Improving Margins and New Business Lines

Phoenix, Ariz., October 6, 2010. NowAuto Group, Inc. (NAUG:BB and NWAU.PK) today announced results for its fiscal year ended June 30, 2010. The Company reported revenue of $5.1 million and a net loss of $0.20 per diluted share versus revenue of approximately $5.4 million and a net loss of $0.24 per diluted share in the prior fiscal year. The decrease in revenue in fiscal 2010 was due to lower sales. Gross margin increased during fiscal 2010 to 58% up from 45% in the prior year as a result of the new enterprise system that is more efficient at capturing cost and incorporating them in the sales price.

Contract receivables, including deferred revenue from lease contracts, increased 2.1% from the prior year. There was a one-time write off that took place during the year. Exclusive of that event, contract receivables increased by 9.7%.

The markets served by the Company continue to experience high unemployment and a severely depressed real estate market. Customers in the Company’s primary markets, construction and retail continue to experience a challenging environment.

“The present condition of the sub-prime and below sub-prime 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 maximize sales while aggressively work with our customer to maintain active contracts. New finance programs, new businesses and changes in marketing and advertising yielded positive results. Nevertheless, we expect a difficult environment for the foreseeable future. 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.

We are seeking to broaden our customer base and increase repeat business using new customer retention and reward programs” said Chief Financial Officer Faith Forbis. “We believe programs, combined with an improved interest rate environment, will boost fiscal 2011 sales.”

“During the second quarter of fiscal 2010 we will be launching new business lines complimentary to our existing operations. We expect minimal start-up and operating expenses for these new lines of business” said Chief Operating Officer Theodore Valenzuela. “While we do not expect substantial contribution to our top line in the first year, we believe these new lines of business will improve the bottom line in fiscal 2012” Valenzuela said.

About NowAuto Group, Inc.

NowAuto Group, Inc. operates two 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.

The following information was filed by Nowauto Group, Inc. (NAUG) on Thursday, October 7, 2010 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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