2.1 Risk Factors

From the securities business characteristics of the company there are
probably some risk factors which may have some impact on the company’s
future operations as follows:

1. The risk on the dropping of income on brokerage fee.

Such risk may caused by many factors such as the fluctuation of the
interest and foreign exchange rates, the political stability and some
unexpected rules and regulations by the government which may affect the
investment mood or even the liberalization of securities broker business
which directly affects those existing broker companies whose income was
mainly depended upon its sub-broker’s customers’ volume. The Company
also has one sub-broker. Fortunately, the income derived from the
sub-broker was minimal and would not affect the company’s income very
much should the sub-broker become a broker itself. Moreover, the rules
of fixing the minimum commission rate which came into effect on 14
January 2002 has a more positive result on the company’s income than the
previous free negotiation policy.

However, The Company has set up policies to cope with such risk.
Internet Trading system has helped enlarging the Company’s income at
lower cost as well as expanding trading channel for the customers. The
consistent training and developing of Marketing personnel and the open
up of branches to various provinces in order to expand its customers
base are other examples. Additionally, the company has attempted to take
up other possible businesses so that its income will not depend wholly
on brokerage fee income, for example, investment banking business in
which the subsidiary company was set up to undertake or the Financial
Advisory business, Debt Instrument Broker Business and Debt Instrument
Investment. It is certain that all these strategies will help boost up
more income in the long run.

2. The risk on the domination of Management

One of the major shareholders’ groups of the company is “Wongkusolkij”
and its related Companies who holds a total of 51% shares of the
Company’s paid up capital as of 31 December 2001. As a result, this
major shareholder is able to dominate almost all the resolutions from
the shareholders’ meeting except for those which legally require 3
quarters votes of the total shareholders and such resolution may include
the appointment of Directors etc. However, the company has appointed
outside Directors who can independently audit the company’s operations
and management.

3. The risk in Securities Trading Business

One of the company’s businesses is Securities Trading Business which
includes the trading of both equity and debt instrument. The revenues
from the trading, however, depend much on the fluctuation of the
securities prices as well as the interest rate all of which were
affected mostly by economic situation and securities market situation.
The Securities Trading Business is, however, taken care by the
Investment Committee who is responsible in setting up the investment
policy concerning the investment portfolio limit, scope of investment,
types of investment and risk management. The monthly reports summarizing
the investment activities are submitted to the Executive Board to always
assure its efficiency.

4. The risk in Underwriting Business

Most of the company’s underwriting agreements were generally a Firm
Commitment type. Thus, the company may have to risk on price dropping of
the unsold underwriting shares which had to be put into the company’s
portfolio. However, this will rarely happen as we will be very selective
on the taking up of only the good fundamental shares to underwrite.
Moreover, the company will strictly comply to the rules and regulations
governing the underwriting activities in order to avoid risks.

5. The Impact from the Branch’s Performance

At present, the company has 3 branches undertaking securities brokerage
business which currently contribute some income to the company.
Therefore, should any adverse effects happen to the branches’
performance, they may also affect the company’s performance as a whole.

6. The Impact from the Company’s Subsidiary

The Company presently has one fully owned subsidiary handling Financial
Advisory business. Therefore, the fluctuation of the subsidiary ‘s
performance may inevitably affect the performance of the whole company.
Fortunately, the Financial Advisory business still has good potential
growth, thus this is instead considered to bring positive impact to the
company.