footnotes appear on page 7

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REORGANIZATION

We have conducted all of our operations through Marlin Leasing Corporation, a Delaware corporation, since it was formed on June 16, 1997. On or prior to the completion of this offering, Marlin Leasing Corporation will become a direct, wholly owned subsidiary of Marlin Business Services Corp., a newly-formed Pennsylvania holding company, and all former shareholders of Marlin Leasing Corporation will have become shareholders of Marlin Business Services Corp. After this reorganization, Marlin Leasing Corporation will continue in existence as our primary operating subsidiary. We will complete this reorganization through the following steps:

	•	all classes of Marlin Leasing Corporation’s redeemable convertible preferred stock will convert by their terms into Class A common stock of Marlin Leasing Corporation;
	•	all warrants to purchase Class A common stock of Marlin Leasing Corporation will be exercised on a net issuance, or cashless, basis for Class A common stock, and a selling shareholder is expected to exercise options to purchase 60,655 shares of Class A common stock. The exercise of the warrants will result in the issuance of 700,046 common shares on a net issuance basis, based on an assumed initial public offering price of $14.00 per share;
	•	all warrants to purchase Class B common stock of Marlin Leasing Corporation will be exercised on a net issuance basis for Class B common stock, and all Class B common stock will convert by its terms into Class A common stock;
	•	a direct, wholly owned subsidiary of Marlin Business Services Corp. will merge with and into Marlin Leasing Corporation, and each share of Marlin Leasing Corporation’s Class A common stock will be exchanged for one share of Marlin Business Services Corp. common stock under the terms of an agreement and plan of merger dated August 27, 2003; and
	•	the Marlin Leasing Corporation 1997 Equity Compensation Plan will be assumed by us and merged into the Marlin Business Services Corp. 2003 Equity Compensation Plan. All outstanding options to purchase Marlin Leasing Corporation’s Class A common stock under the 1997 Equity Compensation Plan will be converted into options to purchase shares of our common stock.

We are taking these steps to reorganize our operations into a holding company structure prior to the offering.

As a result of this reorganization, 7,632,355 shares of our common stock will be issued and outstanding, not including the shares of our common stock that we are selling in connection with this offering, and options to purchase 1,078,260 shares of our common stock will be outstanding under our 2003 Equity Compensation Plan, which includes 134,500 options granted in connection with this offering. Upon the completion of the reorganization, no other options, warrants, preferred stock or other equity securities of ours will be then issued or outstanding.

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RISK FACTORS

You should carefully consider the following risk factors before you decide to buy our common stock.

Risks Related to Marlin Business Services Corp.

If we cannot obtain external financing, we may be unable to fund our operations.

Our business requires a substantial amount of cash to operate. These cash requirements will increase if our lease originations increase. We historically have obtained a substantial amount of the cash required for operations through a variety of external financing sources, such as borrowings under a revolving bank facility, financing of leases through commercial paper (“CP”) conduit warehouse facilities, and term note securitizations. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financing Sources.”

Our current revolving bank facility expires in August 2005. Failure to renew or replace our revolving bank facility could limit our ability to originate leases. Our existing CP conduit warehouse facilities expire in July 2004 and December 2004. A failure to renew or increase the funding commitment under our existing CP conduit warehouse facilities, or add new CP conduit warehouse facilities could affect our ability to refinance leases originated through our revolving bank facility and, accordingly, our ability to fund and originate new leases. An inability to complete term note securitizations would result in our inability to refinance amounts outstanding under our CP conduit warehouse facilities and revolving bank facility and would also negatively impact our ability to originate and service new leases.

Our ability to complete CP conduit transactions and term note securitization, as well as obtain renewals of lenders’ commitments, is affected by a number of factors, including:

	•	conditions in the securities and asset-backed securities markets;
	•	conditions in the market for commercial bank liquidity support for CP programs;
	•	compliance of our leases with the eligibility requirements established in connection with our CP conduit warehouse facilities and term note securitizations, including the level of lease delinquencies and defaults; and
	•	our ability to service the leases.

