1082084--3/14/2008--BROOKE_CAPITAL

related topics

{financial, litigation, operation}

{loss, insurance, financial}

{competitive, industry, competition}

{system, service, information}

{capital, credit, financial}

{loan, real, estate}

{personnel, key, retain}

{stock, price, share}

{condition, economic, financial}

{cost, operation, labor}

{customer, product, revenue}

{stock, price, operating}

{acquisition, growth, future}

{regulation, government, change}

{debt, indebtedness, cash}

{control, financial, internal}

{investment, property, distribution}

{operation, natural, condition}

{cost, contract, operation}

{tax, income, asset}

{cost, regulation, environmental}

{regulation, change, law}

Carrier override and contingent or profit sharing commissions are difficult to predict, and any decrease in our receipt of such payments will adversely affect us. Potential litigation and regulatory proceedings regarding commissions, fees, contingency payments, profit sharing and other compensation paid to brokers or agents could materially adversely affect our financial condition. Our business is impacted by the cyclical pricing of property and casualty insurance, which may adversely affect our franchisees performance and, thus, our financial performance. We may not be able to successfully convert existing agencies into new franchises. We are dependent on key personnel. Our business, results of operations, financial condition or liquidity may be materially adversely affected by errors and omissions. Termination of our professional liability insurance policy would adversely impact our financial prospects and our ability to continue our relationships with insurance companies. If we fail to maintain an effective system of internal controls, including those internal controls impacted by the upgrade of our information technology, we may not be able to accurately report our financial results or prevent fraud. As a result, current and potential stockholders could lose confidence in our financial reporting, which could harm our business and the trading price of our stock. Our dependence on initial franchise fees creates an incentive for us to extend credit to borrowers that may not meet our underwriting guidelines. Because a significant part of our insurance-related revenues and loans derive from operations located in five states, our business may be adversely affected by conditions in these states. If we fail to effectively manage our growth, our financial results could be adversely affected. We may not achieve the same levels of growth in revenues and profits in the future as we have in the past. Our reliance on the Internet could have a material adverse effect on our operations and our ability to meet customer expectations. Our network may be vulnerable to security breaches and inappropriate use by Internet users, which could disrupt or deter future use of our services. We are in highly competitive markets, which could result in reduced profitability. Our management, facilities and labor force may be insufficient to accommodate expected growth. We compete in highly regulated industries, which may result in increased expenses or restrictions in our operations. We are subject to franchise law and regulations that govern our status as a franchisor and regulate some aspects of our franchise relationships. Our ability to develop new franchise locations and to enforce contractual rights against franchisees may be adversely affected by these laws and regulations, which could cause our franchise revenues to decline and adversely affect our growth strategy. A significant factor of our business strategy involves the ability and willingness of our affiliate, Aleritas, in funding loans to our franchisees. We share brand name identity with Brooke Corporation and other affiliates. Most of the advances we make are to privately owned small and medium-sized companies which present a greater risk of loss than advances to larger companies. The expansion of our insurance company operations will be dependent upon the availability of outside financing. Insurance company operations could be disrupted by the failure of their information technology and telecommunications systems because they are dependent on these systems. Our insurance company s ability to earn profits may be restricted by comprehensive regulation. Insurance company operations could be adversely affected if regulation becomes more extensive in the future. Insurance company operations failure to meet minimum capital and surplus requirements could subject them to regulatory action. Insurance company operations profitability could be adversely affected by negative developments and cyclical changes in the non-standard personal automobile industry because it has a concentration in this industry. Our insurance company operations profitability could be adversely affected by competition. Insurance company operational success depends on their abilities to price accurately the risks they underwrite. Insurance company operations could incur additional charges to earnings if its actual losses and loss adjustment expenses exceed loss and loss adjustment expense reserves. Insurance company operations, financial condition and results of operations could be adversely affected if they are not successful in reducing risk and increasing underwriting capacity through reinsurance arrangements. Insurance company revenues and business operations could be adversely affected by new pricing, claim and coverage issues emerging in the automobile insurance industry. Insurance company operations, financial results and capital requirements could be adversely affected if they fail to pay claims accurately. Our ability to implement our business strategy could be adversely affected by our insurance company subsidiaries inability to retain and recruit qualified personnel. Insurance company operations financial results could be adversely affected by litigation. Insurance company operations investment portfolios could be adversely affected by adverse securities market conditions. Severe weather conditions and other catastrophes may result in an increase in the number and amount of claims filed against insurance company operations. Policy lapses in excess of those actuarially anticipated would have a negative impact on our financial performance. Sales of our products may be reduced if we are unable to attract and retain marketing representatives or develop and maintain distribution sources. We may be required to accelerate the amortization of deferred acquisition costs which would increase our expenses and reduce profitability. Failure to protect confidential information and privacy could result in the loss of customers and reductions in our profitability and subject us to fines and penalties. General economic, financial market and political conditions may adversely affect our results of operations and financial condition. Our debt instruments contain restrictive covenants and other requirements that may limit business flexibility by imposing operating and financial restrictions on operations. Risks Related to Our Common Stock Brooke Corporation is able to exert significant control over us and may act in a manner that is adverse to our other stockholders interests. Our relatively low trading volume may limit stockholders ability to sell their shares. The price of our common stock may fluctuate significantly, which may make it difficult for stockholders to resell common stock when they want or at a price they find attractive.

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1082084--3/14/2008--BROOKE_CAPITAL_CORP