UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C. 20549-1004


(Mark One)
[X]                                 FORM 10-Q
                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934


                  For the Quarterly Period Ended June 30, 2004

                                       OR

[ ]             TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

         For the Transition Period from                    to
                                        ------------------    ------------------

         Commission File Number                  0-13084
                                ------------------------------------------------

                             WARRANTECH CORPORATION
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

                Delaware                                     13-3178732
--------------------------------------------------------------------------------
      (State or other jurisdiction of                     (I.R.S. Employer
       incorporation or organization)                    Identification No.)

    2200 Highway 121, Suite 100, Bedford, TX                         76021
--------------------------------------------------------------------------------
    (Address of principal executive offices)                      (Zip Code)

Registrant's telephone number, including area code         (800) 544-9510
                                                   -----------------------------

--------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last year)

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]

         Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act.)   Yes [ ] No [X]

         Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.

               Class                              Outstanding at July 30, 2004
---------------------------------------         --------------------------------
Common stock, par value $.007 per share                15,398,674 shares
<PAGE>

                     WARRANTECH CORPORATION AND SUBSIDIARIES


                                    I N D E X
                                    ---------


                                                                        Page No.
                                                                        --------
                         PART I - Financial Information


Item 1:  Financial Statements

    Condensed Consolidated Statements of Operations -
           For the Three Months Ended June 30, 2004 and 2003 (Unaudited)...   2

    Condensed Consolidated Balance Sheets at June 30, 2004
           (Unaudited) and March 31, 2004..................................   3

    Condensed Consolidated Statements of Cash Flows
           For the Three Months Ended June 30, 2004
           and 2003 (Unaudited)............................................   5

    Notes to Condensed Consolidated Financial Statements...................   6

Item 2:  Management's Discussion and Analysis of
           Financial Condition and Results of Operations ..................  10

Item 3.  Quantitative and Qualitative Disclosures About Market Risk........  14

Item 4.  Controls and Procedures...........................................  14



                           PART II - Other Information


Item 1:  Legal Proceedings.................................................  15

Item 2:  Changes in Securities.............................................  15

Item 3:  Defaults Upon Senior Securities...................................  15

Item 4:  Submission of Matters to a Vote of Security Holders...............  15

Item 5:  Other Information.................................................  15

Item 6:  Exhibits and Reports on Form 8-K..................................  15

Signature .................................................................  16

                                       1
<PAGE>

PART I  -  Financial Information


         Item 1:  Financial Statements

                     WARRANTECH CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                       For the Three Months Ended
                                                                June 30,
                                                      ----------------------------
                                                          2004            2003
                                                      ------------    ------------
<S>                                                   <C>             <C>
Gross revenues                                        $ 32,994,936    $ 39,170,157
   Revenues deferred to future periods                 (31,042,699)     (9,620,586)
   Deferred revenues earned                             21,909,254         844,251
Net (increase) decrease in deferred revenues            (9,133,445)     (8,776,335)
                                                      ------------    ------------
Net revenues                                            23,861,491      30,393,822

Direct costs                                            17,400,074      23,098,528
                                                      ------------    ------------
Gross Profit                                          $  6,461,417    $  7,295,294
Operating expenses
   Service, selling, and general and administrative      6,965,207       7,350,767
   Provision for bad debt expense                          131,279          95,000
   Depreciation and amortization                           728,489         928,080
                                                      ------------    ------------
Total costs and expenses                                 7,824,975       8,373,847
                                                      ------------    ------------

Income (loss) from operations                           (1,363,558)     (1,078,553)
Other income                                               178,641         204,321
                                                      ------------    ------------

Income (loss) before provision for income taxes         (1,184,917)       (874,232)
Provision (benefit) for income taxes                      (425,378)       (399,240)
                                                      ------------    ------------

Net income (loss)                                     $   (759,539)   $   (474,992)
                                                      ============    ============

Earnings (loss) per share:
   Basic                                              ($      0.05)   ($      0.03)
                                                      ============    ============
   Diluted                                            ($      0.05)   ($      0.03)
                                                      ============    ============

Weighted average number of shares outstanding:
   Basic                                                15,398,677      15,344,563
                                                      ============    ============
   Diluted                                              15,398,677      15,344,563
                                                      ============    ============
</TABLE>

     See accompanying notes to condensed consolidated financial statements.

                                       2
<PAGE>

                     WARRANTECH CORPORATION AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                          June 30,
                                                            2004         March 31,
                                                        (Unaudited)        2004
                                                        ------------   ------------
A S S E T S
-----------
<S>                                                     <C>            <C>
Current assets:
   Cash and cash equivalents                            $  6,093,021   $  5,229,773
   Investments in marketable securities                    1,086,622      1,370,731
   Accounts receivable, (net of allowances of
       $328,065 and $233,667, respectively)               23,123,347     23,369,612
   Other receivables, net                                  8,111,005      7,322,289
   Deferred income taxes                                   3,478,250      3,478,250
   Employee receivables                                       66,834         70,908
   Prepaid expenses and other current assets                 526,584        728,265
                                                        ------------   ------------
      Total current assets                                42,485,663     41,569,828
                                                        ------------   ------------

Property and equipment, net                                5,344,034      5,746,851

Other assets:
   Excess of cost over fair value of assets acquired
      (net of accumulated amortization of $5,825,405)      1,637,290      1,637,290
   Deferred income taxes                                  19,346,464     18,879,171
   Deferred direct costs                                 196,255,326    186,513,417
   Investments in marketable securities                    1,384,764      1,083,400
   Restricted cash                                           825,000        825,000
   Split dollar life insurance policies                      900,145        900,145
   Other assets                                               32,556         29,448
                                                        ------------   ------------
          Total other assets                             220,381,544    209,867,871
                                                        ------------   ------------
                    Total Assets                        $268,211,241   $257,184,550
                                                        ============   ============
</TABLE>

     See accompanying notes to condensed consolidated financial statements.

