WTEC Research Note

Warrantech Corporation (WTEC)
By: Richard W. West, CFA

WARRANTECH ANNOUNCES 25% INCREASE IN AUTOMOTVE BUSINESS
FUELED BY WARRANTY PROGRAM

STRONG SPECULATIVE BUY RECOMMENDATION REITEREATED

July 2, 2002. Fueled by the recently introduced reinsurance program with Automotive Investment Group, Warrantech Corporation's automotive business has increased 26% since the introduction on January 1, 2002. New warranty contracts through this program are currently exceeding 2000 per month, a 20% increase in volume for Warrantech's Automotive Division. The program is insured through Heritage Insurance Risk Retention Group and several new clients have signed up for this program.

Warrantech continues to report positive news for its business. However, in the current market environment, the current and future positive fundamentals of Warrantech appear to be ignored. We continue to "pound the table" for Warrantech, since we believe Warrantech is a compelling buy and we reiterate our Strong Speculative Buy recommendation. Based on our estimated EPS of $0.29 for FY2003, the stock trades only at a 2.2 price earnings ratio. We cannot stress enough our belief that Warrantech's current price is impacted by the following: (1) the fact that the common stock is listed on the Bulletin Board and sells for less than $1.00; and (2) the general market environment. It is our opinion that a purchase or the common stock of Warrantech at these levels provides investors with an investment that holds minimum downside risk and major upside rewards. We reiterate our Strong Speculative Buy on Warrantech Corporation and our price target of $1.75 for a 12 to 18-month timeframe.

J.M.Dutton & Associates, LLC. John M. Dutton, President and Supervisory Analyst, 1129 Manning Drive, Suite 310, El Dorado Hills, CA 95762 Phone (916) 941-4985, Fax (978) 418-6422 Email: [email protected] Web site: www.JMDutton.com

Information, opinions or recommendations contained in this research note are submitted solely for advisory and information purposes. The information used and statements of fact made have been obtained from sources considered reliable but we neither guarantee nor represent the completeness or accuracy. Such information and the opinions expressed are subject to change without notice. This research note is not intended as an offering or a solicitation of an offer to buy or sell the securities mentioned or discussed. Neither the Firm, its principals, nor the assigned analysts own or trade shares of any company covered. The Firm does not accept any equity compensation. Anyone may enroll a company for research coverage, which costs US $25,000 prepaid for one-year. Reports are performed on behalf of the public, and are not a service to any company. The analysts are responsible only to the public, and are paid in advance to eliminate pecuniary interests and insure independence. Please read full disclosure and other reports and notes on the Company at www.JMDutton.com.