<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
              ----------------------------------------------------
                                    FORM 10-Q



(MARK ONE)

     X           QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
-----------      SECURITIES EXCHANGE ACT OF 1934

                 For the quarterly period ended   April 30, 2000
                                                -------------------------

                                       OR

                 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
-----------      SECURITIES EXCHANGE ACT OF 1934

                 For the transition period from ________ to _________

                         Commission file number 1-11601

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

                                    Delaware
                                    --------
                         (State or other jurisdiction of
                         incorporation or organization)

                                   34-1816760
                                   ----------
                      (I.R.S. Employer Identification No.)

                      30000 Aurora Road, Solon, Ohio 44139
                      ------------------------------------
              (Address of principal executive offices and zip code)

                                 (440) 349-1000
                                 --------------
              (Registrant's telephone number, including area code)


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

         Indicate the number of shares outstanding of each of the issuer's class
of common stock, as of the latest practicable date.

         As of June 1, 2000, there were 34,757,935 shares of Common Stock, $.05
par value, outstanding.

<PAGE>   2





                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES



                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                                                         PAGE
                                                                                                         ----

<S>             <C>                                                                                     <C>
PART I.         FINANCIAL INFORMATION


Item 1.         Financial Statements                                                                      1

                Report of Independent Certified Public Accountants                                        1

                Condensed Consolidated Balance Sheets as of
                April 30, 2000 and January 31, 2000                                                       2

                Condensed Consolidated Statements of Operations for the
                Three Months Ended April 30, 2000 and 1999                                                3

                Condensed Consolidated Statements of Stockholders' Equity and
                Comprehensive Income for the Three Months Ended April 30, 2000                            4

                Condensed Consolidated Statements of Cash Flows for the
                Three Months Ended April 30, 2000 and 1999                                                5

                Notes to Condensed Consolidated Financial Statements                                      6


Item 2.         Management's Discussion and Analysis of
                Financial Condition and Results of Operations                                            12


Item 3.         Quantitative and Qualitative Disclosures about
                Market Risk                                                                              18


PART II.        OTHER INFORMATION


Item 6.         Exhibits and Reports on Form 8-K                                                         20


Signatures                                                                                               21
</TABLE>


<PAGE>   3





PART I.  FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

REPORT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS


To the Board of Directors and Stockholders of
National Auto Credit, Inc. and Subsidiaries
Solon, Ohio


         We have reviewed the accompanying condensed consolidated balance sheet
and stockholders' equity and comprehensive income of National Auto Credit, Inc.
and its subsidiaries as of April 30, 2000, and the related statements of
operations and cash flows for each of the three-month periods ended April 30,
2000 and 1999. The financial statements are the responsibility of the Company's
management.

         We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with accounting standards generally accepted in the United States of
America, the objective of which is the expression of an opinion regarding the
financial statements taken as a whole. Accordingly, we do not express such an
opinion.

         Based on our review, we are not aware of any material modifications
that should be made to such condensed consolidated financial statements for them
to be in conformity with accounting principles generally accepted in the United
States of America.

         We have previously audited, in accordance with auditing standards
generally accepted in the United States of America, the consolidated balance
sheet as of January 31, 2000, and the related consolidated statements of
operations, stockholders' equity, and cash flows for the year then ended (not
presented herein) and in our report dated April 28, 2000, we expressed an
unqualified opinion on those consolidated financial statements. In our opinion,
the information set forth in the accompanying condensed consolidated balance
sheet as of January 31, 2000, is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.


/s/ Grant Thornton LLP
Cleveland, Ohio
June 9, 2000




                                       1
<PAGE>   4
                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                      (IN THOUSANDS, EXCEPT SHARE AMOUNTS)
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                                       April 30,        January 31,
                                                                                          2000             2000
                                                                                      -------------    --------------

<S>                                                                                       <C>               <C>
ASSETS
Cash and cash equivalents                                                                 $ 56,343          $ 54,333
Marketable securities (Note B)                                                              19,729                 -
Installment loans, net (Note C)                                                                  -            29,306
Investment in AFC (Note D)                                                                  11,078                 -
Property and equipment, net of accumulated depreciation
  of $4,971 and $5,219, respectively                                                         7,112             7,677
Assets held for sale                                                                         6,861             6,861
Income taxes refundable                                                                      3,663             3,664
Other assets                                                                                 3,553             2,121
                                                                                      -------------    --------------

TOTAL ASSETS                                                                             $ 108,339         $ 103,962
                                                                                      =============    ==============


LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Self-insurance claims                                                                      $ 3,991           $ 4,089
Accrued income taxes                                                                         2,694             2,926
Other liabilities                                                                           14,065            13,068
                                                                                      -------------    --------------
                                                                                            20,750            20,083

COMMITMENTS AND CONTINGENCIES  (Note E)                                                          -                 -

STOCKHOLDERS' EQUITY
Preferred stock - $.05 par value,
  authorized 2,000,000 shares, issued 100 and 0 shares,
   respectively                                                                                  -                 -
Common stock - $.05 par value,
  authorized 40,000,000 shares, issued 36,719,463 and
  29,963,301 shares, respectively                                                            1,836             1,498
Additional paid-in capital                                                                 173,080           166,139
Retained deficit                                                                           (80,229)          (69,104)
Accumulated other comprehensive income                                                        (260)                -
Treasury stock, at cost, 1,957,945 and 4,195,598 shares,
   respectively                                                                             (6,838)          (14,654)
                                                                                      -------------    --------------
                                                                                            87,589            83,879
                                                                                      -------------    --------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                               $ 108,339         $ 103,962
                                                                                      =============    ==============
</TABLE>



See notes to condensed consolidated financial statements.


                                       2
<PAGE>   5

                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)


                                                      Three Months Ended
                                                          April 30,
                                                  ------------------------
                                                    2000            1999
                                                  --------        --------

REVENUE
     Interest income                              $    404        $  2,102
     Fees and other income                             108              45
                                                  --------        --------
          Total                                        512           2,147

COSTS AND EXPENSES
     Provision for credit losses                      (856)            182
     Loss on sale of loans                           2,404               -
     Operating                                       1,283           3,073
     General and administrative                      1,225           1,506
     Litigation and non-recurring charges            3,008           1,954
     Write-down of assets held for sale                151               -
     Interest (income) expense                        (980)           (425)
                                                  --------        --------
          Total                                      6,235           6,290
                                                  --------        --------

LOSS BEFORE INCOME TAXES                            (5,723)         (4,143)

Provision for income taxes                               -               -
                                                  --------        --------

NET LOSS                                          $ (5,723)       $ (4,143)
                                                  ========        ========


BASIC AND DILUTED LOSS PER SHARE                  $   (.20)       $   (.14)
                                                  ========        ========

WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING (000'S)
     Basic and diluted                              28,265          28,631
                                                  ========        ========







See notes to condensed consolidated financial statements.


