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|                                  
|----------------------------------
|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 April 30, 2008
|OR                                      
|o                                        | TRANSITION
  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
  EXCHANGE ACT OF 1934
|For the transition period fromto        
|Commission file number 0-14939          
|                                        
|                                        
|                                        

|                                                        
|--------------------------------------------------------
|AMERICAS CAR-MART, INC.                                
|(Exact
  name of registrant as specified in its charter)

|                                                                 |  |                                       
|---------------------------------------------------------------- |  | --------------------------------------
|Texas                                                            |  | 63-0851141                            
|(State
  or other jurisdiction of incorporation or organization) |  | (IRS
  Employer Identification Number)
|802 Southeast Plaza Avenue, Suite 200                            |  |                                       
|Bentonville, Arkansas                                            |  | 72712                                 
|(Address
  of principal executive offices)                       |  | (Zip
  Code)                          

(479) 464-9944(Registrants
telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:NONE

Securities registered pursuant to section 12(g) of the Act:Common Stock, $.01 par value(Title of Class)

Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes  o No x

Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yes  o No x

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

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 or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K.  o

Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of accelerated
filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check
one):

|  |                         |                                       
|- | ----------------------- | --------------------------------------
|o | Large accelerated filer | Accelerated
  filer          x        
|o | Non-accelerated filer   | Smaller reporting
  company          o

Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes  o No   x

The
aggregate market value of the registrants common stock held by non-affiliates
on October 31, 2007 was $121,571,398 (10,114,093 shares), based on the closing
price of the registrants common stock of $12.02.

There
were 11,734,340 shares of the registrants common stock outstanding as of July
3, 2008.

DOCUMENTS INCORPORATED BY REFERENCE

Portions
of the registrants Proxy Statement to be furnished to stockholders in
connection with its 2008 Annual Meeting of Stockholders are incorporated by
reference in response to Part III of this report.

---

---



PART I

Forward-Looking Statements

This
Annual Report on Form 10-K contains numerous forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements address the Companys future objectives, plans
and goals, as well as the Companys intent, beliefs and current expectations
regarding future operating performance, and can generally be identified by
words such as may, will, should, believe, expect, anticipate,
intend, plan, foresee, and other similar words or phrases. Specific
events addressed by these forward-looking statements include, but are not
limited to:

| |   |                                                          
| | - | ---------------------------------------------------------
| |  | new store openings;                                      
| |   |                                                          
| |  | same store revenue growth;                               
| |   |                                                          
| |  | future revenue growth;                                   
| |   |                                                          
| |  | receivables growth greater
  than revenue growth;        
| |   |                                                          
| |  | future credit losses;                                    
| |   |                                                          
| |  | the Companys business and
  growth strategies;          
| |   |                                                          
| |  | financing the majority of
  growth from profits; and     
| |   |                                                          
| |  | having adequate liquidity
  to satisfy its capital needs.

These
forward-looking statements are based on the Companys current estimates and
assumptions and involve various risks and uncertainties. As a result, you are
cautioned that these forward-looking statements are not guarantees of future
performance, and that actual results could differ materially from those
projected in these forward-looking statements. Factors that may cause actual
results to differ materially from the Companys projections include those risks
described elsewhere in this report, as well as:

| |   |                                                                                                                                                                             
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the availability of credit
  facilities to support the Companys business;                                                                                                  
| |   |                                                                                                                                                                             
| |  | the Companys ability to
  underwrite and collect its loans effectively;                                                                                                    
| |   |                                                                                                                                                                             
| |  | competition;                                                                                                                                                                
| |   |                                                                                                                                                                             
| |  | dependence on existing
  management;                                                                                                                                        
| |   |                                                                                                                                                                             
| |  | changes in lending laws or
  regulations; and                                                                                                                               
| |   |                                                                                                                                                                             
| |  | general economic
  conditions in the markets in which the Company operates, including but not
  limited to fluctuations in gas prices, grocery prices and employment levels.

The
Company undertakes no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
You are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the dates on which they are made.

---



Item 1. Business

Business and Organization

Americas
Car-Mart, Inc., a Texas corporation (the Company), is the largest publicly
held automotive retailer in the United States focused exclusively on the Buy
Here/Pay Here segment of the used car market. References to the Company
typically include the Companys consolidated subsidiaries. The Companys
operations are principally conducted through its two operating subsidiaries,
Americas Car-Mart, Inc., an Arkansas corporation, (Car-Mart of Arkansas) and
Colonial Auto Finance, Inc., an Arkansas corporation, (Colonial).
Collectively, Car-Mart of Arkansas and Colonial are referred to herein as
Car-Mart. The Company primarily sells older model used vehicles and provides
financing for substantially all of its customers. Many of the Companys
customers have limited financial resources and would not qualify for
conventional financing as a result of limited credit histories or past credit
problems. As of April 30, 2008, the Company operated 91 stores located
primarily in small cities throughout the South-Central United States.

In
October 2001, the Company made the decision to sell all of its operating
subsidiaries except Car-Mart, and relocate its corporate headquarters to
Bentonville, Arkansas where Car-Mart is based. As a result of this decision,
all of the Companys other operating subsidiaries were sold. The Company sold
its last remaining discontinued operation in July 2002.

Business Strategy

In
general, it is the Companys objective to continue to expand its Buy Here/Pay
Here used car operation using the same business model that has been developed
by Car-Mart over the last 27 years. This business strategy focuses on:

|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Collecting
  Customer Accounts.
  Collecting customer accounts is perhaps the single most important aspect of
  operating a Buy Here/Pay Here used car business and is a focal point for
  store level and corporate office personnel on a daily basis. Periodically,
  the Company measures and monitors the collection results of its stores using
  internally developed delinquency and account loss standards. Substantially
  all associate incentive compensation is tied directly or indirectly to
  collection results. Over the last five years, Car-Marts annual credit losses
  as a percentage of sales have ranged from a low of 20.1% in 2005 to a high of
  29.1% in 2007 (average of 22.8%). The Company believes that it can continue
  to be successful provided it maintains its credit losses within or below its
  historical credit loss range. See item 1A. Risk Factors for further
  discussion.     
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | Maintaining
  a Decentralized Operation. The Companys dealerships will continue to operate on a
  decentralized basis. Each store is responsible for buying (with the
  assistance of a corporate office purchasing agent) and selling its own
  vehicles, making credit decisions and collecting the loans it originates in
  accordance with established policies and procedures (credit scoring, maximum
  loan terms and down-payment requirements as well as other customer profile
  data are all monitored centrally). Most customers make their payments in
  person at one of the Companys dealerships. This decentralized structure is
  complemented by the oversight and involvement of corporate office management
  and the maintenance of centralized financial controls, including credit
  scoring, establishing standards for down-payments and contract terms as well
  as an internal compliance function.

2

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|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Expanding
  Through Controlled Organic Growth. The Company plans to continue to expand its operations by increasing
  revenues at existing dealerships and opening new dealerships. In fiscal 2007
  and into fiscal 2008, the Company decided to slow down its new store openings
  until operational initiatives showed positive results. The focus has been on
  improving performance of existing dealerships prior to opening significant
  numbers of new stores. The Company acquired one existing Buy Here/Pay Here
  dealership in March 2006 and another in May 2006 and may consider acquiring
  additional existing dealerships if conditions and terms are favorable.
  However, the Company will continue to view organic growth as its primary
  source for growth.                                                                                           
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | Selling
  Basic Transportation.
  The Company will continue to focus on selling basic and affordable
  transportation to its customers. The Company generally does not sell luxury
  cars or sports cars. The average retail sales price was $8,690 in fiscal
  2008. By selling vehicles at this price point, the Company is able to keep
  the terms of its installment sales contracts relatively short (overall
  portfolio average of 27.3 months), while requiring relatively low payments.                                                                                                                                                                                                                                                                                                                                                                            
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | Operating
  in Smaller Communities. The majority of the Companys dealerships are located in cities and
  towns with a population of 50,000 or less. The Company believes that by
  operating in smaller communities it experiences better collection results.
  Further, the Company believes that operating costs, such as salaries, rent
  and advertising, are lower in smaller communities than in major metropolitan
  areas.                                                                                                                                                                                                                                                                                                                                                                                                                                          
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | Enhance
  Management including Promoting from Within. It has been the Companys practice to try
  to hire honest and hardworking individuals to fill entry level positions,
  nurture and develop these associates, and attempt to fill the vast majority
  of its managerial positions from within the Company. By promoting from
  within, the Company believes it is better able to train its associates in the
  Car-Mart way of doing business, maintain the Companys unique culture and
  develop the loyalty of its associates. Additionally, the Company looks
  outside for associates possessing requisite skills who share the values and
  appreciate the Companys unique culture developed over the years. The Company
  has been able to attract quality individuals from outside via its Manager in
  Training Program.                                     
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | Cultivating
  Customer Relationships. The Company believes that developing and maintaining a relationship
  with its customers is critical to the success of the Company. A large
  percentage of sales at mature stores are made to repeat customers, and the
  Company estimates an additional 10% to 15% of sales result from customer
  referrals. By developing a personal relationship with its customers, the
  Company believes it is in a better position to assist a customer, and the
  customer is more likely to cooperate with the Company should the customer
  experience financial difficulty during the term of his or her installment
  loan with the Company. The Company is able to cultivate these relationships
  as the majority of its customers make their payments in person at one of the
  Companys dealerships on a weekly or bi-weekly basis.

Business Strengths

The
Company believes it possesses a number of strengths or advantages that
distinguish it from most of its competitors. These business strengths include:

|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Experienced
  and Motivated Management.The Companys executive operating officers have an average tenure of
  approximately 23 years. Several of Car-Marts store managers have been with
  the Company for more than 10 years. Each store manager is compensated, at
  least in part (some entirely), based upon the net income of his or her store.
  A significant portion of the compensation of Car-Mart senior management is
  incentive based and tied to economic profit as opposed to earnings under
  generally accepted accounting standards.

3

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|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Proven
  Business Practices.
  The Companys operations are highly structured. While stores are operated on
  a decentralized basis, the Company has established policies, procedures and
  business practices for virtually every aspect of a stores operations.
  Detailed on-line operating manuals are available to assist the store manager
  and office, sales and collections personnel in performing their daily tasks.
  As a result, each store is operated in a uniform manner. Further, corporate
  office personnel monitor the stores operations through weekly visits and a
  number of daily, weekly and monthly communications and reports.                                                                                                                                                                                                                                                                  
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | Low Cost
  Operator. The
  Company has structured its store and corporate office operations to minimize
  operating costs. The number of associates employed at the store level is
  dictated by the number of active customer accounts each store services.
  Associate compensation is standardized for each store position. Other
  operating costs are closely monitored and scrutinized. Technology is utilized
  to maximize efficiency. The Company believes its operating costs as a
  percentage of revenues, or per unit sold, are among the lowest in the
  industry.                                                                                                                                                                                                                                                                                                                                                
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | Well
  Capitalized / Limited External Capital Required for Growth. As of April 30, 2008, the Companys debt
  to equity ratio was 0.29 to 1.0, which the Company believes is lower than the
  majority of its competitors. Further, the Company believes it can fund a
  significant amount of its planned growth from net income generated from
  operations. Of the external capital that will be needed to fund growth, the
  Company plans to draw on its existing credit facilities, or renewals or
  replacements of those facilities.                                                                                                                                                                                                                                                                                                                                                                                    
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | Significant
  Expansion Opportunities.The Company generally targets smaller communities to locate its
  dealerships (i.e., populations from 20,000 to 50,000), but has had success in
  larger cities such as Tulsa, Oklahoma and Little Rock, Arkansas. The Company
  believes there are numerous suitable communities within the eight states and
  other contiguous states in which the Company currently operates to satisfy
  any anticipated store growth for the next several years. However, the Company
  does not currently plan to add a significant number of new locations in
  fiscal 2009 as the Company has significant growth opportunities within its
  existing store base, most notably for stores opened within the last five
  years. Existing lots will continue to be analyzed to ensure that they are
  producing desired results and have potential to provide adequate returns on
  invested capital.

Operations

|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Store
  Organization.
  Stores are operated on a decentralized basis. Each store is responsible for
  buying (with the assistance of a corporate office buyer) and selling
  vehicles, making credit decisions, and servicing and collecting the
  installment loans it originates. Stores also maintain their own records and
  make daily deposits. Store-level financial statements are prepared by the
  corporate office on a monthly basis. Depending on the number of active
  customer accounts, a store may have as few as two or as many as 25 full-time
  associates employed at that location. Associate positions at a large store
  may include a store manager, assistant store manager, manager trainee, office
  manager, assistant office manager, service manager, buyer, collections
  personnel, salesmen and lot attendants. Stores are open Monday through
  Saturday from 9:00 a.m. to 6:00 p.m. The Company has both regular and
  satellite stores. Satellite stores are similar to regular stores, except that
  they tend to be smaller, sell fewer vehicles and their financial performance
  is not captured in a stand alone financial statement, but rather is included
  in the financial results of the sponsoring regular store.

4

---



|  |                                                                                                                                    
|- | -----------------------------------------------------------------------------------------------------------------------------------
| | Store
  Locations and Facilities.Below is a summary of stores opened during the fiscal years ended
  April 30, 2008, 2007 and 2006:

| |                             |  |                       |    |      |  |      |  |  |    |  
| | --------------------------- |  | --------------------- | -- | ---- |  | ---- |  |  | -- | -
| |                             |  | Years Ended April 30, |   
| |                             |  | 2008                  |    | 2007 |  | 2006 | 
| |                             |  |                       |    |      |  |      | 
| | Stores at beginning of year |  |                       | 92 |      |  | 85   |  |  | 76 |  
| | New stores opened/acquired  |  |                       | 3  |      |  | 7    |  |  | 10 |  
| | Stores closed               |  |                       | (4 | )    |  |     |  |  | (1 | )
| |                             |  |                       |    |      |  |      |  |  |    |  
| |                             |  |                       |    |      |  |      |  |  |    |  
| | Stores at end of year       |  |                       | 91 |      |  | 92   |  |  | 85 |  
| |                             |  |                       |    |      |  |      |  |  |    |  

| |                                                                                      
| | -------------------------------------------------------------------------------------
| | Below is a summary of
  store locations by state as of April 30, 2008, 2007 and 2006:

| |                 |  |                 |    |      |  |      |  |  |    | 
| | --------------- |  | --------------- | -- | ---- |  | ---- |  |  | -- | 
| |                 |  | As of April 30, |   
| | Stores by State |  | 2008            |    | 2007 |  | 2006 | 
| |                 |  |                 |    |      |  |      | 
| | Arkansas        |  |                 | 35 |      |  | 34   |  |  | 34 | 
| | Oklahoma        |  |                 | 17 |      |  | 17   |  |  | 15 | 
| | Texas           |  |                 | 13 |      |  | 16   |  |  | 16 | 
| | Kentucky        |  |                 | 9  |      |  | 9    |  |  | 8  | 
| | Missouri        |  |                 | 11 |      |  | 10   |  |  | 9  | 
| | Kansas          |  |                 |   |      |  | 1    |  |  | 1  | 
| | Indiana         |  |                 | 1  |      |  | 1    |  |  | 1  | 
| | Tennessee       |  |                 | 1  |      |  | 1    |  |  | 1  | 
| | Alabama         |  |                 | 4  |      |  | 3    |  |  |   | 
| |                 |  |                 |    |      |  |      |  |  |    | 
| |                 |  |                 |    |      |  |      |  |  |    | 
| | Total           |  |                 | 91 |      |  | 92   |  |  | 85 | 
| |                 |  |                 |    |      |  |      |  |  |    | 

Stores
are typically located in smaller communities. As of April 30, 2008,
approximately 70% of the Companys stores were located in cities with
populations of less than 50,000. Stores are located on leased or owned property
between one and three acres in size. When opening a new store the Company will
typically use an existing structure on the property to conduct business, or
purchase a modular facility while business at the new location develops. Store
facilities typically range in size from 1,500 to 5,000 square feet.

|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Purchasing. The Company purchases vehicles primarily
  through wholesalers, new car dealers, individuals and from auctions. The
  majority of vehicle purchasing is performed by the Companys buyers, although
  certain store managers are authorized to purchase vehicles. On average, a
  buyer will purchase vehicles for three stores. Buyers report to the store
  manager, or managers, for whom they make purchases, and to a regional
  purchasing director. The regional purchasing directors monitor the quantity
  and quality of vehicles purchased and compare the cost of similar vehicles
  purchased among different buyers.

Generally,
the Companys buyers purchase vehicles between three and 10 years of age with
80,000 to 130,000 miles, and pay between $3,500 and $6,000 per vehicle. The
Company focuses on providing basic transportation to its customers. The Company
generally does not purchase sports cars or luxury cars. Some of the more
popular vehicles the Company sells include the Ford Taurus and Escort,
Chevrolet Lumina and Cavalier, Dodge Neon, Pontiac Grand Am and Oldsmobile
Cutlass. The Company also sells a significant number of trucks and sport
utility vehicles. Buyers inspect and test-drive almost every vehicle they
purchase. Buyers attempt to purchase vehicles that require little or no repair
as the Company has limited facilities to repair or recondition vehicles.

5

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|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Selling,
  Marketing and Advertising. Stores generally maintain an inventory of 15 to 100 vehicles
  depending on the maturity of the dealership. Inventory turns over
  approximately 10 to 12 times each year. Selling is done principally by the
  store manager, assistant manager, manager trainee or sales associate. Sales
  associates are paid a commission for sales that they make in addition to an
  hourly wage. Sales are made on an as is basis; however, customers are given
  an option to purchase a five month or 5,500 mile service contract for $395
  which covers certain vehicle components and assemblies. For covered
  components and assemblies, the Company coordinates service with third party
  service centers with which the Company typically has previously negotiated
  labor rates and mark-up percentages on parts. The majority of the Companys
  customers elect to purchase a service contract when purchasing a vehicle.
  Additionally, the Company offers its customers a payment protection plan
  product. This product contractually obligates the Company to cancel the
  remaining principal outstanding for any loan where the retail customer has
  totaled the vehicle, as defined, or the vehicle has been stolen. This product
  is available in most of the states in which the Company operates and the
  majority of customers elect to purchase this product when purchasing a
  vehicle in those states.

The
Companys objective is to offer its customers basic transportation at a fair
price and treat each customer in such a manner as to earn his or her repeat
business. The Company attempts to build a positive reputation in each community
where it operates and generate new business from such reputation as well as
from customer referrals. The Company estimates that approximately 10% to 15% of
the Companys sales result from customer referrals. The Company recognizes
repeat customers with silver, gold and platinum plaques representing the
purchase of 5, 10 and 15 vehicles, respectively. These plaques are prominently
displayed at the dealership where the vehicles were purchased. For mature
dealerships, a large percentage of sales are to repeat customers.

The
Company primarily advertises in local newspapers, on the radio and on
television. In addition, periodically the Company conducts promotional sales
campaigns in order to increase sales.

|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Underwriting
  and Finance. The
  Company provides financing to substantially all of its customers who purchase
  a vehicle at one of its stores. The Company only provides financing to its
  customers for the purchase of its vehicles, and the Company does not provide
  any type of financing to non-customers. The Companys installment sales
  contracts typically include down payments ranging from 0% to 17% (average of
  7%), terms ranging from 12 months to 36 months (average of 27.3 months), and
  annual interest charges ranging from 6% to 19% (average of 12.8% at April 30,
  2008). The Company requires that payments be made on a weekly, bi-weekly,
  semi-monthly or monthly basis to coincide with the day the customer is paid
  by his or her employer. Upon the customer and the Company reaching a
  preliminary agreement as to financing terms, the Company obtains a credit
  application from the customer which includes information regarding
  employment, residence and credit history, personal references and a detailed
  budget itemizing the customers monthly income and expenses. Certain
  information is then verified by Company personnel. After the verification
  process, the store manager makes the decision to accept, reject or modify
  (perhaps obtain a greater down payment or require an acceptable co-buyer or
  suggest a lower priced vehicle) the proposed transaction. In general, the
  store manager attempts to assess the stability and character of the
  applicant. The store manager who makes the credit decision is ultimately
  responsible for collecting the loan, and his or her compensation is directly
  related to the collection results of his or her store. The Company provides
  centralized support to the store manager in the form of a credit scoring
  system and other supervisory assistance to assist with the credit decision.

6

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|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Collections. All of the Companys retail installment
  contracts are serviced by Company personnel at the store level. The majority
  of the Companys customers make their payments in person at the store where
  they purchased their vehicle, although some customers send their payments
  through the mail. Each store closely monitors its customer accounts using the
  Companys proprietary receivables and collections software that stratifies
  past due accounts by the number of days past due. The Company believes that
  the timely response to past due accounts is critical to its collections
  success.

The
Company has established standards with respect to the percentage of accounts
one and two weeks past due, the percentage of accounts three or more weeks past
due, and for larger stores, one and two weeks past due, 15 to 44 days past due
and 45-plus days past due (delinquency standards), and the percentage of
accounts where the vehicle was repossessed or the account was charged off that
month (account loss standard).

The
Company works very hard to keep its delinquency percentages low, and not to
repossess vehicles. Accounts one day late are sent a notice in the mail.
Accounts three days late are contacted by telephone. Notes from each telephone
contact are electronically maintained in the Companys computer system. If a
customer becomes severely delinquent in his or her payments, and management
determines that timely collection of future payments is not probable, the
Company will take steps to repossess the vehicle. The Company attempts to
resolve payment delinquencies amicably prior to repossessing a vehicle.
Periodically, the Company enters into contract modifications with its customers
to extend the payment terms. The Company only enters into a contract
modification or extension if it believes such action will increase the amount
of monies the Company will ultimately realize on the customers account. For
those vehicles that are repossessed, the majority are returned or surrendered
by the customer on a voluntary basis. Other repossessions are performed by
Company personnel or third party repossession agents. Depending on the
condition of a repossessed vehicle, it is either resold on a retail basis
through a Company store, or sold for cash on a wholesale basis primarily
through physical and/or on-line auctions.

|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | New Store
  Openings. The
  Company plans to slow new store openings until operational initiatives show
  sustained positive results. Senior management, with the assistance of the
  corporate office staff, will make decisions with respect to the communities
  in which to locate a new store and the specific sites within those
  communities. New stores have historically been located in the general
  proximity of existing stores to facilitate the corporate offices oversight
  of the Companys stores.

The
Companys approach with respect to new store openings has been one of gradual
development. The manager in charge of a new store is normally a recently
promoted associate who was an assistant manager at a larger store or a manager
trainee. The corporate office provides significant resources and support with
pre-opening and initial operations of new dealerships. The facility may be of a
modular nature or an existing structure. New stores operate with a low level of
inventory and personnel. As a result of the modest staffing level, the new
store manager performs a variety of duties (i.e., selling, collecting and
administrative tasks) during the early stages of his or her stores operations.
As the store develops and the customer base grows, additional staff is hired.

Typically,
monthly sales levels at new stores are substantially less than sales levels at
mature stores. Over time new stores gain recognition in their communities, and
a combination of customer referrals and repeat business generally facilitate
sales growth. Sales growth at new stores can exceed 20% per year for a number
of years. Historically, mature stores typically experience annual sales growth,
but at a lower percentage than new stores. However, in 2007 the Company did
experience a decrease in sales at mature stores as it focused on improving the
quality of sales in the face of increased credit losses. In 2008, the
historical sales trends returned as operational initiatives showed success and
the Company was able to support higher sales levels as a result.

7

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New
stores are generally provided with approximately $750,000 to $1.2 million in
capital from the corporate office during the first 12 to 24 months of operation.
These funds are used principally to fund receivables growth. After this 12 to
24 month start-up period, new stores typically become cash flow positive. That
is, receivables growth is funded from store profits rather than additional
capital from the corporate office. This limitation of capital to new, as well
as existing, stores serves as an important operating discipline. Essentially,
stores must be profitable in order to grow. Typically, new stores are
profitable within the first year of opening.

|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Corporate
  Office Oversight and Management. The corporate office, based in Bentonville, Arkansas, consists of
  area operations managers, regional vice presidents, regional purchasing
  directors, a vice president of purchasing, compliance auditors, associate and
  management development personnel, accounting and management information
  systems personnel, administrative personnel and senior management. The
  corporate office monitors and oversees store operations. The Companys stores
  transmit and submit operating and financial information and reports to the
  corporate office on a daily, weekly and monthly basis. This information
  includes cash receipts and disbursements, inventory and receivables levels,
  receivables agings and sales and account loss data. The corporate office uses
  this information to compile Company-wide reports, plan store visits and
  prepare monthly financial statements.

Periodically,
area operations managers, regional vice presidents, compliance auditors and
senior management visit the Companys stores to inspect, review and comment on
operations. Often, the corporate office assists in training new managers and
other store level associates. Compliance auditors visit lots quarterly to
ensure policies and procedures are being followed and that the Companys assets
are being safe-guarded. In addition to financial results, the corporate office
uses delinquency and account loss standards and a point system to evaluate a
stores performance. Also, bankrupt and legal action accounts and other accounts
that have been written off at dealerships are handled corporately in an effort
to allow store personnel time to focus on more current accounts.

The
Companys store managers meet monthly on an area, regional or Company-wide
basis. At these meetings, corporate office personnel provide training and
recognize achievements of store managers. Near the end of every fiscal year,
the respective area operations manager, regional vice president and senior
management conduct projection meetings with each store manager. At these
meetings, the years results are reviewed and ranked relative to other stores,
and both quantitative and qualitative goals are established for the upcoming
year. The qualitative goals may focus on staff development, effective delegation,
and leadership and organization skills. Quantitatively, the Company establishes
unit sales goals and, depending on the circumstances, may establish
delinquency, account loss or expense goals.

