<PAGE>


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-K

(Mark One)
 [X]     Annual Report Pursuant to Section 13 or 15(d) of the Securities
                              Exchange Act of 1934
                   For the fiscal year ended January 31, 2003
                   ------------------------------------------
                                       OR
 [ ]   Transition Report Pursuant to Section 13 or 15(d) of the Securities
                              Exchange Act of 1934
                  For the Transition Period from ______to______

                         Commission file number 1-11601

                           NATIONAL AUTO CREDIT, INC.
             (Exact name of registrant as specified in its charter)

              Delaware                                 34-1816760
         -----------------                      -------------------------
      (State of incorporation)              (I.R.S. Employer Identification No.)

             555 Madison Avenue, 29th Floor, New York New York 10022
             -------------------------------------------------------
                (Address of principal executive offices)   (Zip code)

       Registrant's telephone number, including area code: (212) 644-1400
                                                           --------------
        Securities registered pursuant to Section 12(b) of the Act:
                                      NONE

        Securities registered pursuant to Section 12(g) of the Act:

Title of each class
-------------------
COMMON STOCK, PAR VALUE $.05 PER SHARE

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy of this Form 10-K or any
amendment to this Form 10-K. ( )

As of April 25, 2003, 8,030,614 shares of Common Stock of National Auto Credit,
Inc. were outstanding.

Aggregate market value of the registrant's Common Stock held by non-affiliates
at April 25, 2003, was approximately $840,670 (Based on the closing price of the
registrant's common stock on the OTC Bulletin Board on April 25, 2003).

                       DOCUMENTS INCORPORATED BY REFERENCE
                                      None
<PAGE>

                                TABLE OF CONTENTS

Part I                                                                     Page
                                                                           ----
Item      1.   Business....................................................   1
          2.   Properties..................................................   4
          3.   Legal Proceedings...........................................   4
          4.   Submission of Matters to a Vote of Security Holders.........   7


Part II

Item      5.   Market for Registrant's Common Equity and
                    Related Stockholder Matters............................    8
          6.   Selected Financial Data.....................................    9
          7.   Management's Discussion and Analysis of Financial
                    Condition and Results of Operations....................   10
          7a.  Quantitative and Qualitative Disclosures About
                    Market Risk............................................   20
          8.   Financial Statements and Supplementary Data.................   21
          9.   Changes in and Disagreements with Accountants on
                    Accounting and Financial Disclosure....................   67


Part III

Item      10.  Directors and Executive Officers of the Registrant..........   67
          11.  Executive Compensation......................................   69
          12.  Security Ownership of Certain Beneficial Owners
                    and Management.........................................   74
          13.  Certain Relationships and Related Transactions..............   75
          14.  Controls and Procedures ....................................   76


Part IV

Item      15.  Exhibits, Financial Statement Schedules
                    and Reports on Form 8-K................................   77


<PAGE>

                                     PART I

ITEM 1. BUSINESS

GENERAL DEVELOPMENT OF BUSINESS

     National Auto Credit, Inc. ("the Company" or "NAC") began operations in
1969 and was incorporated in Delaware in 1971. Through December 31, 2001, NAC's
operations were conducted principally through three operating segments, (i) the
e-commerce segment, which is comprised of ZoomLot Corporation's ("ZoomLot")
development of e-commerce services to facilitate the process by which used car
dealerships, lenders and insurance companies communicate and complete the
transactions between them that are needed to provide used car dealers' customers
with financing, insurance and other services, (ii) the movie exhibition segment,
which is comprised of the activities of Angelika Film Center LLC ("AFC") and
(iii) the automobile financing segment. However, as the consequence of NAC's
strategic review, as described below, completed in the fourth quarter of Fiscal
2002, NAC suspended its ZoomLot operations and initiated the steps to
discontinue both its e-commerce and auto financing segments. As a result, since
January 1, 2002 NAC has been engaged principally in the movie exhibition
segment.

     NAC uses a January 31 year-end for financial reporting purposes. References
herein to the fiscal year ended January 31, 2003 shall be the term "Fiscal 2003"
and references to other "Fiscal" years shall mean the year, which ended on
January 31 of the year indicated. The term the "Company" or "NAC" as used herein
refers to National Auto Credit, Inc. together with its subsidiaries unless the
context otherwise requires.

     NAC's principal executive offices are located at 555 Madison Avenue, 29th
Floor, New York, New York, 10022. Its telephone number is 212-644-1400.

Significant Developments in and Subsequent to Fiscal 2003
---------------------------------------------------------

     Throughout Fiscal 2003 NAC engaged principally in the movie exhibition
segment while examining new business opportunities.

     In April 2003, NAC consummated a Merger Agreement whereby NAC acquired all
of the outstanding common stock of ORA/Metro Incorporated, also known as OMI
Business Communications ("OMI"), from Dean R. Thompson, sole stockholder of OMI.
OMI, headquartered in New York, New York, is a multi-media production services,
corporate meeting services, web-site development and web content management
company. OMI specializes in the full service design, creative development,
production and post production editing of corporate communication and training
videos for use at corporate events and as collateral content material for client
web-sites. Additionally, OMI frequently provides event planning services
including site selection, survey, event management and related services
associated with remote location presentations. In exchange for the acquisition
of all of the outstanding common stock of OMI, NAC (i) issued 200,000 shares of
NAC Common Stock, valued at $28,000 (ii) assumed approximately $900,000 in bank
debt and capital lease obligations to financial institutions and (iii) issued a
promissory note payable to Mr. Thompson in the amount of $151,000, payable in
monthly installments of principal and interest over a 36 month period. In
addition to the initial payments, NAC agreed to a contingent payment to Mr.
Thompson of $150,000 based upon OMI's financial performance during the
three-year period ending January 31, 2006. OMI's revenues for the years ended
December 31, 2002 and 2001 were approximately $2.5 million and $3.4 million,
respectively, OMI incurred net losses of approximately $356,000 and $27,000 for
those years, respectively. For financial reporting purposes, the effective date
of the merger is April 1, 2003.

                                   1

<PAGE>

     As part of the OMI acquisition, OMI entered into a five year employment
agreement with Mr. Thompson under which Mr. Thompson will serve as President of
OMI and, subject to certain limitations, will have control over the day-to-day
operations of OMI. Under the terms of the employment agreement, Mr. Thompson
will be entitled to base compensation of $175,000 per year, the grant of stock
options for up to 200,000 shares of NAC Common Stock and a performance bonus
based upon the operating results of the acquired companies.

     NAC continues to examine new business opportunities, which may be pursued
through the investment in or acquisition of existing corporate operating
businesses or other means. At January 31, 2003 NAC had cash and marketable
securities of $2.9 million, $5.6 million income tax refundable and approximately
$500,000 accrued interest due NAC on the outstanding income tax receivable (a
component of other assets at January 31, 2003), which together with any cash
flow derived from its investment in AFC and the operations of OMI will be used
to pursue such opportunities. Additionally, NAC will continue to pursue
reductions in its operating expenses and new debt or equity financing (for which
there can be no assurance NAC will obtain such financing) as means of
supplementing the resources available to pursue new opportunities.

Discontinued Operations
-----------------------

     In the fourth quarter of Fiscal 2002, NAC completed a strategic review of
its investment in ZoomLot, acquired December 15, 2000, and the development of
its e-commerce services. NAC's strategic review included evaluating the evolving
market conditions of the used car dealer and financing industries, the start-up
nature of the ZoomLot operations, the current market demand for and penetration
of ZoomLot's e-commerce solution to electronically link eligible used car
dealers and their qualified customers with available used car lenders and
financing terms, current operating losses and forecasts of future operating
results and strategic opportunities available to ZoomLot. As a result of this
review, management of NAC determined that it was unable to predict, with the
requisite degree of certainty, when or whether ZoomLot would achieve positive
cash flows.

     As a consequence of NAC's strategic review and determination, effective
December 31, 2001, NAC suspended its ZoomLot operations and initiated the steps
to discontinue both its e-commerce and auto financing segments. Additionally, as
a consequence of NAC's decision to discontinue its ZoomLot e-commerce
operations, NAC also formally exited the sub-prime used automobile consumer
finance business effective December 31, 2001. As a result of these decisions,
both the e-commerce and automobile finance segments were classified as
discontinued operations as of January 31, 2002.

MOVIE EXHIBITION BUSINESS

     NAC engages in the movie exhibition business through its investment in AFC.
AFC is the owner of the Angelika Film Center which it holds under a long term
lease having a remaining term of approximately 23 years. AFC is owned 50% by NAC
and 50% by Reading International, Inc. Each of the owners of AFC are entitled to
a proportionate share of the cash distributions that are paid by AFC.

     The Angelika Film Center is a 17,000 square foot, six screen multiplex
theater and cafe that focuses on the exhibition of art and specialty films. The
exhibition of art and specialty films, while seasonal in nature, is less so than
the film exhibition business in general. Art and specialty films tend to be
released more evenly over the course of the year and, if successful, tend to
enjoy a longer run than wide release films. Art and specialty films are obtained
from a number of sources ranging from divisions of the larger film distributors
specializing

                                    2

<PAGE>

in specialty films to individuals that have acquired domestic rights to one
film. Generally film payment terms are based on an agreed upon percentage of the
box office receipts.

AUTOMOBILE FINANCING BUSINESS - DISCONTINUED

     NAC's automobile financing operation historically involved investing in
sub-prime used automobile consumer loans, which took the form of installment
loans collateralized by the related vehicle. NAC purchased such automobile
loans, or interests in pools of such loans (collectively "loan investments"),
from member dealers through its wholly-owned subsidiary, NAC, Inc. NAC performed
the underwriting and collection functions for all automobile loans it purchased
in whole, and also performed such functions where NAC had purchased interests in
a pool of such loans. NAC's operations enabled member dealers to provide used
car purchase financing to customers who had limited access to more traditional
consumer credit sources that might otherwise be unable to obtain financing.

     The business of investing in sub-prime automobile loans involves investing
in loans which are high risk, in that the borrowers are individuals with below
average credit quality, and the collateral is subject to loss, damage,
significant declines in value and difficulties of repossession. Accordingly,
each individual loan had a significant risk of not performing in accordance with
its contractual terms. The business relied on mitigating this risk by acquiring
large numbers of loans, thus reducing the exposure to the risk of the default on
any one particular loan, and on reasonably estimating the credit losses to be
incurred and setting loan purchase prices accordingly. An inability to
reasonably predict the future performance of loans purchased, or to set loan
purchase prices that properly reflected those estimates, could significantly
increase the risk of material losses from the business of investing in sub-prime
used automobile loans.

     In Fiscal 2001 NAC sold all of the automobile retail installment loans
remaining in NAC's active loan portfolio and substantially all of its remaining
charged-off automobile installment loans. After the sale of such loans NAC
eliminated essentially all personnel who had previously been engaged in NAC's
loan underwriting, processing and collection operations. Effective December 31,
2001, NAC discontinued its automobile financing operation.

E-COMMERCE BUSINESS - DISCONTINUED

     NAC conducted its e-commerce business through ZoomLot. ZoomLot was engaged
in the development of services to facilitate, through e-commerce, the process by
which used car dealerships, lenders and insurance companies communicate and
complete the transactions between them that are needed to provide the used car
dealer's customers with financing, insurance, and other services. ZoomLot's
service of matching the consumer automobile loans, or "contracts" submitted by
dealers wishing to sell contracts which were retained by them upon the sale of a
vehicle against the underwriting criteria of finance companies, and then
submitting those contracts to the finance companies whose underwriting criteria
the contracts meet, is commonly referred to as "contract aggregation".

     ZoomLot was formed in March 2000 for the purpose of acquiring the
Internet-based operations of Cygnet Dealer Finance, Inc. ("CDF"), an affiliated
company and acquired these operations from CDF on July 1, 2000. Prior to that
date, ZoomLot, which commenced operations in January 2000, was operated as a
division of CDF. ZoomLot and CDF share common management, certain personnel, and
facilities. In connection with the acquisition of the Internet-based business
from CDF, ZoomLot and CDF entered into a management services contract whereby
ZoomLot provided management services and was responsible for substantially all
operating expenses of CDF in exchange for a monthly management fee equivalent to
..625% (7.5% annually) of CDF's

                                    3
<PAGE>

loan portfolio managed by ZoomLot. For Fiscal 2003, as a result of the
discontinued operations, ZoomLot did not realize CDF management fees. For Fiscal
2002 and the period from December 15, 2000 (the date of NAC's acquisition of
ZoomLot) until January 31, 2001, CDF paid ZoomLot management fees of $626,000
and $145,000, respectively. Under this arrangement, NAC accounted for the
management fees as a reduction of ZoomLot's operating expenses which have been
included in the loss from discontinued operations.

EMPLOYEES

     As of January 31, 2003, NAC employed four people, all located at its
corporate headquarters in New York. None of NAC's employees are covered by a
collective bargaining agreement. NAC believes it maintains good relations with
its employees.

ITEM 2.  PROPERTIES

     NAC's corporate headquarters are leased premises of approximately 5,500
square feet of office space in New York, New York. The aggregate annual base
rental for the New York office is $199,000. The lease expires in July 2006.

     NAC leases a document storage warehouse of approximately 6,400 square feet
in Solon, Ohio. The aggregate annual base rental for the warehouse is $28,800.
The lease expires in June 2004.

     ZoomLot's operations were conducted from office space of approximately
11,000 square feet in Phoenix, Arizona. The aggregate annual base rental for the
Phoenix office is $276,000. The lease expires in September 2006. ZoomLot has
subleased its office facility to an unrelated third party in the real estate
development industry through the remaining term of the lease at an annual rate
of $253,000. NAC charged as a reduction of the gain on the disposal of ZoomLot's
discontinued operations in Fiscal 2002 the annual rate differential of $23,000
per year, plus the cost of certain operating expenses due under the terms of the
master lease and sublease agreements.

ITEM 3.  LEGAL PROCEEDINGS

Shareholder Complaints
----------------------

     On July 31, 2001, NAC received a derivative complaint (the "Academy
Complaint") filed by Academy Capital Management, Inc. ("Academy"), a shareholder
of NAC, with the Court of Chancery of Delaware, on or about July 31, 2001,
against James J. McNamara, John A. Gleason, William S. Marshall, Henry Y.L. Toh,
Donald Jasensky, Peter T. Zackaroff, Mallory Factor, and Thomas F. Carney, Jr.
(the "Director Defendants") and names NAC as a nominal defendant. The Academy
Complaint principally seeks: (i) a declaration that the Director Defendants
breached their fiduciary duties to NAC, (ii) a judgment voiding an employment
agreement with James J. McNamara and rescinding a stock exchange agreement in
which NAC acquired ZoomLot Corporation ("ZoomLot"), (iii) a judgment voiding the
grant of stock options and the award of director fees allegedly related thereto,
(iv) an order directing the Director Defendants to account for alleged damages
sustained and profits obtained by the Director Defendants as a result of the
alleged various acts complained of, (v) the imposition of a constructive trust
over monies or other benefits received by the Director Defendants and (vi) an
award of costs and expenses.

                                      4

<PAGE>

     On August 16, 2001, NAC received a derivative complaint (the "Markovich
Complaint") filed by Levy Markovich ("Markovich"), a shareholder of NAC, with
the Court of Chancery of Delaware on or about August 16, 2001, against James J.
McNamara, John A. Gleason, William S. Marshall, Henry Y. L. Toh, Donald
Jasensky, Peter T. Zackaroff, Mallory Factor, and Thomas F. Carney, Jr. and NAC
as a nominal defendant. The Markovich Complaint principally seeks: (i) a
declaration that the Director Defendants have breached their fiduciary duties to
NAC, (ii) a judgment voiding an employment agreement with James J. McNamara and
rescinding a stock exchange agreement in which NAC acquired ZoomLot, (iii) a
judgment voiding the grant of options and the award of directors fees allegedly
related thereto, (iv) an order directing the Director Defendants to account for
alleged damages sustained and alleged profits obtained by the Director
Defendants as a result of the alleged various acts complained of, (v) the
imposition of a constructive trust over monies or other benefits received by the
directors, and (vi) an award of costs and expenses.

     On August 31, 2001, NAC received a derivative complaint (the "Harbor
Complaint") filed by Harbor Finance Partners ("Harbor"), a shareholder of NAC,
with the Court of Chancery of Delaware on or about August 31, 2001, against
Thomas F. Carney, Jr., Mallory Factor, John A. Gleason, Donald Jasensky, William
S. Marshall, James J. McNamara, Henry Y. L. Toh, Peter T. Zackaroff, Ernest C.
Garcia, and ZoomLot Corporation as Defendants and NAC as a nominal defendant.
The Harbor Complaint principally seeks: (i) a judgment requiring the Director
Defendants to promptly schedule an annual meeting of shareholders within thirty
(30) days of the date of the Harbor Complaint; (ii) a judgment declaring that
the Director Defendants breached their fiduciary duties to NAC and wasted its
assets; (iii) an injunction preventing payment of monies and benefits to James
J. McNamara under his employment agreement with NAC and requiring Mr. McNamara
to repay the amounts already paid to him thereunder; (iv) a judgment rescinding
the agreement by NAC to purchase ZoomLot and refunding the amounts it paid; (v)
a judgment rescinding the award of monies and options to the directors on
December 15, 2000 and requiring the directors to repay the amounts they received
allegedly related thereto; (vi) a judgment requiring the defendants to indemnify
NAC for alleged losses attributable to their alleged actions; and (vii) a
judgment awarding interest, attorney's fees, and other costs, in an amount to be
determined.

     On October 12, 2001, NAC received a derivative complaint filed by Robert
Zadra, a shareholder of NAC, with the Supreme Court of the State of New York on
or about October 12, 2001 against James J. McNamara, John A. Gleason, William S.
Marshall, Henry Y. L. Toh, Donald Jasensky, Peter T. Zackaroff, Mallory Factor,
Thomas F. Carney, Jr., and NAC as Defendants. On or about May 29, 2002 the
complaint was amended to include class action allegations (the "Zadra Amended
Complaint"). The Zadra Amended Complaint contains allegations similar to those
in the Delaware actions concerning the Board's approval of the employment
agreement with James McNamara, option grants and past and future compensation to
the Director Defendants, and the ZoomLot transaction. The Amended Complaint
seeks (i) a declaration that as a result of approving these transactions the
Director Defendants breached their fiduciary duties to NAC, (ii) a judgment
enjoining defendants from proceeding with or exercising the option agreements; ,
(iii) rescission of the option grants to defendants, if exercised, (iv) an order
directing the Director Defendants to account for alleged profits and losses
obtained by the Director Defendants as a result of the alleged various acts
complained of, (v) awarding compensatory damages to NAC and the class, together
with prejudgment interest, and (vi) an award of costs and expenses.

     NAC has vigorously defended against each of the respective claims made in
the Academy Complaint, Markovich Complaint, Harbor Complaint and the Zadra
Amended Complaint, as it believes that the claims have no merit. By order of the
Delaware Chancery Court on November 12, 2001, the Academy, Markovich and Harbor
Complaints were consolidated under the title "In re National Auto Credit, Inc.
Shareholders Litigation," Civil Action No. 19028 NC (Delaware Chancery Court)
("Delaware Consolidated Derivative Action") and the Academy Complaint was deemed
the operative complaint.

                                  5
<PAGE>


     The parties in New York thereafter engaged in settlement negotiations and
the parties entered into a stipulation of settlement in December 2002, proposing
to settle all class and derivative claims. In January 2003, the New York Supreme
Court entered an order which, among other things, conditionally certified a
class of shareholders for settlement purposes, approved the form of notice of
the proposed settlement, and scheduled a hearing to approve the settlement.
Notice of the proposed settlement was given to the shareholders of the Company
and members of the class as per the Court's order in January and February 2003.
The hearing on the proposed settlement is scheduled for May 14, 2003. Certain
shareholders, including the plaintiffs in the Delaware Consolidated Action have
objected to the terms of the proposed settlement. A motion to dismiss the
Delaware Consolidated Derivative Action was also filed in 2002 which was denied
by the Delaware court in January 2003. As each of these litigation matters
remains in their early stage, no prediction is made with respect to their
respective ultimate outcomes.

Self-Insurance Reserves for Property Damage and Personal Injury Claims.
-----------------------------------------------------------------------

     NAC, under the names Agency Rent-A-Car, Inc. ("ARAC"), Altra Auto Rental
and Automate Auto Rental, previously engaged in the rental of automobiles on a
short-term basis, principally to the insurance replacement market. In Fiscal
1996, NAC disposed of its rental fleet business through the sale of certain
assets and through certain leases to a national car rental company. All
liabilities related to the discontinued rental business, principally
self-insurance claims, were retained by NAC.

     NAC maintained and continues to maintain self-insurance for claims relating
to bodily injury or property damage from accidents involving the vehicles rented
to customers by its discontinued automobile rental operations. NAC was, when
required by either governing state law or the terms of its rental agreement,
self-insured for the first $1.0 million per occurrence, and for losses in excess
of $5.0 million per occurrence, for bodily injury and property damage resulting
from accidents involving its rental vehicles. NAC was also self-insured, up to
certain retained limits, for bodily injury and property damage resulting from
accidents involving NAC vehicles operated by employees within the scope of their
employment. In connection therewith, NAC established certain reserves in its
financial statements for the estimated cost of satisfying those claims. See Note
13 to Notes to Consolidated Financial Statements

     NAC is named as defendant in a self-insurance action Darrell Smith and
Aaron Simpson ("Plaintiffs") v. John J. Bennett, ARAC, Country Mutual Insurance
Company and Atlanta Casualty Insurance Company in Cook County (State) Court of
Illinois. This matter arises out of an incident in which an ARAC car renters'
son, while driving the rental vehicle, was involved in a fatal accident and with
serious injuries to Plaintiffs, passengers in the vehicle. Initially, the
Plaintiffs appeared to be recovering well from the injuries sustained. However,
subsequently plaintiff Simpson underwent an accident-related surgery on his back
for removal of a shunt, during which nerves in the spine were severed causing
paraplegia. The Plaintiffs are suing for damages resulting from their injuries
and the subsequent paraplegia suffered by plaintiff Simpson. The doctor and
hospital that performed the surgery were also named as defendants by Plaintiffs
and have been impleaded by NAC under a theory of medical malpractice. Damages
alleged in the complaint are not specified, although in discovery Plaintiffs
have indicated they are seeking millions of dollars in compensatory and other
damages. The matter is scheduled for trial during 2003.

     NAC maintains a number of defenses relating to this matter. NAC has almost
exhausted its self-insured retention of $500,000 on this case and NAC attempted
to get its excess carrier, the TIG Insurance Company ("TIG"), to take over the
defense of this action and indemnify NAC up to the policy limits. However, as a
result TIG filed a suit (TIG Insurance Company v. Darrell Smith, Aaron Simpson
and NAC in the United States Court for the Northern District of Illinois) for a
declaratory judgment seeking a ruling that it has no liability as

                                    6

<PAGE>

an "excess insurer" of NAC in connection with the Smith and Simpson action
and that under Illinois law, NAC's (and thereafter TIG's) financial
responsibility is capped at an amount less than what the Plaintiffs are seeking
in the state court action. The federal court initially dismissed this complaint
prior to NAC answering on the grounds that the matter to be decided was
premature as the original action had not been resolved. TIG made a motion to
have the court reconsider its decision and NAC filed a response arguing that the
court should take action on this matter at this time. The Court granted TIG's
motion and permitted the action to proceed. NAC's answer was filed in May 2002.
Thereafter, in August 2002, TIG filed a motion for summary judgment, asserting
that NAC has no liability to Smith and Simpson; that if NAC is liable, such
liability is capped in an amount far less that what Plaintiff is seeking in the
state court action; and that it also has no liability to NAC under its excess
insurance policy. NAC filed its own cross-motion for summary judgment, asserting
that it has no liability to Smith and Simpson; and that if there is any
liability it is capped under Illinois state law, or, if not capped, then TIG's
excess insurance coverage applies. Smith and Simpson filed their own
cross-motion for summary judgment, asserting that NAC is liable for Smith and
Simpson's injuries and that NAC's liability is not capped under Illinois law. On
February 3, 2003, the Court granted the motions of TIG and NAC for summary
judgment, and denied the motion for summary judgment of Smith and Simpson. The
Court concluded that NAC bears no financial responsibility to Smith and Simpson
because, under the express terms of the rental agreement at issue, Bennett was
not a listed additional driver on the underlying rental contract. The Court
further concluded that TIG, as NAC's excess insurance carrier, has no
responsibility to defend or indemnify the Bennett estate. Motions for
reconsideration were filed by Smith and Simpson in February and March but were
denied by the Court. On April 11, 2003, Smith and Simpson filed a Notice of
Appeal of the Courts' decisions. The Company intends to vigorously oppose this
appeal.

     Because of the uncertainties related to these two matters, as well as
several smaller legal proceedings involving NAC's former rental operations and
self-insurance claims, it is difficult to project with precision the ultimate
effect the adjudication or settlement of these matters will have on NAC. At
January 31, 2003 NAC had accrued $518,000 to cover all outstanding
self-insurance liabilities. As additional information regarding NAC's potential
liabilities becomes available, NAC will revise the estimates as appropriate.

Other Litigation
----------------

     In the normal course of its business, NAC is named as defendant in legal
proceedings. It is the policy of NAC to vigorously defend litigation and/or
enter into settlements of claims where management deems appropriate.

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

     No items were submitted to a vote of Security Holders during the fourth
quarter of Fiscal 2003.

                               7

<PAGE>

                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

MARKET INFORMATION

     NAC's Common Stock, $.05 par value, has been trading on the
Over-The-Counter Bulletin Board (the "OTCBB"), operated by The Nasdaq Stock
Market, Inc., since March 23, 1998 under the ticker symbol "NAKD." Prior to that
date, NAC's Common Stock was traded on the New York Stock Exchange under the
symbol NAK.

     The following table sets forth the range of the high and low quotations for
Common Stock on the OTCBB during the periods indicated as reported by the
National Quotation Bureau, Inc. Such market quotations reflect inter-dealer
prices, without mark-up, mark-downs or commissions and may not necessarily
represent actual transactions

<TABLE>
<CAPTION>

                                                                    High                     Low
                                                                 ------------            ------------
<S>                                                         <C>                      <C>


          Year ended January 31, 2003
          First Quarter (February 1 - April 30)......                  $.24                    $.10
          Second Quarter (May 1 - July 31)...........                   .16                     .07
          Third Quarter (August 1 - October 31)......                   .20                     .06
          Fourth Quarter (November 1 - January 31)...                   .16                     .14

          Year ended January 31, 2002
          First Quarter (February 1 - April 30)......                  $.36                    $.18
          Second Quarter (May 1 - July 31)...........                   .28                     .17
          Third Quarter (August 1 - October 31)......                   .28                     .14
          Fourth Quarter (November 1 - January 31)...                   .19                     .12

</TABLE>

STOCKHOLDERS

     At April 25, 2003 there were 1,184 stockholders of record of NAC's Common
Stock based upon a securities position listing furnished to NAC by American
Stock Transfer & Trust Company. On that date, the closing bid quotation of the
Common Stock on OTCBB was $0.16 per share.

