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Letter to the Editor

DriversShield 2Q Report Shows Net Loss of $227,000

Driversshield's 2001 Quarter ending June 2001 reflected a net loss of $227,000 compared to net income of $14,000 in the 2000 Quarter. According to the filing, excluding the non-cash charge of $246,000 for re-pricing certain stock options, net income for the 2001 Quarter would have been $19,000. Heavy expenses and investment relating to the scale up of the company's recently launched insurance-industry CRM business, included sales and marketing, and related website development costs of $81,000. Basic and fully diluted loss per share was $.02 per share in the 2001 Quarter, versus $.00 in the 2000 Quarter.

Revenues were $4,043,000 in the 2001 Quarter, versus $3,411,000 in the 2000 Quarter, representing an increase of $632,000 or 19 percent. The company's revenues increased $691,000, from $2,956,000 to $3,647,000, due to its collision repair and fleet management service business, including subrogation and salvage commissions. This represented an increase of 23 per for the 2001 Quarter, as compared to the 2000 Quarter. In the 2001 Quarter, Affinity Services sales decreased $59,000 or 13 percent, to $396,000 as compared to $455,000 for the same period in 2000, reflecting a percentage of members that did not renew their memberships after the significant increases in memberships that resulted from marketing efforts during the prior year. The direct costs of services related to revenues (principally charges from automotive repair facilities) were $3,029,000 in the 2001 Quarter, as compared to $2,433,000 for the same period in 2000, representing an increase of $596,000 or 24 percent, while the increase in revenues was 19 percent in the aggregate.

Selling, general and administrative expenses increased by $57,000 (6 percent), to $990,000 in the 2001 Quarter, from $933,000 in the 2000 Quarter.

The 2001 Period reflected a net loss of $210,000 compared to net income of $98,000 in the 2000 Period.

Revenues were $8,469,000 in the 2001 Period, versus $6,652,000 in the 2000 Period, representing an increase of $1,817,000 or 27 percent. A 33 percent increase in revenues for collision repair and fleet management services reflects expansion of the client base that was added to the fleet program during the second quarter of 2000, as well as growth from existing customers. In the 2001 Period Affinity Services sales decreased by $83,000 to $795,000 as compared to $878,000 for the same period in 2000, reflecting 9 percent of members that did not renew their memberships.

As of, June 30, 2001, Driversshield had cash and cash equivalents of $744,000.

In March 2001, the company received a Nasdaq Staff Determination that it had failed to meet the $1 minimum price requirement for continued listing on the Nasdaq SmallCap Market and that its shares were subject to potential delisting. The company requested a hearing that occurred in May 2001, which resulted in the Nasdaq Listing Qualifications Panel providing formal notification, in June 2001, approving continued listing on the basis of the company having met compliance with all requirements.

In May 2001 the company signed a letter of intent to merge a private company, Code Technologies Inc. ("Code") into a wholly owned subsidiary of driversshield.com Corp. The merger will be effected as an exchange of stock, not requiring payment out of cash funds of the company. The letter of intent also contemplates that Pegasus Capital Advisors, L.P. will assist in obtaining $5 million of equity for marketing and development of the businesses. The transaction is subject to due diligence of both parties and shareholder approval.

Driversshield has an operating loss carryforward of approximately $4.7 million.

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