The
corporate office is also responsible for establishing policy, maintaining the
Companys management information systems, conducting compliance audits,
orchestrating new store openings and setting the strategic direction for the
Company.

Industry

|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Used Car
  Sales. The market
  for used car sales in the United States is significant. Used car retail sales
  typically occur through franchised new car dealerships that sell used cars or
  independent used car dealerships. The Company operates in the Buy Here/Pay
  Here segment of the independent used car sales and finance market. Buy
  Here/Pay Here dealers sell and finance used cars to individuals with limited
  credit histories or past credit problems. Buy Here/Pay Here dealers typically
  offer their customers certain advantages over more traditional financing
  sources, such as broader and more flexible underwriting guidelines, flexible
  payment terms (including scheduling payments on a weekly or bi-weekly basis
  to coincide with a customers payday), and the ability to make payments in
  person, an important feature to individuals who may not have a checking
  account.

8

---



|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Used Car Financing.
  The used automobile financing industry is served by traditional lending
  sources such as banks, savings and loans, and captive finance subsidiaries of
  automobile manufacturers, as well as by independent finance companies and Buy
  Here/Pay Here dealers. Despite significant opportunities, many of the traditional lending sources do not
  consistently provide financing to individuals with limited credit histories
  or past credit problems. Management believes traditional lenders avoid this
  market because of its high credit risk and the associated collections
  efforts.

Competition

The
used automotive retail industry is highly competitive and fragmented. The
Company competes principally with other independent Buy Here/Pay Here dealers,
and to a lesser degree with (i) the used vehicle retail operations of
franchised automobile dealerships, (ii) independent used vehicle dealers, and
(iii) individuals who sell used vehicles in private transactions. The Company
competes for both the purchase and resale of used vehicles.

Management
believes the principal competitive factors in the sale of its used vehicles
include (i) the availability of financing to consumers with limited credit
histories or past credit problems, (ii) the breadth and quality of vehicle
selection, (iii) pricing, (iv) the convenience of a dealerships location, (v)
the option to purchase a service contract, and (vi) customer service.
Management believes that its dealerships are competitive in each of these
areas.

Regulation and
Licensing

The
Companys operations are subject to various federal, state and local laws,
ordinances and regulations pertaining to the sale and financing of vehicles.
Under various state laws, the Companys dealerships must obtain a license in
order to operate or relocate. These laws also regulate advertising and sales
practices. The Companys financing activities are subject to federal
truth-in-lending and equal credit opportunity regulations as well as state and
local motor vehicle finance laws, installment finance laws, usury laws and
other installment sales laws. Among other things, these laws require that the
Company limit or prescribe terms of the contracts it originates, require
specified disclosures to customers, restrict collections practices, limit the
Companys right to repossess and sell collateral, and prohibit discrimination
against customers on the basis of certain characteristics including age, race,
gender and marital status.

The
states in which the Company operates impose limits on interest rates the
Company can charge on its loans. These limits are generally based on either (i)
a specified margin above the federal primary credit rate, (ii) the age of the
vehicle, or (iii) a fixed rate. Management believes the Company is in
compliance in all material respects with all applicable federal, state and
local laws, ordinances and regulations. However, the adoption of additional
laws, changes in the interpretation of existing laws, or the Companys entrance
into jurisdictions with more stringent regulatory requirements could have a
material adverse effect on the Companys used vehicle sales and finance
business.

Employees

As
of April 30, 2008, the Company, including its consolidated subsidiaries,
employed approximately 840 persons full time. None of the Companys employees
are covered by a collective bargaining agreement and the Company believes that
its relations with its employees are good.

9

---



Available Information

The
Companys website is located at www.car-mart.com. The Company makes available
on this website, free of charge, access to the annual report on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments
to those reports, as well as proxy statements and other information the Company
files with, or furnishes to, the Securities and Exchange Commission (SEC) as
soon as reasonably practicable after the Company electronically submits this
material to the SEC. The information contained on the website or available by
hyperlink from the website is not incorporated into this Annual Report on Form
10-K or other documents the Company files with, or furnishes to, the SEC.

Executive Officers

The
executive officers of the Company are as follows:

|                         |  |     |  |                                                                              
|------------------------ |  | --- |  | -----------------------------------------------------------------------------
|Name                     |  | Age |  | Position
  with the Company                                                  
|                         |  |     |  |                                                                              
|                         |  |     |  |                                                                              
|Tilman J.
  Falgout, III |  | 59  |  | Chairman of
  the Board, General Counsel and Director                        
|                         |  |     |  |                                                                              
|William H.
  Henderson   |  | 44  |  | Vice
  Chairman of the Board, President, Chief Executive Officer and Director
|                         |  |     |  |                                                                              
|Eddie L.
  Hight         |  | 45  |  | Chief
  Operating Officer                                                    
|                         |  |     |  |                                                                              
|Jeffrey A.
  Williams    |  | 45  |  | Chief
  Financial Officer, Vice President Finance and Secretary              

Tilman
J. Falgout, III has served as Chairman of the Board
since May 2004, General Counsel
since 1995 and a director of the Company since 1992. From May 2002 until
October 2007, Mr. Falgout served as Chief Executive Officer of the Company.
From 1995 until May 2002, Mr. Falgout also served as Executive Vice President
of the Company. From 1978 through June 1995, Mr. Falgout was a partner in the
law firm of Stumpf & Falgout, Houston, Texas.

William
H. Henderson has served as Vice Chairman of the Board
since May 2004, as President since May 2002, and as Chief Executive Officer of
the Company since October 2007. From 1999 until May 2002, Mr. Henderson served
as Chief Operating Officer of Car-Mart. From 1992 through 1998, Mr. Henderson served as General Manager of Car-Mart.
From 1987 to 1992, Mr. Henderson primarily held the positions of District
Manager and Regional Manager at Car-Mart.

Eddie
L. Highthas served as Chief Operating Officer of the
Company since May 2002. From 1984 until May 2002, Mr. Hight held a number of positions at Car-Mart
including Store Manager and Regional Manager.

Jeffrey
A. Williams has served as Chief Financial Officer,
Vice President Finance and Secretary of the Company since October 1, 2005. From
October 2004 until his employment by the Company, he served as the Chief
Financial Officer of Budgetext
Corporation, a distributor of new and used textbooks. From February 2004 to
October 2004, Mr. Williams was the President and founder of Clearview
Enterprises, LLC, a regional distributor of animal health products. From
January 1999 to January 2004, Mr. Williams was Chief Financial Officer and Vice
President of Operations of Wynco, LLC, a nationwide distributor of animal
health products.

10

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Item 1A. Risk Factors

Car-Mart
is subject to various risks, including the risks described below. Car-Marts
business, operating results, and financial condition could be materially and
adversely affected by any of these risks. Additional risks not presently known
to the Company or that Car-Mart currently deems immaterial may also impair its
business and operations.

Risks Related to the Used Automotive Retail
and Finance Industry

The Company may have a higher risk of delinquency and
default than traditional lenders because it loans money to credit-impaired
borrowers.

Substantially
all of Car-Marts automobile contracts involve loans made to individuals with
impaired or limited credit histories, or higher debt-to-income ratios than
permitted by traditional lenders. Loans made to borrowers who are restricted in
their ability to obtain financing from traditional lenders generally entail a
higher risk of delinquency, default and repossession, and higher losses than
loans made to borrowers with better credit. Delinquency interrupts the flow of
projected interest income and repayment of principal from a loan, and a default
can ultimately lead to a loss if the net realizable value of the automobile
securing the loan is insufficient to cover the principal and interest due on
the loan or the vehicle cannot be recovered. Car-Marts profitability depends,
in part, upon its ability to properly evaluate the creditworthiness of
non-prime borrowers and efficiently service such loans. Although the Company
believes that its underwriting criteria and collection methods enable it to
manage the higher risks inherent in loans made to non-prime borrowers, no
assurance can be given that such criteria or methods will afford adequate
protection against such risks. If the Company experiences higher losses than
anticipated, its financial condition, results of operations and business
prospects could be materially and adversely affected.

A decrease in market interest rates would likely have an
adverse effect on the Companys profitability.

The
Companys earnings are impacted by its net interest income, which is the
difference between the income earned on interest-bearing assets and the
interest paid on interest-bearing notes payable. The Companys finance
receivables generally bear interest at fixed rates ranging from 6% to 19%,
while its revolving notes payable contain variable interest rates that fluctuate
with market interest rates. However, interest rates charged on finance
receivables originated in the State of Arkansas are limited to the federal
primary credit rate (currently 2.25%) plus 5%. Typically, the Company charges
interest on its Arkansas loans at or near the maximum rate allowed by law.
Thus, while the interest rates charged on the Companys loans do not fluctuate
once established, new loans originated in Arkansas are set at a spread above
the federal primary credit rate which does fluctuate. At April 30, 2008,
approximately 56% of the Companys finance receivables were originated in
Arkansas. Assuming that this percentage is held constant for future loan
originations, the long-term effect of decreases in the federal primary credit
rate would generally have a negative effect on the profitability of the Company
because the amount of interest income lost on Arkansas originated loans would
likely exceed the amount of interest expense saved on the Companys variable
rate borrowings.

The Companys allowance for credit
losses may not be sufficient to cover actual credit losses, which could
adversely affect its financial condition and operating results.

From
time to time, the Company has to recognize losses resulting from the inability
of certain borrowers to repay loans and the insufficient realizable value of
the collateral securing loans. The Company maintains an allowance for credit
losses in an attempt to cover credit losses inherent in its loan portfolio.
Additional credit losses will likely occur in the future and may occur at a
rate greater than the Company has experienced to date. The allowance for credit
losses is based primarily upon historical credit loss experience, with
consideration given to delinquency levels, collateral values, economic
conditions and underwriting and collections practices. This evaluation is
inherently subjective as it requires estimates of material factors that may be
susceptible to significant change. If the Companys assumptions and judgments
prove to be incorrect, its current allowance may not be sufficient and
adjustments may be necessary to allow for different economic conditions or
adverse developments in its loan portfolio.

11

---



A reduction in the availability or access to sources of
inventory would adversely affect the Companys business by increasing the costs
of vehicles purchased.

Car-Mart
acquires vehicles primarily through wholesalers, new car dealers, individuals
and from auctions. There can be no assurance that sufficient inventory will
continue to be available to the Company or will be available at comparable
costs. Any reduction in the availability of inventory or increases in the cost
of vehicles would adversely affect gross profit percentages as the Company
focuses on keeping payments affordable to its customer base. The Company could
have to absorb cost increases.

The used automotive retail industry is highly
competitive and fragmented, which could result in increased costs to the
Company for vehicles and adverse price competition.

The
Company competes principally with other independent Buy Here/Pay Here dealers,
and to a lesser degree with (i) the used vehicle retail operations of
franchised automobile dealerships, (ii) independent used vehicle dealers, and
(iii) individuals who sell used vehicles in private transactions. The Company
competes for both the purchase and resale of used vehicles. The Companys
competitors may sell the same or similar makes of vehicles that Car-Mart offers
in the same or similar markets at competitive prices. Increased competition in
the market, including new entrants to the market, could result in increased
wholesale costs for used vehicles and lower-than-expected vehicle sales and
margins. Further, if any of
Car-Marts competitors seek to gain or retain market share by reducing prices
for used vehicles, the Company would likely reduce its prices in order to
remain competitive, which may result in a decrease in its sales and
profitability and require a change in its operating strategies.

An economic slowdown will have adverse consequences for the
used automotive industry and may have greater consequences for the non-prime
segment of the industry.

In
the normal course of business, the used automotive retail industry is subject
to changes in regional U.S. economic conditions, including, but not limited to,
interest rates, gasoline prices, inflation, personal discretionary spending
levels, and consumer sentiment about the economy in general. Any significant
changes in economic conditions could adversely affect consumer demand and/or
increase costs, resulting in lower profitability for the Company. Due to the
Companys focus on non-prime borrowers, its actual rate of delinquencies,
repossessions and credit losses on loans could be higher under adverse economic
conditions than those experienced in the automotive retail finance industry in
general.

The used automotive industry operates in a highly regulated
environment with significant attendant compliance costs and penalties for
non-compliance.

The
used automotive industry is subject to a wide range of federal, state, and
local laws and regulations, such as local licensing requirements and laws
regarding advertising, vehicle sales, financing, and employment practices.
Facilities and operations are also subject to federal, state, and local laws
and regulations relating to environmental protection and human health and
safety. The violation of these laws and regulations could result in
administrative, civil, or criminal penalties against the Company, or in a cease
and desist order. As a result, the Company has incurred, and will continue to
incur, capital and operating expenditures, and other costs in complying with
these laws and regulations. Further, over the past several years, private plaintiffs
and federal, state, and local regulatory and law enforcement authorities have
increased their scrutiny of advertising, sales, and finance and insurance
activities in the sale of motor vehicles.

12

---



Inclement weather can adversely impact the Companys
operating results.

The
occurrence of weather events, such as rain, snow, wind, storms, hurricanes, or
other natural disasters, adversely affecting consumer traffic at Car-Marts
automotive dealerships, could negatively impact the Companys operating
results.

Risks Related to the Company

The Companys business is geographically concentrated;
therefore, the Companys results of operations may be adversely affected by
unfavorable conditions in its local markets.

The
Companys performance is subject to local economic, competitive, and other
conditions prevailing in the nine states where Car-Mart operates. The Company
provides financing in connection with the sale of substantially all of its
vehicles. These sales are made primarily to customers residing in Arkansas,
Oklahoma, Texas, Kentucky and Missouri, with approximately 53% of revenues
resulting from sales to Arkansas customers. The Companys current results of
operations depend substantially on general economic conditions and consumer
spending habits in these local markets.

Car-Marts success depends upon the continued contributions
of its management teams.

The
Company is dependent upon the continued contributions of its management teams
and other key employees. Since the Company maintains a decentralized operation
in which each store is responsible for buying and selling its own vehicles,
making credit decisions and collecting loans it originates, the key employees
at each store are important factors in the Companys ability to implement its
business strategy. Consequently, the loss of the services of key employees
could have a material adverse effect on the Companys results of operations. In
addition, when Car-Mart decides to open new lots, the Company will need to hire
additional personnel. The market for qualified employees in the industry and in
the regions in which Car-Mart operates is highly competitive and may subject
the Company to increased labor costs during periods of low unemployment.

The Companys business is dependent upon the efficient
operation of its information systems.

Car-Mart
relies on its information systems to manage its sales, inventory, consumer
financing, and customer information effectively. The failure of the Companys
information systems to perform as designed, or the failure to maintain and
continually enhance or protect the integrity of these systems, could disrupt
the Companys business, impact sales and profitability, or expose the Company
to customer or third-party claims.

Changes in the availability or cost of capital and working
capital financing could adversely affect the Companys growth and business
strategies.

The
Company generates cash from income from continuing operations. The cash is
primarily used to fund finance receivables growth, which have historically
grown slightly faster than revenues. To the extent finance receivables growth
exceeds income from continuing operations, generally the Company increases its
borrowings under its revolving credit facilities to provide the cash necessary
to make loans. On a long-term basis, the Company expects its principal sources
of liquidity to consist of income from continuing operations and borrowings
under revolving credit facilities and/or fixed interest term loans. Any adverse
changes in the Companys ability to borrow under revolving credit facilities or
fixed interest term loans, or any increase in the cost of such borrowings,
would likely have a negative impact on the Companys ability to finance
receivables growth which would adversely affect the Companys growth and
business strategies.

13

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Further,
Car-Marts current credit facilities contain various reporting and performance
covenants. Any failure by the Company to comply with these covenants could have
a material adverse effect on the Companys ability to implement its business
strategy.

The Companys growth is dependent upon the availability of
suitable lot sites.

The
Company leases a majority of the properties where its stores are located. If
and when the Company decides to open new stores, the inability to acquire
suitable real estate, either through lease or purchase, at favorable terms
could limit the expansion of the Companys lot base and could have a material
adverse effect on the Companys expansion strategy and future operating
results.

Car-Marts business is subject to seasonal fluctuations.

The
Companys third fiscal quarter (November through January) has historically been
the slowest period for car and truck sales. Conversely, the Companys first and
fourth fiscal quarters (May through July and February through April) have
historically been the busiest times for car and truck sales. Therefore,
Car-Mart generally realizes a higher proportion of its revenue and operating profit
during the first and fourth fiscal quarters. However, in fiscal 2008, tax
refund anticipation sales began in early November 2007 and continued through
January 2008. The success of the tax refund anticipation sales effort led to
higher sales levels during the third quarter of fiscal 2008. The Company
expects this trend to continue in future periods. If conditions arise that
impair vehicle sales during the first or fourth fiscal quarters, the adverse
effect on the Companys revenues and operating profit for the year could be
disproportionately large.

Item 1B. Unresolved Staff Comments

Not
applicable.

Item 2. Properties

As of April
30, 2008, the Company leased approximately 70% of its facilities, including
dealerships and the Companys corporate offices. These facilities are located
principally in the states of Arkansas, Oklahoma, Texas, Kentucky and Missouri.
The Companys corporate offices are located in approximately 12,000 square feet
of leased space in Bentonville, Arkansas. For additional information regarding
the Companys properties, see Contractual Payment Obligations and
Off-Balance Sheet Arrangements under Item 7 of Part II.

Item 3. Legal Proceedings

In
the ordinary course of business, the Company has become a defendant in various
types of legal proceedings. The Company does not expect the final outcome of
any of these actions, individually or in the aggregate, to have a material
adverse effect on the Companys financial position, annual results of
operations or cash flows. However, the results of legal proceedings cannot be
predicted with certainty, and an unfavorable resolution of one or more of these
legal proceedings could have a material adverse effect on the Companys
financial position, annual results of operations or cash flows.

14

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Item 4. Submission of Matters to a Vote of
Security Holders

No
matters were submitted to a vote of security holders of the Company during the
fourth quarter ended April 30, 2008.

15

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PART II

Item 5. Market for Registrants Common
Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

General

The
Companys common stock is traded on the NASDAQ Stock Market under the symbol
CRMT. The following table sets forth, by fiscal quarter, the high and low
closing sales prices reported by NASDAQ for the Companys common stock for the
periods indicated.

|               |  |             |       |             |   |       |  |     |       |  |   |       | 
|-------------- |  | ----------- | ----- | ----------- | - | ----- |  | --- | ----- |  | - | ----- | 
|               |  | Fiscal 2008 |       | Fiscal 2007 |  
|               |  | High        |       | Low         |   | High  |  | Low |      
|               |  |             |       |             |   |       |  |     |      
|               |  |             |       |             |   |       |  |     |      
|First quarter  |  | $           | 13.92 |             | $ | 12.18 |  | $   | 20.58 |  | $ | 15.04 | 
|Second quarter |  |             | 12.50 |             |   | 10.62 |  |     | 17.01 |  |   | 13.90 | 
|Third quarter  |  |             | 13.59 |             |   | 10.30 |  |     | 15.08 |  |   | 10.41 | 
|Fourth quarter |  |             | 14.65 |             |   | 10.90 |  |     | 13.84 |  |   | 10.56 | 

As
of July 3, 2008, there were approximately 1,039 stockholders of record. This
number excludes stockholders holding stock under nominee security position
listings.

Stockholder Return Performance Graph

Set
forth below is a line graph comparing the fiscal year end percentage change in
the cumulative total stockholder return on the Companys common stock to (i)
the cumulative total return of the NASDAQ Market Index (U.S. companies), and
(ii) the Hemscott Group 744 Index  Auto Dealerships (Automobile Index), for
the period of five fiscal years commencing on May 1, 2003 and ending on April
30, 2008. The graph assumes that the value of the investment in the Companys
common stock and each index was $100 on May 1, 2003.

(LINE GRAPH)

16

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The
dollar value at April 30, 2008 of $100 invested in the Companys common stock
on May 1, 2003 was $143.83, compared to $172.87 for the Automobile Index
described above and $178.03 for the NASDAQ Market Index (U.S. Companies).

Dividend Policy

Since
its inception the Company has paid no cash dividends on its common stock. The
Company currently intends to follow a policy of retaining earnings to finance
future growth. Payment of cash dividends in the future will be determined by
the Companys Board of Directors and will depend upon, among other things, the
Companys future earnings, operations, capital requirements and surplus,
general financial condition, contractual restrictions that may exist, and such
other factors as the Board of Directors may deem relevant. Colonials revolving
credit facility prohibits dividends to the Company and Car-Mart of Arkansass
revolving credit facility limits dividends to the Company to 75% of Car-Mart of
Arkansass net income. Thus, the Company is limited in the amount of cash
dividends or other distributions it can make to its shareholders.

Stock Split

In
March 2005, the Companys Board of Directors declared a three-for-two common
stock split, effected in the form of a 50% stock dividend, that was paid in
April 2005. All share and per share numbers and amounts in this Form 10-K have
been adjusted to reflect this three-for-two common stock split.

Equity Compensation Plan Information

The
following table provides information as of April 30, 2008 with respect to the
Companys equity compensation plans:

|                                     |  |                                                                                                 |  |                                                                                |  |                                                                                                  |  |   |       |  |  |  |  |         |  | 
|------------------------------------ |  | ----------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------ |  | ------------------------------------------------------------------------------------------------ |  | - | ----- |  |  |  |  | ------- |  | 
|Plan Category                        |  | Number of Securities to
 be Issued upon
 Exercise of
 Outstanding Options,
 Warrants and Rights |  | Weighted-Average
 Exercise Price of
 Outstanding Options,
 Warrants and Rights |  | Number of Securities
 Remaining Available for
 Future Issuance under
 Equity Compensation
 Plans | 
|                                     |  |                                                                                                 |  |                                                                                |  |                                                                                                  | 
|Equity compensation plans:           |  |                                                                                                 |  |                                                                                |  |                                                                                                  |  |   |       |  |  |  |  |         |  | 
|Approved by security holders         |  |                                                                                                 |  | 593,647                                                                        |  |                                                                                                  |  | $ | 12.11 |  |  |  |  | 640,000 |  | 
|Not approved by security holders (1) |  |                                                                                                 |  | 18,750                                                                         |  |                                                                                                  |  |   | 13.11 |  |  |  |  |        |  | 
|                                     |  |                                                                                                 |  |                                                                                |  |                                                                                                  |  |   |       |  |  |  |  |         |  | 
|Total                                |  |                                                                                                 |  | 612,397                                                                        |  |                                                                                                  |  | $ | 12.14 |  |  |  |  | 640,000 |  | 

| | 
| | 
| | 

|    |                                                                                                                                                                             
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | For a description of equity
 compensation plans not approved by security holders, see Warrants in Note J
 to the Companys financial statements included elsewhere herein.

17

---



Issuer Purchases of Equity Securities

The
Company is authorized to repurchase up to 1 million shares of its common
stock under the common stock repurchase program last amended and approved by
the Board of Directors and announced on December 2, 2005. The following table
sets forth information with respect to purchases made by or on behalf of the
Company of shares of the Companys common stock during the periods indicated:

|                                       |  |                                |  |                               |  |                                                                                          |  |                                                                                        |       |  |  |  |  |         |  |  |  |  |         |  | 
|-------------------------------------- |  | ------------------------------ |  | ----------------------------- |  | ---------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------- | ----- |  |  |  |  | ------- |  |  |  |  | ------- |  | 
|Period                                 |  | Total Numberof SharesPurchased |  | Average Price
 Paid per Share |  | Total Number of
 Shares Purchased
 as part of Publicly
 Announced Plans
 or Programs (2) |  | Maximum Number
 of Shares that may
 yet be Purchased
 under the Plans or
 Programs (2) |      
|                                       |  |                                |  |                               |  |                                                                                          |  |                                                                                        |      
|                                       |  |                                |  |                               |  |                                                                                          |  |                                                                                        |       |  |  |  |  |         |  |  |  |  |         |  | 
|February 1, 2008 to
 February 29, 2008 |  |                                |  |                              |  |                                                                                          |  |                                                                                        |      |  |  |  |  |        |  |  |  |  | 711,783 |  | 
|March 1, 2008 to March 31,
 2008       |  |                                |  | 105,724                       |  |                                                                                          |  | $                                                                                      | 12.38 |  |  |  |  | 105,724 |  |  |  |  | 606,059 |  | 
|April 1, 2008 to April 30,
 2008       |  |                                |  |                              |  |                                                                                          |  |                                                                                        |      |  |  |  |  |        |  |  |  |  | 606,059 |  | 
|Total                                  |  |                                |  | 105,724                       |  |                                                                                          |  | $                                                                                      | 12.38 |  |  |  |  | 105,724 |  |  |  |  | 606,059 |  | 

| | 
| | 
| | 

|    |                                                            
|--- | -----------------------------------------------------------
|(2) | The above stock repurchase
 program has no expiration date.