DIVIDEND POLICY

     It has been NAC's policy to retain any earnings and preserve its cash
resources to finance the growth of its business, provide resources for future
acquisition(s) and reduce outstanding debt and other liabilities; accordingly,
NAC has generally not issued a cash dividend. However, NAC does from time to
time reassess its cash dividend policy and may issue cash dividends in the
future if circumstances warrant. No cash dividends were declared for the fiscal
years ended January 31, 2003 and 2002.


                                        8
<PAGE>

ITEM 6.  SELECTED FINANCIAL DATA

     The following sets forth certain selected financial data appearing in or
derived from NAC's historical financial statements, adjusted for the
discontinued operations of its e-commerce, automobile finance and auto rental
business. The selected financial data should be read in conjunction with the
consolidated financial statements appearing elsewhere herein, and with Item 7 -
Management's Discussion and Analysis of Financial Condition and Results of
Operations (in thousands, except per share amounts):

<TABLE>
<CAPTION>

STATEMENT OF OPERATIONS DATA                                             Years Ended January 31,
                                                      --------------------------------------------------------
                                                        2003        2002        2001        2000        1999
                                                      --------    --------    --------    --------    --------
<S>                                                   <C>         <C>         <C>         <C>         <C>
Revenue                                               $  1,017    $    445    $  4,102    $  2,284    $    635
Costs and expenses                                    $  3,506    $  5,933    $ 50,609    $ 22,948    $ 14,579

Loss from continuing operations                       $   (419)   $ (5,488)   $(46,507)   $(20,664)   $(13,944)
Discontinued operations, net of tax(1)                     310      (9,174)     (1,084)      7,377      (1,671)
Gain (loss) on disposal of discontinued operations,
    net of tax(1)                                         --           394         308         (28)       --
                                                      --------    --------    --------    --------    --------
Net loss                                              $   (109)   $(14,268)   $(47,283)   $(13,315)   $(15,615)
                                                      ========    ========    ========    ========    ========
Basic and diluted (loss) earnings per share
     Continuing operations                            $   (.05)   $   (.47)   $  (1.67)   $   (.73)   $   (.49)
     Discontinued operations                               .04        (.78)       (.04)        .26        (.06)
     Disposal of discontinued operations                  --           .03         .01        --          --
                                                      --------    --------    --------    --------    --------
        Total                                         $   (.01)   $  (1.22)   $  (1.70)   $   (.47)   $   (.55)
                                                      ========    ========    ========    ========    ========
Weighted average number of shares outstanding
     Basic                                               8,380      11,692      27,761      28,169      28,609
                                                      ========    ========    ========    ========    ========
     Diluted                                             8,380      11,692      27,761      28,169      28,609
                                                      ========    ========    ========    ========    ========
<CAPTION>

                                                                          As of January 31,
                                                      --------------------------------------------------------
                                                        2003        2002        2001        2000        1999
                                                      --------    --------    --------    --------    --------
<S>                                                   <C>         <C>         <C>         <C>         <C>
BALANCE SHEET DATA

Cash and cash equivalents                             $  1,873    $  6,122    $ 12,444    $ 54,333    $ 32,109
Total assets                                            18,712      20,534      39,066     103,962     127,292
Notes payable                                             --          --          --          --          --
Redeemable preferred stock(2)                             --          --           629        --          --
Total stockholders' equity                              16,110      16,325      31,455      83,879      99,776
</TABLE>



(1)  See Note 8 of Notes to Consolidated Financial Statements for further
     discussion of discontinued operations.

(2)  See Notes 7 and 8 of Notes to Consolidated Financial Statements for further
     discussion of Series C Redeemable Preferred Stock.


                                        9

<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

GENERAL

     National Auto Credit, Inc. ("the Company" or "NAC") began operations in
1969 and was incorporated in Delaware in 1971. Through December 31, 2001, NAC's
operations were conducted principally through three operating segments, (i) the
e-commerce segment, which is comprised of ZoomLot Corporation's ("ZoomLot")
development of e-commerce services to facilitate the process by which used car
dealerships, lenders and insurance companies communicate and complete the
transactions between them that are needed to provide used car dealers' customers
with financing, insurance and other services, (ii) the movie exhibition segment,
which is comprised of the activities of Angelika Film Center LLC ("AFC") and
(iii) the automobile financing segment. However, as the consequence of NAC's
strategic review, as described below, completed in the fourth quarter of Fiscal
2002, NAC suspended its ZoomLot operations and initiated the steps to
discontinue both its e-commerce and auto financing segments. As a result, since
January 1, 2002 NAC has been engaged principally in the movie exhibition
segment.

Significant Developments in and Subsequent to Fiscal 2003
---------------------------------------------------------

     Throughout Fiscal 2003 NAC engaged principally in the movie exhibition
segment while examining new business opportunities.

     In April 2003, NAC consummated a Merger and Plan of Reorganization
Agreement whereby NAC acquired all of the outstanding common stock of ORA/Metro
Incorporated, also known as OMI Business Communications ("OMI"), from Dean R.
Thompson, sole stockholder of OMI. OMI, headquartered in New York, New York, is
a multi-media production services, corporate meeting services, web-site
development and web content management company. OMI specializes in the full
service design, creative development, production and post production editing of
corporate communication and training videos for use at corporate events and as
collateral content material for client web-sites. Additionally, OMI frequently
provides event planning services including site selection, survey, event
management and related services associated with remote location presentations.
In exchange for the acquisition of all of the outstanding common stock of OMI,
NAC (i) issued 200,000 shares of NAC Common Stock, valued at $28,000 (ii)
assumed approximately $900,000 in bank debt and capital lease obligations to
financial institutions and (iii) issued a promissory notes payable to Mr.
Thompson in the amount of $151,000, payable in monthly installments of principal
and interest over a 36 month period. In addition to the initial payments, NAC
agreed to a contingent payment to Mr. Thompson of $150,000 based upon OMI's
financial performance during the three-year period ending January 31, 2006.
OMI's revenues for the years ended December 31, 2002 and 2001 were approximately
$2.5 million and $3.4 million, respectively, OMI incurred net losses of
approximately $356,000 and $27,000 for those years, respectively. For financial
reporting purposes, the effective date of the merger is April 1, 2003.

     As part of the OMI acquisition, OMI entered into a five year employment
agreement with Mr. Thompson under which Mr. Thompson will serve as President of
OMI and, subject to certain limitations, will have control over the day-to-day
operations of OMI. Under the terms of the employment agreement, Mr. Thompson
will be entitled to base compensation of $175,000 per year, the grant of stock
options for up to 200,000 shares of NAC Common Stock and a performance bonus
based upon the operating results of the acquired companies.

                                       10
<PAGE>

     Throughout the year ended January 31, 2003 and as of April 30, 2003, NAC
had no external source of financing, and has operated on its existing cash
balances and distributions from its investment in AFC. NAC continues to pursue
its plan of examining new business opportunities, which may be pursued through
the investment in, or acquisition of existing operating businesses or other
means. At January 31, 2003 NAC has cash and marketable securities of $2.9
million, $5.6 million income tax refund able and approximately $500,000 accrued
interest due NAC on the outstanding income tax receivable (a component of other
assets at January 31, 2003), which together with any cash flow derived from its
investment in AFC and the operations of OMI will be used to pursue such
opportunities. Additionally, NAC will continue to pursue reduction in operating
expenses and explore new debt or equity financing (for which there can be no
assurance NAC will obtain such financing) as means of supplementing the
resources available to pursue new opportunities.

Discontinued Operations
-----------------------

     In the fourth quarter of Fiscal 2002, NAC completed a strategic review of
its investment in ZoomLot, acquired December 15, 2000, and the development of
its e-commerce services. NAC's strategic review included evaluating the evolving
market conditions of the used car dealer and financing industries, the start-up
nature of the ZoomLot operations, the current market demand for and penetration
of ZoomLot's e-commerce solution to electronically link eligible used car
dealers and their qualified customers with available used car lenders and
financing terms, current operating losses and forecasts of future operating
results and strategic opportunities available to ZoomLot. As a result of this
review, management of NAC determined that it was unable to predict, with the
requisite degree of certainty, when or whether ZoomLot would achieve positive
cash flows.

     As a consequence of NAC's strategic review and determination, effective
December 31, 2001, NAC suspended its ZoomLot operations and initiated the steps
to discontinue its e-commerce operations. As a further consequence of NAC's
decision to discontinue its ZoomLot e-commerce operations, NAC also formally
exited the sub-prime used automobile consumer finance business effective
December 31, 2001. From October 1995 through March 2000, NAC's principal
business activity was to invest in sub-prime used automobile consumer loans,
which took the form of installment loans collateralized by the related vehicle.
NAC purchased such loans, or interests in pools of such loans, from member
dealerships, and performed the underwriting and collection functions for such
loans. As a result of these decisions both the e-commerce and the automobile
financing operations were classified as a discontinued operations as of January
31, 2002.

Significant Developments in Fiscal 2002
---------------------------------------

     In connection with NAC's decision to discontinue the operations of ZoomLot,
NAC entered into formal negotiations with the former shareholders of ZoomLot to
resolve certain financial obligations of NAC and of the former ZoomLot
shareholders resulting from the terms of the Merger Agreement and Plan of
Reorganization dated December 15, 2000 (the "Merger Agreement"). Under the
Merger Agreement, 666,667 shares of Series C Preferred Stock issued in the
acquisition of ZoomLot were forfeitable if ZoomLot did not reach certain
financial performance goals by December 31, 2003, and NAC was obligated to
redeem, at the option of the holders, the 729,047 shares of the Series C
Preferred Stock issued under the Merger Agreement, at a per share price equal to
the greater of $15.00 or ten times the fair market price of NAC's Common Stock,
if ZoomLot did reach those financial performance goals. Additionally, Ernest G.
Garcia II, Cygnet Capital Corporation or Verde Reinsurance Company Ltd., former
ZoomLot shareholders, were obligated to make a payment of $5.2 million to NAC if
ZoomLot did not reach the financial performance goals by December 31, 2003. As
the result of shares of NAC Common Stock issued upon the conversion of the
Series B Preferred Stock issued in the acquisition of ZoomLot, and open market
purchases, Mr. Garcia had become the beneficial owner of 17.7% of the then
outstanding shares of Common Stock of NAC.

                                       11
<PAGE>


     Since NAC discontinued ZoomLot's operations, it was necessary to resolve
the effect of that on the obligations of NAC and the former ZoomLot stockholders
under the Merger Agreement. As a result of the negotiations, on January 31,
2002, NAC entered into an Exchange and Repayment Agreement ("Exchange
Agreement") dated January 31, 2002 with Mr. Garcia, Cygnet Capital Corporation,
Verde Reinsurance Company Ltd., Ernie Garcia III 2000 Trust, Brian Garcia 2000
Trust, EJMS Investors Limited Partnership, Ernest C. Garcia II, Ray Fidel,
Steven P. Johnson, Mark Sauder, Colin Bachinsky, Chris Rompalo, Donna Clawson,
Mary Reiner, and Kathy Chacon, who collectively were the former shareholders of
ZoomLot.

     The Exchange Agreement sets forth the agreement among all the parties to
terminate the operations of ZoomLot. The parties agreed, among other things,
that the financial performance goals (specifically the "First Objective" and the
"Second Objective" as those terms are defined in the Merger Agreement) had not
and would not be met. Accordingly, the 666,667 shares of Series C Preferred
Stock forfeitable if those goals were not met were deemed forfeited and were
returned and surrendered to NAC. For financial reporting purposes, those shares
of Series C Preferred Stock had been treated as contingently issuable, and
accordingly their return had no effect on NAC's consolidated financial
statements.

     Additionally, under the Exchange Agreement, the contingent obligation of
Mr. Garcia, Cygnet Capital Corporation or Verde Reinsurance Company Ltd., to
make a payment of $5.2 million to NAC if ZoomLot did not reach the financial
performance goals by December 31, 2003 was resolved by (i) the transfer back to
NAC of 3,079,530 shares of NAC Common Stock, which for the purposes of the
Exchange Agreement were valued at $1.25 per share, (ii) the return to NAC of
62,380 shares of NAC Series C Redeemable Preferred Stock at an aggregate
agreed-upon value of $854,875, which represented the carrying amount of such
shares of Series C Preferred Stock in NAC's consolidated financial statements,
and (iii) the issuance to NAC of a promissory note in the amount of $986,048,
payable, together with interest at 4% per annum, in cash or NAC Common Stock (at
a mutually agreed-upon value of $1.25 per share) on or before January 30, 2003.

     For financial reporting purposes, NAC recorded the 3,079,530 shares of
Common Stock returned under the Exchange Agreement at $431,000, representing
their market value of the basis of the quoted market price of NAC's Common
Stock, recorded the 62,380 shares of Series C Redeemable Preferred Stock
returned at their aggregate carrying amount of $854,875, and recorded the note
receivable, a component of other assets, at a net value of $110,000 reflecting
the market value at January 31, 2002 of the shares of NAC Common Stock the maker
of the note has the option to tender in payment of the principal. NAC also
incurred or accrued costs of $850,000 for the winding down and closing of
ZoomLot's operations, including rental and broker costs to sublease ZoomLot's
corporate office, employee severance costs and costs of early lease
terminations. As a result, NAC recognized a net gain on the disposal of
ZoomLot's operation of $394,000. See "Discontinued Operations" and Note 8 of
Notes to Consolidated Financial Statements.

     On August 29, 2002, the former ZoomLot shareholders transferred to NAC
409,140 shares of NAC Common Stock as an installment payment against the
promissory note. The market value of the 409,140 shares at the date of their
transfer was $16,000 less than the $56,000 carrying amount of the note
extinguished by the transfer, and, accordingly, NAC recorded the surrendered
shares at their market value of $40,000 and a note receivable collectability
charge (included in general and administrative expenses) for the $16,000
deficiency. On November 13, 2002, the former ZoomLot shareholders transferred to
NAC 402,000 shares of NAC common stock with a net value of $56,000 as the second
and final payment against the promissory note.

                                   12

<PAGE>

     As a further consequence of NAC's decision to discontinue its ZoomLot
e-commerce operations, NAC also formally exited the sub-prime used automobile
consumer finance business effective December 31, 2001. From October 1995 through
March 2000, NAC's principal business activity was to invest in sub-prime used
automobile consumer loans, which took the form of installment loans
collateralized by the related vehicle. NAC purchased such loans, or interests in
pools of such loans, from member dealerships, and performed the underwriting and
collection functions for such loans. In the first and second quarters for the
year ended January 31, 2001, NAC sold its active loan portfolio and the majority
of its charged-off portfolio. However, since NAC had not, until December 2001,
made a definitive decision that it would not reenter the consumer lending
business, either through ZoomLot or another means, the automobile financing
operations had not previously been classified as a discontinued operation. As a
result of the formal decision reached in connection with the decision to
discontinue ZoomLot's operations, the automobile financing operations were
classified as a discontinued operation as of January 31, 2002. See "Discontinued
Operations" and Note 8 of Notes to Consolidated Financial Statements.

RESULTS OF CONTINUING OPERATIONS

     Interest Income on Investments: Interest income is derived principally from
the interest earned on NAC's investments in marketable securities, commercial
paper and money market accounts. In addition, during the fourth quarter of
Fiscal 2003, NAC recorded interest income due NAC of approximately $500,000 as a
result of the claim for its income tax refund for fiscal years 1988 through
1997. Interest income, exclusive of the $500,000 in interest on the income tax
refund due NAC, from investments in Fiscal 2003 was $142,000 as compared to
$344,000 in Fiscal 2002. The decrease in interest income is substantially due to
a decrease in invested funds from Fiscal 2002 to Fiscal 2003. NAC's average cash
reserves and investments in marketable securities, commercial paper and money
market accounts were $4.8 million in Fiscal 2003 as compared to $9.1 million for
Fiscal 2002. Interest income for Fiscal 2001 was $3.8 million during which time
NAC's average cash reserves and investments in marketable securities, commercial
paper and money market accounts were $57.5 million. During the fourth quarter of
Fiscal 2001 NAC utilized $52.0 million of its cash liquidity to repurchase
25,943,360 shares of NAC Common Stock.

     Income from Investment in AFC: NAC accounts for its investment in AFC using
the equity method. For Fiscal 2003, Fiscal 2002 and the nine months from April
5, 2000 (the date of NAC's acquisition of its investment in AFC) to December 31,
2000 NAC's share of the net income of AFC was $375,000, $373,000 and $434,000,
respectively, which represents NAC's share of AFC net income. In addition, in
Fiscal 2002 and Fiscal 2001, prior to the adoption of SFAS 141 and SFAS 142, NAC
recorded amortization expenses of $272,000 and $204,000, respectively, as a
reduction of its income from investments in AFC. As a result of NAC's adoption
of SFAS 141 and SFAS 142, this amortization charge was discontinued in Fiscal
2003.


                                       13

<PAGE>



         AFC's fiscal year ends December 31. The following sets forth summarized
operating results for AFC (in thousands):

                                               Years Ended December 31,
                                            -------------------------------
                                              2002       2001         2000
                                            -------     -------     -------
Revenues                                    $ 6,032     $ 6,958     $ 6,462
                                            -------     -------     -------
Film rental                                   1,627       2,243       2,087
Operating costs                               2,831       3,127       2,509
Depreciation and amortization                   699         693         692
General and administrative  expenses            125         149         184
                                            -------     -------     -------
                                              5,282       6,212       5,472
                                            -------     -------     -------
Net income                                  $   750     $   746     $   990
                                            =======     =======     =======

NAC's proportionate share of net income     $   375     $   373     $   434
Amortization expense                              -         272         204
                                            -------     -------     -------
Income from investment in AFC               $   375     $   101     $   230
                                            =======     =======     =======


     As the result of the net effects of a 14.7% decrease in attendance, offset
in part by a 2.3% increase in average ticket prices, revenues decreased $926,000
for the year ended December 31, 2002 to $6.0 million as compared to $6.9 million
for the year ended December 31, 2001. AFC's revenues can fluctuate from
month-to-month and year-to-year principally as a result of film attendance, and
at times the ticket prices, depending on audience interest in, and the
popularity of the films AFC exhibits and other factors. AFC revenues for the
year ended December 31, 2001 were $6.9 million as compared to $6.5 million for
the year ended December 31, 2000. The increase in revenues for the year ended
December 31, 2001 was due principally to the combined effect of a 1.9% increase
in attendance and a 4.2% increase in average ticket prices.

     For the years ended December 31, 2002, 2001 and 2000, film rental expense,
as a percentage of revenues, were 27.0%, 32.2% and 32.2%, respectively. Film
rental expense generally is a factor of a fixed percentage rental rate per film
multiplied by the number of tickets sold. AFC experiences fluctuations in film
rental expense, as a percentage of revenue, depending upon the rental rate per
film and the popularity of the film.

     For the years ended December 31, 2002, 2001 and 2000, operating costs were
$2.8 million, $3.1 million and $2.5 million, respectively. The nature of AFC's
operating costs tend to generally be more fixed overhead related costs and
advertising expenses. Operating expenses of AFC decreased $296,000 for the year
ended December 31, 2002 to $2.8 million from $3.1 million for the year ended
December 31, 2001 principally as the result of a decrease in advertising
expenditures of $108,000 as AFC developed co-op advertising programs with third
parties to offset its advertising program costs for the year. Operating costs
for the year ended December 31, 2000 were $2.5 million.

     As a result of the net cash flow realized by AFC, distributions by AFC to
NAC for Fiscal 2003, Fiscal 2002 and Fiscal 2001 were $300,000, $909,000 and
$556,000, respectively. The decrease in distributions from Fiscal 2002 to Fiscal
2003 of $609,000 is a result principally of the AFC capital improvement program.
In August 2002, AFC initiated a $1.1 million capital improvement program to
renovate the interior of the theatre and upgrade certain equipment, services and
facilities. AFC financed the capital program through its current cash flow from
operations and as a consequence cash distributions were reduced until the
completion of the capital program which was finished in December 2002.

                                       14
<PAGE>

     General and Administrative: General and administrative expenses include
cost of executive, accounting and legal personnel, occupancy, legal,
professional, insurance, and other general corporate overhead costs. General and
administrative expenses decreased $1.9 million for Fiscal 2003 to $3.5 million
from $5.4 million for Fiscal 2002. General and administrative expenses were $7.7
million for Fiscal 2001.

     The decrease in general and administrative expense of $1.9 million in
Fiscal 2003 as compared to Fiscal 2002 was due principally to (i) a decrease of
$1.4 million relating to a reduction of professional services, inclusive of
board of director fees, and (ii) a decrease of $209,000 in personnel cost due to
a reduction in head count as a result of NAC's relocation from Ohio to New York.
The decrease in general and administrative expenses of $2.3 million in Fiscal
2002 as compared to Fiscal 2001, was due to (i) a one time bonus of $750,000
paid in Fiscal 2001 awarded to the Chairman of the Board for past services, (ii)
a decrease of $400,000 in depreciation and amortization as a result of the sale
of property during Fiscal 2001, and (iii) a decrease of $857,000 related to a
reduction of professional services, inclusive of board of director fees.

     Litigation and Other Charges: The components for litigation and other
charges for Fiscal 2001 were $5.8 million of legal costs and settlement expenses
relating to shareholder and other corporate litigation matters, $116,000 for
crisis management consulting and $375,000 in other litigation support costs.

     Cost Related to Purchase of Shares: The Fiscal 2001 expense of $35.6
million results from the repurchases of 25,943,360 shares of its Common Stock in
two transactions during the fourth quarter of Fiscal 2001 from Mr. Frankino and
his affiliates and Reading Entertainment. See Note 7 of Notes to Consolidated
Financial Statements.

     Write-down of Assets Held for Sale: NAC had certain investments in
affordable housing projects which previously NAC had been holding for
realization through the receipt of distributions from the operations of the
projects and the use of the tax credits generated by the investments. In the
fourth quarter of Fiscal 2000, NAC committed to a plan to sell the investments
and recorded, in that quarter, a write-down of $4.7 million to reduce the
carrying amount of the investments to their fair value less estimated costs to
sell. During Fiscal 2001, NAC reduced its original estimate of the fair value of
the investments to $2.7 million, primarily due to the expiration of certain tax
credits and the increase of the effective yield used in determining the fair
value. As a result, NAC recorded an additional write-down of $3.2 million.

     On January 14, 2002, NAC sold its limited partnership interests in eight
projects to Idacorp Financial Services, Inc. ("Idacorp Financial") for $2.5
million. NAC incurred closing costs, transfer fees and a provision for the
previously deducted investment tax credits in lieu of posting a bond, of
$510,000 and as a result incurred a loss (reflected in continuing operations) of
$549,000. NAC retained its limited partnership interests in three projects,
which at January 31, 2003 and 2002 are included in other assets at their
estimated fair market value of $200,000.

     During the fourth quarter of Fiscal 2000, NAC also committed to plans to
sell certain real estate investments. During Fiscal 2001, NAC sold the
investments for aggregate cash proceeds of approximately $1.0 million and
recorded a loss on sale of $215,000.

     Income Taxes: For Fiscal 2003, 2002 and 2001, NAC recorded income tax
benefits of $2.2 million, $331,000 and $1.2 million, respectively, that
represent either (i) adjustments that increased the previously estimated amount
of net operating losses eligible to be carried back against prior year's taxable
income or (ii) adjustments to revise (reduce) previous estimates of certain
income taxes. For Fiscal 2002 and 2001, these tax

                                    15
<PAGE>

benefits arose and are a component of discontinued operations. For Fiscal 2003,
$145,000 of these tax benefits is a component of discontinued operations.

     As of January 31, 2003 NAC has net operating loss carryforwards of $83.4
million that may be used to reduce future taxable income, subject to
limitations. NAC also has unused low income housing credits totaling $4.5
million. At January 31, 2003, NAC has claims for refunds in the amount of $5.6
million.

     As a result of NAC's November 3, 2000 repurchases of shares of its Common
Stock, NAC underwent a "change in ownership" as defined for the purposes of
Sections 382 and 383 of the Internal Revenue Code. As a result of the "change in
ownership", the use of net operating loss carryforwards totaling $56.3 million
incurred prior to November 3, 2000 will be subject to significant annual
limitation. Additionally, the use of low income housing tax credit carryforwards
of $3.2 million generated prior to November 3, 2000 will be subject to the
Section 382 limitation. The use of the net operating loss and low income housing
credit carryforwards incurred after November 3, 2000, which total $27.1 million
and $1.3 million, respectively, as of January 31, 2003, are not subject to the
Section 382 limitation.

     As of January 31, 2003 NAC has $908,000 of minimum tax credits which may be
applied against any future regular income taxes which exceed alternative minimum
taxes. These credits may be carried forward indefinitely and are also subject to
the Section 383 limitation.

DISCONTINUED OPERATIONS

     E-commerce Operations: In Fiscal 2003 NAC's e-commerce operations realized
income of $2,000 as a result of the winding down of operations. In Fiscal 2002
NAC's e-commerce operations incurred an operating loss of $9.4 million,
reflecting revenues of $867,000 and expenses of $10.2 million. Included in the
expenses of $10.2 million were non-cash charges of $7.4 million for the
amortization and write-off of the goodwill arising in the December 2000
acquisition of ZoomLot. The remaining expenses of $2.8 million represent the
expenses incurred in ZoomLot's attempts to develop its e-commerce method of
facilitating the process by which used car dealerships, lenders and insurance
companies communicate and complete the transactions between them that are needed
to provide the used auto dealers' customers with financing, insurance and other
services.

     In Fiscal 2001 NAC's e-commerce operations incurred an operating loss of
$628,000 principally as the result of operating expenses of $708,000 which
represent goodwill amortization of $191,000 and expenses of $517,000 incurred in
ZoomLot's attempts to develop its e-commerce business. These Fiscal 2001 amounts
reflect the activity of ZoomLot for the 46 days during Fiscal 2001 that it was
owned by NAC.

     Automobile Financing: In Fiscal 2003 NAC's automobile financing operations
realize income of $33,000 comprised of $28,000 from the collection of previously
charged-off loans and $145,000 income tax benefit, offset by $140,000 in legal
and general expenses as a result of the winding down of operations. In Fiscal
2002 NAC's automobile financing operations generated operating income of
$658,000, comprised of $155,000 from the collection of previously charged off
loans, the gain of $34,000 from the sale of its remaining charged off loans, and
a $468,000 reduction in the provision for credit losses.

