SOURCE: Extreme Motorsports of California, Inc.

May 29, 2007 09:00 ET

Extreme Motorsports of California, Inc. Completes Letter of Intent to Acquire Southern Offroad Vehicle Services

BAKERSFIELD, CA--(Marketwire - May 29, 2007) - Extreme Motorsports of California, Inc. (PINKSHEETS: ETMO) ("Xtreme" or the "Company") has entered into a letter of intent to acquire all of the capital stock of Southern Offroad Vehicle Services, LLC ("SOVS"), a company dedicated to providing financing for customers purchasing offroad vehicles. Through this acquisition, Xtreme will not only be able to offer its customers direct financing of sandcar purchases, but will also be the first sandcar manufacturer to offer leasing options, much like any traditional car dealer. Xtreme anticipates the acquisition will be closed no later than June 30, 2007.

In exchange for all of the capital stock of SOVS, Xtreme will pay $10,000 in cash and 15 million shares of Xtreme common stock. Of the 15 million shares of common stock, 10 million will be restricted shares of common stock and 5 million will be free-trading shares. The acquisition is subject only to customary due diligence procedures and legal review of the definitive closing documentation.

In the past, Xtreme required customer down payments at contract signing and final payment upon acceptance of the final vehicle, which required Xtreme to finance the 12-month or more build-out process through the operating cash flow of the company. Now, Xtreme will be able to achieve both greater throughput and profit margins by shifting its financing costs to the customer. SOVS has currently secured $14 million in financing for future customers of Xtreme, both for direct purchases and for leased vehicles. This will provide Xtreme with immediate funding for the build-out of custom sandcars for private customers and "spec" vehicles for its dealers.

"We're thrilled to be able to offer credit to our customers by acquiring SOVS. Now, within a matter of hours, customers will be able to complete a credit application, much like they would at a local car dealership, and receive approval to finance the purchase of our one-of-a-kind sandcars," stated Alan McCaa, President and CEO of Xtreme Motorsports. "Not only does this ease the financial burden for consumers, but it also allows Xtreme to build more cars by compressing our accounts receivable turnover ratio.

"Moreover, Xtreme's new financing division will allow our dealer network to purchase cars through our own finance company and 'floor' these models for retail sales. In effect, this gives our dealers the ability to carry a wide variety of vehicles without having to fund the entire inventory 'out of pocket,'" McCaa continued.

About Extreme Motorsports of California, Inc.

Extreme Motorsports of California, Inc., operating under the trade name "Xtreme Motorsports," is a manufacturer of custom and production-line sandrails, desert and dual sport racecars. Founded in 1983, Xtreme's sandcars have been sold to customers in England, the United Arab Emirates, Australia, South America and the US. For more information, visit the corporate web site

Forward-Looking Statements

Certain statements in this release, and other written or oral statements made by the Company, including the use of the words "expect," "anticipate," "estimate," "project," "forecast," "outlook," "target," "objective," "plan," "goal," "pursue," "on track," and similar expressions, are "forward-looking statements" and are subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance, or achievements of the company to be different from those expressed or implied. The Company assumes no obligation and does not intend to update these forward-looking statements and takes no obligation to update or correct information prepared by third parties that are not paid for by the Company.

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