314340--3/31/2006--SECURITY_CAPITAL

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{product, market, service}

{cost, operation, labor}

{regulation, government, change}

{competitive, industry, competition}

{condition, economic, financial}

{financial, litigation, operation}

{tax, income, asset}

{loan, real, estate}

RISK FACTORS SPECIFIC TO OUR EMPLOYER COST CONTAINMENT AND HEALTH SERVICES SEGMENT Changes in government regulations in the State of Ohio and other states in which we operate could significantly affect and change the way we do business in those states. If the Company fails to manage its growth effectively, it may be unable to execute its business plan, maintain high levels of service or adequately address competitive challenges. A change in market dynamics could negatively impact the Company. The Company faces competition for staffing, which may increase its labor costs and reduce profitability. The Company s failure to compete successfully in our industry may limit our ability to retain customers or attract new customers, which could adversely affect our financial condition, results of operations and cash flows. An adverse decision in the complaint filed by the Cleveland Bar Association against CMI alleging that certain practices by CMI constituted the unauthorized practice of law could have a material adverse effect on our financial condition, results of operations and cash flows. RISK FACTORS SPECIFIC TO OUR Deterioration in economic conditions, including, but not limited to, an increase in the unemployment rate or a recession, could have an adverse effect on our financial condition, results of operations and cash flows. Our inability to successfully compete in the childcare industry could impact our ability to attract new franchisees and retain current franchisees, impede the growth of our business and significantly impact our financial condition, results of operations and cash flows. Participants in the childcare industry, including Primrose and our franchisees, may be subject to certain claims, allegations or litigation involving the care, development and supervision of young children. Such claims, allegations or litigation could significantly damage the reputation of the childcare provider and have adverse effects on the childcare industry, even if such claims, allegations or litigation are proven false. We and our franchisees are subject to various federal, state and local laws as well as to a variety of regulatory provisions relating to zoning of school sites, sanitation, curriculum, health and safety. The failure to comply with these laws and regulations could result in significant costs to the Company and disruptions to the business. RISK FACTORS SPECIFIC TO OUR Our businesses could be materially adversely impacted by uncertainty related to our formal sale process. The pursuit of the formal sale process has consumed a substantial portion of the time and attention of our management, and certain aspects of the process may impact how our businesses are conducted, which may have an adverse effect on our businesses.

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314340--3/31/2006--SECURITY_CAPITAL_CORP/DE/