     In Fiscal 2001 NAC's automobile financing operations incurred an operating
loss, after income tax benefit, of $1.8 million. During Fiscal 2001, NAC, acting
through NAC, Inc., a wholly-owned subsidiary, sold substantially all of the then
outstanding automobile retail installment loans remaining in NAC's active
portfolio for $24.2 million to four unaffiliated financial institutions. In each
case, the selling price was determined based upon arm's length negotiations
between the parties and was paid in cash at closing. The sale of the loans


                                     16
<PAGE>

resulted in an aggregate loss of approximately $1.4 million, which NAC
reported in Fiscal 2001. Additionally, as the result of the sale of the loans,
NAC's interest income from the loans generated prior to the sale of the loans
and other revenues in Fiscal 2001were $527,000. Furthermore, NAC recorded in
Fiscal 2001 a reversal into income of previously recorded credit losses and
allowances of $2.3 million for Fiscal 2001.

     Auto Rental: NAC, under the names Agency Rent-A-Car, Inc. ("ARAC"), Altra
Auto Rental and Automate Auto Rental, previously engaged in the rental of
automobiles on a short-term basis, principally to the insurance replacement
market. In the year ended January 31, 1996, NAC disposed of its rental fleet
business through the sale of certain assets and through certain leases to a
national car rental company. All liabilities related to the discontinued rental
business, principally self-insurance claims, were retained by NAC. NAC also had
a dealership operation that sold cars that were retired from the rental fleet,
primarily to member dealers of NAC's automobile financing business. That
operation was discontinued in the year ended January 31, 1997 as a result of
NAC's disposal of its automobile rental operations. The results of both the auto
rental and dealership operations are included in the results of discontinued
operations (together as "auto rental" operations). For the years ended January
31, 2003, 2002 and 2001, the results of the discontinued auto rental operations
principally represent the effects of the settlement of, and changes in NAC's
reserves for, claims against NAC related to the self-insured claims (see Note 13
of Notes to Consolidated Financial Statements).

LIQUIDITY AND CAPITAL RESOURCES

     During Fiscal 2003, NAC used $4.3 million cash flows from continuing
operations. This is due to the effect of (i) NAC's net loss from continuing
operations of $419,000, (ii) an increase in the income tax refundable of $2.1
million and (iii) the $1.9 million net change in operating assets and
liabilities. NAC also used $294,000 of cash in the various discontinued
operations. NAC generated $363,000 in cash flows from investing activities
principally as the result of distributions from AFC of $300,000.

     During Fiscal 2002, NAC used $7.5 million cash flows from continuing
operations. This is due to the effect of (i) NAC's net loss from continuing
operations of $5.5 million less net non-cash charges of $1.1 million and (ii)
the $3.1 million net change in operating assets and liabilities. NAC also used
$2.1 million of cash in the various discontinued operations. NAC generated $3.3
million in cash flows from investing activities principally as the result of the
proceeds of $2.1 million from its sale of assets and distributions from AFC of
$909,000.

     During Fiscal 2001, NAC used $49.8 million of cash flows from continuing
operations. This was due to NAC's net loss from continuing operations of $46.5
million, which includes the $35.6 million (the portion charged to expense) of
the $52.0 million paid to repurchase shares of NAC Common Stock, plus the net
non-cash charges of $2.0 million. This amount was further offset by a $5.4
million net change in operating assets and liabilities. NAC also used $5.9
million of cash from the various discontinued operations. NAC generated $35.5
million in cash flows from investing activities principally as the result of
collections and the proceeds from its loan portfolio of $24.2 million and the
proceeds from the sale of property of $8.6 million. NAC used $21.6 million in
financing activities as the result of the payments to repurchase shares of $16.4
million and the payment on notes payable of $5.2 million assumed by NAC as part
of the ZoomLot acquisition.

     NAC believes that the available cash and cash equivalents and marketable
securities of $2.9 million and the investment income there from, the collection
of the income tax refund of $5.6 million and the collection of approximately
$500,000 of accrued interest due NAC on the outstanding income tax receivable (a
component of other assets at January 31, 2003) as well as the cash distributions
from its investment in AFC will be sufficient to pay operating expenses,
existing liabilities, and fund its activities through January 31, 2004 as NAC
explores new strategic business alternatives. As discussed in Note 13 of Notes
to Consolidated Financial Statements,

                                       17

<PAGE>

NAC is presently a defendant or nominal defendant in various derivative
shareholder complaints. Although NAC intends to vigorously defend each of the
claims and no prediction can be made with respect to their ultimate outcomes. An
adverse outcome could have a material adverse effect on NAC's liquidity,
financial condition or results of operations. Additionally, as previously
discussed, NAC's lack of external financing sources may limit its ability to
pursue strategic business alternatives being considered by NAC's Board of
Directors. Such limitations may have an adverse impact on NAC's financial
position, results of operations and liquidity.

OTHER

     New Accounting Pronouncements
     -----------------------------

     In June 2001, the FASB issued SFAS 143, Accounting for Asset Retirement
Obligations. SFAS 143 requires entities to record to the fair value of the
liability for an asset retirement obligation in the period in which it is
incurred. The amount initially recorded as the asset retirement obligation is
based upon the estimated present value of the retirement costs to be incurred,
and is capitalized as a part of the asset. The obligation is subsequently
accreted for the passage of time by charges to interest expense, and the
capitalized costs is amortized as part of depreciation expense related to the
asset. The asset retirement obligation is also continually re-estimated, with
changes in its present value caused by changes in the estimated retirement cost
recorded as adjustments to the carrying amount and subsequent depreciation of
the asset. SFAS 143 is effective for fiscal years beginning after June 15, 2002
and was adopted by NAC effective February 1, 2002. At the time of adoption,
there was no material impact to NAC's financial statements.

     In August 2001, the FASB issued SFAS 144, Accounting for the Impairment or
Disposal of Long-Lived Assets. SFAS 144 supercedes SFAS 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,
with the exception of impairment and disposal issues related to goodwill and
other intangible assets that are not amortized. SFAS 144 also supersedes the
accounting and reporting provision of Accounting Principles Board Opinion No.
(APB) 30, Reporting the Results of Operations - Reporting the Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions. SFAS 144 retains many of the fundamental
recognition and measurement provisions of SFAS 121, and also retains the
requirement in APB 30 to separately identify and report discontinued operations.
However, SFAS extends the APB 30 reporting requirements for discontinued
operations to components of an entity that have either been disposed of or is
classified as assets held for sale that may not have qualified as segments under
APB 30, as a result of which operating results that previously were not
classified as discontinued operations may be treated as such upon the adoption
of SFAS 144. SFAS 144 is effective for fiscal years beginning after December 15,
2001 and was adopted by NAC effective February 1, 2002. At the time of adoption,
there was no material impact to NAC's financial statements.

     In July, 2002 the FASB issued SFAS 146, Accounting for Costs Associated
with Exit or Disposal Activities. SFAS 146 requires companies to recognize costs
associated with exit or disposal activities when they are incurred, rather than
at the date of a commitment to an exit or disposal plan. Examples of costs
covered by the standard included lease termination costs and certain employee
severance costs that are associated with a restructuring, discontinued
operation, plant closing, or other exit or disposal activity. Previous
accounting guidance was provided by EITF Issue No. 94-3, Liability Recognition
for Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring. SFAS 146 replaces Issue
94-3 and is required to be applied prospectively to exit or disposal activities
initiated after December 2002. NAC is currently evaluating the impacts, if any,
of SFAS 146.

                                      18
<PAGE>


     In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based
Compensation--Transition and Disclosure. SFAS 148 provides alternative methods
of transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. In addition, SFAS 148 requires
prominent disclosures in both annual and interim financial statements about the
method of accounting for stock-based employee compensation and the effect of the
method used on the reported results. The provisions of SFAS 148 are effective
for financial statements for fiscal years ending after December 15, 2002. NAC is
currently evaluating the impacts, if any, of SFAS 146.

     Inflation
     ---------

     Inflation has not had a material affect on NAC's business.




                                    19

<PAGE>

FORWARD-LOOKING STATEMENTS

     Various statements made in this Item 7 and elsewhere in this Annual Report
on Form 10-K concerning the manner in which NAC intends to conduct its future
operations, and potential trends that may impact its future results of
operations, are forward looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. NAC may be unable to realize its plan
and objectives due to various important factors, including, but not limited to,
the failure of the Board of Directors to promptly determine what strategic
business plan NAC should pursue, the failure of NAC to implement any such plan
due to its inability to identify suitable acquisition candidates or its
inability to obtain the financing necessary to complete any desired
acquisitions, or any adverse outcome of the pending shareholder actions or other
litigation.

ITEM 7a.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Like virtually all commercial enterprises, NAC can be exposed to the risk
("market risk") that the cash flows to be received or paid relating to certain
financial instruments could change as a result of changes in interest rate,
exchange rates, commodity prices, equity prices and other market changes.

     NAC does not engage in trading activities and does not utilize interest
rate swaps or other derivative financial instruments or buy or sell foreign
currency, commodity or stock indexed futures or options. Accordingly, NAC is not
exposed to market risk from these sources.

     NAC's automobile loan portfolio was comprised of fixed rate financing
agreements with high credit risk consumers. The rates on these financing
agreements cannot be increased for changes in market conditions, and accordingly
these loans were not subject to market risk.

     As of January 31, 2003, NAC has no interest bearing debt, and accordingly
no market risk associated with increases in interest costs resulting from
changes in market rates.


                                       20

<PAGE>


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders of
National Auto Credit, Inc. and Subsidiaries
New York, New York


     We have audited the accompanying consolidated balance sheets of National
Auto Credit, Inc. and Subsidiaries as of January 31, 2003 and 2002 and the
related consolidated statements of operations, stockholders' equity and
comprehensive income (loss) and cash flows for each of the three years in the
period ended January 31, 2003. Our audits also included the financial statement
schedule listed in the Index at Item 14(a)(2). These financial statements and
financial statement schedule are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits.

     We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. 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.

     As discussed in Note 1 to the consolidated financial statements, the
company adopted Statement of Financial Accounting Standards No. 142 "Goodwill
and other Intangible Assets" on February 1, 2002.

     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of National
Auto Credit, Inc. and Subsidiaries as of January 31, 2003 and 2002 and the
results of their operations and their cash flows for each of the three years in
the period ended January 31, 2003 in conformity with accounting principles
generally accepted in the United States of America. Also, in our opinion, the
financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly in all
material respects, the information set forth therein.


/s/Grant Thornton LLP
Cleveland, Ohio
April 9, 2003



                                 21

<PAGE>

                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                      (IN THOUSANDS, EXCEPT SHARE AMOUNTS)


                                                              January 31,
                                                       ----------------------
                                                         2003         2002
                                                       ---------    ---------
ASSETS
Cash and cash equivalents                              $   1,873    $   6,122
Marketable securities (Notes 1 and 2)                        984          994
Investment in AFC (Note 3)                                 9,295        9,220
Property and equipment, net of accumulated
  depreciation of $90 and $57, respectively (Note 1)          81           71
Income taxes refundable (Note 6)                           5,577        3,507
Other assets                                                 902          620
                                                       ---------    ---------

TOTAL ASSETS                                           $  18,712    $  20,534
                                                       =========    =========

LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
  Self-insurance claims (Note 13)                      $     518    $     769
  Accrued income taxes (Note 6)                              711          697
  Other liabilities (Note 5)                               1,373        2,743
                                                       ---------    ---------
                                                           2,602        4,209

COMMITMENTS AND CONTINGENCIES (Note 13)                     --           --

STOCKHOLDERS' EQUITY (Notes 7 and 8)
Preferred stock                                             --           --
Common stock - $.05 par value,
  authorized 40,000,000 shares, issued
  39,377,589 shares                                        1,969        1,969
Common stock to be issued                                   --           --
Additional paid-in capital                               174,337      174,337
Retained deficit                                        (136,455)    (136,346)
Accumulated other comprehensive loss                        (143)        (133)
Treasury stock, at cost, 31,546,975 and 30,735,835
  shares, respectively                                   (23,598)     (23,502)
                                                       ---------    ---------
                                                          16,110       16,325
                                                       ---------    ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY             $  18,712    $  20,534
                                                       =========    =========


          See accompanying notes to consolidated financial statements.

                                       22
<PAGE>

                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS
<TABLE>
<CAPTION>


                                                                      Years Ended January 31,
                                                               --------------------------------
                                                                 2003        2002        2001
                                                               --------    --------    --------
<S>                                                            <C>         <C>         <C>
REVENUE
     Interest income on investments                            $    642    $    344    $  3,872
     Income from investment in AFC                                  375         101         230
                                                               --------    --------    --------
          Total                                                   1,017         445       4,102

COSTS AND EXPENSES
     General and administrative                                   3,506       5,384       7,696
     Litigation and other charges (Note 13)                        --          --         6,290
     Write-off of option (Note 8)                                  --          --           500
     Loss (gain) on sale of property (Note 10)                     --           549      (2,868)
     Cost related to purchase of shares (Note 7)                   --          --        35,593
     Write-down of assets held for sale (Note 10)                  --          --         3,398
                                                               --------    --------    --------
          Total                                                   3,506       5,933      50,609
                                                               --------    --------    --------

LOSS FROM CONTINUING OPERATIONS
  BEFORE INCOME TAXES                                            (2,489)     (5,488)    (46,507)

Benefit for income taxes (Note 6)                                (2,070)       --          --
                                                               --------    --------    --------

LOSS FROM CONTINUING OPERATIONS                                    (419)     (5,488)    (46,507)

DISCONTINUED OPERATIONS, NET OF TAX (Note 8)                        310      (9,174)     (1,084)
GAIN (LOSS) ON DISPOSAL OF DISCONTINUED OPERATIONS (Note 8)        --           394         308
                                                               --------    --------    --------

NET LOSS                                                           (109)    (14,268)    (47,283)

Accretion of discount on redeemable preferred stock (Note 7)       --           226          12
                                                               --------    --------    --------

NET LOSS APPLICABLE TO COMMON STOCK                            $   (109)   $(14,494)   $(47,295)
                                                               ========    ========    ========

BASIC AND DILUTED (LOSS) EARNINGS PER SHARE
     Continuing operations                                     $   (.05)   $   (.47)   $  (1.67)
     Discontinued operations                                        .04        (.78)       (.04)
     Disposal of discontinued operations                           --           .03         .01
                                                               --------    --------    --------
          Net loss per share                                   $   (.01)   $  (1.22)   $  (1.70)
                                                               ========    ========    ========

WEIGHTED AVERAGE NUMBER OF SHARES
  OUTSTANDING
     Basic and diluted                                            8,380      11,692      27,761
                                                               ========    ========    ========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       23

<PAGE>

                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                         AND COMPREHENSIVE INCOME (LOSS)
                   YEARS ENDED JANUARY 31, 2003, 2002 AND 2001
                      (IN THOUSANDS, EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                               Preferred Stock                 Common Stock
                                            --------------------------  ------------------------------        Common
                                                              Par                             Par            Stock to
                                               Shares        Value          Shares           Value          be Issued
                                            -------------  -----------  ---------------   ------------     -------------
<S>                                        <C>            <C>          <C>               <C>              <C>
BALANCE, JANUARY 31, 2000                              --  $        --       29,963,301   $      1,498     $         --
Net loss
Stocks issued for
   investment in AFC (Note 3)                         100           --        6,762,247            338
Acquisition of ZoomLot (Note 8)                   270,953          135
Repurchase of Series A
   preferred stock (Note 8)                          (100)          --
Conversion of Series B
   preferred stock (Note 7)                      (270,953)        (135)       2,709,530            135
Repurchase of common
   shares (Note 7)
Stock award (Note 11)                                                                                               219
Stock cancelled under
   benefit plans                                                                (14,641)            --
Accretion on redeemable preferred stock
Other comprehensive income (loss)
     unrealized loss on marketable
     securities
                                            -------------  -----------  ---------------   ------------     -------------
BALANCE, JANUARY 31, 2001                              --           --       39,420,437          1,971              219
Net loss
Stock award                                                                                                        (219)
Accretion on redeemable preferred stock
Return of common stock in settlement of
    ZoomLot agreements (Note 8)
Stock cancelled under benefit plans                                             (42,848)            (2)
Other comprehensive income (loss)
     unrealized loss on marketable securities
                                            -------------  -----------  ---------------   ------------     -------------
BALANCE, JANUARY 31, 2002                              --           --       39,377,589          1,969                --
Net loss
Surrender of common shares as
     payment on note receivable (Note 7)
Other comprehensive income (loss)
     unrealized loss on marketable securities
                                            -------------  -----------  ---------------   ------------     -------------

BALANCE, JANUARY 31, 2003                              --  $        --       39,377,589   $      1,969    $           --
                                            =============  ===========  ===============   ============     =============
<CAPTION>

                                          Additional                                       Other                       Comprehensive
                                            Paid-In       Retained         Treasury     Comprehensive                    Income
                                            Capital        Deficit          Stock       Income (loss)     Total          (Loss)
                                         -------------- --------------   -------------  ------------   -------------   ------------
<S>                                       <C>                 <C>             <C>          <C>          <C>           <C>
BALANCE, JANUARY 31, 2000                $      166,139      $ (69,104)      $ (14,654)   $       --   $      83,879
Net loss                                                       (47,283)                                      (47,283)  $    (47,283)
Stocks issued for
   investment in AFC (Note 3)                     6,954         (5,402)          7,816                         9,706
Acquisition of ZoomLot (Note 8)                   1,312                                                        1,447
Repurchase of Series A
   preferred stock (Note 8)                                                                                       --
Conversion of Series B
   preferred stock (Note 7)                          --                                                           --
Repurchase of common
   shares (Note 7)                                                             (16,437)                      (16,437)
Stock award (Note 11)                                                                                            219
Stock cancelled under
   benefit plans                                    (20)                                                         (20)
Accretion on redeemable preferred stock                            (12)                                          (12)
Other comprehensive income (loss)
     unrealized loss on marketable
     securities                                                                                  (44)            (44)           (44)
                                         -------------- --------------   -------------  ------------   -------------   ------------
BALANCE, JANUARY 31, 2001                       174,385       (121,801)        (23,275)          (44)         31,455   $    (47,327)
                                                                                                                       ============
Net loss                                                       (14,268)                                      (14,268)  $    (14,268)
Stock award                                                        (51)            204                           (66)
Accretion on redeemable preferred stock                           (226)                                         (226)
Return of common stock in settlement of
    ZoomLot agreements (Note 8)                                                   (431)                         (431)
Stock cancelled under benefit plans                 (48)                                                         (50)
Other comprehensive income (loss)
     unrealized loss on marketable
     securities                                                                                  (89)            (89)           (89)
                                         -------------- --------------   -------------  ------------   -------------   ------------
BALANCE, JANUARY 31, 2002                       174,337       (136,346)        (23,502)         (133)         16,325   $    (14,357)
                                                                                                                       ============
Net loss                                                          (109)                                         (109)          (109)
Surrender of common shares as
     payment on note receivable (Note 7)                                           (96)                          (96)
Other comprehensive income (loss)
     unrealized loss on marketable
     securities                                                                                  (10)            (10)           (10)
                                         -------------- --------------   -------------  ------------   -------------   ------------

BALANCE, JANUARY 31, 2003                $      174,337 $     (136,455)  $     (23,598) $       (143)   $     16,110   $       (119)
                                         ============== ==============   =============  ============   =============   ============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       24
<PAGE>

                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                          Years Ended January 31,
                                                                              -------------------------------------------
                                                                                  2003           2002           2001
                                                                              -------------  -------------  -------------
<S>                                                                           <C>            <C>            <C>
CASH FLOWS FROM CONTINUING OPERATING ACTIVITIES
Net loss                                                                      $       (109)  $    (14,268)  $    (47,283)
Adjustments to reconcile net loss to net cash
   (used in) provided by continuing operating activities:
     Loss (gain) from discontinued operations                                         (310)         9,174          1,084
     Gain on disposal of discontinued operations                                         -           (394)          (308)
     Depreciation and amortization                                                      33            606            779
     Gain on sale of property                                                            -              -         (2,868)
     Write-off of option                                                                 -              -            500
     Loss on write-down of assets held for sale                                          -            589          3,398
     Stock compensation                                                                  -           (116)           199
Changes in operating assets and liabilities:
     Accrued income tax/refundable                                                  (2,070)          (175)             -
     Other liabilities                                                              (1,017)        (2,240)        (7,092)
     Other operating assets and liabilities, net                                      (845)          (691)         1,727
                                                                              -------------  -------------  -------------

         Net cash used in continuing operating activities                           (4,318)        (7,515)       (49,864)
                                                                              -------------  -------------  -------------

CASH FLOWS FROM INVESTING ACTIVITIES
   Principal collected on gross finance receivable                                       -            155          5,730
   Proceeds from sale of loans                                                           -            313         24,187
   Change in contracts in progress                                                     106            614              -
   Proceeds from sale of property                                                        -              -          8,606
   Proceeds from sale of assets held for sale                                            -          2,065          1,041
   Investments and acquisitions                                                          -              -         (1,690)
   Proceeds from AFC distributions                                                     300            909            556
   Purchase of marketable securities                                                     -              -        (25,092)
   Proceeds from sale of marketable securities                                           -              -         23,820
   Purchase of other property and equipment                                            (43)          (326)          (188)
   Purchase of affordable housing investments                                            -           (471)        (1,455)
                                                                              -------------  -------------  -------------

        Net cash provided by investing activities                                      363          3,259         35,515
                                                                              -------------  -------------  -------------

CASH FLOWS FROM FINANCING ACTIVITIES
   Net payments on operating debt and notes payable                                      -              -         (5,185)
   Payments to acquire treasury stock                                                    -              -        (16,437)
                                                                              -------------  -------------  -------------

       Net cash used in financing activities                                             -              -        (21,622)
                                                                              -------------  -------------  -------------

Decrease in cash and cash equivalents from continuing operations                    (3,955)        (4,256)       (35,971)
Decrease in cash and cash equivalents from discontinued operations                    (294)        (2,066)        (5,918)
Cash and cash equivalents at beginning of year                                       6,122         12,444         54,333
                                                                              -------------  -------------  -------------
Cash and cash equivalents at end of year                                      $      1,873   $      6,122   $     12,444
                                                                              =============  =============  =============

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
   Interest paid                                                              $          3   $          -   $          -
                                                                              =============  =============  =============
   Income taxes paid                                                          $          -   $        293   $        697
                                                                              =============  =============  =============
</TABLE>
          See accompanying notes to consolidated financial statements.

                                       25
<PAGE>

                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   YEARS ENDED JANUARY 31, 2003, 2002 AND 2001

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     ORGANIZATION: National Auto Credit, Inc. ("the Company" or "NAC") began
operations in 1969 and was incorporated in Delaware in 1971. Through December
31, 2001, NAC's operations were conducted principally through three operating
segments, (i) the e-commerce segment, which was comprised of ZoomLot
Corporation's ("ZoomLot") development of e-commerce services to facilitate the
process by which used car dealerships, lenders and insurance companies
communicate and complete the transactions between them that are needed to
provide used car dealers' customers with financing, insurance and other
services, (ii) the movie exhibition segment, which is comprised of the
activities of Angelika Film Center LLC ("AFC") and (iii) the automobile
financing segment.

     In the fourth quarter of Fiscal 2002, NAC completed a strategic review of
its investment in ZoomLot, acquired December 15, 2000, and the development of
its e-commerce services. NAC's strategic review included evaluating the evolving
market conditions of the used car dealer and financing industries, the start-up
nature of the ZoomLot operations, the current market demand for and penetration
of ZoomLot's e-commerce solution to electronically link eligible used car
dealers and their qualified customers with available used car lenders and
financing terms, current operating losses and forecasts of future operating
results and strategic opportunities available to ZoomLot. As a result of this
review, management of NAC determined that it was unable to predict, with the
requisite degree of certainty, when or whether ZoomLot would achieve positive
cash flows.

     As a consequence of NAC's strategic review and determination, effective
December 31, 2001, NAC suspended its ZoomLot operations and initiated the steps
to discontinue both its e-commerce and auto financing segments. Additionally, as
a consequence of NAC's decision to discontinue its ZoomLot e-commerce
operations, NAC also formally exited the sub-prime used automobile consumer
finance business effective December 31, 2001. As a result of these decisions,
both the e-commerce and automobile finance segments were classified as
discontinued operations as of January 31, 2002 (see Note 8). Subsequent to
December 31, 2001, NAC is engaged principally in the movie exhibition segment.

     NAC is evaluating various additional strategic business alternatives,
including, but not limited to, the purchase of one or more existing businesses
or the entry into one or more businesses (see Note 15).

     PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include
the amounts of NAC and its wholly-owned subsidiaries and its investment in AFC,
a 50% owned limited liability company, which is accounted for under the equity
method. All material intercompany accounts and transactions have been eliminated
in consolidation.

     ESTIMATES: The preparation of financial statements and the accompanying
notes thereto, in conformity with generally accepted accounting principles,
requires management to make estimates and assumptions that affect reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and reported amounts of
revenues and expenses during the respective reporting periods. Actual results
could differ from those estimates.

                                       26
<PAGE>

                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   YEARS ENDED JANUARY 31, 2003, 2002 AND 2001


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     CASH EQUIVALENTS: All highly liquid investments, such as commercial paper
and debt instruments with initial maturities of three months or less are
considered to be cash equivalents. Cash equivalents are stated at cost, which
approximates the market value.

     GOODWILL: NAC adopted Statement of Financial Accounting Standards No.
("SFAS") 141, "Business Combinations", and SFAS 142, "Goodwill and Other
Intangible Assets", effective February 1, 2002. Prior to the adoption of SFAS
142 NAC recorded a monthly charge (as a reduction of its earnings from its
investment in AFC) of $23,000 for the amortization, in a manner similar to
goodwill, of the excess of NAC's investment in AFC over its share of the net
assets of AFC. Under SFAS 142 intangible assets with indefinite lives, including
goodwill, are no longer subject to amortization and are subject to testing for
impairment annually and whenever there is an impairment indicator.

     The goodwill arising from NAC's acquisition of ZoomLot was being amortized
on a straight-line basis over a three year period until the remaining amount was
written off as the result of NAC's decision in December, 2001 to discontinue the
operations of ZoomLot. The amortization and write-off of that goodwill is
included in the results of discontinued operations (see Note 8).

     IMPAIRMENT OF LONG-LIVED ASSETS: Effective February 1, 2002, NAC adopted
SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets. In
accordance with this statement, NAC reviews the carrying value of its long-lived
assets (other than goodwill) whenever events or changes in circumstances
indicate that its carrying amount may not be recoverable. If indicators of
impairment exist, NAC would determine whether the estimated undiscounted sum of
the future cash flows of such assets is less than its carrying amount. If less,
an impairment loss would be recognized based on the excess of the carrying
amount of such assets over their respective fair values. NAC would determine the
fair value by using quoted market prices, if available, for such assets; or if
quoted market prices are not available, NAC would discount the expected
estimated future cash flows. Certain of these long-lived assets are being
disposed of and have been written-down to their estimated fair value (see Notes
8 and 10).