                                       3
<PAGE>

                     WARRANTECH CORPORATION AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                 June 30,
                                                                                   2004           March 31,
                                                                                (Unaudited)          2004
                                                                               -------------    -------------
LIABILITIES AND STOCKHOLDERS' CAPITAL DEFICIENCY
------------------------------------------------
<S>                                                                            <C>              <C>
Current liabilities:
     Current maturities of long-term debt and capital lease obligations        $     647,731    $     664,406
     Insurance premiums payable                                                   36,183,304       31,613,047
     Income taxes payable                                                             44,242           48,099
     Accounts and commissions payable                                              6,414,843        7,083,459
     Claims Liability - Reliance                                                   3,532,287        5,608,893
     Accrued expenses and other current liabilities                                4,423,426        3,776,199
                                                                               -------------    -------------
          Total current liabilities                                               51,245,833       48,794,103
                                                                               -------------    -------------

Deferred revenues                                                                238,032,539      228,955,971
Claims Liability - Reliance                                                        4,208,213        3,882,685
Long-term debt and capital lease obligations                                       1,003,642          980,903
Deferred rent payable                                                                414,836          369,839
                                                                               -------------    -------------
      Total liabilities                                                          294,905,063      282,983,501
                                                                               -------------    -------------

Commitments and contingencies                                                             --               --

Stockholders' Capital Deficiency:
   Preferred stock - $.0007 par value authorized - 15,000,000 Shares
        issued  - none at June 30, 2004 and March 31, 2004                                --               --
   Common stock - $.007 par value authorized - 30,000,000 Shares
        issued  - 16,586,280 shares at June 30, 2004 and March 31, 2004
                                                                                     116,106          116,106
   Additional paid-in capital                                                     23,800,228       23,800,228
   Loans to directors and officers                                               (10,818,424)     (10,747,470)
   Accumulated other comprehensive income, net of taxes                               86,422          150,801
   Deficit                                                                       (35,690,597)     (34,931,059)
                                                                               -------------    -------------
                                                                                 (22,506,265)      21,611,394)
Treasury stock - at cost, 1,187,606 shares at June 30, 2004 and March 31, 2004    (4,187,557)      (4,187,557)
                                                                               -------------    -------------
        Total Stockholders' Capital Deficiency                                   (26,693,822)     (25,798,951)
                                                                               -------------    -------------

                                                                               -------------    -------------
           Total Liabilities and Stockholders' Capital Deficiency              $ 268,211,241    $ 257,184,550
                                                                               =============    =============
</TABLE>

     See accompanying notes to condensed consolidated financial statements.

                                       4
<PAGE>

                     WARRANTECH CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                 For the Three Months
                                                                     Ended June 30,
                                                             ----------------------------
                                                                 2004            2003
                                                             ------------    ------------
<S>                                                          <C>             <C>
Cash flows from operating activities:
  Net income (loss)                                          $   (759,539)   $   (474,992)
                                                             ------------    ------------
  Total adjustments to reconcile net income to net cash
                                                             ------------    ------------
     provided by operating activities:                          1,868,979       1,908,102
                                                             ------------    ------------
Net cash flows provided by operating activities                 1,109,440       1,433,110

Cash flows from investing activities:
  Property and equipment purchased                                (45,392)       (152,192)
  Purchase of marketable securities                              (525,000)       (175,000)
  Proceeds from sales of marketable securities                    500,000         295,000
                                                             ------------    ------------
Net cash provided (used) by investing activities                  (70,392)        (32,192)
                                                             ------------    ------------

Cash flows from financing activities:
    Issuance of common stock                                           --              70
    Repayments, notes and capital leases                         (175,800)       (208,231)
                                                             ------------    ------------
Net cash (used) by  financing activities                         (175,800)       (208,161)
                                                             ------------    ------------

Net increase (decrease) in cash and cash equivalents              863,248      (1,192,757)

Cash and cash equivalents at beginning of period                5,229,773       6,422,530
                                                             ------------    ------------
Cash and cash equivalents at end of period                   $  6,093,021    $  5,229,773
                                                             ------------    ------------

Supplemental Cash Flow Information:
Cash payments for:
   Interest                                                  $     38,950    $     43,582
                                                             ------------    ------------
   Income taxes                                              $     48,650              --
                                                             ------------    ------------

Non-Cash investing and financing activities:
    Property and equipment financed through capital leases   $    187,820    $    168,838
    Increase in loans to officers and directors              $    (70,954)   $    (70,954)
    Issuance of treasury stock for services rendered                   --    $     50,238
</TABLE>

     See accompanying notes to condensed consolidated financial statements.

                                       5
<PAGE>

                     WARRANTECH CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2004
                                   (Unaudited)

1.   THE COMPANY
     -----------

     Warrantech, through its wholly owned subsidiaries, designs, develops,
     markets and acts as a third party administrator for programs ("Programs")
     for service contracts, limited warranties and replacement plans
     (collectively, "Plans"). The Company provides these services to a variety
     of clients in selected industries. On a Program by Program basis, the
     Company contracts with highly rated independent insurance companies or risk
     retention groups available to provide coverage for the Plans sold or issued
     under the Programs. This coverage obligates the insurer to pay the cost of
     repairs or replacements of the products covered by the Plans.

     Plans issued under the Company's Programs provide consumers with expanded
     and/or extended product breakdown coverage for a specified period of time
     (and/or mileage in the case of automobiles and recreational vehicles),
     similar to that provided by manufacturers under the terms of their product
     warranties. Coverage generally provides for the repair or replacement of
     the product, or a component thereof, in the event of its failure. The
     Company's Programs provide clients with the opportunity for increased
     revenue and income without incurring the costs and responsibilities of
     operating their own programs.

