1.  Risk Factors

The factors that may cause risk for investment of investors or affect
the issuer are as following:

The risk from inoperable products distribution center : Most products
sold in SE-ED Book Center branches and book distributed for other
publishers are distributed from the Company’s distribution center. The
distribution is, therefore, very important fact in business operation.
In the case product distribution center becomes inoperable from natural
causes, accident, or other causes, the computer business operation will
be affected.

The Company has sought to insure all the assets and product to reduce
unexpected risk related to disaster which might occur at the
distribution center. In case distribution center failed to operate
properly, the Company can mitigate the problem by requesting publishers
or distributors to deliver products to the distribution center in a
temporary period and then directly deliver the product to the
bookstores.

Risk from product loss : As the Company that operates in retail
bookstore business of over 250 branches nationwide, it has faced with
loss of products due to thief and other causes similar to what other
retail businesses have encountered.

The Company sees the importance of establishing proper product loss and
prevention effort. The Closed-Circuit Tele-Visions (CCTV) have been
installed since the end of fourth quarter in 2006, and also established
a department named Loss Prevention Department (LPD) to address the
issues of measures to deal with book loss specifically. This results in
the significant reduction of product loss in 2007.

The risk from computer and information technology errors or
mal-functions : The Company installed varieties of computer and
information technology systems for all the work such as store front
selling system, distribution management system, purchasing system,
accounting and financial system, etc. All these computer and information
technology are regarded as crucial facts in supporting the effective
Company’s operation. Therefore, errors and mal-functions of computer
systems may have the effect over the Company’s management.

Therefore, to reduce the impact of such computer and technology system
errors and malfunctions at the branch distribution center and
headquarters levels, the Company has set up protection system and
back-up system at the generally accepted standard. It also creates
measures of preparedness for any uneventful circumstances and of back-up
plan. This also includes the regular training schedules and practice of
preventive measures.

Risk in Distribution Channels : One of the main distribution channels is
the chain retail outlets SE-ED Book Center and network stores in leading
department stores and supercenters nationwide. This channel made profit
as 82% of total income in 2007.

Then the Company diversifies risk by opening the bookstores through
several groups of shopping center groups, not binding to department or
opening bookstores in one specific shopping department store group. Most
of the leasing contracts for bookstores are in long term period for
stability in sales location investment. Therefore, if any department
stores or supercenters encounter problems or cannot operate in any
condition or changing leasing policy, the Company’s income will not be
significantly affected.

Moreover, the Company has acquired all the assets and products insurance
to reduce the unexpected risk that might occur.

Risk from foreign currency exchange : As the Company has signed the
agreement to be the sole distributor for all Oxford University Press
(OUP) English Language Teaching (ELT) books in Thailand and also holds
the right to sell in the territory of Cambodia, Laos, Myanmar, and
Indonesia in the effort to push forward the English language education
in Thailand as well as the neighboring countries, resulting in problem
of currency fluctuation caused by the purchase of books in foreign
currency. Thus, to minimize the risk at the acceptable and optimal
level, the Company employs the financial instrumental policy towards
risks by using the forward buying currency with a bank to prevent
unpredictable currency risk when payment of debt owed to foreign
publisher is due, whereby the forward period is set at no more than 6
months.

Risk in specialist shortage : Expert employees and specialized
personnels in each field are the most important resources in the Company
academic books and magazines production including creative artwork
staffs in the Company business line which most of them are the pioneer
in business.

The Company completely realizes the importance of the personnels
mentioned above. Therefore, the ESOP project has been set up to provide
stock options to employees to persuade them with motivation for Company
growth in long-term. This project has been approved by SEC to issue
warrants in December 2001 and the last date to exercise the right will
be on January 2008.

Besides, the Company has also provided training and developed the
Company culture to develop employees to the highest extent and work more
happily. This includes the improvement of several welfares system such
as annual checkup life insurance, health insurance, accident insurance
and increasing the insurance coverage at the adequate level for better
stability and security of the employees and their families. Furthermore,
the Company determines to develop human resources and teamwork at the
unrelentless pace and offers opportunity for staffs who wants to grow
with the Company.

Risk from reselling censored and pirate books : As some of the products
such as tape, CD, and published media may be stipulated and restricted
by laws. Some products must be requested for permission before sales and
some are directly related to the copyright. This causes the Company to
be relatively cautious towards the production and distribution both
retail and distribution of the Company for such products, so as to avoid
the illegal practice and violation of copyrights.

The academic books production may have risk of publishing the book which
may infringe on a copyright of other such as an author or publisher has
infringed a copyright and entrust the Company to publish and/or
distribute while the Company may not aware of the infringement. The
copyright holder may sue the Company as the publisher or the
distributor. Therefore, the Company editorial staffs have to select the
original manuscripts more carefully and cautiously in order to avoid the
problem of copyright infringement. Besides, the Company has specified in
the contract with authors or manuscript owners that they have confirmed
that their works did not infringe upon any copyright and will compensate
all damages happened to the Company if the copyright infringement
occurred. This will reduce the probability of any damages caused by this
problem.

However, very few problems occur and the affected value are not
significant.

Risk of outdate products and superseded by other media : At present the
computer technology has been developed rapidly so the sales duration of
computer books which the Company is one of the leaders in this field is
shorter than before. And the electronics media has begun to replace
books in some category and some application. The Company has redirected
the production by increasing the ratio of books with long length of
sales and have large volume sales in production line, including the set
up of Company website www.se-ed.com for interested people to be informed
more quickly about the new book titles release.

However the international statistics shows that even if the electronics
media becomes rapidly developed it still takes more time to start taking
significant effect towards books business. At that time the Company can
adapt to this trend in time as the Company has already provided
infrastructure for this case.

Risk from raw material and product deficiency : Paper is the important
raw material in books production and price has changed variously
according to market demand and production quantity all the time. But the
books published by the Company have target group with purchasing power
and are well educated enough for the Company to use the policy to set
price in accordance with the real cost in that period, and this does not
cause a considerable impact to the Company.

As the Company which has the major revenue in being a publisher, a
distributor, and a retailer, the Company tries at best to maintain the
role as respectable neutral element who sells books for every publisher
which is in demand by the market, and the Company business policy is
determined on the basis of good ethical standard in business practices.
The Company has its duty to adhere to the ethical standard of business
conduct. The cause of trouble or injustice occurring from the Company
business conducts aiming towards any interest groups will not be
tolerated. Owing to this, the Company has evidently long been supported
by most suppliers in book industry, and it also makes the Company less
dependent on the revenue from one particular supplier.

Risk from printing industry : As the Company has not invested in
printers so there is no risk and does not adversely affect from price
war in printing industry. The Company chooses several printers to
support productions so that the Company can control expense properly to
the competitive printing price offer all the time and can fix the
production time duration definitely.