     MARKETABLE SECURITIES: Marketable securities consist of U.S. Government
Agency mortgage-backed obligations, mortgage-backed securities and mutual funds.
NAC accounts for its marketable securities under SFAS No. 115, "Accounting for
Certain Investments in Debt and Equity Securities", which requires that
marketable debt and equity securities be adjusted to market value at the end of
each accounting period, except in the case of debt securities which a holder has
the positive intent and ability to hold to maturity, in which case the debt
securities are carried at amortized cost. For marketable debt and equity
securities carried at market value, unrealized market value gains and losses are
included directly in net income if the securities are actively traded for
short-term profit, or otherwise are charged or credited to a separate component
of stockholders' equity ("accumulated other comprehensive income (loss)").

     NAC determines the proper classification of its marketable debt and equity
securities at the time of purchase and reevaluates such designations as of each
balance sheet date. At January 31, 2003 and 2002, all marketable securities were
designated as available for sale. Accordingly, these securities are stated at
market value, with unrealized gains and losses reported in a separate component
of stockholders' equity ("accumulated other comprehensive income (loss)").
Realized gains and losses on sale of securities, as determined on a specific
identification basis, are included in net income.

                                       27
<PAGE>

                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   YEARS ENDED JANUARY 31, 2003, 2002 AND 2001



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     PROPERTY AND EQUIPMENT: Property and equipment is stated at cost.
Depreciation is computed using the straight-line method over the estimated
useful lives of the assets, which range from three to five years for furniture
and equipment. Leasehold improvements are amortized using the straight-line
method over the shorter of the lease term or the estimated useful lives of the
related improvements.

     INCOME TAXES: Deferred income taxes are provided for all temporary
differences between the book and tax basis of assets and liabilities. Deferred
income taxes are adjusted to reflect new tax rates when they are enacted into
law. The effect on deferred tax assets and liabilities of a change in tax rates
is recognized in income in the period that includes the enactment date. A
valuation allowance is recognized if it is anticipated that some or all of a net
deferred tax asset may not be realized.

     ACCOUNTING FOR STOCK-BASED COMPENSATION: NAC accounts for stock options and
awards in accordance with SFAS 123, "Accounting for Stock-Based Compensation",
which allows companies to continue to recognize compensation expense for grants
to employees pursuant to Accounting Principles Board Opinion No. 25, ("APB 25"),
"Accounting for Stock Issued to Employees" but requires companies to disclose
the effect on net income (loss) and earnings (loss) per share had NAC adopted
the provisions of SFAS 123 requiring the recognition of compensation expense
based on the fair value of the options or awards (see Note 11).

     EARNINGS PER SHARE: Basic earnings per share is computed by dividing net
income (loss), after reduction for the accretion of the discount on NAC's Series
C Redeemable Preferred Stock (see Note 7), by the weighted-average number of
Common Shares outstanding for the year. Dilutive earnings per share for all
years presented is the same as basic earnings per share because the inclusion of
common stock equivalents would have an antidilutive effect on loss per share for
Fiscal 2003, 2002 and 2001.

     NEW ACCOUNTING PRONOUNCEMENTS: In June 2001, the FASB issued SFAS 143,
Accounting for Asset Retirement Obligations. SFAS 143 requires entities to
record to the fair value of the liability for an asset retirement obligation in
the period in which it is incurred. The amount initially recorded as the asset
retirement obligation is based upon the estimated present value of the
retirement costs to be incurred, and is capitalized as a part of the asset. The
obligation is subsequently accreted for the passage of time by charges to
interest expense, and the capitalized costs is amortized as part of depreciation
expense related to the asset. The asset retirement obligation is also
continually re-estimated, with changes in its present value caused by changes in
the estimated retirement cost recorded as adjustments to the carrying amount and
subsequent depreciation of the asset. SFAS 143 is effective for fiscal years
beginning after June 15, 2002 and was adopted by NAC effective February 1, 2002.
At the time of adoption, there was no material impact to NAC's financial
statements.

                                       28
<PAGE>
                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   YEARS ENDED JANUARY 31, 2003, 2002 AND 2001


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     In August 2001, the FASB issued SFAS 144, Accounting for the Impairment or
Disposal of Long-Lived Assets. SFAS 144 supercedes SFAS 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,
with the exception of impairment and disposal issues related to goodwill and
other intangible assets that are not amortized. SFAS 144 also supersedes the
accounting and reporting provision of Accounting Principles Board Opinion No.
(APB) 30, Reporting the Results of Operations - Reporting the Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions. SFAS 144 retains many of the fundamental
recognition and measurement provisions of SFAS 121, and also retains the
requirement in APB 30 to separately identify and report discontinued operations.
However, SFAS extends the APB 30 reporting requirements for discontinued
operations to components of an entity that have either been disposed of or is
classified as assets held for sale that may not have qualified as segments under
APB 30, as a result of which operating results that previously were not
classified as discontinued operations may be treated as such upon the adoption
of SFAS 144. SFAS 144 is effective for fiscal years beginning after December 15,
2001 and was adopted by NAC effective February 1, 2002. At the time of adoption,
there was no material impact to NAC's financial statements.

     In July, 2002 the FASB issued SFAS 146, Accounting for Costs Associated
with Exit or Disposal Activities. SFAS 146 requires companies to recognize costs
associated with exit or disposal activities when they are incurred, rather than
at the date of a commitment to an exit or disposal plan. Examples of costs
covered by the standard included lease termination costs and certain employee
severance costs that are associated with a restructuring, discontinued
operation, plant closing, or other exit or disposal activity. Previous
accounting guidance was provided by EITF Issue No. 94-3, Liability Recognition
for Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring. SFAS 146 replaces Issue
94-3 and is required to be applied prospectively to exit or disposal activities
initiated after December 2002. NAC is currently evaluating the impacts, if any,
of SFAS 146.

     In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based
Compensation--Transition and Disclosure. SFAS 148 provides alternative methods
of transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. In addition, SFAS 148 requires
prominent disclosures in both annual and interim financial statements about the
method of accounting for stock-based employee compensation and the effect of the
method used on the reported results. The provisions of SFAS 148 are effective
for financial statements for fiscal years ending after December 15, 2002. NAC is
currently evaluating the impacts, if any, of SFAS 146.

     RECLASSIFICATIONS: Certain prior year amounts have been reclassified to
conform to the current year presentation.


                                       29
<PAGE>

                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   YEARS ENDED JANUARY 31, 2003, 2002 AND 2001


NOTE 2 - MARKETABLE SECURITIES

     The marketable securities as of January 31, 2003 and 2002 are summarized as
follows (in thousands):

<TABLE>
<CAPTION>
                                                                        Gross Unrealized
                                                                  ---------------------------
                                                    Cost            Gains            Losses       Fair Value
                                                 -----------      -----------     -----------     -----------
<S>                                              <C>              <C>             <C>             <C>
Equity securities - mutual funds at
   January 31, 2003                                 $ 1,127             $ -          $ (143)         $ 984
Equity securities - mutual funds at
   January 31, 2002                                 $ 1,127             $ -          $ (133)         $ 994
</TABLE>

     All marketable securities held by NAC are classified as available for sale.

NOTE 3 - INVESTMENT IN AFC

     On April 5, 2000, NAC, through its wholly-owned subsidiary National
Cinemas, Inc., purchased a 50% membership interest in AFC. AFC is the owner and
operator of the Angelika Film Center, which is a multiplex cinema and cafe
complex in the Soho District of Manhattan in New York City. The 50% membership
interest was purchased from Reading International, Inc. ("Reading"), formerly
known as Reading Entertainment, Inc., for 8,999,900 shares of NAC's Common
Stock, which included 2,237,653 shares issued from treasury stock, and 100
shares of Series A Convertible Preferred Stock. NAC repurchased the 100 shares
of Series A Convertible Preferred Stock from Reading on November 3, 2000 (see
Note 7).

     AFC is currently owned 50% by NAC and 50% by Reading. The articles and
bylaws of AFC provide that for all matters subject to a vote of the members, a
majority is required, except that in the event of a tie vote, the Chairman of
Reading shall cast the deciding vote.

     NAC also purchased from Reading two separate and independent options to
acquire additional cinema assets owned by Reading in the United States. During
the second quarter of fiscal year 2001, the options lapsed without being
exercised by NAC and the $500,000 paid to acquire them was charged to expense.

     NAC's initial investment was $11.1 million, comprised of (i) the 9,000,000
shares of Common Stock issued, valued at $1.08 per share on the basis of the
average price quoted by the OTCBB for the period immediately following April 5,
2000, (ii) transaction costs, and (iii) the $500,000 paid for one of the
options. The investment exceeds NAC's share of the net assets of AFC by
approximately $5.6 million, which is being treated in a manner similar to
goodwill (see Note 1).

                                       30
<PAGE>

                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   YEARS ENDED JANUARY 31, 2003, 2002 AND 2001


NOTE 3 - INVESTMENT IN AFC (CONTINUED)

     NAC uses the equity method to account for its investment in AFC. AFC uses a
December 31 year-end for financial reporting purposes. NAC reports on a January
31 year-end, and for its fiscal quarters ending April 30, July 31, October 31
and January 31 records its pro-rata share of AFC's earnings on the basis of
AFC's fiscal quarters ending March 31, June 30, September 30, and December 31,
respectively. For Fiscal 2003, 2002 and 2001, NAC's share of the net income of
AFC was $375,000, $373,000 and $434,000, respectively, representing its share of
AFC's income. Additionally, in Fiscal 2002 and 2001, prior to the adoption of
SFAS 141 and SFAS 142, NAC recorded amortization expense of $272,000 and
$204,000, respectively, as a reduction of its income from its investment in AFC.
As a result of NAC's adoption of SFAS 141 and SFAS 143, this amortization charge
was discontinued in Fiscal 2003.

     Summarized financial statement information for AFC as of December 31, 2002
and 2001 and for the years ended December 31, 2002, 2001 and 2000 is as follows
(in thousands):

<TABLE>
<CAPTION>
                                                                         December 31,
                                                                 ----------------------------
                                                                   2002                2001
                                                                 --------            --------
 CONDENSED BALANCE SHEET:
<S>                                                              <C>                 <C>
     Current assets                                              $  1,185            $  1,606
     Property and equipment, net                                    1,524                 549
     Goodwill                                                       8,069               8,659
     Other assets                                                      89                  89
                                                                 --------            --------
                                                                 $ 10,867            $ 10,903
                                                                 ========            ========

    Current liabilities                                          $    756            $  1,111
    Non-current liabilities                                         1,440               1,271
    Members' equity                                                 8,671               8,521
                                                                 --------            --------
                                                                 $ 10,867            $ 10,903
                                                                 ========            ========
<CAPTION>
                                                                          For the Year Ended December 31,
                                                                 ------------------------------------------------
                                                                   2002                2001                2000
                                                                 --------            --------            --------
CONSENSED STATEMENT OF EARNINGS:
<S>                                                              <C>                 <C>                 <C>
     Revenues                                                    $  6,032            $  6,958            $  6,462

     Film rental                                                    1,627               2,243               2,087
     Operating costs                                                2,831               3,127               2,509
     Depreciation and amortization                                    699                 693                 692
     General and administrative expenses                              125                 149                 184
                                                                 --------            --------            --------
                                                                    5,282               6,212               5,472
                                                                 --------            --------            --------
     Net income                                                  $    750            $    746            $    990
                                                                 ========            ========            ========
     NAC's proportionate share of net income                     $    375            $    373            $    434
     Amortization expense                                               -                 272                 204
                                                                 --------            --------            --------
     Income from investment in AFC                               $    375            $    101            $    230
                                                                 ========            ========            ========
</TABLE>

                                       31
<PAGE>

                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   YEARS ENDED JANUARY 31, 2003, 2002 AND 2001

NOTE 4 - FINANCIAL INSTRUMENTS

     NAC has various financial instruments including cash and cash equivalents,
marketable securities, investments in affordable housing limited partnerships,
and miscellaneous other assets. Many of these instruments are short-term in
nature and the fair value of these financial instruments has been estimated
based on available market information and appropriate valuation methodologies.
NAC has determined that their carrying values approximate estimated fair values.


NOTE 5 - OTHER LIABILITIES

     The components of other liabilities are as follows (in thousands):

                                                 January 31,
                                     ------------------------------------
                                        2003                    2002
                                     ------------           -------------

Accounts payable                     $       117            $        397
Accrued litigation expenses                  368                     737
Accrued expenses                             841                   1,557
Accrued state and local taxes                 47                      52
                                     ------------           -------------
   Total                             $     1,373            $      2,743
                                     ============           =============

NOTE 6 - INCOME TAXES

     The components of the provision (benefit) for income taxes, in the
consolidated statement of operations are as follows (in thousands):

                                                Years Ended January 31,
                                        ------------------------------------
                                          2003          2002          2001
                                        --------      --------      --------
Current
   Federal                              $ (2,215)     $   (331)     $ (1,200)
   State                                       -             -             -
                                        --------      --------      --------
                                          (2,215)         (331)       (1,200)
Deferred
   Federal                                     -             -             -
   State                                       -             -             -
                                        --------      --------      --------
                                               -             -             -
                                        --------      --------      --------

Total                                     (2,215)         (331)       (1,200)

Allocated to discontinued operations         145           331         1,200
                                        --------      --------      --------
Continuing operations                   $ (2,070)     $      -      $      -
                                        ========      ========      ========



                                       32
<PAGE>

                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   YEARS ENDED JANUARY 31, 2003, 2002 AND 2001


NOTE 6 - INCOME TAXES (CONTINUED)

     For Fiscal 2003, 2002 and 2001, NAC recorded income tax benefits of $2.2
million, $331,000 and $1.2 million, respectively, that represent either (i)
adjustments that increased the previously estimated amount of net operating
losses eligible to be carried back against prior years taxable income or (ii)
adjustments to revise (reduce) previous estimates of certain income taxes. For
Fiscal 2002 and 2001 these tax benefits arose and are a component of
discontinued operations. For Fiscal 2003, $145,000 of the tax benefit is a
component of discontinued operations.

     As of January 31, 2003 NAC has net operating loss carryforwards of $83.4
million that may be used to reduce future taxable income, subject to
limitations. Such net operating loss carryforwards will expire: $23.0 million in
Fiscal 2019, $21.2 million in Fiscal 2020, $24.1 million in Fiscal 2021, $10.6
million in Fiscal 2022 and $4.5 million in Fiscal 2023. At January 31, 2003, NAC
has claims for refunds in the amount of $5.6 million.

     As a result of NAC's November 3, 2000 repurchases of shares of its Common
Stock (see Note 7), NAC underwent a "change in ownership" as defined for the
purposes of Sections 382 and 383 of the Internal Revenue Code. As a result of
the "change in ownership" described above, the use of net operating loss
carryforwards totaling $56.3 million incurred prior to November 3, 2000 will be
subject to significant annual limitation. The use of the net operating loss
carryforwards incurred after November 3, 2000, which total $27.1 million as of
January 31, 2003, are not subject to the Section 382 limitation.

     As of January 31, 2003, NAC also has unused low income housing credits
totaling $4.5 million which expire: $644,000 in Fiscal 2013, $833,000 in Fiscal
2019, $966,000 in Fiscal 2020, $981,000 in Fiscal 2021, $908,000 in Fiscal 2022
and $180,000 in Fiscal 2023. Of such low income housing credits, $3.2 million
were generated prior to November 3, 2000 and are therefore subject to the
Section 383 limitation described above.

     As of January 31, 2003, NAC has $908,000 of minimum tax credits, which may
be applied against any future regular income taxes which exceed alternative
minimum taxes. These credits may be carried forward indefinitely and are also
subject to the Section 383 limitation.


                                       33
<PAGE>


                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   YEARS ENDED JANUARY 31, 2003, 2002 AND 2001

NOTE 6 - INCOME TAXES (CONTINUED)

     The components of the net deferred tax asset (liability) are as follows (in
thousands):

                                                               January 31,
                                                         ----------------------
                                                           2003          2002
                                                         --------      --------
Deferred tax assets:
   Depreciation                                          $      2      $    146
   Self-insurance claims                                      181           269
   State income taxes                                         138           138
   Accrued liabilities                                        385           863
   Tax credits carryforwards                                5,420         9,535
   Net operating loss carryforward                         29,211        26,567
   Other                                                        4             2
                                                         --------      --------
        Total deferred tax assets                          35,341        37,520
                                                         --------      --------

Deferred tax liabilities:
   Limited partnership investments                         (1,491)         (457)
                                                         --------      --------
       Total deferred tax liabilities                      (1,491)         (457)
                                                         --------      --------

Net deferred tax asset before valuation allowance          33,850        37,063
Less: valuation allowance                                 (33,850)      (37,063)
                                                         --------      --------
Net deferred tax asset                                   $      -      $      -
                                                         ========      ========

     A valuation allowance for all of NAC's net deferred tax assets has been
provided as NAC is unable to determine, at this time, that the generation of
future taxable income against which the net operating loss and tax credit
carryforwards could be used can be predicted to be more likely than not. The net
change in the valuation allowance for the years ended January 31, 2003, 2002 and
2001 was $3.2 million, $4.1 million and $5.5 million, respectively.

     Reconciliations of the federal statutory tax rate to the effective tax rate
for continuing operations are as follows:

<TABLE>
<CAPTION>
                                                                     Years Ended January 31,
                                                            -------------------------------------------
                                                               2003            2002           2001
                                                            ------------   -------------   ------------
<S>                                                            <C>             <C>            <C>
Statutory rate                                                    (35.0)%         (35.0)%        (35.0)%
Permanent differences                                               0.4             1.9           26.8
State income taxes (net of federal tax benefit)                       -            (0.8)          (0.1)
Deferred tax valuation allowance                                 (129.1)           56.7           10.6
Tax credits                                                       165.3           (17.8)          (2.1)
Benefit due to AMT net operating loss carryback claims            (83.2)              -              -
Adjustment to NOL carryforward                                      6.4               -              -
Other                                                              (8.0)           (5.0)          (0.2)
                                                            ------------   -------------   ------------
   Effective Tax Rate                                             (83.2)%           (.0)%          (.0)%
                                                            ============   =============   ============
</TABLE>


                                       34
<PAGE>


                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   YEARS ENDED JANUARY 31, 2003, 2002 AND 2001

NOTE 7 - STOCKHOLDERS' EQUITY AND REDEEMABLE PREFERRED STOCK

Redeemable Preferred Stock
--------------------------

         The following sets forth the changes in Series C Redeemable Preferred
Stock for the year ended January 31, 2002 (dollars in thousands):

<TABLE>
<CAPTION>
                                                              Shares                Dollars
                                                         -----------------      -----------------

<S>                                                     <C>                      <C>
Balance, January 31, 2001                                         729,047                  $ 629
  Accretion of discount to redemption price                                                  226
  Shares redeemed pursuant to terms of Exchange
    Agreement (Note 8)                                            (62,380)                  (855)
  Shares forfeited pursuant to terms of Exchange
    Agreement (Note 8)                                           (666,667)                     -
                                                         -----------------      -----------------

Balance, January 31, 2002                                               -                    $ -
                                                         =================      =================
</TABLE>

Preferred Stock
---------------

     NAC is authorized to issue up to 2,000,000 shares of Preferred Stock, in
one or more series, having such preferences and terms as the Board of Directors
may determine. At January 31, 2003 and 2002, there were no outstanding shares of
Preferred Stock and NAC had 2,000,000 shares of Preferred Stock authorized and
available for issuance.

     The Series A Convertible Preferred Stock was convertible into shares of
NAC's Common Stock on a one for one basis, subject to traditional antidilution
adjustments. The Series A Convertible Preferred Stock was entitled to vote on a
share for share basis with NAC's Common Stock as a single class, except that as
a separate class the Series A Convertible Preferred Stock was required to
approve any amendments to NAC's charter, any amendments to NAC's bylaws made by
the stockholders, or, to the extent permitted by law, the removal of any
director from NAC's Board of Directors. The Series A Convertible Preferred Stock
had a liquidation value of $1.50 per share and was entitled to a dividend
preference equal to any dividends declared on NAC's Common Stock, determined on
a per share basis. On November 3, 2000, NAC repurchased and retired the 100
shares of Series A Convertible Preferred Stock back from Reading as part of the
settlement described below.

     The Series B Convertible Preferred Stock had a par value of $.50 per share.
The holders of the Series B Convertible Preferred Stock could at any time
convert the Series B shares into shares of NAC's Common Stock at the ratio
(subject to adjustment for stock splits and other anti-dilutive events) of ten
shares of Common Stock for each share of Series B Convertible Preferred Stock.
The holders of the outstanding Series B Convertible Preferred Stock had certain
voting rights.

                                       35
<PAGE>

                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   YEARS ENDED JANUARY 31, 2003, 2002 AND 2001


NOTE 7 - STOCKHOLDERS' EQUITY AND REDEEMABLE PREFERRED STOCK (CONTINUED)

     The terms of the Series B Convertible Preferred Stock provided that it
would automatically convert into shares of NAC's Common Stock, at the ratio of
ten shares of NAC's Common Stock for each share of Series B Convertible
Preferred Stock, upon the termination of the Stock Purchase and Standstill
Agreement, executed November 3, 2000 between NAC and the Reading Stockholders
(see Note 8 - Common Stock Repurchases below). That agreement was terminated in
connection with NAC's December 15, 2000 repurchase of additional shares of
Common Stock from the Reading Stockholders described below. As a result, on
December 15, 2000 NAC converted the 270,953 shares of the Series B Convertible
Preferred Stock into 2,709,530 shares of its Common Stock.

Common Stock Repurchases
------------------------

     As described in Note 8, in January 2002 under the Exchange Agreement, the
contingent obligation of the chief executive officer and sole stockholder of
Cygnet Capital, Cygnet Capital, or another company owned by the stockholder to
make a payment of $5.2 million to NAC if ZoomLot did not reach the financial
performance objectives by December 31, 2003 was in part resolved by the transfer
back to NAC of 3,079,530 shares of NAC Common Stock, which for the purposes of
the Exchange Agreement were valued at $1.25 per share and the issuance to NAC a
promissory note in the amount of $986,000 payable with interest at 4% per annum,
in cash or NAC Common Stock (at a mutually agreed upon value of $1.25 per share)
on or before January 31, 2003. For financial reporting purposes, NAC recorded
the 3,079,530 shares of Common Stock returned under the Exchange Agreement at
$431,000, representing their market value of the basis of the quoted market
price of NAC's Common Stock. In addition, NAC recorded the note receivable, a
component of other assets, at a net value of $110,000 reflecting the market
value at January 31, 2002 of the 788,838 shares of NAC Common Stock the maker of
the note had the option to tender in payment of the principal.

     On August 29, 2002, the former ZoomLot shareholders transferred to NAC
409,140 shares of NAC Common Stock as an installment payment against the
promissory note. The market value of the 409,140 shares at the date of their
transfer was $16,000 less than the $56,000 carrying amount of the note
extinguished by the transfer, and, accordingly, NAC recorded the surrendered
shares at their market value of $40,000 and a note receivable collectability
charge (included in general and administrative expenses) for the $16,000
deficiency.

     On November 13, 2002, the former ZoomLot shareholders transferred to NAC
402,000 shares of NAC common stock with a net value of $56,000 as the second and
final payment against the promissory note.


                                       36
<PAGE>


                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   YEARS ENDED JANUARY 31, 2003, 2002 AND 2001



NOTE 7 - STOCKHOLDERS' EQUITY AND REDEEMABLE PREFERRED STOCK (CONTINUED)

     During Fiscal 2001, NAC repurchased 25,943,360 shares of its Common Stock.
The Fiscal 2001 repurchases of Common Stock included the repurchase of shares
from Mr. Sam Frankino and certain parties related to him, and repurchases from
Reading and certain parties related to it as described below.

     On November 3, 2000, NAC entered into a Settlement Agreement and Release
(including Agreement for Sale of Shares) (the "Settlement Agreement") with Mr.
Sam Frankino, individually, as trustee and president of the Samuel J. Frankino
and Connie M. Frankino Charitable Foundation, as trustee of the Corrine L.
Dodero Trust for the Arts and Sciences, and as managing partner of the Frankino
and Frankino Investment Company, a Nevada general partnership (Mr. Frankino and
all such entities referred to herein collectively as "Frankino Parties"). The
Settlement Agreement, among other things, settled all of the litigation between
NAC and Mr. Frankino and resulted in the repurchase by NAC of all NAC securities
held by Mr. Frankino, the other Frankino Parties and certain other of his
related parties. In conjunction with the settlement of the above-referenced
litigation, the parties to the litigations, as well as William Dodero, Lorraine
Dodero, William Maund and Robert Upton, exchanged general releases and releases
against future claims.

     Under the terms of the Settlement Agreement, NAC (i) repurchased an
aggregate of 15,743,012 shares of Common Stock of NAC owned by the Frankino
Parties for a total purchase price of $35.3 million, or $2.245 per share of
Common Stock, (ii) and repurchased an aggregate of 120,348 shares of Common
Stock of NAC owned by certain of NAC's directors, including shares of Common
Stock held by William Maund, shares of Common Stock held by Lorraine Dodero,
shares of Common Stock held by William Dodero and Lorraine Dodero, as joint
tenants with rights of survivorship, and shares of Common Stock held by Lorraine
Dodero, as a trustee of a grantor trust for the benefit of her daughter, Corrine
Dodero, for a total purchase price of $180,000 (such repurchase of the 120,348
shares was completed on January 4, 2001), or $1.50 per share of common stock,
and (iii) reimbursed certain legal fees previously incurred by Mr. Frankino in
the amount of $2,011,600.

     As a result of the repurchases of shares of Common Stock under the
Settlement Agreement, NAC charged to operations in the fourth quarter of Fiscal
2001, $25.1 million, representing the excess of the amount paid under the
Settlement Agreement over the market value of the shares repurchased.

     On November 3, 2000, simultaneously with the execution and closing of the
Settlement Agreement with Mr. Frankino and the Frankino Parties, NAC executed
and closed a Stock Purchase and Standstill Agreement (the "Reading Agreement")
with Reading Entertainment, Inc., FA, Inc., Citadel Holding Corporation, and
Craig Corporation (collectively the "Reading Stockholders"). Prior to the
execution of the Reading Agreement, the Reading Stockholders collectively owned
an aggregate of 10,055,000 shares of NAC Common Stock and 100 shares of Series A
Convertible Preferred Stock, par value $.05 per share.

     Under the terms of the Reading Agreement, NAC repurchased from FA, Inc.
5,277,879 shares of Common Stock of NAC and all 100 shares of Series A
convertible preferred stock for an aggregate purchase price of $8.5 million, or
$1.60 per share.

                                       37
<PAGE>


                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   YEARS ENDED JANUARY 31, 2003, 2002 AND 2001

NOTE 7 - STOCKHOLDERS' EQUITY AND REDEEMABLE PREFERRED STOCK (CONTINUED)

     On December 15, 2000, NAC entered into a second agreement with Reading
Stockholders for the repurchase of 4,777,121 shares of NAC's Common Stock for an
aggregate price of $8.0 million, and on December 21, 2000, NAC purchased 25,000
shares of Common Stock from an associate of Reading for $41,000. As a part of
the second agreement the provisions of the November 3, 2000 Reading Agreement
between the Reading Stockholders and NAC that had continuing effect were
terminated.

