Atlanticus Holdings Corp (Form: 10-K, Received: 03/06/2015 06:29:56)

Table of Contents

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

For the year ended December 31, 2014

ATLANTICUS HOLDINGS CORPORATION

a Georgia Corporation

IRS Employer Identification No. 58-2336689

SEC File Number 0-53717

Five Concourse Parkway, Suite 400

Atlanta, Georgia 30328

(770) 828-2000

Atlanticus’ common stock, no par value per share, is registered pursuant to Section 12(b) of the Securities Exchange Act of 1934 (the “Act”).

Atlanticus is not a well-known seasoned issuer, as defined in Rule 405 of the Securities Act of 1933.

Atlanticus (1) is required to file reports pursuant to Section 13 of the Act, (2) has filed all reports required to be filed by Section 13 of the Act during the preceding 12 months and (3) has been subject to such filing requirements for the past 90 days.

Atlanticus has submitted electronically and posted on its corporate Web site every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months.

Atlanticus believes that its executive officers, directors and 10% beneficial owners subject to Section 16(a) of the Act complied with all applicable filing requirements during 2014, except as set forth under the caption “Section 16(a) Beneficial Ownership Reporting Compliance” in Atlanticus’ Proxy Statement for the 2015 Annual Meeting of Shareholders.

Atlanticus is a smaller reporting company and is not a shell company.

The aggregate market value of Atlanticus’ common stock (based upon the closing sales price quoted on the NASDAQ Global Select Market) held by non-affiliates as of June 30, 2014 was $15.3 million. (For this purpose, directors and officers have been assumed to be affiliates, and we also have excluded 1,459,233 loaned shares at June 30, 2014.)

As of February 20, 2015 , 13,926,379 shares of common stock, no par value, of Atlanticus were outstanding. This excludes 1,459,233 loaned shares to be returned.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of Atlanticus’ Proxy Statement for its 2015 Annual Meeting of Shareholders are incorporated by reference into Part III.

Table of Contents



Page
Part I
	Item 1.	Business	1
	Item 1A.	Risk Factors	6
	Item 1B.	Unresolved Staff Comments	17
	Item 2.	Properties	17
	Item 3.	Legal Proceedings	17
	Item 4.	Mine Safety Disclosures	17

Part II
	Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	18
	Item 6.	Selected Financial Data	18
	Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	19
	Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	36
	Item 8.	Financial Statements and Supplementary Data	36
	Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	36
	Item 9A.	Controls and Procedures	36
	Item 9B.	Other Information	37

Part III
	Item 10.	Directors, Executive Officers and Corporate Governance	38
	Item 11.	Executive Compensation	38
	Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	38
	Item 13.	Certain Relationships and Related Transactions, and Director Independence	38
	Item 14.	Principal Accountant Fees and Services	38

Part IV
	Item 15.	Exhibits and Financial Statement Schedules	39

Table of Contents

In this Report, except as the context suggests otherwise, the words “Company,” “Atlanticus Holdings Corporation,” “Atlanticus,” “we,” “our,” “ours” and “us” refer to Atlanticus Holdings Corporation and its subsidiaries and predecessors. Atlanticus owns Aspire ^® , Emerge ^® , Imagine ^® , Majestic ^® , Monument ^® , Salute ^® , Tribute ^® , Fortiva ^® and other trademarks and service marks in the U.S. and the U.K.

