WTEC Research Note

Research Note

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

WARRANTECH ANNOUNCES RENEWAL AGREEMENT WITH MICRO CENTER
THREE LARGEST CONSUMER PRODUCTS HAVE NOW RENEWED
STRONG BUY RECOMMENDATION REITEREATED

Warrantech Corporation announced on July 11, 2002, that it has signed a three-year extension of its business agreement with the Micro Center, the retail arm of Micro Electronics of Hilliard, Ohio. Micro Center has nineteen large-format retail stores in major metropolitan locations and its "visual store" - Micro Center Online. Micro Center carries 36,000 computer products and had sales approaching $1.0 billion in the year 2001.

SUMMARY AND CONCLUSION:

Not only is Warrantech reporting major new international and domestic contracts (See Research note dated 6/14/02) It has successfully signed renewal agreements with its three largest customers, i.e., Ultimate Electronics, Inc. in December 2001, and BrandsMart USA in June 2001. We expect that revenues and earnings from the new business plus the renewal accounts will continue to grow and the Company should easily report revenue and earnings in line with our estimates of revenues for FY3/31/03 of $42.0 million up 16% from FY3/31/02 of $36.2 million and EPS of $0.29 up over 160% from FY3/31/02 of $0.11.

Warrantech has crept up 11% since our last Research Note, even with the general weak market environment. At its present prices, the stock still only sells for a price earnings ratio of 2.3 and we continue to believe Warrantech is a compelling buy. The STRONG SPECULATIVE BUY recommendation is reiterated. Our price target of $1.75 may well turn out to be conservative and we will review our recommendation after the release of operating results for the six month period of FY3/31/03 ending 6/30/02. It is our firm opinion that investors who take this opportunity to purchase Warrantech Corporation are purchasing a stock in a Company with minimum downside risk and major upside rewards.

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.