     As a result of the repurchases of shares of Common Stock from the Reading
Stockholders and an associate, NAC expensed in the fourth quarter of Fiscal 2001
$10.5 million, representing the excess of the amount paid for the shares
repurchased from the Reading Stockholders over their market value.

     During Fiscal 2000, NAC repurchased 2,849,630 shares of its Common Stock.
The Fiscal 2000 repurchase of 2,849,630 shares of Common Stock was pursuant to
an option agreement (the "Option Agreement"), which NAC entered into with a
then-unaffiliated stockholder on May 10, 1999. NAC acquired the option by paying
the stockholder $1.0 million, which was paid on May 12, 1999, all of which was
to be credited toward the aggregate exercise price of $1.50 per share payable by
NAC upon any exercise of its option. On June 24, 1999, NAC exercised its right
under the Option Agreement to extend the period of the option ("the First
Extension") for 45 days, until August 8, 1999, by paying the stockholder an
additional $500,000, of which $250,000 was to be credited towards the aggregate
exercise price payable upon any exercise of the option. On August 8, 1999, NAC
and the unaffiliated stockholder agreed to an additional extension ("the Second
Extension") of the option, for 120 days, for which NAC paid the stockholder an
additional $1.0 million, of which $750,000 was to be credited towards the
aggregate exercise price payable upon any exercise of the option.

     NAC accounted for the initial option purchase, and the extension payments,
by initially determining the fair value of the option or option extension to be
de minimis. In determining the fair value of the option or extension, NAC
considered the period over which the option or extension was exercisable, the
option exercise price, the market price of NAC's Common Stock and the portion of
the payments creditable to the payment due upon any exercise of the option. The
excess of the option or extension payments over the market value of the
underlying Common Stock was charged to expense. An aggregate of $2,224,000 was
charged to expense in Fiscal 2000, which represented the total of the $1.0
million payment made to obtain the initial option and $1.2 million of the
payments made to obtain the First Extension and Second Extension.

     On November 22, 1999, the Board of Directors of NAC approved the exercise
of its option. On December 2, 1999, NAC exercised such option and paid the
unaffiliated stockholder an additional $2.3 million for the 2,849,630 shares
subject to the option, which amount equals the product of 2,849,630 and the
$1.50 per share exercise price, less the $2.0 million in aggregate credits to
which NAC became entitled under the Option Agreement, the First Extension and
the Second Extension. NAC recorded the 2,849,630 repurchased shares at a price
of $.895 per share, or an aggregate of approximately $2.6 million, representing
the market price of the Common Stock at the date the Second Extension was agreed
to.

                                       38
<PAGE>


                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   YEARS ENDED JANUARY 31, 2003, 2002 AND 2001


NOTE 7 - STOCKHOLDERS' EQUITY AND REDEEMABLE PREFERRED STOCK (CONTINUED)

Stockholders' Rights Plan
-------------------------

     On September 26, 2001, NAC's Board of Directors declared a dividend of one
preferred share purchase right ("Right") for each outstanding share of Common
Stock to stockholders of record at the close of business on October 8, 2001 (the
"Record Date"). Under certain circumstances, a Right may be exercised to
purchase from NAC a unit consisting of one one-hundredth of a share (a "Unit")
of Series D Junior Participating Preferred Stock, par value $.05 per share (the
"Series D Preferred Stock") at a Purchase Price of $5.00 per Unit, subject to
adjustment.

     The Rights become exercisable upon the earlier of (i) ten business days
following a public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has acquired beneficial ownership of
15% or more of the outstanding shares of Common Stock (the "Stock Acquisition
Date"), other than as a result of repurchases of stock by NAC or certain
inadvertent actions by institutional or certain other stockholders, or (ii) 10
business days (or such later date as the Board shall determine) following the
commencement of a tender offer or exchange offer that would result in a person
or group becoming an Acquiring Person. Once exercisable, and in some
circumstances if certain additional conditions are met, the rights plan allows
NAC stockholders (other than the acquirer) to purchase NAC Common Stock or
Common Stock, at a substantial discount, in the surviving acquirer in the event
of a merger.

     The Rights will expire on September 26, 2011 and may be redeemed by NAC for
$0.01 per Right at any time prior to the close of business on the later of (i)
the tenth business day following the acquisition by a person or group of
beneficial ownership of 15% or more of NAC's Common Stock or (ii) the tenth
business day (or such later date as the Board shall determine) following the
commencement of a tender offer or exchange offer that would result in a person
or group becoming an Acquiring Person.

NOTE 8 - DISCOUNTINUED OPERATIONS

     As discussed in Note 1, as a consequence of NAC's strategic review and
determination, effective December 31, 2001, NAC suspended its ZoomLot operations
and initiated the steps to discontinue e-commerce operations. Additionally, as a
consequence of NAC's decision to discontinue its ZoomLot e-commerce operations,
NAC also formally exited the sub-prime used automobile consumer finance business
effective December 31, 2001. In the first and second quarters of the year ended
January 31, 2001, NAC sold its active loan portfolio and the majority of its
charged-off portfolio. However, since NAC had not, until December 2001, made a
definitive decision that it would not reenter the consumer lending business,
either through ZoomLot or another means, the automobile financing operations had
not previously been classified as a discontinued operation. As a result of these
decisions, both the e-commerce and automobile financing segments were classified
as discontinued operations.


                                       39
<PAGE>


                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   YEARS ENDED JANUARY 31, 2003, 2002 AND 2001


NOTE 8 - DISCOUNTINUED OPERATIONS (CONTINUED)

     NAC had acquired ZoomLot on December 15, 2000 under a Merger Agreement and
Plan of Reorganization (the "Merger Agreement"). Under the terms of the Merger
Agreement, NAC issued to the former ZoomLot stockholders 270,953 shares of its
Series B Convertible Preferred Stock and 729,047 shares of its Series C
Redeemable Preferred Stock, each at $.50 par value. Pursuant to the terms of the
Series B Convertible Preferred Stock, on December 15, 2000 NAC obtained the
right to call for the conversion of the shares of Series B Convertible Preferred
Stock, and NAC converted the 270,953 shares of the Series B Convertible
Preferred stock into 2,709,530 shares of NAC Common Stock.

     The holders of the Series C Redeemable Preferred Stock had certain rights
to require the redemption of the shares. At any time after the earlier of
September 30, 2003 or the occurrence of a "redemption event" (but no event
earlier than January 1, 2003) the holder of each share of Series C Redeemable
Preferred Stock would have been entitled to redeem each Series C share for a
cash payment by NAC equal to the greater of (i) $15.00 (as adjusted for any
stock splits, stock dividends, recapitalizations or similar events), plus all
declared but unpaid dividends on such shares or (ii) ten times the fair market
price (determined based on the average daily closing price of NAC's Common Stock
for the twenty days preceding the redemption date) of a share of Common Stock as
of the date of notice for redemption was received by NAC. However, under the
terms of the Merger Agreement 666,667 shares of the Series C Redeemable
Preferred Stock were subject to forfeiture unless certain financial performance
"objectives" were met or certain "valuation events" occurred, and any shares of
Series C Redeemable Preferred Stock that were subject to forfeiture could not be
redeemed until such forfeiture provisions no longer applied. A "redemption
event" would have been deemed to have occurred if (i) ZoomLot has met an
"objective", as described below, which eliminated the forfeiture of Series C
shares, or (ii) there had occurred a "valuation event" which eliminated the
forfeiture of the Series C shares. Specifically, one-half of the 666,667 Series
C Preferred Redeemable Shares would have been forfeited, if, by December 31,
2003, ZoomLot, including any of its subsidiaries, had failed to achieve zero or
positive earnings, before interest expense, interest income, depreciation,
amortization and extraordinary items but after applicable income taxes, for a
period of six consecutive months, and the remaining one-half of those shares
would have been forfeited if, by December 31, 2003, ZoomLot, including any of
its subsidiaries, had not achieved at least $4.5 million in earnings before
interest expense, interest income, depreciation, amortization and extraordinary
items but after applicable income taxes, for a period of twelve consecutive
months. If, however, certain "valuation events" had occurred prior to December
31, 2003, those financial performance objectives would be deemed to have been
achieved. These valuation events generally consisted of (i) transaction that
would have involved an investment in ZoomLot or one of its subsidiaries of at
least $10.0 million, where the pre-investment in ZoomLot or any subsidiary of
ZoomLot was at least $30.0 million, (ii) a change of control of NAC or (iii) the
termination of the key executives of ZoomLot without cause.

     As part of the Merger Agreement, NAC made a capital contribution to ZoomLot
of $5.2 million, which ZoomLot used to repay advances that had been made to it
by Cygnet Capital Corporation ("Cygnet Capital"). The chief executive office and
sole stockholder of Cygnet Capital was also a stockholder of ZoomLot, and by
virtue of the Merger Agreement and subsequent conversion of Series B Convertible
Preferred Stock became the beneficial holder of 1,707,004 shares of NAC Common
Stock and 459,229 shares of Series C Redeemable Preferred Stock. This
stockholder had also previously acquired beneficial ownership of shares of NAC
Common Stock in market purchases, and beneficially owned an aggregate of
2,077,004 shares NAC Common Stock, which represent 17.7% of the then outstanding
shares of NAC's Common Stock. Under the Merger Agreement the stockholder, Cygnet
Capital, or another company owned by the stockholder, were required to

                                       40
<PAGE>


                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   YEARS ENDED JANUARY 31, 2003, 2002 AND 2001


NOTE 8 - DISCOUNTINUED OPERATIONS (CONTINUED)

repay the $5.2 million to NAC unless ZoomLot met the financial performance
objectives, or an event occurs, that eliminated the forfeiture of the Series C
Redeemable Preferred Stock.

     The acquisition of ZoomLot was accounted for using the purchase method of
accounting in accordance with Accounting Principles Board Opinion No. 16,
"Business Combinations" ("APB 16"). Under APB 16, the tangible assets,
identifiable intangible assets and liabilities of the acquired company are
recorded at their fair value, and the excess of the purchase price over the fair
value of the net (of liabilities) tangible and identifiable intangible assets is
recorded as goodwill. Additionally, under the purchase method of accounting the
operating results of the acquired company are included in the consolidated
results of operations from the date of the acquisition.

     In connection with its decision to discontinue the operations of ZoomLot,
NAC entered into formal negotiations with the former stockholders of ZoomLot to
resolve the financial obligations of NAC and of the former ZoomLot stockholders
resulting from the terms of the Merger Agreement. Since NAC discontinued
ZoomLot's operations, it was necessary to resolve the effect of that on the
obligations, as described above, of NAC and the former ZoomLot stockholders
under the Merger Agreement. As a result of the negotiations, on January 31,
2002, NAC, entered into an Exchange and Repayment Agreement ("Exchange
Agreement") dated January 31, 2002 with the former ZoomLot stockholders.

     The Exchange Agreement sets forth the agreement among all the parties to
terminate the operations of ZoomLot. The parties agreed, among other things,
that the financial performance objectives set forth in the Merger Agreement had
not and would not be met. Accordingly, the 666,667 shares of Series C Preferred
Stock forfeitable if those financial performance were not met were deemed
forfeited and were returned and surrendered to NAC. For financial reporting
purposes, in recording the acquisition of ZoomLot those shares of Series C
Preferred Stock had been treated as contingently issuable, and accordingly their
return had no effect on NAC's consolidated financial statements.

     Additionally, under the Exchange Agreement, the contingent obligation of
the chief executive officer and sole stockholder of Cygnet Capital, Cygnet
Capital, or another company owned by the stockholder to make a payment of $5.2
million to NAC if ZoomLot did not reach the financial performance objectives by
December 31, 2003 was resolved by (i) the transfer back to NAC of 3,079,530
shares of NAC Common Stock, which for the purposes of the Exchange Agreement
were valued at $1.25 per share, (ii) the return to NAC of 62,380 shares of NAC
Series C Preferred Stock at an aggregate agreed-upon value of $854,875, which
represented the carrying amount of such shares of Series C preferred Stock in
NAC's consolidated financial statements, and (iii) the issuance to NAC of a
promissory note in the amount of $986,048, payable, together with interest at 4%
per annum, in cash or NAC Common Stock (at a mutually agreed-upon value of $1.25
per share) on or before January 30, 2003.

                                       41
<PAGE>


                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   YEARS ENDED JANUARY 31, 2003, 2002 AND 2001

NOTE 8 - DISCOUNTINUED OPERATIONS (CONTINUED)

     For financial reporting purposes, in Fiscal 2002 NAC recorded the 3,079,530
shares of Common Stock returned under the Exchange Agreement at $431,000,
representing their market value of the basis of the quoted market price of NAC's
Common Stock, recorded the 62,380 shares of Series C Preferred Stock returned at
their aggregate carrying amount of $854,875, and recorded the note receivable, a
component of other assets, at a net value of $110,000 reflecting the market
value at January 31, 2002 of the shares of NAC Common Stock the maker of the
note has the option to tender in payment of the principal. NAC also incurred or
accrued costs of $850,000 for the winding down and closing of ZoomLot's
operations, including rental and broker costs to sublease ZoomLot's corporate
office, employee severance costs and costs of early lease terminations. As a
result, NAC recognized a net gain on the disposal of ZoomLot's operation of
$394,000 in Fiscal 2002.

     NAC, under the names Agency Rent-A-Car, Inc. ("ARAC"), Altra Auto Rental
and Automate Auto Rental, previously engaged in the rental of automobiles on a
short-term basis, principally to the insurance replacement market. In the year
ended January 31, 1996, NAC disposed of its rental fleet business through the
sale of certain assets and through certain leases to a national car rental
company. All liabilities related to the discontinued rental business,
principally self-insurance claims, were retained by NAC. NAC also had a
dealership operation that sold cars that were retired from the rental fleet,
primarily to member dealers of NAC's automobile financing business. That
operation was discontinued in the year ended January 31, 1997 as the result of
NAC's disposal of its automobile rental operations. The results of both the auto
rental and dealership operations are included in the results of discontinued
operations (together as "auto rental" operations). For the years ended January
31, 2003, 2002 and 2001, the results of the discontinued auto rental operations
principally represent the effects of the settlement of, and changes in NAC's
reserves for, claims against NAC related to the self-insured claims (see Note
14).


                                       42
<PAGE>

                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   YEARS ENDED JANUARY 31, 2003, 2002 AND 2001


NOTE 8 - DISCOUNTINUED OPERATIONS (CONTINUED)

     Summarized results of discontinued operations are as follows (in
thousands):

<TABLE>
<CAPTION>
                                                                              Discontinued Operations
                                                                --------------------------------------------------------
                                                                                  Auto           Auto
                                                                  E-Commerce    Financing       Rental         Total
                                                                ------------   ------------  -------------  ------------
<S>                                                            <C>            <C>           <C>            <C>
FISCAL 2003
     Revenue                                                    $         -    $        28   $          -   $        28

     General and administrative (expenses) income                         2           (140)           275           137
                                                                ------------   ------------  -------------  ------------
                                                                          2           (140)           275           137
                                                                ------------   ------------  -------------  ------------
     Income (loss) before income taxes                                    2           (112)           275           165
     Provision (benefit) for income taxes                                 -           (145)             -          (145)
                                                                ------------   ------------  -------------  ------------

     Income (loss) from discontinued operations                 $         2    $        33   $        275   $       310
                                                                ============   ============  =============  ============

FISCAL 2002
     Revenue                                                    $       867    $        34   $          -   $       901

     Operating expense                                              (10,236)             -              -       (10,236)
     General and administrative (expenses) income                         -            293           (463)         (170)
                                                                ------------   ------------  -------------  ------------
                                                                    (10,236)           293           (463)      (10,406)
                                                                ------------   ------------  -------------  ------------
     Income (loss) before income taxes                               (9,369)           327           (463)       (9,505)
     Provision (benefit) for income taxes                                 -           (331)             -          (331)
                                                                ------------   ------------  -------------  ------------
     Income (loss) from discontinued operations                      (9,369)           658           (463)       (9,174)
     Gain on disposal of operations, net of tax                         394              -              -           394
                                                                ------------   ------------  -------------  ------------

     Income (loss) from discontinued operations                 $    (8,975)   $       658   $       (463)  $    (8,780)
                                                                ============   ============  =============  ============

FISCAL 2001
     Revenue                                                    $        80    $       527   $          -   $       607

     Operating (expense) income                                        (708)        (1,754)         1,348        (1,114)
     General and administrative (expenses) income                         -         (1,777)             -        (1,777)
                                                                ------------   ------------  -------------  ------------
                                                                       (708)        (3,531)         1,348        (2,891)
                                                                ------------   ------------  -------------  ------------
     Income (loss) before income taxes                                 (628)        (3,004)         1,348        (2,284)
     Provision (benefit) for income taxes                                 -         (1,200)             -        (1,200)
                                                                ------------   ------------  -------------  ------------
     Income (loss) from discontinued operations                        (628)        (1,804)         1,348        (1,084)
     Gain on disposal of operations, net of tax                           -              -            308           308
                                                                ------------   ------------  -------------  ------------

     Income (loss) from discontinued operations                 $      (628)   $    (1,804)  $      1,656   $      (776)
                                                                ============   ============  =============  ============
</TABLE>

                                       43
<PAGE>

                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   YEARS ENDED JANUARY 31, 2003, 2002 AND 2001


NOTE 9 - INSTALLMENT LOANS, NET

     From October 1995 through March 2000, NAC's principal business activity was
to invest in sub-prime used automobile consumer loans, which took the form of
installment loans collateralized by the related vehicle. NAC purchased such
loans, or interests in pools of such loans, from member dealerships, and
performed the underwriting and collection functions for such loans. In the first
and second quarters for the year ended January 31, 2001, NAC sold its active
loan portfolio and the majority of its charged-off portfolio.

     During Fiscal 2001, NAC sold its active loan portfolio and the majority of
its charged-off portfolio for aggregate cash proceeds of $24.2 million. NAC also
received $6.1 million in actual cash collections on the loans during Fiscal
2001. The sales of the loans resulted in an aggregate loss of $1.4 million. The
loss includes a charge of $666,000 for the write-off of deferred loan
origination assets and liabilities and the accrual for the potential repurchase
of certain loans for breach of any representation or warranty made by NAC. NAC
completed the sale of substantially all of its remaining charged-off loans
during Fiscal 2002 for $313,000. In addition, during Fiscal 2002, NAC collected
$155,000 on previously charged-off loans.

     As discussed in Note 1, as a consequence of NAC's decision to discontinue
its ZoomLot e-commerce operations, NAC also formally exited the sub-prime used
automobile consumer financing business effective December 31, 2001. As a result,
income, expenses, and gains and losses resulting from NAC's investment in or
sale of installment loans is now included in the results of discontinued
operations (see Note 8).

     The following table sets forth the components of and changes in the gross
finance receivable, unearned income, credit loss discount and allowance for
credit losses of NAC's net installment loans as of and for the years ended
January 31, 2001, 2002 and 2003 (in thousands):

<TABLE>
<CAPTION>
                                         Gross                               Credit           Allowance         Installment
                                        Finance           Unearned            Loss            for Credit           Loans,
                                      Receivable           Income           Discount            Losses              Net
                                    ----------------   ---------------  -----------------  -----------------  -----------------

<S>                                  <C>               <C>               <C>                 <C>                <C>
Balance, January 31, 2000           $        50,847    $       (2,646)  $        (16,259)  $         (2,636)  $         29,306
   Purchases                                      -                 -                  -                  -                  -
   Cash collected                            (6,134)                -                  -                  -             (6,134)
   Charge-offs                               (1,203)                -              1,538               (335)                 -
   Provision for credit losses                    -                 -                  -              1,365              1,365
   Interest income                                -               404                  -                  -                404
   Reclassification                               -              (417)               417                  -                  -
   Sale of loans(1)                         (43,510)            2,659             14,304              1,606            (24,941)
                                    ----------------   ---------------  -----------------  -----------------  -----------------

Balance, January 31, 2001                         -                 -                  -                  -                  -
   Cash collected                              (155)                -                  -                  -               (155)
   Provision for credit losses                  468                 -                  -                  -                468
   Sale of loans                               (313)                -                  -                  -               (313)
                                    ----------------   ---------------  -----------------  -----------------  -----------------

Balance, January 31, 2002                         -                 -                  -                  -                  -
   Cash collected                               (28)                                                                       (28)
   Provision for credit losses                   28                 -                  -                  -                 28
                                    ----------------   ---------------  -----------------  -----------------  -----------------

Balance, January 31, 2003           $             -    $            -   $              -   $              -   $              -
                                    ================   ===============  =================  =================  =================
</TABLE>

(1)  Includes cash proceeds of $24.2 million.

                                       44
<PAGE>

                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   YEARS ENDED JANUARY 31, 2003, 2002 AND 2001


NOTE 10 - SALE OF ASSETS

Real Property
-------------

     NAC, through its wholly-owned subsidiary, ARAC, Inc., owned certain real
property which consisted of two four-story, 55,000 square foot office buildings
and approximately ten and one-half acres of land located in Solon, Ohio (the
"Solon Real Property"). On August 23, 2000, an Agreement of Purchase and Sale
was entered into between PVF Capital Corp. ("PVF") and ARAC, Inc. for the sale
of the Solon Real Property to PVF at a gross sales price of $8.7 million cash at
closing (less brokers' fees, pro-rated real estate taxes, adjustments
attributable to tenant leases, and cost and fees of closing), and the sale was
closed on September 1, 2000. The transaction resulted in a gain of $2.9 million.

Investments in Affordable Housing Projects
------------------------------------------

     NAC invested in affordable housing projects through its interests in
various limited liability partnerships. Historically, NAC's investment in
affordable housing projects had been held for realization through the receipt of
distributions from the operations of the projects and the use of the tax credits
generated by the investments. In the fourth quarter of Fiscal 2000, NAC
committed to a plan to sell the investments. During the Fiscal 2001, NAC reduced
its estimate of the fair value of the investments to $2.7 million, primarily due
to the expiration of certain tax credits and the increase of the effective yield
used in determining the fair value. As a result, NAC recorded a write-down of
$3.2 million in Fiscal 2001.

     On January 14, 2002, NAC sold its limited partnership interests in eight
projects to Idacorp Financial Services, Inc. ("Idacorp Financial") for $2.5
million. NAC incurred closing costs, transfer fees and provision for the
recapture of previously deducted investment tax credits in lieu of posting a
bond of $510,000 and as a result incurred a loss (reflected in continuing
operations) of $549,000. NAC retained its limited partnership interests in three
projects, which at January 31, 2003 and 2002 are included in other assets at
their estimated fair market value of $200,000.

Real Estate Investments
-----------------------

     During the fourth quarter of Fiscal 2000, NAC also committed to plans to
sell certain real estate investments. During Fiscal 2002 and 2001, NAC sold the
investments for aggregate cash proceeds of $81,000 and $1.0 million,
respectively, and charged to continuing operations a loss on sale of $29,000 and
$215,000, respectively.

NOTE 11 - BENEFITS PLANS

     NAC's 1993 Equity Incentive Plan provides for the granting of incentive and
non-qualified stock options, stock appreciation rights, and common stock and
restricted common stock awards to key employees. The total number of shares
available for options or awards granted under this Plan is 2,200,000 shares.
There were 42,848 and 14,641 shares of restricted Common Stock cancelled under
this Plan during Fiscal 2002 and Fiscal 2001, respectively. There were 128,352
shares available for future stock awards or option grants at January 31, 2003.

                                       45
<PAGE>

                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   YEARS ENDED JANUARY 31, 2003, 2002 AND 2001


NOTE 11 - BENEFITS PLANS (CONTINUED)

     A summary of all options granted, exercised, and cancelled by all plans
were as follows:

                                                            Weighted Average
                                        Number of           Exercise Price
                                         Options              Per Share
                                      --------------        --------------

 Balance January 31, 2000                   906,960                  1.46
      Granted                             1,200,000                  0.66
      Exercised                                   -                     -
      Cancelled                            (222,560)                 2.25
                                      --------------

 Balance January 31, 2001                 1,884,400                  0.86
      Granted                                     -                     -
      Exercised                                   -                     -
      Cancelled                              (9,400)                 4.53
                                      --------------

 Balance January 31, 2002                 1,875,000                  0.84
      Granted                                     -                     -
      Exercised                                   -                     -
      Cancelled                                   -                     -
                                      --------------

 Balance January 31, 2003                 1,875,000                  0.84
                                      ==============


     The weighted-average fair value of options granted during Fiscal 2001 was
$0.51 per share. No options were granted in Fiscal 2003 or Fiscal 2002.

     The outstanding options expire at dates through the year 2010. A summary of
stock options outstanding and exercisable as of January 31, 2003 is as follows:

<TABLE>
<CAPTION>
                                      Options Outstanding                                       Options Exercisable
                       -------------------------------------------------------------   -----------------------------------
     Range of                            Weighted Average         Weighted Average                     Weighted Average
    Per Share            Number        Remaining Contractual         Per Share           Number      Per Share
Exercise Prices        Outstanding         Life (years)            Exercise Price      Exercisable      Exercise Price
---------------        ------------   ------------------------   -------------------   -----------   ---------------------
<S>                   <C>            <C>                         <C>                  <C>            <C>
$0.66 to $0.92           1,275,000            7.76                    $0.68             1,275,000            $0.68
$1.03 to $1.15             450,000            6.42                     1.04               450,000             1.04
$1.66                      150,000            5.27                     1.66               150,000             1.66
                       ------------                                                    -----------
Total                    1,875,000                                                      1,875,000
                       ============                                                    ===========
</TABLE>


                                       46
<PAGE>

                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   YEARS ENDED JANUARY 31, 2003, 2002 AND 2001


NOTE 11 - BENEFITS PLANS (CONTINUED)

         If NAC had recorded compensation expense using the fair value method of
SFAS 123, the Company's net after tax loss and loss per share would have been as
follows (in thousands, except per share amounts):

<TABLE>
<CAPTION>
                                                                              Years Ended January 31,
                                                             ------------------------------------------------------------
                                                                   2003                 2002                 2001
                                                             -----------------   -------------------  -------------------
<S>                                                                    <C>                <C>                  <C>
Net loss applicable to common stock, as reported                       $ (109)            $ (14,494)           $ (47,295)
Pro forma net loss                                                       (261)              (14,647)             (47,629)
Loss per share, as reported                                              (.01)                (1.22)               (1.70)
Pro forma loss per share                                                 (.03)                (1.25)               (1.72)
</TABLE>

     The fair value of each award or option grant included in the above
calculations is estimated on the date of grant using the Black-Scholes
option-pricing model with the following weighted-average assumptions used for
the year ended January 31, 2001. No stock options were granted in Fiscal 2003 or
Fiscal 2002.

