<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q


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

      For the quarterly period ended        October 31, 2003
                                     ---------------------------------

                                       OR

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

               For the transition period from              to
                                              ------------    ------------

        Commission file number 1-11601
                               -------

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

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


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

                                      (212) 644-1400
              -----------------------------------------------------
              (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 by check mark whether the registrant is an accelerated filer (as
defined in rule 12b-2 of the Securities and Exchange Act).

                                 Yes [ ] No [X]

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

           Class                         Outstanding at December 15, 2003
-----------------------------            --------------------------------
Common Stock, $0.05 par value                       8,702,614

<PAGE>

                    NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES

                                 TABLE OF CONTENTS



<TABLE>
<CAPTION>
                                                                                   PAGE
                                                                                   ----
<S>             <C>                                                                <C>
PART I.         FINANCIAL INFORMATION


Item 1.         Financial Statements


                Report of Independent Certified Public Accountants                  1
                Condensed Consolidated Balance Sheets as of
                October 31, 2003 and January 31, 2003                               2

                Condensed Consolidated Statements of Operations for the
                Three Months and Nine Months Ended October 31, 2003 and 2002        3

                Condensed Consolidated Statements of Stockholders' Equity and

                Comprehensive Income (Loss) for the Nine Months Ended
                October 31, 2003                                                    4

                Condensed Consolidated Statements of Cash Flows for
                the Nine Months Ended October 31, 2003 and 2002                     5

                Notes to Condensed Consolidated Financial Statements                6


Item 2.         Management's Discussion and Analysis of
                Financial Condition and Results of Operations                      19


Item 3.         Quantitative and Qualitative Disclosures about
                Market Risk                                                        30

Item 4.         Controls and Procedures                                            30



PART II.        OTHER INFORMATION

Item 1.         Legal Proceedings                                                  32

Item 6.         Exhibits and Reports on Form 8-K                                   36



Signatures                                                                         36

Certifications                                                                     37
</TABLE>


<PAGE>


                          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
New York, New York


        We have reviewed the accompanying condensed consolidated balance sheet
of National Auto Credit, Inc. and its subsidiaries as of October 31, 2003, the
related statements of operations for each of the three-month and nine-month
periods ended October 31, 2003 and 2002; the related statements of stockholders'
equity and comprehensive income (loss) for the nine-month period ended October
31, 2003 and the statements of cash flows for the nine-month periods ended
October 31, 2003 and 2002. The financial statements are the responsibility of
the Company's management.

        We conducted our reviews 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 auditing 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, 2003, and the related consolidated statements of
operations, stockholders' equity and comprehensive income, and cash flows for
the year then ended (not presented herein) and in our report dated April 9,
2003, 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, 2003, 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
December 11, 2003




                                       1

<PAGE>



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

<TABLE>
<CAPTION>
                                                                  October 31,   January 31,
                                                                      2003          2003
                                                                  -----------   -----------
                                                                       (unaudited)
                         ASSETS
<S>                                                                <C>          <C>
Cash and cash equivalents                                          $   1,372    $   1,873
Marketable securities (Note 3)                                           659          984
Accounts receivable, net of allowance of $70 (Note 1)                  1,806           --
Income taxes refundable                                                2,070        5,577
Prepaid expenses                                                         312          138
Other current assets                                                     263          500
                                                                   ---------    ---------
  Total current assets                                                 6,482        9,072

Property and equipment, net of accumulated depreciation
  of $514, and $90, respectively  (Note 1)                             5,335           81
Investment in AFC (Note 4)                                             8,718        9,295
Goodwill (Note 2)                                                     11,767           --
Other assets                                                             290          264
                                                                   ---------    ---------
                                                                   $  32,592    $  18,712
                                                                   =========    =========

          LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES:
Current maturities of long term obligations (Note 5)               $   1,235    $      --
Accounts payable                                                         965          117
Self-insurance claims                                                    445          518
Accrued income taxes                                                     647          711
Due to former The Campus Group shareholders (Note 5)                     177           --
Deferred revenue                                                         785           --
Other liabilities                                                      1,637        1,256
                                                                   ---------    ---------
  Total current liabilities                                            5,891        2,602

Long term obligations (Note 5)                                         9,351           --
Convertible promisory note  (Note 5)                                   2,825           --
                                                                   ---------    ---------
                                                                      18,067        2,602
                                                                   ---------    ---------

Commitments and contingencies (Note 6)                                    --            --

STOCKHOLDERS' EQUITY:
Preferred stock                                                           --           --
Common stock,  $.05 par value;
  authorized 40,000,000 shares; issued 39,949,589 and 39,377,589
  shares, respectively                                                 1,997        1,969
Additional paid-in capital                                           174,454      174,337
Retained deficit                                                    (138,172)    (136,455)
Deferred compensation                                                   (119)          --
Accumulated other comprehensive loss                                     (37)        (143)
Treasury stock, at cost, 31,546,975 shares                           (23,598)     (23,598)
                                                                   ---------    ---------
                                                                      14,525       16,110
                                                                   ---------    ---------
  Total stockholders' equity                                       $  32,592    $  18,712
                                                                   =========    =========
</TABLE>


     See accompanying notes to condensed consolidated financial statements.

                                       2
<PAGE>

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



<TABLE>
<CAPTION>
                                                                      Three Months Ended    Nine Months Ended
                                                                          October 31,          October 31,
                                                                      ------------------    ------------------
                                                                         2003       2002       2003       2002
                                                                      -------    -------    -------    -------
<S>                                                                   <C>        <C>        <C>        <C>
Revenues                                                              $ 3,051    $    --    $ 3,932    $    --

Cost of revenues                                                        1,717         --      2,290         --
                                                                      -------    -------    -------    -------

Gross profit                                                            1,334         --      1,642         --

Selling, general and administrative                                     1,605        930      3,963      2,613
                                                                      -------    -------    -------    -------

Loss from operations                                                     (271)      (930)    (2,321)    (2,613)

Interest income from investments                                           12         32        499        117
Income from AFC investment                                                111        118        303        220
Interest expense                                                         (171)        --       (187)        --
                                                                      -------    -------    -------    -------

Loss from continuing operations
   before income taxes                                                   (319)      (780)    (1,706)    (2,276)
Provision for income taxes                                                 --         --         --         --
                                                                      -------    -------    -------    -------
Loss from continuing operations                                          (319)      (780)    (1,706)    (2,276)
Income (loss) from discontinued
  operations, net of tax                                                    1       (173)       (11)       (27)
                                                                      -------    -------    -------    -------

Net loss                                                              $  (318)   $  (953)   $(1,717)   $(2,303)
                                                                      =======    =======    =======    =======

Basic and diluted earnings (loss) per share
         Continuing operations                                        $  (.04)   $  (.09)   $  (.21)   $  (.27)
         Discontinued operations                                           --       (.02)        --         --
                                                                      -------    -------    -------    -------
                 Net earnings (loss) per share                        $  (.04)   $  (.11)   $  (.21)   $  (.27)
                                                                      =======    =======    =======    =======

Weighted average number of shares outstanding
     Basic and diluted                                                  8,047      8,357      7,981      8,546
                                                                      =======    =======    =======    =======
</TABLE>


     See accompanying notes to condensed consolidated financial statements.


                                       3
<PAGE>

                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
            CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                         AND COMPREHENSIVE INCOME (LOSS)
                       NINE MONTHS ENDED OCTOBER 31, 2003
                        (IN THOUSANDS, EXCEPT SHARE DATA)
                                   (UNAUDITED)

<TABLE>
<CAPTION>


                                   Preferred Stock    Common Stock
                                   ---------------  ------------------     Additional                          Deferred
                                             Par                   Par      Pain-In    Retained    Treasury   Compensation
                                   Shares   Value     Shares      Value     Capital     Deficit     Stock      Expense
                                   ------   -----     ------      -----     -------     -------     -----      -------

<S>                                <C>       <C>    <C>           <C>       <C>         <C>        <C>           <C>
Balance at
  January 31, 2003                    --     $ --   39,377,589    $1,969    $174,337    $(136,455) $(23,598)     $ --

Net loss                                                                                   (1,717)
Acquisition of OMI                                     200,000        10          16
Stock awards to
  employees                                            372,000        18         101                             (119)
Other comprehensive
  income-unrealize loss
  on marketable
  securities
                                   -------   ------ ----------    ------    --------   ---------------------   -----------

Comprehensive loss


Balance at
  October 31, 2003                      --   $   -- 39,949,589    $1,997    $174,454    $(138,172) $(23,598)   $ (119)
                                   =======   ====== ==========    ======    ========   =====================   ===========
<CAPTION>


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

<S>                                  <C>            <C>          <C>
Balance at
  January 31, 2003                   $ (143)        $16,110

Net loss                                             (1,717)      $(1,717)
Acquisition of OMI                                       26
Stock awards to
  employees                                              --
Other comprehensive
  income-unrealize loss
  on marketable
  securities                            106             106           106
                                     ---------    ------------    -------

Comprehensive loss                                                $(1,611)
                                                                  =======

Balance at
  October 31, 2003                   $  (37)        $14,525
                                     =========    ============
</TABLE>

     See accompanying notes to condensed consolidated financial statements.