                                       3
<PAGE>   6



                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
            CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                            AND COMPREHENSIVE INCOME
                        THREE MONTHS ENDED APRIL 30, 2000
                      (IN THOUSANDS, EXCEPT SHARE AMOUNTS)
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                    Preferred Stock        Common Stock
                                ------------------------ -------------------------     Additional
                                                Par                         Par          Paid-In       Retained     Treasury
                                  Shares       Value          Shares       Value         Capital       Deficit       Stock
                                ------------ -----------   ------------- -----------  --------------  ----------- -------------


<S>                                     <C>         <C>      <C>            <C>           <C>          <C>           <C>
BALANCE,
JANUARY 31, 2000                          -         $ -      29,963,301     $ 1,498       $ 166,139    $ (69,104)    $ (14,654)

Net loss                                                                                                  (5,723)
Stock cancelled under
   benefit plans                                                 (6,085)          -             (13)
Investment in AFC                       100           -       6,762,247         338           6,954       (5,402)        7,816
Other comprehensive
   income-unrealized loss
   on marketable securities
                                ------------ -----------   ------------- -----------  --------------  ----------- -------------

Comprehensive income (loss)


BALANCE,
APRIL 30, 2000                          100         $ -      36,719,463     $ 1,836       $ 173,080    $ (80,229)     $ (6,838)
                                ============ ===========   ============= ===========  ==============  =========== =============

<CAPTION>

                                 Accumulated
                                    Other                       Comprehensive
                                 Comprehensive                     Income
                                    Income         Total            (Loss)
                                --------------  -----------     -------------



<S>                                    <C>         <C>              <C>
BALANCE,
JANUARY 31, 2000                       $    -      $83,879

Net loss                                            (5,723)         $ (5,723)
Stock cancelled under
   benefit plans                                       (13)
Investment in AFC                                    9,706
Other comprehensive
   income-unrealized loss
   on marketable securities              (260)        (260)             (260)
                                --------------  -----------     -------------

Comprehensive income (loss)                                         $ (5,983)
                                                                =============

BALANCE,
APRIL 30, 2000                         $ (260)     $87,589
                                ==============  ===========
</TABLE>


    See notes to condensed consolidated financial statements.



                                       4
<PAGE>   7


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

<TABLE>
<CAPTION>
                                                            Three Months Ended
                                                                 April 30,
                                                          ----------------------
                                                            2000          1999
                                                          --------      --------
<S>                                                       <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss                                                  $ (5,723)     $ (4,143)
Adjustments to reconcile net loss to net cash used in
 operating activities:
    Depreciation and amortization                              247           337
    Provision for credit losses                               (856)          182
    Loss on sale of loans                                    2,404             -
    Write-down of assets held for sale                         151             -
    Changes in operating assets and liabilities:
      Accrued income tax paid/refundable                      (231)           33
      Other liabilities                                      1,297          (372)
      Self-insurance claims                                    (98)         (448)
      Other operating assets and liabilities, net           (1,446)          690
                                                          --------      --------

       Net cash used in operating activities                (4,255)       (3,721)
                                                          --------      --------

CASH FLOWS FROM INVESTING ACTIVITIES
     Principal collected on loans                            5,221        21,657
     Proceeds from sale of loans                            23,294             -
     Purchase of loans                                           -        (8,700)
     Investment in AFC                                      (1,372)            -
     Purchase of marketable securities                     (25,092)            -
     Proceeds from sale of marketable securities             4,985             -
     Purchase of other property and equipment                  (14)         (237)
     Purchase of affordable housing investments               (744)       (1,017)
                                                          --------      --------

       Net cash provided by investing activities             6,278        11,703
                                                          --------      --------

CASH FLOWS FROM FINANCING ACTIVITIES
     Stock cancelled under benefit plans                       (13)          (20)
                                                          --------      --------

       Net cash used in financing activities                   (13)          (20)
                                                          --------      --------

Increase in cash and cash equivalents                        2,010         7,962
Cash and cash equivalents at beginning of period            54,333        32,109
                                                          --------      --------
Cash and cash equivalents at end of period                $ 56,343      $ 40,071
                                                          ========      ========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

     Interest paid                                        $      -      $      -
                                                          ========      ========
     Income taxes paid (refunded)                         $    231      $    (33)
                                                          ========      ========
</TABLE>





See notes to condensed consolidated financial statements.



                                       5
<PAGE>   8

                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE A - Basis of Presentation
         ---------------------

           The accompanying unaudited condensed consolidated financial
statements include the accounts of National Auto Credit, Inc. and subsidiaries
(the "Company"). The financial statements are unaudited, but in the opinion of
management, reflect all adjustments (consisting only of normal recurring
accruals) necessary for a fair presentation of the Company's consolidated
financial position, results of operations, stockholders' equity and
comprehensive income, and cash flows for the periods presented.

         The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial statements and with the rules of the Securities and
Exchange Commission applicable to interim financial statements, and therefore do
not include all disclosures that might normally be required for interim
financial statements prepared in accordance with generally accepted accounting
principles. The accompanying unaudited condensed consolidated financial
statements should be read in conjunction with the Company's consolidated
financial statements, including the notes thereto, appearing in the Company's
Annual Report on Form 10-K for the year ended January 31, 2000.

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

         Cash and cash equivalents include restricted cash of $300,000 held in a
"Rabbi Trust" pursuant to the Company's employment agreement with Allen Rice,
its former President and Director.

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

         The Company determines the proper classification of its marketable debt
and equity securities at the time of purchase and reevaluates such designations
as of each balance sheet date. At April 30, 2000, all marketable debt and equity
securities were designated as available for sale. Accordingly, these securities
are stated at market value, with unrealized gains and losses reported in a
separate component of stockholders' equity ("accumulated other comprehensive
income"). Realized gains and losses on sale of securities, as determined on a
specific identification basis, are included in net income.





