadillac, Inc., 2355 Browns Bridge Rd., Gainesville, GA 30504.

CERTAIN TRANSACTIONS

CERTAIN DEALERSHIP LEASES

Certain of the properties leased by the Company's dealership subsidiaries
are owned by officers, directors or holders of 5% or more of the common stock of
the Company or their affiliates (the "Related Party Leases"). The Company
believes that the terms and conditions of each of these leases is comparable to
those that would result from arm's-length negotiations with unrelated third
parties. Each of the Related Party Leases and the rent payable thereunder are
described below. For a more complete description of the location, use and
expiration date of each lease, see "Business -- Facilities."

During 1995, 1996 and 1997, and continuing after the Offering, the entities
listed below have leased and will continue to lease the real properties on which
their dealerships or operations are located from limited partnerships (WINCO I,
L.P., WINCO II, L.P. and WINCO III, L.P.) controlled by Walter M. Boomershine,
Jr., who is the Chairman of the Board and Senior Vice President of the Company,
and owned by Walter M. Boomershine, Jr. and his family:

ANNUAL
FRANCHISE/SUBSIDIARY RENTAL PAYMENT
- -------------------- --------------

Boomershine Ford and Boomershine Isuzu...................... $480,000
Collision Centers USA (Duluth center)....................... 240,000
Boomershine Pontiac-Buick-GMC, Inc.......................... 281,388
Boomershine Hummer.......................................... 130,800
Boomershine Nissan.......................................... 210,000
Boomershine Mitsubishi...................................... 180,000

Each of these leases requires the respective lessees to pay the taxes,
insurance and maintenance expenses related to the applicable leased property.

Wade Ford, Inc. leases one of the two parcels of real property on which its
dealership is located (the "Wade Lease"), and Wade Ford Buford, Inc. leases the
parcel on which its dealership is located (the "Wade Buford Lease"), from Mr.
Alan K. Arnold, who is a director of the Company. The other parcel on which Wade
Ford, Inc.'s dealership is located is owned by an unaffiliated third party. The
Wade Lease annual rental payments during Wade Ford, Inc.'s last fiscal year were
$420,000, and the Wade Buford Lease annual rental payments during Wade Ford
Buford, Inc.'s last fiscal year were $240,000. Both leases require the
respective subsidiaries to pay the taxes, insurance and maintenance expenses
related to the leased property.

Robertson Oldsmobile-Cadillac, Inc. leases the real property on which its
dealerships are located from Mr. E. Moss Robertson, Jr., who is the son-in-law
of Mr. Walter M. Boomershine, Jr., the Chairman of the Board and Senior Vice
President of the Company. Prior to the Offering, the annual rental payments
under the lease were $180,000 for 1997 and $149,600 for 1996. As part of the
Acquisition, Mr. Robertson and the Company have agreed to replace the existing
lease with a new lease agreement, pursuant to which the annual rental payment of
said lease will be $204,000 for the first and second lease years, $216,000 for
the third through fifth lease years, and $240,000 beginning with the sixth lease
year and thereafter until the end of the

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initial term of the lease. The lease also requires Robertson
Oldsmobile-Cadillac, Inc. to pay the taxes, insurance and maintenance expenses
related to the leased property.

CERTAIN BUSINESS RELATIONSHIPS

In connection with the South Financial Acquisition, the Company borrowed
the sum of $4.5 million from WINCO I, L.P., a limited partnership controlled by
Walter M. Boomershine, Jr. and owned by Walter M. Boomershine and his family.
This loan was made pursuant to a promissory note which matures on July 7, 1998
and carries an interest rate equal to the prime rate of interest announced by
NationsBank, N.A. from time to time. The Company has the option to refinance the
loan for an additional term of five years subsequent to said maturity date, at
an interest rate to 8% per annum, using a 20-year amortization.

For additional information concerning related party transactions of the
Company, see the notes to the Combined and Consolidated Financial Statements of
the Company. For the businesses being acquired in the Acquisitions, see "The
Acquisitions" and the notes to the historical financial statements for each
respective acquired business in this Prospectus, and for the business being
acquired in the Merger, see "The Merger."

PROMISSORY NOTES

On April 22, 1998, the Company's Board of Directors granted to Messrs.
Gundeck, Yancey, Whicker and Brown, each of whom is an executive officer of the
Company, the right to purchase shares of common stock of the Company at a price
of $8.00 per share. Messrs. Gundeck, Yancey, Whicker and Brown elected to
purchase 63,640, 111,081, 64,465 and 10,016 shares of common stock of the
Company, respectively (collectively, the "Executive Shares"), and each executed
a five-year promissory note in favor of the Company (collectively, the
"Executive Notes") in the principal amounts of $509,120, $888,648, $515,720 and
$80,128, respectively. The Executive Notes, which bear interest at a rate of 8%
per annum, require annual payments of interest and a single payment of the
entire principal balance at the end of the five-year term.

DESCRIPTION OF CAPITAL STOCK

GENERAL

The Company's authorized capital stock consists of (i) 450,000,000 shares
of common stock, $0.001 par value, and (ii) 50,000,000 shares of preferred
stock, $0.001 par value. Upon completion of this Offering, the Company will have
10,933,614 outstanding shares of common stock (assuming the Underwriters' over-
allotment option is not exercised) and no outstanding shares of preferred stock.

The following summary description of the Company's capital stock does not
purport to be complete and is qualified in its entirety by reference to the
Company's Articles of Incorporation, which is filed as an exhibit to the
Registration Statement of which this Prospectus forms a part, and Georgia law.
Reference is made to such exhibit and Georgia law for a detailed description of
the provisions thereof summarized below.

COMMON STOCK

As of April 30, 1998, there were 255,202 shares of common stock outstanding
held of record by four shareholders, and options to purchase an aggregate of
1,280,000 shares of common stock were outstanding, none of which was exercisable
as of April 30, 1998. After giving effect to the sale of 5,500,000 shares of
common stock by the Company in this Offering, there will be 10,933,614 shares
outstanding (11,758,614 if the Underwriter's over-allotment option is exercised
in full). Holders of common stock have one vote per share on all matters
submitted to a vote of the shareholders of the Company, including with respect
to the election of directors.

Subject to the prior rights of holders of preferred stock, if any, holders
of the common stock are entitled to receive ratably such dividends, if any, as
are declared by the Company's Board of Directors out of funds legally available
for that purpose. However, as discussed under "Dividend Policy," the Company
currently does not intend to pay any cash dividends. Shareholders of the Company
have no preemptive or other rights to
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subscribe for additional shares. In the event of the liquidation, dissolution or
winding up of the Company, holders of common stock are entitled to share ratably
in all assets available for distribution to holders of common stock after
payment in full of creditors and any rights of preferred shareholders. No shares
of any class of common stock are subject to a redemption or a sinking fund. All
outstanding shares of common stock are, and all shares offered by this
Prospectus will be, when sold, validly issued, fully paid and nonassessable.

PREFERRED STOCK

The Company's Articles authorize the Board of Directors to issue up to
50,000,000 shares of preferred stock in one or more series and to establish such
designations and relative voting, dividend, liquidation, conversion, redemption,
liquidation and other rights, preferences and limitations as the Board of
Directors may determine without any further approval of the shareholders of the
Company. The issuance of preferred stock by the Board of Directors, while
providing desirable flexibility in connection with possible acquisitions and
other corporate purposes could, among other things, adversely affect the voting
power of the holders of common stock and, under certain circumstances, make it
more difficult for a person or group to gain control of the Company. See "Risk
Factors -- Anti-Takeover Provisions." The issuance of any series of preferred
stock, and the relative designations, rights, preferences and limitations of
such series, if and when established, will depend upon, among other things, the
future capital needs of the Company, the then-existing market conditions and
other factors that, in the judgment of the Board of Directors, might warrant the
issuance of preferred stock. At the date of this Prospectus, no shares of
preferred stock are outstanding and there are no plans, agreements or
understandings for the issuance of any shares of preferred stock.

WARRANTS

On March 13, 1998, the Company granted warrants to purchase 50,000 shares
of common stock to Tatum CFO Partners, L.P. in consideration for certain
financial and accounting consulting services rendered in connection with this
Offering. These warrants vest equally on a quarterly basis at 8,333 shares per
quarter, and have an exercise price of $8.00 per share. As of the date of this
Prospectus, 16,666 shares of common stock underlying these warrants are
immediately exercisable and the remaining warrants will vest ratably on a
quarterly basis over the next year. These warrants will expire, if not
exercised, 10 years after the date on which they are granted.

REGISTRATION RIGHTS AND STOCK PRICE PROTECTION

As part of the Acquisitions, the Company entered into a registration rights
agreement with the selling shareholders of Wade Ford, Inc. and Wade Ford Buford,
Inc. (collectively, "Wade Ford") and the sole shareholder of Robertson
Oldsmobile-Cadillac, Inc. (each, a "Registration Rights Agreement" and
collectively, the "Registration Rights Agreements"). Subject to certain
limitations, the Registration Rights Agreements provide said shareholders with
certain piggyback registration rights that permit them to have their shares of
unregistered common stock, as selling security holders, included in any
registration statement pertaining to the registration of the Company's common
stock for issuance by the Company or for resale by other selling security
holders, with the exception of initial public offerings of the common stock,
registrations relating solely to employee benefits plans and registrations
relating solely to a transaction pursuant to Rule 145 under the Securities Act.
These registration rights will be limited or restricted to the extent an
underwriter of an offering, if an underwritten offering, or the Company's Board
of Directors, if not an underwritten offering, determines that the amount of the
common stock to be registered pursuant to any Registration Rights Agreement
would not permit the sale of the registered common stock in the quantity and at
the price originally sought by the Company or the original selling security
holders, as the case may be. Additionally, the Company has contractually agreed
to provide certain price protection to the unregistered common stock of the
Company (the "Price Protection Stock") that will be provided by the Company to
the selling shareholders of Wade Ford and Day's Chevrolet. With respect to the
Price Protection Stock, in the event the price of the Price Protection Stock on
the first anniversary (in the case of the Wade Ford Price Protection Stock) or
the second anniversary (in the case of the Day's Chevrolet, Inc. Price
Protection Stock) after the consummation of the Offering is less than the price
of said stock on the date of the Offering, the Company will compensate the

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applicable shareholders for such deficiency in cash or by issuing additional
shares of unregistered (in the case of Wade Ford Price Protection Stock) or
registered (in the case of the Day's Chevrolet, Inc. Price Protection Stock)
common stock.

GEORGIA LAW, CERTAIN ARTICLES AND BYLAW PROVISIONS AND CERTAIN FRANCHISE
AGREEMENT PROVISIONS

Certain provisions of Georgia Law and of the Company's Articles and Bylaws,
summarized in the following paragraphs, may be considered to have an
anti-takeover effect and may delay, deter or prevent a tender offer, proxy
contest or other takeover attempt that a shareholder might consider to be in
such shareholder's best interest, including such an attempt as might result in
payment of a premium over the market price for shares held by shareholders
unless the takeover or change of control is approved by the Company's Board of
Directors. Such provisions may also make the removal of directors and management
more difficult.

Georgia Anti-takeover Law. The GBCC restricts certain business
combinations with "interested shareholders" (as defined below) (the "Business
Combination Statute"), and contains fair price requirements applicable to
certain mergers with certain interested shareholders (the "Fair Price Statute").
In accordance with the provisions of these statutes, the Company must elect in
its Bylaws to be covered by the restrictions imposed by these statutes. The
Company has elected to be covered by such restrictions in its Bylaws, and this
bylaw provision may only be repealed upon a vote of at least two-thirds of
continuing directors and a majority of the voting shares of the Company.
Furthermore, shareholders may amend or repeal the Company's Bylaws or adopt new
Bylaws (even though these Bylaws may also be amended or repealed by the Board of
Directors).

The Business Combination Statute regulates business combinations such as
mergers, consolidations, share exchanges and asset purchases where the acquired
business has at least 100 shareholders residing in Georgia and has its principal
office in Georgia, as the Company does, and where the acquiror became an
interested shareholder of the corporation, unless either: (i) the transaction
resulting in such acquiror becoming an interested shareholder or the business
combination received the approval of the corporation's board of directors prior
to the date on which the acquiror became an interested shareholder; or (ii) the
acquiror became the owner of at least 90% of the outstanding voting shares of
the corporation (excluding any shares held be certain other persons) in the same
transaction in which the acquiror became an interested shareholder. For purposes
of the Business Combination Statute and the Fair Price Statute, an "interested
shareholder" generally is any person who directly or indirectly, alone or in
concert with others, beneficially owns or controls 10% or more of the voting
power of the outstanding voting shares of the corporation. The Business
Combination Statute prohibits business combinations with an unapproved
interested shareholder for a period of five years after the date on which such
person became an interested shareholder.

The Fair Price Statute prohibits certain business combinations between a
Georgia business corporation and an interested shareholder. The Fair Price
Statute would permit the business combination to be effected if: (i) certain
"fair price" criteria are satisfied; (ii) the business combination is
unanimously approved by the continuing directors; (iii) the business combination
is recommended by at least two-thirds of the continuing directors and approved
by a majority of the votes entitled to be cast by holders of voting shares,
other than voting shares beneficially owned by the interested shareholder; or
(iv) the interested shareholder has been such for at least three years and has
not increased his ownership position in such three-year period by more than one
percent in any 12-month period. The Fair Price Statute is designed to inhibit
unfriendly acquisitions that do not satisfy the specified "fair price"
requirements.

Classified Board of Directors. The Company's Articles and Bylaws provide
for the Board of Directors to be divided into three classes of directors serving
staggered three-year terms. As a result, approximately one-third of the Board of
Directors will be elected each year, and it will take at least two meetings of
the Company's shareholders in order to change the majority of the directors.
Classification of the Board of Directors increases the time required to change
the composition of a majority of directors and may tend to discourage a takeover
bid for the Company. Moreover, in order to remove a Director without cause, the
Articles of Incorporation require the vote of at least eighty percent of the
eligible shares; removal for cause requires the vote of a majority of eligible
shares. Director's positions that become vacant as a result of a

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removal by the shareholders may be filled by the shareholders, or, if authorized
by the shareholders, by a majority vote of the Board of Directors. Director's
positions that become vacant due to the death, resignation or retirement of a
Director may be filled by a majority vote of the remaining Directors. This
above-referenced provision may preclude or hinder shareholders of the Company
from removing incumbent directors without cause, simultaneously gaining control
of the Board of Directors by filing the vacancies with their own nominees. See
"Management -- Executive Officers and Directors; Key Personnel."

Special Meetings of Shareholders. The Company's Articles and Bylaws
provide that special meetings of shareholders may be called only by the Chairman
or Chief Executive Officer of the Company, or by a majority vote of the Board of
Directors of the Company. These provisions may make it more difficult for
shareholders to take action opposed by the Board of Directors.

Advance Notice Requirements for Shareholder Proposals and Director
Nominations. The Company's Bylaws provide that shareholders seeking to bring
business before an annual meeting of shareholders, or to nominate candidates for
election as directors at an annual or a special meeting of shareholders, must
provide timely notice thereof in writing. To be timely, a shareholder's notice
must be delivered to, or mailed and received at, the principal executive office
of the Company at least sixty (60) days prior to the date of such annual or
special meeting. The Bylaws also specify certain requirements for a
shareholder's notice to be in proper written form. These provisions may preclude
some shareholders from bringing matters before the shareholders at an annual or
special meeting or from making nominations for directors at an annual or special
meeting.

Restrictions under Franchise Agreements. The manufacturers' agreements
relating to public companies impose various restrictions on the transfer of the
common stock. A number of manufacturers prohibit transactions which affect
changes in management control of the Company. For instance, Ford may cause the
Company to sell or resign from its Ford franchises if any person or entity
acquires 15% or more of the Company's voting securities. Likewise, GM, Toyota
and Nissan may force the sale of their respective franchises if 20% or more of
the Company's voting securities are so acquired. Chrysler also generally
approves of the public sale of only 50% of the common stock of a public company
and requires prior approval of any future sales that would result in a change in
voting or managerial control of such a public company. All or some of the
restrictions may apply to the Company once the Company reaches an agreement with
each respective manufacturer. Such restrictions may prevent or deter prospective
acquirors from obtaining control of the Company. See "Risk Factors -- Stock
Ownership/Issuance Limits; Limitation on Ability to Issue Additional Equity" and
"Business -- Relationships with Manufacturers."

LISTING

The Company will apply for quotation of the common stock on the Nasdaq
National Market under the symbol "SBLT."

TRANSFER AGENT AND REGISTRAR

The Company has appointed as the transfer agent and
registrar for the common stock.

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SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this Offering, the Company will have outstanding
10,933,614 shares of common stock (assuming no exercise of the Underwriters'
over-allotment option). All of such shares will be freely transferable and may
be resold without further registration under the Securities Act; except for any
shares held by an "affiliate" of the Company (as that term is defined in Rule
144), any shares received by any shareholders in connection with any of the
Acquisitions or the Merger and any shares issued to officers of the Company
pursuant to certain employment contracts, which shares will be subject to the
resale limitations of Rule 144. In general, under Rule 144 as currently in
effect, a person (or persons whose shares are aggregated) who has beneficially
owned "restricted securities" for at least one year may, under certain
circumstances, resell within any three-month period, such number of shares as
does not exceed the greater of one percent of the then-outstanding shares of
common stock or the average weekly trading volume of common stock during the
four calendar weeks prior to such resale. Rule 144 also permits, under certain
circumstances, the resale of shares without any quantity limitation by a person
who has satisfied a two-year holding period and who is not, and has not been for
the preceding three months, an affiliate of the Company. In addition, holding
periods of successive non-affiliate owners are aggregated for purposes of
determining compliance with these one- and two-year holding period requirements.
Sales under Rule 144 are also subject to certain provisions relating to the
manner of sale, notice of sale, and availability of current public information
about the Company. The Company has reserved for issuance 1,597,000 shares of
common stock, which underlie options granted under the Company's Incentive Stock
Plan, and 50,000 shares of common stock, which underlie warrants issued to a
consulting firm, and the Company intends to file a registration statement on
Form S-8 with the Commission following completion of this Offering to register
the shares of the common stock issuable under the Incentive Stock Plan and the
consultant warrants.

The availability of shares for sale or actual sales under Rule 144 and the
Form S-8 registration statement and the perception that such shares may be sold
may have a material adverse effect on the market price of the common stock.
Sales under Rule 144 and the Form S-8 registration statement also could impair
the Company's ability to market additional equity securities. Additionally, the
Company has entered into the Registration Rights Agreement with the shareholders
of Wade Ford, Inc., Wade Ford Buford, Inc. and Robertson Oldsmobile-Cadillac,
Inc., which provides piggyback registration rights with respect to all of the
shares of common stock that the selling shareholders in said acquisition will
receive. For further information regarding the Registration Rights Agreement,
see "Description of Capital Stock -- Registration Rights and Stock Price
Protection."

The Company, its executive officers and directors and holders of more that
two percent (2%) of the common stock have agreed, subject to certain exceptions,
not, directly or indirectly, to: (i) offer, pledge, sell, contract to sell, sell
any option or contract to purchase, purchase any option or contract to sell,
grant any option to purchase, right or warrant to purchase, or otherwise
transfer or dispose of any common stock or securities convertible into or
exchangeable or exercisable for common stock or file a registration statement
under the Securities Act with respect to the foregoing; or (ii) enter into any
swap or other agreement or transaction that transfers, in whole or part,
directly or indirectly, the economic consequences of ownership of the common
stock, whether any such swap or transaction described above is to be settled by
delivery of common stock or such other securities, in cash or otherwise, for 180
days from the date of this Prospectus without the prior written consent of the
Underwriter; provided that the Company may sell shares of common stock to a
third party as consideration for the Company's acquisition from such third party
of an automobile dealership, so long as such third party executes a lock up
agreement on substantially the same terms described above for a period expiring
180 days after the date of this Prospectus.

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UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, the
underwriters named below (the "Underwriters"), through their representative
Raymond James & Associates, Inc. (the "Representative"), have severally agreed
to purchase from the Company the following respective number of shares of common
stock at the public offering price less the underwriting discounts and
commissions set forth on the cover page of this Prospectus:

NUMBER OF
NAME SHARES
- ---- ---------

Raymond James & Associates, Inc.............................

-------
Total.............................................
=======

The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the shares of common stock
offered hereby are subject to approval of certain legal matters by their counsel
and to certain other conditions. The Underwriters are obligated to take and pay
for all shares of common stock offered hereby (other than those covered by the
over-allotment option described below) if any such shares are purchased.

The Underwriters, through the Representative, propose to offer the shares
of common stock directly to the public at the public offering price set forth on
the cover page of this Prospectus and part of the shares to certain dealers at a
price that represents a concession not in excess of $ per share under
the public offering price. The Underwriters may allow, and such dealers may
re-allow, a concession not in excess of $ per share to certain other
dealers. The Representative has advised the Company that the Underwriters do not
intend to confirm sales to any accounts over which they exercise discretionary
authority.

The Company has granted the Underwriters an option exercisable not later
than 30 days after the date of this Prospectus, to purchase up to an aggregate
of 825,000 additional shares of common stock, at the public offering price, less
the underwriting discounts and commissions set forth on the cover page of this
Prospectus. To the extent that the Underwriters exercise such option, each of
the Underwriters will have a firm commitment to purchase approximately the same
percentage thereof as the number of shares of common stock to be purchased by
them shown in the above table bears to the total shown, and the Company will be
obligated, pursuant to the option, to sell such shares to the Underwriters. The
Underwriters may exercise their option only to cover over-allotments made in
connection with the sale of the shares of common stock offered hereby. If
purchased, the Underwriters will sell such additional shares on the same terms
as those on which the shares are being offered.

The Company has agreed to indemnify the Underwriters against, or to
contribute to, losses arising out of certain liabilities in connection with this
Offering, including liabilities under the Securities Act.

At the request of the Company, the Underwriters have reserved for sale, at
the initial public offering price, up to shares of common stock to be
sold and offered hereby by the Company to certain employees and customers of the
Company and other persons. The number of shares of common stock available for
sale to the general public will be reduced to the extent such persons purchase
such reserved shares. Any reserved shares which are not orally confirmed for
purchase within one day of the pricing of the Offering will be offered by the
Underwriters to the general public on the same terms as the other shares
90
92

offered hereby. Certain individuals purchasing reserved shares may be required
to agree not to sell, offer or otherwise dispose of any shares of common stock
for a period of 180 days after the date of this Prospectus.

The Company, its executive officers and directors, and holders of more than
two percent (2%) of the common stock prior to the consummation of the Offering,
have agreed not to sell, offer to sell, contract to sell, pledge or otherwise
dispose of or transfer any shares of common stock, or any securities convertible
into or exchangeable or exercisable for, or any rights to purchase or acquire,
common stock for a period of 180 days following the date of this Prospectus
without the prior written consent of Raymond James & Associates, Inc., other
than, in the case of the Company, the issuance of options to purchase common
stock or shares of common stock issuable upon the exercise thereof, issuance of
common stock in connection with the Wade Acquisition, the Day's Chevrolet
Acquisition, the Jay Acquisition or the Robertson Acquisition and other
issuances of capital stock of the Company in connection with other acquisitions,
provided such shares of common stock issued upon the exercise of options and
such shares of capital stock issued in connection with any such other
acquisitions shall not be transferable prior to the end of the aforesaid 180-day
period. Raymond James & Associates, Inc. may, in its sole discretion and at any
time without notice, release all or any portion of the shares subject to such
lock-up agreements.

Prior to this Offering, there has been no public market for the common
stock of the Company. The initial public offering price the common stock will be
determined by negotiation between the Company and the Representative. Among the
factors to be considered in such negotiations are prevailing market conditions,
the value of publicly traded companies believed to be comparable to the Company,
the results of operations of the Company in recent periods, estimates of the
business potential of the Company, the present state of the Company's
development and other factors deemed relevant.

The Representative, acting on behalf of the Underwriters, may over-allot
the shares offered hereby and, during the course of this Offering, may engage in
stabilizing and syndicate short covering and may impose a penalty bid on members
of the Offering syndicate. Over-allotment involves sales of shares in excess of
the total number being offered, thereby creating a syndicate short position.
Stabilizing involves a bid by the syndicate to purchase shares in the open
market at a specified price, which may not exceed the public offering price and
may be decreased but not increased. Syndicate short covering involves open
market purchases of shares to cover all or a portion of the syndicate short
position created by over-allotments. A penalty bid permits the Representative to
reclaim selling concessions from a syndicate member when shares sold by that
member in the Offering are purchased by the Representative in the open market to
cover a syndicate short position or pursuant to a stabilizing bid. All of these
activities may cause the market price of the common stock to be higher than
otherwise might be the case in the absence of these activities. These
transactions may be effected on the Nasdaq National Market or otherwise and, if
commenced, may be discontinued at any time.

