Precision Auto Care Announces Restatement of FY03 Results

LEESBURG, Va., July 21 -- Precision Auto Care, Inc. (BULLETIN BOARD: PACI) announced that it was restating its financial results for the fiscal year ending June 30, 2003. Revenue and operating profit did not change. Revenue was reported at $11.9 million and that number remains the same as does operating profit of $978,000. However, the gain that was associated with the Company's debt restructure is now reflected as an increase to paid in capital. Consequently, net profits dropped to $1.2 million. This change was made at the behest of the SEC.

"The Company initially treated the 2003 debt restructuring transaction as a "gain" transaction in its financial statements but the Company has now reflected this transaction as a "capital" transaction," said Robert Falconi, PACI's President. "This restatement does not have an impact on our total assets or our stockholder's equity. Moreover, it does not affect current operations or FY05 operating results which have been very positive."

Precision Auto Care, Inc.'s affiliate, Precision Franchising LLC, is one of the world's leading franchisors of auto care centers, with 424 operating centers as of July 21, 2005. The Company franchises Precision Tune Auto Care centers around the world.

Cautionary Statement: The statements in this press release contain forward-looking statements within the meaning of the Securities Act of 1933 or the Securities Exchange Act of 1934. These statements are based on the Company's current expectations, estimates and projections. Statements that are not historical facts are forward-looking statements and typically are identified by words like "believe," "anticipate," "could," "estimate," "expect," "intend," "plan," "project," "will" and similar terms. These statements are not guarantees of future performance, events or results and involve potential risks and uncertainties. Accordingly, actual results may differ from current expectations, estimates and projections. The Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Important factors that may impact the Company's actual results include: (i) business conditions and the general economy; (ii) the federal, state and local regulatory environment; (iii) increased competitive pressure in the automotive after-market services business; (iv) significant automotive technology advances; (v) management's ability to execute the Company's business plan; and (vi) the Company's ability to sell franchises in each state. Additional information concerning risks and uncertainties that could cause actual results to differ materially from those projected or suggested in the forward-looking statements are in the Company's filings with the Securities and Exchange Commission and in its Amended Annual Report on Form 10-KSB/A for the year ended June 30, 2004. The forward-looking statements contained in this prospectus represent the Company's judgment as of the date of this prospectus, and you should not unduly rely on these statements.

                                          Three Months Ending June 30,

  000s except per share amounts

                                                  2004            2003
   Revenue                                    $  2,961       $   3,099
   Net income                                 $    726       $   1,362
   Diluted income per share                   $   0.03       $    0.08
   Shares outstanding - diluted                 26,785          17,711

                                          Twelve Months Ending June 30,

  000s except per share amounts

                                                  2004            2003
   Revenue                                   $  11,774        $ 11,937
   Net income                                $   1,590        $  1,186
   Diluted income per share                  $    0.07        $   0.08
   Shares outstanding - diluted                 22,549          15,188