1264707--2/27/2006--ASSET_ACCEPTANCE_CAPITAL

related topics

{capital, credit, financial}

{personnel, key, retain}

{regulation, change, law}

{cost, operation, labor}

{tax, income, asset}

{condition, economic, financial}

{control, financial, internal}

{operation, international, foreign}

{stock, price, operating}

{competitive, industry, competition}

{acquisition, growth, future}

{product, market, service}

Our ability to collect on our purchased receivables may suffer if the economy suffers a material and adverse downturn for a prolonged period. We generally account for purchased receivable revenues using the interest method of accounting in accordance with U.S. Generally Accepted Accounting Principles, which requires making reasonable estimates of the timing and amount of future cash collections. If the timing and actual amount recovered by us is materially lower than our estimates, it would cause us to recognize impairments and negatively impact our earnings. We are required to maintain compliance with Section 404 of Sarbanes Oxley for the year ended December 31, 2005 and thereafter. If we are unable to maintain compliance with Section 404 or if the costs related to maintaining compliance are significant, our profitability and our stock price could be negatively affected. We may not be able to continue to acquire charged-off consumer receivables in sufficient amounts to operate efficiently and profitably. We may not be able to collect sufficient amounts on our charged-off consumer receivables, which would adversely affect our results of operations. We experience high turnover rates for our account representatives and we may not be able to hire and retain enough sufficiently trained account representatives to support our operations. We face intense competition that could impair our ability to grow and achieve our goals. Our performance may be adversely affected by Internal Revenue Code Section 6050P and the underlying Treasury Regulations and the costs related to compliance therewith. Our growth strategy includes acquiring charged-off receivable portfolios in industries in which we have little or no experience. If we do not successfully acquire and collect on these portfolios, revenue growth may slow and our results of operations may be materially and adversely affected. Our strategy may include the opening of new call centers in selected locations through the acquisition of assets of businesses and the training and integration of existing account representatives into our business. If we open new call centers and do not successfully acquire assets of businesses and train and integrate new account representatives into our business, our results of operations would be negatively affected. Historical operating results and quarterly cash collections may not be indicative of future performance. Our collections may decrease if bankruptcy filings increase or if bankruptcy laws or other debt collection laws change. Failure to effectively manage our growth could adversely affect our business and operating results. We are dependent on our management team for the adoption and implementation of our strategies and the loss of their services could have a material adverse effect on our business. Our ability to recover on our charged-off consumer receivables may be limited under federal and state laws. Our growth strategy may, to a limited extent, include the acquisition of portfolios in selected countries located outside of the United States. If we expand our operations outside of the United States, our international acquisitions could subject us to risks that could have a material adverse effect on our business.

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1264707--2/27/2006--ASSET_ACCEPTANCE_CAPITAL_CORP