                                                          Year Ended
                                                         January 31,
                                                             2001
                                                       -----------------
          Risk-free interest rate                                 5.24%
          Expected life                                      7.00 years
          Expected volatility                                    93.06%
          Dividend yield                                             0%


     The effects of applying SFAS 123 for the pro forma disclosures are not
representative of the effects expected on reported net earnings (loss) per share
in future years, since the valuations are based on highly subjective assumptions
about the future, including stock price volatility and exercise patterns.

     NAC has a 401(k) Savings and Profit-Sharing Plan ("401k") covering
substantially all employees who have completed one year of service with NAC.
This savings plan allows eligible employees to contribute up to 15 percent of
their compensation on a pre-tax basis. NAC matches 50% of the first 4% of the
employees' contribution. NAC contributions are vested incrementally over 6
years. The charge to operations for NAC's contribution was $11,000, $8,000 and
$26,000 for years ended January 31, 2003, 2002 and 2001, respectively.

     NAC does not provide post-retirement or post-employment benefits to its
employees.

     In December 2000, NAC entered into an employment agreement with Mr. James
McNamara for his employment as NAC's Chief Executive Officer. Under the
contract, Mr. McNamara was entitled to receive a stock award of 350,000 shares
of NAC's Common Stock upon the signing of the contract, and Mr. McNamara
surrendered options for the purchase of 175,000 shares of NAC's Common Stock,
which had previously been awarded to him. NAC charged to expense, and recorded
as a component of stockholders' equity ("Common stock to be issued"), the fair
value of the 350,000 shares of Common Stock at $219,000, which became issuable
upon the signing of the contract. The 350,000 shares of Common Stock were issued
in March 2001.


                                       47
<PAGE>

                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   YEARS ENDED JANUARY 31, 2003, 2002 AND 2001


NOTE 12 - RELATED PARTY TRANSACTIONS

     NAC contracted for investor relations and other financial advisory services
from Mallory Factor Inc. during Fiscal 2002 and Fiscal 2001. For Fiscal 2002 and
2001, NAC paid Mallory Factor Inc. $125,000 and $251,000, respectively.
Effective April 2001, NAC consummated an agreement to sub-lease its New York
corporate headquarters from Mallory Factor Inc. Pursuant to the terms of the
Sublease Agreement, NAC subleases its 5,500 square foot New York office
commencing April 1, 2001 and NAC issues all payments directly to the landlord in
accordance with the terms of the Master Lease. The sublease agreement provides
for an annual base rent of $199,000 and the term expires July 31, 2006. Mallory
Factor, who was a member of NAC's Board of Directors from December 2000 until
January 2002, is a principal at Mallory Factor Inc.

     During Fiscal 2001, NAC paid $43,000 to Automotive Personnel, LLC, for
placement services rendered in Fiscal 1998. In addition, NAC paid $69,000 in
Fiscal 2002 for outplacement services provided to the employees of NAC
terminated as a part of its restructuring plan. The President of Automotive
Personnel, LLC, was a member of NAC's Board of Directors until December 2001.

NOTE 13 - COMMITMENTS AND CONTINGENCIES

Shareholder Litigation and Regulatory Investigations
----------------------------------------------------

     NAC and certain of its former officers and directors were named as
defendants in eleven purported class action lawsuits which were filed in the
United States District Court for the Northern District of Ohio subsequent to the
January 1998 resignation of NAC's former independent auditors, Deloitte &
Touche, LLP ("Deloitte & Touche"). The actions, which were consolidated, alleged
fraud and other violations of the federal securities laws and seeks money
damages as the result of various alleged frauds and violations of the Securities
Exchange Act of 1934, including misrepresentations about the adequacy of NAC's
allowance for credit losses and its loan underwriting practices. In April 2000,
NAC and the class action plaintiffs' representatives reached an agreement in
principle to settle the class action securities litigation. Under the terms
agreed upon, NAC agreed to pay to the plaintiffs' class $6.5 million in
consideration for, among other things, the release of all defendants from
liability. The settlement was not an admission of liability by any party. At
January 31, 2000 NAC accrued the $6.5 million settlement amount together with an
estimate of the legal fees that will be incurred in completing the settlement.
The settlement was approved and completed in Fiscal 2001. The Securities and
Exchange Commission, the United States Attorney for the Northern District of
Ohio, and the Federal Bureau of Investigation, investigated the issues raised as
the result of the resignation of Deloitte & Touche. The investigations have
concluded without any further action required by NAC.

     The components of litigation and other charges for Fiscal 2001 were $5.8
million for legal and settlement cost relating to litigation matters, $116,000
for a crisis management consulting and $375,000 in other litigation expenses.

                                       48
<PAGE>

                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   YEARS ENDED JANUARY 31, 2003, 2002 AND 2001


NOTE 13 - COMMITMENTS AND CONTINGENCIES (CONTINUED)

Shareholder Complaints
----------------------

     On July 31, 2001, NAC received a derivative complaint (the "Academy
Complaint") filed by Academy Capital Management, Inc. ("Academy"), a shareholder
of NAC, with the Court of Chancery of Delaware, on or about July 31, 2001,
against James J. McNamara, John A. Gleason, William S. Marshall, Henry Y.L. Toh,
Donald Jasensky, Peter T. Zackaroff, Mallory Factor, and Thomas F. Carney, Jr.
(the "Director Defendants") and names NAC as a nominal defendant. The Academy
Complaint principally seeks: (i) a declaration that the Director Defendants
breached their fiduciary duties to NAC, (ii) a judgment voiding an employment
agreement with James J. McNamara and rescinding a stock exchange agreement in
which NAC acquired ZoomLot Corporation ("ZoomLot"), (iii) a judgment voiding the
grant of stock options and the award of director fees allegedly related thereto,
(iv) an order directing the Director Defendants to account for alleged damages
sustained and profits obtained by the Director Defendants as a result of the
alleged various acts complained of, (v) the imposition of a constructive trust
over monies or other benefits received by the Director Defendants and (vi) an
award of costs and expenses.

     On August 16, 2001, NAC received a derivative complaint (the "Markovich
Complaint") filed by Levy Markovich ("Markovich"), a shareholder of NAC, with
the Court of Chancery of Delaware on or about August 16, 2001, against James J.
McNamara, John A. Gleason, William S. Marshall, Henry Y. L. Toh, Donald
Jasensky, Peter T. Zackaroff, Mallory Factor, and Thomas F. Carney, Jr. and NAC
as a nominal defendant. The Markovich Complaint principally seeks: (i) a
declaration that the Director Defendants have breached their fiduciary duties to
NAC, (ii) a judgment voiding an employment agreement with James J. McNamara and
rescinding a stock exchange agreement in which NAC acquired ZoomLot, (iii) a
judgment voiding the grant of options and the award of directors fees allegedly
related thereto, (iv) an order directing the Director Defendants to account for
alleged damages sustained and alleged profits obtained by the Director
Defendants as a result of the alleged various acts complained of, (v) the
imposition of a constructive trust over monies or other benefits received by the
directors, and (vi) an award of costs and expenses.

     On August 31, 2001, NAC received a derivative complaint (the "Harbor
Complaint") filed by Harbor Finance Partners ("Harbor"), a shareholder of NAC,
with the Court of Chancery of Delaware on or about August 31, 2001, against
Thomas F. Carney, Jr., Mallory Factor, John A. Gleason, Donald Jasensky, William
S. Marshall, James J. McNamara, Henry Y. L. Toh, Peter T. Zackaroff, Ernest C.
Garcia, and ZoomLot Corporation as Defendants and NAC as a nominal defendant.
The Harbor Complaint principally seeks: (i) a judgment requiring the Director
Defendants to promptly schedule an annual meeting of shareholders within thirty
(30) days of the date of the Harbor Complaint; (ii) a judgment declaring that
the Director Defendants breached their fiduciary duties to NAC and wasted its
assets; (iii) an injunction preventing payment of monies and benefits to James
J. McNamara under his employment agreement with NAC and requiring Mr. McNamara
to repay the amounts already paid to him thereunder; (iv) a judgment rescinding
the agreement by NAC to purchase ZoomLot and refunding the amounts it paid; (v)
a judgment rescinding the award of monies and options to the directors on
December 15, 2000 and requiring the directors to repay the amounts they received
allegedly related thereto; (vi) a judgment requiring the defendants to indemnify
NAC for alleged losses attributable to their alleged actions; and (vii) a
judgment awarding interest, attorney's fees, and other costs, in an amount to be
determined.


                                       49
<PAGE>

                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   YEARS ENDED JANUARY 31, 2003, 2002 AND 2001


NOTE 13 - COMMITMENTS AND CONTINGENCIES (CONTINUED)

     On October 12, 2001, NAC received a derivative complaint filed by Robert
Zadra, a shareholder of NAC, with the Supreme Court of the State of New York on
or about October 12, 2001 against James J. McNamara, John A. Gleason, William S.
Marshall, Henry Y. L. Toh, Donald Jasensky, Peter T. Zackaroff, Mallory Factor,
Thomas F. Carney, Jr., and NAC as Defendants. On or about May 29, 2002 the
complaint was amended to include class action allegations (the "Zadra Amended
Complaint"). The Zadra Amended Complaint contains allegations similar to those
in the Delaware actions concerning the Board's approval of the employment
agreement with James McNamara, option grants and past and future compensation to
the Director Defendants, and the ZoomLot transaction. The Amended Complaint
seeks (i) a declaration that as a result of approving these transactions the
Director Defendants breached their fiduciary duties to NAC, (ii) a judgment
enjoining defendants from proceeding with or exercising the option agreements,
(iii) rescission of the option grants to defendants, if exercised, (iv) an order
directing the Director Defendants to account for alleged profits and losses
obtained by the Director Defendants as a result of the alleged various acts
complained of, (v) awarding compensatory damages to NAC and the class, together
with prejudgment interest, and (vi) an award of costs and expenses.

     NAC has vigorously defended against each of the respective claims made in
the Academy Complaint, Markovich Complaint, Harbor Complaint and the Zadra
Amended Complaint, as it believes that the claims have no merit. By order of the
Delaware Chancery Court on November 12, 2001, the Academy, Markovich and Harbor
Complaints were consolidated under the title "In re National Auto Credit, Inc.
Shareholders Litigation," Civil Action No. 19028 NC (Delaware Chancery Court)
("Delaware Consolidated Derivative Action") and the Academy Complaint was deemed
the operative complaint.

     The parties in New York thereafter engaged in settlement negotiations and
the parties entered into a stipulation of settlement in December 2002, proposing
to settle all class and derivative claims. In January 2003, the New York Supreme
Court entered an order which, among other things, conditionally certified a
class of shareholders for settlement purposes, approved the form of notice of
the proposed settlement, and scheduled a hearing to approve the settlement.
Notice of the proposed settlement was given to the shareholders of the Company
and members of the class as per the Court's order in January and February 2003.
The hearing on the proposed settlement is scheduled for May 14, 2003. Certain
shareholders, including the Plaintiffs in the Delaware Consolidated Action, have
objected to the terms of the proposed settlement. A motion to dismiss the
Delaware Consolidated Derivative Action was also filed in 2002 which was denied
by the Delaware court in January 2003. As each of these litigation matters
remains in their early stage, no prediction is made with respect to their
respective ultimate outcomes.

                                       50
<PAGE>

                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   YEARS ENDED JANUARY 31, 2003, 2002 AND 2001


NOTE 13 - COMMITMENTS AND CONTINGENCIES (CONTINUED)

Self-Insurance Reserves for Property Damage and Personal Injury Claims.
-----------------------------------------------------------------------

     NAC, under the names Agency Rent-A-Car, Inc. ("ARAC"), Altra Auto Rental
and Automate Auto Rental, previously engaged in the rental of automobiles on a
short-term basis, principally to the insurance replacement market. In Fiscal
1996, NAC disposed of its rental fleet business through the sale of certain
assets and through certain leases to a national car rental company. All
liabilities related to the discontinued rental business, principally
self-insurance claims, were retained by NAC.

     NAC maintained and continues to maintain self-insurance for claims relating
to bodily injury or property damage from accidents involving the vehicles rented
to customers by its discontinued automobile rental operations. NAC was, when
required by either governing state law or the terms of its rental agreement,
self-insured for the first $1.0 million per occurrence, and for losses in excess
of $5.0 million per occurrence, for bodily injury and property damage resulting
from accidents involving its rental vehicles. NAC was also self-insured, up to
certain retained limits, for bodily injury and property damage resulting from
accidents involving NAC vehicles operated by employees within the scope of their
employment. In connection therewith, NAC established certain reserves in its
financial statements for the estimated cost of satisfying those claims.

     NAC is named as defendant in a self-insurance action Darrell Smith and
Aaron Simpson ("Plaintiffs") v. John J. Bennett, ARAC, Country Mutual Insurance
Company and Atlanta Casualty Insurance Company in Cook County (State) Court of
Illinois. This matter arises out of an incident in which an ARAC car renters'
son, while driving the rental vehicle, was involved in a fatal accident and with
serious injuries to Plaintiffs, passengers in the vehicle. Initially, the
Plaintiffs appeared to be recovering well from the injuries sustained. However,
subsequently plaintiff Simpson underwent an accident-related surgery on his back
for removal of a shunt, during which nerves in the spine were severed causing
paraplegia. The Plaintiffs are suing for damages resulting from their injuries
and the subsequent paraplegia suffered by plaintiff Simpson. The doctor and
hospital that performed the surgery were also named as defendants by Plaintiffs
and have been impleaded by NAC under a theory of medical malpractice. Damages
alleged in the complaint are not specified, although in discovery Plaintiffs
have indicated they are seeking millions of dollars in compensatory and other
damages. The matter is scheduled for trial during 2003.

     NAC maintains a number of defenses relating to this matter. NAC has almost
exhausted its self-insured retention of $500,000 on this case and NAC attempted
to get its excess carrier, the TIG Insurance Company ("TIG"), to take over the
defense of this action and indemnify NAC up to the policy limits. However, as a
result TIG filed a suit (TIG Insurance Company v. Darrell Smith, Aaron Simpson
and NAC in the United States Court for the Northern District of Illinois) for a
declaratory judgment seeking a ruling that it has no liability as an "excess
insurer" of NAC in connection with the Smith and Simpson action and that under
Illinois law, NAC's (and thereafter TIG's) financial responsibility is capped at
an amount less than what the Plaintiffs are seeking in the state court action.
The federal court initially dismissed this complaint prior to NAC answering on
the grounds that the matter to be decided was premature as the original action
had not been resolved. TIG made a motion to have the court reconsider its
decision and NAC filed a response arguing that the court should take action on
this matter at this time. The Court granted TIG's motion and permitted the
action to proceed. NAC's answer was filed in May 2002. Thereafter, in August
2002, TIG filed a motion for summary judgment, asserting that NAC has no
liability to Smith and Simpson; that if NAC is liable, such liability is capped
in an


                                       51
<PAGE>

                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   YEARS ENDED JANUARY 31, 2003, 2002 AND 2001


NOTE 13 - COMMITMENTS AND CONTINGENCIES (CONTINUED)

amount far less that what Plaintiff is seeking in the state court action; and
that it also has no liability to NAC under its excess insurance policy. NAC
filed its own cross-motion for summary judgment, asserting that it has no
liability to Smith and Simpson; and that if there is any liability it is capped
under Illinois state law, or, if not capped, then TIG's excess insurance
coverage applies. Smith and Simpson filed their own cross-motion for summary
judgment, asserting that NAC is liable for Smith and Simpson's injuries and that
NAC's liability is not capped under Illinois law. On February 3, 2003, the Court
granted the motions of TIG and NAC for summary judgment, and denied the motion
for summary judgment of Smith and Simpson. The Court concluded that NAC bears no
financial responsibility to Smith and Simpson because, under the express terms
of the rental agreement at issue, Bennett was not a listed additional driver on
the underlying rental contract. The Court further concluded that TIG, as NAC's
excess insurance carrier, has no responsibility to defend or indemnify the
Bennett estate. Motions for reconsideration were filed by Smith and Simpson in
February and March but were denied by the Court. On April 11, 2003, Smith and
Simpson filed a Notice of Appeal of the Courts' decisions. The Company intends
to vigorously oppose this appeal.

     Because of the uncertainties related to these two matters, as well as
several smaller legal proceedings involving NAC's former rental operations and
self-insurance claims, it is difficult to project with precision the ultimate
effect the adjudication or settlement of these matters will have on NAC. At
January 31, 2003 NAC had accrued $518,000 to cover all outstanding
self-insurance liabilities. As additional information regarding NAC's potential
liabilities becomes available, NAC will revise the estimates as appropriate.

Other Litigation
----------------

     In the normal course of its business, NAC is named as defendant in legal
proceedings. It is the policy of NAC to vigorously defend litigation and/or
enter into settlements of claims where management deems appropriate.

Employment Agreement
--------------------

     In December 2000, NAC entered into an employment agreement with Mr. James
McNamara for his employment as NAC's Chief Executive Officer. Under the
contract, Mr. McNamara is entitled to receive a $1.0 million cash bonus
immediately upon NAC's Common Stock being listed on the NASDAQ Stock Market, the
American Stock Exchange or the New York Stock Exchange; provided, however, that
such listing shall have occurred prior to December 31, 2003.

                                       52
<PAGE>

                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   YEARS ENDED JANUARY 31, 2003, 2002 AND 2001


NOTE 13 - COMMITMENTS AND CONTINGENCIES (CONTINUED)

Lease Commitments
-----------------

     NAC leases office and warehouse facilities in New York, NY and Solon, OH,
respectively, under leases expiring at various dates. NAC's ZoomLot subsidiary,
has subleased its office in Phoenix, AZ to an unaffiliated third party for the
remainder of its term which expires in September 2006 at a rate of $253,000 per
annum. In addition to the lease base rents, NAC is generally required to pay
increases over base period amounts for taxes and other operating expense. At
January 31, 2003, future minimum payments under noncancellable operating leases,
net of the effects of the sublease, are as follows:

                         Fiscal Year              Amount
                         -----------              ------

                         2004                        $ 242
                         2005                          211
                         2006                          199
                         2007                           99
                                               ------------
                                                     $ 751
                                               ============


                                       53
<PAGE>

                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   YEARS ENDED JANUARY 31, 2003, 2002 AND 2001

NOTE 14 - QUARTERLY FINANCIAL DATA (UNAUDITED)

The following tables present unaudited quarterly financial information for
Fiscal 2003, 2002 and 2001 (in thousands, except per share amounts):

<TABLE>
<CAPTION>
                                                                                   Quarter
                                                            ----------------------------------------------------
                                                               First        Second         Third         Fourth
                                                            ----------    ----------    ----------    ----------
<S>                                                        <C>           <C>           <C>           <C>
FISCAL 2003
-----------
Total revenue(1)                                            $      138    $       49    $      150    $      680
                                                            ==========    ==========    ==========    ==========

Income (loss) from continuing operations(1)                 $     (703)   $     (793)   $     (780)   $    1,857
Discontinued operations, net of tax(1)                             182           (36)         (173)          337
                                                            ----------    ----------    ----------    ----------
Net income (loss)                                           $     (521)   $     (829)   $     (953)   $    2,194
                                                            ==========    ==========    ==========    ==========

Basic and diluted income (loss) earnings per share(2)
     Continuing operations                                  $     (.08)   $     (.10)   $     (.09)   $      .24
     Discontinued operations                                       .02          --            (.02)          .04
                                                            ----------    ----------    ----------    ----------
     Net income (loss) per share                            $     (.06)   $     (.10)   $     (.11)   $      .28
                                                            ==========    ==========    ==========    ==========


FISCAL 2002
-----------
Total revenue(1)                                            $      226    $       48    $       87    $       84
                                                            ==========    ==========    ==========    ==========

Income (loss) from continuing operations(1)                 $   (1,210)   $   (1,365)   $   (1,160)   $   (1,753)
Discontinued operations, net of tax(1)                          (1,144)       (1,323)       (6,787)          474
                                                            ----------    ----------    ----------    ----------
Net income (loss)                                           $   (2,354)   $   (2,688)   $   (7,947)   $   (1,279)
                                                            ==========    ==========    ==========    ==========

Basic and diluted income (loss) earnings per share(2)
     Continuing operations                                  $     (.10)   $     (.12)   $     (.10)   $     (.13)
     Discontinued operations                                      (.10)         (.11)         (.58)          .02
                                                            ----------    ----------    ----------    ----------
     Net income (loss) per share                            $     (.20)   $     (.23)   $     (.68)   $     (.11)
                                                            ==========    ==========    ==========    ==========


FISCAL 2001
-----------
Total revenue(1)                                            $      980    $    1,293    $    1,336    $      493
                                                            ==========    ==========    ==========    ==========

Income (loss) from continuing operations(1)                 $   (2,380)   $   (1,505)   $      (10)   $  (42,612)
Discontinued operations, net of tax(1)                          (3,343)        1,366           406           795
                                                            ----------    ----------    ----------    ----------
Net income (loss)                                           $   (5,723)   $     (139)   $      396    $  (41,817)
                                                            ==========    ==========    ==========    ==========

Basic and diluted income (loss) earnings per share(2)
     Continuing operations                                  $     (.08)   $     (.04)           $-    $    (3.21)
     Discontinued operations                                      (.12)          .04           .01           .06
                                                            ----------    ----------    ----------    ----------
     Net income (loss) per share                            $     (.20)           $-    $      .01    $    (3.15)
                                                            ==========    ==========    ==========    ==========
</TABLE>



(1) Total Revenue, loss from continuing operations and loss from discontinued
operations has been reclassified from prior quarters to conform to the current
presentation.

(2) The sum of the quarters do not equal year to date. A large fluctuation in
the fourth quarter fiscal year 2001 is the result of NAC's repurchase of
25,943,360 common shares. See Note 7.

                                       54
<PAGE>

                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   YEARS ENDED JANUARY 31, 2003, 2002 AND 2001


NOTE 15 - SUBSEQUENT EVENT

     In April 2003, NAC consummated a Merger and Plan of Reorganization
Agreement whereby NAC acquired all of the outstanding common stock of ORA/Metro
Incorporated, also known as OMI Business Communications ("OMI"), from Dean R.
Thompson, sole stockholder of OMI. OMI, headquartered in New York, New York, is
a multi-media production services, corporate meeting services, web-site
development and web content management company. OMI specializes in the full
service design, creative development, production and post production editing of
corporate communication and training videos for use at corporate events and as
collateral content material for client web-sites. Additionally, OMI frequently
provides event planning services including site selection, survey, event
management and related services associated with remote location presentations.
In exchange for the acquisition of all of the outstanding common stock of OMI,
NAC (i) issued 200,000 shares of NAC Common Stock, valued at $28,000 (ii)
assumed approximately $900,000 in bank debt and capital lease obligations to
financial institutions and (iii) issued a promissory notes payable to Mr.
Thompson in the amount of $151,000, payable in monthly installments of principal
and interest over a 36 month period. In addition to the initial payments, NAC
agreed to a contingent payment to Mr. Thompson of $150,000 based upon OMI's
financial performance during the three-year period ending January 31, 2006.
OMI's revenues for the years ended December 31, 2002 and 2001 were approximately
$2.5 million and $3.4 million, respectively. OMI incurred net losses of
approximately $356,000 and $27,000 for those years, respectively. For financial
reporting purposes, the effective date of the merger is April 1, 2003.

     As part of the OMI acquisition, OMI entered into a five year employment
agreement with Mr. Thompson under which Mr. Thompson will serve as President of
OMI and, subject to certain limitations, will have control over the day-to-day
operations of OMI. Under the terms of the employment agreement, Mr. Thompson
will be entitled to base compensation of $175,000 per year, the grant of stock
options for up to 200,000 shares of NAC Common Stock and a performance bonus
based upon the operating results of the acquired companies.


                                       55
<PAGE>






                       FINANCIAL STATEMENTS AND REPORT OF
                    INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


                           ANGELIKA FILM CENTERS, LLC

                     December 26, 2002 and December 27, 2001


                                       56
<PAGE>

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors
ANGELIKA FILM CENTERS, LLC

We have audited the accompanying balance sheets of Angelika Film Centers, LLC (a
Delaware limited liability company) as of December 26, 2002 and December 27,
2001, and the related statements of income, members' equity, 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.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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 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 financial position of Angelika Film Centers, LLC as
of December 26, 2002 and December 27, 2001, and the results of its operations
and its cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States of America.