The foregoing includes a summary of certain principal terms of the
Underwriting Agreement and does not purport to be complete. Reference is made to
the copy of the Underwriting Agreement that is on file as an exhibit to the
Registration Statement on Form S-1 (the "Registration Statement") under the
Securities Act and filed by the Company with the Commission with respect to the
shares of common stock offered hereby, of which this Prospectus is a part.

LEGAL MATTERS

The validity of the shares of common stock offered hereby will be passed
upon for the Company by Schnader Harrison Segal & Lewis LLP, Atlanta, Georgia.
Troutman Sanders LLP, Atlanta, Georgia, has served as counsel to the
Underwriters in connection with this Offering.

EXPERTS

The financial statements of Sunbelt Automotive Group, Inc. at December 31,
1997 and for the period from December 17, 1997 (inception) to December 31, 1997,
the consolidated financial statements of Boomershine Automotive Group, Inc. and
Subsidiaries at June 30, 1996 and 1997 and the three years in the period ended
June 30, 1997, the financial statements of Jay Automotive Group, Inc. at
December 31, 1996
91
93

and 1997 and the three years in the period ended December 31, 1997, the
financial statements of Grindstaff, Inc. at December 31, 1996 and 1997 and the
three years in the period ended December 31, 1997, the financial statements of
Day's Chevrolet, Inc. at December 31, 1996 and 1997 and the years then ended,
and the financial statements of Robertson Oldsmobile-Cadillac, Inc. at December
31, 1996 and 1997 and the years then ended, appearing in this Prospectus and
Registration Statement have been audited by Ernst & Young LLP, independent
auditors, as set forth in their reports thereon appearing elsewhere herein, and
are included in reliance upon such reports given upon the authority of such firm
as experts in accounting and auditing. The combined financial statements of Wade
Ford, Inc. and Wade Ford Buford, Inc., at December 31, 1996 and 1997 and the
three years in the period ended December 31, 1997 appearing in this Prospectus
and Registration Statement have been audited by Pyke & Pierce, Certified Public
Accountants, LLP, as set forth in their report thereon appearing elsewhere
herein, and are included in reliance upon such report given upon the authority
of such firm as experts in accounting and auditing. The financial statements of
South Financial Corporation at December 31, 1996 and 1997 and the three years in
the period ended December 31, 1997 appearing in this Prospectus and Registration
Statement have been audited by Davis Monk & Company, independent auditors, as
set forth in their report thereon appearing elsewhere herein, and are included
in reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.

ADDITIONAL INFORMATION

The Company has filed with the Commission a Registration Statement on Form
S-1 under the Securities Act with respect to the shares of common stock offered
hereby. This Prospectus does not contain all of the information set forth in the
Registration Statement and the exhibits and schedules thereto. For further
information with respect to the Company and the shares of common stock offered
hereby, reference is made to the Registration Statement, including the exhibits
and schedules filed as part thereof. Statements contained in this Prospectus as
to the contents of any contract or any other documents are not necessarily
complete, and, in each such instance, reference is made to the copy of the
contract or document filed as an exhibit to the Registration Statement, each
such statement being qualified in all respects by such reference thereto. The
Registration Statement, together with its exhibits and schedules, may be
inspected at the Public Reference Section of the Commission at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices of the
Commission located at 7 World Trade Center, Suite 1300, New York, NY 10048, and
at the Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
IL 60661. Copies of all or any part of such materials may be obtained from any
such office upon payment of the fees prescribed by the Commission. The
Commission also maintains a Website (http://www.sec.gov) that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission.

The Company is not currently subject to the periodic reporting and
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). As a result of the Offering, the Company will be required
to file reports and other information with the Commission pursuant to the
requirements of the Exchange Act. Such reports and other information may be
obtained from the Commission's Public Reference Section and copied at the public
reference facilities and regional offices referred to above.

92
94

INDEX TO FINANCIAL STATEMENTS

PAGE
----

SUNBELT AUTOMOTIVE GROUP, INC.
Report of Independent Auditors.............................. F-3
Financial Statements:
Balance Sheet............................................. F-4
Statement of Operations................................... F-5
Statement of Shareholders' Equity......................... F-6
Statement of Cash Flows................................... F-7
Notes to Financial Statements............................. F-8
BOOMERSHINE AUTOMOTIVE GROUP, INC.
Report of Independent Auditors.............................. F-11
Consolidated Financial Statements:
Consolidated Balance Sheets............................... F-12
Consolidated Statements of Operations and Changes in
Retained Earnings...................................... F-13
Consolidated Statements of Cash Flows..................... F-14
Notes to Consolidated Financial Statements................ F-15
JAY AUTOMOTIVE GROUP, INC.
Report of Independent Auditors.............................. F-23
Financial Statements:
Balance Sheets............................................ F-24
Statements of Income...................................... F-25
Statements of Cash Flows.................................. F-26
Notes to Financial Statements............................. F-27
GRINDSTAFF, INC.
Report of Independent Auditors.............................. F-34
Financial Statements:
Balance Sheets............................................ F-35
Statements of Operations.................................. F-36
Statements of Stockholders' Equity........................ F-37
Statements of Cash Flows.................................. F-38
Notes to Financial Statements............................. F-39
WADE FORD, INC. AND WADE FORD BUFORD, INC.
Independent Auditor's Report................................ F-45
Combined Financial Statements:
Combined Balance Sheets................................... F-46
Combined Statements of Income and Retained Earnings....... F-47
Combined Statements of Cash Flows......................... F-48
Notes to Combined Financial Statements.................... F-49
ROBERTSON OLDSMOBILE-CADILLAC, INC.
Report of Independent Auditors.............................. F-55
Financial Statements:
Balance Sheets............................................ F-56
Statements of Income and Changes in Retained Earnings..... F-57
Statements of Cash Flows.................................. F-58
Notes to Financial Statements............................. F-59

F-1
95

PAGE
----

DAY'S CHEVROLET, INC.
Report of Independent Auditors.............................. F-65
Financial Statements:
Balance Sheets............................................ F-66
Statements of Income and Changes in Retained Earnings..... F-67
Statements of Cash Flows.................................. F-68
Notes to Financial Statements............................. F-69
SOUTH FINANCIAL CORPORATION
Independent Auditors' Report................................ F-74
Financial Statements:
Balance Sheets............................................ F-75
Statements of Operations and Retained Earnings............ F-76
Statements of Cash Flows.................................. F-77
Notes to Financial Statements............................. F-78

F-2
96

REPORT OF INDEPENDENT AUDITORS

The Board of Directors
Sunbelt Automotive Group, Inc.

We have audited the accompanying balance sheet of Sunbelt Automotive Group,
Inc. as of December 31, 1997, and the related statements of operations,
shareholders' equity and cash flows for the period from December 17, 1997 (date
of inception) through December 31, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Sunbelt Automotive Group,
Inc. at December 31, 1997, and the results of its operations and its cash flows
for the period from December 17, 1997 (date of inception) through December 31,
1997 in conformity with generally accepted accounting principles.

/s/ ERNST & YOUNG LLP

Atlanta, Georgia
April 28, 1998

F-3
97

SUNBELT AUTOMOTIVE GROUP, INC.

BALANCE SHEET
DECEMBER 31, 1997

ASSETS
Cash........................................................ $3,000
------
$3,000
======

SHAREHOLDERS' EQUITY
Common stock, $0.001 par value, 450,000,000 shares
authorized, 6,000 shares issued and outstanding........... $ 6
Preferred stock, $0.001 par value, 50,000,000 shares
authorized, none issued and outstanding................... --
Additional paid in capital.................................. 2,994
Retained earnings........................................... --
------
Total shareholders' equity........................ 3,000
------
$3,000
======

See accompanying notes.

F-4
98

SUNBELT AUTOMOTIVE GROUP, INC.

STATEMENT OF OPERATIONS
PERIOD FROM DECEMBER 17, 1997 (DATE OF INCEPTION) THROUGH DECEMBER 31, 1997

Revenues:
Vehicle sales............................................. $ --
Parts and service......................................... --
Finance, commission and other revenues, net............... --
-------
Cost of sales:
Vehicle sales............................................. --
Parts and service......................................... --
-------
Gross profit................................................ --
Selling, general and administrative......................... --
-------
Income from operations...................................... --
Interest expense............................................ --
Interest income............................................. --
Other income, net........................................... --
-------
Income before income taxes.................................. --
Income taxes................................................ --
-------
Net income.................................................. $ --
=======

See accompanying notes.

F-5
99

SUNBELT AUTOMOTIVE GROUP, INC.

STATEMENT OF SHAREHOLDERS' EQUITY
PERIOD FROM DECEMBER 17, 1997 (DATE OF INCEPTION) THROUGH DECEMBER 31, 1997

COMMON STOCK PREFERRED STOCK TOTAL
--------------- --------------- ADDITIONAL PAID RETAINED SHAREHOLDERS'
SHARES AMOUNT SHARES AMOUNT IN CAPITAL EARNINGS EQUITY
------ ------ ------ ------ --------------- -------- -------------

December 17, 1997 (date of
inception).................. -- $ -- -- $ -- $ -- $ -- $ --
Issuance of common stock...... 6,000 6 -- -- 2,994 -- 3,000
----- ------ ------ ------ ------ ------ ------
December 31,1997.............. 6,000 $ 6 -- $ -- $2,994 $ -- $3,000
===== ====== ====== ====== ====== ====== ======

See accompanying notes.

F-6
100

SUNBELT AUTOMOTIVE GROUP, INC.

STATEMENT OF CASH FLOWS
PERIOD FROM DECEMBER 17, 1997 (DATE OF INCEPTION) THROUGH DECEMBER 31, 1997

OPERATING ACTIVITIES
Net income.................................................. $ --
FINANCING ACTIVITIES
Proceeds from issuance of common stock...................... 3,000
------
Net cash provided by financing activities................... 3,000
------
Increase in cash............................................ 3,000
Cash at beginning of the period............................. --
------
Cash at end of the period................................... $3,000
======

See accompanying notes.

F-7
101

SUNBELT AUTOMOTIVE GROUP, INC.

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997

1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Organization and Nature of Business

Sunbelt Automotive Group, Inc. (a Georgia corporation) ("SAG" or the
"Company"), was founded on December 17, 1997 to become a leading operator and
consolidator in the automotive retailing industry. The Company intends to
acquire twenty-one automobile dealerships and related businesses which are
currently owned by eight dealership and other business groups located in
Georgia, North Carolina and Tennessee (the "Founding Groups") (the
"Acquisitions"), complete an initial public offering (the "Offering") of its
common stock and, subsequent to the Offering, continue to acquire, through
merger or purchase, similar companies to geographically expand its operations.

The Company has not conducted any operations, and all activities to date
relate to the Acquisitions. There is no assurance that the Acquisitions
discussed below will be completed and that SAG will be able to generate future
operating revenues. Funding for the Company, to date, has been provided
primarily by Boomershine Automotive Group, Inc. ("BAG"), a member of the
Founding Groups. SAG is dependent upon the Offering to fund the amounts due to
BAG and future operations. In the event that the Offering is not completed, SAG
will pursue alternative sources of funding in order to meet its current
obligations.

Major Suppliers and Franchise Agreements

The Founding Groups purchase substantially all of their new vehicles and
parts inventory from various automobile manufacturers/distributors at the
prevailing prices charged by the manufacturers/distributors to all franchise
dealers. SAG's sales volume subsequent to the Acquisitions could be adversely
impacted by the manufacturers' inability to supply the dealerships with an
adequate supply of popular models or as a result of an unfavorable allocation of
vehicles by the manufacturers.

The dealer franchise agreements contain provisions, which may limit changes
in dealership management and ownership, place certain restrictions on the
dealerships (such as minimum net worth requirements) and which also provide for
termination of the franchise agreement by the manufacturers in certain
instances. Subsequent to the Acquisitions, SAG's ability to acquire additional
franchises from a particular manufacturer may be limited due to certain
restrictions imposed by manufacturers and the acquisition of the Company's stock
by third parties may be limited by the terms of the franchise agreement.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect reported amounts in the financial statements and
accompanying notes. Actual results could differ from those estimates.

Income Taxes

The Company follows the liability method of accounting for income taxes in
accordance with Statement of Financial Accounting Standards No. 109. Under this
method, deferred income taxes are recorded based upon differences between the
financial reporting and tax basis of assets and liabilities and are measured
using the enacted tax rates and laws that will be in effect when the underlying
assets are received or liabilities are settled.

F-8
102
SUNBELT AUTOMOTIVE GROUP, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

2. PROPOSED ACQUISITIONS BY SAG

SAG has signed definitive agreements to acquire seven dealership groups and
related businesses consisting of twenty-one automobile dealerships and related
businesses. The Founding Groups are as follows:

Boomershine Group.......... Consisting of -- Boomershine Pontiac-GMC-Buick,
Inc., Boomershine Automobile Company, Boomershine
Ford, Inc., Boomershine Isuzu, Inc., Boomershine
Services, Inc., Boomershine North Cobb, Inc., d/b/a
Boomershine Mitsubishi and Commerce Credit
Corporation, Thompson Automotive Group, Inc., d/b/a
Boomershine Honda, Boomershine Collision Centers,
Inc., South Financial Corporation

Day Group.................. Consisting of -- Day's Chevrolet, Inc.

Grindstaff Group........... Consisting of -- Grindstaff Chevrolet, Chrysler,
Plymouth, Dodge

Holt Group................. Consisting of -- Hones, Inc. d/b/a Bill Holt Ford
Mercury

Jay Group.................. Consisting of -- Jay Pontiac-Buick-GMC, Inc., Jay
Automotive Group II, Inc. d/b/a Jay Toyota, Jay
Automotive Group V, Inc. d/b/a Jay Mazda

Roberston Group............ Consisting of -- Robertson Oldsmobile-Cadillac,
Inc. d/b/a Moss Robertson Mazda and Moss Robertson
Isuzu

Wade Group................. Consisting of -- Wade Ford, Inc. and Wade Ford
Buford, Inc.

The aggregate consideration that will be paid by SAG to acquire the
Founding Group is approximately $57 million in cash or promissory notes and
5,178,412 shares of SAG common stock (based on an assumed initial public
offering price of $11 per share, the midpoint of the estimated initial public
offering price range).

The following sets forth the consideration to be paid to each of the
Founding Groups:

PROMISSORY
SHARES NOTES CASH
------ ---------- ----

Boomershine Group.................................. 4,251,139 $ 932,000 $ 5,425,000
Day Group.......................................... 527,273 -- 5,589,000
Grindstaff Group................................... -- -- 9,122,000
Holt Group......................................... -- -- 750,000
Jay Group.......................................... -- 4,000,000 12,000,000
Roberston Group.................................... 36,364 -- 7,711,000
Wade Group......................................... 363,636 -- 11,904,000
--------- ---------- -----------
5,178,412 $4,932,000 $52,501,000
========= ========== ===========

The Boomershine Group acquisition will be accounted for as the equivalent
of a pooling of interest as the Company and the Boomershine Group have common
ownership. The remaining acquisitions will be accounted for as purchases with
excess of purchase price over fair value of assets acquired of approximately $42
million.

3. GOVERNMENTAL REGULATION

Substantially all of the Founding Group's facilities are subject to
federal, state and local provisions regulating the discharge of materials into
the environment. Compliance with these provisions has not had, nor does the
Company expect such compliance to have any material effect upon the capital
expenditures, net income, financial condition or competitive position of the
Company. Management believes that its current

F-9
103
SUNBELT AUTOMOTIVE GROUP, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

practices and procedures of the control and disposition of such wastes comply
with applicable federal and state requirements.

4. SUBSEQUENT EVENTS

Stock Option Plan

Effective January 2, 1998, the Company adopted the Sunbelt Automotive
Group, Inc. 1997 & 1998 Incentive Stock Plan (the "Plan"). The Plan provides for
a committee (the "Committee") of non-employee members of the Board of Directors
to grant incentive stock options to any director, officer, employee or
consultant of the Company or any of its subsidiaries. The exercise price of the
options granted under the Plan shall be established by the Committee on or prior
to the date of issuance of the options. Options granted under the Plan vest in
accordance with vesting schedules established by the Committee at the time of
the Grant. The Company intends to adopt the provisions of Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25) to
account for the Plan's transactions.

On January 8, 1998, the Committee granted 425,000 options to certain of the
Company's officers. At such time, the Committee granted the forgoing options
with a $6.27 per share exercise price, based on a third-party valuation
performed on the market value of the Company's Common Stock on the date of
grant.

In April 1998, the Committee granted 855,000 options to certain of the
Company's officers. At such time, the Committee granted the forgoing options
with an $8.00 per share exercise price, based on a third-party valuation
performed on the market value of the Company's Common Stock on the date of
grant.

Additionally, in April 1998, the Committee granted 315,000 options to
certain of the Company's officers and management. The option grant is
conditioned upon the effectiveness of the Offering. The exercise price will be
the initial public offering price for the Company's Common Stock.

Common Stock Issuance

In April 1998, the Board of Directors of the Company approved the issuance
of 249,202 shares of Common Stock to certain of the Company's officers. The
shares were issued at $8.00 per share, the fair value at the date of issuance.
The consideration for the Common Stock issuance were notes payable to the
Company by the officers. The notes payable are due in five years and bear
interest of 8% per year. The notes will be reflected as a reduction of
shareholder's equity until repaid in full.

Warrants

During 1998, the Company granted warrants to purchase 50,000 shares of
common stock to an outside consultant in consideration for certain financial and
accounting consulting services rendered in connection with the Offering. These
warrants vest over a specified period of time and become exercisable upon the
completion of the Offering at an exercise price of $8.00 per share. The warrants
expire, if not exercised within a specified period from the date of grant.

F-10
104

REPORT OF INDEPENDENT AUDITORS

The Board of Directors
Boomershine Automotive Group, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheets of Boomershine
Automotive Group, Inc. and Subsidiaries as of June 30, 1996 and 1997, and the
related consolidated statements of operations and changes in retained earnings
and cash flows for each of the three years in the period ended June 30, 1997.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Boomershine
Automotive Group, Inc. and Subsidiaries at June 30, 1996 and 1997, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended June 30, 1997 in conformity with generally
accepted accounting principles.

/s/ ERNST & YOUNG LLP

Atlanta, Georgia
January 30, 1998

F-11
105

BOOMERSHINE AUTOMOTIVE GROUP, INC.
AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

JUNE 30,
------------------------- DECEMBER 31,
1996 1997 1997
----------- ----------- ------------
(UNAUDITED)

ASSETS
Current assets:
Cash and cash equivalents............................. $ 4,998,408 $ 4,556,291 $ 6,349,162
Accounts receivable, net.............................. 7,701,302 5,267,834 5,115,858
Inventories........................................... 44,668,695 33,591,145 36,957,219
Prepaid expenses and other current assets............. 341,774 259,289 1,484,472
Refundable income taxes............................... 270,920 454,459 28,368
Deferred income taxes................................. 766,591 512,945 754,320
----------- ----------- -----------
Total current assets.......................... 58,747,690 44,641,963 50,689,399
Property and equipment, net............................. 4,187,891 3,962,564 4,251,510
Deferred income taxes................................... 101,461 54,303 24,100
Intangible assets, net.................................. 784,643 718,738 2,481,393
Other assets............................................ 264,376 332,171 453,009
----------- ----------- -----------
$64,086,061 $49,709,739 $57,899,411
=========== =========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Floor plan notes payable.............................. $49,439,711 $36,798,078 $43,587,955
Notes payable -- affiliates........................... 3,457,215 3,299,926 2,833,567
Accrued liabilities................................... 4,406,168 2,905,053 2,208,024
Accounts payable...................................... 1,320,431 1,677,447 2,269,225
Current maturities of long-term debt.................. 98,333 38,333 1,277,979
----------- ----------- -----------
Total current liabilities..................... 58,721,858 44,718,837 52,176,750
Long-term debt, less current maturities................. 523,889 482,362 877,866
Other liabilities....................................... 283,803 309,719 309,719
Stockholders' equity:
Class A voting common stock, no par value, 500,000
shares authorized, 3,600 shares issued and
outstanding........................................ 198,686 198,686 198,686
Class B non-voting common stock, no par value, 500,000
shares authorized, 68,400 shares issued and
outstanding........................................ 3,775,018 3,775,018 3,775,018
Retained earnings..................................... 582,807 225,117 561,372
----------- ----------- -----------
Total stockholders' equity.................... 4,556,511 4,198,821 4,535,076
----------- ----------- -----------
$64,086,061 $49,709,739 $57,899,411
=========== =========== ===========

See accompanying notes.

F-12
106

BOOMERSHINE AUTOMOTIVE GROUP, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND CHANGES IN RETAINED EARNINGS

SIX MONTHS ENDED
YEAR ENDED JUNE 30, DECEMBER 31,
------------------------------------------ ---------------------------
1995 1996 1997 1996 1997
------------ ------------ ------------ ------------ ------------
(UNAUDITED)

Revenues:
Vehicle sales...................... $214,001,989 $230,851,161 $214,435,923 $105,998,128 $ 98,552,360
Parts and service.................. 19,223,080 23,763,491 24,636,720 11,548,943 12,876,370
Finance, commission and other
revenues, net.................... 3,855,623 4,219,077 5,339,652 3,093,484 2,669,237
------------ ------------ ------------ ------------ ------------
237,080,692 258,833,729 244,412,295 120,640,555 114,097,967
Cost of sales:
Vehicle sales...................... 204,004,105 221,379,852 204,701,393 101,828,024 93,803,689
Parts and service.................. 10,816,132 11,553,747 15,018,056 6,618,936 7,557,620
------------ ------------ ------------ ------------ ------------
214,820,237 232,933,599 219,719,449 108,446,960 101,361,309
------------ ------------ ------------ ------------ ------------
Gross profit......................... 22,260,455 25,900,130 24,692,846 12,193,595 12,736,658
Selling, general and
administrative..................... 20,332,772 24,769,911 23,151,867 11,625,465 11,539,357
------------ ------------ ------------ ------------ ------------
Income from operations............... 1,927,683 1,130,219 1,540,979 568,130 1,197,301
Interest expense..................... 1,436,394 1,774,285 2,230,144 1,183,526 721,398
Interest income...................... 218,607 181,318 119,706 63,898 104,555
Other income (expense), net.......... 60,606 12,585 44,303 (43,191) (29,284)
------------ ------------ ------------ ------------ ------------
Income (loss) before taxes........... 770,502 (450,163) (525,156) (594,689) 551,174
Income tax (expense) benefit......... (292,221) 133,545 167,466 221,073 (214,919)
------------ ------------ ------------ ------------ ------------
Net income (loss)........... 478,281 (316,618) (357,690) (373,616) 336,255
Retained earnings at beginning of
period............................. 421,144 899,425 582,807 582,807 225,117
------------ ------------ ------------ ------------ ------------
Retained earnings at end of period... $ 899,425 $ 582,807 $ 225,117 $ 209,191 $ 561,372
============ ============ ============ ============ ============

See accompanying notes.