Item 6. Selected Financial Data

The
financial data set forth below was derived from the audited consolidated
financial statements of the Company and should be read in conjunction with the
consolidated financial statements and related notes thereto, and Managements
Discussion and Analysis of Financial Condition and Results of Operations
contained elsewhere herein.

|                                                      |  |                                     |         |      |   |         |  |      |         |      |   |         |  |   |         | 
|----------------------------------------------------- |  | ----------------------------------- | ------- | ---- | - | ------- |  | ---- | ------- | ---- | - | ------- |  | - | ------- | 
|                                                      |  | Years Ended April 30,(In thousands) |        
|                                                      |  |                                     |        
|                                                      |  | 2008                                |         | 2007 |   | 2006    |  | 2005 |         | 2004 |  
|                                                      |  |                                     |         |      |   |         |  |      |         |      |  
|                                                      |  |                                     |         |      |   |         |  |      |         |      |   |         |  |   |         | 
|Revenues                                              |  | $                                   | 274,631 |      | $ | 240,334 |  | $    | 234,207 |      | $ | 204,788 |  | $ | 176,184 | 
|                                                      |  |                                     |         |      |   |         |  |      |         |      |   |         |  |   |         | 
|Income from continuing operations                     |  | $                                   | 15,033  |      | $ | 4,232   |  | $    | 16,705  |      | $ | 17,976  |  | $ | 15,639  | 
|                                                      |  |                                     |         |      |   |         |  |      |         |      |   |         |  |   |         | 
|Net income                                            |  | $                                   | 15,033  |      | $ | 4,232   |  | $    | 16,705  |      | $ | 17,976  |  | $ | 15,804  | 
|                                                      |  |                                     |         |      |   |         |  |      |         |      |   |         |  |   |         | 
|Diluted earnings per share from continuing operations |  | $                                   | 1.26    |      | $ | 0.35    |  | $    | 1.39    |      | $ | 1.49    |  | $ | 1.31    | 
|                                                      |  |                                     |         |      |   |         |  |      |         |      |   |         |  |   |         | 
|Total assets                                          |  | $                                   | 200,589 |      | $ | 173,598 |  | $    | 177,613 |      | $ | 143,668 |  | $ | 117,241 | 
|Total debt                                            |  | $                                   | 40,337  |      | $ | 40,829  |  | $    | 43,588  |      | $ | 29,145  |  | $ | 22,534  | 
|Stockholders equity                                  |  | $                                   | 137,222 |      | $ | 123,728 |  | $    | 119,251 |      | $ | 103,265 |  | $ | 84,577  | 
|Shares outstanding                                    |  |                                     | 11,688  |      |   | 11,875  |  |      | 11,848  |      |   | 11,844  |  |   | 11,637  | 

| | 
| | 
| | 

Item 7. Managements Discussion and Analysis
of Financial Condition and Results of Operations

The
following discussion should be read in conjunction with the Companys
consolidated financial statements appearing elsewhere in this annual report.

Overview

Americas
Car-Mart, Inc., a Texas corporation (the Company), is the largest publicly
held automotive retailer in the United States focused exclusively on the Buy
Here/Pay Here segment of the used car market. References to the Company
typically include the Companys consolidated subsidiaries. The Companys
operations are principally conducted through its two operating subsidiaries,
Americas Car-Mart, Inc., an Arkansas corporation (Car-Mart of Arkansas), and
Colonial Auto Finance, Inc., an Arkansas corporation (Colonial).
Collectively, Car-Mart of Arkansas and Colonial are referred to herein as
Car-Mart. The Company primarily sells older model used vehicles and provides
financing for substantially all of its customers. Many of the Companys
customers have limited financial resources and would not qualify for
conventional financing as a result of limited credit histories or past credit
problems. As of April 30, 2008, the Company operated 91 stores located
primarily in small cities throughout the South-Central United States.

18

---



Car-Mart
has been operating since 1981. Car-Mart has grown its revenues between
approximately 3% and 21% per year over the last ten years (average 16%).
Historically, finance receivables have tended to grow slightly faster than
revenues. In fiscal 2008, revenues increased 14.3% and finance receivables
principal increased 16.6%. After subtracting deferred revenue associated with
the payment protection plan product, finance receivables increased 14% during
fiscal 2008. The average term for installment sales contracts at April 30, 2008
was relatively flat as compared to April 30, 2007 (27.26 months vs. 27.13
months). In fiscal 2007, revenues increased 2.6% while finance receivables
decreased 3.6% due to higher charge offs experienced for the year. In fiscal
2006, finance receivables grew 21.6% compared to revenue growth of 14.4%. The
increase in 2006 primarily related to 1) an increase in the average term for
installment sales contracts (to 27.25 months), 2) the timing of customer
payments, particularly at year-end, 3) the purchase of finance receivables from
Dans Auto Sales in Lexington, KY in March 2006, 4) the increase in the
percentage of 30-day plus past due amounts at year-end (to 3.7%), and 5) an
increase in the average interest rate charged resulting in a higher percentage
of customer payments going to interest as opposed to principal reduction.
Revenue growth results from same store revenue growth and the addition of new
stores. Going forward, it is anticipated that the historical experience of
finance receivables growing slightly faster than revenues will continue.

The
Companys primary focus is on collections. Each store is responsible for its
own collections with supervisory involvement of the corporate office. Over the
last five fiscal years, Car-Marts credit losses as a percentage of sales have
ranged between approximately 20.1% in 2005 and 29.1% in 2007 (average of
22.8%). Credit losses in fiscal 2007 (29.1%) were higher than the Companys
average over the last five years. Credit losses in fiscal 2007 were negatively
affected by higher losses experienced during the Companys second through
fourth quarters (31.4%). The 2007 credit losses included an approximate $5
million pre-tax charge (2.3%) to increase the allowance for credit losses to
22% of the finance receivables principal balance from 19.2%. Credit losses were
higher due to several factors and included higher losses experienced in most of
the dealerships, including mature dealerships, as the Company saw weakness in
the performance of its portfolio as customers had difficulty making payments
under the terms of their loans. Additionally, significant negative external
economic issues, including higher fuel prices, were prevalent throughout fiscal
2007 and fiscal 2008. Credit losses in fiscal 2008 returned to a more
historical level at 22% of sales as the Company continued to focus on its
operational initiatives, including credit and collections efforts.

The
Companys gross margins as a percentage of sales have been fairly consistent
from year to year. Over the last five fiscal years, Car-Marts gross margins as
a percentage of sales have ranged between approximately 42% and 48%. Gross
margins as a percentage of sales for fiscal 2008 were 42.3% (43.0% for the
fourth quarter). The Companys gross margins are set based upon the cost of the
vehicle purchased, with lower-priced vehicles typically having higher gross
margin percentages. In recent years, the Companys gross margins have been
negatively affected by the increase in the average retail sales price (a
function of a higher purchase price) and higher operating costs, mostly related
to increased vehicle repair costs and higher fuel costs. Additionally, the
percentage of wholesale sales to retail sales, which relate for the most part
to repossessed vehicles sold at or near cost, was higher in fiscal 2007 and
during the first quarter of fiscal 2008 due to the increased level of
repossession activity coupled with relatively flat retail sales levels. The
Company expects that its gross margin percentage will not change significantly
in the near term from its current level.

19

---



Hiring,
training and retaining qualified associates are critical to the Companys
success. The rate at which the Company adds new stores and is able to implement
operating initiatives is limited by the number of trained managers the Company
has at its disposal. Excessive turnover, particularly at the Store Manager
level, could impact the Companys ability to add new stores and to meet
operational initiatives. The Company has added resources to recruit, train and
develop personnel, especially personnel targeted to fill lot manager positions.
The Company expects to continue to invest in the development of its workforce
in fiscal 2009 and beyond.

20

---



Consolidated Operations(Operating Statement Dollars in Thousands)

|                             |  |                       |         |                 |   |                 |    |                 |         |      |          |       |   |      |       |    |  |       |   |  |       |   |  |       |  
|---------------------------- |  | --------------------- | ------- | --------------- | - | --------------- | -- | --------------- | ------- | ---- | -------- | ----- | - | ---- | ----- | -- |  | ----- | - |  | ----- | - |  | ----- | -
|                             |  |                       |         |                 |   |                 |    |                 |         |      | % Change |       |   |      |       |    |  |       |   |  |      
|                             |  |                       |         |                 |   |                 |    |                 |         |      |          |       |   |     
|                             |  | Years Ended April 30, |         | 2008
 vs.
 2007 |   | 2007
 vs.
 2006 |    | As a % of Sales |        
|                             |  |                       |         |                 |   |                 |   
|                             |  | 2008                  |         | 2007            |   | 2006            |    |                 |         | 2008 |          | 2007  |   | 2006 |      
|                             |  |                       |         |                 |   |                 |    |                 |         |      |          |       |   |      |       |    | 
|Operating Statement:         |  |                       |         |                 |   |                 |    |                 |         |      |          |       |   |      |       |    |  |       |   |  |       |   |  |       |  
|Revenues:                    |  |                       |         |                 |   |                 |    |                 |         |      |          |       |   |      |       |    |  |       |   |  |       |   |  |       |  
|Sales                        |  |                       | 250,337 |                 | $ | 216,898         |    | $               | 214,482 |      |          | 15.4  | % |      | 1.1   | %  |  | 100.0 | % |  | 100.0 | % |  | 100.0 | %
|Interest income and other    |  |                       | 24,294  |                 |   | 23,436          |    |                 | 19,725  |      |          | 3.7   |   |      | 18.8  |    |  | 9.7   |   |  | 10.8  |   |  | 9.2   |  
|                             |  |                       |         |                 |   |                 |    |                 |         |      |          |       |   |      |       |    |  |       |   |  |       |   |  |       |  
|Total                        |  |                       | 274,631 |                 |   | 240,334         |    |                 | 234,207 |      |          | 14.3  |   |      | 2.6   |    |  | 109.7 |   |  | 110.8 |   |  | 109.2 |  
|                             |  |                       |         |                 |   |                 |    |                 |         |      |          |       |   |      |       |    |  |       |   |  |       |   |  |       |  
|                             |  |                       |         |                 |   |                 |    |                 |         |      |          |       |   |      |       |    |  |       |   |  |       |   |  |       |  
|Costs and expenses:          |  |                       |         |                 |   |                 |    |                 |         |      |          |       |   |      |       |    |  |       |   |  |       |   |  |       |  
|Cost of sales                |  |                       | 144,537 |                 |   | 125,073         |    |                 | 119,433 |      |          | 15.6  | % |      | 4.7   |    |  | 57.7  |   |  | 57.7  |   |  | 55.7  |  
|SG&A                         |  |                       | 47,263  |                 |   | 41,778          |    |                 | 39,261  |      |          | 13.1  |   |      | 6.4   |    |  | 18.9  |   |  | 19.3  |   |  | 18.3  |  
|Provision for credit loss    |  |                       | 55,046  |                 |   | 63,077          |    |                 | 45,810  |      |          | (12.7 | ) |      | 37.7  |    |  | 22.0  |   |  | 29.1  |   |  | 21.4  |  
|Interest expense             |  |                       | 2,947   |                 |   | 3,728           |    |                 | 2,458   |      |          | (20.9 | ) |      | 51.7  |    |  | 1.2   |   |  | 1.7   |   |  | 1.1   |  
|Depreciation and amort       |  |                       | 1,148   |                 |   | 994             |    |                 | 724     |      |          | 15.5  |   |      | 37.3  |    |  | .5    |   |  | .5    |   |  | .3    |  
|Loss on Lot Closures         |  |                       | 527     |                 |   |                |    |                 |        |      |          |       |   |      |       |    |  | .2    |   |  |       |   |  |       |  
|                             |  |                       |         |                 |   |                 |    |                 |         |      |          |       |   |      |       |    |  |       |   |  |       |   |  |       |  
|Total                        |  |                       | 251,468 |                 |   | 234,650         |    |                 | 207,686 |      |          | 7.2   |   |      | 13.0  |    |  | 100.5 |   |  | 108.2 |   |  | 96.8  |  
|                             |  |                       |         |                 |   |                 |    |                 |         |      |          |       |   |      |       |    |  |       |   |  |       |   |  |       |  
|                             |  |                       |         |                 |   |                 |    |                 |         |      |          |       |   |      |       |    |  |       |   |  |       |   |  |       |  
|Pretax income                |  | $                     | 23,163  |                 | $ | 5,684           |    | $               | 26,521  |      |          | 307.5 |   |      | (78.6 | )  |  | 9.3   |   |  | 2.6   |   |  | 12.4  |  
|                             |  |                       |         |                 |   |                 |    |                 |         |      |          |       |   |      |       |    |  |       |   |  |       |   |  |       |  
|                             |  |                       |         |                 |   |                 |    |                 |         |      |          |       |   |      |       |    |  |       |   |  |       |   |  |       |  
|Operating Data:              |  |                       |         |                 |   |                 |    |                 |         |      |          |       |   |      |       |    |  |       |   |  |       |   |  |       |  
|Retail units sold            |  |                       | 27,207  |                 |   | 25,199          |    |                 | 27,415  |      |          | 8.0   | % |      | (8.1  | %) |  |       |   |  |       |   |  |       |  
|Average stores in operation  |  |                       | 93.0    |                 |   | 89.7            |    |                 | 81.5    |      |          | 3.7   |   |      | 10.1  |    |  |       |   |  |       |   |  |       |  
|Average units sold per store |  |                       | 293     |                 |   | 281             |    |                 | 336     |      |          | 4.3   |   |      | (16.4 | )  |  |       |   |  |       |   |  |       |  
|Average retail sales price   |  | $                     | 8,690   |                 | $ | 8,125           |    | $               | 7,494   |      |          | 7.0   |   |      | 8.4   |    |  |       |   |  |       |   |  |       |  
|Same store revenue growth    |  |                       | 13.0    | %               |   | (3.2            | %) |                 | 9.8     | %    |          |       |   |      |       |    |  |       |   |  |       |   |  |       |  
|Receivables average yield    |  |                       | 12.7    | %               |   | 12.5            | %  |                 | 11.6    | %    |          |       |   |      |       |    |  |       |   |  |       |   |  |       |  

2008 Compared to 2007

Revenues
increased $34.3 million, or 14.3%, in fiscal 2008 as compared to fiscal 2007,
principally as a result of (i) revenue growth from stores that operated a full
12 months in both periods ($27.7 million), (ii) stores opened during fiscal
2007 or stores that opened or closed a satellite location during fiscal 2008 or
fiscal 2007 ($6.7 million), (iii) revenues from stores opened during fiscal
2008 ($.6 million) offset by a $.7 million decrease in revenues for a store that
closed in fiscal 2008.

Revenues
increased 14.3% in fiscal 2008 as compared to revenue growth of 2.6% in fiscal
2007. The increase in revenue growth year over year is attributable to (i) an
8% increase in retail unit volumes in fiscal 2008 together with a 7% increase
in the average unit sales price, (ii) a 3.7% increase in interest and other
income, and (iii) increased wholesale sales during fiscal 2008. Presently, the
Company expects that its average retail sales price will increase in fiscal 2009,
but at a rate less than increases seen in fiscal years 2008 and 2007.

Cost
of sales, as a percentage of sales, was flat at 57.7% in fiscal 2008 compared
to fiscal 2007. The Companys gross margins are set based upon the cost of the
vehicle purchased, with lower-priced vehicles typically having higher gross
margin percentages. The Companys gross margins have been negatively affected
in recent years by the increase in the average retail sales price (a function
of a higher purchase price) and to a lesser extent by higher operating costs,
mostly related to increased vehicle repair costs and higher fuel costs.
Additionally, the percentage of wholesale sales was higher in fiscal 2008 and
2007 than in previous years, which has had a negative effect on overall gross
margin percentages. The consumer demand for vehicles the Company purchases for
resale remains high. This high demand has been exacerbated by the decrease in
domestic new car sales, which results in higher purchase costs for the Company.

21

---



Selling,
general and administrative expense, as a percentage of sales, decreased .4% to
18.9% in fiscal 2008 from 19.3% in fiscal 2007. The percentage decrease was
principally the result of higher sales levels as a large majority of the Companys
operating costs are more fixed in nature. In dollar terms, overall expenses
increased $5.5 million which consisted primarily of increased payroll costs.
Payroll costs increased due to the increase in incentive based compensation,
which is tied to profitability. Also, stock based compensation was $1.6 million
in fiscal 2008 compared to $533,000 in fiscal 2007. The Company also
experienced an increase in lot level expenditures associated with the opening
and/or expansion of dealerships to support higher sales volumes. Additionally,
the Company incurred some increased costs associated with strengthening
controls and enhancing the corporate infrastructure to improve efficiencies and
allow for future growth.

Provision
for credit losses, as a percentage of sales, decreased 7.1% to 22.0% in fiscal
2008 from 29.1% in fiscal 2007. Credit losses in fiscal 2008 were positively
affected by lower losses during the entire year at most dealerships. The fiscal
2007 credit losses included an approximate $5 million pre-tax charge (2.3%)
which increased the allowance for credit losses to 22% of the finance
receivable principal balance from 19.2%. Credit losses were higher in fiscal
2007 due to higher losses experienced in most of the dealerships, including mature
dealerships, as the Company saw weakness in the performance of its portfolio as
customers had difficulty making payments under the terms of their loans.
Additionally, significant negative external economic issues, including higher
fuel prices, were prevalent throughout fiscal years 2007 and 2008.

Interest
expense, as a percentage of sales, decreased .5% to 1.2% in fiscal 2008 from
1.7% in fiscal 2007. The decrease was principally the result of lower average
borrowing levels and lower average interest rates on the credit facilities
during fiscal 2008.

In
fiscal 2008, the Company incurred $527,000 in losses associated with the
closure of four dealerships. One of the dealerships was in Kansas and the other
three were satellite locations in Texas.

The
effective income tax rate in fiscal 2008 was 35.1%. This rate is lower than
historical rates (excluding fiscal 2007) due to the distribution of profits
among the Companys operating subsidiaries. It is anticipated that the effective
income tax rate going forward will be more in the 36-37% range where it has
been historically.

2007 Compared to 2006

Revenues
increased $6.1 million, or 2.6%, in fiscal 2007 as compared to fiscal 2006,
principally as a result of (i) revenue growth from stores opened during fiscal
2006 or stores that opened or closed a satellite location during fiscal 2007 or
fiscal 2006 ($7.4 million), (ii) revenues from stores opened during fiscal 2007
($5.9 million) offset by a $7.2 million decrease in revenues for stores that
operated a full 12 months in both periods.

Revenues
increased 2.6% in fiscal 2007 as compared to revenue growth of 14.4% in fiscal
2006. The decrease in revenue growth year over year is attributable to (i) a
decrease in retail unit volumes in fiscal 2007 offset by an 8.4% increase in
the average unit sales price, (ii) a lower growth rate for interest and other
income, offset by (iii) increased wholesale sales during fiscal 2007.

22

---



Cost
of sales, as a percentage of sales, increased 2.0% to 57.7% in fiscal 2007 from
55.7% in fiscal 2006. The Companys gross margins are set based upon the cost
of the vehicle purchased, with lower-priced vehicles typically having higher
gross margin percentages. The Companys gross margins were negatively affected
by the increase in the average retail sales price (a function of a higher
purchase price) and higher operating costs, mostly related to increased vehicle
repair costs and higher fuel costs. Additionally, the percentage of wholesale
sales was higher in fiscal 2007 versus fiscal 2006 which had a negative effect
on gross margins. Consumer demand for the primary vehicles the Company acquires
for its stores was high and was exacerbated by the slow down in domestic new
car sales, resulting in higher purchase costs for vehicles.

Selling,
general and administrative expense, as a percentage of sales, increased 1.0% to
19.3% in fiscal 2007 from 18.3% in fiscal 2006. The percentage increase was
principally the result of an increase in advertising and payroll costs and
additional lot level expenditures associated with the opening of new
dealerships. Included in payroll costs for 2007 is approximately $533,000 in
stock based compensation associated with the adoption of SFAS 123R on May 1,
2006. Also, the percentage was negatively affected by the lower sales level
increase. Had sales levels been at planned volumes, selling, general and
administrative expense, as a percentage of sales, would have been lower.
Additionally, the Company incurred increased costs associated with
strengthening controls and enhancing the corporate infrastructure to improve
efficiencies and allow for future growth.

Provision
for credit losses, as a percentage of sales, increased 7.7% to 29.1% in fiscal
2007 from 21.4% in fiscal 2006. Credit losses in fiscal 2007 were negatively
affected by higher losses experienced during the Companys second through
fourth quarters (31.4%). The 2007 credit losses included an approximate $5
million pre-tax charge (2.3%) to increase the allowance for credit losses to
22% of the finance receivable principal balance from 19.2%. Credit losses were
higher due to several factors and included higher losses experienced in most of
the dealerships, including mature dealerships, as the Company saw weakness in
the performance of its portfolio as customers had difficulty making payments
under the terms of their loans. Additionally, significant negative external
economic issues, including higher fuel prices, were prevalent throughout fiscal
2007.

Interest
expense, as a percentage of sales, increased .6% to 1.7% in fiscal 2007 from
1.1% in fiscal 2006. The increase was principally the result of higher average
borrowing levels and higher average interest rates on the credit facility
during fiscal 2007.

The
effective income tax rate in 2007 was 26%. This lower tax rate resulted
primarily from the elimination of tax reserves established in prior years
related to Internal Revenue Service (IRS) examinations of the Companys 2002
tax returns and certain items in subsequent years. The reserves were eliminated
based on notification received from the IRS that the Company would not be
assessed any additional taxes, penalties or interest related to the
examinations. Going forward, the Company expects its effective tax rate to be
closer to historical rates.

Financial Condition

The
following table sets forth the major balance sheet accounts of the Company at
April 30, 2008, 2007 and 2006 (in thousands):

|                                             |  |           |         |      |   |         |  |   |         | 
|-------------------------------------------- |  | --------- | ------- | ---- | - | ------- |  | - | ------- | 
|                                             |  | April 30, |        
|                                             |  | 2008      |         | 2007 |   | 2006    | 
|                                             |  |           |         |      |   |         | 
|Assets:                                      |  |           |         |      |   |         |  |   |         | 
|Finance receivables, net                     |  | $         | 163,344 |      | $ | 139,194 |  | $ | 149,379 | 
|Inventory                                    |  |           | 13,532  |      |   | 13,682  |  |   | 10,923  | 
|Property and equipment, net                  |  |           | 18,140  |      |   | 16,883  |  |   | 15,436  | 
|                                             |  |           |         |      |   |         |  |   |         | 
|Liabilities:                                 |  |           |         |      |   |         |  |   |         | 
|Accounts payable and accrued liabilities     |  |           | 14,934  |      |   | 8,706   |  |   | 11,838  | 
|Revolving credit facilities & notes
 payable |  |           | 40,337  |      |   | 40,829  |  |   | 43,588  | 

23

---



Historically,
finance receivables have tended to grow slightly faster than revenue growth.
This has historically been due, to a large extent, to an increasing average
term necessitated by increases in the average retail sales price. In fiscal
2008, revenues increased 14.3% and finance receivables increased 16.6%. After
subtracting deferred revenue associated with the payment protection plan
product, finance receivables increased 14% during fiscal 2008. The average term
for installment sales contracts at April 30, 2008 was relatively flat as
compared to April 30, 2007 (27.26 months vs. 27.13 months). In fiscal 2007,
revenues increased 2.6% while finance receivables decreased 3.6% due to higher
charge offs experienced for the year. In fiscal 2006, finance receivables grew
21.6% compared to revenue growth of 14.4%. The increase in 2006 primarily
related to 1) an increase in the average term for installment sales contracts
(to 27.25 months from 25.9 months at April 30, 2005), 2) the timing of customer
payments, particularly at year-end, 3) the purchase of finance receivables from
Dans Auto Sales in Lexington, KY in March 2006, 4) the increase in the
percentage of 30-day plus past due amounts at year-end (to 3.7%), and 5) an
increase in the average interest rate charged resulting in a higher percentage
of customer payments going to interest as opposed to principal reduction. It is
anticipated that the historical experience of finance receivables growing
slightly faster than revenues will again be the trend into the future.

In
fiscal 2008, inventory decreased by 1.1% ($150,000) as compared to revenue
growth of 14.3%. Improvements in inventory management as well as the timing of
sales, particularly at year-end, allowed the Company to maintain overall
inventory levels while growing revenues. The Company will continue to manage
inventory levels into the future to ensure adequate supply, in volume and mix,
to meet sales demand.

Property
and equipment, net increased $1.3 million in fiscal 2008 as the Company
incurred expenditures to refurbish and expand a number of existing locations.

Accounts
payable and accrued liabilities increased $6.2 million in fiscal 2008 due to
significantly higher sales volumes, most pronounced toward the end of fiscal
2008. Sales were up 31.5% in the fourth quarter of fiscal 2008 compared to the
fourth quarter of fiscal 2007. Also, the unearned portion of the payment
protection plan product, which was introduced in the first quarter of fiscal
2008, was $4.6 million at April 30, 2008.

Borrowings
on the Companys revolving credit facilities fluctuate primarily based upon a
number of factors including (i) net income, (ii) finance receivables changes,
(iii) capital expenditures, and (iv) common stock repurchases. Historically,
income from continuing operations, as well as borrowings on the revolving
credit facilities, have funded the finance receivables growth and capital asset
purchases.