     The Plans generally have terms extending up to one hundred twenty (120)
     months or, in the case of mileage based Plans, up to one hundred fifty
     thousand (150,000) miles. All repairs and/or replacements required under
     the Plans are performed by independent third party repair facilities or
     dealers. The cost of any repair or replacement is generally paid by the
     applicable insurance company. Notwithstanding the foregoing, however,
     certain Plans were insured by Reliance Insurance Company ("Reliance") which
     was placed in liquidation in 2002.

2.   BASIS OF PRESENTATION
     ---------------------

     The accompanying consolidated financial statements have been prepared in
     accordance with accounting principles generally accepted in the United
     States of America ("GAAP"). These consolidated financial statements include
     the accounts of Warrantech Corporation, its subsidiaries, all of which are
     wholly owned, and certain transactions involving Butler Financial
     Solutions, LLC ("Butler") due to its related interest with the Company. All
     intercompany accounts and transactions have been eliminated in
     consolidation. In the opinion of management, all adjustments (consisting of
     normal recurring accruals) considered necessary for a fair presentation of
     the financial position and operating results of the Company for the interim
     period have been included. Operating results for the three months ended
     June 30, 2004 are not necessarily indicative of the results that may be
     expected for the fiscal year ending March 31, 2005. For further
     information, refer to the consolidated financial statements and footnotes
     thereto included in the Company's Annual Report on Form 10-K for the year
     ended March 31, 2004.

3.   OTHER RECEIVABLES
     -----------------

     The nature and amounts of Other Receivables as of June 30, 2004 and March
     31, 2004 are as follows:

<TABLE>
<CAPTION>
                                                                         ---------------------------
                                                                           June 30,       March 31,
                                                                             2004           2004
                                                                         ------------   ------------
<S>                                                                      <C>            <C>
         Other receivables, net
            Due from insurance companies                                 $  4,736,989   $  4,555,772
            Due from dealers                                                  508,475        464,436
            Due from insurance companies - reimbursement of legal fees      2,314,138      1,865,399
                                                                         ------------   ------------
                 Due from insurance companies/dealers                       7,559,602      6,885,607
            Agent advances                                                     95,347        109,604
            Other                                                             456,106        327,078
                                                                         ------------   ------------
                                                                            8,111,005      7,322,289
         Allowance for doubtful accounts                                           --             --
                                                                         ------------   ------------
         Total other receivables, net                                    $  8,111,005   $  7,322,289
                                                                         ============   ============
</TABLE>

                                       6
<PAGE>

         The following table sets forth the carrying amounts and fair values of
the Company's other receivables at June 30, 2004.

<TABLE>
<CAPTION>
                                                         Expected Maturity Date
                                  ----------------------------------------------------------------------
                                     2005        2006        2007        2008        2009     Thereafter      Total     Fair Value
                                  ----------  ----------  ----------  ----------  ----------  ----------    ----------  ----------
<S>                               <C>                 <C>         <C>         <C>         <C>         <C>   <C>         <C>
         Other receivables, net   $8,111,005          --          --          --          --          --    $8,111,005  $8,111,005
</TABLE>


4.   COMPREHENSIVE INCOME (LOSS)
     ---------------------------

         The components of comprehensive income (loss) are as follows:

<TABLE>
<CAPTION>
                                                          For the Three Months Ended
                                                                   June 30,
                                                         ----------------------------
                                                             2004            2003
                                                         ------------    ------------
<S>                                                      <C>             <C>
         Net income (loss)                               ($   759,539)   ($   474,992)
         Other comprehensive income (loss), net of tax
            Unrealized gain (loss) on investments             (11,123)         13,713
            Foreign currency translation adjustments          (53,256)       (158,659)
                                                         ------------    ------------
         Comprehensive income (loss)                     ($   823,918)   ($   619,938)
                                                         ============    ============

         Comprehensive income (loss) per share:          ($      0.05)   ($      0.04)
                                                         ============    ============


         The components of accumulated comprehensive income are as follows:

                                                           June 30,        March 31,
                                                             2004            2004
                                                         ------------    ------------
         Unrealized gain/(loss) on investments           ($    10,160)   $        963
         Accumulated translation adjustments                   96,582         149,838
                                                         ------------    ------------
         Accumulated other comprehensive income          $     86,422    $    150,801
                                                         ============    ============

5.   EARNINGS PER SHARE
     ------------------

     The following table sets forth the calculation of earnings per share for
     the three months ended June 30, 2004 and 2003.

<CAPTION>
                                                             For the Three Months Ended
                                                                      June 30,
                                                            ----------------------------
                                                                2004            2003
                                                            ------------    ------------
<S>                                                         <C>             <C>
         Numerator:
            Net income (loss ) applicable to common stock   ($   759,539)   ($   474,992)
                                                            ============    ============
         Denominator:
             Average outstanding shares used in the
                   computation of per share earnings:
              Common stock issued - Basic shares              15,398,677      15,344,563
                                                            ------------    ------------
                                  - Diluted shares            15,398,677      15,344,563
                                                            ============    ============
         Earnings (loss) per common share:
            Basic                                           ($      0.05)   ($      0.03)
                                                            ============    ============
            Diluted                                         ($      0.05)   ($      0.03)
                                                            ============    ============
</TABLE>

                                       7
<PAGE>

6.   STOCK OPTION PLAN
     -----------------

     In December 2002, the FASB issued Statement of Financial Accounting
     Standards No. 148, "Accounting for Stock-Based Compensation - Transition
     and Disclosure, an Amendment of FASB Statement No. 123" (SFAS No. 148).
     SFAS No. 148 provides alternative methods of transition for companies
     making a voluntary change to fair value-based accounting for stock-based
     employee compensation. The Company continues to account for its stock
     option plan under the intrinsic value recognition and measurement
     principles of APB Opinion No. 25, "Accounting for Stock Issued to
     Employees," and related Interpretations. Effective for interim periods
     beginning after December 15, 2002, SFAS No. 148 also requires disclosure of
     pro-forma results on a quarterly basis as if the Company had applied the
     fair value recognition provisions of SFAS No. 123.