                                       4

<PAGE>

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

<TABLE>
<CAPTION>
                                                                                Nine Months Ended
                                                                                   October 31,
                                                                           --------------------------
                                                                              2003            2002
                                                                           ----------      ----------
<S>                                                                        <C>             <C>
Cash flows from operating activities
  Net loss                                                                  $(1,717)         $(2,303)
     Adjustments to reconcile net loss to net cash provided by
       (used in) operating activities:
     Loss (income) from discontinued operations                                  11               27
     Depreciation and amortization                                              422               22

  Changes in operating assets and liabilities, net of acquisition:
     Accounts receivable                                                       (393)               -
     Income tax refundable                                                    3,507                -
     Accrued income tax                                                         (64)               -
     Accounts payable and other liabilities                                     555             (805)
     Deferred revenue                                                           715                -
     Other operating assets and liabilities, net                                (40)            (204)
                                                                            -------          -------
       Net cash provided by (used in) operating activities                    2,996           (3,263)
                                                                            -------          -------
  Cash flows from investing activities
     Acquisition of OMI net of cash acquired                                    (97)               -
     Acquisition of The Campus Group net of cash acquired                    (3,111)               -
     Change in contracts in progress                                              -              106
     Proceeds from AFC distributions                                            879                -
     Proceeds from the sale of marketible securities                            400                -
     Purchase of property and equipment                                        (193)             (35)
                                                                            -------          -------
       Net cash provided by (used in) investing activities                   (2,122)              71
                                                                            -------          -------
  Cash flows from financing activities
     Payments of due to former The Campus Group shareholders                 (1,079)               -
     Payments of long term debt                                                (212)               -
                                                                            -------          -------
       Net cash used in financing activities                                 (1,291)               -
                                                                            -------          -------
     Increase (decrease) in cash and cash equivalents from
       continuing operations                                                   (417)          (3,192)
     Increase (decrease) in cash and cash equivalents from
       discontinued operations                                                  (84)            (286)
     Cash and cash equivalents at beginning of period                         1,873            6,122
                                                                            -------          -------
     Cash and cash equivalents at end of period                              $1,372           $2,644
                                                                            =======          =======
  Supplemental disclosures of cash flow information
     Common stock issued pursuant to OMI acquisition                            $26              $ -
                                                                            =======          =======
     Promissory notes issued pursuant to The Campus Group acquisition        $9,840              $ -
                                                                            =======          =======
     Convertible note issued pursuant to The Campus Group acquisition        $2,825              $ -
                                                                            =======          =======
     Stock award to employees pursuant to a plan                               $119              $ -
                                                                            =======          =======
     Interest paid                                                              $27               $3
                                                                            =======          =======
     Income taxes paid                                                          $64              $ -
                                                                            =======          =======
</TABLE>

     See accompanying notes to condensed consolidated financial statements.

                                       5
<PAGE>

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

NOTE 1 - BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

General

         The accompanying unaudited condensed consolidated financial statements
include the accounts of National Auto Credit, Inc. and Subsidiaries ("NAC"). 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 NAC'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 NAC's consolidated financial
statements, including the notes thereto, appearing in NAC's Annual Report on
Form 10-K for the year ended January 31, 2003. The results of operations for the
three months and nine months ended October 31, 2003 are not necessarily
indicative of the operating results for the full year.

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

Acquisitions

         In July 2003, NAC consummated a Stock Purchase Agreement whereby NAC
acquired all outstanding capital stock of The Campus Group, four affiliated
companies providing satellite videoconferencing, multi-media production services
and corporate meeting services, from Mr. Steven Campus and certain family trusts
for an aggregate purchase price of $15.5 million. The Campus Group,
headquartered in Tuckahoe, New York, specializes in the full service design,
creative development, production, post production editing and transmission, via
broadcast satellite videoconferencing, webcasting and traditional on-site
presentations, of corporate communication, education and training video and
other services for use at corporate events. For financial reporting purposes,
the effective date of the merger is July 31, 2003 (see Note 2).

         In April 2003, NAC consummated a Merger and Plan of Reorganization
Agreement whereby NAC acquired all of the outstanding common stock of ORA/Metro
Incorporated, now known as OMI Business Communications, Inc. ("OMI"), from Mr.
Dean R. Thompson, sole stockholder of OMI. OMI, headquartered in New York, New
York, is a multi-media production services, corporate meeting services, web-site
development and web content management company. OMI specializes in the full
service design, creative development, production and post production editing of
corporate communication and training videos for use at corporate events and as
collateral content material for client web-sites. Additionally, OMI frequently
provides event planning services including site selection, survey, event
management and related services associated with remote location presentations.
For financial reporting purposes, the effective date of the merger is April 1,
2003 (see Note 2).

                                       6
<PAGE>

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

NOTE 1 - BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Discontinued Operations

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

         As a consequence of NAC's strategic review and determination, effective
December 31, 2001, NAC suspended its ZoomLot operations and initiated steps to
discontinue e-commerce operations. Additionally, as a consequence of NAC's
decision to discontinue its ZoomLot e-commerce operations, NAC also formally
exited the sub-prime used automobile consumer finance business effective
December 31, 2001. As a result of these decisions, both the e-commerce and
automobile finance segments have been classified as discontinued operations as
of January 31, 2002. For the three months ended October 31, 2003, NAC realized
income from discontinued operations of $1,000. For the nine months ended October
31, 2003, NAC incurred a loss from discontinued operations of $11,000. For the
three months and nine months ended October 31, 2002, NAC incurred a loss from
discontinued operations of $173,000 and $27,000 respectively.

         From December 31, 2001 to April 1, 2003, NAC was engaged principally in
the movie exhibition segment. Since April 1, 2003, NAC has also been engaged in
corporate communications and video production activities through its newly
acquired subsidiary, OMI. Effective October 31, 2003, NAC expanded its corporate
communications and video production activities through the acquisition of The
Campus Group.

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

Revenues

         NAC recognizes revenue from video production, video editing, meeting
services and broadcast satellite or webcast services when the video is complete
and delivered or all technical services have been rendered. Deposits and other
prepayments are recorded as deferred revenue until revenue is recognized. NAC
does not have licensing or other arrangements that result in additional revenues
following the delivery of the video or a broadcast. Costs accumulated in the
production of the video, meeting services or broadcasts are deferred until the
sale and delivery are complete. Deferred production costs of $253,000 are
included as a component of other current assets at October 31, 2003.

         NAC recognizes revenue from designing and developing websites when the
customer accepts the completed project. Deposits and other prepayments are
recorded as deferred revenue until revenue is recognized. These contracts are
limited to the design and development of websites. Clients have the option to
engage NAC to maintain and upgrade their websites. These contracts are separate
from the website development and design agreements, and the related revenue is
recognized over the term of the contracts, which is generally up to one year.

                                       7
<PAGE>

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

NOTE 1 - BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         NAC recognizes revenue from developing and maintaining websites
pursuant to the requirements of Statement of Position No. 97-2, "Software
Revenue Recognition" ("SOP 97-2"), as amended by Statement of Position No. 98-9,
"Software Revenue Recognition with Respect to Certain Arrangements." Under SOP
97-2, revenue attributable to an element in a customer arrangement is recognized
when persuasive evidence of an arrangement exists and delivery has occurred,
provided the fee is fixed or determinable, collectibility is probable and the
arrangement does not require significant customization of the software. If at
the outset of the customer arrangement, NAC determines that the arrangement fee
is not fixed or determinable or that collectibility is not probable, NAC defers
the revenue and recognizes the revenue when the arrangement fee becomes due and
payable or, when collectibility is uncertain, as cash is collected.

Cost of Revenues

         Cost of revenues consists of direct expenses specifically associated
with client service revenues. The cost of revenues includes direct salaries and
benefits, purchased products or services for clients, web hosting, support
services, shipping and delivery costs.

Accounts Receivable

         Accounts receivable are recorded at the invoiced amount and do not bear
interest. The allowance for doubtful accounts is NAC's best estimate of the
amount of probable credit losses in NAC's existing accounts receivable. NAC
determines the allowance based on analysis of historical bad debts, client
concentrations, client credit-worthiness and current economic trends. NAC
reviews its allowance for doubtful accounts quarterly. Past-due balances over 90
days and specified other balances are reviewed individually for collectibility.
All other balances are reviewed on an aggregate basis. Account balances are
written off against the allowance after all means of collection have been
exhausted and the potential for recovery is considered remote. NAC does not have
any off-balance sheet credit exposure related to its customers.

Property and Equipment

         Property and equipment are stated at cost. Depreciation, including
depreciation on assets held under capital leases, is computed on the
straight-line method over the estimated useful lives of the assets. The
estimated useful lives are three years for computer equipment and third party
purchased software and five years for furniture and fixtures. Leasehold
improvements are amortized over the term of the lease.

Reclassifications

         Certain Fiscal 2003 amounts have been reclassified to conform with
Fiscal 2004 presentations.

                                       8
<PAGE>

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

NOTE 1 - BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

New Accounting Pronouncements

         In July, 2002 the FASB issued Statement of Financial Accounting
Standards ("SFAS") No. 146, Accounting for Costs Associated with Exit or
Disposal Activities. SFAS No. 146 requires companies to recognize costs
associated with exit or disposal activities when they are incurred, rather than
at the date of a commitment to an exit or disposal plan. Examples of costs
covered by the standard included lease termination costs and certain employee
severance costs that are associated with a restructuring, discontinued
operation, plant closing, or other exit or disposal activity. Previous
accounting guidance was provided by EITF Issue No. 94-3, Liability Recognition
for Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring). SFAS No. 146 replaces
Issue 94-3 and is required to be applied prospectively to exit or disposal
activities initiated after December 2002. SFAS 146 was adopted by NAC effective
February 1, 2003. At the time of adoption, there was no material impact to NAC's
financial statements.