F-13
107

BOOMERSHINE AUTOMOTIVE GROUP, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

SIX MONTHS ENDED
YEAR ENDED JUNE 30, DECEMBER 31,
----------------------------------------- -------------------------
1995 1996 1997 1996 1997
------------ ----------- ------------ ----------- -----------
(UNAUDITED)

OPERATING ACTIVITIES
Net income (loss)....................... $ 478,281 $ (316,618) $ (357,690) $ (373,616) $ 336,255
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization......... 382,828 556,034 823,575 416,026 408,577
Amortization of intangible assets..... 22,788 44,223 65,905 35,452 30,453
Deferred income taxes................. (386,533) (82,510) 300,804 150,400 (211,172)
Loss on sale of property and
equipment........................... 187 2,747 14,268 -- --
Changes in assets and liabilities:
Accounts receivable, net............ (4,747,808) 2,140,834 2,433,468 2,106,781 245,317
Inventories......................... (19,461,780) (576,845) 11,077,550 5,280,616 (3,292,333)
Prepaid expenses and other assets... 123,684 2,520 82,485 (88,045) (1,115,220)
Floor plan notes payable............ 25,160,314 2,823,261 (12,641,633) (4,062,473) 6,789,877
Accounts payable and accrued
liabilities....................... 2,257,945 (283,535) (1,144,099) (1,983,482) (353,623)
Income taxes........................ 253,691 (270,920) (183,539) (371,477) 426,091
Other assets and liabilities........ 113,541 (525,822) (41,879) (315,317) (120,838)
------------ ----------- ------------ ----------- -----------
Net cash provided by operating
activities................... 4,197,138 3,513,369 429,215 794,865 3,143,384
INVESTING ACTIVITIES
Purchases of property and equipment..... (1,715,385) (2,450,747) (808,516) (967,661) (296,072)
Cost of acquisitions.................... (1,281,376) (2,107,458) -- -- (775,000)
Proceeds on disposal of property and
equipment............................. 256,413 319,913 196,000 386,521 202,891
------------ ----------- ------------ ----------- -----------
Net cash used in investing
activities................... (2,740,348) (4,238,292) (612,516) (581,140) (868,181)
FINANCING ACTIVITIES
Principal payments on notes payable --
affiliates, net....................... 259,064 691,953 (157,289) 80,717 (466,359)
Borrowings of long-term debt............ 600,000 -- -- -- --
Principal payments on long-term debt.... (60,000) (682,778) (101,527) (42,361) (15,973)
------------ ----------- ------------ ----------- -----------
Net cash provided by (used in)
financing activities......... 799,064 9,175 (258,816) 38,356 (482,332)
------------ ----------- ------------ ----------- -----------
Change in cash and cash equivalents..... 2,255,854 (715,748) (442,117) 252,081 1,792,871
Cash and cash equivalents at beginning
of the period......................... 3,458,302 5,714,156 4,998,408 4,998,408 4,556,291
------------ ----------- ------------ ----------- -----------
Cash and cash equivalents at end of the
period................................ $ 5,714,156 $ 4,998,408 $ 4,556,291 $ 5,250,489 $ 6,349,162
============ =========== ============ =========== ===========

See accompanying notes.

F-14
108

BOOMERSHINE AUTOMOTIVE GROUP, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996 AND 1997

1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND NATURE OF BUSINESS

Boomershine Automotive Group, Inc. and Subsidiaries (the Company) is
principally engaged in the business of selling and servicing new and used
vehicles. The Company operates eight dealerships in Metropolitan Atlanta
consisting of Ford, Pontiac-GMC, Nissan, Buick, Honda, Mitsubishi, Isuzu, and
Hummer.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of Boomershine
Automotive Group, Inc., (the Company), and its wholly-owned subsidiaries:
Boomershine Pontiac-GMC Truck, Inc., Boomershine Automobile Company (a Georgia
Corporation), Boomershine Ford, Inc., Boomershine Isuzu, Inc., Boomershine
Services, Inc., Boomershine North Cobb, Inc., d/b/a Boomershine Mitsubishi and
Commerce Credit Corporation, and its 86% owned subsidiary, Thompson Automotive
Group, Inc., d/b/a Boomershine Honda. The minority stockholders' interest in the
net assets of the 86% owned subsidiary is included in the consolidated balance
sheet, and the minority stockholders' interest in the subsidiary's net loss has
been considered in computing the consolidated net loss. All significant
intercompany accounts and transactions have been eliminated in consolidation.

DEALERSHIP ACQUISITIONS

During 1995, the Company acquired a Honda dealership in Cartersville,
Georgia that included new vehicle inventories, parts and accessories and certain
other assets for $1,281,376. During 1996, the Company acquired a Buick
dealership in Atlanta, Georgia that included vehicle inventories and certain
other assets for $2,107,458 and the issuance of a note payable of $575,000 due
in 1999. The acquisitions have been accounted for using the purchase method of
accounting. The accompanying consolidated financial statements include the
results of the acquired dealerships' operations from the dates of acquisition.
Pro forma information is not provided because the impact of the acquisitions
does not have a material effect on the Company's results of operations, cash
flows or financial position.

USE OF ESTIMATES

CASH AND CASH EQUIVALENTS

Cash and cash equivalents include cash on hand, contracts in transit
pertaining to the sale of vehicles, and all highly liquid investments with an
original maturity of three months or less at the date of purchase.

INVENTORIES

All inventory is stated at the lower of cost or market. Cost of new and
used vehicles is determined using the last in, first-out (LIFO) method.

F-15
109
BOOMERSHINE AUTOMOTIVE GROUP, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
REVENUE RECOGNITION

Finance fees represent revenue earned by the Company for notes placed with
financial institutions in connection with customer vehicle financing. Finance
fees are recognized in income upon acceptance of the credit by the financial
institution. Insurance income represents commissions earned on credit life,
accident and disability insurance sold in connection with a vehicle on behalf of
third-party insurance companies. Insurance and warranty commissions are
recognized in income upon customer acceptance of the contract terms as evidenced
by contract execution. Net revenues related to finance fees and insurance and
warranty commissions are included in other revenues.

The Company is charged back a portion of fees and commissions earned on
finance or insurance contracts if the customer terminates a contract prior to
its scheduled maturity. The estimated allowance for these chargebacks is based
upon the Company's historical experience for prepayments or defaults on the
finance and insurance contracts.

PROPERTY AND EQUIPMENT

Property and equipment is stated at cost less accumulated depreciation.
Depreciation is provided predominately on the straight-line method over the
estimated useful lives of the assets. The ranges of estimated useful lives are
as follows:

Buildings.................................................. 15 - 20 years
Furniture and fixtures..................................... 5 - 7 years
Leasehold improvements..................................... 5 - 18 years
Machinery and shop equipment............................... 5 - 12 years
Rental cars and company vehicles........................... 3 years

INTANGIBLES

Intangibles consist principally of goodwill, which represents the excess of
cost over assigned fair market value of dealerships acquired and franchise
rights and are being amortized on a straight-line basis over their estimated
useful lives, not exceeding 40 years. Accumulated amortization was $317,712 and
$383,617 at June 30, 1996 and 1997, respectively. The carrying amount of
intangibles and other long lived assets are reviewed if facts and circumstances
suggest that it may be impaired. If this review indicates that these assets will
not be recoverable, as determined based on the estimated undiscounted cash flows
of the entity acquired over the remaining amortization period, the carrying
amount of the asset is reduced by the estimated shortfall of the discounted cash
flows.

MAJOR SUPPLIER

F-16
110
BOOMERSHINE AUTOMOTIVE GROUP, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
changes in dealership management and ownership. A manufacturer is also entitled
to terminate the Dealer Agreement if the dealership is in material breach of its
terms.

CONCENTRATIONS OF CREDIT RISK

Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of contracts in transit and
accounts receivable. Also, at times, cash deposits in banks exceed the Federal
Deposit Insurance Corporation insurance limit. Contracts in transit are for
funds received shortly after balance sheet date from contracts financed with
financial institutions. Trade receivables principally result from extending
short-term credit to a large number of customers and other automotive dealers
located in the North Georgia area. Finance companies receivables are commissions
on credit contracts of customers. Receivables also result from transactions with
automotive manufacturers. Although the Company is directly affected by the
economic conditions in the automotive industry, financial institutions, banks,
its customers and the general economy of the Atlanta and North Georgia area,
management does not believe significant credit risk exists.

ADVERTISING

The Company expenses the cost of advertising as incurred. Advertising
expense was approximately $1,900,000, $2,700,000 and $2,538,000 for the years
ended June 30, 1995, 1996 and 1997, respectively.

FAIR VALUES OF FINANCIAL INSTRUMENTS

The Company considers the carrying amounts of significant classes of
financial instruments on the consolidated balance sheet, including cash and
contracts in transit, notes payable and long-term debt to be reasonable
estimates of fair value. Fair value of the Company's debt was estimated using
discounted cash flow analysis, based on the Company's current incremental
borrowing rates for similar types of arrangements.

INTERIM FINANCIAL STATEMENTS

The accompanying unaudited financial statements as of December 31, 1997 and
for the six months ended December 31, 1996 and 1997 have been prepared on
substantially the same basis as the audited financial statements and include all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair presentation of the financial information set forth therein.

2. ACCOUNTS RECEIVABLE

Accounts receivable consist of the following at June 30, 1996 and 1997:

JUNE 30,
-----------------------
1996 1997
---------- ----------

Customers................................................... $4,929,130 $3,435,110
Factory..................................................... 2,079,487 1,756,567
Finance companies........................................... 696,471 233,532
Employees................................................... 122,553 19,404
Other....................................................... 6,882 53,862
---------- ----------
7,834,523 5,498,475
Less allowance for doubtful accounts........................ 133,221 230,641
---------- ----------
$7,701,302 $5,267,834
========== ==========

F-17
111
BOOMERSHINE AUTOMOTIVE GROUP, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

3. INVENTORIES

Inventories consist of the following at June 30, 1996 and 1997:

JUNE 30,
-------------------------
1996 1997
----------- -----------

New vehicles................................................ $41,240,836 $32,942,563
Used vehicles............................................... 7,204,193 4,994,574
Parts, accessories and other................................ 1,786,259 1,616,334
----------- -----------
50,231,288 39,553,471
Less LIFO reserve........................................... 5,562,593 5,962,326
----------- -----------
$44,668,695 $33,591,145
=========== ===========

The Company uses the LIFO method of inventory valuation for new and used
vehicles. During the year ended June 30, 1997, the Company reduced certain
inventory quantities, which were valued at lower LIFO costs prevailing in prior
years. The effects of these reductions were to increase net income by
approximately $263,000.

4. PROPERTY AND EQUIPMENT

A summary of property and equipment is as follows as of June 30, 1996 and
1997:

JUNE 30,
-----------------------
1996 1997
---------- ----------

Buildings................................................... $ 904,954 $1,005,885
Leasehold improvements...................................... 1,116,411 1,169,026
Machinery and shop equipment................................ 2,257,615 2,620,613
Furniture and fixtures...................................... 1,302,609 1,481,849
Rental cars and company vehicles............................ 1,383,665 1,010,845
---------- ----------
6,965,254 7,288,218
Less accumulated depreciation and amortization.............. 2,777,363 3,325,654
---------- ----------
$4,187,891 $3,962,564
========== ==========

5. FLOOR PLAN NOTES PAYABLE AND NOTES PAYABLE -- AFFILIATES

A summary of notes payable as of June 30, 1996 and 1997 is as follows:

JUNE 30,
-------------------------
1996 1997
----------- -----------

Floor plan notes payable.................................... $49,439,711 $36,798,078
Notes payable -- stockholders; bearing interest at prime
rate; due on demand; unsecured............................ 2,242,825 2,161,103
Notes payable -- employees; bearing interest at prime rate;
due on demand; unsecured.................................. 630,336 458,384
Notes payable -- related party; bearing interest at prime
rate; due on demand; unsecured............................ 584,054 680,439
----------- -----------
3,457,215 3,299,926
----------- -----------
$52,896,926 $40,098,004
=========== ===========

F-18
112
BOOMERSHINE AUTOMOTIVE GROUP, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

5. FLOOR PLAN NOTES PAYABLE AND NOTES PAYABLE -- AFFILIATES (CONTINUED)
Floor plan notes payable consists of notes with financial institutions. The
floor plan notes are secured by certain new and used vehicles. The floor plan
arrangements permit the Company to borrow up to approximately $49,500,000 and
$43,250,000 in 1996 and 1997, respectively, restricted by new and used vehicle
levels. The notes are generally due within ten days of the vehicle being sold or
after the vehicle has been in inventory for one year for new vehicles and after
three months for used vehicles. The notes bear interest based on contractual
rates, which ranged from approximately 7.5% to 8.3% and 7.1% to 8.0% at June 30,
1996 and 1997, respectively.

6. ACCRUED LIABILITIES

Accrued liabilities consist of the following at June 30, 1996 and 1997:

JUNE 30,
-----------------------
1996 1997
---------- ----------

Salaries, wages, bonus and vacation......................... $1,188,070 $ 608,286
Finance reserve............................................. 434,627 538,800
Accrued taxes............................................... 586,035 397,284
Accrued interest............................................ 572,103 284,107
Other accrued liabilities................................... 1,625,333 1,076,576
---------- ----------
$4,406,168 $2,905,053
========== ==========

7. LONG-TERM DEBT

A summary of long-term debt as of June 30, 1996 and 1997 is as follows:

JUNE 30,
-------------------
1996 1997
-------- --------

Note payable; bearing interest at LIBOR plus 2%, payable
monthly, balance due February 1999, unsecured............. $557,222 $520,695
Other....................................................... 65,000 --
-------- --------
622,222 520,695
Less current maturities of long-term debt................... 98,333 38,333
-------- --------
$523,889 $482,362
======== ========

During 1995, 1996 and 1997, total cash paid for interest on notes payable
and long-term debt was approximately $1,770,000, $1,400,000 and $2,230,000
respectively.

8. INCOME TAXES

The Company files consolidated Federal and State income tax returns with
its subsidiaries. The current income tax provision represents the amount of
income taxes paid or payable for the year. The deferred income

F-19
113
BOOMERSHINE AUTOMOTIVE GROUP, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

8. INCOME TAXES (CONTINUED)
tax provision represents the change in deferred tax liabilities and assets.
Significant components of the provisions for income taxes are as follows for the
year ended June 30, 1995, 1996 and 1997, respectively:

JUNE 30,
--------------------------------
1995 1996 1997
--------- -------- ---------

Current income tax (expense) benefit:
Federal............................................ $(571,469) $ 42,262 $ 394,254
State.............................................. (107,285) 8,773 74,016
Deferred income tax benefit (expense)................ 386,533 82,510 (300,804)
--------- -------- ---------
Total provision for income tax (expense)
benefit.................................. $(292,221) $133,545 $ 167,466
========= ======== =========

The Company utilized net operating loss carrybacks for Federal and State
income tax purposes of approximately $1,234,000 during the year ended June 30,
1997. The Company received refunds of income taxes of approximately $443,000 in
1997.

A reconciliation of the expected income tax benefit (expense) at the
statutory federal rate to the Company's actual income tax provision for the year
ended June 30, 1995, 1996 and 1997, respectively follows:

JUNE 30,
-------------------------------
1995 1996 1997
--------- -------- --------

Federal statutory (expense) benefit................... $(261,971) $153,055 $178,553
State (expense) benefit, net of federal (expense)
benefit............................................. (30,820) 18,006 21,006
Other................................................. 570 (37,516) (32,093)
--------- -------- --------
$(292,221) $133,545 $167,466
========= ======== ========

Deferred income taxes are recognized for tax consequences of temporary
differences between the financial and tax bases of existing assets and
liabilities by applying enacted statutory tax rates to such differences.
Significant components of the Company's deferred tax liabilities and assets as
of June 30, 1996 and 1997 are as follows:

JUNE 30,
---------------------
1996 1997
---------- --------

Deferred tax assets:
Deferred compensation..................................... $ 69,675 $ 82,918
Intangibles............................................... 75,499 70,431
Accrued liabilities....................................... 620,379 211,185
Bad debt reserve.......................................... 50,624 87,643
Finance reserves.......................................... 155,345 204,744
Inventories............................................... 41,236 87,197
Other..................................................... 31,996 36,639
---------- --------
Total deferred tax assets......................... 1,044,754 780,757
Deferred tax liabilities:
Property and equipment.................................... 43,713 99,048
Other..................................................... 132,989 114,461
---------- --------
Total deferred tax liabilities.................... 176,702 213,509
---------- --------
Total net deferred tax assets..................... $ 868,052 $567,248
========== ========

F-20
114
BOOMERSHINE AUTOMOTIVE GROUP, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

8. INCOME TAXES (CONTINUED)
Deferred tax assets are recognized for the tax benefit of deducting timing
differences. Valuation allowances are recognized on these assets if it is
believed that some or all of the deferred tax assets will not be realized.
Management believes the majority of deferred tax assets will be realized because
of the available taxable income in carryback years and anticipated future
taxable income resulting from operations; therefore, no valuation allowance was
considered necessary.

9. MINORITY STOCKHOLDERS' INTEREST IN CONSOLIDATED SUBSIDIARY

A related party to the Company's principal owner owns 100,000 shares (14%)
non-voting common stock of the Company's subsidiary, Thompson Automotive Group,
Inc., d/b/a Boomershine Honda. The capital stock of the subsidiary has no par
value. The book value of this stock was $95,447 and $91,514 and at June 30, 1996
and 1997, respectively. The minority stockholder's interest in the subsidiary's
net income (loss) was not significant in the years ended June 30, 1995, 1996 and
1997.

10. CONTINGENCIES

At June 30, 1997, there were certain lawsuits and claims pending against
the Company. In the opinion of management, the ultimate liabilities, if any,
resulting from such lawsuits and claims, will not materially affect the
financial position of the Company.

11. COMMITMENTS AND TRANSACTIONS WITH RELATED PARTIES

The Company is obligated to related parties under certain non-cancelable
leases. These leases, which cover the lease of certain buildings, land and
equipment provide for the following payments:

1998........................................................ $ 1,642,188
1999........................................................ 1,642,188
2000........................................................ 1,642,188
2001........................................................ 1,664,188
2002........................................................ 1,694,188
Later years................................................. 15,897,302
-----------
Total minimum payments............................ $24,182,242
===========

Total rent expense for the years ended June 30, 1995, 1996 and 1997 was
$1,188,538, $1,288,465 and $1,588,045, respectively. Rent expense includes
$1,095,000, $1,288,465 and $1,578,245 for leases with related parties for the
years ended June 30, 1995, 1996 and 1997, respectively.

12. GOVERNMENTAL REGULATION

Substantially all of the Company's facilities are subject to federal, state
and local provisions regulating the discharge of materials into the environment.
Compliance with these provisions has not had, nor does the Company expect such
compliance to have any material effect upon the capital expenditures, net
income, financial condition or competitive position of the Company. Management
believes that its current practices and procedures of the control and
disposition of such wastes comply with applicable federal and state
requirements.

F-21
115
BOOMERSHINE AUTOMOTIVE GROUP, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

13. EMPLOYEE BENEFIT PLAN

The Company has an employee savings plan under Section 401(k) of the
Internal Revenue Code. This plan covers substantially all full time employees.
The Company matches the employees' contributions of up to four percent of
compensation at the rate of $0.50 per $1.00 on the first 2% of compensation
contributed and $0.25 per $1.00 on the next 2% of compensation contributed. The
Company's contributions generally vest over 5 years. The amount charged against
income for the Company's contributions to the plan for the years ended June 30,
1995, 1996 and 1997 was $102,752, $132,612 and $144,737, respectively.

14. SUBSEQUENT EVENTS

In December 1997, the Company purchased an automobile repair business that
consisted of three repair centers in the Metropolitan Atlanta area. The
acquisition included the purchase of certain assets and assumption of
liabilities, the payment of $775,000 and the issuance of notes payable of
$931,000 due in 1998. The acquisition was accounted for as a purchase.

In December 1997, the Company entered into a lease agreement related to
certain equipment. The lease, which was accounted for as a capital lease,
resulted in the recording of a note payable of approximately $535,000, of which
approximately $123,000 is due in 1998.

In January 1998, the Company purchased South Financial Corporation, a
finance company with operations in Florida, North Carolina and Tennessee. The
primary business of South Financial Corporation is to purchase from retail
automobile dealers sales contracts of substandard credit arising from the sale
of used automobiles. The acquisition included the purchase of certain assets and
assumption of liabilities and the payment of $4,650,000. The acquisition will be
accounted for as a purchase.

In January 1998, the Board of Directors approved the Company to exchange
shares of its common stock with Sunbelt Automotive Group, Inc. ("Sunbelt
Automotive"), a related company, in connection with the filing of a registration
statement with the Securities and Exchange Commission. Prior to completion of
the offering by Sunbelt Automotive, the Company and other affiliated companies
will consummate a restructuring, which will result in each of the Company's
dealerships and operating divisions becoming direct or indirect wholly-owned
subsidiaries of Sunbelt Automotive.

F-22
116

REPORT OF INDEPENDENT AUDITORS

The Board of Directors
Jay Automotive Group, Inc.

We have audited the accompanying balance sheets of Jay Automotive Group,
Inc. (as defined in Note 1, Basis of Presentation) as of December 31, 1996 and
1997, and the related statements of income and cash flows for each of the three
years in the period ended December 31, 1997. These financial statements are the
responsibility of the management of Jay Automotive Group, Inc. Our
responsibility is to express an opinion on these financial statements based on
our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Jay Automotive Group, Inc.
at December 31, 1996 and 1997, and results of their operations and their cash
flows for each of the three years in the period ended December 31, 1997 in
conformity with generally accepted accounting principles.

/s/ ERNST & YOUNG LLP

Atlanta, Georgia
March 23, 1998

F-23
117

JAY AUTOMOTIVE GROUP, INC.

BALANCE SHEETS

DECEMBER 31,
-------------------------
1996 1997
----------- -----------

ASSETS
Current assets:
Cash and cash equivalents................................. $ 2,406,058 $ 3,758,389
Accounts receivable....................................... 1,049,224 1,053,218
Notes receivable.......................................... 227,359 297,968
Inventories -- Notes 5 and 7.............................. 15,290,708 12,022,640
Other current assets...................................... 138,060 381,181
----------- -----------
Total current assets.............................. 19,111,409 17,513,396
Property and equipment, net -- Note 6....................... 1,013,309 889,254
Intangible assets, net -- Note 3............................ 338,333 318,333
Other assets................................................ 81,437 16,554
----------- -----------
$20,544,488 $18,737,537
=========== ===========
LIABILITIES AND OWNER'S EQUITY
Current liabilities:
Floor plan notes payable -- Note 7........................ $12,375,365 $ 9,019,181
Accrued liabilities....................................... 453,029 693,976
Accounts payable.......................................... 905,766 896,598
Current maturities of long-term debt...................... 60,000 60,000
----------- -----------
Total current liabilities......................... 13,794,160 10,669,755
Long-term debt, less current maturities -- Note 7........... 185,900 131,076
Commitments and contingencies -- Notes 3, 7, 10 and 11
Total owner's equity -- Notes 4 and 9............. 6,564,428 7,936,706
----------- -----------
$20,544,488 $18,737,537
=========== ===========

See accompanying notes.

F-24
118

JAY AUTOMOTIVE GROUP, INC.

STATEMENTS OF INCOME

YEAR ENDED DECEMBER 31,
----------------------------------------
1995 1996 1997
----------- ----------- ------------

Revenues:
Vehicle sales........................................ $68,752,615 $82,686,950 $ 86,461,125
Parts and service.................................... 9,008,736 10,635,601 11,869,480
Finance, commission and other revenues, net.......... 1,720,997 2,066,160 2,183,817
----------- ----------- ------------
79,482,348 95,388,711 100,514,422
Cost of sales:
Vehicle sales........................................ 64,383,162 77,264,532 80,887,066
Parts and service.................................... 5,751,659 6,841,136 7,656,492
----------- ----------- ------------
70,134,821 84,105,668 88,543,558
----------- ----------- ------------
Gross profit........................................... 9,347,527 11,283,043 11,970,864
Selling, general and administrative.................... 7,134,069 8,952,606 9,588,307
----------- ----------- ------------
Income from operations................................. 2,213,458 2,330,437 2,382,557
Interest expense..................................... 447,932 397,007 361,555
Interest income...................................... 88,687 96,291 101,104
----------- ----------- ------------
Income before income taxes............................. 1,854,213 2,029,721 2,122,106
Income taxes........................................... 702,792 774,742 806,000
----------- ----------- ------------
Net income................................... $ 1,151,421 $ 1,254,979 $ 1,316,106
=========== =========== ============

See accompanying notes.

F-25
119

JAY AUTOMOTIVE GROUP, INC.