Cautionary Notice Regarding Forward-Looking Statements

We make forward-looking statements in this Report and in other materials we file with the Securities and Exchange Commission (“SEC”) or otherwise make public. In this Report, both Item 1, “Business,” and Item 7, “Management’s Discussion and Analysis of Financial Conditions and Results of Operations,” contain forward-looking statements. In addition, our senior management might make forward-looking statements to analysts, investors, the media and others. Statements with respect to expected revenue, income, receivables, income ratios, net interest margins, long-term shareholder returns, acquisitions and other growth opportunities, divestitures and discontinuations of businesses, loss exposure and loss provisions, delinquency and charge-off rates, the effects of account actions we may take or have taken, changes in collection programs and practices, changes in the credit quality and fair value of our credit card loans and fees receivable and the fair value of their underlying structured financing facilities, the impact of actions by the Federal Deposit Insurance Corporation (“FDIC”), Federal Trade Commission (“FTC”), Consumer Financial Protection Bureau (“CFPB”) and other regulators on both us, banks that issue credit cards and other credit products on our behalf, and merchants that participate in our point-of-sale finance operations, account growth, the performance of investments that we have made, operating expenses, the impact of bankruptcy law changes, marketing plans and expenses, the performance of our Auto Finance segment, our plans in the United Kingdom (“U.K.”), the impact of our U.K. credit card receivables on our financial performance, the sufficiency of available capital, the prospect for improvements in the capital and finance markets, future interest costs, sources of funding operations and acquisitions, growth and profitability of our point-of-sale finance operations, our entry into international markets, our ability to raise funds or renew financing facilities, share repurchases, debt retirement, the results associated with our equity-method investees, our servicing income levels, gains and losses from investments in securities, experimentation with new products and other statements of our plans, beliefs or expectations are forward-looking statements. These and other statements using words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “project,” “target,” “can,” “could,” “may,” “should,” “will,” “would” and similar expressions also are forward-looking statements. Each forward-looking statement speaks only as of the date of the particular statement. The forward-looking statements we make are not guarantees of future performance, and we have based these statements on our assumptions and analyses in light of our experience and perception of historical trends, current conditions, expected future developments and other factors we believe are appropriate in the circumstances. Forward-looking statements by their nature involve substantial risks and uncertainties that could significantly affect expected results, and actual future results could differ materially from those described in such statements. Management cautions against putting undue reliance on forward-looking statements or projecting any future results based on such statements or present or historical earnings levels.

Although it is not possible to identify all factors, we continue to face many risks and uncertainties. Among the factors that could cause actual future results to differ materially from our expectations are the risks and uncertainties described under “Risk Factors” set forth in Part I, Item 1A, and the risk factors and other cautionary statements in other documents we file with the SEC, including the following:


•	the availability of adequate financing to support growth;


•	the extent to which federal, state, local and foreign governmental regulation of our various business lines and products limits or prohibits the operation of our businesses;


•	current and future litigation and regulatory proceedings against us;


•	the effect of adverse economic conditions on our revenues, loss rates and cash flows;


•	competition from various sources providing similar financial products, or other alternative sources of credit, to consumers;


•	the adequacy of our allowances for uncollectible loans and fees receivable and estimates of loan losses used within our underwriting and analyses;


•	the possible impairment of assets;


•	our ability to manage costs in line with the expansion or contraction of our various business lines;


•	our relationship with the merchants that participate in our point-of-sale finance operations and the banks that provide certain services that are needed to operate our business lines; and


•	theft and employee errors.

Most of these factors are beyond our ability to predict or control. Any of these factors, or a combination of these factors, could materially affect our future financial condition or results of operations and the ultimate accuracy of our forward-looking statements. There also are other factors that we may not describe (generally because we currently do not perceive them to be material) that could cause actual results to differ materially from our expectations.

Table of Contents

We expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

iii

Table of Contents

PART I



ITEM 1.	BUSINESS

General

A general discussion of our business follows. For additional information about our business, please visit our website at www.Atlanticus.com . Information contained on or available through our website is not incorporated by reference in this Report.

We are a Georgia corporation formed in 2009, as successor to an entity that commenced operations in 1996. We provide various credit and related financial services and products primarily to or associated with the financially underserved consumer credit market—a market largely represented by credit risks that regulators classify as sub-prime.

Currently, within our Credit and Other Investments segment, we are applying the experiences and infrastructure from our 18-year operating history to originate consumer loans through multiple channels, including retail point-of-sale and direct solicitation. In our point-of-sale channel, we partner with retailers and service providers in various industries across the United States ("U.S.") to provide credit to their customers for the purchase of goods and services or the rental of merchandise to their customers under rent-to-own arrangements. These products are often extended to customers who may have been declined under traditional financing options. We specialize in providing this "second-look" credit service. Using our infrastructure and technology platform, we also provide loan servicing, including underwriting, marketing, customer service and collections operations for third parties. Also through our Credit and Other Investments segment, we engage in testing and limited investment in consumer finance technology platforms as we seek to capitalize on our expertise and infrastructure.