                                       6
<PAGE>   9

                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE B - Marketable Securities
         ---------------------

         Marketable securities at April 30, 2000 are summarized as follows (in
thousands):

<TABLE>
<CAPTION>
                                                                         Gross Unrealized
                                                                  -------------------------------
                                                    Cost             Gains             Losses          Fair Value
                                                -------------     -------------     -------------     -------------

<S>                                                 <C>                    <C>             <C>            <C>
Debt securities
   U.S. Government Agency mortgage-
     backed obligations                             $ 16,629               $ -             $ 242          $ 16,387
   Mortgage-backed securities                          2,233                 -                 -             2,233
Equity securities - mutual funds                       1,127                 -                18             1,109
                                                -------------     -------------     -------------     -------------
     Total                                          $ 19,989               $ -             $ 260          $ 19,729
                                                =============     =============     =============     =============
</TABLE>

         All marketable securities were classified as available for sale. All
debt securities mature after 2010.

         Proceeds from the sale of the marketable securities were $4,985,000 for
the three months ended April 30, 2000. Gross realized gains and losses for the
period ended April 30, 2000 were not material.


NOTE C - Installment Loans, Net
         ----------------------

         During the first quarter of fiscal 2001, the Company sold its active
loan portfolio and approximately one-third of its charged-off portfolio for
aggregate cash proceeds of $23,294,000. The Company also received $5,625,000 in
actual cash collections on the loans during the first quarter of fiscal 2001.
The sales of the loans resulted in an aggregate loss of $2,404,000. The loss
includes the write-off of deferred loan origination assets and liabilities,
computer equipment directly associated with the management of the loan
portfolio, and the accrual for the potential repurchase of certain loans for
breach of any representation or warranty made by the Company.


NOTE D - Investment in AFC
         -----------------

         On April 5, 2000, the Company purchased a 50% membership interest in
Angelika Film Center, LLC ("AFC"). AFC is the owner and operator of the Angelika
Film Center, which is a multiplex cinema and cafe complex in the Soho District
of Manhattan in New York City. The 50% membership interest was purchased from
Reading Entertainment, Inc. ("Reading") for 8,999,900 shares of the Company's
common stock (which included 2,237,653 shares issued from treasury stock) and
100 shares of Series A Preferred Stock (representing 100% of the Class of
Series A Convertible Preferred Stock outstanding).

         As a result of the transfer, AFC is now owned 50% by the Company,
33.33% by Reading and 16.67% by Sutton Hill Associates. The Angelika Film Center
will continue to be managed by Sutton Hills Associates as part of its City
Cinemas Chain. The articles and bylaws of AFC provide that for all matters
subject to a vote of the members, a majority is required, except that in the
event of a tie vote, the Chairman of Reading shall cast the deciding vote.



                                       7
<PAGE>   10

                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE D - Investment in AFC (cont.)
         -------------------------

         The Series A Convertible Preferred Stock is convertible into shares of
the Company's common stock on a one for one basis, subject to traditional
antidilution adjustment; it votes share for share with the Common Stock as a
single class, provided that as a class the Series A Preferred must separately
approve any amendments to the Company's charter, any amendments made to the
Company's bylaws by the stockholders, or, to the extent permitted by law,
the removal of any director from the Company's Board of Directors; it has a
liquidation value of $1.50 per share; and is entitled to a dividend preference
equal to any dividends declared on the Company's common stock (determined on a
per share basis).

         The Company also purchased from Reading two separate and independent
options to acquire additional cinema assets owned by Reading in the United
States. Under the first option, the Company has the right to acquire the
remaining 33.33% membership interest in AFC owned by Reading in exchange for the
issuance of an additional six million shares of the Company's common stock. To
the extent authorized but unissued shares of the Company's common stock are not
available for such purpose, the Company has the right to substitute cash for
such shares at the rate of $1.50 per share. The option can be exercised for a
period of 45 days, through and including May 20, 2000. The remaining 16.67%
interest would continue to be owned by Sutton Hill Associates, and the Angelika
Film Center would continue to be managed as a part of the City Cinemas Chain. On
May 30, 2000, the Company and Reading agreed to extend the exercise option until
June 30, 2000 at no additional cost to the Company.

         Under the second option, which is independent of the first option, the
Company has the right to acquire the remainder of Reading's domestic cinema
exhibition assets for cash (including Reading's rights to acquire the City
Cinemas Chain of cinemas and related real estate in Manhattan), and, if the
Company has not previously exercised its option to acquire Reading's 33.33%
interest in AFC for stock, Reading's remaining interest in AFC. If the Company
exercises this right, it is required to give to Reading's affiliate, Citadel
Holding Corporation, a right to participate in such transaction on a 50/50 basis
with the Company. The option can be exercised for a period of 60 days, through
and including June 5, 2000. The Company paid to Reading $500,000 in
consideration of this option. On May 30, 2000, the Company and Reading agreed to
extend the exercise option until June 30, 2000 at no additional cost to the
Company. The Company has the right to extend the option for two 30-day periods
by payment of an additional $100,000 for each such 30-day extension period. The
purchase price would be based on a value of $27,000,000 for AFC and the lower of
the historical cost or fair value for the remainder of Reading's assets. The
decision whether or not to proceed with the exercise of either or both of such
options rests with the Company and not with Reading.

         The Company's initial investment of $11,078,000 is comprised of (i) the
9,000,000 shares issued, valued at $1.08 per share on the basis of the average
price quoted by the OTC Bulletin Board for the period immediately preceding
April 5, 2000, (ii) transaction costs, and (iii) the $500,000 paid for the
second option. The investment exceeds the Company's share of the net assets of
AFC by approximately $5,500,000, which is being treated as goodwill and will be
amortized on the straight-line method over 20 years. The Company will use the
equity method to account for its investment in AFC. AFC uses a December 31
year-end for financial reporting purposes. The Company reports on a January 31
year-end, and for its fiscal quarters ending April 30, July 31, October 31 and
January 31 will record its pro-rata share of AFC's earnings on the basis of
AFC's fiscal quarters ending March 31, June 30, September 30 and December 31,
respectively. Accordingly, no income relating to the investment in AFC has been
recorded for the quarter ended April 30, 2000 since the acquisition occurred
subsequent to AFC's quarter ended March 31, 2000.