STATEMENTS OF CASH FLOWS

YEAR ENDED DECEMBER 31,
---------------------------------------
1995 1996 1997
----------- ----------- -----------

OPERATING ACTIVITIES
Net income.............................................. $ 1,151,421 $ 1,254,979 $ 1,316,106
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization......................... 164,968 251,965 218,554
Changes in current assets and liabilities:
Accounts receivable................................ (209,094) (109,842) (3,994)
Notes receivable................................... (1,812) (61,263) (70,609)
Inventories........................................ (2,227,883) (1,891,222) 3,268,068
Floor plan notes payable, net...................... 2,887,279 1,231,619 (3,356,184)
Accounts payable................................... 170,963 104,845 (9,168)
Accrued liabilities................................ 8,905 (133,019) 240,947
Other................................................. (48,944) 21,158 (179,461)
----------- ----------- -----------
Net cash provided by operating activities..... 1,895,803 669,220 1,424,259
INVESTING ACTIVITIES
Purchases of property and equipment..................... (322,999) (78,902) (163,179)
Purchase of business.................................... (1,496,372) (275,187) --
Proceeds from sale of assets............................ -- 263,703 89,903
----------- ----------- -----------
Net cash used in investing activities......... (1,819,371) (90,386) (73,276)
FINANCING ACTIVITIES
Payments on long term debt.............................. (3,978) (50,122) (54,824)
Payments and changes in due to/from subsidiaries not
being acquired by SAG, net............................ 76,565 87,354 56,172
----------- ----------- -----------
Net cash provided by financing activities..... 72,587 37,232 1,348
----------- ----------- -----------
Increase in cash and cash equivalents................... 149,019 616,036 1,352,331
Cash and cash equivalents at beginning of the year...... 1,641,003 1,790,022 2,406,058
----------- ----------- -----------
Cash and cash equivalents at end of the year............ $ 1,790,022 $ 2,406,058 $ 3,758,389
=========== =========== ===========

See accompanying notes.

F-26
120

JAY AUTOMOTIVE GROUP, INC.

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1997

1. BASIS OF PRESENTATION

Pursuant to a stock purchase agreement dated January 5, 1998, (the
"Purchase Agreement") Sunbelt Automotive Group, Inc. ("SAG") has agreed to
purchase all of the issued and outstanding shares of the common stock of Jay
Automotive Group, Inc. ("JAG") subject to certain terms and closing conditions
as set forth in the Purchase Agreement. JAG has various wholly-owned
subsidiaries through which it operates the Toyota, Saturn, Mazda, Pontiac,
Buick, GMC, Suzuki, and Mitsubishi automobile dealerships located in Columbus,
Georgia.

JAG also owns and operates, through other of its wholly-owned subsidiaries,
other businesses which are not being acquired by SAG. Under the terms of the
Purchase Agreement, such businesses will be liquidated or spun off prior to the
closing date. The closing date is anticipated to occur prior to June 30, 1998.
Additionally, the Saturn dealership will be acquired by an affiliate of SAG. Jay
Leasing, Inc. ("Jay Leasing"), a subsidiary not being acquired by SAG, owns or
leases certain land, buildings and equipment used by Jay Automotive (see Note
11).

The accompanying financial statements are intended to present the
operations of Jay Automotive Group, Inc. which are to be acquired by SAG
pursuant to the Purchase Agreement and do not include the other operations of
JAG which will be sold, liquidated or spun off. The accompanying financial
statements include the accounts of JAG and certain of its wholly-owned
subsidiaries: Jay Pontiac-Buick-GMC, Inc., Jay Automotive Group II, Inc. d/b/a
Jay Toyota and Jay Automotive Group V, Inc. d/b/a Jay Mazda, collectively ("Jay
Automotive" or the "Company").

The accompanying financial statements are derived from the historical books
and records of Jay Automotive and do not give effect to any purchase accounting
adjustments that SAG may record as a result of its acquisition.

2. SIGNIFICANT ACCOUNTING POLICIES

USE OF ESTIMATES

CASH AND CASH EQUIVALENTS

REVENUE RECOGNITION

Revenues from vehicle and parts sales and from service operations are
recognized at the time the vehicle is delivered to the customer or service is
completed. The Company generates ancillary revenues from its vehicle sales
operations. Such revenues include finance fees, insurance fees and service
contract commissions. Finance fees represent revenue earned by the Company for
notes placed with financial institutions in connection with customer vehicle
financing. Finance fees are generally recognized in income upon acceptance of
the credit by the financial institution. Insurance income represents commissions
earned on credit life, accident and disability insurance sold in connection with
a vehicle on behalf of third-party insurance companies. Insurance and service
contract commissions are recognized at contract execution.

A portion of fees and commissions for finance, insurance or certain service
contracts can be charged back to the Company if the customer terminates a
contract prior to its scheduled maturity. An estimated allowance

F-27
121
JAY AUTOMOTIVE GROUP, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
for these chargebacks is recorded based upon the Company's historical experience
for prepayments or defaults on the finance and insurance contracts.

INVENTORIES

All inventory is valued at the lower of cost, as determined under the LIFO
method, or market. Cost of new and used vehicles is determined using the
last-in, first-out "LIFO" method. Cost of parts, accessories and other are
determined primarily by using factory list price using the first-in, first-out
"FIFO" method except for those parts and accessories related to the Toyota
dealership which are costed on the LIFO method. Cost of sales during the year
ended December 31, 1997 decreased approximately $89,000 due to a decrement in
the LIFO layer.

OTHER CURRENT ASSETS

Included in other current assets are notes receivable from JAG's
stockholder of $76,644 and $313,000 at December 31, 1996 and 1997, respectively.
The outstanding balance at December 31, 1997 was repaid in January 1998.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost less accumulated depreciation.
Depreciation expense is provided on accelerated methods over the estimated
useful lives of the assets. The ranges of estimated useful lives are as follows:

Furniture and fixtures...................................... 3 - 5 years
Leasehold improvements...................................... 5 - 19 years
Machinery and shop equipment................................ 5 years

INCOME TAXES

The Company files a consolidated federal income tax return with its
subsidiaries. The accompanying financial statements exclude the income tax
expense and/or benefit associated with income or losses of the JAG operations
that will be sold, liquidated or spun off (see Note 1).

The Company accounts for income taxes in accordance with FASB Statement No.
109, Accounting for Income Taxes. Under this method, deferred tax assets and
liabilities are determined based on differences between financial reporting and
tax bases of assets and liabilities and are measured using the enacted tax rate
and laws that will be in effect when the differences are expected to reverse.
The temporary differences are primarily the result of valuation reserves and
warranty reserves. Temporary differences are not material.

INTANGIBLE ASSETS

Intangibles consist of goodwill that represents the excess of cost over
assigned fair market value of dealerships acquired and are being amortized on a
straightline basis over 15 years. Accumulated amortization was approximately
$2,000 and $22,000 at December 31, 1996 and 1997, respectively. The carrying
amount of intangibles and other long lived assets are reviewed if facts and
circumstances suggest that it may be impaired. If this review indicates that the
carrying value of these assets will not be recoverable, as determined based on
the estimated undiscounted cash flows of the entity acquired over the remaining
amortization period, the carrying amount of the asset is reduced by the
estimated shortfall of cash flows.

F-28
122
JAY AUTOMOTIVE GROUP, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CONCENTRATIONS OF CREDIT RISK

Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of contracts in transit and
accounts receivable. Also, at times, cash deposits in banks exceed the Federal
Deposit Insurance Corporation insurance limit. Contracts in transit are for
funds received shortly after the balance sheet date from contracts financed with
financial institutions. Significant trade receivables result from the extension
of credit for short-term periods to customers located within the Columbus,
Georgia area. Accounts receivable for motor vehicles, parts and services are
mostly from customers and other automotive dealers in Georgia. Finance companies
receivables are commissions on credit contracts of customers. Receivables also
result from transactions with automotive manufacturers.

Although the Company is directly affected by the economic effects in the
automotive industry, financial institutions, banks, its customers and the
general economy of the Columbus, Georgia and the surrounding geographical area,
management does not believe significant credit risk exists.

MAJOR SUPPLIERS

The Company purchases substantially all of its new vehicles and parts
inventory from automobile manufacturers/distributors at the prevailing prices
charged by the manufacturers/distributors to all franchise dealers. The Company
enters into agreements ("Dealer Agreements") with each manufacturer. The Dealer
Agreements, among other things, generally limit the location of the dealership
and include manufacturer approval rights over changes in dealership management
and ownership. A manufacturer is also entitled to terminate the Dealer Agreement
if the dealership is in material breach of the Dealer Agreement terms.

ADVERTISING

The Company expenses the cost of advertising as incurred. Advertising
expense was approximately $654,000, $705,000 and $789,000 for the years ended
December 31, 1995, 1996 and 1997, respectively. Substantially all advertising is
contracted through an affiliate of the stockholder.

FAIR VALUES OF FINANCIAL INSTRUMENTS

The Company considers the carrying amounts of significant classes of
financial instruments on the accompanying balance sheets, including cash and
contracts in transit, notes payable and long-term debt to be reasonable
estimates of fair value due either to the length of maturity or the existence of
variable interest rates that approximate prevailing market rates.

3. BUSINESS COMBINATIONS

On November 20, 1995, Jay Mazda purchased substantially all the assets and
assumed certain liabilities of Charles Levy Mazda for approximately $1.5 million
in cash and notes payable of $300,000. The excess of the purchase price over the
net tangible assets acquired was not material.

On December 16, 1996, Jay Pontiac-Buick-GMC, Inc. acquired the Buick Sales
and Service Agreement. At the date of acquisition, the Company purchased
vehicles and other items for a cash payment of approximately $275,000 and the
assumption of approximately $1,824,000 of floor plan liabilities. The excess of
the purchase price over the net tangible assets acquired was approximately
$300,000. As part of the terms of an exclusive use agreement, JAG could be
required to pay $225,000 to General Motors if there is a breach of certain
covenants as set forth in the agreement.

F-29
123
JAY AUTOMOTIVE GROUP, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

4. JAG CAPITALIZATION

JAG has 500,000 shares of $10 par value common stock authorized of which
21,955 shares were issued and outstanding at both December 31, 1996 and 1997.
The JAG capitalization also includes additional paid-in-capital of $573,348 at
both December 31, 1996 and 1997. See Note 9 for a discussion of JAG corporate
allocations and changes in owner's equity.

5. INVENTORIES

Inventories consist of the following:

DECEMBER 31,
-------------------------
1996 1997
----------- -----------

New vehicles................................................ $10,730,881 $ 8,433,366
Used vehicles............................................... 4,299,635 3,512,675
Parts, accessories and other................................ 1,321,698 1,240,092
----------- -----------
16,352,214 13,186,133
Less LIFO reserve........................................... (1,061,506) (1,163,493)
----------- -----------
$15,290,708 $12,022,640
=========== ===========

6. PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

DECEMBER 31,
------------------------
1996 1997
---------- -----------

Leasehold improvements...................................... $ 171,881 $ 171,881
Machinery and shop equipment................................ 914,969 996,511
Furniture and fixtures...................................... 326,424 364,407
Rental cars and company vehicles............................ 579,796 509,752
---------- -----------
1,993,070 2,042,551
Less accumulated depreciation............................... (979,761) (1,153,297)
---------- -----------
$1,013,309 $ 889,254
========== ===========

7. FLOOR PLANS AND LONG-TERM DEBT

A summary of floor plans and long-term debt is as follows:

DECEMBER 31,
------------------------
1996 1997
----------- ----------

World Omni Financial Corporation floor plan; availability of
$4.7 million; secured by vehicle inventories; due upon
sale of vehicles; interest payable monthly at prime, plus
.25% reduced by various factory incentives................ $ 2,100,396 $ 819,309
GMAC floor plan; availability of $9 million at December 31,
1997 subsequently raised to $13 million during March 1998;
secured by vehicle inventories; due upon sale of vehicles;
interest payable monthly at 1% above prime, reduced by
various GMAC and factory incentives....................... 8,405,449 6,766,165

F-30
124
JAY AUTOMOTIVE GROUP, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

DECEMBER 31,
------------------------
1996 1997
----------- ----------

7. FLOOR PLANS AND LONG-TERM DEBT (CONTINUED)
First Union floor plan; availability of $3,850,000; secured
by vehicle inventories; due upon sale of vehicles;
interest payable monthly at 2% over LIBOR, reduced by
various factory incentives................................ 1,869,520 1,433,707
----------- ----------
$12,375,365 $9,019,181
=========== ==========
Note payable; bearing interest at 9% due in monthly
installments of principal and interest of $6,228 through
November 2000............................................. $ 245,900 $ 191,076
Less current installments of long-term debt................. (60,000) (60,000)
----------- ----------
$ 185,900 $ 131,076
=========== ==========

During 1995, 1996 and 1997, total cash paid for interest on floor plans and
long-term debt was $444,000, $382,000 and $368,000, respectively.

8. INCOME TAXES

The Company files consolidated federal and state income tax returns with
its subsidiaries. The current income tax provision represents the amount of
income taxes paid or payable, by Jay Automotive for each year. The deferred
income tax provision is not material. Significant components of the provisions
for income taxes are as follows:

YEAR ENDED DECEMBER 31,
------------------------------
1995 1996 1997
-------- -------- --------

Current income taxes:
Federal.............................................. $598,000 $659,000 $685,000
State................................................ 104,792 115,742 121,000
-------- -------- --------
Total provision for income taxes............. $702,792 $774,742 $806,000
======== ======== ========

A reconciliation of the expected income tax expense at the statutory
federal rate to Jay Automotive's actual income tax provision is as follows:

YEAR ENDED DECEMBER 31,
------------------------------
1995 1996 1997
-------- -------- --------

Federal statutory benefit.............................. $630,000 $690,000 $721,000
State benefit, net of federal benefit.................. 70,000 77,000 80,000
Other.................................................. 2,792 7,742 5,000
-------- -------- --------
$702,792 $774,742 $806,000
======== ======== ========

Jay Automotive made income tax payments of approximately $830,000,
$1,019,000 and $555,000 during the years ended December 31, 1995, 1996 and 1997,
respectively.

9. JAG CORPORATE ALLOCATIONS AND OWNERS' EQUITY

The corporate employees and operations of JAG provide management and
related services to the various JAG subsidiaries. An allocation of corporate
costs has not been made to the operations of the subsidiaries not included in
the accompanying financial statements because such amounts would not be
material.

F-31
125
JAY AUTOMOTIVE GROUP, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

9. JAG CORPORATE ALLOCATIONS AND OWNERS' EQUITY (CONTINUED)
JAG provides centralized cash management for all subsidiaries. There are no
terms of settlement nor interest charges on intercompany accounts. All
intercompany balances due to/from the subsidiaries not being acquired by SAG are
included as a part of owner's equity.

JAG allocates certain employee benefits to the various operations,
including those operations not being acquired by SAG, based on directly
identifiable incurred costs.

JAG did not pay any dividends to its stockholder during the three year
period ended December 31, 1997. An analysis of the net transactions in the
owner's equity accounts for each of the three years in the period ended December
31 is as follows:

1995 1996 1997
---------- ---------- ----------

Balance of the beginning of year................... $3,994,109 $5,222,095 $6,564,428
Payments to JAG and change in due to/from
subsidiaries not being acquired by SAG, net... 76,565 87,354 56,172
Net earnings..................................... 1,151,421 1,254,979 1,316,106
---------- ---------- ----------
Balance at the end of year......................... $5,222,095 $6,564,428 $7,936,706
========== ========== ==========

10. COMMITMENTS AND CONTINGENCIES

The Company and its subsidiaries are involved in various legal proceedings
which are normal to its business. In the opinion of management, the ultimate
liabilities, if any, resulting from such lawsuits and claims, will not have a
material adverse effect on the financial position of the Company.

Substantially all of the Company's facilities are subject to federal, state
and local provisions regulating the discharge of materials into the environment.
Compliance with these provisions has not had, nor does the Company expect such
compliance to have, any material effect upon the capital expenditures, net
income, financial condition or competitive position of the Company. Management
believes that its current practices and procedures for the control and
disposition of material and wastes comply with applicable federal and state
requirements.

11. LEASES

The Company is obligated under certain written or verbal leases for certain
buildings, land and equipment. The leases generally provide for the payment of
fixed monthly rentals and the payment of property taxes, insurance and repairs.
These operating leases provide for the following payments:

1998........................................................ $250,645
1999........................................................ 181,188
2000........................................................ 25,820
--------
$457,653
========

Total rent expense for the years ended December 31, 1995, 1996 and 1997 was
approximately $441,000, $543,000 and $526,000, respectively. Rent expense
includes approximately $157,000, $277,000 and $279,000 for verbal leases with
Jay Leasing for the years ended December 31, 1995, 1996 and 1997, respectively.

By March 1998, all of the Company's operations except for the Toyota
dealership, the Mazda dealership and three used car stores, relocated to a new
auto mall. The Toyota dealership and Mazda dealership will relocate to the auto
mall by June 1998. The cost of the acquisition, construction and equipping of
the auto mall was financed through the issuance of industrial revenue bonds (the
"Revenue Bonds") by the Development Authority of Columbus, Georgia (the
"Development Authority") in the aggregate principal
F-32
126
JAY AUTOMOTIVE GROUP, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

11. LEASES (CONTINUED)
amount of $10 million. The Revenue Bonds bear interest at a variable rate (as
defined in the Bond Indenture), but may be converted to a term rate at the
election of the lessee, subject to certain terms and restrictions described in
the Bond Indenture. Interest on the Revenue Bonds may be payable quarterly,
semiannually or on the day following a variable rate or term rate period
depending on the rate chosen by the lessee. JAG, Jay Leasing and JAG's
shareholder have guaranteed the Revenue Bonds.

The auto mall is leased by the Development Authority to Jay Leasing
pursuant to a lease agreement dated as of July 1, 1997 and expiring on July 1,
2017. Rental payments due under the lease agreement mirror the debt service
requirements set forth in the Bond Indenture. After having met certain terms and
conditions (as described in the lease agreement), Jay Leasing has the right to
purchase the auto mall from the Authority for $10. Aggregate annual principal
payments due on the Revenue Bonds are as follows:

1998........................................................ $ 255,000
1999........................................................ 280,000
2000........................................................ 305,000
2001........................................................ 325,000
2002........................................................ 355,000
Thereafter.................................................. 8,480,000
-----------
$10,000,000
===========

A formal lease for the auto mall between Jay Leasing and the other JAG
affiliates, including the Saturn dealership, has not yet been finalized.
Management anticipates that rental expense to be paid to Jay Leasing for the
auto mall, including the Saturn dealership, will approximate $1.1 million
annually for twenty years.

12. EMPLOYEE BENEFIT PLAN

The Company has an employee savings plan under Section 401(k) of the
Internal Revenue Code. This plan covers substantially all eligible, full time
employees. The Company may elect to make contributions to match a portion of the
employees' contributions. The Company's contributions vest ratably over five
years. The amounts charged against income in the accompanying financial
statements for the Company's contributions to the plan for the years ended
December 31, 1995, 1996 and 1997 was approximately $22,000, $60,000 and $43,000,
respectively.

F-33
127

REPORT OF INDEPENDENT AUDITORS

The Board of Directors
Grindstaff, Inc.

We have audited the accompanying balance sheets of Grindstaff, Inc. as of
December 31, 1996 and 1997, and the related statements of operations,
stockholders' equity, and cash flows for each of the three years in the period
ended December 31, 1997. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

/s/ ERNST & YOUNG LLP

Atlanta, Georgia
February 13, 1998

F-34
128

GRINDSTAFF, INC.

BALANCE SHEETS

DECEMBER 31,
-------------------------
1996 1997
----------- -----------

ASSETS
Current assets:
Cash and cash equivalents................................. $ 1,433,537 $ 293,036
Accounts receivable, net.................................. 789,155 748,928
Inventories............................................... 8,024,643 7,849,280
Prepaid expenses and other current assets................. 16,537 38,664
Deferred income taxes..................................... 19,458 6,734
----------- -----------
Total current assets.............................. 10,283,330 8,936,642
Machinery and equipment, net................................ 1,065,223 1,225,749
Receivable from stockholders................................ 429,319 1,259,202
Other assets................................................ 161,359 107,432
----------- -----------
$11,939,231 $11,529,025
=========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Floor plan notes payable.................................. $ 8,995,573 $ 8,953,198
Accrued liabilities and other............................. 554,904 663,092
Accounts payable.......................................... 727,534 537,607
Accounts payable -- related party......................... 720,000 --
Current maturities of long-term debt and capital lease.... 145,962 163,880
----------- -----------
Total current liabilities......................... 11,143,973 10,317,777
Long-term debt and capital lease, less current portion...... 272,806 325,768
Stockholders' equity:
Common stock, $1,000 par value, 100 shares authorized, 100
shares issued and outstanding.......................... 100,000 100,000
Treasury stock, 10 shares in 1996......................... (150,000) --
Additional paid-in capital................................ 948,212 948,212
Accumulated deficit....................................... (375,760) (162,732)
----------- -----------
Total stockholders' equity........................ 522,452 885,480
----------- -----------
$11,939,231 $11,529,025
=========== ===========

See accompanying notes.

F-35
129

GRINDSTAFF, INC.

STATEMENTS OF OPERATIONS

YEAR ENDED DECEMBER 31,
---------------------------------------
1995 1996 1997
----------- ----------- -----------

Revenues:
Vehicle sales......................................... $46,472,309 $50,384,680 $52,375,232
Parts and service..................................... 2,868,328 3,387,955 3,897,284
Finance, commission and other revenues, net........... 1,778,275 1,552,020 1,357,153
----------- ----------- -----------
51,118,912 55,324,655 57,629,669
Cost of sales:
Vehicle sales......................................... 43,156,061 46,969,662 47,657,291
Parts and service..................................... 1,703,042 2,038,175 2,397,025
----------- ----------- -----------
44,859,103 49,007,837 50,054,316
----------- ----------- -----------
Gross profit............................................ 6,259,809 6,316,818 7,575,353
Selling, general and administrative expenses............ 5,390,428 5,864,166 6,972,127
----------- ----------- -----------
Income from operations.................................. 869,381 452,652 603,226
Interest expense........................................ 306,138 588,510 458,534
Interest income......................................... 137,828 167,456 26,516
Other income (expense), net............................. (18,403) (509,191) 54,544
----------- ----------- -----------
Income (loss) before income tax benefit................. 682,668 (477,593) 225,752
Income tax (expense) benefit............................ (39,844) 32,347 (12,724)
----------- ----------- -----------
Net income (loss)............................. $ 642,824 $ (445,246) $ 213,028
=========== =========== ===========

See accompanying notes.

F-36
130

GRINDSTAFF, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY

ADDITIONAL TOTAL
COMMON TREASURY PAID-IN ACCUMULATED STOCKHOLDERS'
STOCK STOCK CAPITAL DEFICIT EQUITY
-------- --------- ---------- ----------- -------------

Balance at January 1, 1995.............. $100,000 $ -- $948,212 $(573,338) $ 474,874
Net income............................ -- -- -- 642,824 642,824
-------- --------- -------- --------- ---------
Balance at December 31, 1995............ 100,000 -- 948,212 69,486 1,117,698
Repurchase of 10 shares of common
stock.............................. -- (150,000) -- -- (150,000)
Net loss.............................. -- -- -- (445,246) (445,246)
-------- --------- -------- --------- ---------
Balance at December 31, 1996............ 100,000 (150,000) 948,212 (375,760) 522,452
Issuance of 10 shares of common
stock.............................. -- 150,000 -- -- 150,000
Net income............................ -- -- -- 213,028 213,028
-------- --------- -------- --------- ---------
Balance at December 31, 1997............ $100,000 $ -- $948,212 $(162,732) $ 885,480
======== ========= ======== ========= =========

See accompanying notes.

F-37
131

GRINDSTAFF, INC.

STATEMENTS OF CASH FLOWS

YEAR ENDED DECEMBER 31,
---------------------------------------
1995 1996 1997
----------- ----------- -----------

OPERATING ACTIVITIES
Net income (loss)....................................... $ 642,824 $ (445,246) $ 213,028
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation.......................................... 197,428 197,214 228,018
Amortization.......................................... 32,654 34,906 33,101
Loss (gain) on sale of machinery and equipment........ 2,236 (5,974) (3,902)
Changes in operating assets and liabilities:
Accounts receivable, net........................... (286,121) 132,181 40,227
Inventories........................................ (4,360,138) 2,159,881 175,363
Prepaid expenses and other current assets.......... 24,169 (6,002) (22,127)
Deferred income taxes.............................. -- (19,458) 12,724
Receivable from stockholders....................... -- (140,356) (829,883)
Other assets....................................... 37,239 (65,229) 53,927
Floor plan notes payable........................... 5,390,849 (2,783,027) (42,375)
Accounts payable and accrued liabilities........... 340,123 798,815 (801,739)
----------- ----------- -----------
Net cash provided by (used in) operating
activities.................................. 2,021,263 (142,295) (943,638)
INVESTING ACTIVITIES
Proceeds on sale of investment.......................... 46,759 -- --
Purchases of machinery and equipment.................... (473,252) (144,993) (312,679)
Proceeds on disposal of machinery and equipment......... 36,792 29,297 154,650
----------- ----------- -----------
Net cash used in investing activities......... (389,701) (115,696) (158,029)
FINANCING ACTIVITIES
(Purchase) sale of treasury stock....................... -- (150,000) 150,000
Principal payments on long-term debt.................... (124,529) (147,314) (188,834)
----------- ----------- -----------
Net cash used in financing activities................... (124,529) (297,314) (38,834)
----------- ----------- -----------
Change in cash and cash equivalents..................... 1,507,033 (555,305) (1,140,501)
Cash and cash equivalents at beginning of the year...... 481,809 1,988,842 1,433,537
----------- ----------- -----------
Cash and cash equivalents at end of the year............ $ 1,988,842 $ 1,433,537 $ 293,036
=========== =========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION
Assets acquired under capital leases.................... $ -- $ 48,961 $ 259,714
=========== =========== ===========
Cash paid for interest.................................. $ 267,698 $ 611,176 $ 465,353
=========== =========== ===========

See accompanying notes.