         In December 2002, the FASB issued SFAS No. 148, Accounting for
Stock-Based Compensation--Transition and Disclosure. SFAS No. 148 provides
alternative methods of transition for a voluntary change to the fair value based
method of accounting for stock-based employee compensation. In addition, SFAS
No. 148 requires prominent disclosures in both annual and interim financial
statements about the method of accounting for stock-based employee compensation
and the effect of the method used on the reported results. The provisions of
SFAS 148 are effective for financial statements for fiscal years ending after
December 15, 2002. SFAS 148 was adopted by NAC effective February 1, 2003. At
the time of adoption, there was no material impact to NAC's financial
statements.

         In January 2003, the FASB issued FASB Interpretation ("FIN") No. 46,
Consolidation of Variable Interest Entities. FIN No. 46 clarifies the
application of Accounting Research Bulletin No. 51, "Consolidated Financial
Statements," to certain entities in which equity investors do not have the
characteristics of a controlling financial interest or in which equity investors
do not bear the residual economic risks. The interpretation was immediately
applicable to variable interest entities ("VIEs") created after January 31,
2003, and to VIEs in which an enterprise obtains an interest after that date. It
applies in the fiscal year or interim period beginning after December 15, 2003,
to VIEs in which an enterprise holds a variable interest that was acquired
before February 1, 2003. The adoption of FIN No. 46 is not expected to have a
material impact on the consolidated financial statements of NAC.

         In May 2003, the FASB issued SFAS No. 150, Accounting for Certain
Financial Instruments with Characteristics of Both Liabilities and Equity. SFAS
No. 150 establishes standards for how an issuer measures certain financial
instruments with characteristics of both liabilities and equity and classifies
them in its balance sheet. It requires that an issuer classify a financial
instrument that is within its scope, such as an issue of preferred or common
shares that are subject to redemption at specified times or at the option of the
holder, as a liability when that financial instrument embodies an obligation of
the issuer. SFAS No. 150 is effective for financial instruments entered into or
modified after May 31, 2003, and otherwise is effective at the beginning of the
first interim period beginning after June 15, 2003. SFAS 150 was adopted by NAC
effective February 1, 2003. At the time of adoption, there was no material
impact to NAC's financial statements.

                                       9
<PAGE>

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

NOTE 2 - ACQUISITIONS

The Campus Group

         In July 2003, NAC consummated a Stock Purchase Agreement whereby NAC
acquired all outstanding capital stock of four affiliated companies, Campus
Group Companies, Inc., Audience Response Systems, Inc, Interactive Conferencing
Network, Inc. and Multi-Video Services, Inc., collectively known as The Campus
Group. In exchange for the acquisition of all of the outstanding capital stock
of The Campus Group, NAC (i) paid $2.8 million at closing from NAC's available
cash balances, (ii) issued to Mr. Campus and certain family trusts promissory
notes of $9.9 million, and (iii) issued to a family trust a convertible
promissory note of $2.8 million. The Campus Group revenues for the years ended
December 31, 2002 and 2001 were $10.7 million and $12.7 million, respectively.
The Campus Group realized net income of $1.2 million and $2.3 million for those
years, respectively. For financial reporting purposes, the effective date of the
transaction is July 31, 2003.

         As part of The Campus Group acquisition, Mr. Campus entered into an
employment agreement for which he has agreed to serve as President of each of
the four acquired companies with an initial term of three years. The term of the
employment agreement will be automatically extended until such time as the
promissory notes and convertible promissory note are retired. Mr. Campus,
subject to certain limitations, will have control over day-to-day operations of
The Campus Group. Under the terms of the employment agreement, Mr. Campus will
be entitled to base compensation of $100,000 per year and a performance bonus
based upon the operating results of the acquired companies.

           The components and allocation of the purchase price were as follows
(in thousands):

                                                                 Amount
                                                              -----------
Components of purchase price:
      Cash paid at closing                                     $    2,825
      Promissory notes issued at closing                            9,840
      Convertible note issued at closing                            2,825
      Transaction costs                                               861
                                                              -----------
           Total purchase price                                $   16,351
`                                                             ===========

Allocation of purchase price:
      Current assets                                           $    1,758
      Property and equipment                                        4,851
      Goodwill arising in the acqusition                           11,226
                                                              -----------
                                                                   17,835

      Accounts payable and accrued expenses                         (228)
      Due to shareholder                                          (1,256)
                                                              -----------
      Net assets acquired                                      $   16,351
`                                                             ===========

           NAC is in the process of engaging an independent valuation firm to
assist in its evaluation of the acquired assets in order to finalize its
purchase accounting allocation.

                                       10
<PAGE>

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

NOTE 2 - ACQUISITIONS (CONTINUED)

OMI
         In April 2003, NAC consummated a Merger Agreement and Plan of
Reorganization whereby NAC acquired all of the outstanding common stock of OMI
from Mr. Dean R. Thompson, sole stockholder of OMI. In exchange for the
acquisition of all of the outstanding common stock of OMI, NAC (i) issued
200,000 shares of NAC Common Stock, valued at $26,000 (ii) assumed $814,000 in
bank debt and capital lease obligations to financial institutions and (iii)
issued a promissory note payable to Mr. Thompson in the amount of $153,000,
payable in monthly installments of principal and interest over a 36 month
period. In addition to the initial payments, NAC agreed to a contingent payment
to Mr. Thompson of $150,000 based upon OMI's financial performance during the
three-year period ending January 31, 2006. OMI's revenues for the years ended
December 31, 2002 and 2001 were $2.5 million and $3.5 million, respectively. OMI
incurred net losses of $343,000 and $27,000 for those years, respectively. For
financial reporting purposes, the effective date of the merger is April 1, 2003.

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

           The components and allocation of the purchase price were as follows
(in thousands):

                                                           Amount
                                                         ----------
Components of purchase price:
      Common stock                                       $     26
      Promissory note                                         153
      Transaction costs                                       110
                                                         ----------
           Total purchase price                          $    289
                                                         ==========

Allocation of purchase
price:
      Current assets                                     $    376
      Property and equipment                                  632
      Other assets                                             61
      Goodwill arising in the acqusition                      541
                                                         ----------
                                                            1,610
      Accounts payable and accrued expenses                  (516)
      Debt                                                   (805)
                                                         ----------
      Net assets acquired                                $    289
                                                         ==========


                                       11
<PAGE>

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

NOTE 2 - ACQUISITIONS (CONTINUED)

         The following sets forth the pro forma condensed results of operations
of NAC, The Campus Group and OMI for the nine months ended October 31, 2003 and
2002 as if the acquisition were consummated on February 1, 2003 and 2002,
respectively. Prior to its acquisition, The Campus Group and OMI used a December
31 year end, and accordingly the pro forma results have been prepared by
combining the historical results for NAC for the nine month periods ended
October 31, with the historical results of The Campus Group and OMI for the nine
month periods ended September 30. These pro forma results have been prepared for
illustrative purposes only and do not purport to be indicative of what would
have occurred had the acquisition been in effect for the periods indicated or
the results which may occur in the future. Pro forma revenues, net loss and loss
per share are as follows:


<TABLE>
<CAPTION>
                                                 Nine Months                 Nine Months
                                            Ended October 31, 2003      Ended October 31, 2002
                                            ----------------------      ----------------------
<S>                                                 <C>                        <C>
Revenues                                            $   9,028                  $   10,659
                                                   ==========                  ==========
Net loss from continuing operations                 $  (1,525)                 $   (1,264)
                                                   ==========                  ==========
Loss per share from continuing operations           $   (0.19)                 $    (0.14)
                                                   ==========                  ==========
</TABLE>

NOTE 3 - MARKETABLE SECURITIES

         Marketable securities at October 31, 2003 are summarized as follows (in
thousands):


<TABLE>
<CAPTION>
                                                                        Gross Unrealized
                                                                   ---------------------------
                                                    Cost             Gains             Losses          Fair Value
                                                -----------       -----------       -----------        -----------
<S>                                               <C>               <C>               <C>                <C>
Equity securities - mutual funds                  $   696           $     -           $   (37)           $   659

</TABLE>

         All marketable securities were classified as available for sale.

NOTE 4 - INVESTMENT IN AFC

         On April 5, 2000, NAC, through its wholly owned subsidiary National
Cinemas, Inc., acquired 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.

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

                                       12
<PAGE>

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

NOTE 4 - INVESTMENT IN AFC (CONTINUED)

         NAC uses the equity method to account for its investment in AFC. NAC's
initial investment exceeded its share of AFC's net assets and that portion of
the investment balance is accounted for in a manner similar to goodwill. AFC
uses a December 31 year-end for financial reporting purposes. NAC reports on a
January 31 year-end, and for its fiscal quarters ending April 30, July 31,
October 31 and January 31 records its pro-rata share of AFC's earnings on the
basis of AFC's fiscal quarters ending March 31, June 30, September 30, and
December 31, respectively. For the three months ended October 31, 2003 and 2002,
NAC recorded income of $111,000 and $118,000, respectively, representing its
share of AFC's net income. For the nine months ended October 31, 2003 and 2002,
NAC recorded income of $303,000 and $220,000, respectively, representing its
share of AFC's net income.