/s/ Grant Thornton LLP

Cleveland, Ohio
March 27, 2003




                                       57
<PAGE>

                           ANGELIKA FILM CENTERS, LLC
                          (A Limited Liability Company)

                                 BALANCE SHEETS
                          (dollar amounts in thousands)

                     December 26, 2002 and December 27, 2001

<TABLE>
<CAPTION>
                                                                  DECEMBER 26,         DECEMBER 27,
                                                                     2002                  2001
                                                               ----------------      ----------------
<S>                                                            <C>                   <C>
                                 ASSETS
Current Assets
   Cash                                                        $          1,099      $          1,081
   Trade and other receivables                                                4                     7
   Due from affiliates (Note E)                                              64                   348
   Concession inventories (Note A)                                           10                     9
   Prepaid expenses and other current assets                                  8                   161
                                                               ----------------      ----------------
        Total current assets                                              1,185                 1,606

Property, Equipment and Leasehold Improvements, net
   (Note B)                                                               1,524                   549
Intangible With Definitive Life (Note A)                                  8,069                 8,659
Deposits                                                                     89                    89
                                                               ----------------      ----------------
             TOTAL ASSETS                                      $         10,867      $         10,903
                                                               ================      ================

                    LIABILITIES AND MEMBERS' EQUITY

Current Liabilities:
   Accounts payable and accrued liabilities                    $            549      $          1,076
   Due to affiliates (Note E)                                  $            151                  --
   Deferred income and other obligations                                     56                    35
                                                               ----------------      ----------------
        Total current liabilities                                           756                 1,111

Deferred Rental Obligations  (Note C)                                     1,440                 1,271
                                                               ----------------      ----------------
        Total liabilities                                                 2,196                 2,382

 Commitments and Contingencies (Note D)                                    --                    --

 Members' Equity (Note A)                                                 8,671                 8,521
                                                               ----------------      ----------------
             TOTAL LIABILITIES AND MEMBERS' EQUITY             $         10,867      $         10,903
                                                               ================      ================
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                       58
<PAGE>

                           ANGELIKA FILM CENTERS, LLC
                          (A Limited Liability Company)

                              STATEMENTS OF INCOME
                          (dollar amounts in thousands)

           For the years ended December 26, 2002 and December 27, 2001

<TABLE>
<CAPTION>
                                                               DECEMBER 26,           DECEMBER 27,
                                                                   2002                  2001
                                                              -------------          -------------
<S>                                                           <C>                    <C>
Revenue
  Theatre income                                              $       5,028          $       5,756
  Theatre concessions                                                   576                    655
  Cafe concession sales                                                 369                    416
  Rental and other income                                                59                    131
                                                              -------------          -------------

        Total operating income                                        6,032                  6,958

Operating costs and expenses
  Film Rental                                                         1,627                  2,243
  Operating costs                                                     2,831                  3,127
  General and administrative expenses                                   116                     98
  Depreciation and amortization                                         699                    693
                                                              -------------          -------------

        Total operating costs and expenses                            5,273                  6,161
                                                              -------------          -------------

           Income from operations                                       759                    797
                                                              -------------          -------------

Other income
  Interest income                                                         3                   --
                                                              -------------          -------------

        Total other income                                                3                   --
                                                              -------------          -------------

           Income before state and local tax expense                    762                    797

State and local income tax expense (Note A)                              12                     51
                                                              -------------          -------------

            NET INCOME                                        $         750          $         746
                                                              =============          =============
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                       59
<PAGE>

                           ANGELIKA FILM CENTERS, LLC
                          (A Limited Liability Company)

                          STATEMENTS OF MEMBERS' EQUITY
                          (dollar amounts in thousands)

           For the years ended December 26, 2002 and December 27, 2001

<TABLE>
<CAPTION>
                                            NATIONAL                              CITADEL           READING
                                            CINEMAS,             FA              CINEMAS,           INTERNATIONAL
                                              INC.              INC.               INC.               INC.              TOTAL
                                          -------------      ------------       ------------      -------------      ------------

<S>                                        <C>               <C>                <C>                    <C>           <C>
BALANCE AT DECEMBER 28, 2000                   $ 4,796           $ 3,192            $ 1,605                $ -           $ 9,593

  Distribution to members                         (909)             (606)              (303)                 -            (1,818)

  Net income                                       373               248                125                  -               746
                                          -------------      ------------       ------------      -------------      ------------

BALANCE AT DECEMBER 27, 2001                     4,260             2,834              1,427                  -             8,521

  Transfer of interest in AFC (Note A)               -            (2,834)            (1,427)             4,261                 -

  Distribution to members                         (300)                -                  -               (300)             (600)

  Net income                                       375                 -                  -                375               750
                                          -------------      ------------       ------------      -------------      ------------

BALANCE AT DECEMBER 26, 2002                   $ 4,335               $ -                $ -            $ 4,336           $ 8,671
                                          =============      ============       ============      =============      ============
</TABLE>


   The accompanying notes are an integral part of these financial statements.
                                       60
<PAGE>

                           ANGELIKA FILM CENTERS, LLC
                          (A Limited Liability Company)

                            STATEMENTS OF CASH FLOWS
                          (dollar amounts in thousands)

           For the years ended December 26, 2002 and December 27, 2001

<TABLE>
<CAPTION>
                                                                       DECEMBER 26,     DECEMBER 27,
                                                                          2002            2001
                                                                      -------------    -------------
<S>                                                                   <C>              <C>
Cash Flows from Operating Activities:
   Net income                                                         $         750    $         746
   Adjustments to reconcile net income to net cash
      provided by operating activities:
         Depreciation and amortization                                          699              693
         Deferred rent expense                                                  169              219
         Changes in assets and liabilities associated with
             operating activities:
                Trade and other receivables                                       3               30
                State and local income taxes receivable                        --                 27
                Due to (from) affiliates                                        435             (245)
                Concessions inventories                                          (1)              11
                Prepaid expenses and other current assets                       153               71
                Accounts payable and accrued liabilities                       (527)             580
                Deferred income and other obligations                            21              (23)
                                                                      -------------    -------------
                    Net cash provided by operating activities                 1,702            2,109

CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchases of property, equipment and
      leasehold improvements                                                 (1,084)             (30)

CASH FLOWS FROM FINANCING ACTIVITIES:
  Distribution to members                                                      (600)          (1,818)
                                                                      -------------    -------------

                    NET INCREASE IN CASH                                         18              261

Cash at beginning of year                                                     1,081              820
                                                                      -------------    -------------

Cash at end of period                                                 $       1,099    $       1,081
                                                                      =============    =============

Supplemental Disclosures of Cash Flow Information:
  Cash paid during the year for income taxes                          $          12    $          51
                                                                      =============    =============
</TABLE>

   The accompanying notes are an integral part of these financial statements.


                                       61
<PAGE>

                           ANGELIKA FILM CENTERS, LLC
                          (A Limited Liability Company)

                          NOTES TO FINANCIAL STATEMENTS

                     December 26, 2002 and December 27, 2001

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     NATURE OF OPERATIONS
     --------------------

     Angelika Film Centers LLC (AFC) is a Delaware limited liability company,
     whose membership interest at December 26, 2002 is held 50% by Reading
     International, Inc. (RDI) and 50% by National Cinemas, Inc. (NCI), a
     wholly-owned subsidiary of National Auto Credit, Inc.

     RDI is the result of the merger on December 31, 2001 of F.A. Inc. (FA),
     Reading Entertainment, Inc. (RDGE), parent company of FA, and Craig
     Corporation (CRG) and Citadel Cinemas, Inc. (CCI) and other wholly-owned
     subsidiaries of Citadel Holding Corporation (Citadel). Citadel then changed
     its name to RDI. As a result, following the merger, RDI held a 50% combined
     interest in AFC.

     Fiscal Year
     -----------

     AFC's fiscal year ends on the Thursday closest to December 31. The twelve
     months ending December 26, 2002 and December 27, 2001 contained 52 weeks.
     Unless stated otherwise, references herein are to the AFC's fiscal years.

     Cash and Cash Equivalents
     -------------------------

     AFC considers all highly liquid investments and money market accounts with
     the original maturities of three months or less to be cash equivalents.

     Concession Inventories
     ----------------------

     Inventories are comprised of concession goods and are stated at lower of
     cost (first-in, first-out method) or market.

     Property and Equipment
     ----------------------

     Property and equipment is stated at cost. Depreciation is computed using
     the straight-line method over the estimated useful lives of the assets,
     which range from 7 to 12 years for leasehold improvements, furniture,
     fixtures and equipment. Leasehold improvements are amortized using the
     straight-line method over the shorter of the lease term or the estimated
     useful lives of the related improvements.

                                       62
<PAGE>

                           ANGELIKA FILM CENTERS, LLC
                          (A Limited Liability Company)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                     December 26, 2002 and December 27, 2001


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

     Income Taxes
     ------------

     AFC is a limited liability company; therefore, no federal income taxes have
     been provided for its operations. Any liability or benefit from the AFC's
     income or losses is the responsibility of the individual members. AFC
     provides for state and city income tax liabilities in accordance with the
     Statement of Financial Accounting Standards No. 109, Accounting for Income
     Taxes (SFAS 109).

     Intangible With Definitive Life
     -------------------------------

     AFC originally recorded $11,810,000 as intangible in conjunction with an
     asset acquisition during fiscal year 1996. AFC licenses the use of the name
     "Angelika" under a licensing agreement. The Company had an independent
     appraisal, which was used to determine the fair value of assets acquired.
     The Company is amortizing the intangible on a straight-line basis over a
     twenty-year period. Accumulated amortization of the intangible is
     $3,741,000 and $3,151,000 at December 26, 2002 and December 27, 2001,
     respectively.

     Advertising Expense
     -------------------

     Advertising costs are expensed as incurred. Advertising expenses were
     approximately $249,000 and $357,000 for the years ended December 26, 2002
     and December 27, 2001, respectively.

     Fair Value Financial Instruments
     --------------------------------

     The Company has various financial instruments including cash and cash
     equivalents, trade and other receivables and accounts payable and accrued
     liabilities. These instruments are short-term in nature and the Company has
     determined that their carrying values approximate estimated fair values.

     Impairment of Long-Lived Assets
     -------------------------------

     Effective January 1, 2002, AFC adopted SFAS 144, Accounting for the
     Impairment or Disposal of Long-Lived Assets. In accordance with this
     statement, AFC reviews the carrying value of its long-lived assets (other
     than goodwill) whenever events or changes in circumstances indicate that
     its carrying amount may not be recoverable. If indicators of impairment
     exist, AFC would determine whether the estimated undiscounted sum of the
     future cash flows of such assets is less than its carrying amount. If less,
     an impairment loss would be recognized based on the excess of the carrying
     amount of such assets over their respective fair values. AFC would
     determine the fair value by using quoted market prices, if available, for
     such assets; or if quoted market prices are not available, AFC would
     discount the expected estimated future cash flows. No impairment was
     recorded during the 12 months ended December 26, 2002 and December 27,
     2001.

                                       63
<PAGE>

                           ANGELIKA FILM CENTERS, LLC
                          (A Limited Liability Company)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                     December 26, 2002 and December 27, 2001


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

     Estimates
     ---------

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

     New Accounting Pronouncements
     -----------------------------

     In December 2002, SFAS No. 148, Accounting for Stock-Based Compensation -
     Transition and Disclosure, and amendment of FASB Statement No. 123, was
     issued. SFAS 148 prescribes amendments to the disclosure and transition
     provisions of SFAS 123, "Accounting for Stock-Based Compensation", and is
     effective for fiscal years ending after December 15, 2002. As of December
     26, 2002, AFC has no option plans; therefore, the adoption of SFAS 148 had
     no impact on its financial position or result of operations.

     In January 2003, the FASB issued Interpretation No. 46, Consolidation of
     Variable Interest Entities (FIN 46) to provide guidance on when an investor
     should consolidate another entity from which they receive benefits or are
     exposed to risks when those other entities are not controlled based on
     traditional voting interests or they are thinly capitalized. The provisions
     of FIN 46 are effective beginning July 1, 2003. Although management is
     still reviewing the provisions of FIN 46, its preliminary assessment is
     that this interpretation will not have a material impact on its financial
     position or results of operations.

NOTE B - PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS

     At December 26, 2002 and December 27, 2001, a summary of property,
     equipment and leasehold improvements is as follows (in thousands):

<TABLE>
<CAPTION>
                                                                  DECEMBER 26,             DECEMBER 27,
                                                                      2002                     2001
                                                              ---------------------    ---------------------
<S>                                                            <C>                      <C>
           Leasehold improvements                                    $   532                  $   525
           Furniture, fixtures and equipment                             537                      537
           Construction in progress                                    1,077                       -
                                                              ---------------------    ---------------------
                                                                       2,146                    1,062
           Less accumulated depreciation                                 622                      513
                                                              ---------------------    ---------------------
                Property, equipment and
                   leasehold improvements, net                       $ 1,524                  $   549
                                                              =====================    =====================
</TABLE>



                                       64
<PAGE>

                           ANGELIKA FILM CENTERS, LLC
                          (A Limited Liability Company)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED


                     December 26, 2002 and December 27, 2001


NOTE C - LEASE COMMITMENTS

     AFC leases a theater under a non-cancelable operating lease which matures
     in August 2026. Rental expense was $855,000; including noncash rent of
     $169,000 and $219,000, for the years ended December 26, 2002 and December
     27, 2001, respectively. At December 26, 2002, future minimum rental
     commitments for the next five years were as follows (in thousands):



                     2003                                   $ 657
                     2004                                     657
                     2005                                     657
                     2006                                     692
                     2007                                     741
                  Thereafter                               17,545
                                                ------------------

         Total minimum lease payments                     $20,949
                                                ==================

     AFC has scheduled rent increases under the theater lease. The accompanying
     statement of operations reflects rent expense on a straight-line basis over
     the term of the theater lease. Deferred rental obligations of $1,440,000
     and $1,271,000 are reflected in the accompanying balance sheets as of
     December 26, 2002 and December 27, 2001, respectively.

NOTE D - COMMITMENTS AND CONTINGENCIES

     AFC has been involved in various lawsuits. The ultimate outcome of these
     lawsuits is not always determinable; however, in the opinion of management,
     based in part upon advice of counsel, the amount of losses that might be
     sustained, if any, would not materially affect the financial position of
     AFC.

NOTE E - RELATED PARTY TRANSACTIONS

     Citadel operates and manages the Angelika Film Centers pursuant to a
     management agreement (the Agreement). Citadel operates the theater in
     accordance with the terms of the Agreement entered into with the AFC in
     August 1996. This Agreement was assigned to Citadel from an affiliate
     effective June 1, 2000.

     Citadel is to be paid an annual management fee of $125,000 and a bonus fee
     contingent on the attainment of certain income levels (as defined in the
     Agreement). Management and bonus fee expense amounted to the base fee of
     $125,000 for the years ended December 26, 2002 and December 27, 2001.

                                       65
<PAGE>


                           ANGELIKA FILM CENTERS, LLC
                          (A Limited Liability Company)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                     December 26, 2002 and December 27, 2001


NOTE E - RELATED PARTY TRANSACTIONS - Continued

     AFC's leasehold interest for the Angelika Theater is guaranteed by both the
     Reading Company and Reading Entertainment, Inc. through the day prior to
     the 15th anniversary of the lease commencement.

     At December 26, 2002, AFC had an aggregate payable balance of $87,000 to
     Citadel. This amount is comprised of monies collected by those affiliated
     entities for gift certificates and credit card purchases offset by amounts
     paid by Citadel on behalf of AFC. At December 27, 2001, AFC had an
     aggregate receivable balance of $348,000 due from Citadel. This amount is
     comprised of monies collected by those affiliated entities for gift
     certificates and credit card purchases that are then remitted to AFC.







                                       66
<PAGE>


ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

     There have been no changes in accountants due to disagreements on
accounting and financial disclosure during the 24 months prior to January 31,
2003.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The executive officers and directors of NAC, as of April 15, 2003 are as
follows:

       Name               Age             Position
----------------------  --------  -----------------------------------------
James J. McNamara          54       Chairman of the Board and Chief
                                    Executive Officer

Robert V. Cuddihy, Jr      43       Chief Financial Officer, Secretary and
                                    Treasurer

John A. Gleason            54       Director

Henry Y. L. Toh            45       Director

William S. Marshall        85       Director


     JAMES J. McNAMARA has been Chairman of the Board and Chief Executive
Officer since November 3, 2000. Mr. McNamara has been a Director of NAC since
February 20, 1998 and previously served as its Chairman from April 1998 to
November 1999. Mr. McNamara has also been President of Film Management
Corporation (a film company) since 1995, and he has been President and Chief
Executive Officer of Celebrity Entertainment, Inc. (an entertainment company)
since 1992. Mr. McNamara was Chairman of the Board and Chief Executive Officer
of Princeton Media Group, Inc. (a magazine publisher) from 1994 to 1998. A
subsidiary of Princeton Media Group, Inc. and Celebrity Entertainment, Inc. each
effected an assignment of their respective assets for the benefit of creditors
in 1998.

     ROBERT V. CUDDIHY, JR. has been NAC's Chief Financial Officer and Treasurer
since September 2001. Mr. Cuddihy has been NAC's Secretary since January 2003.
Mr. Cuddihy was an independent financial consultant to NAC from May 2001 to
August 2001. From July 1987 to March 2001, Mr. Cuddihy was the Chief Financial
Officer of HMG Worldwide Corporation, a company engaged in in-store marketing
and retail store fixturing design and manufacture, and also served as a Director
from February 1998 to May 2001. HMG Worldwide Corporation effected an assignment
of their assets for the benefit of creditors in 2002. From July 1981 to July
1987, Mr. Cuddihy was with KMPG Peat Marwick, Certified Public Accountants,
where he last served as a senior audit manager.

     JOHN A. GLEASON has been a Director of NAC since April 5, 2000. Mr. Gleason
previously served as Director of NAC from February 20, 1998 to September 28,
1999. From 1995 to 1998, Mr. Gleason served on NAC's Dealer Advisory Board,
serving as Chairman of such panel from 1996 to 1998. Mr. Gleason has been the
President and principal of Automax, Inc., an independent car dealership since
1987. Mr. Gleason has been the President of New Franklin, Inc., an automobile
finance consulting firm, since 1992 and has been a partner in Coslar Properties
LLC, a real estate firm, since 1995.

                                       67
<PAGE>


     HENRY Y. L. TOH has been a Director of NAC since December 22, 1998. Mr. Toh
is also a Director of three other public companies, I-Link Incorporated (an
Internet telephone company) since 1992, Teletouch Communications, Inc. (a paging
and telecom services provider) since December 2001 and Bigmar, Inc. (an
international pharmaceutical firm) since April 2002. Mr. Toh has been the
principal officer of Four M. International, Inc. (a private investment entity)
since 1992.

     WILLIAM S. MARSHALL has been a Director of NAC since April 5, 2000. Mr.
Marshall twice previously served as director of NAC from 1983 to 1993 and from
March 9, 1998 to September 29, 1999. Mr. Marshall has been an attorney engaged
in private practice since April 1985. For more than four years prior thereto,
Mr. Marshall was a partner/stockholder of the Miami, Florida office of the law
firm Baskin & Steingut, P.A.

Section 16(a) Beneficial Ownership Reporting Compliance
-------------------------------------------------------

     Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
all NAC officers and directors, and persons who own more than ten percent of a
registered class of NAC equity securities, to file reports of ownership and
changes in ownership of equity securities of NAC with the SEC and any applicable
stock exchange. Officers, directors and greater than ten percent stockholders
are required by SEC regulation to furnish NAC with copies of all Section 16(a)
forms that they file. Based solely upon a review of Forms 3, 4, and 5 furnished
to NAC pursuant to the Exchange Act during Fiscal 2003 and Fiscal 2002, NAC
believes that none of its officers, directors and greater than 10% beneficial
owners failed to file such Forms on a timely basis during the most recent fiscal
year.


                                       68
<PAGE>

ITEM 11.  EXECUTIVE COMPENSATION

     The following table shows all compensation paid by NAC for the fiscal years
ended January 31, 2003, 2002 and 2001 to (i) any persons who served as Chief
Executive Officer or President of NAC during Fiscal 2003 and (ii) the
individuals, other than persons who served as the Chief Executive Officer, who
served as an executive officer of NAC at January 31, 2003 and whose income
exceeded $100,000.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                              Annual Compensation                                       Long Term Compensation
                          -----------------------------------------------------------------------------------------
                                                                                                Awards
                                                                                     ------------------------------
    Name and Principal      Fiscal         Salary         Bonus       Other Annual       Number of Securities          All Other
         Position            Year                                     Compensation      Underlying Options/SARs     Compensation (3)
------------------------------------------------------------------------------------------------------------------------------------
<S>                        <C>             <C>           <C>                   <C>      <C>                            <C>
James J. McNamara,           2003            $ 500,000     $ 250,000             $ -                             -          $ 89,913
Chairman and CEO (1, 2)      2002            $ 500,000     $ 250,000             $ -                             -          $ 68,740
                             2001            $ 134,856     $ 750,000        $ 10,250                       750,000         $ 224,750
------------------------------------------------------------------------------------------------------------------------------------
Robert V. Cuddihy, Jr.       2003            $ 265,000      $ 15,000             $ -                             -          $ 13,662
Chief Financial Officer      2002             $ 16,666      $ 16,666        $ 77,500                             -               $ -
Secretary  & Treasurer (4)   2001                  $ -           $ -             $ -                             -               $ -
------------------------------------------------------------------------------------------------------------------------------------
Robert Dixon                 2003                  $ -           $ -             $ -                             -               $ -
Chief Financial Officer (5)  2002                  $ -           $ -       $ 198,479                             -               $ -
                             2001                  $ -           $ -             $ -                             -               $ -
------------------------------------------------------------------------------------------------------------------------------------
Sean P.  Maroney             2003                  $ -           $ -             $ -                             -               $ -
Director of Financial        2002             $ 79,312           $ -        $ 89,365                             -               $ -
  Reporting (6)              2001            $ 101,617       $ 4,998         $ 6,900                             -           $ 7,205
------------------------------------------------------------------------------------------------------------------------------------
Raymond Varcho               2003                  $ -           $ -             $ -                             -               $ -
Secretary (7)                2002            $ 141,916           $ -       $ 141,653                             -               $ -
                             2001            $ 196,154       $ 4,998        $ 15,115                             -           $ 3,654
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

     (*) Employees who were Directors did not receive any additional
     compensation for serving on the Board of Directors.

     (1) The amounts included in "Bonus" for 2003 is $125,000 bonus accrued but
     not yet paid as of January 21, 2003.

     (2) The amounts included in "Other Annual Compensation" are the imputed
     value for the use of Company automobiles and related tax reimbursement.

     (3) "All Other Compensation" includes aggregate stock awards pursuant to
     employment agreements, executive life and disability insurance, vision,
     401(k) match, executive plan medical premiums and auto allowances paid.

     (4) Mr. Cuddihy became an employee of NAC in September 2001. For Mr.
     Cuddihy, the amount in "All Other Compensation" includes amounts paid to
     Mr. Cuddihy for services he performed for NAC as an independent consultant
     from May 2001 to September 2001.

     (5) Mr. Dixon, a consultant to NAC, provided financial services to NAC from
     February 2001 to November 2001. Additionally, Mr. Dixon served in the
     capacity of NAC's principal financial officer until September 2001.

     (6) Mr. Maroney was NAC's Director of Financial Reporting until April 2001.
     For Mr. Maroney, the amount in "All Other Compensation" includes amounts
     paid to Mr. Maroney pursuant to a severance arrangement with NAC.

                                       69
<PAGE>

     (7) Mr. Varcho was NAC's internal corporate counsel and corporate Secretary
     until April 2001. For Mr. Varcho, the amount in "All Other Compensation"
     includes amounts paid to Mr. Varcho pursuant to a severance arrangement
     with NAC.

OPTION/SAR GRANTS IN LAST FISCAL YEAR

     NAC's Board of Directors did not grant options during Fiscal 2003 to any
Executive Officers of NAC.

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES

     There were no exercises of options or stock appreciation rights by officers
or directors during Fiscal 2003.

EMPLOYMENT AGREEMENTS

Employment Agreement with James J. McNamara
-------------------------------------------

     On December 15, 2000, NAC's Board of Directors approved an Employment
Agreement, effective as of November 3, 2000, with James J. McNamara. Under the
terms of that agreement, Mr. McNamara shall be employed as Chief Executive
Officer for an initial term of three years, until December 31, 2003, with a base
salary of $500,000 per year. In the event that NAC should achieve in any year
certain performance milestones with respect to the market price of its Common
Stock, as set forth in Exhibit A of the Employment Agreement, Mr. McNamara will
also receive a target cash bonus of $300,000, which may also be increased by the
Board if the Board believes it appropriate to reward the Chief Executive
Officer's performance for that year. Those performance milestones are as
follows. Mr. McNamara will receive 25% of the target cash bonus if the market
price of the Common Stock is 110% of such market price at the end of the prior
employment year. Mr. McNamara will receive 50% of the target cash bonus if the
market price of the Common Stock is 120% of such market price at the end of the
prior employment year; Mr. McNamara will receive 100% of the target cash bonus
if the market price of the Common Stock is 130% of such market price at the end
of the prior employment year. The market price of the Common Stock as of the
commencement of Mr. McNamara's Employment Agreement was $0.65.

     Following the initial three-year term, the Employment Agreement will
automatically renew for consecutive year-long terms unless 90 days prior notice
is given by either party. NAC may terminate the Employment Agreement at any time
for cause, and Mr. McNamara may terminate at any time in his discretion.

     In the event of a change of control resulting in his separation from NAC,
Mr. McNamara would also receive a $250,000 target bonus for any years remaining
under the Employment Agreement. Mr. McNamara has also received a lump-sum
payment of $750,000 as a signing bonus and compensation for past services
rendered to NAC and he will be entitled to an additional bonus in the amount of
$1,000,000 in the event that NAC's Common Stock is listed on the NASDAQ National
Stock Market, Inc., the American Stock Exchange or the New York Stock Exchange.
As a signing bonus, Mr. McNamara was granted the right to 350,000 shares of
Common Stock. Mr. McNamara was previously granted options to purchase 175,000
shares of restricted Common Stock, which he surrendered to NAC, prior to the
issuance of the shares constituting his signing bonus.

                                       70
<PAGE>

     The employment agreement also grants Mr. McNamara the right to options to
purchase an additional 750,000 shares of NAC Common Stock with an exercise price
equal to the average of the closing bid prices of the Common Stock on the OTCBB
for the five trading days preceding December 16, 2000 or $.664, which also may
be exercised by means of cashless exercise. Such options shall have a term of 10
years from the date of grant; and shall be fully vested and be exercisable as
follows: (a) options with respect to 250,000 shares shall vest and be
exercisable immediately; (b) options with respect to 250,000 shares shall vest
and be exercisable on and after December 15, 2001; and (c) options with respect
to 250,000 shares shall vest and be exercisable on and after December 15, 2002;
provided, however, that upon a change of control, as defined in the Employment
Agreement, all options that have not yet vested and become exercisable shall be
deemed to have vested and have become exercisable as of the time immediately
preceding such change of control. Further, the options shall be issued under a
qualified omnibus long-term incentive plan that will provide for incentive stock
options pursuant to the Internal Revenue Code of 1986, as amended (the "Code").
From time to time, the Board may, in its discretion, increase Mr. McNamara's
base salary and grant additional options to Mr. McNamara, on such terms as the
Board determines.

     The Agreement also provides for certain payments in the event of a
termination without cause by NAC or a termination for good reason by Mr.
McNamara as follows: NAC will pay to Mr. McNamara one dollar ($1) less than the
amount that would constitute an "excess parachute payment" under Code Section
280G of the Internal Revenue Code. NAC shall pay to Mr. McNamara such amount in
lump sum cash payment as soon as practicable following the effective date of
such termination. NAC shall also continue to provide Mr. McNamara with all
employee benefits and perquisites, which he was participating in or receiving at
the effective date of termination (or if greater, at the end of the prior year)
for two years following termination.

     If it is determined by reason of any payment, or the occurrence of an
option vesting, pursuant to the terms of the Employment Agreement (or upon any
other plan, agreement or program) upon a Change in Control, as defined in the
Employment Agreement (collectively "the Payment"), the Executive would be
subject to the excise tax imposed by Code Section 4999 (the "Parachute Tax"),
then Mr. McNamara shall be entitled to receive an additional payment or payments
(a "Gross-Up Payment") in an amount such that, after payment by Mr. McNamara of
all taxes (including any Parachute Tax) imposed upon the Gross-Up Payment, Mr.
McNamara will retain an amount of the Gross-Up Payment equal to the Parachute
Tax imposed upon the Payment.

Employment Agreement with Robert V. Cuddihy, Jr.
------------------------------------------------

     Effective December 31, 2001, NAC consummated an employment agreement with
Robert V. Cuddihy, Jr. Under the terms of the agreement, Mr. Cuddihy shall be
employed as Chief Financial Officer and Treasurer for an initial term of three
years, until December 31, 2004, with a base salary of $240,000 per year and a
minimum annual bonus of $25,000 per year. Mr. Cuddihy is also entitled to NAC
employee benefits of health insurance, 401-K plan and related programs.
Following the initial three year term, the agreement will automatically renew
for consecutive year-long terms unless 90 days prior written notice is given by
either party. In the event that the agreement is terminated by NAC without
cause, Mr. Cuddihy shall receive one year compensation in the form of severance
compensation.

