WTEC Research Note

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

Warrantech Announces Five-Year Agreement
With U.S. Operations Of Royal & Sun Alliance

Warrantech's Automotive Sevice Contract Business
Up Over 15% For First Month Of Fy 2003

Strong Buy Recommendation Reitereated

Warrantech announced on June 24, 2002 the signing of a five-year agreement with Royal & SunAlliance USA, the U.S. operations of London-based Royal & Sun Alliance Insurance Group plc, one of the world?s largest multi-line insurance companies. Under this contract, Warrantech will administer the claims of a portfolio of over 40,000 vehicle service contracts. Royal & SunAlliance USA offers an array of insurance products and programs for multinational companies in addition to small and mid-size businesses and consumers throughout the U.S.

SUMMARY:

Warrantech also announced that their automotive service division had booked more contracts in the past quarter than any other three-month period in the prior three years. Further, the Company estimates that its automotive service contract business is up 15% for the first month of FY 2003 vs. the first month of FY2002.

At its present prices, we continue to believe Warrantech is a compelling buy and we reiterate our STRONG SPECULATIVE BUY recommendation. Based on our estimated EPS of $0.11 for the year ended 3/31/02 and our estimated EPS of $0.29 for the year ended 3/31/03, the stock is now trading at a 5.6 price earnings ratio for the year ended 3/31/02 and 2.1 price earnings ratio for year ended 3/31/03. We firmly believe that Warrantech's current price is impacted by the fact that the common stock is listed on the Bulletin Board and the general market malaise and the fundamentals are not being recognized. Investors who take this opportunity to purchase Warrantech are purchasing a speculative stock with minimum downside and major upside potential. We reiterate our Strong Speculative Buy on Warrantech Corporation and out price target of $1.75 for a twelve to eighteen-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.