                                       8
<PAGE>   11

                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE D - Investment in AFC (cont.)
         -------------------------

         As discussed in Note E, Sam J. Frankino, in a counterclaim to a suit
brought against him by the Company, seeks to set aside the Company's purchase
of the interest in AFC and the two options. In the event that Mr. Frankino is
successful in that litigation, he may set aside these transactions.


NOTE E - Commitments and Contingencies
         -----------------------------

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

         The Company and certain of its former and current officers and
directors have been named as defendants in eleven purported class action
lawsuits which were filed in the United States District Court for the Northern
District of Ohio subsequent to the January 1998 resignation of the Company's
former independent auditors, Deloitte & Touche, LLP ("Deloitte & Touche"). The
actions, which were consolidated, allege fraud and other violations of the
federal securities laws and seeks money damages as the result of various alleged
frauds and violations of the Securities Exchange Act of 1934, including
misrepresentations about the adequacy of the Company's allowance for credit
losses and its loan underwriting practices.

         In April 2000, the Company and the class action plaintiff's
representatives reached an agreement in principle to settle the class action
securities litigation. Under the terms agreed upon, the Company will pay to the
plaintiffs' class $6.5 million in consideration for, among other things, the
release of all defendants from liability. The settlement is not an admission of
liability by any party. The settlement is subject to preparation and execution
of final documentation and court approval. The Company believes that the
proposed settlement is fair, reasonable and adequate and accordingly should be
approved by the court, and as a result believes it is probable that the
settlement will be approved by the court and completed on the terms agreed to
in principle. Accordingly in the fourth quarter of fiscal 2000 the Company
accrued the $6.5 million settlement amount together with an estimate of the
legal fees that will be incurred in completing the settlement. However, there
can be no assurance that the settlement will be approved and completed. In the
event the settlement is not completed, the Company intends to vigorously
defend itself; however, absent such settlement, the Company cannot currently
predict the ultimate outcome of this matter, and an unfavorable resolution of
these actions could have a material adverse effect on the Company's financial
position, results of operations and liquidity. Pursuant to the agreement in
principle, on June 8, 2000 the Company transferred $6.5 million to an escrow
account.

         The Securities and Exchange Commission, the United States Attorney for
the Northern District of Ohio, and the Federal Bureau of Investigation, are
investigating the issues raised as the result of the resignation of Deloitte &
Touche. The Company is cooperating fully with the investigations. The ultimate
outcome of these investigations on the Company cannot presently be predicted and
the Company has not recorded any provision for any monetary penalties that may
result from civil or criminal proceedings that might be commenced at the
conclusion of such investigations. An unfavorable resolution of any of these
investigations could have a material adverse effect on the Company's financial
position, results of operations and liquidity.

         On April 6, 2000 the Company filed a complaint in the Delaware Court of
Chancery captioned National Auto Credit, Inc. v. Sam J. Frankino, Civil Action
No. 17973-NC (the "NAC Action"). The complaint, as amended on May 3, 2000, seeks
injunctive and monetary relief against defendant Frankino for alleged breaches
of fiduciary duty in his capacity as a director of the Company.


                                       9
<PAGE>   12

                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE E - Commitments and Contingencies (cont.)
         -------------------------------------

         On April 12, 2000, Sam J. Frankino filed an action entitled Frankino v.
Huber et al., Civil Action No. 17894-NC (the "Frankino Action") against the
Company and certain of its directors, namely, David L. Huber, Donald Jasensky,
James J. McNamara, Philip A. Sauder, Henry Y.L. Toh, Peter T. Zackaroff, John A.
Gleason, and William S. Marshall. The complaint in the Frankino Action, as
amended, seeks a declaratory judgment (i) validating a written consent delivered
by Mr. Frankino to the Company on April 7, 2000 which, among other things,
purported to remove the individual defendants as directors of the Company and to
revoke certain bylaws adopted by the Board of Directors on April 5, 2000 and
(ii) declaring void the Series A Preferred Stock and common stock issued in
connection with the Company's purchase of the interest in AFC. On May 3, 2000,
the Company and the individual defendants filed an answer denying the material
allegations of the complaint and asserting affirmative defenses. By Order dated
April 13, 3000, the Court entered in the Frankino Action an Order maintaining
Status Quo which provides that, pending the resolution of the Frankino Action,
(i) the Company's Board of Directors shall take no actions which are outside
the routine day-to-day operations of the Company in the ordinary course of
business, (ii) Mr. Frankino is required to give the Company five days notice
prior to acquiring, directly or indirectly, any additional stock of the
Company, soliciting proxies or written consents from stockholders of the
Company, or attempting to take action by consent without a meeting of
stockholders, and (iii) Ms. Dodero and Messrs. Dodero, Frankino, Huber,
Jasensky, Maund, McNamara, Sauder, Toh, Upton and Zackaroff shall constitute the
Board of Directors of the Company.

         On May 17, 2000, the Court (i) consolidated the NAC Action with the
Frankino Action and (ii) assigned a trial commencement date for both actions of
September 11, 2000 in Delaware. On June 2, 2000, Mr. Frankino filed his Answer,
Counterclaim and Third-Party Complaint in the NAC Action, naming Messrs. Huber,
Jasensky, McNamara, Sauder, Toh, Zackaroff, Gleason, and Marshall, along with
FA, Inc., Slusser Associates, Inc., and Reading Entertainment, Inc. as
third-party defendants (the "Counterclaim"). Pursuant to the Counterclaim,
Frankino seeks, among other things, to set aside the Company's purchase of an
interest in AFC and the related options, and the changes to the Company's bylaws
adopted by the Board of Directors on April 5, 2000.

         On April 12, 2000, Sam J. Frankino filed a complaint in the Delaware
Court of Chancery captioned Sam J. Frankino v. National Auto Credit, Inc., Civil
Action No. 17985-NC. The complaint seeks an order directing the Company to
permit the inspection and copying of certain of its books and records. The
Company has made the books and records available and is seeking a dismissal of
the complaint.