We are and will continue to be dependent upon the availability of credit from these external financing sources to continue to originate leases and to satisfy our other working capital needs. We may be unable to obtain additional financing on acceptable terms or at all, as a result of prevailing interest rates or other factors at the time, including the presence of covenants or other restrictions under existing financing arrangements. If any or all of our funding sources become unavailable on acceptable terms or at all, we may not have access to the financing necessary to conduct our business, which would limit our ability to fund our operations. We do not have long term commitments from any of our current funding sources. As a result, we may be unable to continue to access these or other funding sources. In the event we seek to obtain equity financing, our shareholders may experience dilution as a result of the issuance of additional equity securities. This dilution may be significant depending upon the amount of equity securities that we issue and the prices at which we issue such securities.

Our financing sources impose covenants, restrictions and default provisions on us, which could lead to termination of our financing facilities, acceleration of amounts outstanding under our financing facilities and our removal as servicer.

The legal agreements relating to our revolving bank facility, our CP conduit warehouse facilities and our term note securitizations contain numerous covenants, restrictions and default provisions relating to, among other things, maximum lease delinquency and default levels, a minimum net worth requirement and a maximum debt to equity ratio. In addition, a change in our Chief Executive Officer or President is an event of default under our revolving bank facility and CP conduit warehouse facilities unless we hire a replacement acceptable to our lenders within 90 days. Such a change is also an immediate event of servicer termination under our term note securitizations. A merger or consolidation with another company

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If we inaccurately assess the creditworthiness of our end user customers, we may experience a higher number of lease defaults, which may restrict our ability to obtain additional financing and adversely affect our earnings.

We specialize in leasing equipment to small businesses. Small businesses may be more vulnerable than large businesses to economic downturns, typically depend upon the management talents and efforts of one person or a small group of persons and often need substantial additional capital to expand or compete. The death, disability or resignation of one or more of these persons could have an adverse impact on the operations of that business. Small business leases, therefore, may entail a greater risk of delinquencies and defaults than leases entered into with larger, more creditworthy leasing customers. In addition, there is typically only limited publicly available financial and other information about small businesses and they often do not have audited financial statements. Accordingly, in making credit decisions, our underwriting guidelines rely upon the accuracy of information about these small businesses obtained from the small business owner and/or third party sources, such as credit reporting agencies. If the information we obtain from these sources is incorrect, our underwriting will not be as effective and our ability to make appropriate credit decisions will be impaired. While we do not maintain any minimum credit standards for our leases, our underwriting guidelines take into account a variety of factors aimed at determining whether our end user customers are creditworthy, such as credit bureau reports, time in business, bank and trade references and performance under existing debt obligations. If we inaccurately assess the creditworthiness of our end user customers, we may experience a higher number of lease defaults and related decreases in our earnings.

Defaulted leases and certain delinquent leases also do not qualify as collateral against which initial advances may be made under our revolving bank facility or CP conduit warehouse facilities, and we cannot include them in our term note securitizations. An increase in delinquencies or lease defaults could reduce the funding available to us under our facilities and could adversely affect our earnings, possibly materially. In addition, increasing rates of delinquencies or charge-offs could result in adverse changes in the structure of our future financing facilities, including increased interest rates payable to investors and the imposition of more burdensome covenants and credit enhancement requirements. Any of these occurrences could have a material adverse effect on our business, financial condition and results of operations.

If we are unable to effectively manage any future growth, we may suffer material operating losses.

We have grown our lease originations and overall business significantly since we commenced operations. However, our ability to continue to increase originations at a comparable rate depends upon our ability to implement our disciplined growth strategy and upon our ability to evaluate, finance and service increasing volumes of leases of suitable yield and credit quality. Accomplishing such a result on a cost-effective basis is largely a function of our marketing capabilities, our management of the leasing process, our credit underwriting guidelines, our ability to provide competent, attentive and efficient servicing to our end user customers, our access to financing sources on acceptable terms and our ability to attract and retain high quality employees in all areas of our business.