F-38
132

GRINDSTAFF, INC.

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997

1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND NATURE OF BUSINESS

Grindstaff, Inc. (the Company) is principally engaged in the business of
selling and servicing new and used vehicles. The Company operates three
dealerships in Northeast Tennessee: Grindstaff Chevrolet, Grindstaff Kia, and
Grindstaff Chrysler/Plymouth/Dodge/Jeep/Eagle.

USE OF ESTIMATES

CASH AND CASH EQUIVALENTS

Cash and cash equivalents include cash on hand, deposits in banks,
contracts in transit pertaining to the sale of vehicles, and all highly liquid
investments with an original maturity of three months or less at the date of
purchase. The Company's cash equivalents include $1,814,646 at December 31, 1996
and $66,624 at December 31, 1997, which it invested with GMAC as collateral
security for the Company's floor plan notes payable under its security agreement
with GMAC. In consideration, the Company receives a reduction in the interest
charged under the security agreement. So long as the Company is not in default
under its security agreement, it may, upon written request, require GMAC to
return all or a portion of the invested balance to it on the next business day
following receipt by GMAC of the request. The Company's management believes that
there is little, if any, credit risk because its investment may not exceed 75%
of the Company's floor plan notes payable to GMAC.

REVENUE RECOGNITION

Revenues from vehicle and parts sales and from service operations are
recognized at the time the vehicle is delivered to the customer or service is
completed.

ALLOWANCE FOR DOUBTFUL ACCOUNTS

The allowance for doubtful accounts is based on historical bad debt
experience and management's periodic evaluation of individual accounts.

F-39
133
GRINDSTAFF, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INVENTORIES

All inventory is stated at the lower of cost or market. Cost of new and
used vehicles is determined using the last in, first-out (LIFO) method.

MACHINERY AND EQUIPMENT

Machinery and equipment is stated at cost less accumulated depreciation.
Depreciation is provided predominately on the straight-line method over the
estimated useful lives of the assets. The ranges of estimated useful lives are
as follows:

Furniture and fixtures...................................... 5 - 10 years
Leasehold improvements...................................... 5 - 40 years
Machinery and shop equipment................................ 5 - 20 years
Rental cars and company vehicles............................ 7 years

CONCENTRATIONS OF CREDIT RISK

Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of contracts in transit and
accounts receivable. Also, at times, cash deposits in banks exceed the Federal
Deposit Insurance Corporation insurance limit. Contracts in transit are for
funds received shortly after the balance sheet date from contracts financed with
financial institutions. Trade receivables principally result from extending
short-term credit to a large number of customers and other automotive dealers
located in Northeast Tennessee. Finance companies receivables are commissions on
credit contracts of customers. Receivables also result from transactions with
automotive manufacturers. Although the Company is directly affected by the
economic conditions in the automotive industry, financial institutions, banks,
its customers and the general economy of Northeast Tennessee, management does
not believe significant credit risk exists.

INCOME TAXES

The Company has elected to be taxed under the provisions of Subchapter S of
the Internal Revenue Code. Under these provisions, the Company does not pay
federal corporate income taxes on its taxable income. Instead, the stockholders
are liable for individual income taxes on their respective share of the
Company's taxable income.

The Company accounts for state income taxes under the liability method.
Under the liability method, deferred income taxes are recorded to reflect the
net effects of temporary differences between the carrying amounts of assets and
liabilities for financial reporting and the amounts used for state income tax
purposes.

MAJOR SUPPLIER

The Company purchases substantially all of its new vehicles and parts
inventory from automobile manufacturers/distributors at the prevailing prices
charged by the manufacturers/distributors to all franchise dealers. The Company
enters into agreements ("Dealer Agreements") with each manufacturer. The Dealer
Agreements generally limit the location of the dealership and include
manufacturer approval rights over changes in dealership management and
ownership. A manufacturer is also entitled to terminate the Dealer Agreement if
the dealership is in material breach of its terms.

ADVERTISING

The Company expenses the cost of advertising as incurred. Advertising
expense was $727,523, $912,853 and $1,139,148 for the years ended December 31,
1995, 1996 and 1997, respectively.
F-40
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GRINDSTAFF, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The Company considers the carrying amounts of significant classes of
financial instruments on the balance sheet, including cash and contracts in
transit, notes payable and long-term debt to be reasonable estimates of fair
value. Fair value of the Company's debt was estimated using discounted cash flow
analysis, based on the Company's current incremental borrowing rates for similar
types of arrangements.

STOCK DIVIDEND

On March 3, 1997, the Company effected a 1-for-2 common stock dividend. The
share amounts in the financial statements have been retroactively adjusted for
the stock dividend.

2. ACCOUNTS RECEIVABLE

Accounts receivable consist of the following at December 31, 1996 and 1997:

DECEMBER 31,
-------------------
1996 1997
-------- --------

Customers................................................... $314,785 $183,938
Factory..................................................... 376,643 473,186
Finance companies........................................... 56,403 46,638
Employees................................................... 44,389 52,967
-------- --------
792,220 756,729
Less allowance for doubtful accounts........................ (3,065) (7,801)
-------- --------
$789,155 $748,928
======== ========

3. INVENTORIES

Inventories consist of the following at December 31, 1996 and 1997:

DECEMBER 31,
-----------------------
1996 1997
---------- ----------

New vehicles................................................ $7,263,231 $7,494,649
Used vehicles............................................... 2,343,152 1,876,461
Parts, accessories and other................................ 275,064 387,370
---------- ----------
9,881,447 9,758,480
Less LIFO reserve........................................... 1,856,804 1,909,200
---------- ----------
$8,024,643 $7,849,280
========== ==========

F-41
135
GRINDSTAFF, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

4. MACHINERY AND EQUIPMENT

A summary of machinery and equipment is as follows as of December 31, 1996
and 1997:

DECEMBER 31,
-----------------------
1996 1997
---------- ----------

Leasehold improvements...................................... $ 866,414 $ 870,320
Machinery and shop equipment................................ 524,368 579,699
Furniture and fixtures...................................... 587,496 759,976
Rental cars and company vehicles............................ 317,674 345,411
---------- ----------
2,295,952 2,555,406
Less accumulated depreciation............................... 1,230,729 1,329,657
---------- ----------
$1,065,223 $1,225,749
========== ==========

5. FLOOR PLAN NOTES PAYABLE

Floor plan notes payable consists of notes with financial institutions. The
floor plan notes are secured by certain new and used vehicles. The floor plan
arrangements permit the Company to borrow up to $9,000,000 in 1996 and
$9,505,000 in 1997, restricted by new and used vehicles levels. The notes are
generally due within ten days of the vehicle being sold or after the vehicle has
been in inventory for one year for new vehicles and after three months for used
vehicles. The notes bear interest based on contractual rates, which ranged from
9.00% to 9.75% at December 31, 1997.

6. ACCRUED LIABILITIES AND OTHER

Accrued liabilities and other consist of the following at December 31, 1996
and 1997:

DECEMBER 31,
-------------------
1996 1997
-------- --------

Salaries, wages, bonus and vacation......................... $109,393 $258,666
Finance reserve............................................. 40,000 40,000
Accrued taxes............................................... 256,971 208,320
Accrued interest............................................ 66,371 79,563
Other accrued liabilities................................... 82,169 76,543
-------- --------
$554,904 $663,092
======== ========

7. LONG-TERM DEBT

At December 31, 1996 and 1997 the Company had a note outstanding in the
amount of $285,633 and $187,328, respectively. The note payable to General
Motors Acceptance Corporation is collateralized by all fixed assets, parts and
accessories, and a personal guarantee of a stockholder of the Company. The note
is dated May 25, 1994 with a term of five years payable in monthly installments
of principal and interest. Interest is calculated at prime plus one percent,
9.5% and 10.0% at December 31, 1996 and 1997, respectively. At December 31, 1996
and 1997, $100,000 of the note is classified as current and the remainder is due
during 1999.

F-42
136
GRINDSTAFF, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

8. INCOME TAXES

The current income tax provision represents the amount of state income
taxes paid or payable for the year. The deferred income tax provision represents
the change in deferred tax liabilities and assets. Significant components of the
provisions for income taxes are as follows for the years ended December 31,
1995, 1996 and 1997, respectively:

DECEMBER 31,
----------------------------
1995 1996 1997
------- -------- -------

Current state income tax expense (benefit)............... $ 9,126 $(12,889) $ --
Deferred state income tax expense (benefit).............. 30,718 (19,458) 12,724
------- -------- -------
Total provision for income tax expense
(benefit).................................... $39,844 $(32,347) $12,724
======= ======== =======

The Company recorded deferred tax assets of $19,458 and $6,734 at December
31, 1996 and 1997, respectively, relating to unutilized net operating loss
carryforwards, which expire through 2011.

The pro forma provision for federal and state income taxes for the years
ended December 31, 1995, 1996 and 1997 would be $255,876, $(184,637) and
$80,503, respectively. The pro forma provision reflects amounts recorded related
to the state tax provision and that would have been recorded had the Company's
income been taxed for federal purposes as if it were a C Corporation.

9. COMMITMENTS AND TRANSACTIONS WITH RELATED PARTIES

The Company is obligated to related parties under certain non-cancelable
leases. These leases, which cover the lease of certain buildings, land and
equipment provide for the following payments:

CAPITAL OPERATING
LEASES LEASES TOTAL
-------- ---------- ----------

1998................................................ $ 63,880 $ 630,000 $ 693,880
1999................................................ 65,741 630,000 695,741
2000................................................ 69,713 630,000 699,713
2001................................................ 74,008 390,000 464,008
2002................................................ 28,978 -- 28,978
-------- ---------- ----------
Total minimum payments.................... $302,320 $2,280,000 $2,582,320
======== ========== ==========

Interest relating to capital leases is generally prepaid in the first year
of the lease. Total rent expense, all of which was paid to related parties, for
the years ended December 31, 1995, 1996 and 1997 was $541,000, $632,200 and
$687,000, respectively.

The Company is obligated under a non-cancelable operating lease on
buildings and automobile lots, which expires on June 30, 2001. A stockholder of
the Company is the leasor of the property.

During 1996, the Company made a $600,000 payment to terminate a property
lease with a stockholder of the Company. This termination payment was recorded
as other expense during 1996.

For all years presented, the Company paid certain personal expenses of a
stockholder and reflected these payments as a receivable from stockholder. This
receivable is due upon demand, non-interest bearing and unsecured.

10. GOVERNMENTAL REGULATION

F-43
137
GRINDSTAFF, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

10. GOVERNMENTAL REGULATION (CONTINUED)
Company expect such compliance to have any material effect upon the capital
expenditures, net income, financial condition or competitive position of the
Company. Management believes that its current practices and procedures for the
control and disposition of such wastes comply with applicable federal and state
requirements.

11. SUBSEQUENT EVENT

Subsequent to December 31, 1997, the stockholders of the Company signed an
agreement to sell the stock of the Company. The agreement is subject to several
conditions, including the manufacturers' approval of change in dealership
management and ownership.

F-44
138

INDEPENDENT AUDITOR'S REPORT

Board of Directors
Wade Ford, Inc.
3860 South Cobb Drive
Smyrna, GA 30080

We have audited the accompanying combined balance sheets of Wade Ford, Inc.
(an S corporation) and affiliate as of December 31, 1997, 1996 and 1995, and the
related combined statements of income, retained earnings, and cash flows for the
years then ended. These combined financial statements are the responsibility of
the Companies' management. Our responsibility is to express an opinion on these
combined financial statements based on our audits.

The combined financial statements include the financial statements of Wade
Ford, Inc. (an S corporation) and Wade Ford Buford, Inc. (an S corporation),
which are related through common ownership and management.

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

In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of Wade Ford, Inc. and
affiliate as of December 31, 1997, 1996 and 1995, and the results of their
operations and their cash flows for the years then ended in conformity with
generally accepted accounting principles.

Respectfully submitted,

/s/ PYKE & PIERCE, CPA'S

Certified Public Accountants

Atlanta, Georgia
February 9, 1998

F-45
139

WADE FORD, INC. AND WADE FORD BUFORD, INC.

COMBINED BALANCE SHEETS
DECEMBER 31, 1997, 1996 AND 1995

1997 1996 1995
----------- ----------- -----------

ASSETS
CURRENT ASSETS:
Cash........................................................ $ 4,661,059 $ 4,634,350 $ 1,953,192
Accounts Receivable -- Trade (Net of Allowance for Doubtful
Accounts of $25,000 in 1997, $25,000 in 1996 and $91,519
in 1995).................................................. 4,088,793 3,656,387 3,518,142
Accounts Receivable -- Employees............................ 24,811 20,969 22,076
Inventories:
New Vehicles.............................................. 22,582,440 18,198,332 14,651,525
Used Vehicles............................................. 2,725,909 1,971,999 1,433,234
Parts, Accessories and Other.............................. 642,771 670,869 630,097
Prepaid Expenses............................................ 13,164 19,837 10,381
Note Receivable -- Stockholders............................. 502,531 484,045 431,592
----------- ----------- -----------
Total Current Assets............................... 35,241,478 29,656,788 22,650,239
----------- ----------- -----------
PROPERTY AND EQUIPMENT:
Buildings and Improvements.................................. 32,375 32,375 32,375
Parts and Service Equipment................................. 809,275 712,462 606,532
Rental Vehicles............................................. -- -- 704,243
Office Equipment............................................ 680,640 644,698 551,229
Leasehold Improvements...................................... 387,591 339,959 244,963
----------- ----------- -----------
1,909,881 1,729,494 2,139,342
Accumulated Depreciation.................................... (1,379,236) (1,249,139) (1,228,343)
----------- ----------- -----------
Total Property and Equipment....................... 530,645 480,355 910,999
----------- ----------- -----------
INTANGIBLES AND OTHER ASSETS:
Deposits.................................................... 2,727 2,727 4,727
Cash Surrender Value of Life Insurance (Net of Policy
Loans).................................................... 68,426 68,790 68,371
Goodwill and Organization Expense (Net of Accumulated
Amortization of $65,266 in 1997, $63,154 in 1996 and
$57,154 in 1995).......................................... 24,688 27,160 32,800
----------- ----------- -----------
Total Intangibles and Other Assets................. 95,841 98,677 105,898
----------- ----------- -----------
Total Assets....................................... $35,867,964 $30,235,820 $23,667,136
=========== =========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Floor Plan Notes............................................ $30,714,435 $25,523,346 $19,428,485
Notes Payable -- Rental Vehicles............................ 588,831
Notes Payable -- Officers and Stockholders.................. 980,000 1,300,000 658,004
Notes Payable -- Other...................................... 12,610 21,877 24,646
Accounts Payable............................................ 426,478 310,453 303,029
Accrued Payroll Taxes and Sales Taxes....................... 111,685 101,370 115,089
Accrued Wages............................................... 264,715 142,441 94,841
Accrued Interest............................................ 281,859 207,772 193,472
Accrued Taxes, Other than Income Tax........................ 105,361 50,743 55,927
Other Accrued Expenses...................................... 466,971 444,300 285,337
----------- ----------- -----------
Total Current Liabilities.......................... 33,364,114 28,102,302 21,747,661
LONG-TERM LIABILITIES:
Notes Payable -- Officers and Stockholders.................. -- -- 690,000
Notes Payable -- Other...................................... 52,814 61,027 69,327
----------- ----------- -----------
Total Long-Term Liabilities........................ 52,814 61,027 759,327
----------- ----------- -----------
Total Liabilities.................................. 33,416,928 28,163,329 22,506,988
----------- ----------- -----------
STOCKHOLDERS' EQUITY:
Common Stock................................................ 178,788 178,788 178,788
Additional Paid-In Capital.................................. 99,500 99,500 99,500
Retained Earnings........................................... 2,172,748 1,794,203 881,860
----------- ----------- -----------
Total Stockholders' Equity......................... 2,451,036 2,072,491 1,160,148
----------- ----------- -----------
Total Liabilities and Stockholders' Equity......... $35,867,964 $30,235,820 $23,667,136
=========== =========== ===========

See accompanying notes and Independent Auditor's Report.

F-46
140

WADE FORD, INC. AND WADE FORD BUFORD, INC.

COMBINED STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

1997 1996 1995
------------ ------------ ------------

Sales................................................ $165,341,767 $143,593,721 $116,539,754
Cost of sales........................................ 152,680,182 131,462,052 106,586,885
------------ ------------ ------------
Gross profit......................................... 12,661,585 12,131,669 9,952,869
Selling, general and administrative expense.......... 10,467,214 11,261,008 9,503,822
------------ ------------ ------------
Income from operations............................... 2,194,371 870,661 449,047
Floor plan interest.................................. 157,354 290,813 155,948
Interest income...................................... 162,322 81,802 35,970
Other income......................................... 95,405 252,046 229,703
------------ ------------ ------------
Net income................................. 2,294,744 913,696 558,772
Retained earnings -- Beginning....................... 1,794,203 881,860 562,443
Less: Current Year Distributions................... (1,916,199) (1,353) (239,355)
------------ ------------ ------------
Retained earnings -- Ending.......................... $ 2,172,748 $ 1,794,203 $ 881,860
============ ============ ============

See accompanying notes and Independent Auditor's Report.

F-47
141

WADE FORD, INC. AND WADE FORD BUFORD, INC.

COMBINED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

1997 1996 1995
----------- ----------- -----------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income.............................................. $ 2,294,744 $ 913,696 $ 558,772
Adjustments to Reconcile Net Income to Net Cash Provided
by Operating Activities:
Depreciation and Amortization......................... 143,419 141,847 229,400
Loss on Sale of Property and Equipment................ 465 39,578
Change in LIFO Reserve................................ 72,080 328,080 744,610
Cash Value of Officer's Life Insurance................ 364 (419) 865
(Increase) Decrease In:
Accounts Receivable................................ (424,263) (161,123) (381,180)
Inventories........................................ (5,182,000) (4,454,424) (3,418,097)
Prepaid Expenses................................... 6,673 (9,456) (10,381)
Notes Receivable................................... (30,471) (28,468) (290,257)
Deposits........................................... -- 2,000 (2,000)
Increase (Decrease) In:
Floor Plan Notes................................... 5,191,089 5,506,030 189,576
Accounts Payable and Accrued Expenses.............. 399,990 209,384 107,535
----------- ----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES..... 2,472,090 2,447,147 (2,231,579)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Property and Equipment...................... (185,232) (294,395) (766,946)
Proceeds From Sale of Property and Equipment............ -- 588,831 3,349,764
----------- ----------- -----------
NET CASH PROVIDED (USED) BY INVESTING
ACTIVITIES.................................. (185,232) 294,436 2,582,818
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Loans from Stockholder.................................. 530,000 -- --
Repayment of Loans from Stockholders.................... (1,050,000) -- (50,000)
Proceeds from Long-Term Borrowings...................... 705,000 336,524 1,036,080
Repayment on Long-Term Borrowings....................... (528,950) (395,596) (792,583)
Distribution to Owners.................................. (1,916,199) (1,353) (239,355)
----------- ----------- -----------
NET CASH PROVIDED (USED) BY FINANCING
ACTIVITIES.................................. (2,260,149) (60,425) (45,858)
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH............... 26,709 2,681,158 305,381
CASH AT BEGINNING OF YEAR............................... 4,634,350 1,953,192 1,647,811
----------- ----------- -----------
CASH AT END OF YEAR..................................... $ 4,661,059 $ 4,634,350 $ 1,953,192
=========== =========== ===========
SUPPLEMENTAL DISCLOSURES:
INTEREST PAID........................................... $ 2,580,002 $ 2,326,346 $ 2,016,521
=========== =========== ===========

See accompanying notes and Independent Auditor's Report.

F-48
142

WADE FORD, INC. AND WADE FORD BUFORD, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1997, 1996 AND 1995

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS

Wade Ford, Inc., located in Smyrna, Georgia, (Smyrna) is an authorized Ford
dealership. Wade Ford Buford, Inc., (Buford) located in Buford, Georgia, is an
authorized Ford-Mercury dealership. The dealerships provide retail and fleet
sales of new and used vehicles, parts and service. The Companies' principal
market areas are the Metropolitan Atlanta area and Northeast Georgia. A major
component of the Buford business is dealer financing of used car sales, also
known as "Tote-Note" sales. Dealer finance receivables are secured by
automobiles sold. Most contracts have payment terms in the 12 to 24 month range.
Because the loans are made principally in the Northeast Georgia and Metropolitan
Atlanta area, the ultimate ability to collect amounts due may be affected by
local economic fluctuations.

EXCESS OF COST OVER NET ASSETS OF BUSINESSES ACQUIRED AND ORGANIZATIONAL
EXPENSES

The excess of cost over the net assets of businesses acquired at original
purchase in 1982 (Smyrna) is being amortized on a straight-line basis over a
25-year period. Organizational expenses of Buford are being amortized on the
straight-line method over a five year period. The Organizational expenses
(Buford) became fully amortized in 1996. Amortization expense charged to
operations for 1997, 1996 and 1995 was $2,470, $2,470 and $5,638, respectively.

INVENTORIES

All inventories are valued at the lower of cost or market. The cost of new
and used vehicles and parts is determined using the last-in, first-out method
(LIFO). If the first-in, first-out (FIFO) method had been used to determine the
cost of new and used vehicles and parts, the inventories would have been
increased by approximately $3,601,316 at December 31, 1997, $3,407,171 at
December 31, 1996 and $2,807,787 at December 31, 1995. Also, the Companies would
have reported net income of approximately $1,590,323 for 1997, $1,885,162 for
1996 and $1,727,511 for 1995.

INCOME TAXES

The Companies have elected to be treated as S Corporations for Federal and
State income tax purposes. Under this election, items of profit and loss are
passed through to the shareholders. Accordingly, the financial statements do not
reflect any provision for income tax expense.

The pro forma provision for income taxes for the years ended December 31,
1997, 1996 and 1995 would be $863,941, $336,872 and $191,771, respectively. The
pro forma provision reflects amounts that would have been recorded had the
Companies' income been taxed for federal and state purposes as if they were C
Corporations.

PROPERTY AND EQUIPMENT

Property and Equipment are recorded at cost. Maintenance and repairs are
charged to expense as incurred, and renewals and betterments are capitalized.
Gains or losses on disposals are credited or charged to operations. Depreciation
is provided using the straight-line method over the estimated useful lives of
the assets acquired prior to January 1, 1981 and straight-line and accelerated
methods, for assets acquired subsequent to December 31, 1980. Depreciation and
amortization expense for 1997, 1996 and 1995 was $143,419, $141,847 and $229,400
respectively.

F-49
143
WADE FORD, INC. AND WADE FORD BUFORD, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures. Accordingly,
actual results could differ from these estimates.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents include cash on hand, contracts in transit
pertaining to the sale of vehicles, all highly liquid investments with an
original maturity of three months or less at the date of purchase, and the Cash
Management Account (See Note 9).

PRINCIPLES OF COMBINATION

The accompanying combined financial statements present the combination of
the financial statements of Wade Ford, Inc. and the financial statements of Wade
Ford Buford, Inc., both of which are under common control.

2. CASH SURRENDER VALUE

The Smyrna dealership is the beneficiary of insurance policies on the life
of a former stockholder and previous owner of Wade Ford, Inc. At December 31,
1997, 1996 and 1995, notes payable to the insurance companies in the amounts of
$42,940, respectively, were collateralized by the cash value of the policies
which is $68,426 for 1997, $68,790 for 1996 and $68,371 for 1995.