Also within our Credit and Other Investments segment, we continue to collect on portfolios of credit card receivables. These receivables include both receivables we originated through third-party financial institutions and portfolios of receivables we purchased from third-party financial institutions.

The recurring cash flows we receive within our Credit and Other Investments segment principally include those associated with (1) our point-of-sale and direct-to-consumer finance activities, (2) servicing compensation and (3) credit card receivables portfolios that are unencumbered or where we own a portion of the underlying structured financing facility.

Within our Auto Finance segment, our CAR subsidiary operations principally purchase and/or service loans secured by automobiles from or for, and also provide floor plan financing for, a pre-qualified network of independent automotive dealers and automotive finance companies in the buy-here, pay-here, used car business. We purchase auto loans at a discount and with dealer retentions or holdbacks that provide risk protection. Also within our Auto Finance segment, we are collecting on portfolios of auto finance receivables that we previously originated through franchised and independent auto dealers in connection with prior business activities, as well as providing certain lending products in addition to our traditional loans secured by automobiles.

Currently we no longer market or maintain open credit card accounts in the U.S. other than as part of servicing agreements with third parties. We do believe, however, that our point-of-sale and direct-to-consumer finance activities are generating and will continue to generate attractive returns on assets, thereby allowing us to secure debt financing under terms and conditions (including advance rates and pricing) that will allow us to achieve our desired returns on equity, and we continue to pursue growth in this area.

Although we closely monitor and manage our expenses based on current product offerings (and in recent years have significantly reduced our overhead infrastructure which was built to accommodate higher account originations and managed receivables levels), we are maintaining our infrastructure and incurring increased overhead and other costs in order to expand point-of-sale and direct-to-consumer finance solutions and new product offerings that we believe have the potential to grow into our infrastructure and allow for long-term shareholder returns.

Subject to the availability of capital at attractive terms and pricing, we plan to continue to evaluate and pursue a variety of activities, including: (1) the expansion of our point-of-sale and direct-to-consumer finance products; (2) the acquisition of additional financial assets associated with our point-of-sale finance activities as well as the acquisition of receivables portfolios; (3) investments in other assets or businesses that are not necessarily financial services assets or businesses; (4) the repurchase of our convertible senior notes and other debt or our outstanding common stock; and (5) the servicing of receivables and related financial assets for third parties (and in which we have limited or no equity interests) to allow us to leverage our expertise and infrastructure.

Table of Contents

Credit and Other Investments Segment. Our Credit and Other Investments segment includes our point-of-sale and direct-to-consumer finance operations, investments in and servicing of our various credit card receivables portfolios and other testing and limited investment in consumer finance technology platforms that generally capitalize on our credit infrastructure.

As previously discussed, our point-of-sale finance operations allow retail partners to offer installment lending or revolving credit options as well as rent-to-own arrangements to their customer base. With many potential customers currently declined under traditional financing terms offered by other lenders, we are able to increase a business' customer base by approving certain of these overlooked consumers for various payment arrangements. We currently provide this service by (i) allowing retail partners access to our proprietary online application processing and (ii) offering competitively priced payment options to consumers and other offerings unique to the industry. We believe that our ability to offer customers flexibility in their payment arrangements (from installment loans and revolving credit to rent-to-own options) affords us a competitive advantage in the marketplace.

Currently our installment and revolving credit loans cover a variety of goods and services including consumer electronics, furniture, elective medical procedures and home-improvements. Alternatively, our rent-to-own options allow consumers to obtain and use brand name products (in the aforementioned categories) with flexible rental purchase agreements and no long-term obligations. Our growing portfolio of point-of-sale finance assets are generating and we believe will continue to generate attractive returns on assets, thereby allowing us to secure debt financing under terms and conditions (including advance rates and pricing) that will allow us to achieve our desired returns on equity, and we continue to pursue growth in this area.