Even if we are able to continue our growth in lease originations, our future success will be dependent upon our ability to manage our growth. Among the factors we would need to manage are the training,

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If losses from leases exceed our allowance for credit losses, our operating income will be reduced or eliminated and our financial condition may be adversely affected.

In connection with our financing of leases, we record an allowance for credit losses to provide for estimated losses. Our allowance for credit losses is based on, among other things, past collection experience, industry data, lease delinquency data and our assessment of prospective collection risks. Determining the appropriate level of the allowance is an inherently uncertain process and therefore our determination of this allowance may prove to be inadequate to cover losses in connection with our portfolio of leases. Factors that could lead to the inadequacy of our allowance may include our inability to effectively manage collections, unanticipated adverse changes in the economy or discrete events adversely affecting specific leasing customers, industries or geographic areas. Losses in excess of our allowance for credit losses would cause us to increase our provision for credit losses, reducing or eliminating our operating income and adversely affecting our financial condition.

If we cannot effectively compete within the equipment leasing industry, we may be unable to increase our revenues or maintain our current levels of operations.

The business of small-ticket equipment leasing is highly fragmented and competitive. We compete with:

	•	national, regional and local finance and leasing companies;
	•	captive finance and leasing companies affiliated with major equipment manufacturers; and
	•	other sources of financing, including corporate credit card issuers and traditional financial services companies such as commercial banks, savings and loan associations and credit unions.

Many of our competitors are substantially larger and have considerably greater financial, technical and marketing resources than we do. For example, some competitors may have a lower cost of funds and access to funding sources that are not available to us. A lower cost of funds could enable a competitor to offer leases with yields that are lower than those we use to price our leases, potentially forcing us to decrease our yields or lose origination volume. In addition, certain of our competitors may have higher risk tolerances or different risk assessments, which could allow them to establish more origination source and end user customer relationships and increase their market share. There are few barriers to entry with respect to our business and, therefore, new competitors could enter the business of small-ticket equipment leasing at any time. The companies that typically provide financing for large-ticket or middle-market transactions could begin competing with us on small-ticket equipment leases. If this occurs, or we are unable to compete effectively with our competitors, we may be unable to sustain our operations at their current levels or generate revenue growth.

If we experience significant telecommunications or technology downtime, our operations would be disrupted and our ability to generate operating income could be adversely affected.

Our business depends in large part on our telecommunications and information management systems. The temporary or permanent loss of our computer systems, telecommunications equipment or software systems, through casualty or operating malfunction, could disrupt our operations adversely affect our ability to service our customers and lead to significant declines in our operating income.

If we cannot maintain our relationships with origination sources, our ability to generate lease transactions and related revenues may be significantly impeded.

We have formed relationships with thousands of origination sources, comprised primarily of independent equipment dealers and, to a lesser extent, lease brokers. We rely on these relationships to generate lease applications and originations. We invest significant time and resources in establishing and maintaining

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Deteriorated economic or business conditions may lead to greater than anticipated lease defaults and credit losses, which could limit our ability to obtain additional financing and harm our operating results.

Our operations may be adversely affected by various economic factors and business conditions, including the level of economic activity in the markets in which we operate. Delinquencies and credit losses generally increase during economic slowdowns or recessions. Because we extend credit primarily to small businesses, many of our customers may be particularly susceptible to economic slowdowns or recessions and may be unable to make scheduled lease payments during these periods. Therefore, to the extent that economic activity or business conditions deteriorate, our delinquencies and credit losses may increase. Unfavorable economic conditions may also make it more difficult for us to maintain both our new lease origination volume and the credit quality of new leases at levels previously attained. Unfavorable economic conditions could also increase our funding costs or operating cost structure, limit our access to the securitization and other capital markets or result in a decision by lenders not to extend credit to us. Any of these events could significantly harm our operating results.