         Summarized income statement data for AFC for the three months and nine
months ended September 30, 2003, and 2002, respectively, is as follows (in
thousands):

<TABLE>
<CAPTION>
                                                        Three Months Ended                  Nine Months Ended
                                                           September 30,                        September 30,
                                                   -----------------------------      -----------------------------
                                                      2003                2002            2003              2002
                                                   -----------        ----------      -----------       -----------
<S>                                                <C>                 <C>             <C>               <C>
Revenues                                           $   1,375           $  1,529        $  4,566          $  4,338

Film rental                                              272                420           1,082             1,155
Operating costs                                          636                656           2,147             2,092
Depreciation and amortization                            214                175             637               524
General and administrative expenses                       32                 42              94               127
                                                   -----------        ----------      -----------       -----------
                                                       1,154              1,293           3,960             3,898
                                                   -----------        ----------      -----------       -----------
Net income                                          $    221            $   236         $   606           $   440
                                                   ===========        ==========      ===========       ===========
NAC's proportionate share of net income             $    111            $   118         $   303           $   220
                                                   ===========        ==========      ===========       ===========
</TABLE>

NOTE 5 - CURRENT AND LONG TERM OBLIGATIONS

         As a consequence of NAC's acquisition of The Campus Group effective
July 31, 2003, NAC issued to Mr. Campus and certain family trusts promissory
notes of $9.9 million and issued to a family trust a convertible promissory note
of $2.8 million. Of the $9.9 million in promissory notes issued by NAC, $6.5
million of the promissory notes ("Base Notes") bear interest at 5% per annum and
are repayable in quarterly installments according to a formula based upon the
future cash flows realized from The Campus Group over a period not to exceed
seven years. The remaining $3.4 million in promissory notes ("Trailing Notes")
issued by NAC bear interest at 5% per annum and are repayable in quarterly
installments, commencing upon the retirement of the Base Notes, according to a
formula based upon the future cash flows realized from The Campus Group over a
period not to exceed three years subsequent to the retirement of the Base Notes.
The $2.8 million convertible promissory note (i) bears interest at 5% per annum,
payable quarterly in cash or accumulating as principal at the election of NAC,
(ii) requires principal payments commence upon the retirement of the Base Notes
and Trailing Notes and is then repayable in quarterly installments according to
a formula based upon the future cash flows realized from The Campus Group over a
period not to exceed three years and (iii) is convertible at the option of the
holder into shares of NAC common stock at a base conversion price of $1.50 per
share. The holder may not convert the convertible promissory note into NAC
common stock prior to repayment of the Base Notes and Trailing Notes. The
promissory notes are secured by the capital stock of the companies comprising
The Campus Group.

                                       13
<PAGE>

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

NOTE 5 - CURRENT AND LONG TERM OBLIGATIONS (CONTINUED)

         As a consequence of NAC's acquisition of OMI effective April 1, 2003,
NAC assumed $814,000 in bank debt and capital lease obligations to financial
institutions and issued a promissory note payable to Mr. Thompson in the amount
of $153,000.

         During 2001, OMI obtained a $300,000 bank term loan (the "Term Loan")
to finance certain capital expenditures. The Term Loan is payable in monthly
installments of $6,000, comprised of principal and interest, over a five year
term, expiring in July 2006. The Term Loan bears interest at the rate of 8.25%
per annum. In addition, during 2001 OMI obtained a $100,000 revolving credit
facility (the "Credit Facility") with a bank which must be renewed annually. The
Credit Facility bears interest at 2.5% per annum above the bank's prime rate.
The Term Loan and the Credit Facility are collateralized by substantially all of
OMI's assets and the personal guarantee of Mr. Thompson. Pursuant to the terms
of the Merger Agreement, NAC is seeking to obtain releases of Mr. Thompson's
personal guarantees from each financial institution.

         On April 25, 2002, OMI obtained a $402,000 loan guaranteed by the U.S.
Small Business Administration (the "SBA Loan") to finance losses incurred as a
result of the September 11, 2001 terrorist attacks in New York City. The SBA
Loan is repayable in monthly installments of $3,309 beginning in May 2004, with
the last payment due in April 2017. The loan bears no interest through May 2004
and at the rate of 4% per annum thereafter.

         The promissory note payable to Mr. Thompson is payable in monthly
installments of principal and interest over a 36 month period expiring April
2006. The promissory note bears interest at 5% per annum.

         OMI leases computer equipment under several different capital leases
with finance institutions with various payments terms, expiration dates and
imputed annual rates of interest.

         The components of long term obligations at October 31, 2003 are as
follows (in thousands):

                                             October 31, 2003
                                             ----------------
         Capital leases                          $     80
         Term loan                                    168
         SBA loan                                     402
         Promissory note                               95
         Base promissory notes                      6,565
         Trailing promissory notes                  3,275
                                              ------------
                                                   10,585
         Less current maturities                   (1,235)
                                              ------------
         Long term obligations                      9,351
         Convertible note payable                   2,825
                                              ------------
                                                 $ 12,176
                                              ============

                                       14
<PAGE>

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

NOTE 5 - CURRENT AND LONG TERM OBLIGATIONS (CURRENT)

         NAC's current maturities and long term obligations at October 31, 2003
are as follows (in thousands):

                                          October 31, 2003
                                          ----------------
              2004                             $  1,241
              2005                                1,294
              2006                                1,258
              2007                                1,272
              2008                                1,335
              Thereafter                          7,023
                                            ------------
                                                 13,423
          less interest due under
            capital leases obligations              (13)
                                            ------------
                                               $ 13,410
                                            ============

         The cost and accumulated depreciation for equipment under capital
leases were $335,000 and $65,000, respectively at October 31, 2003.

         The liability due to the former The Campus Group shareholders
represents the net amount outstanding for various loans and advances made by the
former shareholders to The Campus Group prior to their acquisition by NAC. The
loans do not bear interest. Pursuant to the terms of Stock Purchase Agreement,
repayments to reduce the loans and advances are to be made periodically when
cash requirements of The Campus Group permit and shall be repaid in full prior
to January 31, 2004. For the three month period ended October 31, 2003, NAC paid
$1.1 million due to the former The Campus Group shareholders. At October 31,
2003, the balance due the former The Campus Group shareholders was $177,000.


NOTE 6 - COMMITMENTS AND CONTINGENCIES

Shareholder Complaints

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

                                       15
<PAGE>

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

NOTE 6 - COMMITMENTS AND CONTINGENCIES (CONTINUED)

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

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

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

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

                                       16
<PAGE>

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

NOTE 6 - COMMITMENTS AND CONTINGENCIES (CONTINUED)

         The parties in New York thereafter engaged in settlement negotiations
and the parties entered into a stipulation of settlement in December 2002,
proposing to settle all class and derivative claims. In January 2003, the New
York Supreme Court entered an order which, among other things, conditionally
certified a class of shareholders for settlement purposes, approved the form of
notice of the proposed settlement, and scheduled a hearing to approve the
settlement. Notice of the proposed settlement was given to the shareholders of
the Company and members of the class as per the Court's order in January and
February 2003. A hearing on the proposed settlement was held on October 15, 2003
and the New York Supreme Court approved the terms of the proposed settlement.
The parties are awaiting the Court's written Order and Judgment. In the Delaware
Consolidated Action, a motion to dismiss that Action was also filed in 2002 and
was denied by the Delaware court in January 2003. The Delaware court has stayed
proceedings in that action pending issuance of the New York court's order.

         No predictions can be made with respect to the outcome of these matters
and, accordingly, no provision for any loss or settlement that may occur has
been recorded in the consolidated financial statement.

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

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

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

         NAC is named as defendant in a self-insurance action Darrell Smith and
Aaron Simpson ("Plaintiffs") v. John J. Bennett, ARAC, Country Mutual Insurance
Company and Atlanta Casualty Insurance Company in Cook County (State) Court of
Illinois. This matter arises out of an incident in which an ARAC car renters'
son, while driving the rental vehicle, was involved in a fatal accident and with
serious injuries to Plaintiffs, passengers in the vehicle. Initially, the
Plaintiffs appeared to be recovering well from the injuries sustained. However,
subsequently plaintiff Simpson underwent an accident-related surgery on his back
for removal of a shunt, during which nerves in the spine were severed causing
paraplegia. The Plaintiffs are suing for damages resulting from their injuries
and the subsequent paraplegia suffered by plaintiff Simpson. The doctor and
hospital that performed the surgery were also named as defendants by Plaintiffs
and have been impleaded by NAC under a theory of medical malpractice. Damages
alleged in the complaint are not specified, although in discovery Plaintiffs
have indicated they are seeking millions of dollars in compensatory and other
damages. The matter is scheduled for trial during the first half of 2004.

                                       17
<PAGE>

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

NOTE 6 - COMMITMENTS AND CONTINGENCIES (CONTINUED)

         NAC maintains a number of defenses relating to this matter. NAC has
almost exhausted its self-insured retention of $500,000 on this case and NAC
attempted to get its excess carrier, the TIG Insurance Company ("TIG"), to take
over the defense of this action and indemnify NAC up to the policy limits.
However, as a result TIG filed a suit (TIG Insurance Company v. Darrell Smith,
Aaron Simpson and NAC in the United States Court for the Northern District of
Illinois) for a declaratory judgment seeking a ruling that it has no liability
as an "excess insurer" of NAC in connection with the Smith and Simpson action
and that under Illinois law, NAC's (and thereafter TIG's) financial
responsibility is capped at an amount less than what the Plaintiffs are seeking
in the state court action. TIG filed a motion for summary judgment on the same
grounds, arguing that it has no liability to NAC under such insurance policy.
NAC filed a motion for summary judgment, asserting that it has no liability to
Smith and Simpson; and that if there is any liability it is capped under
Illinois state law, or, if not capped, then TIG's excess insurance coverage
applies. Smith and Simpson filed their own cross-motion for summary judgment,
asserting that NAC is liable for Smith and Simpson's injuries and that NAC's
liability is not capped under Illinois law. On February 3, 2003, the Court
granted the motions of TIG and NAC for summary judgment, and denied the motion
for summary judgment of Smith and Simpson. The Court concluded that NAC bears no
financial responsibility to Smith and Simpson because, under the express terms
of the rental agreement at issue, Bennett was not a listed additional driver on
the underlying rental contract. The Court further concluded that TIG, as NAC's
excess insurance carrier, has no responsibility to defend or indemnify the
Bennett estate. Motions for reconsideration were filed by Smith and Simpson in
February and March but were denied by the Court. On April 11, 2003, Smith and
Simpson filed a Notice of Appeal of the Courts' decisions. NAC intends to
vigorously oppose this appeal.