     As the exercise price of all options granted under the plan was equal to or
     above the market price of the underlying common stock on the grant date, no
     stock-based employee compensation is charged to operations. The following
     table illustrates the effect on net income and earnings per share if the
     company had applied the fair value recognition provisions of SFAS No. 123,
     as amended, to options granted under the stock option plans and rights to
     acquire stock granted under the company's Stock Participation Plan,
     collectively called "options." For purposes of this pro-forma disclosure,
     the value of the options is estimated using a Black-Scholes option pricing
     model and amortized ratably to expense over the options' vesting periods.
     Because the estimated value is determined as of the date of grant, the
     actual value ultimately realized by the employee may be significantly
     different.

                                                     For the Three Months Ended
                                                             June 30,
                                                    ---------------------------
                                                       2004             2003
                                                    -----------     -----------

     Net income (loss) as reported                 ($   759,539)   ($   474,992)
     Net income (loss) pro forma                   ($   782,286)   ($   494,676)
     Shares - Basic                                  15,398,677      15,344,563
     Basic earnings (loss) per share as reported   ($      0.05)   ($      0.03)
     Basic earnings per (loss) share pro forma     ($      0.05)   ($      0.03)

     The fair value of Warrantech stock options used to compute pro forma net
     income and earnings per share disclosures is the estimated value at grant
     date using the Black-Scholes option-pricing model with the following
     weighted average assumptions for the three months ended June 30, 2004 and
     2003, respectively: expected dividend yield of 0%; expected volatility of
     30% - 50%; a risk free interest rate of 4.0% - 5.0%; and expected option
     life of 3 to 10 years.

     Presented below is a summary of the status of the stock options in the plan
     and the related transactions for the three months ended June 30, 2004 and
     2003.

<TABLE>
<CAPTION>
                                                                   2004                     2003
                                                          -------------------------------------------------
                                                                        Weighted                  Weighted
                                                                        Average                   Average
                                                                        Exercise                  Exercise
                                                            Shares       Price        Shares       Price
                                                          -------------------------------------------------
<S>                                                        <C>         <C>          <C>          <C>
         Options outstanding at beginning of the period    1,332,789   $     1.35    1,306,380   $     1.10
         Granted                                                  --           --      180,000         2.18
         Canceled/Surrendered                                     --           --           --           --
         Exercised                                                --           --           --           --
         Forfeited                                                --           --           --           --
                                                          -------------------------------------------------
         Options outstanding at end of period              1,332,789   $     1.35    1,486,380   $     1.16
                                                          =================================================

                                                          -------------------------------------------------
         Options exercisable at end of period                764,604   $     1.35      708,660   $     1.36
                                                          =================================================
</TABLE>

     The weighted average fair value of stock options at date of grant,
     calculated using the Black-Scholes option-pricing model, granted during the
     three months ended June 30, 2004 and 2003 was is $0.00 and $0.54,
     respectively.

                                       8
<PAGE>

     The Company may issue options to purchase the Company's common stock to
     officers, non-employees, non-employee directors or others as part of
     settlements in disputes and/or incentives to perform services for the
     Company. The Company accounts for stock options issued to vendors and
     non-employees of the Company under SFAS No. 123 "Accounting for Stock-based
     Compensation." The fair value of each option grant is estimated on the date
     of grant, using the Black-Scholes option-pricing model, is charged to
     operations utilizing weighted average assumptions identical to those used
     for options granted to employees.

     The following table summarizes the status of all Warrantech's stock options
     outstanding and exercisable at June 30, 2004.

<TABLE>
<CAPTION>
                                             Stock Options                    Stock Options
                                              Outstanding                      Exercisable
                                    --------------------------------    --------------------------
                                                           Weighted                      Weighted
                                                           Average                        Average
                                                           Exercise                      Exercise
       Range Of Exercise Prices        Shares               Price           Shares         Price
       ------------------------     ------------        ------------    ------------   -----------
<S>                                    <C>                     <C>      <C>                  <C>
       $0.67 to $0.87                    694,010               $0.78         301,250         $0.73
       $1.00                           1,650,000               $1.00    $  1,650,000         $1.00
       $1.26 to $1.595                   617,065               $1.40         437,065         $1.33
       $3.25 to $3.375                   101,290               $3.26         101,290         $3.26
                                    ------------        ------------    ------------   -----------
       Total at June 30, 2004          3,062,365               $1.68       2,489,605         $1.90
                                    ============        ============    ============   ===========
</TABLE>

7.   SEGMENTS
     --------

The Company operates in three major business segments: Automotive, Consumer
Products and International. The Automotive segment designs, develops, markets
and acts as a third party administrator for vehicle service contract programs
and other related automotive after-sale products, all of which enhance the
dealer's profitability from the sale of automobiles, light trucks, recreational
vehicles, personal watercraft and automotive components. These products are sold
principally by franchised and independent automobile dealers, leasing companies,
repair facilities, retail stores, financial institutions and other specialty
marketers. The Consumer Products segment develops, markets and administers
extended warranties and product replacement plans on household appliances,
consumer electronics, televisions, computers and home office equipment, which
are sold principally through retailers, distributors, manufacturers, utility
companies, financial institutions and other specialty marketers Warrantech also
markets these warranties and plans directly to the ultimate consumer on behalf
of the retailer/dealer and/or the manufacturer through telemarketing and direct
mail campaigns. It also offers call center and technical computer services. The
International segment designs, develops, markets and acts as a third party
administrator for many of the same Programs and services outside the United
States that Warrantech Automotive and Warrantech Consumer Products market and
administer in the United States and Canada.. The International segment is
currently operating in Puerto Rico, Guatemala, El Salvador, Chile and Peru.