The departure of any of our key management personnel or our inability to hire suitable replacements for our management may result in defaults under our financing facilities, which could restrict our ability to access funding and effectively operate our business.

Our future success depends to a significant extent on the continued service of our senior management team. A change in our Chief Executive Officer or President is an event of default under our revolving bank facility and CP conduit warehouse facilities unless we hire a replacement acceptable to our lenders within 90 days. Such a change is also an immediate event of servicer termination under our term note securitizations. The departure of any of our executive officers or key employees could limit our access to funding and ability to operate our business effectively.

Our results of operations would be negatively affected by the termination or interruption of, or a decrease in volume under, our property insurance program.

Our end user customers are required to obtain all-risk property insurance for the replacement value of the leased equipment. The end user customer has the option of either delivering a certificate of insurance listing us as loss payee under a commercial property policy issued by a third party insurer or satisfying their insurance obligation through our insurance program. Under our program, the end user customer purchases coverage under a master property insurance policy written by a national third party insurer (our “primary insurer”) with whom our captive insurance subsidiary, AssuranceOne, Ltd., has entered into a 100% reinsurance arrangement. Termination or interruption of our program could occur for a variety of reasons, including: 1) adverse changes in laws or regulations affecting our primary insurer or AssuranceOne; 2) a change in the financial condition or financial strength ratings of our primary insurer or AssuranceOne; 3) negative developments in the loss reserves or future loss experience of AssuranceOne which render it uneconomical for us to continue the program; 4) termination or expiration of the reinsurance agreement with our primary insurer, coupled with an inability by us to quickly identify and negotiate an acceptable arrangement with a replacement carrier; or 5) competitive factors in the property insurance market. Our operating results would be negatively impacted if there was a termination or interruption of this program or if fewer end user customers elected to satisfy their insurance obligations through our program.

Regulatory and legal uncertainties could result in significant financial losses and may require us to alter our business strategy and operations.

Laws or regulations may be adopted with respect to our equipment leases or the equipment leasing, telemarketing and collection processes. Any new legislation or regulation, or changes in the interpretation

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We, like other finance companies, face the risk of litigation, including class action litigation, and regulatory investigations and actions in connection with our business activities. These matters may be difficult to assess or quantify, and their magnitude may remain unknown for substantial periods of time. A substantial legal liability or a significant regulatory action against us could cause us to suffer significant costs and expenses, and could require us to alter our business strategy and the manner in which we operate our business.

If interest rates change significantly, we may be subject to higher interest costs on future term note securitizations and we may be unable to effectively hedge our variable rate borrowings, which may cause us to suffer material losses.

Because we generally fund our leases through a revolving bank facility, CP conduit warehouse facilities and term note securitizations, our margins could be adversely affected by an increase in interest rates. Each of our leases is structured so that the sum of all scheduled lease payments will equal the cost of the equipment to us, less the residual, plus a return on the amount of our investment. This return is known as the yield. The yield on our leases is fixed because the scheduled payments are fixed at the time of lease origination. When we originate or acquire leases, we base our pricing in part on the spread we expect to achieve between the yield on each lease and the effective interest rate we expect to pay when we finance the lease. To the extent that a lease is financed with variable rate funding, increases in interest rates during the term of a lease could narrow or eliminate the spread, or result in a negative spread. A negative spread is an interest cost greater than the yield on the lease. Currently, our revolving bank facility and our CP conduit warehouse facilities have variable rates. As required under our financing facility agreements, we enter into interest rate cap agreements to hedge against the risk of interest rate increases in our CP conduit warehouse facilities. If our hedging strategies are imperfectly implemented or if a counterparty defaults on a hedging agreement, we could suffer losses relating to our hedging activities. In addition, with respect to our fixed rate borrowings, such as our term note securitizations, increases in interest rates could have the effect of increasing our borrowing costs on future term note transactions.