24

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Liquidity and Capital Resources

The
following table sets forth certain historical information with respect to the
Companys statements of cash flows (in thousands):

|                                                                                             |  |                       |          |      |   |          |   |   |          |  
|-------------------------------------------------------------------------------------------- |  | --------------------- | -------- | ---- | - | -------- | - | - | -------- | -
|                                                                                             |  | Years Ended April 30, |         
|                                                                                             |  | 2008                  |          | 2007 |   | 2006     |  
|                                                                                             |  |                       |          |      |   |          |  
|Operating activities:                                                                        |  |                       |          |      |   |          |   |   |          |  
|Net income                                                                                   |  | $                     | 15,033   |      | $ | 4,232    |   | $ | 16,705   |  
|Provision for credit losses                                                                  |  |                       | 55,046   |      |   | 63,077   |   |   | 45,810   |  
|Claims for payment
 protection plan                                                          |  |                       | 1,871    |      |   |         |   |   |         |  
|Depreciation and amortization                                                                |  |                       | 1,148    |      |   | 994      |   |   | 709      |  
|Stock based compensation                                                                     |  |                       | 1,600    |      |   | 533      |   |   |         |  
|Finance receivable originations                                                              |  |                       | (230,920 | )    |   | (196,200 | ) |   | (196,190 | )
|Finance receivable collections                                                               |  |                       | 129,232  |      |   | 124,092  |   |   | 111,315  |  
|Inventory                                                                                    |  |                       | 20,249   |      |   | 16,811   |   |   | 10,692   |  
|Current Income Taxes                                                                         |  |                       | (1,390   | )    |   | (3,695   | ) |   | 1,509    |  
|Deferred Income Taxes                                                                        |  |                       | 3,130    |      |   | (754     | ) |   | (898     | )
|Accrued Interest on Finance Receivables                                                      |  |                       | (139     | )    |   | 124      |   |   | (294     | )
|Change in deferred payment protection plan
 revenue                                          |  |                       | 4,631    |      |   |         |   |   |         |  
|Accounts payable and accrued liabilities                                                     |  |                       | 3,690    |      |   | (692     | ) |   | 1,389    |  
|Other                                                                                        |  |                       | (106     | )    |   | (213     | ) |   | (251     | )
|                                                                                             |  |                       |          |      |   |          |   |   |          |  
|Total                                                                                        |  |                       | 3,075    |      |   | 8,309    |   |   | (9,504   | )
|                                                                                             |  |                       |          |      |   |          |   |   |          |  
|                                                                                             |  |                       |          |      |   |          |   |   |          |  
|Investing activities:                                                                        |  |                       |          |      |   |          |   |   |          |  
|Purchase of property and equipment                                                           |  |                       | (2,559   | )    |   | (2,716   | ) |   | (5,011   | )
|Proceeds from sale of property and
 equipment                                                |  |                       | 112      |      |   | 357      |   |   | 157      |  
|Proceeds from sale of finance receivables
 related to lot closure                            |  |                       | 343      |      |   |          |   |   |          |  
|Payment for business acquired                                                                |  |                       |         |      |   | (460     | ) |   | (1,200   | )
|                                                                                             |  |                       |          |      |   |          |   |   |          |  
|Total                                                                                        |  |                       | (2,104   | )    |   | (2,819   | ) |   | (6,054   | )
|                                                                                             |  |                       |          |      |   |          |   |   |          |  
|                                                                                             |  |                       |          |      |   |          |   |   |          |  
|Financing activities:                                                                        |  |                       |          |      |   |          |   |   |          |  
|Debt facilities, net                                                                         |  |                       | (492     | )    |   | (2,759   | ) |   | 14,444   |  
|Change in cash overdrafts                                                                    |  |                       | 2,556    |      |   | (2,441   | ) |   | 1,629    |  
|Purchase of common stock                                                                     |  |                       | (3,538   | )    |   | (454     | ) |   | (1,312   | )
|Exercise of stock options and warrants,
 including tax benefits and issuance of common stock |  |                       | 399      |      |   | 166      |   |   | 593      |  
|                                                                                             |  |                       |          |      |   |          |   |   |          |  
|Total                                                                                        |  |                       | (1,075   | )    |   | (5,488   | ) |   | 15,354   |  
|                                                                                             |  |                       |          |      |   |          |   |   |          |  
|                                                                                             |  |                       |          |      |   |          |   |   |          |  
|Cash provided by (used in) continuing
 operations                                            |  | $                     | (104     | )    | $ | 2        |   | $ | (204     | )
|                                                                                             |  |                       |          |      |   |          |   |   |          |  

The
Company generates cash flow from income from operations. Historically, most or
all of this cash is used to fund finance receivables growth and for capital
expenditures. To the extent finance receivables growth and capital expenditures
exceeds income from operations, generally the Company increases its borrowings
under its revolving credit facilities. The majority of the Companys growth has
been self-funded.

The
Company tends to lease the majority of the properties where its stores are
located. As of April 30, 2008, the Company leased approximately 70% of its
store properties. The Company expects to continue to lease the majority of the
properties where its stores are located.

Car-Marts
credit facilities limit distributions from Car-Mart to the Company beyond (i)
the repayment of an intercompany loan ($10.0 million at April 30, 2008), and
(ii) dividends equal to 75% of Car-Mart of Arkansas net income. At April 30,
2008, the Companys net assets (excluding its $126 million equity investment in
Car-Mart) consisted of $4,000 in cash, $1.4 million in other net assets and a
$10.0 million receivable from Car-Mart. Thus, the Company is limited in the
amount of dividends or other distributions it can make to its shareholders
without the consent of Car-Marts lender.

At
April 30, 2008, the Company had $.2 million of cash on hand and an additional
$19.4 million of availability under its revolving credit facilities (see Note F
to the consolidated financial statements). On a short-term basis, the Companys
principal sources of liquidity include income from operations and borrowings
under its revolving credit facilities. On a longer-term basis, the Company
expects its principal sources of liquidity to consist of income from operations
and borrowings under revolving credit facilities and/or fixed interest term
loans. Further, while the Company has no specific plans to issue debt or equity
securities, the Company believes, if necessary, it could raise additional
capital through the issuance of such securities.

25

---



The
Company expects to use cash to (i) grow its finance receivables portfolio by a
percentage that is slightly larger than the percentage that its revenues grow,
(ii) purchase property and equipment of approximately $3 million in the next 12
months in connection with refurbishing existing stores and adding three to four
new stores, and (iii) reduce debt to the extent excess cash is available. In
addition, occasionally the Company may use cash to repurchase its common stock.

The
Companys revolving credit facilities mature in April 2009. The Company expects
that it will be able to renew or refinance its revolving credit facilities on
or before the date they mature. The Company believes it will have adequate
liquidity to satisfy its capital needs for the foreseeable future.

Contractual Payment Obligations

The
following is a summary of the Companys contractual obligations as of April 30,
2008, including renewal periods under operating leases that are reasonably
assured (in thousands):

|                          |  |                        |        |                    |   |           |  |           |       |                     |   |       |  |   |        | 
|------------------------- |  | ---------------------- | ------ | ------------------ | - | --------- |  | --------- | ----- | ------------------- | - | ----- |  | - | ------ | 
|                          |  | Payments Due by Period |       
|                          |  |                        |       
|Contractual
  Obligations |  | Total                  |        | Less Than
  1 Year |   | 1-3 Years |  | 3-5 Years |       | More Than
  5 Years |  
|                          |  |                        |        |                    |   |           |  |           |       |                     |  
|                          |  |                        |        |                    |   |           |  |           |       |                     |   |       |  |   |        | 
|Revolving lines of credit |  | $                      | 30,587 |                    | $ | 30,587    |  | $         |      |                     | $ |      |  | $ |       | 
|Notes payable             |  |                        | 9,749  |                    |   | 864       |  |           | 1,925 |                     |   | 2,226 |  |   | 4,734  | 
|Interest payments         |  |                        | 3,392  |                    |   | 669       |  |           | 1,142 |                     |   | 842   |  |   | 739    | 
|Operating leases          |  |                        | 25,215 |                    |   | 2,342     |  |           | 4,708 |                     |   | 4,558 |  |   | 13,607 | 
|                          |  |                        |        |                    |   |           |  |           |       |                     |   |       |  |   |        | 
|                          |  |                        |        |                    |   |           |  |           |       |                     |   |       |  |   |        | 
|Total                     |  | $                      | 68,943 |                    | $ | 34,462    |  | $         | 7,775 |                     | $ | 7,626 |  | $ | 19,080 | 
|                          |  |                        |        |                    |   |           |  |           |       |                     |   |       |  |   |        | 

We
calculate estimated interest payments for the long term debt using the
applicable rates and payment dates. We typically expect to settle such interest
payments with cash flows from operations and short-term borrowings.

The
above excludes estimated interest payments on the Companys revolving line of
credit. The Company paid $2.9 million in interest payments on the revolving
line of credit debt in fiscal 2008.

The
$25.2 million of lease commitments includes $3.4 million of non-cancelable
lease commitments under the primary lease terms, and $21.8 million of lease
commitments for renewal periods at the Companys option that are reasonably
assured.

Off-Balance Sheet Arrangements

The
Company has entered into operating leases for approximately 70% of its store
and office facilities. Generally these leases are for periods of three to five
years and usually contain multiple renewal options. The Company uses leasing
arrangements to maintain flexibility in its store locations and to preserve
capital. The Company expects to continue to lease the majority of its store and
office facilities under arrangements substantially consistent with the past.
For the years ended April 30, 2008, 2007 and 2006, rent expense for all
operating leases amounted to approximately $2.7 million, $2.8 million and $2.4
million, respectively.

Other
than its operating leases, the Company is not a party to any off-balance sheet
arrangement that management believes is reasonably likely to have a current or
future effect on the Companys financial condition, revenues or expenses,
results of operations, liquidity, capital expenditures or capital resources
that are material to investors.

26

---



Related Finance Company Contingency

Car-Mart
of Arkansas and Colonial do not meet the affiliation standard for filing
consolidated income tax returns, and as such they file separate federal and
state income tax returns. Car-Mart of Arkansas routinely sells its finance
receivables to Colonial at what the Company believes to be fair market value
and is able to take a tax deduction at the time of sale for the difference
between the tax basis of the receivables sold and the sales price. These types
of transactions, based upon facts and circumstances, have been permissible
under the provisions of the Internal Revenue Code (IRC) as described in the
Treasury Regulations. For financial accounting purposes, these transactions are
eliminated in consolidation, and a deferred tax liability has been recorded for
this timing difference. The sale of finance receivables from Car-Mart of
Arkansas to Colonial provides certain legal protection for the Companys
finance receivables and, principally because of certain state apportionment
characteristics of Colonial, also has the effect of reducing the Companys
overall effective state income tax rate by approximately 240 basis points. The
actual interpretation of the Regulations is in part a facts and circumstances
matter. The Company believes it satisfies the material provisions of the
Regulations. Failure to satisfy those provisions could result in the loss of a
tax deduction at the time the receivables are sold, and have the effect of
increasing the Companys overall effective income tax rate as well as the
timing of required tax payments.

In
May 2007, the Internal Revenue Service (IRS) concluded on the previously
disclosed examinations of the Companys tax returns for fiscal 2002 and certain
items in subsequent years. The IRS concluded that the Company would not be
assessed any additional taxes, penalties or interest related to the
examinations. The examinations focused on whether or not the Company satisfied
the provisions of the Treasury Regulations which would entitle Car-Mart of
Arkansas to a tax deduction at the time it sells its finance receivables to
Colonial. Based upon the favorable IRS conclusion, the Company recognized
$500,000 of net income in the fourth quarter of fiscal 2007 for the elimination
of associated income tax reserves.

Critical Accounting Estimates

The
preparation of financial statements in conformity with generally accepted
accounting principles in the United States of America requires the Company to
make estimates and assumptions in determining the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from the Companys
estimates. The Company believes the most significant estimate made in the
preparation of the accompanying consolidated financial statements relates to
the determination of its allowance for credit losses, which is discussed below.
The Companys accounting policies are discussed in Note B to the accompanying
consolidated financial statements.

The
Company maintains an allowance for credit losses on an aggregate basis at a
level it considers sufficient to cover estimated losses in the collection of
its finance receivables. The allowance for credit losses is based primarily
upon historical credit loss experience, with consideration given to recent
credit loss trends and changes in loan characteristics (i.e., average amount
financed and term), delinquency levels, collateral values, economic conditions
and underwriting and collection practices. The allowance for credit losses is
periodically reviewed by management with any changes reflected in current
operations. Although it is at least reasonably possible that events or
circumstances could occur in the future that are not presently foreseen which
could cause actual credit losses to be materially different from the recorded
allowance for credit losses, the Company believes that it has given appropriate
consideration to all relevant factors and has made reasonable assumptions in
determining the allowance for credit losses.

27

---



At
October 31, 2006 (the end of the Companys 2007 second quarter), management
increased the allowance for credit loss percentage from 19.2% to 22% due to
higher credit loss experience and trends. A change in accounting estimate was
recognized to reflect the decision to increase the allowance for credit losses,
resulting in a pretax, non-cash charge of $5,271,000 for the Companys second
quarter of fiscal 2007.

Recent Accounting Pronouncements

In
September 2006, the FASB issued Statement of Financial Accounting Standard No.
157, Fair Value Measurements (SFAS 157), which defines fair value,
establishes a framework for measuring fair value in generally accepted
accounting principles, and expands disclosures about fair value measurements.
SFAS 157 does not require any new fair value measurements, but provides
guidance on how to measure fair value by providing a fair value hierarchy used
to classify the source of the information.

In
February 2008, the FASB issued FASB Staff Position 157-2, Effective Date of
FASB Statement No. 157, to provide a one-year deferral of the effective date
of Statement 157 for nonfinancial assets and nonfinancial liabilities, except
those that are recognized or disclosed in financial statements at fair value on
a recurring basis. For nonfinancial assets and nonfinancial liabilities subject
to the deferral, the effective date of Statement 157 is postponed to fiscal
years beginning after November 15, 2008. The Company does not believe the
adoption of Statement 157 will have a material impact on the Companys
financial statements.

In
February 2007, the FASB issued Statement 159, The Fair Value Option for
Financial Assets and Financial Liabilities  Including an Amendment of FASB
Statement 115. The statement permits entities to choose to measure certain
financial instruments and other items at fair value. The objective is to
improve financial reporting by providing entities with the opportunity to
mitigate volatility in reported earnings caused by measuring related assets and
liabilities differently without having to apply complex hedge accounting provisions.
Unrealized gains and losses on any items for which Car-Mart elects the fair
value measurement option would be reported in earnings. Statement 159 is
effective for fiscal years beginning after November 15, 2007. However, early
adoption is permitted for fiscal years beginning on or before November 15,
2007. The Company does not believe the adoption of Statement 159 will have a
material impact on the Companys financial statements.

In
March 2008, the FASB issued Statement 161, Disclosures about Derivative
Instruments and Hedging Activities. Due to the use and complexity of
derivative instruments, there were concerns regarding the existing disclosure
requirements in FASB 133. Accordingly, this Statement requires enhanced
disclosures about an entitys derivative and hedging activities. Entities will
be required to provide enhanced disclosures about (i) how and why an entity
uses derivative instruments, (ii) how derivative instruments and related
hedging items are accounted for under Statement 133 and its related
interpretations, and (iii) how derivative instruments and related hedging items
affect an entitys financial position, financial performance, and cash flows.
This Statement is effective for financial statements issued for fiscal years after
November 15, 2008. The Company does not believe the adoption of Statement 161
will have a material impact on the Companys financial statements.

28

---



Seasonality

The
Companys third fiscal quarter (November through January) has historically been
the slowest period for car and truck sales. Conversely, the Companys first and
fourth fiscal quarters (May through July and February through April) have
historically been the busiest times for car and truck sales. Therefore,
Car-Mart generally realizes a higher proportion of its revenue and operating
profit during the first and fourth fiscal quarters. However, in fiscal 2008,
tax refund anticipation sales began in early November 2007 and continued
through January 2008. The success of the tax refund anticipation sales effort
led to higher sales levels during the third quarter of fiscal 2008. The Company
expects this trend to continue in future periods. If conditions arise that
impair vehicle sales during the first or fourth fiscal quarters, the adverse
effect on the Companys revenues and operating profit for the year could be
disproportionately large.

Impact of Inflation

Inflation
has not historically been a significant factor impacting the Companys results;
however, recent purchase price increases for vehicles, most pronounced over the
last two fiscal years, have had a negative effect on the Companys gross profit
percentages. This is due to the fact that the Company focuses on keeping
payments affordable to its customer base and at the same time ensuring that the
term of the loan matches the economic life of the vehicle.

Item 7A. Quantitative and Qualitative
Disclosures about Market Risk

The
Company is exposed to market risk on its financial instruments from changes in
interest rates. In particular, the Company has exposure to changes in the
federal primary credit rate and the prime interest rate of its lender. The
Company does not use financial instruments for trading purposes or to manage
interest rate risk. The Companys earnings are impacted by its net interest
income, which is the difference between the income earned on interest-bearing
assets and the interest paid on interest-bearing notes payable. As described
below, a decrease in market interest rates would generally have an adverse
effect on the Companys profitability.

The
Companys financial instruments consist of fixed rate finance receivables,
variable rate revolving notes payable, an $8.7 million fixed rate term loan and
a $1.1 million fixed rate term loan (see Note F to the consolidated financial
statements). The Companys finance receivables generally bear interest at fixed
rates ranging from 6% to 19%. These finance receivables generally have
remaining maturities from one to 36 months. The Companys revolving notes
payable contain variable interest rates that fluctuate with market interest
rates (i.e., the rate charged on the Companys revolving credit facility
fluctuates with the prime interest rate of its lender). On May 16, 2008 the
Company entered into a five year interest rate swap agreement which will
effectively fix the interest rate on a notional $20 million of the revolving
credit facilities. Interest rates charged on finance receivables originated in
the State of Arkansas are limited to the federal primary credit rate (2.25% at
April 30, 2008) plus 5.0%. Typically, the Company charges interest on its
Arkansas loans at or near the maximum rate allowed by law. Thus, while the
interest rates charged on the Companys loans do not fluctuate once established,
new loans originated in Arkansas are set at a spread above the federal primary
credit rate which does fluctuate. At April 30, 2008, approximately 56% of the
Companys finance receivables were originated in Arkansas. The remaining loan
portfolio carries interest rates approximating 17%. Assuming that these
percentages are held constant for future loan originations, the long-term
effect of decreases in the federal primary credit rate would generally have a
negative effect on the profitability of the Company. This is the case because
the amount of interest income lost on Arkansas originated loans would likely
exceed the amount of interest expense saved on the Companys variable rate
borrowings (assuming the prime interest rate of its lender decreases by the
same percentage as the decrease in the federal primary credit rate). The
initial impact within the first few months on profitability resulting from a
decrease in the federal primary credit rate and the rate charged on its
variable interest rate borrowings could be positive, as the immediate interest
expense savings could outweigh the loss of interest income on new loan
originations. As the amount of new loans originated at the lower interest rate
increases to an amount in excess of the amount of variable interest rate
borrowings, the effect on profitability would become negative.

29

---



The
table below illustrates the estimated impact that hypothetical changes in the
federal primary credit rate would have on the Companys continuing pretax earnings.
The calculations assume (i) the increase or decrease in the federal primary
credit rate remains in effect for two years, (ii) the increase or decrease in
the federal primary credit rate results in a like increase or decrease in the
rate charged on the Companys variable rate borrowings, (iii) the principal
amount of finance receivables ($208.2 million) and variable interest rate
borrowings ($10.6 million- excludes the $20 million notional amount underlying
the interest rate swap agreement), and the percentage of Arkansas originated
finance receivables (56%), remain constant during the periods, and (iv) the
Companys historical collection and charge-off experience continues throughout
the periods.

|                                     |  |                                                   |      |                                                   |  |   |        |   | 
|------------------------------------ |  | ------------------------------------------------- | ---- | ------------------------------------------------- |  | - | ------ | - | 
|Increase (Decrease)in Interest Rates |  | Year 1
  Increase (Decrease)
  in Pretax Earnings |      | Year 2
  Increase (Decrease)
  in Pretax Earnings | 
|                                     |  |                                                   |      |                                                   | 
|                                     |  | (in thousands)                                    |      | (in thousands)                                    | 
|+200
  basis points                  |  | $                                                 | 786  |                                                   |  | $ | 1,867  |   | 
|+100
  basis points                  |  |                                                   | 393  |                                                   |  |   | 933    |   | 
|-100
  basis points                  |  |                                                   | (393 | )                                                 |  |   | (933   | ) | 
|-200
  basis points                  |  |                                                   | (786 | )                                                 |  |   | (1,867 | ) | 

Item 8. Financial Statements and
Supplementary Data

| |                                                                                                       |                                                                                                     |   
| | ----------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------- | --
| | The
  following financial statements and accountants report are included in Item 8
  of this report:
| |                                                                                                       |                                                                                                     |   
| |                                                                                                       | Report of Independent Registered Public Accounting Firm                                             | 31
| |                                                                                                       |                                                                                                     |   
| |                                                                                                       | Consolidated Balance Sheets as of April 30, 2008 and 2007                                           | 32
| |                                                                                                       |                                                                                                     |   
| |                                                                                                       | Consolidated Statements of Operations for the years ended April 30,
  2008, 2007 and 2006           | 33
| |                                                                                                       |                                                                                                     |   
| |                                                                                                       | Consolidated Statements of Cash Flows for the years ended April 30,
  2008, 2007 and 2006           | 34
| |                                                                                                       |                                                                                                     |   
| |                                                                                                       | Consolidated Statements of Stockholders Equity for the years ended
  April 30, 2008, 2007 and 2006 | 35
| |                                                                                                       |                                                                                                     |   
| |                                                                                                       | Notes to Consolidated Financial Statements                                                          | 36

30

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Report of
Independent Registered Public Accounting Firm

Stockholders
and Board of Directors
Americas Car-Mart, Inc.

We have
audited the accompanying consolidated balance sheets of Americas Car-Mart,
Inc. (a Texas corporation) and subsidiaries as of April 30, 2008 and 2007, and
the related consolidated statements of operations, cash flows, and
stockholders equity for each of the three years in the period ended April 30,
2008.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 the standards of the Public Company Accounting
Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We
believe that our audits provide a reasonable basis for our opinion.

In our
opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Americas Car-Mart,
Inc. and subsidiaries as of April 30, 2008 and 2007, and the results of their
operations and their cash flows for each of the three years in the period ended
April 30, 2008 in conformity with accounting principles generally accepted in
the United States of America.

As discussed
in Note B to the consolidated financial statements, the Company adopted the
provisions of Statements of Financial Accounting Standards No. 123(R), Share-Based Payments effective May 1,
2006.

We also have
audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), Americas Car-Mart, Inc. and subsidiaries internal
control over financial reporting as of April 30, 2008, based on criteria
established in Internal ControlIntegrated
Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO)and
our report dated July 3, 2008 expressed an unqualified opinion.