"Other" includes intersegment eliminations of revenues and receivables and net
unallocated corporate expenses.

<TABLE>
<CAPTION>
                                                   Consumer                        Reportable
Three Months Ended                Automotive       Products       International     Segments           Other             Total
                                -------------    -------------    -------------   -------------    -------------    -------------
June 30, 2004
-------------
<S>                               <C>               <C>               <C>           <C>                <C>            <C>
Gross revenues                     21,828,089        9,356,492        2,082,343      33,266,924         (271,988)      32,994,936
Income (loss) from operations        (262,236)         482,445           96,792         317,001       (1,680,559)      (1,363,558)
Pretax income (loss)               (1,114,110)        (469,633)          95,973      (1,487,770)         302,853       (1,184,917)
Net interest income (expense)         (14,508)         (16,804)              25         (31,287)          88,962           57,675
Depreciation/amortization              81,839          246,758           19,931         348,528          379,961          728,489
Total assets                      189,604,825       67,560,659        4,704,522     261,870,006        6,341,323      268,211,241

June 30, 2003
-------------
Gross revenues                     28,283,402        9,105,165        1,873,018      39,261,585          (91,428)      39,170,157
Income (loss) from operations        (586,971)         425,273          260,433          98,735       (1,177,288)      (1,078,553)
Pretax income (loss)               (1,920,724)         (35,145)         263,833      (1,692,037)         817,805         (874,232)
Net interest income                   (60,691)          (7,031)           1,906         (65,815)         100,454           34,639
Depreciation/amortization              95,706          404,834           21,441         521,981          406,099          928,080
Total assets                      180,102,006       67,028,613        4,023,199     251,153,818       11,165,541      262,319,359
</TABLE>

                                       9

<PAGE>

                     WARRANTECH CORPORATION AND SUBSIDIARIES

Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations
        -----------------------------------------------------------------------

Except for the historical information contained herein, the matters discussed
below or elsewhere in this Quarterly Report on Form 10-Q may contain
forward-looking statements that involve risks and uncertainties that could cause
actual results to differ materially from those contemplated by the
forward-looking statements. The Company makes such forward-looking statements
under the provisions of the "safe harbor" section of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements reflect the Company's
views and assumptions, based on information currently available to management,
including, among other things, the Company's operating and financial performance
over recent years and its expectations about its business for the current and
future fiscal years. When used in this Quarterly Report on Form 10-Q, the words
"believes," "estimates," "plans," "expects," and "anticipates" and similar
expressions as they relate to the Company or its management are intended to
identify forward-looking statements.

Although the Company believes that the expectations reflected in the
forward-looking statements are reasonable, it can give no assurance that its
expectations will prove to be correct. These statements are subject to certain
risks, uncertainties and assumptions, including, but not limited to,

         (a) prevailing economic conditions which may significantly deteriorate,
         thereby reducing the demand for the Company's products and services,
         (b) availability of technical support personnel or increases in the
         rate of turnover of such personnel, resulting from increased demand for
         such qualified personnel,
         (c) changes in the terms or availability of insurance coverage for the
         Company's programs,
         (d) regulatory or legal changes affecting the Company's business,
         (e) loss of business from, or significant change in relationships with
         any major customer,
         (f) the ability to successfully identify and contract new business
         opportunities, both domestically and internationally,
         (g) the ability to secure necessary capital for general operating or
         expansion purposes,
         (h) the adverse outcomes of litigation,
         (i) the non-payment of notes due from an officer and two directors of
         the Company in 2007 which would result in a charge against earnings in
         the period in which the event occurred,
         (j) the inability of any of the insurance companies which insure the
         service contracts marketed and administered by the Company to pay the
         claims under the service contracts,
         (k) the termination of extended credit terms being provided by the
         Company's current insurance company,
         (l) the development of facts and circumstances which could affect
         existing accounting policies, and
         (m) illiquidity of the Company's common stock,

Should one or more of these or any other risks or uncertainties materialize or
develop in a manner adverse to the Company, or should the Company's underlying
assumptions prove incorrect, actual results of operations, cash flows or the
Company's financial condition may vary materially from those anticipated,
estimated or expected and there could be a materially adverse effect on the
Company's business.

Results of Operations
---------------------

                                 Gross Revenues

                                           For the Three Months
                                              Ended June 30,
                                       ----------------------------
                                           2004            2003
                                       ------------    ------------

           Automotive segment          $ 21,828,089    $ 28,283,402
           Consumer Products segment      9,356,492       9,105,165
           International segment          2,082,343       1,873,018
           Other                           (271,988)        (91,428)
                                       ------------    ------------
              Total gross revenues     $ 32,994,936    $ 39,170,157
                                       ============    ============

                                       10
<PAGE>

Gross revenues for the period ended June 30, 2004 decreased $6,175,221, or 16%,
over the same period in 2003. The Consumer Products and International segments
reported increased gross revenues of 3% and 11%, respectively, in the period
ended June 30, 2004 over 2003. The Automotive segment reported a 6,455,313 or
23% decrease in gross revenues during the period ended June 30, 2004 compared to
the same period in 2003.

