SOURCE: Brooke Capital Corporation

May 05, 2008 08:00 ET

Brooke Capital Announces Operating Initiatives and Schedules First Quarter Financial Results and Conference Call

PHILLIPSBURG, KS--(Marketwire - May 5, 2008) - Brooke Capital Corporation (AMEX: BCP) announced that it has reduced its staff by approximately 17% by reducing its workforce at its Overland Park and agent service centers effective May 2, 2008. This and other expense reduction initiatives have been implemented as the result of: 1) a reduction in the rate of monthly franchise royalties charged to franchisees, and 2) a reduction in the pace of new franchise recruitment primarily as the result of the continuing restricted credit market environment.

Monthly Franchise Royalties ... Brooke Capital Corporation's chief executive officer, Kyle Garst, announced a reduction in the rate of monthly franchise royalties at the company's national convention last October as part of plans for the company's "New Era." Franchisees received bonuses that reduced their franchise fee royalties by approximately $900,000 during the first quarter of 2008.

"This reduction in the monthly royalty rate has made our franchisees financially stronger and better equipped to handle economic uncertainty," said Mr. Garst. "However, this reduction in monthly royalties has also forced Brooke Capital Corporation to become more efficient and focused when providing services to its franchisees. Accordingly, we will be consolidating our national office franchise support services with Phillipsburg operations to eliminate redundancies and maximize efficiencies and accountability without impacting the basic franchise support services provided."

One of these recently implemented expense reduction measures is limiting commission advances to franchisees. This has been done in order to offset the reduction in the monthly royalty rate and because these advances are expensive to administer and collect. Another expense reduction measure is an increased emphasis on financial discipline by franchisees, especially franchisees with past due premiums owed to the premiums trust account, or franchisees owing balances to Brooke Capital Corporation for past due premiums paid by Brooke on behalf of franchisees.

Initial Franchise Fees ... Brooke Capital expects to sell fewer franchises during the coming months as a result of the continued restricted credit market environment. This reduction in cost structure also reflects the expected reduction in initial franchise fee revenues for the balance of 2008.

Kyle Garst stated, "We intended to limit the number of new franchises sold this year, to focus on quality, but it has become increasingly apparent that we must be prepared for a no-growth scenario until the credit markets turn around. These market conditions have forced us to limit operating expenses to no more than the recurring monthly royalty and recurring monthly collateral preservation revenues that we collect. This transition is painful but necessary, as we are committed to running our company with a strong degree of operational discipline."

Management also announced that it will issue first quarter financial results prior to the opening of the stock market on Monday, May 12, 2008 and host an investor and analyst conference call to discuss these results later that morning, as follows:

Time:                  10 a.m. Central Time
Dial-in-number:        866-831-6247 (domestic) or
                       (617) 213-8856 (international)
Conference Call ID:    31094479

About Brooke Capital Corporation ... Brooke Capital Corporation (AMEX: BCP) is an Overland Park, Kansas-based insurance organization founded in 1997. Brooke Capital is the parent company of Brooke Investments, Inc., an insurance agency franchisor, First Life America Corporation, a life insurance company, and Brooke Capital Advisors, Inc., a loan consultant for managing general insurance agencies.

This press release contains forward-looking statements. All forward-looking statements involve risks and uncertainties, and several factors could cause actual results to differ materially from those in the forward-looking statements. The following factors, among others, could cause actual results to differ from those indicated in the forward-looking statements: the uncertainty that the Company will achieve its short-term and long-term profitability and growth goals, uncertainties associated with market acceptance of and demand for the Company's products and services, the impact of competitive products and pricing, the dependence on third-party suppliers and their pricing, its ability to meet product demand, the availability of funding sources, the exposure to market risks, uncertainties associated with the development of technology, changes in the law and in economic, political and regulatory environments, changes in management, the dependence on intellectual property rights, the effectiveness of internal controls, and risks and factors described from time to time in reports and registration statements filed by the Company with the Securities and Exchange Commission. A more complete description of the Company's business is provided in the Company's reports and registration statements, which are available from the Company without charge at or at

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