/s/ GRANT THORNTON LLP

Tulsa,
Oklahoma 
July 3, 2008

31

---



Consolidated
Balance Sheets 
Americas Car-Mart, Inc.(Dollars in
thousands)

|                                                                                                                                           |  |                |         |                |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------------ |  | -------------- | ------- | -------------- | - | ------- | -
|                                                                                                                                           |  | April 30, 2008 |         | April 30, 2007 |  
|                                                                                                                                           |  |                |         |                |  
|Assets:                                                                                                                                    |  |                |         |                |   |         |  
|Cash and cash equivalents                                                                                                                  |  | $              | 153     |                | $ | 257     |  
|Accrued interest on finance receivables                                                                                                    |  |                | 833     |                |   | 694     |  
|Finance receivables, net                                                                                                                   |  |                | 163,344 |                |   | 139,194 |  
|Inventory                                                                                                                                  |  |                | 13,532  |                |   | 13,682  |  
|Prepaid expenses and other assets                                                                                                          |  |                | 832     |                |   | 600     |  
|Income tax receivable                                                                                                                      |  |                | 3,400   |                |   | 1,933   |  
|Goodwill                                                                                                                                   |  |                | 355     |                |   | 355     |  
|Property and equipment, net                                                                                                                |  |                | 18,140  |                |   | 16,883  |  
|                                                                                                                                           |  |                |         |                |   |         |  
|                                                                                                                                           |  |                |         |                |   |         |  
|                                                                                                                                           |  | $              | 200,589 |                | $ | 173,598 |  
|                                                                                                                                           |  |                |         |                |   |         |  
|                                                                                                                                           |  |                |         |                |   |         |  
|Liabilities and stockholders equity:                                                                                                      |  |                |         |                |   |         |  
|Accounts payable                                                                                                                           |  | $              | 3,871   |                | $ | 2,473   |  
|Deferred payment protection plan revenue                                                                                                   |  |                | 4,631   |                |   |        |  
|Accrued liabilities                                                                                                                        |  |                | 11,063  |                |   | 6,233   |  
|Deferred tax liabilities, net                                                                                                              |  |                | 3,465   |                |   | 335     |  
|Revolving credit facilities and notes
payable                                                                                              |  |                | 40,337  |                |   | 40,829  |  
|                                                                                                                                           |  |                |         |                |   |         |  
|Total liabilities                                                                                                                          |  |                | 63,367  |                |   | 49,870  |  
|                                                                                                                                           |  |                |         |                |   |         |  
|                                                                                                                                           |  |                |         |                |   |         |  
|Commitments and contingencies                                                                                                              |  |                |         |                |   |         |  
|                                                                                                                                           |  |                |         |                |   |         |  
|Stockholders equity:                                                                                                                      |  |                |         |                |   |         |  
|Preferred stock, par value $.01 per share, 1,000,000
shares
 authorized; none issued or outstanding                                        |  |                |        |                |   |        |  
|Common stock, par value $.01 per share, 50,000,000
shares authorized; 
 12,091,628 and 11,985,958 shares issued at April 30, 2008 and 2007 |  |                | 121     |                |   | 120     |  
|Additional paid-in capital                                                                                                                 |  |                | 37,284  |                |   | 35,286  |  
|Retained earnings                                                                                                                          |  |                | 105,307 |                |   | 90,274  |  
|Treasury stock, at cost (403,941 and 111,250 shares
at April 30, 2008
 and 2007)                                                           |  |                | (5,490  | )              |   | (1,952  | )
|                                                                                                                                           |  |                |         |                |   |         |  
|Total stockholders equity                                                                                                                 |  |                | 137,222 |                |   | 123,728 |  
|                                                                                                                                           |  |                |         |                |   |         |  
|                                                                                                                                           |  |                |         |                |   |         |  
|                                                                                                                                           |  | $              | 200,589 |                | $ | 173,598 |  
|                                                                                                                                           |  |                |         |                |   |         |  

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

32

---



Consolidated
Statements of Operations 
Americas Car-Mart, Inc.(Dollars in
thousands except per share amounts)

|                                                |  |                       |            |      |   |            |  |   |            | 
|----------------------------------------------- |  | --------------------- | ---------- | ---- | - | ---------- |  | - | ---------- | 
|                                                |  | Years Ended April 30, |           
|                                                |  | 2008                  |            | 2007 |   | 2006       | 
|                                                |  |                       |            |      |   |            | 
|Revenues:                                       |  |                       |            |      |   |            |  |   |            | 
|Sales                                           |  | $                     | 250,337    |      | $ | 216,898    |  | $ | 214,482    | 
|Interest and other income                       |  |                       | 24,294     |      |   | 23,436     |  |   | 19,725     | 
|                                                |  |                       |            |      |   |            |  |   |            | 
|                                                |  |                       | 274,631    |      |   | 240,334    |  |   | 234,207    | 
|                                                |  |                       |            |      |   |            |  |   |            | 
|                                                |  |                       |            |      |   |            |  |   |            | 
|Costs and expenses:                             |  |                       |            |      |   |            |  |   |            | 
|Cost of sales                                   |  |                       | 144,537    |      |   | 125,073    |  |   | 119,433    | 
|Selling, general and administrative             |  |                       | 47,263     |      |   | 41,778     |  |   | 39,261     | 
|Provision for credit losses                     |  |                       | 55,046     |      |   | 63,077     |  |   | 45,810     | 
|Interest expense                                |  |                       | 2,947      |      |   | 3,728      |  |   | 2,458      | 
|Depreciation and amortization                   |  |                       | 1,148      |      |   | 994        |  |   | 724        | 
|Loss on lot closures                            |  |                       | 527        |      |   |           |  |   |           | 
|                                                |  |                       |            |      |   |            |  |   |            | 
|                                                |  |                       | 251,468    |      |   | 234,650    |  |   | 207,686    | 
|                                                |  |                       |            |      |   |            |  |   |            | 
|                                                |  |                       |            |      |   |            |  |   |            | 
|Income before taxes                             |  |                       | 23,163     |      |   | 5,684      |  |   | 26,521     | 
|                                                |  |                       |            |      |   |            |  |   |            | 
|Provision for income taxes                      |  |                       | 8,130      |      |   | 1,452      |  |   | 9,816      | 
|                                                |  |                       |            |      |   |            |  |   |            | 
|                                                |  |                       |            |      |   |            |  |   |            | 
|Net income                                      |  | $                     | 15,033     |      | $ | 4,232      |  | $ | 16,705     | 
|                                                |  |                       |            |      |   |            |  |   |            | 
|                                                |  |                       |            |      |   |            |  |   |            | 
|Earnings per share:                             |  |                       |            |      |   |            |  |   |            | 
|Basic                                           |  | $                     | 1.27       |      | $ | .36        |  | $ | 1.41       | 
|Diluted                                         |  | $                     | 1.26       |      | $ | .35        |  | $ | 1.39       | 
|                                                |  |                       |            |      |   |            |  |   |            | 
|Weighted average number of
 shares outstanding: |  |                       |            |      |   |            |  |   |            | 
|Basic                                           |  |                       | 11,825,657 |      |   | 11,850,247 |  |   | 11,852,804 | 
|Diluted                                         |  |                       | 11,907,321 |      |   | 11,953,987 |  |   | 12,018,541 | 

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

33

---



Consolidated
Statements of Cash Flows 
Americas Car-Mart, Inc.(In thousands)

|                                                                                                          |  |                       |          |      |   |          |   |   |          |  
|--------------------------------------------------------------------------------------------------------- |  | --------------------- | -------- | ---- | - | -------- | - | - | -------- | -
|                                                                                                          |  | Years Ended April 30,
|                                                                                                          |  |                       |         
|                                                                                                          |  | 2008                  |          | 2007 |   | 2006     |  
|                                                                                                          |  |                       |          |      |   |          |  
|Operating activities:                                                                                     |  |                       |          |      |   |          |   |   |          |  
|Net income                                                                                                |  | $                     | 15,033   |      | $ | 4,232    |   | $ | 16,705   |  
|Adjustments to reconcile income from operations to
net cash provided
  by (used in) operating activities: |  |                       |          |      |   |          |   |   |          |  
|Provision for credit losses                                                                               |  |                       | 55,046   |      |   | 63,077   |   |   | 45,810   |  
|Claims for payment protection
plan                                                                        |  |                       | 1,871    |      |   |         |   |   |         |  
|Depreciation and amortization                                                                             |  |                       | 1,148    |      |   | 994      |   |   | 709      |  
|Loss (gain) on sale of property and
equipment                                                             |  |                       | 203      |      |   | (82      | ) |   | 15       |  
|Stock based compensation                                                                                  |  |                       | 1,600    |      |   | 533      |   |   |         |  
|Deferred income taxes                                                                                     |  |                       | 3,130    |      |   | (754     | ) |   | (898     | )
|Changes in operating assets and
liabilities:                                                              |  |                       |          |      |   |          |   |   |          |  
|Finance receivable originations                                                                           |  |                       | (230,920 | )    |   | (196,200 | ) |   | (196,190 | )
|Finance receivable collections                                                                            |  |                       | 129,232  |      |   | 124,092  |   |   | 111,315  |  
|Accrued interest on finance receivables                                                                   |  |                       | (139     | )    |   | 124      |   |   | (294     | )
|Inventory                                                                                                 |  |                       | 20,249   |      |   | 16,811   |   |   | 10,692   |  
|Prepaid expenses and other assets                                                                         |  |                       | (232     | )    |   | (46      | ) |   | (152     | )
|Accounts payable and accrued liabilities                                                                  |  |                       | 3,690    |      |   | (692     | ) |   | 1,389    |  
|Change in deferred payment protection plan
revenue                                                        |  |                       | 4,631    |      |   |         |   |   |         |  
|Income taxes payable                                                                                      |  |                       | (1,390   | )    |   | (3,695   | ) |   | 1,509    |  
|Excess tax benefit from share-based
payments                                                              |  |                       | (77      | )    |   | (85      | ) |   | (114     | )
|                                                                                                          |  |                       |          |      |   |          |   |   |          |  
|Net
  cash provided by (used in) operating activities                                                     |  |                       | 3,075    |      |   | 8,309    |   |   | (9,504   | )
|                                                                                                          |  |                       |          |      |   |          |   |   |          |  
|                                                                                                          |  |                       |          |      |   |          |   |   |          |  
|Investing activities:                                                                                     |  |                       |          |      |   |          |   |   |          |  
|Purchase of property and equipment                                                                        |  |                       | (2,559   | )    |   | (2,716   | ) |   | (5,011   | )
|Proceeds from sale of property and
equipment                                                              |  |                       | 112      |      |   | 357      |   |   | 157      |  
|Proceeds from sale of finance receivables related
to lot closure                                          |  |                       | 343      |      |   |         |   |   |         |  
|Payment for business acquired                                                                             |  |                       |         |      |   | (460     | ) |   | (1,200   | )
|                                                                                                          |  |                       |          |      |   |          |   |   |          |  
|Net cash used in investing activities                                                                     |  |                       | (2,104   | )    |   | (2,819   | ) |   | (6,054   | )
|                                                                                                          |  |                       |          |      |   |          |   |   |          |  
|                                                                                                          |  |                       |          |      |   |          |   |   |          |  
|Financing activities:                                                                                     |  |                       |          |      |   |          |   |   |          |  
|Exercise of stock options and warrants                                                                    |  |                       | 205      |      |   | 81       |   |   | 479      |  
|Excess tax benefits from share based
compensation                                                         |  |                       | 77       |      |   | 85       |   |   | 114      |  
|Issuance of common stock                                                                                  |  |                       | 117      |      |   |         |   |   |         |  
|Purchase of common stock                                                                                  |  |                       | (3,538   | )    |   | (454     | ) |   | (1,312   | )
|Change in cash overdrafts                                                                                 |  |                       | 2,556    |      |   | (2,441   | ) |   | 1,629    |  
|Proceeds from notes payable                                                                               |  |                       |         |      |   | 11,200   |   |   |         |  
|Principal payments on notes payable                                                                       |  |                       | (769     | )    |   | (682     | ) |   |         |  
|Proceeds from revolving credit facilities                                                                 |  |                       | 78,405   |      |   | 68,456   |   |   | 121,025  |  
|Payments on revolving credit facilities                                                                   |  |                       | (78,128  | )    |   | (81,733  | ) |   | (106,581 | )
|                                                                                                          |  |                       |          |      |   |          |   |   |          |  
|Net cash provided by (used in) financing
activities                                                       |  |                       | (1,075   | )    |   | (5,488   | ) |   | 15,354   |  
|                                                                                                          |  |                       |          |      |   |          |   |   |          |  
|                                                                                                          |  |                       |          |      |   |          |   |   |          |  
|Increase (decrease) in cash and cash equivalents                                                          |  |                       | (104     | )    |   | 2        |   |   | (204     | )
|Cash and cash equivalents at:      Beginning
  of period                                                  |  |                       | 257      |      |   | 255      |   |   | 459      |  
|                                                                                                          |  |                       |          |      |   |          |   |   |          |  
|                                                                                                          |  |                       |          |      |   |          |   |   |          |  
|End of period                                                                                             |  | $                     | 153      |      | $ | 257      |   | $ | 255      |  
|                                                                                                          |  |                       |          |      |   |          |   |   |          |  

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

34

---



Consolidated Statements of Stockholders
Equity 
Americas Car-Mart, Inc.(Dollars
in thousands)

For the Years Ended April 30, 2008, 2007 and 2006

|                                    |  |              |            |        |   |     |  |                                |        |                     |   |                  |  |                                |        |   |   |         |  
|----------------------------------- |  | ------------ | ---------- | ------ | - | --- |  | ------------------------------ | ------ | ------------------- | - | ---------------- |  | ------------------------------ | ------ | - | - | ------- | -
|                                    |  |              |            |        |   |     |  | Additional
  Paid-In
  Capital |        | Retained
  Earnings |   | Treasury
  Stock |  | Total
  Stockholders
  Equity |       
|                                    |  | Common Stock |            |        |   |     | 
|                                    |  | Shares       |            | Amount |   |     |  |                                |       
|                                    |  |              |            |        |   |     |  |                                |        |                     |   |                  | 
|                                    |  |              |            |        |   |     |  |                                |        |                     |   |                  |  |                                |        |   |   |         |  
|Balance at April 30, 2005           |  |              | 11,852,188 |        | $ | 118 |  | $                              | 33,996 |                     | $ | 69,337           |  | $                              | (186   | ) | $ | 103,265 |  
|                                    |  |              |            |        |   |     |  |                                |        |                     |   |                  |  |                                |        |   |   |         |  
|Stock options/warrants exercised    |  |              | 77,086     |        |   | 1   |  |                                | 478    |                     |   |                 |  |                                |       |   |   | 479     |  
|                                    |  |              |            |        |   |     |  |                                |        |                     |   |                  |  |                                |        |   |   |         |  
|Purchase of 72,800 treasury shares  |  |              |           |        |   |    |  |                                |       |                     |   |                 |  |                                | (1,312 | ) |   | (1,312  | )
|                                    |  |              |            |        |   |     |  |                                |        |                     |   |                  |  |                                |        |   |   |         |  
|Tax benefit of options exercised    |  |              |           |        |   |    |  |                                | 114    |                     |   |                 |  |                                |       |   |   | 114     |  
|                                    |  |              |            |        |   |     |  |                                |        |                     |   |                  |  |                                |        |   |   |         |  
|Net income                          |  |              |           |        |   |    |  |                                |       |                     |   | 16,705           |  |                                |       |   |   | 16,705  |  
|                                    |  |              |            |        |   |     |  |                                |        |                     |   |                  |  |                                |        |   |   |         |  
|                                    |  |              |            |        |   |     |  |                                |        |                     |   |                  |  |                                |        |   |   |         |  
|Balance at April 30, 2006           |  |              | 11,929,274 |        | $ | 119 |  | $                              | 34,588 |                     | $ | 86,042           |  | ($                             | 1,498  | ) | $ | 119,251 |  
|                                    |  |              |            |        |   |     |  |                                |        |                     |   |                  |  |                                |        |   |   |         |  
|Stock options/warrants exercised    |  |              | 13,750     |        |   |    |  |                                | 81     |                     |   |                 |  |                                |       |   |   | 81      |  
|                                    |  |              |            |        |   |     |  |                                |        |                     |   |                  |  |                                |        |   |   |         |  
|Purchase of 30,000 treasury shares  |  |              |           |        |   |    |  |                                |       |                     |   |                 |  |                                | (454   | ) |   | (454    | )
|                                    |  |              |            |        |   |     |  |                                |        |                     |   |                  |  |                                |        |   |   |         |  
|Tax benefit of options exercised    |  |              | 22,329     |        |   |    |  |                                | 85     |                     |   |                 |  |                                |       |   |   | 85      |  
|                                    |  |              |            |        |   |     |  |                                |        |                     |   |                  |  |                                |        |   |   |         |  
|Stock based compensation            |  |              | 20,605     |        |   | 1   |  |                                | 532    |                     |   |                 |  |                                |       |   |   | 533     |  
|Net income                          |  |              |           |        |   |    |  |                                |       |                     |   | 4,232            |  |                                |       |   |   | 4,232   |  
|                                    |  |              |            |        |   |     |  |                                |        |                     |   |                  |  |                                |        |   |   |         |  
|                                    |  |              |            |        |   |     |  |                                |        |                     |   |                  |  |                                |        |   |   |         |  
|Balance at April 30, 2007           |  |              | 11,985,958 |        | $ | 120 |  | $                              | 35,286 |                     | $ | 90,274           |  | ($                             | 1,952  | ) | $ | 123,728 |  
|                                    |  |              |            |        |   |     |  |                                |        |                     |   |                  |  |                                |        |   |   |         |  
|Issuance of common stock            |  |              | 10,273     |        |   |    |  |                                | 117    |                     |   |                 |  |                                |       |   |   | 117     |  
|                                    |  |              |            |        |   |     |  |                                |        |                     |   |                  |  |                                |        |   |   |         |  
|Stock options/warrants exercised    |  |              | 55,898     |        |   | 1   |  |                                | 204    |                     |   |                 |  |                                |       |   |   | 205     |  
|                                    |  |              |            |        |   |     |  |                                |        |                     |   |                  |  |                                |        |   |   |         |  
|Purchase of 292,691 treasury shares |  |              |           |        |   |    |  |                                |       |                     |   |                 |  |                                | (3,538 | ) |   | (3,538  | )
|                                    |  |              |            |        |   |     |  |                                |        |                     |   |                  |  |                                |        |   |   |         |  
|Tax benefit of options exercised    |  |              |           |        |   |    |  |                                | 77     |                     |   |                 |  |                                |       |   |   | 77      |  
|                                    |  |              |            |        |   |     |  |                                |        |                     |   |                  |  |                                |        |   |   |         |  
|Stock based compensation            |  |              | 39,499     |        |   |    |  |                                | 1,600  |                     |   |                 |  |                                |       |   |   | 1,600   |  
|                                    |  |              |            |        |   |     |  |                                |        |                     |   |                  |  |                                |        |   |   |         |  
|Net income                          |  |              |           |        |   |    |  |                                |       |                     |   | 15,033           |  |                                |       |   |   | 15,033  |  
|                                    |  |              |            |        |   |     |  |                                |        |                     |   |                  |  |                                |        |   |   |         |  
|                                    |  |              |            |        |   |     |  |                                |        |                     |   |                  |  |                                |        |   |   |         |  
|Balance at April 30, 2008           |  |              | 12,091,628 |        | $ | 121 |  | $                              | 37,284 |                     | $ | 105,307          |  | ($                             | 5,490  | ) | $ | 137,222 |  
|                                    |  |              |            |        |   |     |  |                                |        |                     |   |                  |  |                                |        |   |   |         |  

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

35

---



Notes to
Consolidated Financial Statements
Americas Car-Mart, Inc.

A - Organization and
Business

Americas
Car-Mart, Inc., a Texas corporation (the Company), is the largest publicly
held automotive retailer in the United States focused exclusively on the Buy
Here/Pay Here segment of the used car market. References to the Company
typically include the Companys consolidated subsidiaries. The Companys
operations are principally conducted through its two operating subsidiaries,
Americas Car-Mart, Inc., an Arkansas corporation (Car-Mart of Arkansas) and
Colonial Auto Finance, Inc., an Arkansas corporation (Colonial).
Collectively, Car-Mart of
Arkansas and Colonial are referred to herein as Car-Mart. The Company
primarily sells older model used vehicles and provides financing for
substantially all of its customers. Many of the Companys customers have
limited financial resources and would not qualify for conventional financing as
a result of limited credit histories or past credit problems. As of April 30,
2008, the Company operated 91 stores located primarily in small cities
throughout the South-Central United States.

B - Summary of
Significant Accounting Policies

Principles of Consolidation

The
consolidated financial statements include the accounts of Americas Car-Mart,
Inc. and its subsidiaries. All intercompany accounts and transactions have been
eliminated.

Use of Estimates

The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenues and expenses
during the period. Actual results could differ from those estimates.

Concentration of Risk

The
Company provides financing in connection with the sale of substantially all of
its vehicles. These sales are made primarily to customers residing in Arkansas,
Oklahoma, Texas, Kentucky and Missouri, with approximately 53% of revenues
resulting from sales to Arkansas customers. Periodically, the Company maintains
cash in financial institutions in excess of the amounts insured by the federal
government. Car-Marts revolving credit facilities mature in April 2009. The Company expects that these credit
facilities will be renewed or refinanced on or before the scheduled maturity
dates.

Restrictions on Subsidiary Distributions/Dividends

Car-Marts
revolving credit facilities limit distributions from Car-Mart to the Company
beyond (i) the repayment of an intercompany loan ($10.0 million at April 30, 2008), and (ii)
dividends equal to 75% of Car-Mart of Arkansas net income. At April 30, 2008,
the Companys assets (excluding its $126 million equity investment in Car-Mart)
consisted of $4,000 in cash, $1.4 million in other net assets and a $10.0
million receivable from Car-Mart. Thus, the Company is limited in the amount of
dividends or other distributions it can make to its shareholders without the
consent of Car-Marts lender.

36

---



Cash Equivalents

The
Company considers all highly liquid instruments purchased with original
maturities of three months or less to be cash equivalents.

Finance Receivables, Repossessions and
Charge-offs and Allowance for Credit Losses

The
Company originates installment sale contracts from the sale of used vehicles at
its dealerships. Finance receivables are collateralized by vehicles sold and
consist of contractually scheduled payments from installment contracts net of
unearned finance charges and an allowance for credit losses. Unearned finance
charges represent the balance of interest income remaining from the total interest
to be earned over the term of the related installment contract. An account is
considered delinquent when a contractually scheduled payment has not been
received by the scheduled payment date. At April 30, 2008 and 2007,
respectively, 3.1% and 3.4% of the Companys finance receivable balances were
30 days or more past due.

The
Company takes steps to repossess a vehicle when the customer becomes delinquent
in his or her payments, and management determines that timely collection of
future payments is not probable. Accounts are charged-off after the expiration
of a statutory notice period for repossessed accounts, or when management
determines that the timely collection of future payments is not probable for
accounts where the Company has been unable to repossess the vehicle. For
accounts with respect to which the vehicle was repossessed, the fair value of
the repossessed vehicle is charged as a reduction of the gross finance
receivable balance charged-off. On average, accounts are approximately 53 days
past due at the time of charge-off. For previously charged-off accounts that
are subsequently recovered, the amount of such recovery is credited to the
allowance for credit losses.

The
Company maintains an allowance for credit losses on an aggregate basis at a
level it considers sufficient to cover estimated losses in the collection of
its finance receivables. The allowance for credit losses is based primarily
upon historical credit loss experience, with consideration given to recent credit
loss trends and changes in loan characteristics (i.e., average amount financed
and term), delinquency levels, collateral values, economic conditions and
underwriting and collection practices. The allowance for credit losses is
periodically reviewed by management with any changes reflected in current
operations. Although it is at least reasonably possible that events or
circumstances could occur in the future that are not presently foreseen which
could cause actual credit losses to be materially different from the recorded
allowance for credit losses, the Company believes that it has given appropriate
consideration to all relevant factors and has made reasonable assumptions in
determining the allowance for credit losses.

At
October 31, 2006 (the end of the Companys 2007 second quarter), management
increased the allowance for credit loss percentage from 19.2% to 22% due to
recent higher credit loss experience and trends. A change in accounting
estimate was recognized to reflect the decision to increase the allowance for
credit losses, resulting in a pretax, non-cash charge of $5,271,000 for the
Companys second quarter of fiscal 2007. No such charge was required in the
third or fourth quarters of fiscal 2007 or during fiscal 2008.

Inventory

Inventory
consists of used vehicles and is valued at the lower of cost or market on a
specific identification basis. Vehicle reconditioning costs are capitalized as
a component of inventory. Repossessed vehicles are recorded at fair value,
which approximates wholesale value. The cost of used vehicles sold is
determined using the specific identification method.

37

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Goodwill

Goodwill
reflects the excess of purchase price over the fair value of specifically
identified net assets purchased. In accordance with Statement of Financial
Accounting Standards No. 142, Goodwill and Other Intangibles
(SFAS 142), goodwill and intangible assets deemed to have indefinite
lives are not amortized but are subject to annual impairment tests. The impairment
tests are based on the comparison of the fair value of the reporting unit to
the carrying value of such
unit. If the fair value of the reporting unit falls below its carrying value,
goodwill is deemed to be impaired and a write-down of goodwill would be recognized.
There was no impairment of goodwill during fiscal years 2008, 2007 or 2006.

Property and Equipment

Property
and equipment are stated at cost. Expenditures for additions, renewals and
improvements are capitalized. Costs of repairs and maintenance are expensed as incurred.
Leasehold improvements are amortized over the shorter of the estimated life of
the improvement or the lease period. The lease period includes the primary
lease term plus any extensions that are reasonably assured. Depreciation is
computed principally using the straight-line method generally over the
following estimated useful lives:

|                                   |               
|---------------------------------- | --------------
|Furniture,
 fixtures and equipment | 3 to 7 years  
|Leasehold
 improvements            | 5 to 15 years 
|Buildings
 and improvements        | 18 to 39 years

Property
and equipment are reviewed for impairment whenever events or changes in
circumstances indicate the carrying amount of an asset may not be recoverable.
Recoverability of assets to be held and used is measured by a comparison of the
carrying amount of an asset to future undiscounted net cash flows expected to
be generated by the asset. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which the carrying
values of the impaired assets exceed the fair value of such assets. Assets to
be disposed of are reported at the lower of the carrying amount or fair value
less costs to sell.

Cash Overdraft

The
Companys primary disbursement bank account is set up to operate with a fixed
$50,000 cash balance. As checks are presented for payment, monies are
automatically drawn against cash collections for the day and, if necessary, are
drawn against one of its revolving credit facilities. The cash overdraft
balance principally represents outstanding checks, net of any deposits in
transit that as of the balance sheet date had not yet been presented for
payment.

Deferred Sales Tax

Deferred
sales tax represents a sales tax liability of the Company for vehicles sold on
an installment basis in the State of Texas. Under Texas law, for vehicles sold
on an installment basis, the related sales tax is due as the payments are
collected from the customer, rather than at the time of sale.

Income Taxes

Income
taxes are accounted for under the liability method. Under this method, deferred
tax assets and liabilities are determined based on differences between financial reporting
and tax bases of assets and liabilities and are measured using the enacted tax
rates expected to apply in the years in which these temporary differences are
expected to be recovered or settled.

38

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Occasionally,
the Company is audited by taxing authorities. These audits could result in
proposed assessments of additional taxes. The Company believes that its tax positions
comply in all material respects with applicable tax law. However, tax law is
subject to interpretation, and interpretations by taxing authorities could be
different from those of the Company, which could result in the imposition of
additional taxes.

The
Company adopted the provisions of FASB Interpretation 48, Accounting for
Uncertainty in Income Taxes, on May 1, 2007. Previously, the Company had
accounted for tax contingencies in accordance with Statement of Financial
Accounting Standards 5, Accounting for Contingencies. As required by
Interpretation 48, which clarifies Statement 109, Accounting for Income
Taxes, the Company recognizes the financial statement benefit of a tax
position only after determining that the relevant tax authority would more
likely than not sustain the position following an audit. For tax positions
meeting the more-likely-than-not threshold, the amount recognized in the
financial statements is the largest benefit that has a greater than 50 percent
likelihood of being realized upon ultimate settlement with the relevant tax
authority. At the adoption date, the Company applied Interpretation 48 to all
tax positions for which the statute of limitations remained open. The Company
had no adjustments or unrecognized tax benefits as a result of the
implementation of Interpretation 48.