                                       71
<PAGE>

1993 EQUITY INCENTIVE PLAN

     NAC's 1993 Equity Incentive Plan (the "Plan") provides for the grant of
Incentive Options, Non-Qualified Options, Stock Appreciation Rights, Restricted
Stock Appreciation Rights, Restricted Stock and Common Stock (all of which are
sometimes collectively referred to as "Awards") to the Executive Officers
referred to in the cash compensation table as well as to other employees of NAC
and its subsidiaries and any former employee of NAC eligible to receive an
assumed or replacement award or award settlement. Awards may be granted singly,
in combination or in tandem. In addition, Awards may be made in combination, or
in tandem with, in replacement of, or as the payment for grants or rights under
any other compensation plan of the NAC, including the Option Plan or the plan of
any acquired entity.

     The total number of shares available for options or awards granted under
this Plan is 2,200,000 shares. There were 42,848 and 14,641 shares of restricted
stock cancelled under this Plan during the years ended January 31, 2002 and
2001, respectively. There were 128,352 shares available for future stock awards
or option grants at January 31, 2003. The shares to be issued under the Plan may
be authorized and unissued shares, treasury shares or a combination thereof. The
Compensation Committee (the "Committee") administers the Plan. The Committee is
comprised of three non-employee Directors, all of whom must be "disinterested
persons" as defined under the Plan.

     Any compensation income realized by a participant with respect to any Award
granted under the Plan shall be subject to withholding by NAC of income,
employment or other taxes required by federal, state, local or foreign law. The
Committee may in its discretion satisfy the withholding requirement by causing
the entity or subsidiary employing the participant to withhold the appropriate
amount of any and all of such taxes from any other compensation otherwise
payable to such participant.

REMUNERATION OF DIRECTORS

     For services in Fiscal 2003, all non-employee directors received: (1)
compensation at the annual rate of $55,000 plus an additional $5,000 per annum
for serving on one or more committees of the Board; and (2) reimbursement for
all reasonable fees and expenses incurred in connection with the performance of
services on behalf of the Company. Fees and expenses shall be reimbursed upon
submission to the Company of appropriate documentation for such fees and
expenses in accordance with then-current Company policy.

     Due to the substantial issues faced by NAC during Fiscal 2002 and Fiscal
2003, including (i) the sale and disposition of NAC's automobile loan portfolio,
(ii) the issues raised by various auto rental, auto finance and shareholder
litigation and settlements, (iii) the purchase of the 50% interest in the
Angelika Film Centers, LLC interest along with the subsequent agreements made in
December 2000 with Reading and its subsidiaries, (iv) the purchase of ZoomLot
and the subsequent consummation of the Exchange Agreement with the former
ZoomLot shareholders, (v) managing NAC's acquisition due diligence and related
investment analysis activities, and (vi) the acquisition of OMI, various members
of the Board of Directors were required to devote substantial time to the
affairs of NAC.

                                       72
<PAGE>

     Amounts paid to Directors in Fiscal 2003 aggregated $220,000 for services
rendered during the period as follows:

        Director                 Amount    Director Status(1)
        --------                 ------    ------------------
     James J. McNamara(2)      $    --     Director
     John A. Gleason              60,000   Director
     Henry Y.L Toh                60,000   Director
     William S. Marshall          60,000   Director
     Thomas F. Carney, Jr.        40,000   Resigned as a Director September 2002

     (1) During Fiscal 2003, the number of Directors constituting NAC's Board of
         Directors decreased due to, among other things (i) the relocation of
         NAC's principal office to New York from Ohio, (ii) the discontinuance
         of ZoomLot's e-commerce operations and NAC automobile finance
         operations and (iii) the hiring of certain full time employees in New
         York to manage NAC's day-to-day operations.

     (2) Directors who are also employees of NAC do not receive any additional
         compensation for serving on the Board of Directors.

PERFORMANCE GRAPH

     The following graph compares the yearly change in NAC's cumulative total
shareholder return on its Common Stock (based on the market price of NAC's
Common Stock) with the cumulative total return of the S&P 600 Small Cap Index,
the Russell 2000 Index, Reading International, Inc. (a theatre and real estate
concern) and AMC Entertainment, Inc. (a theatre concern).

<TABLE>
<CAPTION>
                                 2/1/98    1/31/99   1/31/00   1/31/01   1/31/02   1/31/03
                                -----------------------------------------------------------
<S>                                <C>      <C>       <C>        <C>       <C>       <C>
     National Auto Credit, Inc.    100      117       140        37        19        19
     S&P 600 Small Cap Index       100       99       108       129       132       107
     Russell 2000 Index            100       99       115       118       112        87
     AMC Entertainment, Inc.       100       63        35        20        40        30
     Reading International, Inc.   100       95        69        53        47       100
</TABLE>

     For purposes of the above table, NAC is compared to both AMC Entertainment,
Inc. and Reading International Inc. as each company is engaged principally in
the operations of various film theatres. NAC's current operations are comprised
principally of its investment in the Angelika Film Center LLC.

                                       73
<PAGE>

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth certain information as of April 25, 2003
with respect to: (1) all persons known by NAC to be the beneficial owners of
five percent or more of Common Stock; (2) each executive officer and director;
and (3) all executive officers and directors of NAC as a group.

<TABLE>
<CAPTION>
     Name and Address of                   Number of Shares             Approximate
     Beneficial Owner(1)                  Beneficially Owned        Percentage of Class(2)
     -------------------                  ------------------        ----------------------
<S>                                      <C>                       <C>
     James McNamara(3)                        2,885,075                     33.6%
     555 Madison Ave 29th Floor
     New York, New York 10022

     William S. Banowsky, Jr.(4)                431,350                      5.5%
     600 Congress Avenue, Suite 1400
     Austin, TX 77701

     William S. Marshall(5)                     255,000                      3.2%
     555 Madison Ave 29th Floor
     New York, New York 10022

     John A. Gleason(5)                         245,000                      3.0%
     555 Madison Ave 29th Floor
     New York, New York 10022

     Henry Y. L. Toh(5)                         245,000                      3.0%
     555 Madison Ave 29th Floor
     New York, New York 10022

     Robert V. Cuddihy, Jr.                        --                         --
     555 Madison Ave 29th Floor
     New York, New York 10022

     All executive officers and               3,630,075                     39.0%
     Directors as a group (5 persons)(6)
</TABLE>

(1)  Pursuant to rules promulgated under the Exchange Act of 1934, an individual
     is considered to beneficially own shares of Common Stock if he or she
     directly or indirectly has or shares (i) voting power, which includes the
     power to vote or direct the voting of shares; or (2) investment power,
     which includes the power to dispose or direct the disposition of the
     shares. Unless otherwise noted, NAC believes that all of such shares are
     owned of record by each individual named as beneficial owner and that such
     individual has sole voting and dispositive power with respect to the shares
     of Common Stock owned by each of them. Such person's percentage ownership
     is determined by assuming that the options or convertible securities that
     are held by such person, and which are exercisable within 60 days from the
     date hereof, have been exercised or converted, as the case may be.

(2)  Based on 8,030,614 shares outstanding as of April 25, 2003.

(3)  Includes 2,135,075 shares of stock and vested options to purchase 750,000
     shares of Common Stock.

                                       74
<PAGE>

(4)  The information recited is based upon information set forth in the Form
     13-D filed on January 6, 2003 by Mr. Banowsky.

(5)  Includes 245,000 shares issuable upon exercise of options.

(6)  Includes 2,145,075 shares outstanding and 1,485,000 shares issuable upon
     exercise of options.

EQUITY COMPENSATION PLAN INFORMATION

     The following table sets forth, as of January 31, 2003, with respect to
compensation plans (including individual compensation arrangements) under which
equity securities of NAC are authorized for issuance.

<TABLE>
<CAPTION>
                                                                                     NUMBER OF SECURITIES
                                                                                    REMAINING AVAILABLE FOR
                                                                                     FUTURE ISSUANCE UNDER
                              NUMBER OF SECURITIES TO       WEIGHTED-AVERAGE          EQUITY COMPENSATION
                              BE ISSUED UPON EXERCISE       EXERCISE PRICE OF          PLANS (EXCLUDING
                              OF OUTSTANDING OPTIONS,     OUTSTANDING OPTIONS,      SECURITIES REFLECTED IN
       PLAN CATEGORY            WARRANTS AND RIGHTS        WARRANTS AND RIGHTS            COLUMN (A))
                                       ( A )                      ( B )                      ( C )
---------------------------- -------------------------- -------------------------- --------------------------
<S>                          <C>                        <C>                        <C>
Equity compensation plans
approved by security
holders                               1,875,000                    $0.84                      128,352

Equity compensation plans
not approved by security
holders                                      -                         -                            -
                             -------------------------- -------------------------- --------------------------

Total                                1,875,000                     $0.84                            -
                             -------------------------- -------------------------- --------------------------
</TABLE>

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     None

                                       75
<PAGE>

ITEM 14. CONTROLS AND PROCEDURES

(a)  Evaluation of Disclosure Controls and Procedures

     Within the 90 days prior to the filing date of the Annual Report, we
     carried out an evaluation, under the supervision and with the participation
     of our management, including the Chief Executive Officer and the Chief
     Financial Officer, of the effectiveness of the design and operation of our
     disclosure controls and procedures pursuant to Securities Exchange Act Rule
     13a-14(c) and 15d-14(c). Based upon that evaluation, the Chief Executive
     and the Chief Financial Officer concluded that our disclosure controls and
     procedures were effective as of the date of their evaluation in timely
     alerting them to material information relating to the Company required to
     be included in this Annual Report.

(b)  Changes in Internal Controls

     There were no significant change in our internal controls or in other
     factors that could significantly affect such internal controls subsequent
     to the date of the evaluation described in paragraph (a) above. As a
     result, no corrective actions were required or undertaken.



                                       76
<PAGE>

                                     PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
         DOCUMENTS FILED AS PART OF THIS REPORT:

(a)(1)  The following statements are included in Part II, Item 8:

        Financial Statements of the Company
        -----------------------------------

           Report of Independent Certified Public Accountants

           Financial Statements:
             Consolidated Balance Sheets - as of
               January 31, 2003 and 2002

           Consolidated Statements of Operations -
             Years Ended January 31, 2003, 2002 and 2001

           Consolidated Statements of Stockholders' Equity and Comprehensive
             Income (Loss) - Years Ended January 31, 2003, 2002 and 2001

           Consolidated Statements of Cash Flows - Years Ended
             January 31, 2003, 2002 and 2001

           Notes to Consolidated Financial Statements - Years Ended
             January 31, 2003, 2002 and 2001

        Financial Statements of AFC
        ---------------------------

          Report of Independent Certified Public Accountants

          Financial Statements:
            Balance Sheets as of December 26, 2002 and December 27, 2001

            Statements of Operations for the years ended
              December 26, 2002 and December 27, 2001

            Statements of Members' Equity for the years ended
              December 26, 2002 and December 27, 2001

            Statements of Cash Flows for the years ended
              December 26, 2002 and December 27, 2001

            Notes to Financial Statements for the years ended
              December 26, 2002 and December 27, 2001

                                       77
<PAGE>

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
         (CONT.)

(a)(2)   The following financial statement schedule for the years ended January
         31, 2003, 2002 and 2001 is submitted herewith:

               Schedule II - Valuation and Qualifying Accounts

         All other schedules are omitted because the required information either
         is not applicable or is shown in the consolidated financial statements
         or notes.

(a)(3)   Exhibits

                    Description
                    -----------
         2.1        Agreement of Merger (incorporated by reference to Exhibit 2
                    to the Company's Form 8 B dated December 27, 1995, SEC File
                    No. 1-11601).

         2.2        Settlement Agreement and Release (Including Agreement for
                    Sale of Shares) by and among National Auto Credit, Inc., Mr.
                    Frankino, individually and as trustee and president of the
                    Samuel J. Frankino and Connie M. Frankino Charitable
                    Foundation, trustee of the Corrine L. Dodero Trust for the
                    Arts and Sciences and managing partner of the Frankino and
                    Frankino Investment Company, dated November 3, 2000
                    (incorporated by reference to Exhibit 2.1 to the Company's
                    Form 8-K dated November 17, 2000, SEC File No. 1-11601).

         2.3        Stock Purchase and Standstill Agreement by and among
                    National Auto Credit, Inc., Reading Entertainment, Inc., FA,
                    Inc., Citadel Holding Corporation, and Craig Corporation,
                    dated November 3, 2000 (incorporated by reference to Exhibit
                    2.2 on the Current Report on Form 8-K filed November 17,
                    2000, SEC File No. 1-11601).

         2.4        Merger Agreement and Plan of Reorganization by and among ZLT
                    Acquisition Corp., a Delaware and a wholly-owned subsidiary
                    of NAC; ZoomLot Corporation, a Delaware corporation,
                    including all of its subsidiaries; and Ernest C. Garcia II,
                    Verde Reinsurance Company, Ltd., a Nevis Island corporation,
                    Ernie Garcia III 2000 Trust, Brian Garcia 2000 Trust, Ray
                    Fidel, Steven Johnson, Mark Sauder, EJMS Investors Limited
                    Partnership, an Arizona limited partnership, Colin
                    Bachinsky, Chris Rompalo, Donna Clawson, Mary Reiner, and
                    Kathy Chacon dated December 15, 2000 (incorporated by
                    reference to Exhibit 2 of the Current Report on Form 8-K
                    filed January 2, 2001, SEC File No. 1-11601).

         2.5        Stock Purchase and Standstill Agreement by and among Reading
                    Entertainment, Inc., FA, Inc., Citadel Holding Corporation,
                    Craig Corporation, and National Auto Credit, dated as of
                    December 15, 2000, (incorporated by reference to Exhibit
                    99.1 of the Current Report on Form 8-K filed January 2,
                    2001, SEC File No. 1-11601).

         3.1        Restated Certificate of Incorporation of National Auto
                    Credit, Inc. (incorporated by reference to Exhibit 3 (1) to
                    the Company's Form 8B filed December 27, 1995, SEC File No.
                    1-11601).

                                       78
<PAGE>

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
         (CONT.)

         3.2        Certificate of Designation, Number, Powers, Preferences and
                    Relative, Participating, Optional and Other Special Rights
                    and the Qualifications, Limitations, Restrictions, and Other
                    Distinguishing Characteristics of the Series A Convertible
                    Preferred Stock of National Auto Credit, Inc., dated as of
                    April 5, 2000 (incorporated by reference to Exhibit 10.3 of
                    the Current Report on Form 8-K filed on April 20, 2000, File
                    No. 1-11601).

         3.3        Amended and Restated Bylaws of National Auto Credit, Inc.
                    dated April 5, 2000 (incorporated by reference to the
                    Company's Annual Report on Form 10-K for the fiscal year
                    ended January 31, 2000, SEC File No. 1-11601).

         3.4        Certificate of Designations of Series B and C Preferred
                    Stock of National Auto Credit, Inc. dated as of December 15,
                    2000 (incorporated by reference to Exhibit 4.1 of the
                    Current Report on Form 8-K filed January 2, 2001, SEC File
                    No. 1-11601).

         3.5        Certificate of Designation for the Series D Junior
                    Participating Preferred Stock (incorporated by reference to
                    the Company's Current Report on Form 8-K, dated October 9,
                    2001, SEC File No. 1-11601).

         4.1        Specimen Stock Certificate - National Auto Credit, Inc.
                    (incorporated by reference to the Company's Annual Report on
                    Form 10-K for the fiscal year ended January 31, 1996, SEC
                    File No. 1-11601).

         4.2        Specimen Series C redeemable preferred stock Certificate -
                    National Auto Credit, Inc. (incorporated by reference to the
                    Company's Annual Report on Form 10-K for the fiscal year
                    ended January 31, 2001, SEC File No. 1-11601).

         4.3        Rights Agreement, dated as of September 26, 2001, between
                    the Company and American Stock Transfer & Trust Company,
                    which included the form of Certificate of Designation for
                    the Series D Junior Participating Preferred Stock as Exhibit
                    "A", the form of Rights Certificate as Exhibit "B" and the
                    Summary of Rights to Purchase Preferred Stock as Exhibit "C"
                    (incorporated herein by reference to the Company's Current
                    Report on Form 8-K, dated October 9, 2001, SEC File No.
                    1-11601).

         10.1       National Auto Credit, Inc. 1983 Stock Option Plan
                    (incorporated by reference to the Company's Post Effective
                    Amendment No. 2 to Form S-8 as filed on October 1, 1987,
                    File No. 2-93984).

         10.2       Form of Directors' Indemnification Agreement dated July 2,
                    1986 (incorporated by reference to Exhibit 10(f) of the
                    Company's Annual Report of Form 10-K for fiscal year ended
                    January 31, 1988, File No. 0-12201).

         10.3       National Auto Credit, Inc. 1993 Equity Incentive Plan
                    (incorporated by reference to the Company's Form S-8
                    Registration Statement as filed on December 28, 1993, File
                    No. 33-51727).

                                       79
<PAGE>

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
         (CONT.)

         10.4       National Auto Credit, Inc. 401(k) Savings and Retirement
                    Plan and Trust (incorporated by reference to the Company's
                    Form S-8 Registration Statement as filed on December 28,
                    1993, File No. 33-51727).

         10.5       Purchase Agreement among National Auto Credit, Inc.,
                    National Cinemas, Inc., FA, Inc. and Reading Entertainment,
                    Inc., dated as of April 5, 2000 (incorporated by reference
                    to Exhibit 10.1 of the Current Report on Form 8-K filed on
                    April 20, 2000, File No. 1-11601).

         10.6       Registration Rights Agreement, dated as of April 5, 2000
                    (incorporated by reference to Exhibit 10.2 of the Current
                    Report on Form 8-K filed on April 20, 2000, File No.
                    1-11601).

         10.7       Registration Rights Agreement, dated as of December 15, 2000
                    (incorporated by reference to Exhibit 4.2 to the Company's
                    Form 8-K filed January 2, 2001, SEC File No. 1-11601).

         10.8       Lockup, Standstill and Voting Agreement, dated as of
                    December 15, 2000, (incorporated by reference to Exhibit 4.3
                    of the Current Report on Form 8-K filed January 2, 2001, SEC
                    File No. 1-11601).

         10.9       Employment Agreement between NAC and James J. McNamara dated
                    as of December 15, 2000 (incorporated by reference to
                    Exhibit 10.1 of the Current Report on Form 8-K filed January
                    2, 2001, SEC File No. 1-11601).

         10.10      Separation Agreement between NAC and David L. Huber dated as
                    of December 15, 2000 filed and incorporated herein by
                    reference of the Annual Report on Form 10-K/A filed May 31,
                    2001 (SEC File No. 1-11601).

         10.11      Agreement for Purchase and Sale of Limited Liability
                    Partnership Interests (exhibits to Form 8-K filed January
                    28, 2002, SEC File No. 1-11601).

         10.12      Exchange and Repayment Agreement dated January 31, 2002 by
                    and among National Auto Credit, Inc., Cygnet Capital
                    Corporation, Verde Reinsurance Company Ltd, Ernie Garcia III
                    2000 Trust, Brian Garcia 2000 Trust, EJMS Investors Limited
                    Partnership, Ernest C. Garcia II, Ray Fidel, Steven P.
                    Johnson, Mark Sauder, Colin Bachinsky, Chris Rompalo, Donna
                    Clawson, Mary Reiner, and Kathy Chacon (exhibit to Form 8-K
                    filed February 4, 2002, SEC File No. 1-11601).

         10.13      Separation Agreement from NAC for Raymond A. Varcho dated as
                    of April 25, 2001 (exhibit 10.2 to the Company's Quarterly
                    Report on Form 10-Q file June 15, 2001, SEC File No.
                    1-11601).

         10.14      Employment Agreement between Robert V. Cuddihy, Jr. and the
                    Company dated December 31, 2001 and incorporated by
                    reference to the Annual Report on Form 10-K filed May 13,
                    2002.

         10.15      Merger Agreement and Plan of Reorganization between the
                    Company, ORA/Metro Incorporated and Mr. Dean R. Thompson
                    dated as of April 1, 2003 and incorporated by reference
                    herewith.

                                       80
<PAGE>

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
         (CONT.)

         10.16      Employment Agreement and Non-Competition and
                    Non-Solicitation Agreement between OMI Communications, Inc.
                    and Mr. Dean R. Thompson dated as of April 1, 2003 and
                    incorporated by reference herewith.

         10.17      Non-Negotiable Promissory Note between the Company and Mr.
                    Dean R. Thompson dated as of April 1, 2003 and incorporated
                    by reference herewith.

         10.18      Registration Rights Agreement between the Company and Mr.
                    Dean R. Thompson dated as of April 1, 2003 and incorporated
                    by reference herewith.


         21         Subsidiaries of National Auto Credit, Inc. at January 31,
                    2003.

         23         Consent of Independent Certified Public Accountants.

        EXHIBIT                                                           PAGE
        NUMBER             TITLE OF EXHIBIT                              NUMBER
        -----------------------------------------------------------------------
        99.1      Certification of Principal Executive Officer
                  Pursuant to Section 906 of the Sarbanes-Oxley
                  Act of 2002 (18 U.S.C. 1350)                             146
        99.2      Certification of Principal Financial Officer
                  Pursuant to Section 906 of the Sarbanes-Oxley
                  Act of 2002 (18 U.S.C. 1350)                             147


(B) REPORTS ON FORM 8-K

     On April 17, 2003, a Form 8-K was filed to announce the acquisition of
ORA/Metro Incorporated

                                       81
<PAGE>

                                   SIGNATURES
                                   ----------

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, National Auto Credit, Inc. has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.


                                            National Auto Credit, Inc.
                                             Registrant





Date  April 25, 2003                     By: /s/ James J. McNamara
    ------------------------------           --------------------------------
                                             James J. McNamara
                                             Chairman of the Board and
                                             Chief Executive Officer

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities as indicated on April 25, 2003.

                                         Principal Financial and
Principal Executive Officer              Accounting Officer

By: /s/ James J. McNamara                By: /s/ Robert  V. Cuddihy, Jr.
    ------------------------------           --------------------------------
James J. McNamara                            Robert V. Cuddihy, Jr.
Chairman of the Board and                    Chief Financial Officer and
Chief Executive Officer                      Treasurer

                                   Directors:
                                   ----------


/s/ William S. Marshall                  /s/ John A. Gleason
----------------------------------       --------------------------------
William S. Marshall                      John A. Gleason

/s/ James J. McNamara                    /s/ Henry Y. L. Toh
----------------------------------       --------------------------------
James J. McNamara                        Henry Y. L. Toh

                                       82
<PAGE>

                       OFFICER'S CERTIFICATION PURSUANT TO
                       -----------------------------------

         SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. 1350)
         --------------------------------------------------------------

I, James McNamara., certify that:

1. I have reviewed this Annual Report on Form 10-K of National Auto Credit,
Inc.;

2. Based on my knowledge, this Annual Report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this Annual
Report;

3. Based on my knowledge, the financial statements, and other financial
information included in this Annual Report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this Annual Report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15-d-14) for the registrant and we have:

     (a) designated such disclosure controls and procedures to ensure that
     material information related to the registrant, including its consolidating
     subsidiaries, is made known to us by others within those entities,
     particularly during the period in which this Annual Report is being
     prepared;

     (b) evaluated the effectiveness of the registrant's disclosure controls and
     procedures as of a date within 90 days prior to the filing date of this
     Annual Report ("Evaluation Date"); and

     (c) presented in the Annual Report our conclusions about the effectiveness
     of the disclosure controls and procedures based on our evaluation as of the
     Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
the registrant's Board of Directors (or persons performing the equivalent
function):

     (a) all significant deficiencies in the design or operation of internal
     controls which could adversely affect the registrant's ability to record,
     process, summarize and report financial data and have identified for the
     registrant's auditors and material weakness in internal controls; and

     (b) any fraud, whether or not material, that involves management or other
     employees who have significant role in the registrant's internal controls;
     and

6. The registrant's other certifying officers and I have indicated in this
Annual Report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.


                                         Date: April 25, 2003

                                         By: /s/  James J. McNamara
                                             -----------------------------------
                                         James J. McNamara
                                         Chief Executive Officer

                                       83
<PAGE>

                       OFFICER'S CERTIFICATION PURSUANT TO
                       -----------------------------------

         SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. 1350)
         --------------------------------------------------------------

I, Robert V. Cuddihy, Jr., certify that:

1. I have reviewed this Annual Report on Form 10-K of National Auto Credit,
Inc.;

2. Based on my knowledge, this Annual Report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this Annual
Report;

3. Based on my knowledge, the financial statements, and other financial
information included in this Annual Report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this Annual Report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15-d-14) for the registrant and we have:

     (a) designated such disclosure controls and procedures to ensure that
     material information related to the registrant, including its consolidating
     subsidiaries, is made known to us by others within those entities,
     particularly during the period in which this Annual Report is being
     prepared;

     (b) evaluated the effectiveness of the registrant's disclosure controls and
     procedures as of a date within 90 days prior to the filing date of this
     Annual Report ("Evaluation Date"); and

     (c) presented in the Annual Report our conclusions about the effectiveness
     of the disclosure controls and procedures based on our evaluation as of the
     Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
the registrant's Board of Directors (or persons performing the equivalent
function):

     (a) all significant deficiencies in the design or operation of internal
     controls which could adversely affect the registrant's ability to record,
     process, summarize and report financial data and have identified for the
     registrant's auditors and material weakness in internal controls; and

     (b) any fraud, whether or not material, that involves management or other
     employees who have significant role in the registrant's internal controls;
     and

6. The registrant's other certifying officers and I have indicated in this
Annual Report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.


                                               Date: April 25, 2003

                                               By: /s/ Robert V. Cuddihy, Jr.
                                                   -----------------------------
                                               Robert V. Cuddihy, Jr.
                                               Chief Financial Officer


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<PAGE>

                                   SCHEDULE II

                        VALUATION AND QUALIFYING ACCOUNTS
                                 (In Thousands)

<TABLE>
<CAPTION>
           Column A                   Column B                     Column C                   Column D            Column E
--------------------------------  ------------------   ----------------------------------   --------------     ---------------
                                     Balance at              Additions Charged to:                                 Balance
                                    beginning of       ----------------------------------                        at end of
Description                            period             Expenses            Other          Deductions            period
--------------------------------  ------------------   ----------------  ----------------   --------------     ---------------
<S>                               <C>                  <C>               <C>                <C>                <C>
Year ended January 31, 2003
--------------------------------
Self-insurance claims                         $ 769                $ -               $ -            $ 251 (a)           $ 518

Year ended January 31, 2002
--------------------------------
Self-insurance claims                         $ 970              $ 463               $ -            $ 664 (b)           $ 769

Year ended January 31, 2001
--------------------------------
Self-insurance claims                       $ 4,089           $ (1,656)              $ -          $ 1,463 (b)           $ 970
</TABLE>

(a) Included $51,000 cash disbursements related to self-insurance claims and a
$200,000 reduction in the estimated liability based upon current estimates of
outstanding claims.

(b) Cash disbursements related to self-insured claims.


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