Case Financial, Inc. Announces Second Quarter and Six-Month Results; Enthusiastic Response For New Litigation Finance Program.

Business Editors

SHERMAN OAKS, Calif.--(BUSINESS WIRE)--May 19, 2003

Case Financial, Inc. (OTCBB: CSEF) announced financial results for the second quarter and six months ended March 31, 2003.

For the quarter ended March 31, 2003, the Company reported revenues of $140,224, a loss from operations of ($580,407) and a net loss of ($679,685), or ($0.04) per share. For the three-month period ended March 31, 2002, the Company reported revenues of $159,630, a loss from operations of ($124,842) and a net loss of ($303,800), or ($0.09) per share.

The Company reported revenues for the first six months of 2003 were $279,628, a loss from operations of ($1,085,221) and a net loss of ($1,235,221), or ($0.08) per share, as compared with revenues of $470,971, a loss from operations of ($185,180) and a net loss of ($689,742), or ($0.20) per share, for the six-month period ended March 31, 2002.

Eric A. Alden, Co-Chairman and CEO said "Our portfolio continues to improve in both yield and cash cycle time, which is particularly encouraging given the very short period the investments have been outstanding. When you consider that participation fees of $148,628 were earned on successfully resolved cases managed by us for third party investors during the quarter (and netted in arriving at reported contract fee revenue for GAAP reporting purposes), our gross contract fee revenue totaled $266,043, an increase of 67%, compared with the same quarter in 2002, and is only 5.5% less than the total revenues earned in the comparable six-month period ended March 31, 2002. This was all accomplished on an average investment base in 2003 of $1.3 million, which is only 57% of the investment outstanding in the prior year. We are making more money, faster, with less money invested.

"As part of our business strategy to position Case as the premiere, institutional non-recourse litigation finance company, on April 10th we successfully launched the industry's first non-recourse line of credit funding program, L.E.G.s(TM), for plaintiff attorneys. The new non-recourse loan program is administered by the Company's wholly owned subsidiary, Case Capital Corporation (CCC). CCC is one of the industry's first non-recourse California licensed lenders. I am very encouraged by the enthusiastic response from the legal community to our new L.E.G.s(TM) program," Alden said.

Because Case Financial, Inc. is one of only two public companies in the non-recourse litigation funding space and has a business model unfamiliar to most investors, the Company reviewed some of the more important factors affecting its portfolio performance, and the accounting practices affecting financial reporting, in order to provide some basic metrics for measuring the health of the investment portfolio, better understand the financial statements and measure how the Company is performing.

-- 1. Revenue recognition is deferred until end of case. As a

result of the non-recourse nature of advances, income on our

investments in contracts, which is earned throughout the

period the advance is outstanding, is recognized as revenue

only upon the successful resolution (settlement or positive

judgment) of the underlying case. On average, cases in the

portfolio of investments in contracts resolve between six and

15 months after funding. While the Company cannot recognize

the revenue for GAAP purposes, it does, however, disclose in

the footnotes to its financial statements an estimate of this

accrued income, net of a provision for potential contract

losses upon resolution of the cases. As of March 31, 2003,

this unreported portfolio income aggregated $1,507,000, which

CSEF expects to realize as the cases resolve in the periods

subsequent to the balance sheet date. For the six months ended

March 31, 2003, this represents approximately $300,000 in

additional unreported revenue not recognized during that

period as compared with the unreported portfolio income on

investments in contracts at September 30, 2002. Furthermore,

the estimated current value of the investment-in-contracts

portfolio then can be computed by adding the amount reported

on the balance sheet plus the estimate of unreported income

set forth in the footnotes. The estimated portfolio value, net

of the reserve for contract losses therefore aggregated

$2,788,000 at March 31, 2003 and $2,575,000 at September 30,

2002.

-- 2. Estimated contract losses reserved at date of advance.

Notwithstanding that income recognition is deferred to the end

of the case, as required by GAAP, CSEF is further required to

charge as a current expense in the period an investment is

made, an estimate of future contract losses on that

investment. As a result, contract loss expense is accelerated

while revenue recognition is deferred.

-- 3. Third party participations. From time to time, the Company

has the opportunity to fund highly attractive cases, but which

exceed the dollar limitations it places on individual

investments in its portfolio. When possible, CSEF participates

in these cases by arranging for third parties to make direct

investments on those selected cases. CSEF originates and

services the investment on behalf of the investor for a

success fee based typically upon 25% of the income generated

by the investment at successful resolution of the case. By

doing so, the Company continues to provide more complete

service to its larger customers, without taking any financial

risk for the investment. For financial statement purposes,

contract fee revenue is reported net of amounts paid to third

party participants. During the six months ended March 31,

2003, the Company paid fees of $166,455 to third party

participants for successfully resolved cases that were not

reflected in its reported revenue. The portfolio of

investments in contracts therefore generated gross contract

fee revenue of $400,858 for the six months ended March 31,

2003. As its portfolio grows the need for this 'opportunity

sharing' will diminish

"As for costs, we continue to focus on containing costs and improving efficiency. As anticipated, costs and expenses for sales and G&A rose. These increases were mainly attributable to accounting, audit and legal costs in connection with the annual audit and filing for the new fiscal year end, legal costs incurred to both qualify our subsidiary, Case Capital Corporation, as a licensed California Finance Lender and the launch of our new Litigation Expense Guaranty (L.E.G.s(TM)) program," Alden concluded.

Founded in 1998, Case Financial, Inc. (a licensed California Finance Lender) is one of California's leading litigation funding companies, providing non-recourse financing to law firms. The Company makes investments in personal injury cases and other types of litigation through non-recourse loans basing its funding decision and the pricing of its fees on an underwriting risk analysis and estimate of settlement value and timing. The non-recourse cash loans are collateralized by the proceeds of each legal settlement and are repaid when a case is settled or favorably adjudicated in court.

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for certain forward-looking statements. The statements contained in this news release that are not historical facts are forward-looking statements based on the Company's current expectations and beliefs concerning future developments and their potential effects on the Company. There can be no assurance that future developments affecting the Company will be those anticipated by the Company. Actual results may differ from those projected in the forward-looking statements. The forward-looking statements involve significant risks and uncertainties (some of which are beyond the control of the Company) and are subject to change based upon various factors. These factors include, without limitation, the Company's lack of profitability, the Company's need for financing, the Company's relatively brief operating history, the uncertainty of litigation outcomes, the length of the Company's collection cycle, the Company's ability to collect upon the judgment recovery, the success of the Company's new funding program, and future legislation including tort reform that may potentially affect the Company's business. For a detailed discussion of some of the ongoing risks and uncertainties of the Company's business, see the Company's annual and quarterly filings on Forms 10-KSB and 10-QSB with the Securities and Exchange Commission. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

                         FINANCIAL HIGHLIGHTS

                                          Second Quarter Ended
                                                March 31,
                                             2003       2002
Revenues                                 $ 140,224   $ 159,630
Net Loss from Operations                  (580,407)   (124,842)
Net Loss                                  (679,685)   (303,800)
Loss Per Share -- Basic & Diluted            (0.04)      (0.09)
Weighted Average Shares Outstanding     15,561,108   3,487,500

                                             Six Months Ended
                                                March 31,
                                             2003       2002
Revenues                                 $ 279,628   $ 470,971
Net Loss from Operations                (1,085,221)   (185,180)
Net Loss                                (1,235,221)   (689,742)
Loss Per Share -- Basic & Diluted            (0.08)      (0.20)
Weighted Average Shares Outstanding     15,561,108   3,416,071