Failure to realize the projected value of residual interests in equipment we finance could adversely affect our results of operations and financial condition.

At June 30, 2003, approximately 36% of our leases had fair market value purchase options or fixed purchase options, the latter of which are typically 10% of the original equipment cost. We estimate the residual value of the equipment which is recorded as an asset on our balance sheet. Realization of residual values depends on numerous factors, most of which are outside of our control, including:

	•	the general market conditions at the time of expiration of the lease;
	•	the cost of comparable new equipment;
	•	the obsolescence of the leased equipment;
	•	any unusual or excessive wear and tear on or damage to the equipment;
	•	the effect of any additional or amended government regulations; and
	•	the foreclosure by a secured party of our interest in a defaulted lease.

Our failure to realize our recorded residual values would adversely affect our results of operations and financial condition.

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Our quarterly operating results may fluctuate significantly.

Our operating results may differ from quarter to quarter, and these differences may be significant. Factors that may cause these differences include:

	•	changes in the volume of lease applications, approvals and originations;
	•	changes in interest rates;
	•	the timing of term note securitizations;
	•	the availability of capital;
	•	the degree of competition we face; and
	•	general economic conditions and other factors.

The results of any one quarter may not indicate what our performance may be in the future.

Risks Relating to this Offering

We may be unable to effectively manage the new challenges and increased costs that we will be faced with as a public company.

Our management team has historically operated our business as a privately held company. Our management team has never had direct responsibility for managing a publicly traded company. We will incur increased costs as a result of being a public company, particularly in light of recently enacted and proposed changes in laws and regulations and listing requirements. Our business and financial condition may be adversely affected if we are unable to effectively manage these increased costs and public company regulatory requirements.

We may use the proceeds of this offering in ways with which you may disagree or in a manner that does not yield a significant, or any, return for our shareholders.

We intend to use the net proceeds of this offering to repay subordinated debt, pay accrued dividends to our preferred shareholders and for unspecified general corporate purposes, including working capital needs. Our management will have significant discretion in the use of these funds, and you may disagree with the way these funds are utilized. The manner in which we invest the proceeds may not yield a significant return, or any return at all.

A market for our common stock may never develop, and you may be unable to sell your shares at an attractive price or at all.

The initial public offering price for our common stock will be determined through our negotiations with the underwriters and may not bear any relationship to the market price at which it will trade after this offering. Before this offering there was no public trading market for our common stock and one may never develop or be sustained after this offering. If a market does not develop or is not sustained, it may be difficult for you to sell your shares of common stock at an attractive price or at all. We cannot predict the prices at which our common stock will trade. It is possible that in some future quarter our operating results may be below the expectations of financial market analysts and investors and, as a result of these and other factors, the price of our common stock may decline.

The price of our common stock may be volatile.

The trading price of our common stock following this offering may fluctuate substantially. The price of our common stock after this offering may be higher or lower than the price you pay, depending on many factors, some of which are beyond our control and may not be related to our operating performance. These fluctuations could cause you to lose part or all of your investment in our shares of common stock. Those factors that could cause fluctuations include, but are not limited to, the following:

	•	price and volume fluctuations in the overall stock market from time to time;
	•	significant volatility in the market price and trading volume of financial services companies;
	•	actual or anticipated changes in our earnings or fluctuations in our operating results or in the expectations of financial market analysts;

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	•	investor perceptions of the equipment leasing industry in general and our company in particular;
	•	the operating and stock performance of comparable companies;
	•	general economic conditions and trends;
	•	major catastrophic events;
	•	loss of external funding sources;
	•	sales of large blocks of our stock or sales by insiders; or
	•	departures of key personnel.

If you purchase shares of common stock sold in this offering, you will experience immediate dilution.