         In November 2003, the plaintiff Simpson reached an agreement in
principle to settle with all parties against whom he had claims. Definitive
agreements are being drafted, pursuant to which all of plaintiff Simpson's
claims against NAC will be dismissed with prejudice without any further
liability or cost to NAC. The plaintiff Smith is continuing to pursue his claims
and appeals.

         Because of the uncertainties related to these two matters, as well as
several smaller legal proceedings involving NAC's former rental operations and
self-insurance claims, it is difficult to project with precision the ultimate
effect the adjudication or settlement of these matters will have on NAC. At
October 31, 2003, NAC had accrued $445,000 to cover all outstanding
self-insurance liabilities. As additional information regarding NAC's potential
liabilities becomes available, NAC will revise the estimates as appropriate.

Other Litigation

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



                                       18
<PAGE>

                                     ITEM 2.
                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


GENERAL

         National Auto Credit, Inc. (the "Company" or "NAC") began operations in
1969 and was incorporated in Delaware in 1971. NAC has recently consummated a
series of acquisitions transforming its operations into a multi-dimensional
corporate communication and entertainment company.

Acquisitions

         In July 2003, NAC consummated a Stock Purchase Agreement whereby NAC
acquired all outstanding capital stock of The Campus Group which provides
satellite videoconferencing, multi-media production services and corporate
meeting services, from Mr. Steven Campus and certain family trusts for an
aggregate purchase price of $15.5 million. The Campus Group, headquartered in
Tuckahoe, New York, specializes in the full service design, creative
development, production, post production editing and transmission, via broadcast
satellite videoconferencing, webcasting and traditional on-site presentations,
of corporate communication, education and training video and other services for
use at corporate events.

         In exchange for the acquisition of all of the outstanding capital stock
of The Campus Group, NAC (i) paid $2.8 million at closing from NAC's available
cash balances, (ii) issued to Mr. Campus and certain family trusts promissory
notes of $9.9 million, and (iii) issued to a family trust a convertible
promissory note of $2.8 million. The Campus Group revenues for the years ended
December 31, 2002 and 2001 were $10.7 million and $12.7 million, respectively.
The Campus Group realized net income of $1.2 million and $2.3 million for those
years, respectively. For financial reporting purposes, the effective date of the
transaction is July 31, 2003.

         In April 2003, NAC consummated a Merger Agreement and Plan of
Reorganization whereby NAC acquired all of the outstanding common stock of
ORA/Metro Incorporated, now known as OMI Business Communications, Inc. ("OMI"),
from Mr. Dean R. Thompson, sole stockholder of OMI. OMI, headquartered in New
York, New York, is a multi-media production services, corporate meeting
services, web-site development and web content management company. OMI
specializes in the full service design, creative development, production and
post production editing of corporate communication and training videos for use
at corporate events and as collateral content material for client web-sites.
Additionally, OMI frequently provides event planning services including site
selection, survey, event management and related services associated with remote
location presentations.

         In exchange for the acquisition of all of the outstanding common stock
of OMI, NAC (i) issued 200,000 shares of NAC Common Stock, valued at $26,000
(ii) assumed $814,000 in bank debt and capital lease obligations to financial
institutions and (iii) issued a promissory notes payable to Mr. Thompson in the
amount of $153,000, payable in monthly installments of principal and interest
over a 36 month period. In addition to the initial payments, NAC agreed to a
contingent payment to Mr. Thompson of $150,000 based upon OMI's financial
performance during the three-year period ending January 31, 2006. OMI's revenues
for the years ended December 31, 2002 and 2001 were $2.5 million and $3.5
million, respectively. OMI incurred net losses of $343,000 and $27,000 for those
years, respectively. For financial reporting purposes, the effective date of the
merger is April 1, 2003.

                                       19
<PAGE>



                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED


Discontinued Operations

         Through and including December 31, 2001, NAC's operations were
conducted principally through three operating segments, (i) the e-commerce
segment designed to facilitate the process by which used car dealerships,
lenders and insurance companies communicate and complete the transactions
between them that are needed to provide used car dealers' customers with
financing, insurance and other services, (ii) the movie exhibition segment,
which is comprised of the activities of Angelika Film Center LLC ("AFC") and
(iii) the automobile financing segment. In the fourth quarter of Fiscal 2002,
NAC completed a strategic review of its investment in its e-commerce services.
As a result of this review, management of NAC determined that it was unable to
predict, with the requisite degree of certainty, when or whether its e-commerce
segment would achieve positive cash flows.

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

Other

         Throughout the nine months ended October 31, 2003 and as of December
15, 2003, NAC's external sources of financing are comprised of its cash flows
from its investment in marketable securities, distributions from AFC, and since
their respective acquisitions the cash flows from the operations of OMI and The
Campus Group, and NAC has operated principally on its existing cash balances.
NAC continues to pursue its plan of examining new business opportunities, which
may be pursued through the investment in, or acquisition of existing operating
businesses or other means. At October 31, 2003, NAC has cash and marketable
securities of $2.0 million, which together with any cash flow derived from its
investment in AFC and proceeds from the collection of its $2.1 million federal
income tax refund, may be used to pursue such opportunities. Additionally, NAC
will continue to pursue reduction in operating expenses and explore new debt or
equity financing (for which there can be no assurance NAC will obtain such
financing) as means of supplementing the resources available to pursue new
opportunities.

CRITICAL ACCOUNTING POLICIES

         NAC's consolidated financial statements are prepared in accordance with
generally accepted accounting principles, which require NAC to make estimates
and assumptions. Those estimates and assumptions affect the reported amounts of
assets and liabilities, the disclosure of contingent assets and liabilities, and
the reported revenues and expenses of NAC. Certain accounting policies are
deemed "critical", as they require management's highest degree of judgment,
estimates and assumptions. These accounting estimates and disclosures have been
discussed with the Audit Committee of NAC's Board of Directors. A discussion of
NAC's critical accounting policies, the judgments and uncertainties affecting
their application, and the likelihood that materially different amounts would be
reported under different conditions or using different assumptions are as
follows:

                                       20
<PAGE>

                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED


      Revenues

         NAC recognizes revenue from video production, video editing, meeting
services and broadcast satellite or webcast services when the video is complete
and delivered or all technical services have been rendered. Deposits and other
prepayments are recorded as deferred revenue until revenue is recognized. NAC
does not have licensing or other arrangements that result in additional revenues
following the delivery of the video or a broadcast. Costs accumulated in the
production of the video, meeting services or broadcasts are deferred until the
sale and delivery are complete. Deferred production costs of $253,000 are
included as a component of other current assets at October 31, 2003.

         NAC recognizes revenue from designing and developing websites when the
customer accepts the completed project. Deposits and other prepayments are
recorded as deferred revenue until revenue is recognized. These contracts are
limited to the design and development of websites. Clients have the option to
engage NAC to maintain and upgrade their websites. These contracts are separate
from the website development and design agreements, and the related revenue is
recognized over the term of the contracts, which is generally up to one year.

         NAC recognizes revenue from developing and maintaining websites
pursuant to the requirements of Statement of Position No. 97-2, "Software
Revenue Recognition" ("SOP 97-2"), as amended by Statement of Position No. 98-9,
"Software Revenue Recognition with Respect to Certain Arrangements." Under SOP
97-2, revenue attributable to an element in a customer arrangement is recognized
when persuasive evidence of an arrangement exists and delivery has occurred,
provided the fee is fixed or determinable, collectibility is probable and the
arrangement does not require significant customization of the software. If at
the outset of the customer arrangement, NAC determines that the arrangement fee
is not fixed or determinable or that collectibility is not probable, NAC defers
the revenue and recognizes the revenue when the arrangement fee becomes due and
payable or, when collectibility is uncertain, as cash is collected.

      Cost of Revenues

         Cost of revenues consists of direct expenses specifically associated
with client service revenues. The cost of revenues includes direct salaries and
benefits, purchased products or services for clients, web hosting, support
services, shipping and delivery costs.

      Accounts Receivable

         NAC extends credit to clients in the normal course of business. NAC
continuously monitors collections and payments from clients and maintain an
allowance for doubtful accounts based upon historical experience and any
specific client collection issues that have been identified. Since accounts
receivable are concentrated in a relatively few number of clients, a significant
change in the liquidity or financial position of any of these clients could have
a material adverse impact on the collectability of the accounts receivable and
future operating results.