3. FLOOR PLAN NOTES -- FORD MOTOR CREDIT CORPORATION

The Companies' floor plan notes payable to Ford Motor Credit Co. are floor
plan loans bearing interest at 1% over the floating prime commercial lending
rate. Principal payments are made as each unit of the new and used vehicle
inventory is sold. Interest is payable monthly. The notes are collateralized by
the new and used vehicle inventory.

Notes payable to Ford Motor Credit Co. -- Rental vehicles are floor plan
loans bearing interest at 2 3/4% over the commercial paper rate based on the
date the vehicle is put into rental service. Principal payments are made monthly
at a rate of 1.75% of the capitalized cost of the rental truck and 2 1/4% for
rental car. When a vehicle is taken out of rental service, any remaining
principal balance is then due.

4. LONG-TERM DEBT

Long-term debt consists of the following:

1997 1996 1995
-------- --------- --------

Note payable to irrevocable trust of a former
stockholder. Interest is 1% above floating prime and
payable monthly. Note is unsecured.................. $ $ $580,000
Note Payable to estate of a former stockholder.
Interest is 1% above floating prime and payable
monthly. Principal due November 15, 1997............ 110,000 110,000
Notes Payable for cash value of life insurance.
Interest is payable at 5 percent.................... 42,940 42,940 42,940

F-50
144
WADE FORD, INC. AND WADE FORD BUFORD, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

4. LONG-TERM DEBT (CONTINUED)

1997 1996 1995
-------- --------- --------

Installment notes payable, payable in variable monthly
installments of principal plus interest, interest
from 7.5% to 9%, due between 1994 and 1998, secured
by Rotunda equipment................................ 22,484 39,965 42,437
-------- --------- --------
65,424 192,905 775,377
Less Current Maturities............................... (12,610) (131,878) (16,050)
-------- --------- --------
TOTAL LONG-TERM DEBT........................ $ 52,814 $ 61,027 $759,327
======== ========= ========

As of December 31, 1997, long-term debt matures approximately as follows:

1998........................................................ $12,610
1999........................................................ 47,730
2000........................................................ 3,813
2001........................................................ 1,271
2002........................................................ --
-------
$65,424
=======

5. LEASE COMMITMENTS

The Companies rent their facilities under operating leases. Smyrna rents a
portion of its facility from an officer/shareholder. Buford leases its
facilities from an officer/shareholder. While the agreements provide for minimum
lease payments, the leases also provide that the Company pay the taxes,
insurance, and maintenance expenses related to the leased property. Buford's
lease as of December 31, 1997, is being continued on a month-to-month basis.
Smyrna's lease is noncancellable through the end of its term.

The following is a schedule by years of future minimum lease payments
required under the Companies' operating leases:

1998........................................................ $ 420,000
1999........................................................ 423,000
2000........................................................ 432,000
2001........................................................ 435,000
2002........................................................ 444,000
2003 and thereafter......................................... 2,166,000

Total rent expense for 1997, 1996 and 1995 was $659,471, $658,543 and
$651,828, respectively.

The Companies also lease their computer system and have other equipment
leases. These leases are treated as operating leases. Future minimum lease
payments required under the above written lease agreements are:

1998........................................................ $84,775
1999........................................................ 83,777
2000........................................................ 83,777
2001........................................................ 15,795
2002........................................................ --

F-51
145
WADE FORD, INC. AND WADE FORD BUFORD, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

6. ARRANGEMENTS FOR RENTAL TO OTHERS

The Smyrna location rents cars and trucks to others under agreements with
varying terms, primarily daily, weekly or monthly, with renewal options. The
agreements are cancelable by either party. The Company holds title to the cars
and finances the arrangements by blanket-type rent payments consisting of
principal, interest and insurance. Interest is payable at 3/4 percent over
floating prime at date of rental. Ford Motor Company is the lien holder on the
vehicles. The dealership discontinued this program during 1996 and had no
vehicles at December 31, 1997 or 1996.

The following is an analysis of the book value of the rental cars at
December 31, 1995:

Cost........................................................ $704,243
Less Accumulated Depreciation............................... 115,412
--------
$588,831
========

7. PROFIT SHARING PLAN

The Companies have profit-sharing plans that cover any employee with 12
months of service. Enrollment, when eligible, is January 1 or July 1 of each
year. Contributions to the plans are based on a formula and are contingent upon
the attainment of certain level of earnings as defined in the agreements. During
1997, 1996 and 1995, contributions to the plans charged to operations were
$55,841, $51,662 and $39,958, respectively.

8. RELATED PARTY TRANSACTIONS

1997 1996 1995
-------- -------- --------

Accounts Receivable Stockholders............................ $ 38,015 $ 50,000 $ 26,015
Notes Receivable from Stockholders $85,000 demand note with
interest at 8.5%; $50,000 demand note with interest at 7%;
$204,741 demand note with interest at 8%; $22,749 demand
note with interest at 8%; (includes accrued interest of
$98,670, $68,849 and $39,396 in 1997, 1996, and 1995,
respectively)............................................. 464,516 434,045 405,577
-------- -------- --------
$502,531 $484,045 $431,592
======== ======== ========

The Companies borrow from stockholders and their related entities varying
amounts at 1% above floating prime. These notes are generally unsecured and
payable on demand or in periods of two years or less.

Interest paid on the aforementioned notes payable during 1997, 1996 and
1995 was $50,129, $122,590 and $63,188, respectively.

9. CONCENTRATIONS OF CREDIT RISK

Financial instruments that potentially subject the Companies to
concentrations of credit risk consist principally of customer accounts
receivables. Concentrations of credit risk with respect to customer receivables
are limited due to the large number of customers comprising the Companies'
customer base and their dispersion across the Metropolitan Atlanta area and
Northeast Georgia. As of December 31, 1997, 1996 and 1995, the companies had no
significant concentrations of credit risk arising from these customer accounts
receivable.

The Companies maintain their cash balances with two financial institutions
located in Atlanta, Georgia. The balances are insured by the Federal Deposit
Insurance Corporation up to $100,000 per dealership at each financial
institution location. At December 31, 1997, 1996 and 1995, the Companies'
uninsured cash balances totaled $747,899, $1,055,457 and $961,156, respectively.
F-52
146
WADE FORD, INC. AND WADE FORD BUFORD, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

9. CONCENTRATIONS OF CREDIT RISK (CONTINUED)
The Companies have on deposit with Ford Motor Credit -- $2,480,000 in Cash
Management Accounts (CMA), as of December 31, 1997. These monies are used to
reduce Ford Motor Credit's balance of the Companies' floor plan notes. These
monies are uninsured.

Balance of CMA at December 31, 1996 -- $2,950,000.

Balance of CMA at December 31, 1995 -- $1,730,000.

10. INTERNAL REVENUE SERVICE EXAMINATION

In 1995, the Internal Revenue Service began an examination of the
Companies' tax returns for the year ended December 31, 1993. In their report,
dated August 30, 1995, the Internal Revenue Service terminated the Companies'
use of the Last-In, First-Out (LIFO) inventory method. This LIFO termination has
been rescinded by the Service and the Companies have agreed to come under the
provisions of Revenue Procedure 97-44. Under this procedure the Companies can
continue to use LIFO but the stockholders were required to pay a penalty to the
Internal Revenue Service.

11. POTENTIAL SALE

Subsequent to December 31, 1997, the stockholders of the Companies signed
an agreement to sell the stock of the Companies. The agreement is subject to
several conditions, including the manufacturers' approval of change in the
dealerships' management and ownership.

12. MAJOR SUPPLIER

The Companies purchase substantially all of its new vehicles and parts
inventory from Ford Motor Co. at the prevailing prices charged by Ford to all
franchise dealers. The Companies enter into agreements ("Dealer Agreements")
with Ford. The Dealer Agreements generally limit the location of the dealership
and include Ford's approval rights over changes in dealership management and
ownership. Ford is also entitled to terminate the Dealer Agreements if the
dealerships are in material breach of their terms.

13. ADVERTISING

The Companies expense the cost of advertising as incurred. Advertising
expense was $595,629, $832,622 and $695,695 for the years ended December 31,
1997, 1996 and 1995, respectively.

14. GOVERNMENTAL REGULATION

Substantially all of the Companies facilities are subject to federal, state
and local provisions regulating the discharge of materials into the environment.
Compliance with these provisions has not had, nor does the Companies expect such
compliance to have any material effect upon the capital expenditures, net
income, financial condition or competitive position of the Companies. Management
believes that its current practices and procedures of the control and
disposition of such wastes comply with applicable federal and state
requirements.

F-53
147
WADE FORD, INC. AND WADE FORD BUFORD, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

15. LAWSUIT

Wade Ford, Inc. is a defendant in a lawsuit filed by a customer for alleged
fraudulent misrepresentation. The suit asks for damages totaling $128,000.
Outside counsel from the Company has advised that at this stage in the
proceedings, they cannot offer an opinion as to the probable outcome. Outside
counsel did state that the Company's liability insurance policy does not provide
coverage for damages assessed for fraud.

16. COMMON STOCK

A summary of common stock follows:

WADE
WADE FORD
FORD, INC. BUFORD COMBINED
---------- ------- --------

Total Value.............................................. $ 1,000 177,788 $178,788
======= ======= ========

Stated value per share................................... $ 1.00 No par
value
Authorized shares........................................ 10,000 500,000
Shares issued and outstanding............................ 1,000 12,800

F-54
148

REPORT OF INDEPENDENT AUDITORS

The Board of Directors
Robertson Oldsmobile-Cadillac, Inc. d/b/a
Moss Robertson Mazda and
Moss Robertson Isuzu

We have audited the accompanying balance sheets of Robertson
Oldsmobile-Cadillac, Inc. d/b/a Moss Robertson Mazda and Moss Robertson Isuzu as
of December 31, 1996 and 1997, and the related statements of income and changes
in retained earnings and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Robertson
Oldsmobile-Cadillac, Inc. d/b/a Moss Robertson Mazda and Moss Robertson Isuzu at
December 31, 1996 and 1997, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.

/s/ ERNST & YOUNG LLP

Atlanta, Georgia
January 26, 1998

F-55
149

ROBERTSON OLDSMOBILE-CADILLAC, INC. D/B/A
MOSS ROBERTSON MAZDA AND
MOSS ROBERTSON ISUZU

BALANCE SHEETS

DECEMBER 31,
-----------------------
1996 1997
---------- ----------

ASSETS
Current assets:
Cash and cash equivalents................................. $2,554,818 $2,168,413
Accounts receivable....................................... 355,968 258,276
Inventories............................................... 2,341,805 2,766,897
Prepaid expenses and other current assets................. 23,114 41,879
---------- ----------
Total current assets.............................. 5,275,705 5,235,465
Machinery and equipment, net................................ 60,770 46,228
Intangible assets, net...................................... 117,592 108,122
---------- ----------
$5,454,067 $5,389,815
========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Floor plan notes payable.................................. $1,921,823 $2,391,254
Accounts payable.......................................... 537,806 290,511
Accrued liabilities....................................... 45,402 54,072
Current maturities of long-term debt...................... 7,663 --
---------- ----------
Total current liabilities......................... 2,512,694 2,735,837
Stockholder's equity:
Common stock, $5 par value:
2,000 shares authorized, 1,000 shares issued and
outstanding........................................... 5,000 5,000
Additional paid in capital................................ 144,500 144,500
Retained earnings......................................... 2,791,873 2,504,478
---------- ----------
Total stockholder's equity........................ 2,941,373 2,653,978
---------- ----------
$5,454,067 $5,389,815
========== ==========

See accompanying notes.

F-56
150

ROBERTSON OLDSMOBILE-CADILLAC, INC. D/B/A
MOSS ROBERTSON MAZDA AND
MOSS ROBERTSON ISUZU

STATEMENTS OF INCOME AND CHANGES IN RETAINED EARNINGS

YEAR ENDED DECEMBER 31,
-------------------------
1996 1997
----------- -----------

Revenues:
Vehicle sales............................................. $18,781,757 $20,258,720
Parts and service......................................... 2,499,903 2,778,577
Finance, commission and other revenues, net............... 216,387 387,204
----------- -----------
21,498,047 23,424,501
Cost of sales:
Vehicle Sales............................................. 17,213,988 18,912,247
Parts and service......................................... 1,233,144 1,537,189
----------- -----------
18,447,132 20,449,436
----------- -----------
Gross profit................................................ 3,050,915 2,975,065
Selling, general and administrative expenses................ 2,195,664 1,956,762
----------- -----------
Income from operations...................................... 855,251 1,018,303
Interest expense............................................ 45,365 66,811
Interest income............................................. 152,541 174,892
Other (expense) income, net................................. 2,987 (4,779)
----------- -----------
Net income........................................ 965,414 1,121,605
Dividends paid.............................................. (411,930) (1,409,000)
Retained earnings at beginning of year...................... 2,238,389 2,791,873
----------- -----------
Retained earnings at end of year............................ $ 2,791,873 $ 2,504,478
=========== ===========

See accompanying notes.

F-57
151

ROBERTSON OLDSMOBILE-CADILLAC, INC. D/B/A
MOSS ROBERTSON MAZDA AND
MOSS ROBERTSON ISUZU

STATEMENTS OF CASH FLOWS

YEAR ENDED DECEMBER 31,
-----------------------
1996 1997
---------- ----------

OPERATING ACTIVITIES
Net income.................................................. $ 965,414 $1,121,605
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation........................................... 50,862 45,027
Amortization........................................... 9,470 9,470
Gain (loss) on sale of machinery and equipment......... 4,282 (771)
Changes in assets and liabilities:
Accounts receivable.................................. (83,622) 97,692
Prepaid expenses and other current assets............ (3,431) (18,765)
Inventories.......................................... (190,283) (425,092)
Floor plan notes payable............................. 307,442 469,431
Accounts payable..................................... 206,763 (247,295)
Accrued liabilities.................................. (34,023) 8,670
---------- ----------
Net cash provided by operating activities......... 1,232,874 1,059,972
INVESTING ACTIVITIES
Purchases of machinery and equipment........................ (48,541) (30,813)
Proceeds on disposal of machinery and equipment............. -- 1,099
---------- ----------
Net cash used in investing activities............. (48,541) (29,714)
FINANCING ACTIVITIES
Principal payments on long-term debt........................ (17,956) (7,663)
Dividends paid.............................................. (411,930) (1,409,000)
Loans (to) from stockholder, net............................ (337,661) --
Payments of stockholder loans, net.......................... 337,661 --
---------- ----------
Net cash used in financing activities............. (429,886) (1,416,663)
---------- ----------
Change in cash and cash equivalents......................... 754,447 (386,405)
Cash and cash equivalents at beginning of the year.......... 1,800,371 2,554,818
---------- ----------
Cash and cash equivalents at end of the year................ $2,554,818 $2,168,413
========== ==========

See accompanying notes.

F-58
152

ROBERTSON OLDSMOBILE-CADILLAC, INC. D/B/A
MOSS ROBERTSON MAZDA AND
MOSS ROBERTSON ISUZU

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1997

1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND NATURE OF BUSINESS

Robertson Oldsmobile-Cadillac, Inc. d/b/a Moss Robertson Mazda and Moss
Robertson Isuzu (the Company) is principally engaged in the business of selling
and servicing new and used vehicles. The Company operates 4 dealerships in
Gainesville, Georgia consisting of Oldsmobile, Cadillac, Mazda, and Isuzu.

USE OF ESTIMATES

CASH AND CASH EQUIVALENTS

Cash and cash equivalents include cash on hand, deposits in banks,
contracts in transit pertaining to the sale of vehicles, and all highly liquid
investments with an original maturity of three months or less at the date of
purchase. The Company's cash equivalents include $1,664,144 at December 31, 1996
and $1,764,144 at December 31, 1997, which it invested with GMAC as collateral
security for the Company's floor plan notes payable under its security agreement
with GMAC. In consideration, the Company receives a reduction in the interest
charged under the security agreement. So long as the Company is not in default
under its security agreement, it may, upon written request, require GMAC to
return all or a portion of the invested balance to it on the next business day
following receipt by GMAC of the request. The Company's management believes that
there is little, if any, credit risk because its investment may not exceed 75%
of the Company's floor plan notes payable to GMAC.

INVENTORIES

All inventory is stated at the lower of cost or market. Cost of new
vehicles and certain parts and accessories is determined using the last-in,
first-out (LIFO) method. Cost of used vehicles and other parts and accessories
is determined using the first-in, first-out (FIFO) method.

MACHINERY AND EQUIPMENT

Machinery and equipment is stated at cost less accumulated depreciation.
Depreciation is provided predominately using accelerated methods over the
estimated useful lives of the assets ranging from 3 to 7 years.

REVENUE RECOGNITION

Revenues from vehicle and parts sales and from service operations are
recognized at the time the vehicle is delivered to the customer or service is
completed.

Finance fees represent revenue earned by the Company for notes placed with
financial institutions in connection with customer vehicle financing. Finance
fees are recognized in income upon acceptance of the credit by the financial
institution. Insurance income represents commissions earned on credit life,
accident and disability insurance sold in connection with a vehicle on behalf of
third-party insurance companies. Insurance commissions are recognized in income
upon customer acceptance of the insurance terms as evidenced by contract
execution. Net revenues related to finance fees and insurance commissions are
included in other

F-59
153
ROBERTSON OLDSMOBILE-CADILLAC, INC. D/B/A
MOSS ROBERTSON MAZDA AND
MOSS ROBERTSON ISUZU

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
revenues. The Company is charged back a portion of fees and commissions earned
on finance or insurance contracts if the customer terminates a contract prior to
its scheduled maturity.

INTANGIBLES

Intangibles consists of goodwill that represents the excess of cost over
assigned fair market value of a dealership acquired and is being amortized on a
straight-line basis over its estimated useful life, not exceeding 40 years.
Accumulated amortization was $24,464 and $33,934 at December 31, 1996 and 1997,
respectively. The carrying amount of the intangible is reviewed if facts and
circumstances suggest that it may be impaired. If this review indicates that the
asset will not be recoverable, as determined based on the estimated undiscounted
cash flows of the entity acquired over the remaining amortization period, the
carrying amount of the asset is reduced by the estimated shortfall of discounted
cash flows.

INCOME TAXES

The Company has elected to be taxed under the provisions of Subchapter S of
the Internal Revenue Code. Under those provisions, the Company does not pay
federal or state corporate income taxes. Instead, the stockholders are liable
for individual federal and state income taxes on their respective shares of the
Company's taxable income.

The pro forma provision for federal and state income taxes for the years
ended December 31, 1996 and 1997 would be $367,408 and $428,301, respectively.
The pro forma provision reflects amounts that would have been recorded had the
Company's income been taxed for state and federal purposes as if it were a C
Corporation.

CONCENTRATIONS OF CREDIT RISK

Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of contracts in transit and
accounts receivable. Also, at times, cash deposits in banks exceed the Federal
Deposit Insurance Corporation insurance limit. Contracts in transit are for
funds received shortly after balance sheet date from contracts financed with
financial institutions. Trade receivables principally result from extending
short-term credit to a large number of customers and other automotive dealers
located in the North Georgia area. Finance companies receivables are commissions
on credit contracts of customers. Receivables also result from transactions with
automotive manufacturers. Although the Company is directly affected by the
economic conditions in the automotive industry, financial institutions, banks,
its customers and the general economy of the Gainesville, Georgia area,
management does not believe significant credit risk exists.

MAJOR SUPPLIER

The Company purchases substantially all of its new vehicles and parts
inventory from automobile manufacturers/distributors at the prevailing prices
charged by the manufacturers/distributors to all franchise dealers. The Company
enters into agreements ("Dealer Agreements") with each manufacturer. The Dealer
Agreements generally limit the location of the dealership and include
manufacturer approval rights over changes in dealership management and
ownership. A manufacturer is also entitled to terminate the Dealer Agreement if
the dealership is in material breach of its terms.

F-60
154
ROBERTSON OLDSMOBILE-CADILLAC, INC. D/B/A
MOSS ROBERTSON MAZDA AND
MOSS ROBERTSON ISUZU

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
ADVERTISING

The Company expenses the cost of advertising as incurred. Advertising
expense was $122,509 and $82,276 for the years ended December 31, 1996 and 1997,
respectively.

FAIR VALUES OF FINANCIAL INSTRUMENTS

The Company considers the carrying amounts of significant classes of
financial instruments on the balance sheet, including cash and contracts in
transit, floor plan notes payable and long-term debt to be reasonable estimates
of fair value. Fair value of the Company's debt was estimated using discounted
cash flow analysis, based on the Company's current incremental borrowing rates
for similar types of arrangements.

2. ACCOUNTS RECEIVABLE

Accounts receivable consist of the following at December 31, 1996 and 1997:

DECEMBER 31,
-------------------
1996 1997
-------- --------

Customers................................................... $ 77,610 $ 42,974
Vehicle receivables......................................... 119,152 35,766
Factory..................................................... 147,141 156,182
Finance companies........................................... 6,010 17,232
Employees and shareholder................................... 6,055 6,122
-------- --------
$355,968 $258,276
======== ========

3. INVENTORIES

Inventories consist of the following at December 31, 1996 and 1997:

DECEMBER 31,
-----------------------
1996 1997
---------- ----------

New vehicles................................................ $1,944,514 $2,587,395
Used vehicles............................................... 676,534 494,600
Parts, accessories and other................................ 144,813 123,856
---------- ----------
2,765,861 3,205,851
Less LIFO reserve........................................... (424,056) (438,954)
---------- ----------
$2,341,805 $2,766,897
========== ==========

F-61
155
ROBERTSON OLDSMOBILE-CADILLAC, INC. D/B/A
MOSS ROBERTSON MAZDA AND
MOSS ROBERTSON ISUZU

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

4. MACHINERY AND EQUIPMENT

A summary of machinery and equipment is as follows as of December 31, 1996
and 1997:

DECEMBER 31,
-------------------
1996 1997
-------- --------

Machinery and shop equipment................................ $261,726 $259,818
Furniture and fixtures...................................... 250,106 268,765
Parts and accessories equipment............................. 27,972 32,525
Company vehicle............................................. 14,048 14,048
-------- --------
553,852 575,156
Less accumulated depreciation............................... 493,082 528,928
-------- --------
$ 60,770 $ 46,228
======== ========

5. FLOOR PLAN NOTES PAYABLE

Floor plan notes payable consist of a note payable with a financial
institution. Floor plan notes payable are secured by certain new and used
vehicles. The floor plan arrangement permits the Company to borrow up to
$6,475,000, restricted by new and used vehicle levels. The notes are generally
due within ten days of the vehicle being sold or after the vehicle has been in
inventory for one year for new vehicles and after three months for used
vehicles.

The notes bear interest based on contractual rates which ranged from
approximately 8.5% to 8.25% at December 31, 1996 and 1997. During 1996 and 1997,
total cash paid for interest on floor plan notes payable and long-term debt was
$44,057 and $66,674, respectively. Interest expense related to floor plan notes
payable was reduced by manufacturer floor plan allowances and credits of
$155,437 and $193,925 for 1996 and 1997, respectively.

6. ACCRUED LIABILITIES

Accrued liabilities consist of the following at December 31, 1996 and 1997:

DECEMBER 31,
-----------------
1996 1997
------- -------

Accrued payroll............................................. $43,841 $51,131
Accrued taxes............................................... 1,250 2,502
Other accrued liabilities................................... 311 439
------- -------
$45,402 $54,072
======= =======

7. LONG-TERM DEBT

A summary of long-term debt as of December 31, 1997 and 1996 is as follows:

DECEMBER 31,
----------------
1996 1997
------ -------

Note payable; bearing interest at 7.5%, payable monthly,
balance paid in full June 1997............................ $7,663 $ --
Less current maturities of long-term debt................... 7,663 --
------ -------
$ -- $ --
====== =======

F-62
156
ROBERTSON OLDSMOBILE-CADILLAC, INC. D/B/A
MOSS ROBERTSON MAZDA AND
MOSS ROBERTSON ISUZU

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

8. COMMITMENTS AND TRANSACTIONS WITH RELATED PARTIES

The Company is obligated to stockholder of the Company under certain
non-cancelable leases. The Company has an option to renew this lease for an
additional five year period with rent renegotiated at that time but in no event
for less than rent payable at March 31, 2005. These leases, which cover the
lease of certain buildings, land and equipment provide for the following
payments:

1998........................................................ $ 180,000
1999........................................................ 180,000
2000........................................................ 202,500
2001........................................................ 210,000
2002........................................................ 210,000
Thereafter.................................................. 472,500
----------
Total minimum payments...................................... $1,455,000
==========

Total rent expense for leases with related parties for the years ended
December 31, 1996 and 1997 was $149,600 and $180,000, respectively.

