NowAuto Group, Inc. Announces Second Quarter Fiscal Results

Company sees significant drop in bad debt charges in a challenging economic environment 


TEMPE, Ariz., Feb. 14  /PRNewswire-FirstCall/ -- NowAuto Group, Inc. (OTC:NAUGOTC:andOTC:PinkOTC:Sheets:OTC:NWAU) (BULLETIN BOARD: NAUG and Pink Sheets: NWAU)  today announced results for its fiscal 2008 second quarter ended December 31, 2007. The Company reported revenue of approximately $1.1 million and a net loss of $0.03 per diluted share versus revenue of approximately $2.1 million and a net loss of $0.06 per diluted share in the prior year. During the quarter ended December 31, 2007 gross margin increased to 50% reflecting increased finance income and higher margin sales. Bad debt charges saw a year over year decline from approximately $580,000 to $237,000. As previously reported, the switch from sales to leases and stricter underwriting standards have resulted in lower revenues, but improved gross margins and significantly declining bad debt costs. In addition, the Company experienced lower volume during the quarter due to significantly lower contract purchases, caused by lower credit quality and sales volume.

Charge-offs and defaults improved significantly over the prior quarter and year in spite of challenging economic conditions. Net Contract Receivables increase 8% over the prior year. Fixed costs were further reduced from the prior quarter. Excluding bad debt charges, the Company's loss for the second quarter was less than $0.01 per share.

"The present condition of the sub-prime and below sub-prime auto market has continued to impact our industry and our company," said CEO Scott Miller. "While our emphasis is always on collections, our challenge in the current environment is to aggressively work with our customers to maintain active contracts. Efforts began in the September quarter to maintain contracts have resulted in significantly improved bad debt charges over the prior quarter and year. Our commitment to customers and shareholders alike remains; NowAuto will do whatever it can to maintain productive contracts without placing imprudent demands on our customers," Miller said.

"Extraordinary efforts have been made over the past several months to improve our bottom line. Now we are beginning to see the results and are looking forward to stronger results in the future," said Faith Forbis, CFO.

"Critical in this environment is conditioning and maintaining our vehicles, both before as well as after the sale," said Tino Valenzuela, Chief Operating Officer. "That is why we have invested in a new vehicle conditioning center that opened December 1, 2007. While this will serve our customers by providing lower cost vehicle maintenance and repair, we expect this part of our business to be a profit center by the end of fiscal 2008," stated Valenzuela.

"As previously announced, we have taken significant strides in identifying an acquirer," stated Miller. "While, we hope to be in a position to make a public announcement in coming weeks, it is more important that the best candidate be chosen and completion of due diligence be done before any announcement is made. Consummation of a transaction, if there indeed is one, will not likely occur until later in 2008. Our goal is to find the candidate that offers to our shareholders the best prospects for the future," Miller added.

About NowAuto Group, Inc.

NowAuto Group, Inc. operates three buy-here-pay-here used vehicle dealerships in Arizona. The Company manages all of its installment finance contracts and purchases installment finance contracts from a select number of other independent used vehicle dealerships. Through its subsidiary, NavicomGPS, Inc. the company markets GPS tracking devices, primarily to independent used vehicle dealerships.

Note to Investors

This press release contains forward-looking information within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Act of 1934, and is subject to the safe harbor created by those sections. The forward-looking information is based upon current information and expectations regarding NowAuto Group, Inc. These estimates and statements speak only as of the date on which they are made, are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecasted in such forward-looking statements.

NowAuto Group, Inc. assumes no obligation to update the information contained in this press release. NowAuto Group, Inc.'s forward-looking statements in this press release and future results may be materially impacted by any number of factors, any or all of which could have a negative impact on sales, operating results, financial and budgetary constraints. NowAuto Group, Inc.'s future results may also be impacted by other risk factors listed from time to time in its SEC filings, including, but not limited to, the Company's Form-QSBs and its Annual Report on Form 10-K. The statements made herein are independent statements of NowAuto Group, Inc. The inclusion, if any, of any third parties does not represent an endorsement of any NowAuto Group, Inc. products or services by any such third party.

For further information contact NowAuto Group, Inc. or visit the Company's Web site at http://www.nowauto.com/. 

DATASOURCE: NowAuto Group, Inc.



CONTACT:  Randy Humphrey, NowAuto Group, Inc., [phone],





Web site:  http://www.nowauto.com/ 

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