                                       10
<PAGE>   13


                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE E - Commitments and Contingencies (cont.)
         -------------------------------------

         Following the resignation of Deloitte & Touche, the Company instituted
investigations of its previous financial reporting and underwent changes in
management. In fiscal 1998, the Company accrued initial estimates of certain
resulting costs, and additional costs in excess of those initial estimates are
being expensed as incurred or as such estimates are revised. In the first
quarter of fiscal 2001, the Company accrued an initial estimate of the costs to
be incurred in the litigation with Mr. Frankino that commenced in April 2000,
and additional costs in excess of that initial estimate will be expensed as
incurred or as such estimate is revised. At April 30, 2000 the Company has
accrued an aggregate of $9,851,000, representing (i) the accrual of the costs of
the settlement of the class action litigation, as discussed above, (ii) an
estimate of the legal costs to be incurred in responding to the investigations
described above, and (iii) an estimate of the costs to be incurred in the
litigation with Mr. Frankino. Included in the results of operations for the
first quarters of fiscal 2001 and 2000, respectively, are the following costs
(in thousands):


<TABLE>
<CAPTION>
                                                                               Three Months Ended April 30,
                                                                         -----------------------------------------
                                                                             2000                       1999
                                                                         --------------             --------------

<S>                                                                            <C>                          <C>
Legal costs relating to litigation matters                                     $ 2,949                      $ 735
Crisis management consulting                                                        59                        550
Fees for special independent audits                                                  -                        341
Financing fees                                                                       -                        275
Costs of special investigations                                                      -                         53
                                                                         --------------             --------------
     Total                                                                     $ 3,008                    $ 1,954
                                                                         ==============             ==============
</TABLE>


                                       11
<PAGE>   14


ITEM  2.             MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL
-------

         National Auto Credit, Inc., through NAC, Inc., a wholly-owned
subsidiary, invested in sub-prime used automobile consumer loans, which took the
form of installment loans collateralized by the related vehicle. The Company
purchased such loans, or interests in pools of such loans, from used car
dealerships that participated in the Company's loan purchase program through
March 2000. The Company performed the underwriting and collection functions for
all loans it purchased in whole, and also performed such functions where the
member dealer had sold to the Company, and retained for itself, interests in a
pool of loans.

         On March 17, 2000, the Company sold to Crescent Bank & Trust
substantially all of the automobile retail installment loans remaining in the
Company's active portfolio for $17.9 million. In prior transactions in March
2000, NAC had sold to First Southwestern Financial Services, for $2.7 million,
certain automobile retail installment loans held in the Company's active
portfolio and to Ameristar Financial Servicing Company, L.L.C., for $2.2
million, certain automobile retail installment loans held in the Company's
portfolio of charged-off accounts (representing approximately one-third of the
charged-off portfolio). In each of the three transactions, the buyer was an
independent party that did not have a material relationship with the Company,
any affiliate of the Company, any director or officer of the Company or any
associate of any officer or director of the Company. In each case, the selling
price was determined based upon arm's length negotiations between the parties
and was paid in cash at closing. The transactions resulted in an aggregate loss
of approximately $2.4 million.

         Following its disposition of these automobile installment loans, the
Company's assets consisted principally of money market funds, commercial paper,
government securities and other short-term, highly liquid investments.

         On April 5, 2000, the Company purchased a 50% membership interest in
Angelika Film Center, LLC ("AFC"). AFC is the owner and operator of the Angelika
Film Center, which is a multiplex cinema and cafe complex in the Soho District
of Manhattan in New York City. The 50% membership interest was purchased from
Reading for 8,999,900 shares of the Company's common stock (which included
2,237,653 shares issued from treasury stock) and 100 shares of Series A
Preferred Stock (representing 100% of the Class of Series A Convertible
Preferred Stock outstanding). As a result of the transfer, AFC is now owned 50%
by the Company, 33.33% by Reading and 16.67% by Sutton Hill Associates. The
Angelika Film Center will continue to be managed by Sutton Hill Associates as
a part of its City Cinemas Chain. The articles and bylaws of AFC provide that
for all matters subject to a vote of the members, a majority is required,
except that in the event of a tie vote, the Chairman of Reading shall cast the
deciding vote.

         The Series A Convertible Preferred Stock is convertible into shares of
the Company's common stock on a one for one basis, subject to traditional
antidilution adjustment; it votes share for share with the Common Stock as a
single class, provided that as a class the Series A Preferred must separately
approve any amendments to the Company's charter, any amendments to the
Company's bylaws made by the stockholders, or, to the extent permitted by law,
the removal of any director from the Company's Board of Directors; it has a
liquidation value of $1.50 per share; and is entitled to a dividend preference
equal to any dividends declared on the Company's common stock (determined on a
per share basis).

         The Company also purchased from Reading two separate and independent
options to acquire additional cinema assets owned by Reading in the United
States. Under the first option, the Company has the right to acquire the
remaining 33.33% membership interest in AFC owned by Reading in exchange for the
issuance of an additional six million shares of the Company's common stock. To
the extent authorized but unissued shares of the Company's common stock are not
available for such purpose, the Company has the right to substitute cash for
such shares at the rate of $1.50 per share. The option can be exercised for a
period of 45 days, through and including May 20, 2000. The remaining 16.67%
interest


                                       12
<PAGE>   15

would continue to be owned by Sutton Hill Associates, and the Angelika Film
Center would continue to be managed as a part of the City Cinemas Chain. On May
30, 2000, the Company and Reading agreed to extend the exercise period to June
30, 2000 at no additional cost to the Company.

         Under the second option, which is independent of the first option, the
Company has the right to acquire the remainder of Reading's domestic cinema
exhibition assets for cash (including Reading's rights to acquire the City
Cinemas Chain of cinemas and related real estate in Manhattan), and, if the
Company has not previously exercised its option to acquire Reading's 33.33%
interest in AFC for stock, Reading's remaining interest in AFC. If the Company
exercises this right, it is required to give to Reading's affiliate, Citadel
Holding Corporation, a right to participate in such transaction on a 50/50 basis
with the Company. The option can be exercised for a period of 60 days, through
and including June 5, 2000. The Company paid to Reading $500,000 in
consideration of this option. On May 30, 2000, the Company and Reading agreed to
extend the exercise period to June 30, 2000 at no additional cost to the
Company. The Company has the right to extend the option for two 30-day periods
by payment of an additional $100,000 for each such 30-day extension period. The
purchase price would be based on a value of $27,000,000 for AFC and the lower of
the historical cost or fair value for the remainder of Reading's assets. The
decision whether or not to proceed with the exercise of either or both of such
options rests with the Company and not with Reading.

