1.  Risk Factors

  Risk factors will affect to the Company operation are as follows:

1.  Risk on external source of fund

  In present, the major source of fund came from Bank of Ayudhya, the
  credit limited Baht 520 million were bank over draft and on call
  promissory notes. As at 31^(st) December 2004, the Company utilized
  Baht 418.87 million, with - the interest expenses Baht 25.90 million
  for 2004.

  The interest rate- MOR of Bank of Ayudhya per annum at 31^(st)
  December 2004 is 6.00% which is nearly average MOR of top 5 big bank
  which is 5.90% per annum.

  Because the Company was a good customer of Bank of Ayudhya over
  eighteen years, the Bank of Ayudhya always gives us financial support
  continuously. However, the Company’s policy tries to minimize that
  risk by raising funds from the other sources.

2.  Risk on interest rate

  The major of the Company’s revenues came from hire purchase
  motorcycles. Then, the higher interest loan rate will directly affect
  to the Company’s profit. In 2004, the Company interest margin is about
  32.11%. If the interest loan rate rise up, the cost of fund will be
  increased. While the hire purchase interest rate was fixed for the
  period of hire purchase contract, which the Company can’t push higher
  interest expenses to our customers.

  As at 31^(st) December 2004, We utilized Baht 418.87 million out of
  the credit limited Baht 520 million with the interest expense Baht
  25.90 million. However, if interest loan rate rise up 1.00% the
  Company’s interest expense will increase by Baht 4.19 million per year
  from the principle of loan Baht 418.87 million.

3.  Risk on the mismatch between source of fund to the period of hire
    purchase motorcycles contract

  Because the major source of fund came from the Bank of Ayudhya ,was an
  on call short term loan while the average period of hire purchase
  motorcycles contract was about 26 months. There was a risk whenever
  bank called back the principle of loan.

  However the Company is a good customer of Bank of Ayudhya over
  eighteen years, the Bank of Ayudhya always give us financial support
  continuously. The Company’s policy tries to matching fund to minimize
  the risk.

4.  Risk on governmental regulations

  In present, there is no rules or regulations from the Bank of Thailand
  to control hire purchase motorcycle. Excepted the Office of Consumer
  Protection Board regulations, Ministry of Commerce which issued
  regulations to protect consumer for some agreement in hire purchase
  motorcycle contract such as to limited interest rate for default
  customers which can’t be charged more than MOR + 10% per annum of
  Krung Thai Bank etc.

  Whenever, The Government issues regulations to control hire purchase
  motorcycle business, It will affect to our operation in the future.
  For example, to limit interest rate of hire purchase motorcycle
  contract or limit down payment etc.

5.  Risk on non performing loan

  In present, the hire purchase motorcycles business isn’t limited by
  any rule or special laws from the government. Therefore, the Company
  in hire purchase motorcycles business can expand business with the
  capacity of themselves. However, the risk will be occurred at the
  approved credit process if there is not good internal control system
  and inaccuracy.

  For our experience, as the Company is a membership of The Thai Credit
  Bureau Company Limited, the Company send the historical payment of
  customers to credit bureau every month. By this way, the Company can
  reduced non performing loan if customer acquires some loan from
  Financial Institute, there will be the record. If the good record of
  customer shows up, the payment will be easily approved on the other
  hand for bad record, it will be rejected until they clear overdue or
  closed account.

6.  Risk on loss on sales from repossessed motorcycles

  Repossessed motorcycles from non performing loan or doubtful accounts
  will be sold by auction within 15 days to used motorcycles’ dealers.
  The major used motorcycles’ dealers come from Bangkok, boundary, and
  upcountry who are closed relationship and continued auction with us
  for more than 10 years. The pricing of repossessed motorcycles is
  variable in quality, aging and favor of used motorcycles. In case of
  auction price is not cover debt, the Company can call the lost from
  debtor or guarantors. If not, we will record loss on sales repossessed
  motorcycles.

7.  Risk on the major shareholder’s influence

  Mr. Khanchai Boonpan, who is the major shareholder holding of 12.79
  million shares- 28.42% of registered capital and completely issued and
  paid-up capital 45 million shares. He can neither control nor
  influence the Company’s operations and a number of votes for
  shareholders’ meeting, because the significant votes must be 3 of 4
  votes from shareholders’ meeting.

  To balance the administrations power, the Company provides 3 of 11
  directors for independent directors which equal to 27.3 percent of all
  directors.

8.  Risk on new entrance and competitive in hire purchase motorcycles
    business

  To operate the hire purchase motorcycles business, it is not necessary
  to use many materials and tools. It’s easy to entrance in the business
  because hire purchase motorcycles business can be set up and expand
  with big capital. Somehow it’s difficult to successes and existing.

  Dealers are important advisor to induce clients to buy our services.
  Therefore, there is risk if dealers don’t suggest our services to
  customers.

  With the fast operation, complete information system, experienced and
  specialize in business, we can approve credit within an hour which
  satisfy to dealers’ needs. The Company can develop information system
  with ourselves to support business, then we can rapidly check and
  response any inquiry to dealers and customers for clearing outstanding
  balance.