The
Company is subject to income taxes in the U.S. federal jurisdiction and various
state jurisdictions. Tax regulations within each jurisdiction are subject to
the interpretation of the related tax laws and regulations and require
significant judgment to apply. With few exceptions, the Company is no longer
subject to U.S. federal, state and local income tax examinations by tax
authorities for the years before 2005.

The
Companys policy is to recognize accrued interest related to unrecognized tax
benefits in interest expense and penalties in operating expenses. The Company
had no accrued penalties and/or interest as of April 30, 2008.

Revenue Recognition

Revenues
are generated principally from the sale of used vehicles, which in most cases
includes a service contract and a payment protection plan product, and interest
income and late fees earned on finance receivables. Revenues are net of taxes
collected from customers and remitted to government agencies.

Revenues
from the sale of used vehicles are recognized when the sales contract is
signed, the customer has taken possession of the vehicle and, if applicable,
financing has been approved. Revenues from the sale of service contracts are
recognized ratably over the five-month service contract period. Service
contract revenues are included in sales and the related expenses are included
in cost of sales. Payment protection plan revenues are initially deferred and
then recognized to income using the Rule of 78s interest method over the
life of the loan so that revenues are recognized in proportion to the amount of
cancellation protection provided. Payment protection plan revenues are included
in sales and related losses are included in cost of sales. Interest income is
recognized on all active finance receivable accounts using the interest method.

Active
accounts include all accounts except those that have been paid-off or
charged-off. At April 30, 2008 and 2007, finance receivables more than 90 days
past due were approximately $241,000 and $115,000, respectively. Late fees are
recognized when collected and are included in interest income.

39

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Advertising Costs

Advertising
costs are expensed
as incurred and consist principally of radio, television and print media
marketing costs. Advertising costs amounted
to $2,888,000, $2,912,000 and $2,326,000 for the years ended April 30, 2008,
2007 and 2006, respectively.

Employee Benefit Plans

The Company has 401(k) plans for all of its
employees meeting certain eligibility requirements. The plans provide for voluntary employee contributions and the Company
matches 50% of employee contributions up to a maximum of 2% of each employees
compensation. The Company contributed approximately $153,000, $156,000, and
$155,000 to the plans for the years ended April 30, 2008, 2007 and 2006,
respectively.

Effective February 1, 2007, the Company began
offering employees the right to purchase common shares at a 15% discount from
market price under the 2006 Employee Stock Purchase Plan which was approved by
shareholders in October 2006. The Company will take a charge to earnings for
the 15% discount. Amounts for fiscal years 2008 and 2007 were not material. A
total of 200,000 shares were registered and 191,976 remain available for
issuance at April 30, 2008.

Earnings per Share

Basic
earnings per share are computed by dividing net income by the average number of
common shares outstanding during the period. Diluted earnings per share
takes into consideration the potentially dilutive effect of common stock equivalents, such as outstanding
stock options and warrants, which if exercised or converted into common stock
would then share in the earnings of the Company. In computing diluted earnings
per share, the Company utilizes the treasury stock method and anti-dilutive
securities are excluded.

Stock-based Compensation

On
May 1, 2006, the Company adopted the provisions of Statement of Financial
Accounting Standards 123R, Share Based Payment (SFAS 123R), which revises
Statement 123, Accounting for Stock-Based Compensation, and supersedes APB
Opinion 25, Accounting for Stock Issued to Employees. SFAS 123R requires the
Company to recognize expense related to the fair value of stock-based
compensation awards, including employee stock options.

Prior
to the adoption of SFAS 123R, the Company accounted for stock-based compensation
awards using the intrinsic value method of Opinion 25. Accordingly, the Company
did not recognize compensation expense in the statement of operations for
options granted that had an exercise price equal to the market value of the
underlying common stock on the date of grant. As required by Statement 123, the
Company also provided certain pro forma disclosures for stock-based awards as
if the fair-value-based approach of Statement 123 had been applied.

The
Company has elected to use the modified prospective transition method as
permitted by SFAS 123R and therefore has not restated financial results for
prior periods. Under this transition method, the Company applied the provisions
of SFAS 123R to new awards and to awards modified, repurchased, or cancelled
after May 1, 2006. All stock options and warrants outstanding at May 1, 2006
were fully vested.

40

---



The
Company recorded compensation cost for stock-based employee awards of $1.6
million ($1.04 million after-tax) during the year ended April 30, 2008. The
pre-tax amounts include $358,000 for restricted shares issued on May 1, 2006,
$823,000 for stock options granted during the year ended April 30, 2008,
$403,000 for restricted shares issued on December 18, 2007 and $16,000 related
to stock issued under the 2006 Employee Stock Purchase Plan. The Company
recorded compensation cost for stock-based employee awards of $533,000
($336,000 after-tax) during the year ended April 30, 2007. The pretax amounts
include $397,000 for restricted shares issued on May 1, 2006 and $136,000 for
stock options granted in fiscal 2007. Tax benefits were recognized for these
costs at the Companys overall expected effective tax rate.

As
a result of the adoption of SFAS 123R, earnings were lower than under the
previous accounting method for share-based compensation by the following
amounts:

|                                        |  |                               |     | 
|--------------------------------------- |  | ----------------------------- | --- | 
|                                        |  |                               |     | 
|(Dollars in thousands)                  |  | Year
  Ended
  April 30, 2007 |    
|                                        |  |                               |    
|                                       
|Income before taxes                     |  | $                             | 136 | 
|                                        |  |                               |     | 
|Net income                              |  | $                             | 85  | 
|                                        |  |                               |     | 
|Basic net earnings per common
  share   |  | $                             | .01 | 
|                                        |  |                               |     | 
|Diluted net earnings per
  common share |  | $                             | .01 | 

The
following table illustrates the effect on net income after tax and net income
per common share as if the Company had applied the fair value recognition
provisions of SFAS 123 to stock-based compensation for the year ended April 30,
2006:

|                                     |                                                                                                                                   |                                |        |      |  
|------------------------------------ | --------------------------------------------------------------------------------------------------------------------------------- | ------------------------------ | ------ | ---- | -
|(Dollars in
thousands)               |                                                                                                                                   | Year 
  Ended
  April 30, 2006 |       
|                                     |                                                                                                                                   |                                |       
|                                     |                                                                                                                                   |                                |        |     
|Net income, as reported              |                                                                                                                                   | $                              | 16,705 |     
|Deduct:                              | Stock-based employee
  compensation expense determined under fair value-based method for all awards,
  net of related tax effects |                                |        | (100 | )
|                                     |                                                                                                                                   |                                |        |      |  
|Pro forma net income                 |                                                                                                                                   | $                              | 16,605 |     
|                                     |                                                                                                                                   |                                |        |     
|                                     |                                                                                                                                   |                                |        |      |  
|Basic earnings per common
  share:   |                                                                                                                                   |                                |        |     
|                                     | As reported                                                                                                                       |                                | $      | 1.41 |  
|                                     | Pro forma                                                                                                                         |                                | $      | 1.40 |  
|                                     |                                                                                                                                   |                                |        |      |  
|Diluted earnings per common
  share: |                                                                                                                                   |                                |        |     
|                                     | As reported                                                                                                                       |                                | $      | 1.39 |  
|                                     | Pro forma                                                                                                                         |                                | $      | 1.38 |  

The
fair value of options granted is estimated on the date of grant using the
Black-Scholes option pricing model based on the weighted average assumptions in
the table below.

|                        |  |                |   |                |      |                |  |     |   | 
|----------------------- |  | -------------- | - | -------------- | ---- | -------------- |  | --- | - | 
|                        |  | April 30, 2008 |   | April 30, 2007 |      | April 30, 2006 | 
|                        |  |                |   |                |      |                | 
|                       
|Expected term (years)   |  | 6.9            |   |                | 4.8  |                |  | 5.0 |   | 
|Risk-free interest rate |  | 4.4            | % |                | 5.14 | %              |  | 4.5 | % | 
|Volatility              |  | 80             | % |                | 62   | %              |  | 45  | % | 
|Dividend yield          |  |               |   |                |     |                |  |    |   | 

41

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The
expected term of the options is based on evaluations of historical and expected
future employee and director exercise behavior. The risk-free interest rate is
based on the U.S. Treasury rates at the date of grant with maturity dates
approximately equal to the expected life at the grant date. Volatility is based
on historical volatility of the Companys stock. The Company has not
historically issued any dividends and does not expect to do so in the
foreseeable future.

Stock Options

On
October 16, 2007, the shareholders of the Company approved the 2007 Stock
Option Plan (the 2007 Plan). The 2007 Plan provides for the grant of options
to purchase up to an aggregate 1,000,000 shares of the Companys common stock
for grants to employees, directors and certain advisors of the Company at a
price not less than the fair market value of the stock on the date of grant and
for periods not to exceed ten years. The shares of common stock available for
issuance under the 2007 Plan may, at the election of the Companys board of
directors, be unissued shares or treasury shares, or shares purchased in the
open market or by private purchase.

The
stockholders of the Company previously approved three stock option plans,
including the 1986 Incentive Stock Option Plan (1986 Plan), the 1991
Non-Qualified Stock Option Plan (1991 Plan) and the 1997 Stock Option Plan
(1997 Plan). No additional option grants may be made under the 1986, 1991 or
1997 Plans. The 1997 Plan set aside 1,500,000 shares of the Companys common
stock for grants to employees, directors and certain advisors of the Company at
a price not less than the fair market value of the stock on the date of grant
and for periods not to exceed ten years. The options vested upon issuance. At
April 30, 2007, there were 28,558, shares of common stock available for grant
under the 1997 Plan. Options for 15,000 of these shares were granted to the
Companys outside directors on July 2, 2007. The 1997 Plan expired in July
2007. Outstanding options granted under the Companys stock option plans expire
in the calendar years 2008 through 2017.

|                                                                               |  |      |                |      |  |                    | 
|------------------------------------------------------------------------------ |  | ---- | -------------- | ---- |  | ------------------ | 
|                                                                               |  | Plan |               
|                                                                               |  |      |               
|                                                                              
|                                                                               |  | 1997 |                | 2007 | 
|                                                                               |  |      |               
|                                                                              
|Minimum exercise price as a
  percentage of fair market value at date of grant |  |      | 100%           |      |  | 100%               | 
|Last expiration date for
  outstanding options                                 |  |      | July
  2, 2017 |      |  | October
  16, 2017 | 
|Shares available for grant
  at April 30, 2008                                 |  |      | 0              |      |  | 640,000            | 

The
grant-date fair value of options granted during fiscal years 2008 and 2007 was
$3,360,000 and $130,000, respectively. The aggregate intrinsic value of
outstanding options at April 30, 2008 is $2,098,000. Of the 375,000 options
granted during fiscal 2008, 360,000 were granted to executive officers on
October 16, 2007 upon the approval by shareholders of the 2007 Plan. The
options were granted at fair market value on date of grant. The vesting of
these options are set to vest in one third increments and is subject to the
attainment of certain profitability goals over the three fiscal years ending
April 30, 2010. As of April 30, 2008, the Company has $2,538,000 of total
unrecognized compensation cost related to unvested options granted under the
2007 Plan. At each period end, the Company will evaluate and estimate the
likelihood of attaining the underlying performance goals and recognize compensation
cost accordingly. These outstanding options have a weighted-average remaining
vesting period of 2.0 years.

42

---



The
Company received cash from options exercised of $205,000, $81,000 and $479,000
in fiscal years 2008, 2007 and 2006, respectively. The impact of these cash
receipts is included in financing activities in the accompanying Consolidated
Statements of Cash Flows.

The
intrinsic value for options exercised was $495,000, $156,000, and $851,000 in
fiscal years 2008, 2007, and 2006, respectively.

Warrants

As
of April 30, 2008, the Company had outstanding stock purchase warrants issued
in 2004 to purchase 18,750 shares at prices ranging from $11.83 to $18.23 per
share (weighted average exercise price of $13.11). All of the warrants are
presently exercisable and expire between 2008 and 2009. The warrants have a
weighted average remaining contractual life of 3.8 months at April 30, 2008.
There were 22,329 shares of stock purchased as the result of warrants exercised
during the fiscal year ended April 30, 2007. The intrinsic value of the
warrants exercised was $374,000. The outstanding warrants at April 30, 2008 had
an aggregate intrinsic value of $38,400.

Stock Incentive Plan

The
shareholders of the Company approved an amendment to the Companys Stock
Incentive Plan on October 16, 2007. The amendment increased from 100,000 to
150,000 the number of shares of common stock that may be issued under the Stock
Incentive Plan. For shares issued under the Stock Incentive Plan, the
associated compensation expense is generally recognized equally over the
vesting periods established at the award date and is subject to the employees
continued employment by the Company. During fiscal 2008, 65,000 restricted
shares were granted with a fair value of $11.90 per share, the market price of
the Companys stock on the grant date. During fiscal 2007, 57,500 restricted
shares were granted with a fair value of $20.07 per share, the market price of
the Companys stock on the grant date. Restricted shares issued under the Stock
Incentive Plan had an initial weighted average vesting period of 2.6 years and
began vesting on April 30, 2007. A total of 22,480 shares remained available
for award at April 30, 2008.

The
Company recorded a pre-tax expense of $761,000 and $397,000 related to the
Stock Incentive Plan during fiscal years 2008 and 2007, respectively.

As
of April 30, 2008, the Company has $808,000 of total unrecognized compensation
cost related to unvested awards granted under the Stock Incentive Plan, which
the Company expects to recognize over a weighted-average remaining period of
1.7 years. The fair value at vesting for awards under the stock incentive plan
was $655,000 and $229,000 in fiscal 2008 and 2007, respectively.

There
were no modifications to any of the Companys outstanding share-based payment
awards during fiscal 2008.

Treasury Stock

The
Company purchased 292,691 and 30,000 shares of its common stock to be held as
treasury stock for a total cost of $3,537,986 and $454,029 during 2008 and
2007, respectively. Treasury stock may be used for issuances under the
Companys stock option plan or for other general corporate purposes.

43

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Recent Accounting Pronouncements

From
time to time, new accounting pronouncements are issued by the Financial
Accounting Standards Board (FASB) or other standard setting bodies which the
Company adopts as of the specified effective date. Unless otherwise discussed,
the Company believes the impact of recently issued standards which are not yet
effective will not have a material impact on our consolidated financial
statements upon adoption.

In
September 2006, the FASB issued Statement of Financial Accounting Standard
No. 157, Fair Value Measurements (SFAS 157), which defines fair value,
establishes a framework for measuring fair value in generally accepted
accounting principles, and expands disclosures about fair value measurements.
SFAS 157 does not require any new fair value measurements, but provides
guidance on how to measure fair value by providing a fair value hierarchy used
to classify the source of the information.

In
February 2008, the FASB issued FASB Staff Position 157-2, Effective Date of
FASB Statement No. 157, to provide a one-year deferral of the effective date
of Statement 157 for nonfinancial assets and nonfinancial liabilities, except
those that are recognized or disclosed in financial statements at fair value on
a recurring basis. For nonfinancial assets and nonfinancial liabilities subject
to the deferral, the effective date of Statement 157 is postponed to fiscal
years beginning after November 15, 2008. The Company does not believe the
adoption of Statement 157 will have a material impact on the Companys financial
statements.

In
February 2007, the FASB issued Statement 159, The Fair Value Option for
Financial Assets and Financial Liabilities  Including an Amendment of FASB
Statement 115. The statement permits entities to choose to measure certain financial
instruments and other items at fair value. The objective is to improve
financial reporting by providing entities with the opportunity to mitigate
volatility in reported earnings caused by measuring related assets and
liabilities differently without having to apply complex hedge accounting
provisions. Unrealized gains and losses on any items for which Car-Mart elects
the fair value measurement option would be reported in earnings. Statement 159
is effective for fiscal years beginning after November 15, 2007. The
Company does not believe the adoption of Statement 159 will have a material
impact on the Companys financial statements.

In
March 2008, the FASB issued Statement 161, Disclosures about Derivative
Instruments and Hedging Activities. Due to the use and complexity of
derivative instruments, there were concerns regarding the existing disclosure
requirements in FASB 133. Accordingly, this Statement requires enhanced
disclosures about an entitys derivative and hedging activities. Entities will
be required to provide enhanced disclosures about (i) how and why an entity
uses derivative instruments, (ii) how derivative instruments and related
hedging items are accounted for under Statement 133 and its related
interpretations, and (iii) how derivative instruments and related hedging items
affect an entitys financial position, financial performance, and cash flows.
This Statement is effective for financial statements issued for fiscal years
after November 15, 2008. The Company does not believe the adoption of Statement
161 will have a material impact on the Companys financial statements.

44

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C - Finance Receivables, Net

The
Company originates installment sale contracts from the sale of used vehicles at
its dealerships. These installment sale contracts typically include interest
rates ranging from 6% to 19% per annum, are collateralized by the vehicle sold
and provide for payments over periods ranging from 12 to 36 months. The
components of finance receivables as of April 30, 2008 and 2007 are as follows:

|                                 |  |           |         |      |   |         |  
|-------------------------------- |  | --------- | ------- | ---- | - | ------- | -
|                                 |  | April 30, |        
|(In thousands)                   |  | 2008      |         | 2007 |  
|                                 |  |           |         |      |  
|                                 |  |           |         |      |   |         |  
|Gross contract amount            |  | $         | 231,069 |      | $ | 199,677 |  
|Less unearned finance charges    |  |           | (22,916 | )    |   | (21,158 | )
|                                 |  |           |         |      |   |         |  
|                                 |  |           |         |      |   |         |  
|Principal balance                |  |           | 208,153 |      |   | 178,519 |  
|Less allowance for credit losses |  |           | (44,809 | )    |   | (39,325 | )
|                                 |  |           |         |      |   |         |  
|                                 |  |           |         |      |   |         |  
|Finance receivables, net         |  | $         | 163,344 |      | $ | 139,194 |  
|                                 |  |           |         |      |   |         |  

Changes
in the finance receivables, net balance for the years ended April 30, 2008,
2007 and 2006 are as follows:

|                                                                       |  |                       |          |      |   |          |   |   |          |  
|---------------------------------------------------------------------- |  | --------------------- | -------- | ---- | - | -------- | - | - | -------- | -
|                                                                       |  | Years Ended April 30, |         
|(In thousands)                                                         |  | 2008                  |          | 2007 |   | 2006     |  
|                                                                       |  |                       |          |      |   |          |  
|                                                                       |  |                       |          |      |   |          |   |   |          |  
|Balance at beginning of year                                           |  | $                     | 139,194  |      | $ | 149,379  |   | $ | 123,099  |  
|Finance receivable originations                                        |  |                       | 230,920  |      |   | 196,200  |   |   | 196,190  |  
|Finance receivables from acquisition of
business                       |  |                       |         |      |   | 354      |   |   | 845      |  
|Finance receivable collections                                         |  |                       | (129,232 | )    |   | (124,092 | ) |   | (111,315 | )
|Provision for credit losses                                            |  |                       | (55,046  | )    |   | (63,077  | ) |   | (45,810  | )
|Lot closure                                                            |  |                       | (522     | )    |   |         |   |   |         |  
|Payment protection plan claims                                         |  |                       | (1,871   | )    |   |         |   |   |         |  
|Inventory acquired in repossessions and payment
protection plan claims |  |                       | (20,099  | )    |   | (19,570  | ) |   | (13,630  | )
|                                                                       |  |                       |          |      |   |          |   |   |          |  
|                                                                       |  |                       |          |      |   |          |   |   |          |  
|Balance at end of year                                                 |  | $                     | 163,344  |      | $ | 139,194  |   | $ | 149,379  |  
|                                                                       |  |                       |          |      |   |          |   |   |          |  

Changes in the
finance receivables allowance for credit losses for the years ended April 30,
2008, 2007 and 2006 are as follows:

|                                                         |  |                       |         |      |   |         |   |   |         |  
|-------------------------------------------------------- |  | --------------------- | ------- | ---- | - | ------- | - | - | ------- | -
|                                                         |  | Years Ended April 30, |        
|(In thousands)                                           |  | 2008                  |         | 2007 |   | 2006    |  
|                                                         |  |                       |         |      |   |         |  
|                                                         |  |                       |         |      |   |         |   |   |         |  
|Balance at beginning of year                             |  | $                     | 39,325  |      | $ | 35,864  |   | $ | 29,251  |  
|Provision for credit losses                              |  |                       | 55,046  |      |   | 63,077  |   |   | 45,810  |  
|Allowance related to acquisition of business, net
change |  |                       | (236    | )    |   | (366    | ) |   | 527     |  
|Charge-offs, net of recovered collateral                 |  |                       | (49,326 | )    |   | (59,250 | ) |   | (39,724 | )
|                                                         |  |                       |         |      |   |         |   |   |         |  
|                                                         |  |                       |         |      |   |         |   |   |         |  
|Balance at end of year                                   |  | $                     | 44,809  |      | $ | 39,325  |   | $ | 35,864  |  
|                                                         |  |                       |         |      |   |         |   |   |         |  

45

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D - Property and Equipment

A
summary of property and equipment as of April 30, 2008 and 2007 is as follows:

|                                               |  |           |        |      |   |        |  
|---------------------------------------------- |  | --------- | ------ | ---- | - | ------ | -
|                                               |  | April 30, |       
|(In thousands)                                 |  | 2008      |        | 2007 |  
|                                               |  |           |        |      |  
|                                               |  |           |        |      |  
|Land                                           |  | $         | 5,740  |      | $ | 5,221  |  
|Buildings and improvements                     |  |           | 6,808  |      |   | 5,890  |  
|Furniture, fixtures and equipment              |  |           | 4,295  |      |   | 4,000  |  
|Leasehold improvements                         |  |           | 5,213  |      |   | 4,588  |  
|Less accumulated depreciation and
amortization |  |           | (3,916 | )    |   | (2,816 | )
|                                               |  |           |        |      |   |        |  
|                                               |  |           |        |      |   |        |  
|                                               |  | $         | 18,140 |      | $ | 16,883 |  
|                                               |  |           |        |      |   |        |  

E - Accrued Liabilities

A
summary of accrued liabilities as of April 30, 2008 and 2007 is as follows:

|                                                   |  |           |        |      |   |       | 
|-------------------------------------------------- |  | --------- | ------ | ---- | - | ----- | 
|                                                   |  | April 30, |       
|(In thousands)                                     |  | 2008      |        | 2007 |  
|                                                   |  |           |        |      |  
|                                                   |  |           |        |      |  
|Compensation                                       |  | $         | 3,354  |      | $ | 1,970 | 
|Cash overdraft (see Note B)                        |  |           | 2,556  |      |   |      | 
|Deferred service contract revenue (see Note
B)     |  |           | 2,295  |      |   | 1,812 | 
|Deferred sales tax (see Note B)                    |  |           | 1,035  |      |   | 928   | 
|Subsidiary redeemable preferred stock (see Note
H) |  |           | 500    |      |   | 500   | 
|Interest                                           |  |           | 177    |      |   | 286   | 
|Other                                              |  |           | 1,146  |      |   | 737   | 
|                                                   |  |           |        |      |   |       | 
|                                                   |  |           |        |      |   |       | 
|                                                   |  | $         | 11,063 |      | $ | 6,233 | 
|                                                   |  |           |        |      |   |       | 

F  Revolving Credit Facilities

A summary of
revolving credit facilities is as follows:

|                            |          |                    |                |                 |                |            |  |            |  |        
|--------------------------- | -------- | ------------------ | -------------- | --------------- | -------------- | ---------- |  | ---------- |  | -------
|Revolving Credit Facilities
|                           
|Primary Lender              |          | Aggregate
  Amount |                | Interest
  Rate |                |            |  | Balance at
|                            | Maturity |                    | April 30, 2008 |                 | April 30, 2007
|                            |          |                    |                |                 |                |            |  |            |  |        
|                           
|Bank
  of Oklahoma          |          | $50.0
  million    |                | Prime
  +/-     |                | Apr
  2009 |  | $30,587    |  | $30,311

On
April 28, 2006, Car-Mart and its lenders amended the credit facilities. The
amended facilities set total borrowings allowed on the revolving credit
facilities at $50 million and established a $10 million term loan. The term
loan was funded in May 2006 and called for 120 consecutive and substantially
equal installments beginning June 1, 2006. The interest rate on the term loan
is fixed at 7.33%. The principal balance on the term loan was $8.7 million at
April 30, 2008. The combined total for the Companys credit facilities is $60
million. On March 12, 2007 (effective December 31, 2006) Car-Mart and its
lenders again amended the credit facilities. The March 12, 2007 amendments
served to change the Companys financial covenant requirements and to and
adjust the Companys interest rate pricing grid on its revolving credit
facilities. The pricing grid is based on funded debt to EBITDA, as defined, and
the interest rate on the revolving credit facilities can range from prime minus
..25 or LIBOR plus 2.75 to prime plus 1.00 or LIBOR plus 4.00.

46

---



The
facilities are collateralized by substantially all the assets of Car-Mart
including finance receivables and inventory. Interest is payable monthly under
the revolving credit facilities at the banks prime lending rate minus .25% per
annum at April 30, 2008 (4.75%) and at the banks prime lending rate plus .75%
per annum at April 30, 2007 (9.0%). The interest rate on the revolving credit
facilities decreased between years due to decreases in the prime rate and to
the Companys financial performance. The facilities contain various reporting
and performance covenants including (i) maintenance of certain financial ratios
and tests, (ii) limitations on borrowings from other sources, (iii)
restrictions on certain operating activities, and (iv) limitations on the
payment of dividends or distributions to the Company. The Company was in
compliance with the covenants at April 30, 2008. The amount available to be drawn
under the facilities is a function of eligible finance receivables and
inventory. Based upon eligible finance receivables and inventory at April 30,
2008, Car-Mart could have drawn an additional $19.4 million under its
facilities.