         The Company will use the equity method to account for its investment in
AFC. AFC uses a December 31 year-end for financial reporting purposes. The
Company reports on a January 31 year-end, and for its fiscal quarters ending
April 30, July 31, October 31 and January 31 will record its pro-rata share of
AFC's earnings on the basis of AFC's fiscal quarters ending March 31, June 30,
September 30 and December 31, respectively. Accordingly, no income relating to
the investment in AFC has been recorded for the quarter ended April 30, 2000
since the acquisition occurred subsequent to AFC's quarter ended
March 31, 2000.


         Sam J. Frankino, in a counterclaim to a suit brought against him by the
Company, seeks to set aside the Company's purchase of the interest in AFC and
the two options. In the event that Mr. Frankino is successful in that
litigation, he may set aside these transactions. See Note E of Notes to
Condensed Consolidated Financial Statements.

         During fiscal 2000 the Company reduced its staffing levels, from
approximately 250 employees at January 31, 1999 to approximately 100 employees
at January 31, 2000, and to approximately 50 employees at April 30, 2000. As the
size of its operations decrease, the Company will continue those staffing
reductions to eliminate the personnel no longer required as the result of the
sale of substantially all of the loan portfolio and the resulting cessation of
loan underwriting, processing and collection operations. The Company anticipates
that those eliminations will be completed in July 2000, at which point the
Company will have remaining approximately 30 administrative and executive
employees, occupancy costs, and general and administrative recurring costs
estimated to be approximately $400,000 per month. The Company plans to fund
these expenses from the interest earned on its money market, commercial paper
and government securities investments, which currently are invested at a
weighted average yield of approximately 6.8%.

         For the first three months of fiscal 2001 ended April 30, 2000, the
Company incurred a net loss of $5,723,000, primarily as the result of a 76.2%
decline in revenues to $512,000, the loss on the sales of loans of $2,404,000
and the incurrence of costs of $3,008,000 associated with certain litigation and
non-recurring charges, as discussed below.

         The Securities and Exchange Commission, the United States Attorney for
the Northern District of Ohio and the Federal Bureau of Investigation are
investigating the issues raised as the result of the resignation of Deloitte &
Touche. The Company is fully cooperating with the investigations. Although the
Company has accrued certain costs it expects to incur in responding to the
investigations, the ultimate outcome of these investigations cannot presently be
predicted and the Company has not recorded any provision for any monetary
penalties that may result from civil or criminal proceedings that might be
commenced at the conclusion of such investigations. The Company's liquidity will
be adversely affected as it incurs costs to

                                       13
<PAGE>   16


respond to the investigations. An unfavorable resolution of any of these
investigations could have a material adverse effect on the Company's financial
position, results of operations and liquidity.

         In addition, the Company and certain of its former and current officers
and directors have been named as defendants in eleven purported class action
lawsuits which were filed in the United States District Court for the Northern
District of Ohio subsequent to the January 1998 resignation of the Company's
former independent auditors, Deloitte & Touche. The actions, which were
consolidated, allege fraud and other violations of the federal securities laws
and seeks monetary damages as the result of various alleged frauds and
violations of the Securities Exchange Act of 1934, including misrepresentations
about the adequacy of the Company's allowance for credit losses and its loan
underwriting practices. In April 2000, the Company and the class action
plaintiff's representatives reached an agreement in principle to settle the
class action securities litigation. Under the terms agreed upon, the Company
will pay to the plaintiffs' class $6.5 million in consideration for, among other
things, the release of all defendants from liability. The settlement is not an
admission of liability by any party. The settlement is subject to preparation
and execution of final documentation and court approval. The Company believes
that the proposed settlement is fair, reasonable and adequate and accordingly
should be approved by the court, and as a result believes it is probable that
the settlement will be approved by the court and completed on the terms agreed
to in principle. Accordingly in the fourth quarter of fiscal 2000 the Company
accrued the $6.5 million settlement amount together with an estimate of the
legal fees that will be incurred in completing the settlement. However, there
can be no assurance that the settlement will be approved and completed. In the
event the settlement is not completed, the Company intends to vigorously defend
itself; however, absent such settlement, the Company cannot currently predict
the ultimate outcome of this matter, and an unfavorable resolution of these
actions could have a material adverse effect on the Company's financial
position, results of operations and liquidity.

         Throughout the first quarter of fiscal 2001 and as of April 30, 2000,
the Company had no external source of financing, and has operated on the cash
balances created by the excess of collections on installment loans over the
investment in new loans and the cash proceeds received from the sale of loans.
The Company's pending litigation and regulatory investigations may limit its
ability to obtain external financing.

         The Company's Board of Directors is considering various additional
strategic business alternatives, including but not limited to, the purchase of
one or more existing operating businesses or the entry into one or more
businesses. However, the Board presently may not consummate any such transaction
due to an Order Maintaining Status Quo entered by the Delaware Chancery Court in
connection with the litigation Mr. Frankino filed in April 2000 unless the
parties to the status quo agree, or if the Court, upon motion, approves the
transaction. See Note E of Notes to Condensed Consolidated Financial Statements.
In addition, the Company's current lack of external financing sources may limit
its ability to pursue such alternatives. In the interim, the Company will use
the income from the investment of its cash, together with the cash equivalents
and marketable securities themselves, to pay operating expenses and existing
liabilities. The Company has cash equivalents and marketable securities of
approximately $78,500,000 at May 31, 2000, and it believes that such cash
equivalents and marketable securities and the investment income therefrom will
be sufficient to pay operating expenses and existing liabilities.


RESULTS OF OPERATIONS
---------------------

         INTEREST INCOME: The Company's loan investments result from purchases
of installment loans at discounts from the face or contractual amount. Those
discounts reflect both (i) an element of interest income that the Company seeks
to earn on its investment in the loans, and (ii) the Company's assessment, at
the time of purchase, that a portion of the loans it purchases are impaired in
that the loans will not be repaid in accordance with their contractual terms.

         At the time of purchase, the Company groups loans into loan pools that
it believes will have common future cash flow characteristics, on the basis of
possessing similar contractual and risk characteristics. Loans are initially
recorded at the cost to purchase the loans, adjusted for any net loan



                                       14
<PAGE>   17

origination fees and related direct incremental loan origination costs. At the
time of purchase, the Company's net initial investment in the loans is recorded
by establishing as the "gross finance receivable" the contractual cash flows
(including contractual interest) to which the Company is entitled, which is
offset by the difference between the gross finance receivable and the net
initial investment, which is segregated into two components: (i) unearned
income, which represents the difference between the net initial investment and
the Company's estimate of the future cash flows from the gross finance
receivable and (ii) a credit loss discount, which represents the difference
between the Company's estimate of the future cash flows from the gross finance
receivable and its contractual cash flows.