                                  Direct Costs

                                           For the Three Months
                                               Ended June 30,
                                       ----------------------------
                                           2004             2003
                                       ------------    ------------

           Automotive segment          $ 12,345,557    $ 18,191,090
           Consumer Products segment      4,607,963       5,086,985
           International segment            877,761         789,574
           Other                           (431,207)       (969,121)
                                       ------------    ------------
              Total direct costs       $ 17,400,074    $ 23,098,528
                                       ============    ============

Direct costs for the quarter ended June 30, 2004 decreased $5,698,454 or 25%
over the same period in 2003. The Automotive segment direct costs decreased
$5,845,533 or 32% during the fiscal period ended June 30, 2004 compared to 2003.
The Consumer Products segment direct costs decreased $479,022 or 9% during the
fiscal period ended June 30, 2004 compared to the same period in 2003. The
International segment direct costs increased $88,187, or11%, during period ended
June 30, 2004 compared to the same period in 2003.

                                  Gross Profit

                                           For the Three Months
                                               Ended June 30,
                                        ---------------------------
                                           2004            2003
                                        ------------   ------------

            Automotive segment          $  1,787,342   $  1,510,904
            Consumer Products segment      3,332,335      3,826,268
            International segment          1,182,520      1,080,427
            Other                            159,220        877,695
                                        ------------   ------------
               Total gross profit       $  6,461,417   $  7,295,294
                                        ============   ============

Gross Profit for the quarter ended June 30, 2004 decreased $833,877 or 11% over
the same period in 2003. The Automotive segment gross profit increased $276,438
or 18% during the fiscal period ended June 30, 2004 compared to 2003. The
Consumer Products segment gross profit decreased $493,933 or 13% during the
fiscal period ended June 30, 2004 compared to the same period in 2003. The
International segment gross profit increased $102,093, or 9%, during period
ended June 30, 2004 compared to the same period in 2003.

                                      SG&A

                                                    For the Three Months
                                                        Ended June 30,
                                                 ---------------------------
                                                     2004           2003
                                                 ------------   ------------

   Service, selling and general administrative   $  6,965,207   $  7,350,767


Service, selling and general and administrative ("SG&A") for the quarter ended
June 30, 2004 decreased $385,560, or 5%, compared to the same quarter in the
prior year. Legal expenses increased $258,680 for the period ended June 30, 2004
compared to the 2003 period, primarily because of the increase in litigation
expenses related to the Lloyd's Underwriter's lawsuit that is being prepared for
trial. Employee costs were lower at $4,299,729 during the period ended June 30,
2004, compared to $4,454,517 in the period ended June 30, 2003, primarily due to
a decrease in salary costs. Rent expense decreased from $603,522 for the period
ended June 30, 2004 to $410,427 for the period ended June 30, 2003, as a result
of the Company's move to its new corporate headquarters in Bedford, Texas.

                          Depreciation and amortization

                                             For the Three Months
                                                 Ended June 30,
                                          ---------------------------
                                              2004           2003
                                          ------------   ------------

          Depreciation and amortization   $    728,489   $    928,080
                                          ============   ============

                                       11
<PAGE>

Depreciation and amortization expenses were reduced by $199,591, or 22%, during
period ended June 30, 2004 compared to the same period for 2003. This decrease
is the result of the Company's assets maturing and a reduced requirement for
capital expenditures for the past few years.

                                  Other Income

                                             For the Three Months
                                                 Ended June 30,
                                         ----------------------------
                                             2004            2003
                                         ------------    ------------

         Interest and dividend income    $    150,637    $    166,836
         Interest expense                     (92,962)       (132,197)
         Gain (loss) on sale of assets          1,100             (23)
         Credit card usage rebate             120,000         129,177
         Miscellaneous income                    (134)         40,528
                                         ------------    ------------
               Total other income        $    178,641    $    204,321
                                         ============    ============

Other income for quarter ended June 30, 2004 decreased slightly compared to the
quarter ended June 30, 2003 due to a reduction in miscellaneous income from
2003.

                          Income Tax Expense (Benefit)

                                              For the Three Months
                                                  Ended June 30,
                                          ----------------------------
                                              2004            2003
                                          ------------    ------------

         Income taxes expense (benefit)   ($   425,378)   ($   399,240)
                                          ============    ============

Income taxes benefit increased $26,138 for the period ended June 30, 2004
compared to the period ended June 30, 2003, primarily due to a higher net loss
in fiscal 2004 than in fiscal 2003.

Liquidity and Financial Resources
---------------------------------

During the three months ended June 30, 2004, the Company had a net increase in
cash and cash equivalents of $863,248, which was primarily generated by
operating activities to fund working capital. Working capital was a negative
$8.8 million at June 30, 2004 compared to a negative $7.2 million at June 30,
2003, primarily due to the payment made on the Reliance claims reserve.

The Company believes that internally generated funds, extended payment terms,
combined with the $3 million line of credit from GAIC ("Great American Insurance
Company"), will be sufficient to finance its current operations for at least the
next twelve months. The Company is aggressively pursuing new business both
domestically and internationally to fund future working capital. The Company
plans to continue to contain its SG&A costs and utilize technologies for
operational efficiencies to further enhance both its operating income and cash
flows from operating activities.

On June 22, 2004, the Company notified Butler Financial Solutions, LLC, that
effective as of October 22, 2004, the Company will terminate the Obligor
Agreement between the two Companies. As a result of the agreement termination,
that will benefit liquidity, Butler Financial Solutions, LLC will no longer be
the obligor on service contracts sold by Warrantech after October 22, 2004.

The effect of inflation has not been significant to the Company.

Commitments
-----------

The Company has ongoing relationships with equipment financing companies and
intends to continue financing certain future equipment needs through
lease/purchase transactions. The total amount financed through these
transactions during the three months ended June 30, 2004 amounted to $187,820
compared to $168,838 during the three months ended June 30, 2003.

                                       12
<PAGE>

Set forth below is information about the Company's commitments outstanding at
June 30, 2004.