The
Company also has a $1.1 million term loan secured by the corporate aircraft.
The term loan is payable over fifteen years and has a fixed interest rate of
6.87% at April 30, 2008.

G - Income Taxes

The
provision for income taxes for the fiscal years ended April 30, 2008, 2007 and
2006 was as follows:

|                           |  |                         |       |      |   |       |   |   |        |  
|-------------------------- |  | ----------------------- | ----- | ---- | - | ----- | - | - | ------ | -
|                           |  | Years Ended
  April 30, |      
|(In thousands)             |  | 2008                    |       | 2007 |   | 2006  |  
|                           |  |                         |       |      |   |       |  
|Provision for income taxes |  |                         |       |      |   |       |   |   |        |  
|Current                    |  | $                       | 5,000 |      | $ | 2,206 |   | $ | 10,714 |  
|Deferred                   |  |                         | 3,130 |      |   | (754  | ) |   | (898   | )
|                           |  |                         |       |      |   |       |   |   |        |  
|                           |  | $                       | 8,130 |      | $ | 1,452 |   | $ | 9,816  |  
|                           |  |                         |       |      |   |       |   |   |        |  

The
provision for income taxes is different from the amount computed by applying
the statutory federal income tax rate to income before income taxes for the
following reasons:

|                                    |  |                         |       |      |   |       |   |   |       |  
|----------------------------------- |  | ----------------------- | ----- | ---- | - | ----- | - | - | ----- | -
|                                    |  | Years Ended
  April 30, |      
|(In thousands)                      |  | 2008                    |       | 2007 |   | 2006  |  
|                                    |  |                         |       |      |   |       |  
|                                    |  |                         |       |      |   |       |   |   |       |  
|Tax provision at statutory rate     |  | $                       | 8,091 |      | $ | 1,938 |   | $ | 9,282 |  
|State taxes, net of federal benefit |  |                         | 56    |      |   | 13    |   |   | 643   |  
|Reduction of tax reserves           |  |                         |      |      |   | (500  | ) |   |      |  
|Other, net                          |  |                         | (17   | )    |   | 1     |   |   | (109  | )
|                                    |  |                         |       |      |   |       |   |   |       |  
|                                    |  | $                       | 8,130 |      | $ | 1,452 |   | $ | 9,816 |  
|                                    |  |                         |       |      |   |       |   |   |       |  

The
effective income tax rate in 2007 was 26%. This tax rate resulted primarily
from the elimination of $500,000 of tax reserves established in prior years for
potential issues from the Internal Revenue Service (IRS) examinations of the
Companys 2002 tax returns and certain items in subsequent years. The reserves
were eliminated based on a favorable audit determination from the IRS that the
Company would not be assessed any additional taxes, penalties or interest
related to the examinations. Also, the Companys state income taxes for 2008
and 2007 were lower due to the distribution of taxable income among the
Companys operating subsidiaries.

47

---



Deferred
income taxes reflect the net tax effects of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and
the amounts used for income tax purposes. Significant components of the
Companys deferred tax assets and liabilities as of April 30, 2008 and 2007
were as follows:

|                                     |  |           |       |      |   |       | 
|------------------------------------ |  | --------- | ----- | ---- | - | ----- | 
|                                     |  | April 30, |      
|(In thousands)                       |  | 2008      |       | 2007 |  
|                                     |  |           |       |      |  
|Deferred tax liabilities related to: |  |           |       |      |   |       | 
|Finance receivables                  |  | $         | 8,524 |      | $ | 1,671 | 
|Property and equipment               |  |           | 501   |      |   | 413   | 
|                                     |  |           |       |      |   |       | 
|Total                                |  |           | 9,025 |      |   | 2,084 | 
|                                     |  |           |       |      |   |       | 
|                                    
|Deferred tax assets related to:      |  |           |       |      |   |       | 
|Accrued liabilities                  |  |           | 1,553 |      |   | 1,112 | 
|Inventory                            |  |           | 638   |      |   | 586   | 
|Share based compensation             |  |           | 414   |      |   | 51    | 
|Tax Carry-forwards                   |  |           | 2,955 |      |   |       | 
|                                     |  |           |       |      |   |       | 
|Total                                |  |           | 5,560 |      |   | 1,749 | 
|                                     |  |           |       |      |   |       | 
|Deferred tax liabilities, net        |  | $         | 3,465 |      | $ | 335   | 
|                                     |  |           |       |      |   |       | 

At
April 30, 2008, the Company has approximately $7.9 million in tax loss carry
forwards that expire in 2028.

H - Capital Stock

The
Company is authorized to issue up to one million shares of $.01 par value
preferred stock in one or more series having such respective terms, rights and
preferences as are designated by the Board of Directors. The Company has not
issued any preferred stock.

A
subsidiary of the Company has issued 500,000 shares of $1.00 par value
preferred stock which carries an 8% cumulative dividend. Accumulated but
undeclared dividends were $10,000 and $30,000 at April 30, 2008 and 2007, respectively.
The Companys subsidiary can redeem the preferred stock at any time at par
value plus any unpaid dividends. After April 30, 2010, a holder of 400,000
shares of the subsidiary preferred stock can require the Companys subsidiary
to redeem such stock for $400,000 plus any unpaid dividends. The subsidiary
preferred stock is included in accrued liabilities.

I  Weighted Average Shares Outstanding

Weighted
average shares outstanding used in the calculation of basic and diluted
earnings per share were as follows for the years ended April 30, 2008, 2007 and
2006:

|                                      |  |                       |            |      |  |            |  |  |            | 
|------------------------------------- |  | --------------------- | ---------- | ---- |  | ---------- |  |  | ---------- | 
|                                      |  | Years Ended April 30, |           
|                                      |  | 2008                  |            | 2007 |  | 2006       | 
|                                      |  |                       |            |      |  |            | 
|                                      |  |                       |            |      |  |            | 
|Average shares outstanding  basic    |  |                       | 11,825,657 |      |  | 11,850,247 |  |  | 11,852,804 | 
|Dilutive options and warrants         |  |                       | 81,664     |      |  | 103,740    |  |  | 165,737    | 
|                                      |  |                       |            |      |  |            |  |  |            | 
|                                      |  |                       |            |      |  |            |  |  |            | 
|Average shares outstanding  diluted  |  |                       | 11,907,321 |      |  | 11,953,987 |  |  | 12,018,541 | 
|                                      |  |                       |            |      |  |            |  |  |            | 
|                                      |  |                       |            |      |  |            |  |  |            | 
|Antidilutive securities not included: |  |                       |            |      |  |            |  |  |            | 
|Options and warrants                  |  |                       | 216,209    |      |  | 88,500     |  |  | 77,250     | 
|Restricted Stock                      |  |                       | 32,576     |      |  | 39,667     |  |  |           | 

48

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J - Stock Options and Warrants

Stock Options

Since
inception, the shareholders of the Company have approved three stock option
plans including the 1986 Incentive Stock Option Plan (1986 Plan), the 1991
Non-Qualified Stock Option Plan (1991 Plan) and the 1997 Stock Option Plan
(1997 Plan). While previously granted options remain outstanding, no
additional option grants may be made under the 1986 and 1991 Plans. The 1997
Plan sets aside 1,500,000 shares of the Companys common stock for grants to
employees, directors and certain advisors of the Company at a price not less
than the fair market value of the stock on the date of grant and for periods
not to exceed ten years. At April 30, 2008 and 2007, there were 0 and 28,558
shares of common stock available for grant, respectively, under the 1997 Plan.
Options granted under the Companys stock option plans expire in the calendar
years 2008 through 2016. The following is an aggregate summary of the activity
in the Companys stock option plans from April 30, 2005 to April 30, 2008:

|                                |  |                       |         |                               |   |                          |  |                                                 |           |   |   |       | 
|------------------------------- |  | --------------------- | ------- | ----------------------------- | - | ------------------------ |  | ----------------------------------------------- | --------- | - | - | ----- | 
|                                |  | Number
  of 
  Shares |         | Exercise 
  Price
  per Share |   | Proceeds
  on
  Exercise |  | Weighted Average 
  Exercise Price per 
  Share |          
|                                |  |                       |         |                               |   |                          |  |                                                 |          
|                                |  |                       |         |                               |   |                          |  |                                                 |           |   |   |       | 
|Outstanding at April 30,
  2005 |  |                       | 370,220 |                               | $ | 3.67  to  $23.75         |  |                                                 | 3,584,975 |   | $ | 9.68  | 
|Granted                         |  |                       | 15,000  |                               |   | 22.17                    |  |                                                 | 332,550   |   |   | 22.17 | 
|Exercised                       |  |                       | (72,650 | )                             |   | 3.67  to      8.77       |  |                                                 | (479,971  | ) |   | 6.61  | 
|Canceled                        |  |                       | (25,275 | )                             |   | 6.59  to    23.75        |  |                                                 | (456,715  | ) |   | 18.07 | 
|                                |  |                       |         |                               |   |                          |  |                                                 |           |   |   |       | 
|                                |  |                       |         |                               |   |                          |  |                                                 |           |   |   |       | 
|Outstanding at April 30,
  2006 |  |                       | 287,295 |                               | $ | 3.67  to  $23.75         |  |                                                 | 2,980,839 |   | $ | 10.38 | 
|Granted                         |  |                       | 12,250  |                               |   | 11.62  to    20.47       |  |                                                 | 241,908   |   |   | 19.75 | 
|Exercised                       |  |                       | (13,750 | )                             |   | 3.67  to    11.83        |  |                                                 | (81,030   | ) |   | 5.89  | 
|Canceled                        |  |                       | (11,250 | )                             |   | 19.83  to    22.17       |  |                                                 | (234,250  | ) |   | 20.82 | 
|                                |  |                       |         |                               |   |                          |  |                                                 |           |   |   |       | 
|Outstanding at April 30,
  2007 |  |                       | 274,545 |                               | $ | 3.67  to  $23.75         |  |                                                 | 2,907,467 |   | $ | 10.59 | 
|                                |  |                       |         |                               |   |                          |  |                                                 |           |   |   |       | 
|Granted                         |  |                       | 375,000 |                               | $ | 11.90  to  $13.37        |  |                                                 | 4,484,550 |   | $ | 11.96 | 
|Exercised                       |  |                       | (55,898 | )                             | $ | 3.67                     |  |                                                 | (204,959  | ) |   | 3.67  | 
|                                |  |                       |         |                               |   |                          |  |                                                 |           |   |   |       | 
|                                |  |                       |         |                               |   |                          |  |                                                 |           |   |   |       | 
|Outstanding at April 30,
  2008 |  |                       | 593,647 |                               | $ | 3.67  to  $23.75         |  | $                                               | 7,187,058 |   | $ | 12.11 | 
|                                |  |                       |         |                               |   |                          |  |                                                 |           |   |   |       | 

Options
for 360,000 shares were granted to executive officers on October 16,
2007 but were not yet exercisable. The vesting of these options are set to vest
in one third increments and are subject to the attainment of certain
profitability goals over the three fiscal years ending April 30, 2010. All
other options are currently exercisable. A summary of stock options outstanding as of April 30, 2008 is as
follows:

|                           |  |  |                    |         |                                                 |  |                                     |  |   |       | 
|-------------------------- |  |  | ------------------ | ------- | ----------------------------------------------- |  | ----------------------------------- |  | - | ----- | 
|Range of
  Exercise Prices |  |  | Number
  of Shares |         | Weighted Average
  Remaining
  Contractual Life |  | Weighted
  Average
  Exercise Price | 
|                           |  |  |                    |         |                                                 |  |                                     | 
|                           |  |  |                    |         |                                                 |  |                                     |  |   |       | 
|$  3.67  to  $ 8.77        |  |  |                    | 129,147 |                                                 |  | 1.88                                |  | $ | 5.30  | 
|11.62  to   23.75          |  |  |                    | 464,500 |                                                 |  | 8.92                                |  |   | 14.00 | 
|                           |  |  |                    |         |                                                 |  |                                     |  |   |       | 
|                           |  |  |                    |         |                                                 |  |                                     |  |   |       | 
|                           |  |  |                    | 593,647 |                                                 |  | 7.38                                |  | $ | 12.11 | 
|                           |  |  |                    |         |                                                 |  |                                     |  |   |       | 

49

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K - Commitments and Contingencies

Facility Leases

The
Company leases certain dealership and office facilities under various
non-cancelable operating leases. Dealership leases are generally for periods from three to
five years and contain multiple renewal options. As of April 30, 2008, the
aggregate rentals due under such leases, including renewal options that are
reasonably assured, were as follows:

|                         |  |                        |        | 
|------------------------ |  | ---------------------- | ------ | 
|Years Ending
  April 30, |  | Amount(In
  thousands) |       
|                         |  |                        |       
|                         |  |                        |       
|2009                     |  | $                      | 2,342  | 
|2010                     |  |                        | 2,333  | 
|2011                     |  |                        | 2,375  | 
|2012                     |  |                        | 2,331  | 
|2013                     |  |                        | 2,227  | 
|Thereafter               |  |                        | 13,607 | 
|                         |  |                        |        | 
|                         |  |                        |        | 
|                         |  | $                      | 25,215 | 
|                         |  |                        |        | 

The
$25.2 million of lease commitments includes $3.4 million of non-cancelable
lease commitments under the primary lease terms, and $21.8 million of lease
commitments for renewal periods at the Companys option that are reasonably assured. For the years ended
April 30, 2008, 2007 and 2006, rent expense for all operating leases amounted
to approximately $2,698,000, $2,757,000 and $2,440,000, respectively.

Litigation

In
the ordinary course of business, the Company has become a defendant in various
types of other legal
proceedings. The Company does not expect the final outcome of any of these
actions, individually or in the aggregate, to have a material adverse effect on
the Companys financial position, annual results of operations or cash flows.
However, the results of legal proceedings cannot be predicted with certainty,
and an unfavorable resolution of one or more of these legal proceedings could
have a material adverse effect on the Companys financial position, annual
results of operations or cash flows.

Related Finance Company

Car-Mart
of Arkansas and Colonial do not meet the affiliation standard for filing
consolidated income tax returns, as such they file separate federal and state
income tax returns. Car-Mart of Arkansas routinely sells its finance
receivables to Colonial at what the Company believes to be fair market value
and is able to take a tax deduction at the time of sale for the difference
between the tax basis of the receivables sold and the sales price. These types
of transactions, based upon facts and circumstances, have been permissible
under the provisions of the Internal Revenue Code (IRC) as described in the
Treasury Regulations. For financial accounting purposes, these transactions are
eliminated in consolidation, and a deferred tax liability has been recorded for
this timing difference. The sale of finance receivables from Car-Mart of
Arkansas to Colonial provides certain legal protection for the Companys
finance receivables and, principally because of certain state apportionment
characteristics of Colonial, also has the effect of reducing the Companys
overall effective state income tax rate by approximately 240 basis points. The
actual interpretation of the Regulations is in part a facts and circumstances
matter. The Company believes it satisfies the material provisions of the
Regulations. Failure to satisfy those provisions could result in the loss of a
tax deduction at the time the receivables are sold, and have the effect of
increasing the Companys overall effective income tax rate as well as the
timing of required tax payments.

50

---



In
May 2007, the Internal Revenue Service (IRS) concluded on the previously
disclosed examinations of the Companys tax returns for fiscal 2002 and certain
items in subsequent years. The IRS concluded that the Company would not be
assessed any additional taxes, penalties or interest related to the
examinations. The examinations focused on whether or not the Company satisfied
the provisions of the Treasury Regulations which would entitle Car-Mart of
Arkansas to a tax deduction at the time it sells its finance receivables to
Colonial. Based upon the favorable IRS conclusion, the Company recognized
$500,000 of net income in the fourth quarter of fiscal 2007 for the elimination
of associated income tax reserves.

The
Company adopted the provisions of FASB Interpretation 48, Accounting for
Uncertainty in Income Taxes, on May 1, 2007. Previously, the Company had
accounted for tax contingencies in accordance with Statement of Financial
Accounting Standards 5, Accounting for Contingencies. As required by
Interpretation 48, which clarifies Statement 109, Accounting for Income
Taxes, the Company recognizes the financial statement benefit of a tax
position only after determining that the relevant tax authority would more
likely than not sustain the position following an audit. For tax positions
meeting the more-likely-than-not threshold, the amount recognized in the
financial statements is the largest benefit that has a greater than 50 percent
likelihood of being realized upon ultimate settlement with the relevant tax
authority. At the adoption date, the Company applied Interpretation 48 to all
tax positions for which the statute of limitations remained open. The Company
had no adjustments or unrecognized tax benefits as a result of the
implementation of Interpretation 48.

The
Company is subject to income taxes in the U.S. federal jurisdiction and various
state jurisdictions. Tax regulations within each jurisdiction are subject to
the interpretation of the related tax laws and regulations and require
significant judgment to apply. With few exceptions, the Company is no longer
subject to U.S. federal, state and local income tax examinations by tax
authorities for the years before 2005.

The
Companys policy is to recognize accrued interest related to unrecognized tax
benefits in interest expense and penalties in operating expenses. The Company
had no accrued penalties and/or interest as of April 30, 2008.

L - Fair Value of Financial Instruments

The
table below summarizes information about the fair value of financial
instruments included in the Companys financial statements at April 30, 2008 and 2007:

|                              |  |                  |         |                |   |                  |  |              |         |  |   |         | 
|----------------------------- |  | ---------------- | ------- | -------------- | - | ---------------- |  | ------------ | ------- |  | - | ------- | 
|                              |  | April 30, 2008   |         | April 30, 2007 |  
|                              |  |                  |         |                |  
|(In thousands)                |  | Carrying
  Value |         | Fair
  Value   |   | Carrying
  Value |  | Fair
  Value |        
|                              |  |                  |         |                |   |                  |  |              |        
|                              |  |                  |         |                |   |                  |  |              |         |  |   |         | 
|Cash                          |  | $                | 153     |                | $ | 153              |  | $            | 257     |  | $ | 257     | 
|Finance
  receivables, net    |  |                  | 163,344 |                |   | 131,832          |  |              | 139,194 |  |   | 133,840 | 
|Accounts
  payable            |  |                  | 3,871   |                |   | 3,871            |  |              | 2,473   |  |   | 2,473   | 
|Revolving
  credit facilities |  |                  | 30,587  |                |   | 30,587           |  |              | 30,311  |  |   | 30,311  | 
|Notes
  payable               |  |                  | 9,750   |                |   | 9,750            |  |              | 10,518  |  |   | 10,518  | 

51

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Because
no market exists for certain of the Companys financial instruments, fair value
estimates are based on judgments and estimates regarding yield expectations of
investors, credit risk and other risk characteristics, including interest rate and prepayment risk.
These estimates are subjective in nature and involve uncertainties and matters
of judgment and therefore cannot be determined with precision. Changes in
assumptions could significantly affect these estimates. The methodology and
assumptions utilized to estimate the fair value of the Companys financial
instruments are as follows:

| | Financial
Instrument          |  | Valuation Methodology                                                                                                                                                                           
| | ----------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                               |  |                                                                                                                                                                                                 
| |                               |  |                                                                                                                                                                                                 
| | Cash                          |  | The carrying
  amount is considered to be a reasonable estimate of fair value due to the
  short-term nature of the financial instrument.                                                       
| |                               |  |                                                                                                                                                                                                 
| | Finance
  receivables, net    |  | The fair
  value was estimated based upon discussions with third party purchasers of
  finance receivables and the Companys own recent experience with purchasing
  businesses in the industry.
| |                               |  |                                                                                                                                                                                                 
| | Accounts
  payable            |  | The carrying
  amount is considered to be a reasonable estimate of fair value due to the
  short-term nature of the financial instrument.                                                       
| |                               |  |                                                                                                                                                                                                 
| | Revolving
  credit facilities |  | The fair
  value approximates carrying value due to the variable interest rates charged
  on the borrowings.                                                                                    
| |                               |  |                                                                                                                                                                                                 
| | Notes
  payable               |  | The fair
  value approximates carrying value due to the nature of the collateral and the
  fairly recent placement of the debt.                                                                 

M - Supplemental Cash
Flow Information

Supplemental
cash flow disclosures for the years ended April 30, 2008, 2007 and 2006 are as follows:

|                                                                         |  |                       |        |      |   |        |  |   |        | 
|------------------------------------------------------------------------ |  | --------------------- | ------ | ---- | - | ------ |  | - | ------ | 
|                                                                         |  | Years Ended April 30, |       
|(In thousands)                                                           |  | 2008                  |        | 2007 |   | 2006   | 
|                                                                         |  |                       |        |      |   |        | 
|Supplemental
  disclosures:                                              |  |                       |        |      |   |        |  |   |        | 
|Interest paid                                                            |  | $                     | 3,056  |      | $ | 3,700  |  | $ | 2,336  | 
|Income taxes paid, net                                                   |  |                       | 6,391  |      |   | 5,856  |  |   | 9,204  | 
|                                                                         |  |                       |        |      |   |        |  |   |        | 
|Non-cash
  transactions:                                                 |  |                       |        |      |   |        |  |   |        | 
|Inventory acquired in repossessions and
  payment protection plan claims |  |                       | 20,099 |      |   | 19,570 |  |   | 13,630 | 

N - Quarterly Results of Operations
(unaudited)

A
summary of the Companys
quarterly results of operations for the years ended April 30, 2008 and 2007 is
as follows (in thousands, except per share information):

|                      |  |                           |        |                  |   |                 |  |                  |        |       |   |        |  |   |         | 
|--------------------- |  | ------------------------- | ------ | ---------------- | - | --------------- |  | ---------------- | ------ | ----- | - | ------ |  | - | ------- | 
|                      |  | Year Ended April 30, 2008 |       
|                      |  | First
  Quarter           |        | Second
  Quarter |   | Third
  Quarter |  | Fourth
  Quarter |        | Total |  
|                      |  |                           |        |                  |   |                 |  |                  |        |       |  
|                      |  |                           |        |                  |   |                 |  |                  |        |       |  
|Revenues              |  | $                         | 58,707 |                  | $ | 68,243          |  | $                | 71,139 |       | $ | 76,542 |  | $ | 274,631 | 
|Net income            |  |                           | 2,141  |                  |   | 3,466           |  |                  | 3,378  |       |   | 6,048  |  |   | 15,033  | 
|Earnings per
  share: |  |                           |        |                  |   |                 |  |                  |        |       |   |        |  |   |         | 
|Basic                 |  |                           | .18    |                  |   | .29             |  |                  | .29    |       |   | .52    |  |   | 1.27    | 
|Diluted               |  |                           | .18    |                  |   | .29             |  |                  | .28    |       |   | .51    |  |   | 1.26    | 

52

---



|                      |  |                           |        |                  |   |                 |   |                  |        |       |   |        |  |   |         | 
|--------------------- |  | ------------------------- | ------ | ---------------- | - | --------------- | - | ---------------- | ------ | ----- | - | ------ |  | - | ------- | 
|                      |  | Year Ended April 30, 2007 |       
|                      |  | First
  Quarter           |        | Second
  Quarter |   | Third
  Quarter |   | Fourth
  Quarter |        | Total |  
|                      |  |                           |        |                  |   |                 |   |                  |        |       |  
|                      |  |                           |        |                  |   |                 |   |                  |        |       |  
|Revenues              |  | $                         | 62,191 |                  | $ | 59,539          |   | $                | 59,308 |       | $ | 59,296 |  | $ | 240,334 | 
|Net income
  (loss)   |  |                           | 4,155  |                  |   | (1,928          | ) |                  | (50    | )     |   | 2,055  |  |   | 4,232   | 
|Earnings per
  share: |  |                           |        |                  |   |                 |   |                  |        |       |   |        |  |   |         | 
|Basic                 |  |                           | .35    |                  |   | (.16            | ) |                  |       |       |   | .17    |  |   | .36     | 
|Diluted               |  |                           | .35    |                  |   | (.16            | ) |                  |       |       |   | .16    |  |   | .35     | 

53

---



Item 9. Changes in and Disagreements with
Accountants on Accounting and Financial Disclosure

Not
applicable.

Item 9A. Controls and Procedures

Disclosure Controls and Procedures

We
maintain disclosure controls and procedures that are designed to ensure that
information required to be disclosed by us in the reports we file or submit
under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in the SECs rules and forms, and that such information
is accumulated and communicated to our management, including our Chief
Executive Officer (principal executive officer) and Chief Financial Officer
(principal financial officer), to allow timely decisions regarding required
disclosure.

Our
management, including our Chief Executive Officer and Chief Financial Officer,
evaluated the effectiveness of our disclosure controls and procedures (as
defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange
Act), as of the end of period covered by this report, April 30, 2008. Based on
that evaluation, our Chief Executive Officer and Chief Financial Officer
concluded that, as of April 30, 2008, our disclosure controls and procedures
were effective.

Managements Report on Internal
Control Over Financial Reporting

Management
of the Company is responsible for establishing and maintaining adequate
internal control over financial reporting as defined in
Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act
of 1934. The Companys internal control over financial reporting is designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles.

Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Therefore, even those systems determined to be
effective can provide only reasonable assurance with respect to financial
statement preparation and presentation. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.