                                       21
<PAGE>

                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED


      Valuation of Long-lived Assets and Goodwill

         NAC reviews long-lived assets and goodwill for impairment whenever
events or changes in circumstances indicate that the carrying amount of these
assets may not be fully recoverable. When it is determined that the carrying
amount of long-lived assets and goodwill may not be fully recoverable,
impairment is measured by comparing an asset's estimated fair value to its
carrying value. The determination of fair value is based on quoted market prices
in active markets, if available, or independent appraisals; sales price
negotiations; or projected future cash flows discounted at a rate determined by
management to be commensurate with our business risk. The estimation of fair
value utilizing discounted forecasted cash flows includes significant judgments
regarding assumptions of revenue, operating and marketing costs; selling and
administrative expenses; interest rates; property and equipment additions and
retirements; and industry competition, general economic and business conditions,
among other factors.

         Management has determined that there was no impairment to our
long-lived assets and goodwill on the basis of a review of a discounted cash
flow analysis performed at the subsidiary level. If there is a material change
in the assumptions used in the determination of fair value or a material change
in the conditions or circumstances influencing fair value, NAC could be required
to recognize a material impairment charge.

      Self-Insurance Claims

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

      Income Taxes

         NAC recognizes deferred tax assets and liabilities based on differences
between the financial statement carrying amounts and the tax basis of assets and
liabilities. Loss carrybacks, reversal of deferred tax liabilities, tax planning
and estimates of future taxable income are considered in assessing the need for
a valuation allowance. At the time it is determined that NAC is unable to
realize deferred tax assets in excess of the recorded amount, an adjustment to
the deferred tax asset would increase income in the period such determination
was made. Likewise, should management determine that NAC would not be able to
realize all or part of its net deferred tax assets in the future, an adjustment
to the deferred tax assets would be charged to income in the period such
determination was made.


                                       22
<PAGE>

                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED


RESULTS FROM OPERATIONS FOR THE THREE MONTHS ENDED OCTOBER 31, 2003
  AS COMPARED TO THE THREE MONTHS ENDED OCTOBER 31, 2002

         General: As a consequence of the acquisition of The Campus Group
effective July 31, 2003 and the acquisition of OMI effective April 1, 2003, the
results of operations for the three months ended October 31, 2003 include the
operating results of The Campus Group and OMI (the "Acquired Companies") for the
entire period.

         Revenues and Costs of Revenues: Revenues and the related cost of
revenues for the three months ended October 31, 2003 are comprised principally
of revenues and related costs derived from the Acquired Companies' operations.
The average gross margin of the Acquired Companies for the three months ended
October 31, 2003 was 43.7% which is comparable to the average gross margins of
the Acquired Companies for the comparable period prior to NAC's acquisition.

         Selling, General and Administrative: Selling, general and
administrative expenses ("SG&A") include costs of three months of the Acquired
Companies' operations and NAC's executive, accounting and legal personnel,
occupancy, legal, professional, insurance and other general corporate overhead
costs. SG&A expenses increased $675,000 to $1.6 million for the three months
ended October 31, 2003 from $930,000 for the three months ended October 31,
2002. The increase in SG&A costs for the three months ended October 31, 2003,
was primarily due to $675,000 of SG&A expenses associated with the Acquired
Companies as NAC's non-Acquired Company SG&A expenses were stable period to
period.

         Interest Income from Investments: Interest income from investments is
principally the interest earned on NAC's investments in marketable securities,
commercial paper and money market accounts. Interest income from these
investments was $12,000 for the three months ended October 31, 2003 as compared
to $32,000 for the three months ended October 31, 2002. The decrease was
primarily due to the decrease in the weighted average investment balances for
the three months ended October 31, 2003.

         Income from AFC Investment: NAC accounts for its investment in AFC
using the equity method. For the three months ended October 31, 2003 and 2002,
NAC recorded income of $111,000 and $118,000, respectively, representing NAC's
share of AFC's net income for the three months ended September 30, 2003 and
2002, respectively.

                                       23
<PAGE>

                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED


         The following sets forth summarized operating results for AFC (in
thousands):

                                                Three Months Ended September 30,
                                               ---------------------------------
                                                  2003                    2002
                                               ----------             ----------
Revenues                                       $   1,375               $   1,529

Film rental                                          272                     420
Operating costs                                      636                     656
Depreciation and amortization                        214                     175
General and administrative expenses                   32                      42
                                               ----------             ----------
                                                   1,154                   1,293
                                               ----------             ----------
Net income                                     $     221               $     236
                                               ==========             ==========
NAC's proportionate share of net income        $     111               $     118
                                               ==========             ==========


         AFC's revenues decreased $154,000 for the three months ended September
30, 2003 as compared to the three months ended September 30, 2002, principally
as a result of the net effects of (i) a 16.4% decrease in attendance, (ii) an
increase of $51,000 in other, concession and cafe revenues and (iii) stable
ticket prices period-to-period. The attendance, and at times the ticket prices,
at AFC will vary depending on audience interest in, and the popularity of the
films it exhibits and other factors. Film rental, as a percentage of revenue,
decreased 7.7% to 19.8% from 27.5% for the three months ended September 30, 2003
and 2002, respectively. Film rental expense generally is a factor of a fixed
percentage rental rate per film multiplied by the number of tickets sold. AFC
experiences fluctuations in film rental expense, as a percentage of revenue,
depending upon the rental rate per film and the popularity of the film.
Operating costs, as a percent of revenue, increased 3.3% to 46.2% for the three
months ended September 30, 2003 as compared to 42.9% for the three months ended
September 30, 2002 due principally to an increase in revenues. The nature of
AFC's operating costs tend to generally be more fixed overhead-related costs and
advertising expenses.

         Income Taxes: Due to net operating losses and the availability of net
operating loss carryforwards, NAC's effective income tax rate was zero for the
three month periods ended October 31, 2003 and October 31, 2002. NAC 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.

                                       24
<PAGE>

                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED


RESULTS FROM OPERATIONS FOR THE NINE MONTHS ENDED OCTOBER 31, 2003
  AS COMPARED TO THE NINE MONTHS ENDED OCTOBER 31, 2002

         General: As a consequence of the acquisitions of the Acquired
Companies, the results from operations for the nine months ended October 31,
2003 include the operating results from (i) The Campus Group, acquired July 31,
2003, only for the three months ended October 31, 2003 and (ii) OMI, acquired
April 1, 2003, only for the seven month period ended October 31, 2003.

         Revenues and Costs of Revenues: Revenues and the related cost of
revenues for the nine months ended October 31, 2003 are comprised principally of
revenues and related costs derived from the Acquired Companies' operations. Pro
forma revenues, combining the revenues of NAC, OMI and The Campus Group, for the
nine months ended October 31, 2003 were $9.0 million as compared to pro forma
revenues of $10.7 million for the nine months ended October 31, 2002. The
decline in pro forma revenues for Fiscal 2004 of $1.6 million was principally
due to the nature and timing of completion of the client programs actually
scheduled for and completed during the period compared to the comparable period
in Fiscal 2003. The average gross margin for the period subsequent to the
acquisition of the Acquired Companies was 41.8% which is comparable to the
average gross margins of the Acquired Companies prior to NAC's acquisition.

         Selling, General and Administrative: SG&A expenses include costs of
seven months of OMI's operations, three months of The Campus Group's operations,
and nine months of NAC's executive, accounting and legal personnel, occupancy,
legal, professional, insurance and other general corporate overhead costs. SG&A
expenses increased $1.4 million to $4.0 million for the nine months ended
October 31, 2003 from $2.6 million for the nine months ended October 31, 2002.
The increase in SG&A costs for the nine months ended October 31, 2003, was
primarily due to $1.4 million in expenses associated with the Acquired
Companies.

         Interest Income from Investments: Interest income from investments is
principally the interest earned on NAC's investments in marketable securities,
commercial paper and money market accounts. Interest income from these
investments was $48,000 for the nine months ended October 31, 2003 as compared
to $117,000 for the nine months ended October 31, 2002. The decrease was
primarily due to the decrease in the weighted average investment balances for
the nine months ended October 31, 2003. In addition, during the nine months
ended October 31, 2003, NAC realized additional interest income of approximately
$451,000 as a result of a final determination of refund by the Internal Revenue
Service relating to certain NAC claims for a federal income tax refund and NAC's
resultant receipt of a refund of $3.5 million plus interest.

         Income from AFC Investment: NAC accounts for its investment in AFC
using the equity method. For the nine months ended October 31, 2003 and 2002,
NAC recorded income of $303,000 and $202,000, respectively, representing NAC's
share of AFC's net income for the nine months ended September 30, 2003 and 2002,
respectively.

                                       25
<PAGE>

                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED

         The following sets forth summarized operating results for AFC (in
thousands):

                                                 Nine Months Ended September 30,
                                               ---------------------------------
                                                  2003                    2002
                                               ----------             ----------
Revenues                                       $   4,566               $   4,338

Film rental                                        1,082                   1,155
Operating costs                                    2,147                   2,092
Depreciation and amortization                        637                     524
General and administrative expenses                   94                     127
                                               ----------             ----------
                                                   3,960                   3,898
                                               ----------             ----------
Net income                                      $    606                $    440
                                               ==========             ==========
NAC's proportionate share of net income         $    303                $    220
                                               ==========             ==========

         AFC's revenues increased $228,000 for the nine months ended September
30, 2003 as compared to the nine months ended September 30, 2002, principally as
a result of the net effects of (i) a 1.0% increase in average ticket prices,
(ii) an increase of $184,000 in other, concession and cafe revenues and (iii)
stable attendance period-to-period. The attendance, and at times the ticket
prices, at AFC will vary depending on audience interest in, and the popularity
of the films it exhibits and other factors. Film rental, as a percentage of
revenue, decreased 2.3% to 23.7% from 26.0% for the nine months ended September
30, 2003 and 2002, respectively. Film rental expense generally is a factor of a
fixed percentage rental rate per film multiplied by the number of tickets sold.
AFC experiences fluctuations in film rental expense, as a percentage of revenue,
depending upon the rental rate per film and the popularity of the film.
Operating costs, as a percent of revenue, was 47.0% for the nine months ended
September 30, 2003 as compared to 48.2% for the nine months ended September 30,
2002 due principally to an increase in revenues. The nature of AFC's operating
costs tend to generally be more fixed overhead-related costs and advertising
expenses.