The Company is a guarantor of a mortgage secured by the leased property
referred to above. At December 31, 1996 and 1997, the unpaid balance of the
mortgage amounted to $976,561 and $932,448, respectively. Until full payment and
performance of all obligations of the borrower under the loan, borrower and
guarantor must maintain certain financial ratios and covenants. Failure to do so
would result in a default under the terms of the mortgage loan agreement. It is
not practical to estimate the fair value of the above guarantee, however, the
Company does not expect to incur any significant losses as a result of this
guarantee.

During 1996, the stockholder of the Company borrowed $480,661 from the
Company and repaid it, including interest. In addition, the Company borrowed
$143,000 from the stockholder during 1996, which was also repaid including
interest.

9. GOVERNMENTAL REGULATION

Substantially all of the Company's facilities are subject to federal, state
and local provisions regulating the discharge of materials into the environment.
Compliance with these provisions has not had, nor does the Company expect such
compliance to have any material effect upon the capital expenditures, net
income, financial condition or competitive position of the Company. Management
believes that its current practices and procedures for the control and
disposition of such wastes comply with applicable federal and state
requirements.

10. EMPLOYEE BENEFIT PLAN

The Company has an employee savings plan under Section 401(k) of the
Internal Revenue Code. This plan covers substantially all full time employees
that have been employed by the Company for one year and work at least 1,000
hours annually. Generally, employees can defer from 2% to 15% of their
compensation and the Company can make matching contributions of a designated
percentage at the Company's discretion. The amount charged against income for
the Company's contributions to the plan for the years ended December 31, 1996
and 1997 was $16,105 and $15,248, respectively.

F-63
157
ROBERTSON OLDSMOBILE-CADILLAC, INC. D/B/A
MOSS ROBERTSON MAZDA AND
MOSS ROBERTSON ISUZU

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

11. SUBSEQUENT EVENT

Subsequent to December 31, 1997, the stockholder of the Company signed an
agreement to sell the stock of the Company. The agreement is subject to several
conditions, including the manufacturers' approval of change in dealership
management and ownership.

F-64
158

REPORT OF INDEPENDENT AUDITORS

The Board of Directors
Day's Chevrolet, Inc.

We have audited the accompanying balance sheets of Day's Chevrolet, Inc. as
of December 31, 1996 and 1997, and the related statements of income and changes
in retained earnings and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Day's Chevrolet, Inc. at
December 31, 1996 and 1997, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.

/s/ ERNST & YOUNG LLP

Atlanta, Georgia
March 26, 1998

F-65
159

DAY'S CHEVROLET, INC.

BALANCE SHEETS

DECEMBER 31,
-------------------------
1996 1997
----------- -----------

ASSETS
Current assets:
Cash and cash equivalents................................. $ 917,181 $ 1,287,204
Accounts receivable....................................... 707,353 849,913
Inventories............................................... 8,095,756 8,113,893
Prepaid expenses and other current assets................. 8,935 5,862
----------- -----------
Total current assets.............................. 9,729,225 10,256,872
Property and equipment, net................................. 2,224,636 249,898
Other assets................................................ 116,715 104,699
----------- -----------
$12,070,576 $10,611,469
=========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Floor plan notes payable.................................. $ 7,864,591 $ 9,102,706
Note payable.............................................. 273,295 --
Accrued liabilities....................................... 199,455 310,644
Accounts payable.......................................... 482,918 333,965
----------- -----------
Total current liabilities......................... 8,820,259 9,747,315
Stockholders' equity:
Class A voting common stock, $1 par value, 500,000 shares
authorized, 110,000 shares issued and outstanding...... 110,000 110,000
Additional paid-in capital................................ 32,344 32,344
Retained earnings......................................... 3,107,973 721,810
----------- -----------
Total stockholders' equity........................ 3,250,317 864,154
----------- -----------
$12,070,576 $10,611,469
=========== ===========

See accompanying notes.

F-66
160

DAY'S CHEVROLET, INC.

STATEMENTS OF INCOME AND CHANGES IN RETAINED EARNINGS

YEAR ENDED DECEMBER 31,
-------------------------
1996 1997
----------- -----------

Revenues:
Vehicle sales............................................. $48,996,779 $50,587,196
Parts and service......................................... 9,525,159 9,339,883
Finance, commission and other revenues, net............... 997,917 855,957
----------- -----------
59,519,855 60,783,036
Cost of sales:..............................................
Vehicle sales............................................. 46,165,607 48,091,556
Parts and service......................................... 6,580,364 6,453,453
----------- -----------
52,745,971 54,545,009
----------- -----------
Gross profit................................................ 6,773,884 6,238,027
Selling, general and administrative expenses................ 5,076,021 5,178,182
----------- -----------
Income from operations...................................... 1,697,863 1,059,845
Interest expense............................................ 124,764 101,739
Interest income............................................. 1,888 2,311
Other income, net........................................... 7,365 5,812
----------- -----------
Net income........................................ 1,582,352 966,229
Distributions to stockholders............................... (989,245) (3,352,392)
Retained earnings at beginning of year...................... 2,514,866 3,107,973
----------- -----------
Retained earnings at end of year............................ $ 3,107,973 $ 721,810
=========== ===========

See accompanying notes.

F-67
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DAY'S CHEVROLET, INC.

STATEMENTS OF CASH FLOWS

YEAR ENDED DECEMBER 31,
-------------------------
1996 1997
----------- -----------

OPERATING ACTIVITIES
Net income.................................................. $ 1,582,352 $ 966,229
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation.............................................. 242,590 194,795
Gain on disposal of property and equipment................ (1,008) --
Changes in assets and liabilities:
Accounts receivable.................................... (31,583) (142,560)
Inventories............................................ (752,170) (18,137)
Prepaid expenses and other current assets.............. 854 3,073
Other assets........................................... 10,171 12,016
Floor plan notes payable............................... 414,653 1,238,115
Accounts payable and accrued liabilities............... 27,158 (37,764)
----------- -----------
Net cash provided by operating activities......... 1,493,017 2,215,767
INVESTING ACTIVITIES
Purchases of property and equipment......................... (332,027) (52,611)
Proceeds on disposal of property and equipment.............. 188,290 31,483
----------- -----------
Net cash used in investing activities............. (143,737) (21,128)
FINANCING ACTIVITIES
Principal payments on note payable.......................... (252,288) (273,295)
Dividends paid.............................................. (989,245) (1,551,321)
----------- -----------
Net cash used in financing activities............. (1,241,533) (1,824,616)
----------- -----------
Increase in cash and cash equivalents....................... 107,747 370,023
Cash and cash equivalents at beginning of the year.......... 809,434 917,181
----------- -----------
Cash and cash equivalents at end of the year................ $ 917,181 $ 1,287,204
=========== ===========

See accompanying notes.

F-68
162

DAY'S CHEVROLET, INC.

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1997

1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND NATURE OF BUSINESS

Day's Chevrolet, Inc. (the Company) is principally engaged in the business
of selling and servicing new and used vehicles. The Company operates a Chevrolet
dealership in Acworth, Georgia.

USE OF ESTIMATES

CASH AND CASH EQUIVALENTS

ALLOWANCE FOR DOUBTFUL ACCOUNTS

The allowance for doubtful accounts is based on historical bad debt
experience and management's periodic evaluation of individual accounts.

INVENTORIES

REVENUE RECOGNITION

F-69
163
DAY'S CHEVROLET, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PROPERTY AND EQUIPMENT

Buildings................................................... 15-20 years
Furniture and fixtures...................................... 5-7 years
Leasehold improvements...................................... 5-18 years
Machinery and shop equipment................................ 5-12 years
Rental cars................................................. 3 years

INCOME TAXES

The pro forma provision for federal and state income taxes for the years
ended December 31, 1996 and 1997 would be $608,227 and $640,359, respectively.
The pro forma provision reflects amounts that would have been recorded had the
Company's income been taxed for state and federal purposes as if it were a C
Corporation.

CONCENTRATIONS OF CREDIT RISK

Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of contracts in transit and
accounts receivable. Also, at times, cash deposits in banks exceed the Federal
Deposit Insurance Corporation insurance limit. Contracts in transit are for
funds received shortly after the balance sheet date from contracts financed with
financial institutions. Trade receivables principally result from extending
short-term credit to a large number of customers and other automotive dealers
located in the metropolitan Atlanta, Georgia area. Finance companies receivables
are commissions on credit contracts of customers. Receivables also result from
transactions with automotive manufacturers. Although the Company is directly
affected by the economic conditions in the automotive industry, financial
institutions, banks, its customers and the general economy of the metropolitan
Atlanta, Georgia area, management does not believe significant credit risk
exists.

MAJOR SUPPLIER

The Company purchases substantially all of its new vehicles and parts
inventory from automobile manufacturers/distributors at the prevailing prices
charged by the manufacturers/distributors to all franchise dealers. The Company
entered into an agreement ("Dealer Agreement") with the manufacturer. The Dealer
Agreement generally limits the location of the dealership and includes
manufacturer approval rights over changes in dealership management and
ownership. The manufacturer is also entitled to terminate the Dealer Agreement
if the dealership is in material breach of its terms.

ADVERTISING

The Company expenses the cost of advertising as incurred. Advertising
expense was $379,209 and $393,487 for the years ended December 31, 1996 and
1997, respectively.

F-70
164
DAY'S CHEVROLET, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FAIR VALUES OF FINANCIAL INSTRUMENTS

The Company considers the carrying amounts of significant classes of
financial instruments on the balance sheet, including cash and contracts in
transit and note payable to be reasonable estimates of fair value. Fair value of
the Company's debt was estimated using discounted cash flow analysis, based on
the Company's current incremental borrowing rates for similar types of
arrangements.

2. ACCOUNTS RECEIVABLE

Accounts receivable consist of the following at December 31, 1996 and 1997:

DECEMBER 31,
-------------------
1996 1997
-------- --------

Customers................................................... $494,572 $547,203
Factory..................................................... 173,143 234,851
Finance companies........................................... 38,348 65,407
Employees................................................... 1,290 2,452
-------- --------
$707,353 $849,913
======== ========

3. INVENTORIES

Inventories consist of the following at December 31, 1996 and 1997:

DECEMBER 31,
-----------------------
1996 1997
---------- ----------

New vehicles................................................ $6,443,653 $7,297,211
Used vehicles............................................... 2,484,732 2,000,929
Parts, accessories and other................................ 645,131 608,065
---------- ----------
9,573,516 9,906,205
Less LIFO reserve........................................... 1,477,760 1,792,312
---------- ----------
$8,095,756 $8,113,893
========== ==========

4. PROPERTY AND EQUIPMENT

During 1997, the Company made a distribution of land and buildings to the
stockholders. This is described further in Note 8. A summary of plant and
equipment is as follows as of December 31, 1996 and 1997:

DECEMBER 31,
-----------------------
1996 1997
---------- ----------

Land........................................................ $ 496,906 $ --
Buildings................................................... 1,948,790 --
Machinery and shop equipment................................ 434,448 437,768
Furniture and fixtures...................................... 297,914 306,321
Rental cars and company vehicles............................ 410,944 414,515
---------- ----------
3,589,002 1,158,604
Less accumulated depreciation............................... 1,364,366 908,706
---------- ----------
$2,224,636 $ 249,898
========== ==========

F-71
165
DAY'S CHEVROLET, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

5. FLOOR PLAN NOTES PAYABLE

Floor plan notes payable consist of a note payable with a financial
institution. Floor plan notes payable are secured by certain new and used
vehicles. The floor plan arrangement permits the Company to borrow up to
$11,000,000 for 1996 and 1997, restricted by new and used vehicle levels. The
notes are generally due within ten days of the vehicle being sold or after the
vehicle has been in inventory for one year for new vehicles and after three
months for used vehicles.

The notes bear interest based on contractual rates which were 9.25% and
9.5% at December 31, 1996 and 1997, respectively. During 1996 and 1997, total
cash paid for interest on floor plan notes payable and note payable was $124,764
and $101,739, respectively.

6. NOTE PAYABLE

The Company's note payable to GMAC, bearing interest at 9.25%, payable
monthly, was paid in full in December 1997.

7. ACCRUED LIABILITIES

Accrued liabilities consist of the following at December 31, 1996 and 1997:

DECEMBER 31,
-------------------
1996 1997
-------- --------

Salaries, wages, bonus and vacation......................... $ -- $ 150
Finance reserve............................................. 50,000 50,000
Other accrued liabilities................................... 149,455 260,494
-------- --------
$199,455 $310,644
======== ========

8. COMMITMENTS AND TRANSACTIONS WITH RELATED PARTIES

The Company declared a dividend of its land and buildings which was
transferred to the stockholder, effective September 1, 1997. In addition, the
Company leased certain land and buildings from the stockholders, effective
September 1, 1997. The lease, which is cancelable by either the Company or the
stockholders at any time prior to its expiration in February 1999, requires
monthly payments of $21,667. At December 31, 1997, the Company owed the
stockholders $86,667 for rent relating to this lease.

9. GOVERNMENTAL REGULATION

10. EMPLOYEE BENEFIT PLAN

The Company has an employee savings plan under Section 401(k) of the
Internal Revenue Code. This plan covers substantially all full time employees.
The Company matches the employees' contributions of up to four percent of
compensation at the rate of $0.25 per $1.00. The Company's contributions
generally vest over 6 years. The amount charged against income for the Company's
contributions to the plan for the years ended December 31, 1996 and 1997 was
$3,646 and $4,749, respectively.

F-72
166
DAY'S CHEVROLET, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

11. SUBSEQUENT EVENT

F-73
167

INDEPENDENT AUDITORS' REPORT

To the Stockholder
South Financial Corporation
Gainesville, Florida

We have audited the accompanying balance sheets of South Financial
Corporation as of December 31, 1997 and 1996, and the related statements of
operations and retained earnings, and cash flows for the years ended December
31, 1997, 1996 and 1995. These financial statements are the responsibility of
South Financial Corporation's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of South Financial Corporation
as of December 31, 1997 and 1996, and the results of its operations and its cash
flows for the years ended December 31, 1997, 1996 and 1995, in conformity with
generally accepted accounting principles.

/s/ DAVIS, MONK & COMPANY

Gainesville, Florida
February 12, 1998

F-74
168

SOUTH FINANCIAL CORPORATION

BALANCE SHEETS
DECEMBER 31, 1997 AND 1996

1997 1996
----------- -----------

ASSETS
Finance receivables, net.................................... $12,846,772 $17,141,343
Cash........................................................ 64,076 4,184
Other receivables........................................... 38,131 45,089
Due from affiliated companies............................... -- 350,000
Repossessions in liquidation................................ 309,587 --
Property and equipment, net................................. 225,980 286,816
Deposits.................................................... 19,991 22,101
Prepaid expenses............................................ -- 10,022
----------- -----------
Total assets...................................... $13,504,537 $17,859,555
=========== ===========

LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
Contractual obligations payable to dealers on finance
contracts.............................................. $ 726,678 $ 3,919,205
Senior debt............................................... 11,461,888 11,647,230
Subordinated debt......................................... 294,872 967,430
Accounts payable and accrued expenses..................... 93,769 16,771
Deferred tax liability, net............................... 266,486 405,746
----------- -----------
Total liabilities................................. 12,843,693 16,956,382
Stockholder's Equity:
Common stock, $.05 par value per share, 10,000 shares
authorized, 1 share issued and outstanding............. 1 1
Additional paid-in capital................................ 654 654
Retained earnings......................................... 660,189 902,518
----------- -----------
Total stockholder's equity........................ 660,844 903,173
----------- -----------
Total liabilities and stockholder's equity........ $13,504,537 $17,859,555
=========== ===========

The accompanying notes are an integral part of these financial statements.

F-75
169

SOUTH FINANCIAL CORPORATION

STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

1997 1996 1995
---------- ---------- ----------

Revenues:
Interest, fees and loan discount income.................. $4,631,852 $5,447,343 $3,165,858
Insurance commissions.................................... 110,814 275,749 21,430
---------- ---------- ----------
Total revenues................................... 4,742,666 5,723,092 3,187,288
Expenses and losses:
Interest expense......................................... 1,420,125 1,416,083 978,003
Salaries and personnel costs............................. 2,063,241 2,091,580 1,192,368
Dealer incentives........................................ -- 8,830 13,397
Loss on asset disposals.................................. 20,151 -- --
Depreciation............................................. 67,004 58,042 28,702
Other operating expenses................................. 758,618 882,507 545,071
Provision for credit losses.............................. 795,116 525,281 --
---------- ---------- ----------
Total expenses and losses........................ 5,124,255 4,982,323 2,757,541
---------- ---------- ----------
Income (loss) before income taxes.......................... (381,589) 740,769 429,747
Income tax benefit (expense)............................... 139,260 (306,949) (150,548)
---------- ---------- ----------
Net income (loss)................................ (242,329) 433,820 279,199
Retained earnings, beginning of year, as previously
reported................................................. 902,518 468,698 103,738
Prior period adjustment.................................... -- -- 85,761
---------- ---------- ----------
Retained earnings, beginning of year, as restated.......... 902,518 468,698 189,499
---------- ---------- ----------
Retained earnings, end of year............................. $ 660,189 $ 902,518 $ 468,698
========== ========== ==========

The accompanying notes are an integral part of these financial statements.

F-76
170

SOUTH FINANCIAL CORPORATION

STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

1997 1996 1995
------------ ------------ ------------

CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss).................................... $ (242,329) $ 433,820 $ 279,199
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Provision for credit losses........................ 795,116 525,281 --
Loss on asset disposal............................. 20,151 -- --
Depreciation....................................... 67,004 58,042 28,702
Deferred taxes..................................... (139,260) 204,159 (75,521)
Changes in:
Unearned income................................. (1,080,484) 1,112,404 --
Other receivables and assets.................... 19,090 (40,998) (308,923)
Due from affiliated companies................... -- 64,861 63,356
Contractual obligations payable to dealers...... (1,301,293) (1,221,267) 1,703,128
Due to affiliated companies..................... -- 39,535 --
Accounts payable and accrued expenses........... 76,998 (20,413) 13,031
Income taxes.................................... -- -- 205,751
------------ ------------ ------------
Net cash provided by (used in) operating
activities............................... (1,785,007) 1,155,424 1,908,723
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Finance contracts originated......................... (9,305,267) (12,231,702) (16,288,429)
Principal payments received on finance contracts..... 11,684,385 7,502,004 8,896,552
Advances to affiliated companies..................... -- -- (894,747)
Payments received from affiliated companies.......... -- -- 656,412
Acquisition of property and equipment................ (26,319) (128,778) (188,861)
------------ ------------ ------------
Net cash provided by (used in) investing
activities............................... 2,352,799 (4,858,476) (7,819,073)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Payments to investors................................ (139,853) (49,810) (118,651)
Advances from investors.............................. -- 37,926 768,482
Net borrowings from (payments to) lending
institutions....................................... (185,342) 3,484,006 5,288,223
Net advances from stockholder........................ -- 170,441 58,491
Net payments to stockholder.......................... (182,705) -- (41,331)
------------ ------------ ------------
Net cash provided by (used in) financing
activities............................... (507,900) 3,642,563 5,955,214
------------ ------------ ------------
Net increase (decrease) in cash............ 59,892 (60,489) 44,864
Cash, beginning of year.............................. 4,184 64,673 19,809
------------ ------------ ------------
Cash, end of year.................................... $ 64,076 $ 4,184 $ 64,673
============ ============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest (none capitalized)........................ $ 1,420,125 $ 1,416,083 $ 992,341
============ ============ ============
Income taxes....................................... $ -- $ 40,510 $ 20,500
============ ============ ============

The accompanying notes are an integral part of these financial statements.

F-77
171

SOUTH FINANCIAL CORPORATION

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997, 1996 AND 1995

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

South Financial Corporation (SFC) is a finance company licensed by the
State of Florida as a sales finance company. It has one stockholder, Mr. Thomas
Murphy (the Stockholder). In January, 1998, the Stockholder sold 100% of his
interest in SFC to Boomershine, Inc. of Atlanta, Georgia.

The primary business conducted by SFC is to purchase from retail automobile
dealers (dealers) sales contracts of substandard credit arising from the sale of
used automobiles. At December 31, 1997, dealers are located in Florida (62%),
North Carolina (21%) and Tennessee (17%). Beginning in 1997, the receivables are
purchased without recourse. However, prior to 1997, some receivables were
purchased with recourse. Such contracts are obtained after advancing the dealer
25% to 75% of the principal amount financed on installment sales contracts. As
collateral for each receivable purchased, SFC obtains a security interest in the
vehicle. In the event of default, SFC has the right to take possession of the
vehicle. At that time, SFC has the right to resell the vehicle at a public or
private sale. Contract terms average approximately 35 months and do not exceed
48 months.

FINANCE RECEIVABLES

Finance receivables are carried at the sales contract's unpaid balance
including finance charges. Deferred loan costs are added to the receivable
balance. Deferred finance income, deferred commissions on credit life, deferred
origination fees and purchase discounts are deducted from the balance of finance
receivables. Any discounts on contracts acquired by SFC for less than the face
value are amortized to income over the period of the payments to be received
using the interest method.

When contracts are purchased, the allowance for loan losses is increased by
a portion of the purchase discount. The allowance is decreased by the amount of
chargeoffs, net of recoveries on repossessed collateral. Management records a
charge to income when the allowance is not considered sufficient to cover
estimated losses in the portfolio. Management's periodic estimates of the
adequacy of the allowance are based on past loan loss experience, known and
inherent risks in the portfolio, adverse situations that may affect the
borrower's ability to repay, the estimated value of any underlying collateral
and current economic conditions. It is reasonably possible that these estimates
could be revised due to changes in the related circumstances.

For approximately 30% of the portfolio at December 31, 1997, SFC has
agreements with the automobile dealers that contain terms to hold the dealer
responsible for all defaults on related installment contracts. When management
believes that collectibility of these loans is unlikely, losses are first
charged against any obligation payable to dealers.

CASH

Cash consists solely of bank deposits which are fully insured by the
Federal Deposit Insurance Corporation.

PROPERTY AND EQUIPMENT AND DEPRECIATION

Property and equipment is recorded at cost. Depreciation is provided over
the estimated useful lives of the related assets using the straight-line method.

REPOSSESSIONS IN LIQUIDATION

Repossessions in liquidation are carried at the vehicle's fair value minus
estimated costs to sell. They represent contracts that have been charged off and
where SFC is proceeding to repossess the vehicle. SFC

F-78
172
SOUTH FINANCIAL CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
estimates the carrying value of repossessions based on historical averages of
the number of vehicles that can be repossessed and the net amount that can be
recovered.

CONTRACTUAL OBLIGATIONS PAYABLE TO DEALERS

In addition to advancing to dealers from 25% to 75% of principal amounts
financed, prior to 1997, SFC entered into arrangements with dealers whereby
reserves are established to protect SFC from potential losses associated with
financing of sales finance contracts. As part of SFC's agreement with the
dealers, a portion of the proceeds of finance contracts is retained by SFC and
is available to SFC to offset any losses on specific accounts.

LOAN ORIGINATION FEES AND INSURANCE COMMISSIONS

Fees received and direct costs incurred for the origination of loans as
well as insurance commissions on credit life policies are deferred and amortized
to interest income over the contractual lives of the loans using the interest
method. Insurance commissions on warranty policies are deferred and amortized
over the life of the insurance policy (6 months). Unamortized fee and commission
income amounts are recognized in income at the time the loans are sold or paid
in full.

INCOME TAXES

Income taxes are provided for the tax effects of transactions reported in
the financial statements and consist of deferred taxes related primarily to
differences between the basis of finance receivables for financial and income
tax reporting. The deferred tax assets and liabilities represent the future tax
return consequences of those differences, which will either be taxable or
deductible when the assets and liabilities are recovered or settled. Deferred
taxes are also recognized for operating losses that are available to offset
future taxable income.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires SFC to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could vary from the estimates that were used.

F-79
173
SOUTH FINANCIAL CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

2. FINANCE RECEIVABLES

The following schedule displays contractual annual maturities of retail
automobile contracts, including interest, and a reconciliation of total
contracts receivable to net finance receivables reported on the balance sheets.