If you purchase shares of our common stock in this offering, you will experience significant and immediate dilution, because the price that you pay will be substantially greater than the net tangible book value per share of the shares you acquire. This dilution is due in large part to the fact that our earlier investors paid substantially less than the initial public offering price when they purchased their shares. You will experience additional dilution upon the exercise of stock options to purchase common stock and the issuance of restricted stock to our employees under our equity compensation plan.

Insiders will continue to have substantial control over us after this offering, which could limit your ability to influence the outcome of key transactions, including a change of control, and may result in the approval of transactions that would be adverse to your interests.

Our principal shareholders, directors and executive officers and entities affiliated with them will beneficially own approximately 51.5% of the outstanding shares of our common stock immediately after this offering. As a result, these shareholders, if acting together, would be able to influence or control matters requiring approval by our shareholders, including the election of directors and the approval of mergers or other extraordinary transactions. They may also have interests that differ from yours and may vote in a way with which you disagree and which may be adverse to your interests. The concentration of ownership may have the effect of delaying, preventing or deterring a change of control of our company, could deprive our shareholders of an opportunity to receive a premium for their common stock as part of a sale of our company and might ultimately affect the market price of our common stock.

We do not anticipate paying cash dividends on our shares of common stock in the foreseeable future.

We have never declared or paid any cash dividends on our shares of common stock. We intend to retain any future earnings to fund the operation and expansion of our business and, therefore, we do not anticipate paying cash dividends on our shares of common stock in the foreseeable future.

Common stock available for future sale by our shareholders may adversely affect our stock price.

If our shareholders sell substantial amounts of our common stock in the public market following this offering, the market price of our common stock could fall. These sales could also make it more difficult for us to sell shares of our common stock or equity related securities in the future.

Anti-takeover provisions and our right to issue preferred stock could make a third-party acquisition of us difficult.

We are a Pennsylvania corporation. Anti-takeover provisions of Pennsylvania law could make it more difficult for a third party to acquire control of us, even if such change in control would be beneficial to our shareholders. Our amended and restated articles of incorporation and our bylaws will contain certain other provisions that would make it more difficult for a third party to acquire control of us, including a provision that our board of directors may issue preferred stock without shareholder approval.

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A WARNING ABOUT FORWARD-LOOKING STATEMENTS

We make forward-looking statements in this prospectus that are subject to risks and uncertainties. These forward-looking statements include information about possible or assumed future results of our business, financial condition, liquidity, results of operations, plans and objectives. Statements regarding the following subjects are forward-looking by their nature:

	•	our business strategy;
	•	our projected operating results;
	•	our ability to obtain external financing;
	•	our understanding of our competition;
	•	industry and market trends;
	•	projected capital expenditures;
	•	the impact of technology on our products, operations and business; and
	•	use of the proceeds of this offering.

The forward-looking statements are based on our beliefs, assumptions and expectations of our future performance, taking into account all information currently available to us. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to us. We will update this prospectus only to the extent required under applicable securities laws. If a change occurs, our business, financial condition, liquidity and results of operations may vary materially from those expressed in our forward-looking statements. You should carefully consider these risks before you decide to invest in our common stock:

	•	the factors referenced in this prospectus, including those set forth under the sections captioned “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Our Business”;
	•	general volatility of the securitization and capital markets;
	•	the market price of our common shares;
	•	changes in our business strategy;
	•	availability, terms and deployment of capital;
	•	availability of qualified personnel;
	•	changes in our industry, interest rates or the general economy; and
	•	the degree and nature of our competition.

When we use the words “believe,” “expect,” “anticipate,” “estimate” or similar expressions, we intend to identify forward-looking statements. You should not place undue reliance on these forward-looking statements.

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USE OF PROCEEDS

We estimate our net proceeds from the sale of our common stock in this offering will be approximately $38.8 million, or approximately $44.9 million if the underwriters’ over-allotment option is exercised in full, assuming an offering price of $14.00 per share, which is the mid-point of the price range set forth on the cover page of this prospectus, and after deducting the estimated underwriting discount and estimated offering expenses. In addition, 1,286,733 shares, or 1,478,745 shares if the underwriters’ over-allotment option is exercised in full, are being offered by the selling shareholders. We will receive no proceeds from the sale of shares by the selling shareholders.