         Income Taxes: Due to net operating losses and the availability of net
operating loss carryforwards, NAC's effective income tax rate was zero for the
nine-month period ended October 31, 2003 and October 31, 2002. NAC 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.

DISCONTINUED OPERATIONS

         For the three months ended October 31, 2003, NAC realized income a
$1,000 from discontinued operations. For the three months ended October 31,
2002, NAC incurred a loss from discontinued operations of $173,000 comprised
principally of professional service expenses incurred with the closing of the
auto finance and e-commerce operations. For the nine months ended October 31,
2003 and October 31, 2003, NAC incurred a loss from discontinued operations of
$11,000 and $27,000, respectively.


                                       26
<PAGE>

                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED


LIQUIDITY AND CAPITAL RESOURCES

         As a consequence of NAC's acquisition of The Campus Group effective
July 31, 2003, NAC issued to Mr. Campus and certain family trusts promissory
notes of $9.9 million and issued to a family trust a convertible promissory note
of $2.8 million. Of the $9.9 million in promissory notes issued by NAC, $6.5
million of the promissory notes ("Base Notes") bear interest at 5% per annum and
are repayable in quarterly installments according to a formula based upon the
future cash flows realized from The Campus Group over a period not to exceed
seven years. The remaining $3.4 million in promissory notes ("Trailing Notes")
issued by NAC bear interest at 5% per annum and are repayable in quarterly
installments, commencing upon the retirement of the Base Notes, according to a
formula based upon the future cash flows realized from The Campus Group over a
period not to exceed three years subsequent to the retirement of the Base Notes.
The $2.8 million convertible promissory note (i) bears interest at 5% per annum,
payable quarterly in cash or accumulating as principal at the election of NAC,
(ii) requires principal payments commence upon the retirement of the $9.9
million of Base Notes and the Trailing Notes and is then repayable in quarterly
installments according to a formula based upon the future cash flows realized
from The Campus Group over a period not to exceed three years and (iii) is
convertible at the option of the holder into shares of NAC common stock at a
base conversion price of $1.50 per share. The holder may not convert the
convertible promissory note into NAC common stock prior to repayment of the Base
Notes and the Trailing Notes. The promissory notes are secured by the capital
stock of the companies comprising The Campus Group.

         As a consequence of NAC's acquisition of OMI effective April 1, 2003,
NAC assumed $814,000 in bank debt and capital lease obligations to financial
institutions and issued a promissory note payable to Mr. Thompson in the amount
of $153,000.

         During 2001, OMI obtained a $300,000 bank term loan (the "Term Loan")
to finance certain capital expenditures. The Term Loan is payable in monthly
installments of $6,000, comprised of principal and interest, over a five year
term, expiring in July 2006. The Term Loan bears interest at the rate of 8.25%
per annum. In addition, during 2001 OMI obtained a $100,000 revolving credit
facility (the "Credit Facility") with a bank which must be renewed annually. The
Credit Facility bears interest at 2.5% per annum above the bank's prime rate.
The Term Loan and the Credit Facility are collateralized by substantially all of
OMI's assets and the personal guarantee of Mr. Thompson. Pursuant to the terms
of the Merger Agreement, NAC is seeking to obtain releases of Mr. Thompson's
personal guarantees from each financial institution. At October 31, 2003, OMI
had $168,000 outstanding under the terms of the Term Loan.

         On April 25, 2002, OMI obtained a $402,000 loan guaranteed by the U.S.
Small Business Administration (the "SBA Loan") to finance losses incurred as a
result of the September 11, 2001 terrorist attacks in New York City. At October
31, 2003, the SBA Loan of $402,000 is repayable in monthly installments of
$3,309 beginning in May 2004, with the last payment due in April 2017. The SBA
Loan bears no interest through May 2004 and at the rate of 4% per annum
thereafter.

         At October 31, 2003, the $95,000 promissory note payable to Mr.
Thompson is payable in monthly installments of principal and interest over a 36
month period expiring April 2006. The promissory note bears interest at 5% per
annum.

                                       27
<PAGE>

                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED


         OMI leases computer equipment under several different capital leases
with finance institutions with various payments terms, expiration dates and
imputed annual rates of interest. At October 31, 2003, amounts outstanding under
the capital leases were $80,000.

         For the nine months ended October 31, 2003, NAC's cash and cash
equivalents decrease $501,000 due to the net effects of (i) cash flows generated
from operations of $3.0 million, (ii) proceeds from AFC distributions of
$879,000, (iii) proceeds from the sale of marketable securities of $400,000
offset by (iv) cash used to acquire The Campus Group Companies of $3.2 million
and (v) the repayment of debt of $1.3 million. For the nine months ended October
31, 2003, NAC generated cash flows of $3.0 million for operating activities
principally as a result of the net proceeds of $3.5 million, plus accrued
interest, as a result of a final determination of refund by the Internal Revenue
Service relating to certain NAC claims for a federal income tax refund. On July
31, 2003, NAC used a portion of its cash resources, $2.8 million, and issued
$12.7 million in promissory notes and convertible note to consummate its
acquisition of The Campus Group. NAC also funded $861,000 of transaction costs
related to the acquisition of The Campus Group from its cash resources. For the
nine months ended October 31, 2002, NAC used cash flows of $3.3 million for
operating activities as NAC's payments for operating and general and
administrative expenses exceeded the cash flows from its investments in
marketable securities. NAC funded the negative operating cash flows from its
existing cash balances.

         NAC believes that the available cash and cash equivalents and
marketable securities totaling $2.0 million at October 31, 2003, the investment
income therefrom, the collection of the federal income tax refund of $2.1
million and any cash distributions from its investment in AFC and cash flow from
the Acquired Companies' operations will be sufficient to pay operating expenses,
existing liabilities, fund existing debt repayments and fund its activities
through the next twelve months as NAC explores new strategic business
alternatives. As discussed in Note 6 of Notes to Condensed Consolidated
Financial Statements, NAC is presently a defendant or nominal defendant in
various derivative shareholder complaints and various litigation matters
relating to NAC's discontinued auto finance and auto rental businesses. Although
NAC intends to vigorously defend each of the claims, no prediction can be made
with respect to their ultimate outcomes. Accordingly, no provision for any loss
or settlement that may occur has been recorded in the consolidated financial
statements. An adverse outcome could have a material adverse effect on NAC's
liquidity, financial condition or results of operations. Additionally, as
previously discussed, NAC's lack of external financing sources may limit its
ability to pursue strategic business alternatives being considered by NAC's
Board of Directors. Such limitations may have an adverse impact on NAC's
financial position, results of operations and liquidity.

NEW ACCOUNTING PRONOUNCEMENTS

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

                                       28
<PAGE>

                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED


December 2002. SFAS No. 146 was adopted by NAC effective February 1, 2003. At
the time of adoption, there was no material impact to NAC's financial
statements.

         In December 2002, the FASB issued SFAS No. 148, Accounting for
Stock-Based Compensation--Transition and Disclosure. SFAS No. 148 provides
alternative methods of transition for a voluntary change to the fair value based
method of accounting for stock-based employee compensation. In addition, SFAS
148 requires prominent disclosures in both annual and interim financial
statements about the method of accounting for stock-based employee compensation
and the effect of the method used on the reported results. The provisions of
SFAS No. 148 are effective for financial statements for fiscal years ending
after December 15, 2002. SFAS No. 148 was adopted by NAC effective February 1,
2003. At the time of adoption, there was no material impact to NAC's financial
statements.

         In January 2003, the FASB issued FASB Interpretation ("FIN") No. 46,
Consolidation of Variable Interest Entities. FIN No. 46 clarifies the
application of Accounting Research Bulletin No. 51, "Consolidated Financial
Statements," to certain entities in which equity investors do not have the
characteristics of a controlling financial interest or in which equity investors
do not bear the residual economic risks. The interpretation was immediately
applicable to variable interest entities ("VIEs") created after January 31,
2003, and to VIEs in which an enterprise obtains an interest after that date. It
applies in the fiscal year or interim period beginning after December 15, 2003,
to VIEs in which an enterprise holds a variable interest that was acquired
before February 1, 2003. The adoption of FIN No. 46 is not expected to have a
material impact on the consolidated financial statements of NAC.

         In May 2003, the FASB issued SFAS No. 150, Accounting for Certain
Financial Instruments with Characteristics of Both Liabilities and Equity. SFAS
No. 150 establishes standards for how an issuer measures certain financial
instruments with characteristics of both liabilities and equity and classifies
them in its balance sheet. It requires that an issuer classify a financial
instrument that is within its scope, such as an issue of preferred or common
shares that are subject to redemption at specified times or at the option of the
holder, as a liability when that financial instrument embodies an obligation of
the issuer. SFAS No. 150 is effective for financial instruments entered into or
modified after May 31, 2003, and otherwise is effective at the beginning of the
first interim period beginning after June 15, 2003. SFAS No. 150 was adopted by
NAC effective February 1, 2003. At the time of adoption, there was no material
impact to NAC's financial statements.

