1214933--3/9/2007--MANCHESTER

related topics

{stock, price, share}

{acquisition, growth, future}

{debt, indebtedness, cash}

{condition, economic, financial}

{interest, director, officer}

{competitive, industry, competition}

{loan, real, estate}

{product, market, service}

{loss, insurance, financial}

{financial, litigation, operation}

{stock, price, operating}

{personnel, key, retain}

{cost, regulation, environmental}

Risks Related To Our Company We have recently changed our business to become an operator of Buy-Here/Pay-Here automobile dealerships. Therefore, our past performance cannot be relied upon as an indication of future results. A change in market interest rates could have an adverse effect on the Company s profitability. For our Company to pursue its strategy for growth, we will need to raise additional funds either through borrowing or the issuance of equity or convertible debt securities. If we are unable to obtain supplemental funding our business could be materially harmed. We have a high level of indebtedness which will require us to divert much of our cash flow to service our debt costs. Our inability to service payments due on our indebtedness would adversely affect any investment in the Company. If the Company raises additional funds through the issuance of equity or convertible debt securities, the ownership of current shareholders will be diluted. Should the Company borrow funds under the Commitment to make additional Acquisitions, the Company will be burdened with debt with significant interest rates. The failure to manage growth will create risks. Should we fail to manage growth effectively, the future expansion of the Company s operations may lead to losses. The Company s dependence on management creates risks. The loss of our experienced officers and key employees could adversely affect our business. Risks Related To Our Company Business And The automobile industry is a mature and cyclical business sensitive to changing economic conditions. A lack of growth in the industry, coupled with possible downturns in the future, may result in declining profits and share price. We operate in a highly competitive environment. Our current competitors may adversely affect the results of our operations by attracting our potential customers. There are low barriers to the entry of market competitors. New competitors may adversely affect the results of our operations by attracting our potential customers. The Company s business model is evolving. Should our model fail to adapt, this could adversely affect our operations. There will be fluctuations in quarterly operating results and margins caused by the seasonality of our business. As a result, our stock price may fluctuate accordingly. Competition from e-commerce automotive retailing may diminish our profit margins. Such decline in profit margins would cause our stock price to fall. We depend on successful acquisitions of vehicle inventory. Should we fail to acquire the appropriate inventory, our business will be adversely affected. We may become subject to legal and administrative proceedings. Should we not prevail in such proceedings, the costs to our Company could be considerable. We are subject to extensive governmental regulation. Such regulation may adversely affect the results of our operations. In connection with our recent acquisition of the Buy-Here/Pay-Here business, we will have to obtain used car sales business permits reflecting the change of ownership. The Company is contemplating additional acquisitions and business transactions. These acquisitions and transactions may have a negative effect on our business and may cause the value of our stock to go down. The Company is and will continue to be exposed to the risks of sub-prime sector lending. Such risks may adversely affect our profits and the valuation of our stock price. There are risks associated with security interests. These risks could cause losses that might adversely affect our business. There are risks that there could be restrictions on collateral recoveries. If we are unable to recover funds owed, the Company could be adversely effected. The bankruptcy regime currently in effect creates risks for the Company. A failure of our ability to collect moneys owed as a result of bankruptcy law could have a material adverse effect on our business. There exists the risk of increases in delinquencies. Should delinquencies increase, there may be a material adverse effect on the Company s results of operations. There exists risk related to certain limitations on interest payments and repossessions. Such limitations may cause the Company s profits to decline. There are risks relating to the geographic concentration of the Company s activities. In the event of an economic downturn in the region, this lack of diversification would prevent the Company from mitigating losses elsewhere. Risks Related To Investing In Our Common Stock Our growth strategy may cause dilution to existing shareholders. This may adversely affect the Company s stock price. The possibility of future sales of our common stock create risks. Additional sales of the Company s common stock may depress the price of the stock. Investors may have difficulty selling the common stock. Investors may therefore lose all or a significant portion of their investment. The Company s uncertain liquidity creates risks. This may deter potential investors, and depress the price of our stock. We do not anticipate paying cash dividends. This may deter certain investors and adversely affect our stock price.

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1214933--3/9/2007--MANCHESTER_INC