Management
assessed the effectiveness of the Companys internal control over financial
reporting as of April 30, 2008. In making this assessment, management used the
criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO) in Internal Control-Integrated Framework.

Based
on managements assessment and those criteria, management believes that the
Company maintained effective internal control over financial reporting as of
April 30, 2008.

The
Companys independent registered public accounting firm have issued an
attestation report on managements assessment of the Companys internal control
over financial reporting. That report appears below.

54

---



Report of
Independent Registered Public Accounting Firm

|                                     
|-------------------------------------
|Stockholders and Board of
  Directors
|Americas Car-Mart, Inc.             

We have audited Americas
Car-Mart, Inc.s (a Texas corporation) internal control over financial
reporting as of April 30, 2008, based on criteria established in Internal
ControlIntegrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). Americas Car-Mart, Inc.s
management is responsible for maintaining effective internal control over
financial reporting and for its assessment of the effectiveness of internal
control over financial reporting, included in the accompanying Managements
Report on Internal Control Over Financial Reporting. Our responsibility is to
express an opinion on Americas Car-Mart, Inc.s internal control over
financial reporting based on our audit.

We conducted our audit in
accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether effective internal control over
financial reporting was maintained in all material respects. Our audit included
obtaining an understanding of internal control over financial reporting,
assessing the risk that a material weakness exists, testing and evaluating the
design and operating effectiveness of internal control based on the assessed
risk, and performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our
opinion.

A companys internal control
over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally
accepted accounting principles. A companys internal control over financial
reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the
company are being made only in accordance with authorizations of management and
directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition
of the companys assets that could have a material effect on the financial
statements.

Because of its inherent
limitations, internal control over financial reporting may not prevent or
detect misstatements. Also, projections of any evaluation of effectiveness to
future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate. In our opinion, Americas Car-Mart, Inc.
maintained, in all material respects, effective internal control over financial
reporting as of April 30, 2008, based on criteria established in Internal
ControlIntegrated Framework issued by COSO.

We also have audited, in
accordance with the standards of the Public Company Accounting Oversight Board
(United States), the consolidated balance sheets of Americas Car-Mart, Inc.
and subsidiaries as of April 30, 2008 and 2007, and the related consolidated
statements of operations, cash flows and stockholders equity for each of the
three years in the period ended April 30, 2008 and our report dated July 3,
2008 expressed
an unqualified opinion.

|                      
|----------------------
|/s/ GRANT THORNTON LLP
|                      
|Tulsa, Oklahoma       
|July 3, 2008          

55

---



Changes in Internal Control Over Financial Reporting

There
were no changes in the Companys internal control over financial reporting (as
defined in Rule 13a-15(f) under the Exchange Act) that occurred
during the Companys last fiscal quarter that have materially affected or are
reasonably likely to materially affect the Companys internal control over
financial reporting.

Item 9A(T). Controls and Procedures

Not
Applicable.

Item 9B. Other Information

Not
Applicable.

56

---



PART III

Except
as to information with respect to executive officers which is contained in a
separate heading under Part I, Item 1 of this Form 10-K, the information
required by Items 10 through 14 of this Form 10-K is, pursuant to General
Instruction G(3) of Form 10-K, incorporated by reference herein from the
Companys definitive proxy statement to be filed pursuant to Regulation 14A for
the Companys Annual Meeting of Stockholders to be held in October 2007 (the
Proxy Statement). The Company will, within 120 days of the end of its fiscal
year, file with the SEC a definitive proxy statement pursuant to Regulation
14A.

Item 10. Directors, Executive Officers and
Corporate Governance

The
information required by this item will be contained in the Proxy Statement and
such information is incorporated herein by reference. Information regarding the
executive officers of the Company is set forth under the heading Executive
Officers in Part I, Item 1 of this report.

Item 11. Executive Compensation

The
information required by this item will be contained in the Proxy Statement and
such information is incorporated herein by reference.

Item 12. Security Ownership of Certain
Beneficial Owners and Management and Related Stockholder Matters

The
information required by this item will be contained in the Proxy Statement and
such information is incorporated herein by reference. See also Equity
Compensation Plan Information in Item 5 of this report in response to this
item.

Item 13. Certain Relationships and Related
Transactions, and Director Independence

The
information required by this item will be contained in the Proxy Statement and
such information is incorporated herein by reference.

Item 14. Principal
Accountant Fees and Services

The
information required by this item is will be contained in the Proxy Statement
and such information is incorporated herein by reference.

57

---



PART IV

Item 15. Exhibits and Financial Statement
Schedules

|      |                                                                                                       |                                                                                                        |   
|----- | ----------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------ | --
|(a)1. | Financial Statements and Accountants
  Report                                                       
|      |                                                                                                      
|      | The
  following financial statements and accountants report are included in Item 8
  of this report: |                                                                                                       
|      |                                                                                                       |                                                                                                       
|      |                                                                                                       | Report of
  Independent Registered Public Accounting Firm                                              | 55
|      |                                                                                                       |                                                                                                        |   
|      |                                                                                                       | Consolidated
  Balance Sheets as of April 30, 2008 and 2007                                            | 32
|      |                                                                                                       |                                                                                                        |   
|      |                                                                                                       | Consolidated
  Statements of Operations for the years ended April 30, 2008,
  2007 and 2006            | 33
|      |                                                                                                       |                                                                                                        |   
|      |                                                                                                       | Consolidated
  Statements of Cash Flows for the years ended April 30, 2008, 2007 and 2006              | 34
|      |                                                                                                       |                                                                                                        |   
|      |                                                                                                       | Consolidated
  Statements of Stockholders Equity for the years ended April 30, 2008, 2007
  and 2006m | 35
|      |                                                                                                       |                                                                                                        |   
|      |                                                                                                       | Notes to Consolidated Financial Statements                                                             | 36
|      |                                                                                                       |                                                                                                       
|(a)2. | Financial Statement Schedules                                                                        

The
financial statement schedules are omitted since the required information is not
present, or is not present in amounts sufficient to require submission of the
schedules, or because the information required is included in the consolidated
financial statements and notes thereto.

|      |         
|----- | --------
|(a)3. | Exhibits

|      |                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |  |                        | 
|----- | ---------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | ---------------------- | 
|      | Exhibit
  Number |                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |  | Description of Exhibit | 
|      |                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |  |                        | 
|      |                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|3.1   |                  | Articles of Incorporation
  of the Company, as amended. (2)                                                                                                                                                                                                                                                                                                                                                                                        
|      |                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|3.2   |                  | Amended and
  Restated Bylaws of the Company dated December 4, 2007. (3)                                                                                                                                                                                                                                                                                                                                                                           
|      |                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|4.1   |                  | Specimen
  stock certificate. (4)                                                                                                                                                                                                                                                                                                                                                                                                                  
|      |                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|4.2   |                  | Amended and Restated
  Agented Revolving Credit Agreement, dated June 23, 2005, among Colonial Auto
  Finance, Inc., as borrower, Bank of Arkansas, N.A., Great Southern Bank,
  Arvest Bank, First State Bank, Bank of Oklahoma, N.A., and Liberty Bank of
  Arkansas and one or more additional lenders to be determined at a later date,
  Bank of Arkansas, N.A., as agent for the banks and Bank of Oklahoma, N.A., as
  the paying agent. (5)
|      |                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|4.2.1 |                  | First
  Amendment to the Amended
  and Restated Agented Revolving Credit Agreement, dated September 30, 2005,
  among Colonial Auto Finance, Inc., as borrower, Bank of Arkansas, N.A., Great
  Southern Bank, Arvest Bank, First State Bank, Bank of Oklahoma, N.A., and
  Liberty Bank of Arkansas and one or more additional lenders to be determined
  at a later date, Bank of Arkansas, N.A., as agent for the banks. (6)                    

58

---



|      |                |                                                                                                                                                                                                                                                                                                                                                                                                                          |  |  |                        | 
|----- | -------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  |  | ---------------------- | 
|      | Exhibit Number |                                                                                                                                                                                                                                                                                                                                                                                                                          |  |  | Description of Exhibit | 
|      |                |                                                                                                                                                                                                                                                                                                                                                                                                                          |  |  |                        | 
|4.2.2 |                | Third
 Amendment to the Amended
 and Restated Agented Revolving Credit Agreement, dated February 24, 2006,
 among Colonial Auto Finance, Inc., as borrower, Bank of Arkansas, N.A., Great
 Southern Bank, Arvest Bank, First State Bank, Bank of Oklahoma, N.A., and
 Liberty Bank of Arkansas and one or more additional lenders to be determined
 at a later date, Bank of Arkansas, N.A., as agent for the banks. (7)
|      |                |                                                                                                                                                                                                                                                                                                                                                                                                                         
|4.2.3 |                | Fourth
 Amendment to the Amended
 and Restated Agented Revolving Credit Agreement, dated April 28, 2006, among
 Colonial Auto Finance, Inc., as borrower, Bank of Arkansas, N.A., Great
 Southern Bank, Arvest Bank, First State Bank, Bank of Oklahoma, N.A., and
 Liberty Bank of Arkansas and one or more additional lenders to be determined
 at a later date, Bank of Arkansas, N.A., as agent for the banks. (8)  
|      |                |                                                                                                                                                                                                                                                                                                                                                                                                                         
|4.2.4 |                | Fifth Amendment to Amended
 and Restated Agented Revolving Credit Agreement, dated March 8, 2007
 (effective December 31, 2006), among Colonial Auto Finance, Inc., as
 borrower, Bank of Arkansas, N.A., Great Southern Bank, First State Bank of
 Northwest Arkansas, Enterprise Bank and Trust, Sovereign Bank, Commerce Bank,
 N.A. and First State Bank. (16)                                                      
|      |                |                                                                                                                                                                                                                                                                                                                                                                                                                         
|4.2.5 |                | Sixth Amendment to Amended
 and Restated Agented Revolving Credit Agreement, dated May 16, 2008, among
 Colonial Auto Finance, Inc., as borrower, Bank of Arkansas, N.A., Great
 Southern Bank, First State Bank of Northwest Arkansas, Enterprise Bank and
 Trust, Sovereign Bank, Commerce Bank, N.A. and First State Bank. (19)                                                                                      
|      |                |                                                                                                                                                                                                                                                                                                                                                                                                                         
|4.3   |                | Revolving Credit Agreement,
 dated June 23, 2005, among Americas Car-Mart, Inc., an Arkansas corporation,
 and Texas Car-Mart, Inc., as borrowers, and Bank of Oklahoma, N.A., as
 lender. (5)                                                                                                                                                                                                                         
|      |                |                                                                                                                                                                                                                                                                                                                                                                                                                         
|4.3.1 |                | Second
 Amendment to Revolving
 Credit Agreement, dated September 30, 2005, among Americas Car-Mart, Inc.,
 an Arkansas corporation, and Texas Car-Mart, Inc., as borrowers, and Bank of
 Oklahoma, N.A., as lender. (6)                                                                                                                                                                                               
|      |                |                                                                                                                                                                                                                                                                                                                                                                                                                         
|4.3.2 |                | Third
 Amendment to Revolving
 Credit Agreement, dated April 28, 2006, among Americas Car-Mart, Inc., an
 Arkansas corporation, and Texas Car-Mart, Inc., as borrowers, and Bank of
 Oklahoma, N.A., as lender. (8)                                                                                                                                                                                                    
|      |                |                                                                                                                                                                                                                                                                                                                                                                                                                         
|4.3.3 |                | Fourth
 Amendment to Revolving Credit Agreement, dated March 8, 2007 (effective
 December 31, 2006), among Americas Car-Mart, Inc. an Arkansas corporation,
 and Texas Car-Mart, Inc. as borrowers, and Bank of Arkansas, N.A., as lender.
 (16)                                                                                                                                                                       
|      |                |                                                                                                                                                                                                                                                                                                                                                                                                                         
|4.3.4 |                | Guaranty
 Agreement dated March 8, 2007 (effective December 31, 2006), among Americas
 Car-Mart, Inc., an Arkansas corporation, and Bank of Arkansas, N.A., as
 lender. (16)                                                                                                                                                                                                                                           
|      |                |                                                                                                                                                                                                                                                                                                                                                                                                                         
|4.3.5 |                | Fifth
 Amendment to Revolving Credit Agreement, dated May 16, 2008, among Americas
 CAR-MART, Inc., an Arkansas corporation, and Texas CAR-MART, Inc., as
 borrowers, and Bank of Arkansas, N.A., as lender. (19)                                                                                                                                                                                                      
|      |                |                                                                                                                                                                                                                                                                                                                                                                                                                         

59

---



|       |                  |                                                                                                                                                                                                                                                              |  |  |                        | 
|------ | ---------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  |  | ---------------------- | 
|       | Exhibit 
 Number |                                                                                                                                                                                                                                                              |  |  | Description of Exhibit | 
|       |                  |                                                                                                                                                                                                                                                              |  |  |                        | 
|4.4    |                  | International
 Swap Dealers Association, Inc. Master Agreement, Schedule to the Master
 Agreement and Credit Support Annex dated May 15, 2008 among Americas
 CAR-MART, Inc., Texas CAR-MART, Inc., Colonial Finance, Inc. and Bank of
 Oklahoma, N.A. (19)
|       |                  |                                                                                                                                                                                                                                                             
|10.1   |                  | 1986
 Incentive Stock Option Plan. (9)                                                                                                                                                                                                                      
|       |                  |                                                                                                                                                                                                                                                             
|10.1.1 |                  | Amendment to
 1986 Incentive Stock Option Plan adopted September 27, 1990. (10)                                                                                                                                                                             
|       |                  |                                                                                                                                                                                                                                                             
|10.2   |                  | 1991
 Non-Qualified Stock Option Plan. (11)                                                                                                                                                                                                                 
|       |                  |                                                                                                                                                                                                                                                             
|10.3   |                  | 1997 Stock
 Option Plan. (12)                                                                                                                                                                                                                               
|       |                  |                                                                                                                                                                                                                                                             
|10.4   |                  | 2005
 Restricted Stock Plan. (15)                                                                                                                                                                                                                           
|       |                  |                                                                                                                                                                                                                                                             
|10.4.1 |                  | Amendment to
 2005 Restricted Stock Plan (17)                                                                                                                                                                                                               
|       |                  |                                                                                                                                                                                                                                                             
|10.5   |                  | Form of
 Indemnification Agreement between the Company and certain officers and
 directors of the Company. (13)                                                                                                                                             
|       |                  |                                                                                                                                                                                                                                                             
|10.6   |                  | Employment
 Agreement, dated May 1, 2006, between the Company and Tilman J. Falgout, III.
 (18)                                                                                                                                                             
|       |                  |                                                                                                                                                                                                                                                             
|10.6.1 |                  | Amendment
 No. 1 to Employment Agreement, effective as of August 27, 2007, between the
 Company and Tilman J. Falgout, III. (3)                                                                                                                             
|       |                  |                                                                                                                                                                                                                                                             
|10.7   |                  | Employment
 Agreement, dated as of May 1, 2007, between the Company and William H.
 Henderson. (3)                                                                                                                                                          
|       |                  |                                                                                                                                                                                                                                                             
|10.8   |                  | Employment
 Agreement, dated as of May 1, 2007, between the Company and Eddie L. Hight.
 (3)                                                                                                                                                                
|       |                  |                                                                                                                                                                                                                                                             
|10.9   |                  | Employment
 Agreement, dated May 1, 2007, between the Company and Jeffrey A. Williams.
 (3)                                                                                                                                                                 
|       |                  |                                                                                                                                                                                                                                                             
|10.10  |                  | 2007 Stock
 Option Plan effective August 27, 2007. (20)                                                                                                                                                                                                     
|       |                  |                                                                                                                                                                                                                                                             
|10.11  |                  | Amendment to
 the Stock Incentive Plan adopted August 27, 2007. (20)                                                                                                                                                                                        
|       |                  |                                                                                                                                                                                                                                                             
|10.12  |                  | Form of
 Option Agreement for 2007 Stock Option Plan. (3)                                                                                                                                                                                                   
|       |                  |                                                                                                                                                                                                                                                             
|14.1   |                  | Code of
 Business Conduct and Ethics. (14)                                                                                                                                                                                                                  
|       |                  |                                                                                                                                                                                                                                                             
|21.1   |                  | Subsidiaries
 of Americas Car-Mart, Inc. (1)                                                                                                                                                                                                               
|       |                  |                                                                                                                                                                                                                                                             
|23.1   |                  | Consent of
 Independent Registered Public Accounting Firm. (1)                                                                                                                                                                                              
|       |                  |                                                                                                                                                                                                                                                             
|24.1   |                  | Power of
 Attorney of William H. Henderson. (1)                                                                                                                                                                                                             

60

---



|     |                 |                                                   |  |  |                        | 
|---- | --------------- | ------------------------------------------------- |  |  | ---------------------- | 
|     | Exhibit
 Number |                                                   |  |  | Description of Exhibit | 
|     |                 |                                                   |  |  |                        | 
|     |                 |                                                  
|24.2 |                 | Power of
 Attorney of Tilman J. Falgout, III. (1)
|     |                 |                                                  
|24.3 |                 | Power of
 Attorney of J. David Simmons. (1)      
|     |                 |                                                  
|24.4 |                 | Power of
 Attorney of William A. Swanston. (1)   
|     |                 |                                                  
|24.5 |                 | Power of
 Attorney of William M. Sams. (1)       
|     |                 |                                                  
|24.6 |                 | Power of
 Attorney of Daniel J. Englander. (1)   
|     |                 |                                                  
|31.1 |                 | Rule
 13a-14(a) certification. (1)               
|     |                 |                                                  
|31.2 |                 | Rule
 13a-14(a) certification. (1)               
|     |                 |                                                  
|32.1 |                 | Section 1350
 certification. (1)                 

|     |  |                                                                                                                                                                                                                                           | 
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|     | 
|(1)  |  | Filed
 herewith.                                                                                                                                                                                                                         
|     |  |                                                                                                                                                                                                                                          
|(2)  |  | Previously
 filed as Exhibits 4.1-4.8 to the Companys Registration Statement on Form S-8
 initially filed with the Securities and Exchange Commission on November 16,
 2005 (No. 333-129727) and incorporated herein by reference.      
|     |  |                                                                                                                                                                                                                                          
|(3)  |  | Previously
 filed as Exhibit 3.2 to the Companys current report on Form 8-K initially
 filed with the Securities and Exchange Commission on December 7, 2007 and
 incorporated herein by reference.                                     
|     |  |                                                                                                                                                                                                                                          
|(4)  |  | Previously filed as an Exhibit to the Companys Annual Report on Form 10-K
 for the year ended April 30, 1994 and incorporated herein by reference.                                                                                      
|     |  |                                                                                                                                                                                                                                          
|(5)  |  | Previously
 filed as an Exhibit to the Companys Current Report on Form 8-K initially
 filed with the Securities and Exchange Commission on June 29, 2005 and
 incorporated herein by reference.                                         
|     |  |                                                                                                                                                                                                                                          
|(6)  |  | Previously
 filed as an Exhibit to the Companys Current Report on Form 8-K initially
 filed with the Securities and Exchange Commission on October 6, 2005 and
 incorporated herein by reference.                                       
|     |  |                                                                                                                                                                                                                                          
|(7)  |  | Previously
 filed as an Exhibit to the Companys Current Report on Form 8-K initially
 filed with the Securities and Exchange Commission on February 27, 2006 and
 incorporated herein by reference.                                     
|     |  |                                                                                                                                                                                                                                          
|(8)  |  | Previously
 filed as an Exhibit to the Companys Current Report on Form 8-K initially
 filed with the Securities and Exchange Commission on May 3, 2006 and
 incorporated herein by reference.                                           
|     |  |                                                                                                                                                                                                                                          
|(9)  |  | Previously
 filed as an Exhibit to the Companys Registration Statement on Form 10, as
 amended, (No. 0-14939) and incorporated herein by reference.                                                                                     
|     |  |                                                                                                                                                                                                                                          
|(10) |  | Previously
 filed as an Exhibit to the Companys Annual Report on Form 10-K for the year
 ended April 30, 1991 and incorporated herein by reference.                                                                                     
|     |  |                                                                                                                                                                                                                                          
|(11) |  | Previously
 filed as an Exhibit to the Companys Annual Report on Form 10-K for the year
 ended April 30, 1992 and incorporated herein by reference.                                                                                     
|     |  |                                                                                                                                                                                                                                          
|(12) |  | Previously filed as an
 Exhibit to the Companys Registration Statement on Form S-8, as amended, initially
 filed with the Securities
 and Exchange Commission on October 20, 1997 (No. 333-38475) and incorporated
 herein by reference.
|     |  |                                                                                                                                                                                                                                          
|(13) |  | Previously
 filed as an Exhibit to the Companys Quarterly Report on Form 10-Q for the
 quarter ended July 31, 1993 and incorporated herein by reference.                                                                                
|     |  |                                                                                                                                                                                                                                          
|(14) |  | Previously
 filed as an Exhibit to the Companys Annual Report on Form 10-K for the year
 ended April 30, 2004 and incorporated herein by reference.                                                                                     
|     |  |                                                                                                                                                                                                                                          
|(15) |  | Previously
 filed as Appendix B to the Companys Proxy Statement on Schedule 14A
 initially filed with the Securities and Exchange Commission on August 29,
 2005 and incorporated herein by reference.                                  
|     |  |                                                                                                                                                                                                                                          
|(16) |  | Previously
 filed as an Exhibit to the Companys Quarterly Report on Form 10-Q for the
 quarter ended January 31, 2007 and incorporated herein by reference.                                                                             
|     |  |                                                                                                                                                                                                                                          
|(17) |  | Previously
 filed as an Exhibit to the Companys Quarterly Report on Form 10-Q for the
 quarter ended October 31, 2006 and incorporated herein by reference.                                                                             

61

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|     |  |                                                                                                                                                                                                      
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(18) |  | Previously
 filed as an Exhibit to the Companys Annual Report on Form 10-K for the year
 ended April 30, 2006 and incorporated herein by reference.                                                 
|     |  |                                                                                                                                                                                                      
|(19) |  | Previously
 filed as an Exhibit to the Companys Quarterly Report on Form 10-Q for the
 quarter ended October 31, 2007 and incorporated herein by reference.                                         
|     |  |                                                                                                                                                                                                      
|(20) |  | Previously
 filed as Appendix to the Companys Proxy Statement on Schedule 14A initially
 filed with the Securities and Exchange Commission on August 28, 2007 and
 incorporated herein by reference.
|     |  |                                                                                                                                                                                                      
|(b)  |  | The exhibits
 are listed in Item 15(a)3 above.                                                                                                                                                       
|     |  |                                                                                                                                                                                                      
|(c)  |  | Refer to
 Item 15(a)2. above.                                                                                                                                                                        

62

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SIGNATURES

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

|                     |  |                           |                                                     | 
|-------------------- |  | ------------------------- | --------------------------------------------------- | 
|                     |  | AMERICAS
 CAR-MART, INC.
|                     |  |                           |                                                    
|Dated: July
 3, 2008 |  | By:                       | /s/ William
 H. Henderson                          
|                     |  |                           |                                                     | 
|                     |  |                           | William H.
 Henderson                              
|                     |  |                           | Chief
 Executive Officer                           
|                     |  |                           | (principal
 executive officer)                     
|                     |  |                           |                                                    
|Dated: July
 3, 2008 |  | By:                       | /s/ Jeffrey
 A. Williams                           
|                     |  |                           |                                                     | 
|                     |  |                           | Jeffrey A.
 Williams                               
|                     |  |                           | Vice
 President Finance and Chief Financial Officer
|                     |  |                           | (principal
 financial and accounting officer)      

Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has
been signed by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.

|                        |           |                                     |  |              |       |  |  |  |      | 
|----------------------- | --------- | ----------------------------------- |  | ------------ | ----- |  |  |  | ---- | 
|                        | Signature |                                     |  |              | Title |  |  |  | Date | 
|                        |           |                                     |  |              |       |  |  |  |      | 
|                        |           |                                     |  |              |       | 
|*                       |           | Chairman of
 the Board,             |  | July 3, 2008
|                        |           |                                     |  |             
|Tilman J.
 Falgout, III |           | General Counsel and Director        |  |             
|                        |           |                                     |  |             
|*                       |           | Vice
 Chairman of the Board,        |  |             
|                        |           |                                     |  |             
|William H.
 Henderson   |           | Chief Executive Officerand Director |  | July 3, 2008
|                        |           |                                     |  |             
|*                       |           | Director                            |  | July 3, 2008
|                        |           |                                     |  |             
|J. David
 Simmons       |           |                                     |  |             
|                        |           |                                     |  |             
|*                       |           | Director                            |  | July 3, 2008
|                        |           |                                     |  |             
|Daniel J.
 Englander    |           |                                     |  |             
|                        |           |                                     |  |             
|*                       |           | Director                            |  | July 3, 2008
|                        |           |                                     |  |             
|William M.
 Sams        |           |                                     |  |             
|                        |           |                                     |  |             
|*                       |           | Director                            |  | July 3, 2008
|                        |           |                                     |  |             
|William A.
 Swanston    |           |                                     |  |             

|                               |                         | 
|------------------------------ | ----------------------- | 
|* By  /s/
 Jeffrey A. Williams |                        
|                               |                         | 
|                               | Jeffrey A. Williams     | 
|                               | As Attorney-in-Fact     | 
|                               | Pursuant to Powers of   | 
|                               | Attorney filed herewith | 

63

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