OTHER

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

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


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<PAGE>

FORWARD-LOOKING STATEMENTS

         Various statements made in this Item 2 and elsewhere in this Quarterly
Report on Form 10-Q concerning the manner in which NAC intends to conduct its
future operations, and potential trends that may impact its future results of
operations, are forward looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. NAC may be unable to realize its plan
and objectives due to various important factors, including, but not limited to,
the failure of the Board of Directors to promptly determine what strategic
business plan NAC should pursue, the failure of NAC to implement any such plan
due to its inability to identify suitable acquisition candidates or its
inability to obtain the financing necessary to complete any desired
acquisitions, or any adverse outcome of the pending shareholder actions or other
litigation.

ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

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

         As of October 31, 2003, as a result of the acquisitions of The Campus
Group and OMI, NAC has interest-bearing debt. The interest rate on each
financial instrument, except for OMI's Credit Facility, is generally fixed in
nature and accordingly do not create a market risk associated with increases in
interest costs resulting from changes in market rates. The OMI Credit Facility
charges interest at a variable rate of the institution's prime rate plus 2.5%.
As of October 31, 2003 there are no amounts outstanding under the Credit
Facility and therefore NAC's exposure to market risks, if any, is limited.

ITEM 4.   CONTROLS AND PROCEDURES

         In accordance with Item 307 of Regulation S-K promulgated under the
Securities Act 1933, as amended, and within 90 days of the date of this
Quarterly Report on Form 10-Q (the "Evaluation Date"), the Chief Executive
Officer and the Chief Financial Officer of NAC (the "Certifying Officers") have
conducted evaluations of NAC's disclosure controls and procedures. As defined
under Sections 13a-14(c) and 15d-14(c) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), the term "disclosure controls and procedures"
means controls and other procedures of an issuer that are designed to ensure
that information required to be disclosed by the issuer in the reports that it
files or submits under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the Commission's rules and forms.
Disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed by an
issuer in the reports that it files or submits under the Exchange Act is
accumulated and communicated to the issuer's management, including its principal
executive officer or officers and principal financial officer or officers, or
persons performing similar functions, as appropriate to allow timely decisions
regarding required disclosure. The Certifying Officers have reviewed NAC's
disclosure controls and procedures and have concluded that (subject to the
qualifications and disclosures set forth herein below) those disclosure controls
and procedures are effective as of the date of this Quarterly Report on Form
10-Q. In compliance with Section 302 of the Sarbanes-Oxley Act of 2002, (18
U.S.C. 1350), each of the Certifying Officers executed an Officer's
Certification included in this Quarterly Report on Form 10-Q.

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<PAGE>

         As of this Quarterly Report on Form 10-Q, there have not been any
significant changes in NAC's internal controls or in other factors that could
significantly affect these controls subsequent to the date of their evaluation,
including corrective actions with regard to significant deficiencies and
material weaknesses.






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<PAGE>

                                    PART II.
                                OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

Shareholder Complaints

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

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

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

                                       32
<PAGE>

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

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

         The parties in New York thereafter engaged in settlement negotiations
and the parties entered into a stipulation of settlement in December 2002,
proposing to settle all class and derivative claims. In January 2003, the New
York Supreme Court entered an order which, among other things, conditionally
certified a class of shareholders for settlement purposes, approved the form of
notice of the proposed settlement, and scheduled a hearing to approve the
settlement. Notice of the proposed settlement was given to the shareholders of
the Company and members of the class as per the Court's order in January and
February 2003. A hearing on the proposed settlement was held on October 15, 2003
and the New York Supreme Court approved the terms of the proposed settlement.
The parties are awaiting the Court's written Order and Judgment. In the Delaware
Consolidated Action, a motion to dismiss that Action was also filed in 2002 and
was denied by the Delaware court in January 2003. The Delaware court has stayed
proceedings in that action pending issuance of the New York court's order.

         No predictions can be made with respect to the outcome of these matters
and, accordingly, no provision for any loss or settlement that may occur has
been recorded in the consolidated financial statement

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

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

         NAC maintained and continues to maintain self-insurance for claims
relating to bodily injury or property damage from accidents involving the
vehicles rented to customers by its discontinued automobile rental operations.
NAC was, when required by either governing state law or the terms of its rental
agreement, self-insured for the first $1.0 million per occurrence, and for
losses in excess of $5.0 million per occurrence, for bodily injury and property
damage resulting from accidents involving its

                                       33
<PAGE>

rental vehicles. NAC was also self-insured, up to certain retained limits, for
bodily injury and property damage resulting from accidents involving NAC
vehicles operated by employees within the scope of their employment. In
connection therewith, NAC established certain reserves in its financial
statements for the estimated cost of satisfying those claims.

         NAC is named as defendant in a self-insurance action Darrell Smith and
Aaron Simpson ("Plaintiffs") v. John J. Bennett, ARAC, Country Mutual Insurance
Company and Atlanta Casualty Insurance Company in Cook County (State) Court of
Illinois. This matter arises out of an incident in which an ARAC car renters'
son, while driving the rental vehicle, was involved in a fatal accident and with
serious injuries to Plaintiffs, passengers in the vehicle. Initially, the
Plaintiffs appeared to be recovering well from the injuries sustained. However,
subsequently plaintiff Simpson underwent an accident-related surgery on his back
for removal of a shunt, during which nerves in the spine were severed causing
paraplegia. The Plaintiffs are suing for damages resulting from their injuries
and the subsequent paraplegia suffered by plaintiff Simpson. The doctor and
hospital that performed the surgery were also named as defendants by Plaintiffs
and have been impleaded by NAC under a theory of medical malpractice. Damages
alleged in the complaint are not specified, although in discovery Plaintiffs
have indicated they are seeking millions of dollars in compensatory and other
damages. The matter is scheduled for trial during the first half of 2004.

         NAC maintains a number of defenses relating to this matter. NAC has
almost exhausted its self-insured retention of $500,000 on this case and NAC
attempted to get its excess carrier, the TIG Insurance Company ("TIG"), to take
over the defense of this action and indemnify NAC up to the policy limits.
However, as a result TIG filed a suit (TIG Insurance Company v. Darrell Smith,
Aaron Simpson and NAC in the United States Court for the Northern District of
Illinois) for a declaratory judgment seeking a ruling that it has no liability
as an "excess insurer" of NAC in connection with the Smith and Simpson action
and that under Illinois law, NAC's (and thereafter TIG's) financial
responsibility is capped at an amount less than what the Plaintiffs are seeking
in the state court action. TIG filed a motion for summary judgment on the same
grounds, arguing that it has no liability to NAC under such insurance policy.
NAC filed a motion for summary judgment, asserting that it has no liability to
Smith and Simpson; and that if there is any liability it is capped under
Illinois state law, or, if not capped, then TIG's excess insurance coverage
applies. Smith and Simpson filed their own cross-motion for summary judgment,
asserting that NAC is liable for Smith and Simpson's injuries and that NAC's
liability is not capped under Illinois law. On February 3, 2003, the Court
granted the motions of TIG and NAC for summary judgment, and denied the motion
for summary judgment of Smith and Simpson. The Court concluded that NAC bears no
financial responsibility to Smith and Simpson because, under the express terms
of the rental agreement at issue, Bennett was not a listed additional driver on
the underlying rental contract. The Court further concluded that TIG, as NAC's
excess insurance carrier, has no responsibility to defend or indemnify the
Bennett estate. Motions for reconsideration were filed by Smith and Simpson in
February and March but were denied by the Court. On April 11, 2003, Smith and
Simpson filed a Notice of Appeal of the Courts' decisions. NAC intends to
vigorously oppose this appeal.

         In November 2003, the plaintiff Simpson reached an agreement in
principle to settle with all parties against whom he had claims. Definitive
agreements are being drafted, pursuant to which all of plaintiff Simpson's
claims against NAC will be dismissed with prejudice without any further
liability or cost to NAC. The plaintiff Smith is continuing to pursue his claims
and appeals.

         Because of the uncertainties related to these two matters, as well as
several smaller legal proceedings involving NAC's former rental operations and
self-insurance claims, it is difficult to project with precision the ultimate
effect the adjudication or settlement of these matters will have on NAC. At
October 31, 2003, NAC had accrued $445,000 to cover all outstanding
self-insurance liabilities. As additional information regarding NAC's potential
liabilities becomes available, NAC will revise the estimates as appropriate.

                                       34
<PAGE>

Other Litigation

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




                                       35
<PAGE>

ITEM  6.  EXHIBITS AND REPORTS ON FORM 8-K

     A) EXHIBITS

EXHIBIT                                                                  PAGE
NUMBER                     TITLE OF EXHIBIT                              NUMBER
--------------------------------------------------------------------------------
31.1     Officer's Certification Pursuant to Section 302 of the
         Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)                       37
31.2     Officer's Certification Pursuant to Section 302 of the
         Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)                       38
99.1     Certification of Principal Executive Officer Pursuant to
         Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)    39
99.2     Certification of Principal Financial Officer Pursuant to
         Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)    40


     B) REPORTS ON FORM 8-K

          On October 14, 2003 NAC filed a Current Report on Form 8-K to report
          the acquisition of The Campus Group.



                                   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:     December 18, 2003             By: /s/ James J. McNamara
      ------------------------              ------------------------------------
                                        James J. McNamara
                                        Chairman of the Board and Chief
                                        Executive Officer


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



                                       36