1997 1996
----------- -----------

Due Within:
One year.................................................. $10,660,721 $11,111,293
Two years................................................. 7,135,926 7,412,544
Three years............................................... 2,662,948 3,885,017
Four years................................................ 146,003 575,862
----------- -----------
Total............................................. 20,605,598 22,984,716
Unearned finance income................................... (4,769,768) (5,739,915)
Unearned insurance commissions............................ (80,632) (103,458)
Unearned discount income.................................. (959,529) --
Deferred loan origination costs........................... 87,511 --
----------- -----------
Amortized cost of contracts financed...................... 14,883,180 17,141,343
Allowance for doubtful accounts........................... (2,036,408) --
----------- -----------
Finance receivables, net.................................. $12,846,772 $17,141,343
=========== ===========

Because a certain portion of contracts receivable will be repaid before or
extended after the contractual maturity dates or charged back to dealers, the
annual maturities stated are not to be regarded as a forecast of future cash
collections. At December 31, 1997, 1996 and 1995, accrued interest income of
$370,246, $321,616 and $112,844, respectively, was included in the finance
receivable balance. Approximately 3,940, 4,100 and 3,500 contracts were being
serviced by SFC at December 31, 1997, 1996 and 1995, respectively.

Contracts deemed uncollectible by management are first charged back to
balances owed by SFC to dealers, if any. Any excess of uncollectible amounts
over amounts due to dealers is charged to the provision for credit losses. The
amount of contracts written off in 1997, 1996 and 1995, net of recoveries, was
$7,285,753, $10,165,878 and $4,832,587, respectively. This amount approximated
16.8% and 21% of the gross value of contracts (principal and interest) owned and
originated in 1997 and 1996, respectively. SFC incurred credit losses of
$795,116 in 1997 and $525,281 in 1996 as a result of the above mentioned charge
backs.

3. PROPERTY AND EQUIPMENT

ESTIMATED USEFUL
LIFE IN YEARS 1997 1996
---------------- --------- ---------

Furniture and fixtures........................ 5-7 $ 137,569 $ 178,445
Leasehold improvements........................ 7 149,970 140,672
Computer equipment............................ 5 69,782 69,781
--------- ---------
357,321 388,898
Less: Accumulated depreciation................ (131,341) (102,082)
--------- ---------
Property and Equipment, net......... $ 225,980 $ 286,816
========= =========

F-80
174
SOUTH FINANCIAL CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

4. SENIOR DEBT

Senior debt is comprised of the following at December 31:

1997 1996
----------- -----------

Secured revolving note payable to General Electric Capital
Corporation (G. E. Capital)............................... $11,461,888 $11,647,230
=========== ===========

The G.E. Capital revolving credit note is secured by finance contracts
assigned to G.E. Capital as well as all other assets of SFC. All contract
collections are remitted directly to G.E. Capital and applied towards the
outstanding loan balance. Under the loan and security agreement, SFC may borrow
up to $15,000,000 by obtaining advances of 90% on SFC's net investment in all
eligible finance contracts. The loan, which is guaranteed by the stockholder,
matures September 18, 1998, with provision for automatic annual renewals unless
terminated by either party. The loan bears interest at the LIBOR rate plus 5.1%
and 5.6%, which resulted in a rate of 10.81% and 10.997% at December 31, 1997
and 1996, respectively.

Primarily due to reserve adjustments made at year end December 31, 1997,
SFC was unable to meet certain financial ratio covenants and was in violation of
its credit agreement with G.E. Capital. Provisions of the credit agreement state
that in event of default, G. E. Capital has the option to make all notes and
loans due and owing immediately and to seize control of all assets to liquidate
these obligations. In a letter dated February 25, 1998, G. E. Capital has waived
compliance with the following covenants effective for the period from December
31, 1997 through June 1, 1998:

Debt ratio not to exceed 4.3 to 1
Interest coverage of at least 1.5 to 1

Management plans to receive additional capital contributions from its parent
company and expects that interest coverage will be adequate due to improved
operations.

5. SUBORDINATED DEBT

The following obligations have no stated maturities. Payment of principal
is postponed and subordinated to all payment obligations of SFC under the G. E.
Capital loan.

1997 1996
-------- --------

Note payable to Investors Equity Corporation................ $291,122 $353,514
Note payable to HW Investments.............................. -- 350,000
Due to stockholder.......................................... 3,750 186,455
Due to South Funding Corporation............................ -- 39,535
Note payable to Ed Tillman Auto Sales on Cassat, Inc........ -- 37,926
-------- --------
Total subordinated debt........................... $294,872 $967,430
======== ========

The note payable to Investors Equity Corporation is unsecured and is owed
to an entity in which the Stockholder also owns a 50% interest. The note bears
interest at 18% (27.2%), payable monthly, as of December 31, 1997 (1996).

The note payable to HW Investments is unsecured and is used to
collateralize future borrowing through SFC for the benefit of South Financial
Floorplan, Corp., a related party. The note bears interest at 15% annually. This
note payable was repaid during 1997.

SFC leases Corporate office space from the Stockholder. Total rent expense
paid under these leases for 1997, 1996 and 1995 was $27,000, $31,500 and
$29,729, respectively. Other transactions, combined with those

F-81
175
SOUTH FINANCIAL CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

5. SUBORDINATED DEBT (CONTINUED)
related to rent expense, result in $3,750 and $186,455 due to the Stockholder at
December 31, 1997 and 1996, respectively.

South Funding Corporation is owned by an officer of SFC. The above amount
due to South Funding Corporation was advanced to SFC on a short-term basis and
was repaid in 1997.

Ed Tillman Auto Sales on Cassat, Inc. (Tillman) and SFC entered into an
agreement whereby Tillman would sell SFC certain receivables with full recourse.
SFC is entitled, under the terms of the agreement, to 9.5% of the gross
principal balance of the installment payments collected. In addition, SFC may
advance Tillman up to $500,000 to the extent of any outstanding dealer reserves.
This note payable was repaid during 1997.

6. INCOME TAXES

The following reconciliation displays the relationship between income
(loss) before income taxes and operating tax income (loss).

1997 1996 1995
----------- ----------- ---------

Income (loss) before income taxes................ $ (381,589) $ 740,769 $ 429,747
Permanent differences............................ 10,231 11,485 8,748
Temporary differences............................ (812,697) (1,430,443) (349,373)
----------- ----------- ---------
Operating tax income (loss)...................... $(1,184,055) $ (678,189) $ 89,122
=========== =========== =========

The operating tax loss may be offset against future taxable income. If not
used, the carryforward will expire in the year 2012.

The temporary differences consist primarily of losses recognized on
individual finance contracts which are permitted as deductions from taxable
income. Other differences include the deferral amounts associated with
non-refundable loan origination fees and commissions received on credit life
policies over the life of the contract in accordance with generally accepted
accounting principles.

The net deferred tax liability is comprised of the following:

1997 1996
--------- ---------

Deferred tax liability...................................... $ 959,374 $ 654,613
Deferred tax asset.......................................... (692,888) (248,867)
--------- ---------
Deferred tax liability, net....................... $ 266,486 $ 405,746
========= =========

Measurement of the provision for income taxes is based on the statutory
rate of 34% for federal taxes and approximately 5.5% for state taxes.

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176
SOUTH FINANCIAL CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

7. TRANSACTIONS WITH RELATED PARTIES

The following schedule displays transactions with related parties during
the years ended December 31, 1997 and 1996:

SOUTH
SOUTH FINANCIAL
SUPER STAFF, FINANCIAL FLOORPLAN,
EQUILEASE INC. SERVICES INC. TOTAL
--------- ------------ --------- ---------- -----------

Due from related parties,
December 31, 1995........... $ -- $ -- $ -- $ 414,861 $ 414,861
Advances...................... 23,292 1,817,821 28,587 30,525 1,900,225
Payments and other reductions
in amounts due.............. (23,292) (1,817,821) (28,587) (95,386) (1,965,086)
-------- ----------- -------- --------- -----------
Due from related parties,
December 31, 1996........... -- -- -- 350,000 350,000
Obligations accrued........... -- (1,852,767) -- -- (1,852,767)
Cash payments (receipts)...... -- 1,762,999 -- (350,000) 1,412,999
-------- ----------- -------- --------- -----------
Due to related parties,
December 31, 1997........... $ -- $ (89,768) $ -- $ -- $ (89,768)
======== =========== ======== ========= ===========

SFC leases certain computer equipment from Equilease, another company
wholly-owned by the Stockholder.

SFC leases all its employees, except for the Stockholder, from Super Staff,
Inc., another company wholly-owned by the Stockholder. The amount due to Super
Staff, Inc. is included in Accounts payable and accrued expenses.

Included in transactions with South Financial Services is $24,375 for rent
of SFC's branch office in Gainesville, Florida.

South Financial Floorplan, Inc. finances floorplans for automobile dealers.

8. OPERATING LEASES

Certain office space is rented under operating leases. Certain leases
include options for renewal. Total rent expense for 1997, 1996 and 1995, was
$143,450, $147,131 and $118,598, respectively. Future minimum lease payments
under operating leases with an initial or remaining noncancelable term in excess
of one year at December 31, 1997 are as follows:

1998........................................................ $ 97,428
1999........................................................ 78,373
2000........................................................ 67,013
2001........................................................ 55,434
2002........................................................ 55,434
--------
Total............................................. $353,682
========

9. PRIOR PERIOD ADJUSTMENT

Retained earnings at the beginning of 1995 has been restated by $85,761.
SFC has corrected its method of computing interest income under the interest
(actuarial) method. The correction increased interest revenue for the years
prior to 1995 by $136,780, net of Federal and State taxes of $51,019.

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177

======================================================

NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR BY THE UNDERWRITERS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY
SECURITIES OTHER THAN THE SHARES OF COMMON STOCK OFFERED HEREBY, OR AN OFFER TO,
OR A SOLICITATION OF ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER, OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF OR THAT THE INFORMATION HEREIN CONTAINED IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.

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

TABLE OF CONTENTS

PAGE
----

Prospectus Summary.................... 3
Risk Factors.......................... 9
The Merger............................ 20
The Acquisitions...................... 21
Use of Proceeds....................... 23
Dividend Policy....................... 24
Capitalization........................ 25
Dilution.............................. 26
Selected Financial Data............... 27
Pro Forma Combined and Condensed
Financial Data...................... 29
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 34
Business.............................. 59
Management............................ 75
Principal Shareholders................ 83
Certain Transactions.................. 84
Description of Capital Stock.......... 85
Shares Eligible for Future Sale....... 88
Underwriting.......................... 90
Legal Matters......................... 91
Experts............................... 91
Additional Information................ 92
Index to Financial Statements......... F-1

---------------------
UNTIL , 1998 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING
IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS DELIVERY
REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS
WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
======================================================
======================================================

5,500,000 SHARES

SUNBELT
AUTOMOTIVE
GROUP, INC.

COMMON STOCK
------------------------

PROSPECTUS

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

RAYMOND JAMES &
ASSOCIATES, INC.
, 1998

======================================================
178

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth an estimate (except for the SEC, NASD and
Nasdaq fees) of the fees and expenses, all of which will be borne by the
Registrant, in connection with the sale and distribution of the securities being
registered, other than underwriting discounts and commissions.

AMOUNT
-------

SEC Registration Fee........................................ $20,525
NASD Filing Fee............................................. $ 7,457
Legal fees and expenses..................................... $ *
Nasdaq National Market Listing Fee.......................... $63,725
Accounting fees and expenses................................ $ *
Blue Sky fees and expenses.................................. $ *
Printing expenses........................................... $ *
Transfer Agent Fees......................................... $ *
Miscellaneous............................................... $ *
-------
Total............................................. $
=======

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

* To be completed by amendment.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Articles of Incorporation of the Registrant provide that the Registrant
shall indemnify any person to the extent prescribed by the Georgia Business
Corporation Code (the "GBCC").

Section 14-2-851 of the GBCC authorizes, inter alia, a corporation to
indemnify any person ("Indemnitee") who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that such person is or was an officer or director of such corporation or is or
was serving at the request of such corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise. The indemnity may include expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by such person in connection with such action, suit or proceeding, provided that
he acted in good faith and in a manner he reasonably believed to be in (in the
case of conduct in his official capacity) or not opposed to (in all other
instances) the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. Section 14-2-851 further provides that a corporation may not
indemnify a director (1) in connection with a proceeding by or in the right of
the corporation, except for reasonable expenses incurred in connection with the
proceeding if it is determined that the director has met the relevant standard
of conduct under the GBCC; or (2) in connection with any proceeding with respect
to conduct for which he or she was adjudged liable on the basis that personal
benefit was improperly received by him or her, whether or not involving action
in his or her official capacity. In addition to the indemnifications set forth
above, Section 14-2-857 of the GBCC states that a corporation may also indemnify
and advance expenses to an officer, employee or agent of the corporation who is
a party to a proceeding because he or she is an officer, employee or agent of
the corporation to the extent as may be provided by the articles of
incorporation, the bylaws, a resolution of the board of directors, or contract
except for liability arising out of conduct that constitutes: (1) appropriation,
in violation of his or her duties, of any business opportunity of the
corporation; (2) acts or omissions which involve intentional misconduct or a
knowing violation of law; (3) liability for unlawful distribution; or (4)
receipt of an improper personal benefit. Where an officer or director is
successful on the merits or otherwise in defense of any action referred to
above, or in defense of any claim, issue or matter therein, the corporation must
indemnify him against the expenses (including attorneys' fees) which he

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179

actually and reasonably incurred in connection therewith. Section 14-7-855 of
the GBCC provides that any indemnification shall be made by the corporation only
as authorized in each specific case upon a determination by the (i)
shareholders, (ii) Board of Directors by a majority vote of a quorum consisting
of directors who were not parties to such action, suit or proceeding or by a
majority of the members of a committee of two or more disinterested directors
appointed by vote, or (iii) special legal counsel if a quorum of disinterested
directors so directs or, if there are fewer than two disinterested directors,
selected by the Board of Directors. Section 14-2-859 of the GBCC provides that
indemnification pursuant to its provision is not exclusive of other rights of
indemnification to which a person may be entitled under any bylaw, agreement,
vote of shareholders or disinterested directors or otherwise.

Section 14-2-858 of the GBCC also empowers the Company to purchase and
maintain insurance on behalf of any person who is or was an officer, director,
employee or agent of the Company against liability asserted against or incurred
by him in any such capacity, whether or not the Company would have the power to
indemnify such officer or director against such liability under the provisions
of Part 5 of Article 8 of the GBCC. The Company intends to purchase and maintain
a directors' and officers' liability policy for such purposes.

In accordance with Section 14-2-202 of the GBCC, the Articles of
Incorporation of the Registrant set forth a provision which eliminates the
personal liability of directors to the Registrant or its shareholders for
monetary damages for any action taken, or any failure to take any action, as a
director, provided, however, that no provision eliminates or limits the
liability of a director; (1) for any appropriation, in violation of his duties,
of any business opportunity of the corporation; (2) for acts or omissions which
involve intentional misconduct or a knowing violation of law; (3) for liability
in connection with unlawful distributions; or (4) for any transaction from which
the director received an improper personal benefit; provided that no such
provision shall eliminate or limit the liability of a director for any act or
omission occurring prior to the date when such provision becomes effective.

Reference is made to Section of the Underwriting Agreement (Exhibit
1. ) which provides for indemnification by the Underwriter of the Registrant,
its officers and directors.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

The following sets forth information, as of the closing date of this
Offering, regarding all sales of unregistered securities of the Registrant
during the past three years. All such shares were issued in reliance upon an
exemption or exemptions from registration under the Securities Act by reason of
Section 4(2) of the Securities Act or Regulation D promulgated thereunder, or
Rule 701 promulgated under Section 3(b) of the Securities Act, as transactions
by an issuer not involving a public offering or transactions pursuant to
compensatory benefit plans and contracts relating to compensation as provided
under Rule 701. In connection with each of these transactions, the securities
were sold to a limited number of persons, such persons were provided access to
all relevant information regarding the Registrant and/or represented to the
Registrant that they were "sophisticated" investors, and such persons
represented to the Registrant that the shares were purchased for investment
purposes only and with no view toward distribution.

- As of December 18, 1997, as part of the original organization of the
Company, the Registrant issued to each of Walter M. Boomershine, Jr.,
Charles K. Yancey and Stephen C. Whicker 2,000 shares each of common
stock of the Company in exchange for $1,000 in cash from each such
shareholder.

II-2
180

- In connection with the Merger, the Registrant will to issue up to an
aggregate of 4,251,139 shares of its common stock to the current
shareholders of Boomershine Automotive.

- In connection with the Collision Centers USA Acquisition, the Registrant
issued to James E. L. Peters stock options to purchase 5,000 shares of
the Registrant's common stock.

- The Registrant will issue the following shares of its common stock to the
following persons in connection with the Acquisitions: (i) 363,636 shares
to the shareholders of the Wade Ford Acquisition in exchange for all of
their interest in Wade Ford, Inc. and Wade Ford Buford, Inc., which sale
occurred as of November 21, 1997; (ii) 525,000 shares to the shareholders
of Day's Chevrolet in exchange for all of their interest in Day's
Chevrolet, Inc., which sale occurred as of March 3, 1998; and (iii)
36,364 shares to E. Moss Robertson, Jr. in exchange for all of his
interest in Robertson Oldsmobile-Cadillac, Inc., which sale occurred as
of March 1, 1998.

- On January 8, 1998, the Registrant issued to three of its officers,
pursuant to the Registrant's Incentive Stock Plan, options to purchase
425,000 shares of the Registrant's common stock in the aggregate.

- On March 13, 1998, the Registrant issued warrants to purchase 50,000
shares of the Registrant's common stock to a consulting firm that has
rendered financial and accounting services to the Registrant in
connection with this Offering.

- On April 22, 1998, the Registrant issued to four of its executive
officers, pursuant to the Registrant's Inventive Stock Plan, options to
purchase 850,000 shares of the Registrant's common stock in the
aggregate.

- On April 22, 1998, the Registrant issued to three of its officers,
pursuant to employment agreements with each of those officers, 249,202
shares of the Registrant's common stock in the aggregate. Such securities
are subject to a risk of forfeiture in the event such officers'
employment with the Company is terminated.

- On the effective date of this Offering, the Registrant will issue to six
of its executive officers and employees, pursuant to the Registrant's
Incentive Stock Plan, options to purchase 317,000 shares of the
Registrant's common stock in the aggregate.

ITEM 16. EXHIBITS

EXHIBIT
NUMBER DESCRIPTION
- ------- -----------

1.1* -- Form of Underwriting Agreement.
2.1* -- Stock Purchase Agreement among Boomershine Automotive Group,
Inc., Sunbelt Automotive Group, Inc., BAG Georgia III, Inc.,
Jay Automotive Group, Inc. and the shareholders of Jay
Automotive Group, Inc., dated January 5, 1998.
2.2* -- Agreement and Plan of Merger and Reorganization among
Boomershine Automotive Group, Inc., BAG Georgia I, Inc., BAG
Georgia II, Inc., Wade Ford, Inc., Wade Ford Buford, Inc.
and the shareholders of Wade Ford, Inc. and Wade Ford
Buford, Inc., dated November 21, 1997, as amended on January
19, 1998.
2.3* -- Stock Purchase Agreement among Sunbelt Automotive Group,
Inc., Boomershine Automotive Group, Inc., Robertson
Oldsmobile-Cadillac, Inc. and the shareholders of Robertson
Oldsmobile-Cadillac, Inc., dated March 1, 1998.
2.4* -- Agreement and Plan of Merger and Reorganization among
Sunbelt Automotive Group, Inc., BAG Georgia IV, Inc., Day's
Chevrolet, Inc. and the shareholders of Day's Chevrolet,
Inc., dated March 3, 1998.
2.5* -- Stock Purchase Agreement among Sunbelt Automotive Group,
Inc., BAG Tennessee II, Inc., Grindstaff, Inc. and the
shareholders of Grindstaff, Inc., dated December 27, 1997,
as amended on February 24, 1998.

II-3
181

EXHIBIT
NUMBER DESCRIPTION
- ------- -----------

2.6* -- Asset Purchase Agreement among Boomershine Automotive Group,
Inc., BAG North Carolina I, Inc., Hones, Inc. and the
shareholders of Hones, Inc., dated December 11, 1997, as
amended on January 31, 1998.
2.7* -- Stock Purchase Agreement among BAG Florida II, Inc. and the
shareholder of South Financial Corporation, dated December
23, 1997.
2.8* -- Stock Purchase Agreement among Boomershine Collision
Centers, Inc. and the shareholder of Southlake Collision
Centers, Inc., Southlake Collision Henry County, Inc. and
Southlake Collision Cobb Parkway, Inc., dated November 6,
1997.
3.1 -- Articles of Incorporation of the Company.
3.2 -- Bylaws of the Company.
4.1* -- Specimen common stock certificate.
5.1* -- Opinion of Schnader Harrison Segal & Lewis LLP.
10.1* -- Form of Employment Agreement between the Company and Walter
M. Boomershine, Jr.
10.2* -- Form of Employment Agreement between the Company and Charles
K. Yancey.
10.3* -- Form of Employment Agreement between the Company and Robert
W. Gundeck.
10.4* -- Form of Employment Agreement between the Company and Stephen
C. Whicker.
10.5* -- Form of Employment Agreement between the Company and Ricky
L. Brown.
10.6* -- Form of Employment Agreement between the Company and Alan K.
Arnold.
10.8* -- Form of Employment Agreement between the Company and R.
Glynn Wimberly.
10.9* -- 1997 and 1998 Incentive Stock Plan of Company.
23.1 -- Consent of Ernst & Young LLP.
23.2 -- Consent of Pyke & Pierce, CPAs.
23.3 -- Consent of Davis, Monk & Company.
23.4* -- Consent of Schnader Harrison Segal & Lewis LLP (included in
the opinion filed as Exhibit 5.1).
24.1 -- Powers of Attorney (included on the signature page to this
Registration Statement).
27.1* -- Financial Data Schedule (for SEC use only).
99.1 -- Consent of George D. Busbee.
99.2 -- Consent of Lee M. Sessions, Jr.
99.3 -- Consent of Jack R. Altherr.

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

* To be filed by amendment.

ITEM 17. UNDERTAKINGS

The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.

(2) For purposes of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-4
182

(4) The undersigned Registrant hereby undertakes to provide to the
Underwriter at the closing specified in the Underwriting Agreement
certificates in such denominations and registered in such names as required
by the Underwriter to permit prompt delivery to each purchaser.

(5) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions described in Item 14
hereof, or otherwise, the Registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person thereof in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.

II-5
183

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Atlanta, State of
Georgia, on the 30th day of April, 1998.

SUNBELT AUTOMOTIVE GROUP, INC.
a Georgia corporation

By:/s/ WALTER M. BOOMERSHINE, JR.
------------------------------------
Walter M. Boomershine, Jr.,
Chairman of the Board

POWER OF ATTORNEY

Each person whose signature appears below hereby constitutes and appoints
Walter M. Boomershine, Jr. and Stephen C. Whicker, and each of them, as his true
and lawful attorneys-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to the Registration Statement, or any related registration statement that is to
be effective on filing pursuant to Rule 462 under the Securities Act, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto each of
said attorneys-in-fact and agents, acting alone, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that each of said
attorneys-in-fact and agents, acting alone, or his substitute, may lawfully do
or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates stated.

SIGNATURE TITLE DATE
--------- ----- ----

/s/ WALTER M. BOOMERSHINE, JR. Chairman of the Board and Senior April 30, 1998
- ----------------------------------------------------- Vice President
Walter M. Boomershine, Jr.

/s/ CHARLES K. YANCEY Chief Operating Officer, April 30 1998
- ----------------------------------------------------- President and Director
Charles K. Yancey

/s/ ROBERT W. GUNDECK Chief Executive Officer and April 30, 1998
- ----------------------------------------------------- Director (Principal Executive
Robert W. Gundeck Officer)

/s/ RICKY L. BROWN Chief Financial Officer, Vice April 30, 1998
- ----------------------------------------------------- President of Finance and
Ricky L. Brown Treasurer (Principal
Accounting and Financial
Officer)

/s/ STEPHEN C. WHICKER Executive Vice President of April 30, 1998
- ----------------------------------------------------- Corporate Development, General
Stephen C. Whicker Counsel, Secretary and
Director

II-6