<TABLE>
<CAPTION>
                                                        Payments due by period
                            ------------------------------------------------------------------------
                                            Less than         1 - 3          3 - 5        More than
                               Total          1 year          Years          Years         5 years
                            ------------   ------------   ------------   ------------   ------------
<S>                         <C>            <C>            <C>            <C>            <C>
Capital Lease Obligations   $  1,651,373   $    647,731   $  1,003,642   $         --   $         --
Operating Leases              11,101,038      1,345,969      2,500,698      2,530,205      4,724,166
Employment agreements          6,150,854      2,003,354      2,532,500      1,615,000             --
Claims Loss Liability          9,141,180      3,532,287      5,608,893             --             --
                            ------------   ------------   ------------   ------------   ------------
   Total                    $ 28,044,445   $  7,529,341   $ 11,645,733   $  4,145,205   $  4,724,166
                            ============   ============   ============   ============   ============
</TABLE>

Critical Accounting Policies
----------------------------

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the dates
of the financial statements and the reported amounts of revenues and expenses
during the reporting periods. Note 1 to the Company's Consolidated Financial
Statements set forth in the "Item 8. - Financial Statements and Supplementary
Data," in the Company's Annual Report on Form 10-K for the year ended March 31,
2004, describes the significant accounting policies and methods used in the
preparation of the Consolidated Financial Statements. The following lists some
of the Company's critical accounting policies affected by judgments, assumptions
and estimates.

Revenue Recognition

Revenue from administrator-obligor contracts is recognized in accordance with
Financial Accounting Standards Board Technical Bulletin 90-1, Accounting for
Separately Priced Extended Warranty and Product Maintenance Contracts, ("TB
90-1"). The Company recognizes such revenue over the life of the contract on a
straight-line basis. In addition the Company charges the costs of contracts to
operations over the life of the contracts on a straight-line basis.

Revenue from dealer-obligor service contracts, are sales in which the
retailer/dealer or a third party is designated as the obligor. Historically,
through June 15, 2003, the Company recognized revenues from these contracts in
direct proportion to the costs incurred in providing the service contract
programs to the Company's clients. Revenues in amounts sufficient to meet future
administrative costs and a reasonable gross profit were deferred.

Since Butler has been determined to be a nominally capitalized entity, all
transactions concerning Butler obligor-contracts are treated in a manner similar
to the accounting principles discussed in Financial Accounting Standards Board
Emerging Issues Task Force Topic No. D-14, "Transactions Involving
Special-Purpose Entities." The Company, therefore, treats the Butler-obligor
contracts as if they were administrator-obligor contracts and recognizes
revenues under such contracts pursuant to TB 90-1. Additionally, because the
Company is treating the Butler-obligor contracts as Warrantech-obligor contracts
for financial reporting purposes only, the Company eliminated the transactions
between Warrantech and Butler from its financial statements.

Reflecting these transactions for financial reporting purposes does not alter
the legal obligations under the applicable agreements in which the Company is
not responsible for, and has not assumed the obligations of Butler. Butler
remains legally obligated under such agreements and the service contracts in
which it is the named obligor. Butler is not deemed a "consolidated subsidiary"
of the Company, as that term is used in this Report, including, but not limited
to, the Certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley
Act of 2002 which are annexed to this Report. Butler's income, expenses, assets
and liabilities have not been consolidated with those of the Company. Butler is
an independent entity owned by parties unrelated to the Company and, except for
the transactions between Butler and Warrantech as described in this Report,
Warrantech does not have knowledge of, or control over, Butler's affairs or
financial reporting. Warrantech also has no knowledge of, nor has it established
or evaluated, Butler's internal controls or disclosure controls or procedures.
Any reference to "consolidated subsidiary," internal controls or disclosure

                                       13
<PAGE>

controls and procedures in this Report, including, but not limited to, the
Certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of
2002 which are annexed to this Report, do not pertain to Butler.

Prior to July 1, 2003, the Company recognized revenue from service contracts in
which dealers or other third parties (other than Butler) were the obligor
(dealer-obligor contracts) in direct proportion to the costs incurred in
providing the service contract programs to the Company's clients. Revenues in
amounts sufficient to meet future administrative costs and a reasonable gross
profit were deferred. With the issuance of EITF Abstracts Issue No. 00-21 (EITF
No. 00-21), "Revenue Arrangements with Multiple Deliverables", as of July 1,
2003, the Company recognizes revenue from these dealer-obligor contracts on a
straight-line basis over the life of the service contract, pursuant to Staff
Accounting Bulletin 101.

Now that the Company is required to recognize revenues from all service
contracts over the life of the service contracts, the Company believes that it
is unlikely that the Company will be able to report operating profits until at
least 2008 when the Company expects that the revenues recognized from prior
periods will begin to equal the revenue being deferred to future periods.
However, there can be no assurance that the Company will be profitable at that
time. In the meantime, the revenue recognition policies adopted by the Company
do not have an impact on the Company's cash flow, and it is important to measure
the Company by reviewing the Statements of Cash Flows which are part of these
financial statements.

Direct Costs

Direct costs, which consist primarily of insurance premiums and commissions, are
those costs directly related to the production and acquisition of service
contracts. Effective with the application of the revenue recognition policy(s)
described above on all service contracts, the Company recognizes direct cost
according to Statement of Financial Accounting Standards No. 113 ("SFAS 113"),
"Accounting and Reporting for Reinsurance of Short-Duration and Long Duration
Contracts". This requires that insurance premium costs be ratably expensed over
the life of the service contract.

Impairment of Long-Lived Assets

The Company assesses potential impairment of its long-lived assets, which
include its property and equipment and its identifiable intangibles such as
software development costs, goodwill and deferred charges under the guidance of
SFAS 144 "Accounting for the Impairment or Disposal of Long-Lived Assets." Once
annually, or as events or circumstances indicate that an asset may be impaired,
the Company assesses potential impairment of its long-lived assets. The Company
determines impairment by measuring the undiscounted future cash flows generated
by the assets, comparing the result to the assets' carrying value and adjusting
the assets to the lower of their carrying value or fair value and charging
current operations for any measured impairment. At June 30, 2004 and 2003, the
Company found no impairment to its property and equipment or its other
identifiable intangibles.