         Unearned income is recognized as income over the life of the loans on
the interest method, using for each pool of loans the interest rate that
reflects the difference between the Company's net investment in the loans and
its estimate of the future cash flows therefrom as determined at the time of the
loan purchase. The Company's net investment in each loan pool includes its net
initial investment, any interest income recognized but not yet collected,
reduced by collections and any previously recorded allowance for credit losses.

         Interest income declined to $404,000 for the first three months of
fiscal 2001 from $2,102,000 for the first three months of fiscal 2000,
representing a decline of 80.8%. The decline was due to the decrease in the size
of the Company's net loan portfolio, from $70,401,000 at February 1, 1999 to
$29,306,000 at February 1, 2000 and the sale of substantially all of the
Company's loans in March 2000.

         PROVISION FOR CREDIT LOSSES: The Company's methodology for determining
the allowance for credit losses is to group loans into pools with similar
characteristics and to assess the recoverability of its loan investments on the
basis of the present value of the expected future cash flows, as discussed in
Statement of Financial Accounting Standards ("SFAS") 114 (as amended by SFAS
118), "Accounting by Creditors for Impairment of a Loan." On a continual basis
the Company reviews its estimates of future cash flows for its loan pools. Such
estimates are revised to reflect changes in historical collection rates,
charge-off rates, loan delinquencies and other economic indicators that serve as
the basis for predicting future loan performance. The Company's net investment
in each loan pool is compared to the present value of the revised estimate of
future cash flows, discounted using the rate at which the Company is recognizing
interest income on that pool of loans. Where the estimated cash flows have been
revised downward and, as a result, such a comparison reflects an excess of the
investment over the present value of the future cash flows, the Company records
an allowance for credit losses by a charge to expense, and also reduces unearned
income by a reclassification to the credit loss discount so that future interest
income will reflect the same original annual interest rate on the net investment
in the loan pool. In those instances where a revised estimate of future cash
flows indicates an increase in estimated cash flows over the previous estimate,
the Company first reverses into income any previously recorded provision for
credit losses, and then increases the rate at which future interest income is
recognized by a reclassification from the credit loss discount to unearned
income.

         The Company recorded a reversal into income of previously recorded
credit losses of $856,000 for the first three months of fiscal 2001 as compared
to a charge to the provision for credit losses of $182,000 for the first three
months of fiscal 2000. In determining the allowance for credit losses, the
Company used weighted average estimates of future cash flows from its loans
expressed as a percentage of the contractual amounts receivable, which was
approximately 58% at February 29, 2000 (prior to the sales of the loans as
described above) compared to 57% at April 30, 1999.





                                       15
<PAGE>   18

         LOSS ON SALE OF LOANS: During the first quarter of fiscal 2001, the
Company sold its active loan portfolio and approximately one-third of the
charged-off portfolio for aggregate cash proceeds of $23,294,000. The Company
also received $5,625,000 in actual cash collections on the loans during the
first quarter of fiscal 2001. The sales of the loans resulted in an aggregate
loss of $2,404,000. The loss includes the write-off of deferred loan
origination assets and liabilities, computer equipment directly associated
with the management of the loan portfolio and the accrual for the potential
repurchase of certain loans for breach of any representation or warranty made
by the Company.

         The Company sold approximately 50% of the remaining charged-off loans
  during May 2000 and is currently pursuing the sale of the balance of the
  charged-off portfolio.

         OPERATING EXPENSES: Operating expenses include sales and marketing
costs, collection costs and other operating costs. Operating expenses decreased
to $1,283,000 for the first three months of fiscal 2001 from $3,073,000 for the
first three months of fiscal 2000. As a percentage of revenues, operating
expenses increased to 250.6% for the first three months of fiscal 2001 from
143.1% for the first three months of fiscal 2000 due principally to the decline
in revenues.

         Operating expenses are expected to generally vary with revenues,
however, for the three months ended April 30, 2000 operating expenses decreased,
but increased as a percentage of revenues due to the decline in revenue, as
discussed above. Operating expenses decreased as a result of a reduction in
personnel costs and the cessation of loan underwriting, processing and
collection operations upon the Company's sales of its loans. The expenses
associated with such activities are expected to further decrease as the Company
completes the elimination of its loan related staff. Additionally, certain
personnel and occupancy costs historically associated with the loans operations,
but which the Company will continue to incur, will in the future be classified
as general and administrative expenses.

         GENERAL AND ADMINISTRATIVE: General and administrative expenses include
costs of executive, accounting, and legal personnel, occupancy, legal,
professional, insurance, and other general corporate overhead costs. General and
administrative expenses decreased to $1,225,000 for the first three months of
fiscal 2001 from $1,506,000 for the first three months of fiscal 2000, but
increased as a percentage of revenues, due to the decline in revenues, to 239.3%
for the first three months of fiscal 2001 from 70.1% for the first three months
of fiscal 2000.

         General and administrative expenses are more fixed in nature than
operating expenses and are not expected to vary as directly with revenues. The
decrease in general and administrative costs in the first quarter fiscal 2001,
as compared to 2000, was due to a decrease in personnel and occupancy costs.
General and administrative expenses may increase in the future as the result of
the inclusion of expenses previously classified as operating expenses, as
discussed above.