We intend to use the net proceeds we receive from the offering for the following purposes:

	•	to repay $10.0 million of outstanding subordinated debt plus accrued interest for the current quarterly period, which has a fixed interest rate of 11.0% per annum and is scheduled to mature on March 30, 2006;
	•	to pay approximately $6.0 million of accrued dividends owed on our preferred stock, which accrued at a rate of 7.0% per annum from their respective issue dates through July 24, 2001, and at 8.0% per annum thereafter; and
	•	for general corporate and working capital purposes, including but not limited to investing in lease originations, establishing regional offices in strategic locations and hiring additional sales account executives.

The amounts and timing of our actual expenditures for each purpose may vary significantly depending upon numerous factors, including our volume of lease originations, payments received on existing leases, availability of funding from external sources and the amount of cash, if any, we generate from operations.

We may find it necessary or advisable to use portions of the net proceeds we receive from this offering for other purposes, and we will have broad discretion in applying the net proceeds of this offering. Pending the uses described above, we intend to invest the net proceeds of this offering in short-term, investment-grade, interest-bearing securities.

CAPITALIZATION

The following table sets forth our:

	•	actual capitalization as of June 30, 2003;
	•	pro forma capitalization after giving effect to our reorganization, which is described in detail in the “Reorganization” section of this prospectus and which includes: 1) the conversion of all outstanding shares of redeemable convertible preferred stock into 5,156,152 shares of Class A common stock; 2) the exercise of all outstanding warrants for 700,046 shares of Class A common stock on a net issuance basis based on an assumed initial public offering price of $14.00 per share, which is the mid-point of the range set forth on the cover page of this prospectus; 3) the expected exercise by a selling shareholder of options to purchase 60,655 shares of Class A common stock; and 4) the exchange of all Class A common stock in the merger for an equal number of shares of our common stock; and
	•	pro forma as adjusted capitalization after giving effect to: 1) the sale by us of 3,113,267 shares of common stock in this offering, at an assumed initial public offering price of $14.00 per share, which is the mid-point of the range set forth on the cover page of this prospectus and after deducting the estimated underwriting discount and estimated offering expenses payable by us; and 2) the payment of accrued dividends owed on our redeemable convertible preferred stock and the repayment of our outstanding subordinated debt plus accrued interest with a portion of the net proceeds from this offering.

You should read this table in conjunction with the sections of this prospectus captioned “Reorganization,” “Use of Proceeds,” “Selected Financial Information” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as the audited consolidated financial statements and related notes included elsewhere in this prospectus.

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DILUTION

As of June 30, 2003, our pro forma net tangible book value was approximately $26.4 million, or approximately $3.45 per share of common stock. Pro forma net tangible book value per share represents the amount of our total assets less intangible assets and less our total pro forma liabilities, divided by the total pro forma number of shares of common stock outstanding, in each case after giving effect to our reorganization, which is described in detail in the section of this prospectus captioned “Reorganization.”

After giving effect to the sale of our shares of common stock in this offering at an assumed initial public offering price of $14.00 per share and our receipt of the estimated net proceeds of the offering, our pro forma as adjusted net tangible book value as of June 30, 2003 would have been approximately $64.8 million, or $6.03 per share. This represents an immediate increase in pro forma net tangible book value of $2.58 per share to existing shareholders and an immediate dilution of $7.97 per share to new investors in this offering. The following table illustrates this per share dilution:

The following table summarizes, as of June 30, 2003, on the pro forma basis described above, the differences between existing shareholders and the new investors with respect to the number of shares of common stock purchased from us, the total consideration paid and the average price per share paid before deducting the underwriters’ discount and our estimated offering expenses.