                                       14
<PAGE>

Income Taxes

Deferred tax assets and liabilities are determined using enacted tax rates for
the effects of net operating losses and temporary differences between the book
and tax bases of assets and liabilities. The Company records a valuation
allowance on deferred tax assets when appropriate to reflect the expected future
tax benefits to be realized. In determining the appropriate valuation allowance,
certain judgments are made relating to recoverability of deferred tax assets,
use of tax loss carryforwards, level of expected future taxable income and
available tax planning strategies. These judgments are routinely reviewed by
management. At June 30, 2004, the Company had deferred tax assets of $22,824,714
net of a valuation allowance of $177,020.

                                       15
<PAGE>

Item 3.   Quantitative and Qualitative Disclosures About Market Risk
          ----------------------------------------------------------

As of June 30, 2004, the Company did not have any derivatives, debt or hedges
outstanding. Therefore, the Company was not subject to interest rate risk. In
addition, the risk of foreign currency fluctuation was and is not material to
the Company's financial position or results of operations.

Short-term marketable securities and long-term investments are comprised of
municipal bonds which bear interest at fixed rates. Interest income from these
securities is generally affected by changes in the U.S. interest rates. The
following tables provide information about the Company's financial instruments
that are sensitive to changes in interest rates. The tables present principal
cash flows and weighted-average interest rates by expected maturity dates. All
of the investments are considered "available for sale." The resultant
differences between amortized cost and fair value, net of taxes, have been
reflected as a separate component of accumulated other comprehensive income.

Principal amounts by expected maturity as of June 30, 2004 of marketable
securities are as follows:

<TABLE>
<CAPTION>
                                                Expected Maturity Date as of June 30,
                                -----------------------------------------------------------------------
                                    2005         2006         2007        2008       2009    Thereafter  Total Cost   Fair Value
                                -----------  -----------  -----------  ---------- ---------- ----------  -----------  -----------
<S>                             <C>          <C>          <C>                  <C>        <C>        <C> <C>          <C>
Available for sale securities   $ 1,055,000  $ 1,100,000  $   270,000          --         --         --  $ 2,425,000  $ 2,471,386
       Interest rate                   3.48%        4.07%        3.52%         --         --         --
</TABLE>


Item 4. Controls and Procedures
        -----------------------

Disclosure Controls and Procedures

The Company's Chief Executive Officer (CEO) and Chief Financial Officer (CFO)
are primarily responsible for the accuracy of the financial information that is
presented in this Quarterly Report on Form 10-Q. Each of them has, within 90
days of the filing date of this Quarterly Report, evaluated the Company's
disclosure controls and procedures, as defined under the rules of the SEC, and
have determined that such controls and procedures were effective in ensuring
that material information relating to the Company and its consolidated
subsidiaries was made known to them during the period covered by this Quarterly
Report.

Internal Controls

To meet their responsibility for financial reporting, the CEO and CFO have
established internal controls and procedures which they believe are adequate to
provide reasonable assurance that the Company's assets are protected from loss.
These internal controls are reviewed by the Company's independent accountants to
support their audit work. In addition, the Company's Audit Committee, which is
composed entirely of outside directors, meets regularly with management and the
independent accountants to review accounting, auditing and financial matters.
This Committee and the independent accountants have free access to each other,
with or without management being present.

THERE WERE NO SIGNIFICANT CHANGES IN COMPANY'S INTERNAL CONTROLS OR IN OTHER
FACTORS THAT COULD SIGNIFICANTLY AFFECT INTERNAL CONTROLS SUBSEQUENT TO THE DATE
OF THE CEO'S AND CFO'S MOST RECENT EVALUATION.

                                       16
<PAGE>

                           PART II. Other Information

Item 1.       Legal Proceedings
              -----------------

              Not applicable.

Item 2.       Changes in Securities and Use of Proceeds
              -----------------------------------------

              Not applicable.

Item 3.       Defaults Upon Senior Securities
              -------------------------------

              Not applicable.

Item 4.       Submission of Matters to a Vote of Security Holders
              ---------------------------------------------------

              Not applicable.

Item 5.       Other Information
              -----------------

              Not applicable.

Item 6.       Exhibits and Reports on Form 8-K
              --------------------------------

              (a)     Exhibits
                      --------

                           31.1     Certification by the Chief Executive Officer
                                    pursuant to Rule 13a-14(a) of the Securities
                                    Exchange Act of 1934, as amended.

                           31.2     Certification by the Chief Financial Officer
                                    pursuant to Rule 13a-14(a) of the Securities
                                    Exchange Act of 1934, as amended.

                           32.1     Statement by the Chief Executive Officer and
                                    the Chief Financial Officer furnished
                                    pursuant to Rule 13a-14(b) of the Securities
                                    Exchange Act of 1934, as amended.

              (b)     Reports on Form 8-K
                      -------------------

<TABLE>
<CAPTION>
                        Date                Item Reported             Financial Statements Filed
                        ----                -------------             --------------------------
<S>                                         <C>                       <C>
                        April 16, 2004      Item 5 - Other Events     None
                        June 10, 2004       Item 5 - Other Events     None
</TABLE>

                                       17
<PAGE>

                                    SIGNATURE
                                    ---------



         Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.




                       WARRANTECH CORPORATION
                       ----------------------
                       (Registrant)



                       /s/ RICHARD F. GAVINO
                       ---------------------------------------------------------
                       Richard F. Gavino - Executive Vice President, Chief
                       Financial Officer, Chief Accounting Officer and Treasurer
                       (Chief Financial Officer and Duly Authorized Officer)


Dated: August 23, 2004

                                       18