         LITIGATION AND NON-RECURRING CHARGES: Following the resignation of
Deloitte & Touche LLP, the Company instituted investigations of its previous
financial reporting, and underwent changes in management. In fiscal 1998, the
Company accrued initial estimates of certain resulting costs, and additional
costs in excess of those initial estimates are being expensed as incurred or as
such estimates are revised. In the first quarter of fiscal 2001, the Company
accrued an initial estimate of the costs to be incurred in the litigation with
Mr. Frankino that commenced in April 2000, and additional costs in excess of
that initial estimate will be expensed as incurred or as such estimate is
revised. At April 30, 2000 the Company has accrued an aggregate of $9,851,000,
representing (i) the accrual of the costs of the settlement of the class action
litigation, as discussed above, (ii) an estimate of the legal costs to be
incurred in responding to the investigations described above, and (iii) an
estimate of the



                                       16
<PAGE>   19



costs to be incurred in the litigation with Mr. Frankino. Included in the
results of operations for the first quarters of fiscal 2001 and 2000,
respectively, are the following costs (in thousands):


<TABLE>
<CAPTION>
                                                                           Three Months Ended
                                                                               April 30,
                                                                  ------------------------------------
                                                                      2000                    1999
                                                                  ------------            ------------

<S>                                                                   <C>                       <C>
Legal costs relating to litigation matters                            $ 2,949                   $ 735
Crisis management consulting                                               59                     550
Fees for special independent audits                                         -                     341
Financing fees                                                              -                     275
Costs of special investigations                                             -                      53
                                                                  ------------            ------------
   Total                                                              $ 3,008                 $ 1,954
                                                                  ============            ============
</TABLE>

         INTEREST INCOME: Interest Income increased to $980,000 for the first
three months of fiscal 2001 from $425,000 primarily due to the increase in the
average cash equivalents balance (including marketable securities) to
$65,203,000 during fiscal 2001 from $36,090,000 during fiscal 2000.

         INCOME TAXES: Due to net operating losses and the availability of net
operating loss carryforwards, the Company's effective income tax rate was 0% for
the three-month periods ended April 30, 2000 and April 30, 1999. The Company has
provided a full valuation allowance against its net operating loss carryforward
and other net deferred tax asset items due to the uncertainty of their future
realization.

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

         During the first three months of fiscal year 2001, the Company used
$4,255,000 from operating activities as the Company's payments for operating,
general and administrative and litigation and non-recurring expenses continue to
exceed interest income from the declining portfolio balance. The Company
generated $6,278,000 in cash flows from investing activities principally as the
result of $23,294,000 of cash flows from the sales of loans and a net (of
sales) of $20,107,000 of the proceeds invested in marketable securities. The
cash flows generated by these sources were used to finance the negative
operating cash flows and retain a cash balance of $56,343,000 at April 30, 2000.

         During the first three months of fiscal year 2000, the Company used
$3,721,000 from operating activities as the Company's payments for operating,
general and administrative and litigation and non-recurring expenses continue to
exceed interest income from the declining portfolio balance. The Company
generated $11,703,000 in cash flows from investing activities principally as the
result of $12,957,000 of cash flows from the reduction in the size of the loan
portfolio. The cash flows generated by these sources were used to finance the
negative operating cash flows and retain a cash balance of $40,071,000 at April
30, 1999.

         The Company believes that the cash equivalents and marketable
securities of approximately $78,500,000 at May 31, 2000, and the investment
income therefrom will be sufficient to pay operating expenses, existing
liabilities, including costs associated with pending civil litigation and
investigations, and fund its activities through January 31, 2001. However, as
previously discussed, the Company's lack of external financing sources and the
Order Maintaining Status Quo may limit its ability to pursue strategic business
alternatives being considered by Board of Directors. Such limitations may have
an adverse impact on the Company's financial position, results of operations and
liquidity.



                                       17
<PAGE>   20


OTHER
-----

         The Company's exposure to the risks of inflation is generally limited
to the potential impact of inflation on the operating and general and
administrative expenses. To date, inflation has not had a material adverse
impact on the Company.

         The Company does not utilize futures, options or other derivative
financial instruments.


FORWARD-LOOKING STATEMENTS
--------------------------

         Various statements made in this Item 2 concerning the manner in which
the Company intends to conduct its future operations, and potential trends that
may impact its future results of operations, are forward looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995. The
Company may be unable to realize its plan and objectives due to various
important factors, including, but not limited to, the failure of the court to
approve the class action settlement proposed to be entered into by the Company,
the failure of the Board of Directors to promptly determine what strategic
business plan the Company should pursue, the failure of the Company to implement
any such plan due to its inability to identify suitable acquisition candidates
or its inability to obtain the financing necessary to complete any desired
acquisitions, the uncertainties created by the ongoing litigation with Sam J.
Frankino that limit the Board's ability to make decisions, or any adverse action
taken by the Securities and Exchange Commission that impedes the ability of the
Company to pursue any desired plan of action.


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

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

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

         As of April 30, 2000 the Company has mutual fund investments with a
market value of $1,109,000. Those mutual funds generally invest in equity
securities, and as a result such investments are subject to equity price risk.






                                       18
<PAGE>   21

         As of April 30, 2000, the Company has certain investments in marketable
debt securities. Those marketable debt securities are subject to interest rate
risk. The table below provides, for those marketable debt securities, principal
cash flows and related weighted average interest rates by expected maturity
dates (dollars in thousands):


                                               Expected Maturity Date
                                        2000 through 2005          After 2005
                                       --------------------     ---------------

Fixed rate debt securities

  U.S. Government Agency
     mortgage-backed obligations        $        -                 $ 16,640
  Average interest rate                                                8.35%

  Mortgage-backed securities            $        -                  $ 2,233
  Average interest rate                                                8.25%







         As of April 30, 2000 the Company has no interest bearing debt, and
accordingly no market risk associated with increases in interest costs resulting
from changes in market rates.











                                       19
<PAGE>   22



PART II.       OTHER  INFORMATION

ITEM  6.       EXHIBITS AND REPORTS ON FORM 8-K

               a)  Exhibits
                   --------

               27  Financial Data Schedule

               b)  Reports on Form 8-K
                   -------------------


                   On April 3, 2000, a Form 8-K was filed regarding the sale of
                   substantially all of the automobile retail installment
                   contracts remaining in the Company's active portfolio. Such
                   Form 8-K was amended by the filing of a Form 8-K/A on May
                   16, 2000.

                   On April 20, 2000, a Form 8-K was filed regarding the
                   Company purchasing a 50% membership interest in Angelika
                   Film Center, LLC.
























                                       20
<PAGE>   23

                                   SIGNATURES
                                   ----------



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


                      NATIONAL AUTO CREDIT, INC.

Date:  June 14, 2000    By: /s/ David L. Huber
      ---------------       -------------------------------------------------
                            David L. Huber
                            Chairman of the Board and Chief Executive Officer
                            (Principal Financial Officer)

                       By:   /s/ Sean P. Maroney
                             ------------------------------------------------
                             Sean P. Maroney
                             Director of Financial Reporting

























                                       21