BCP) provided an update on the operating initiatives announced on May 5, 2008, which are designed to realign operations to the current level of expected revenues in 2008. As previously announced, expense reductions have been required as the result of: 1) a reduction in the rate of monthly franchise royalty revenues charged to existing franchisees, which helps them better cope with the current economic uncertainties; and 2) the virtual elimination of initial franchise fee revenues, because loans are generally unavailable to new franchisees in the current uncertain credit environment.

Basic Services Unchanged -- Brooke Capital Corporation expects few changes with regard to services provided by Franchise Support Center personnel. Services provided to insurance agents pursuant to a franchise agreement have typically been performed by Franchise Support Center personnel located in Phillipsburg, Kan. Corresponding expenses have been paid by monthly franchise royalties. Advertising assistance has been typically performed by Franchise Support Center personnel located in Phillipsburg, Kan., and the corresponding expenses have been matched to profit-sharing commission revenues.

Collateral Preservation Services Reduced -- In recent years, most of the company's expenses have been incurred as the result of providing collateral preservation assistance to lenders. Collateral preservation expenses are expected to decrease significantly in the third quarter as lenders, especially Aleritas Capital Corp., an affiliate of the company (OTCBB: BRCR), accelerate the sale of assets of financially troubled franchisees. Collateral preservation services are typically performed by national and regional personnel. Beginning in the third quarter, the company expects to generate collateral preservation fees in excess of collateral preservation expenses incurred.

Commission Advances Halted -- As previously announced, as of August 15, 2008, all commission advances will be discontinued. Unlike previous years, the company does not have revenues from initial fees paid by new franchisees to help fund commission advances.

Discontinuation of Insurance Company Operations Planned -- The company had previously announced expansion plans for expanded issuance of non-standard auto insurance policies through Traders Insurance Company and life insurance policies through First Life America. Because of the current credit environment and its adverse impact on initial fees generated from recruitment of new franchisees, the company has discontinued these expansion plans and expects to liquidate these assets to pay down short-term liabilities.

Service Centers Halted -- The company has historically assisted franchisees by providing operating service centers which allowed agents to share office personnel and expenses with other agents.