Substantially all of the credit card accounts underlying our credit card receivables and portfolios have been closed to new cardholder purchases since 2009. We continue to service our credit card portfolios as they continue to liquidate. Our credit and other operations are heavily regulated, which may cause us to change how we conduct our operations either in response to regulation or in keeping with our goal of leading the industry in adherence to consumer-friendly practices. We have made several significant changes to our practices over the past several years, and because our account management practices are evolutionary and dynamic, it is possible that we may make further changes to these practices, some of which may produce positive, and others of which may produce adverse, effects on our operating results and financial position. Customers at the lower end of the credit score range intrinsically have higher loss rates than do customers at the higher end of the credit score range. As a result, we price our products to reflect this higher loss rate. As such, our products are subject to greater regulatory scrutiny than the products of prime lenders who are able to price their credit products at much lower levels than we can. See “Consumer and Debtor Protection Laws and Regulations—Credit and Other Investments Segment” and Item 1A, “Risk Factors.”

Auto Finance Segment. The operations of our Auto Finance segment are principally conducted through our CAR platform, which we acquired in April 2005. CAR primarily purchases and/or services loans secured by automobiles from or for a pre-qualified network of independent automotive dealers and automotive finance companies in the buy-here, pay-here used car business. In 2010, we started offering floor-plan financing to this same group of dealers and finance companies. In 2013 we also started offering certain installment lending products in addition to our traditional loans secured by automobiles. While this product represented less than 15% of CAR's net outstanding receivables as of December 31, 2014, we seek to grow the volume of these loans in the coming quarters.

Through our CAR operations, we generate revenues on purchased loans through interest earned on the face value of the installment agreements combined with discounts on loans purchased. We generally earn discount income over the life of the applicable loan. Additionally, we generate revenues from servicing loans on behalf of dealers for a portion of actual collections and by providing back-up servicing for similar quality assets owned by unrelated third parties. We offer a number of other products to our network of buy-here, pay-here dealers (including our floor-plan financing offering), but the majority of our activities are represented by our purchases of auto loans at discounts and our servicing of auto loans for a fee. As of December 31, 2014 , our CAR operations served more than 570 dealers in 36 states, the District of Columbia and two U.S. territories. These operations continue to perform well in the current environment (achieving consistent profitability and generating positive cash flows with modest growth).

How Do We Manage the Accounts and Mitigate Our Risks?

Credit and Other Investments Segment. We manage accounts using credit behavioral scoring, credit file data and our proprietary risk evaluation systems. These strategies include the management of transaction authorizations, account renewals, over-limit accounts, credit line modifications and collection programs. We use an adaptive control system to translate our strategies into account management processes. The system enables us to develop and test multiple strategies simultaneously, which allows us to continually refine our account management activities. We have incorporated our proprietary risk scores into the control system, in addition to standard credit behavior scores used widely in the industry, in order to segment, evaluate and

Table of Contents

manage the accounts. We believe that by combining external credit file data along with historical and current customer activity, we are able to better predict the true risk associated with current and delinquent accounts.

For our point-of-sale and direct-to-consumer finance activities as well as the accounts that are open to purchases, we generally seek to manage credit lines to reward financially underserved customers who are performing well and to mitigate losses from delinquent customer segments. We also employ strategies to reduce otherwise open credit lines for customers demonstrating indicators of increased credit or bankruptcy risk. Data relating to account performance are captured and loaded into our proprietary database for ongoing analysis. We adjust account management strategies as necessary, based on the results of such analyses. Additionally, we use industry-standard fraud detection software to manage the portfolio. We route accounts to manual work queues and suspend charging privileges if the transaction-based fraud models indicate a probability of fraudulent use.

Auto Finance Segment. Our CAR operations manage credit quality and loss mitigation at the dealer portfolio level through the implementation of dealer-specific loss reserve accounts. In most instances, the reserve accounts are cross-collateralized across all accounts presented by any single dealer. CAR monitors performance at the dealer portfolio level (by product type) to adjust pricing or the reserve account or to determine whether to terminate future account purchases from such dealer.

CAR provides dealers with specific purchase guidelines based upon each product offering and delegates approval authority to assist in the monitoring of transactions during the loan acquisition process. Dealers are subject to specific approval criteria, and individual accounts typically are verified for accuracy before, during and after the acquisition process. Dealer portfolios across the business segment are monitored and compared against expected collections and peer dealer performance. Monitoring of dealer pool vintages, delinquencies and loss ratios helps determine past performance and expected future results, which are used to adjust pricing and reserve requirements. Our CAR operations also manage risk through diversifying their receivables among multiple dealers.

How Do We Collect from Our Customers?

Credit and Other Investments Segment. The goal of the collections process is to collect as much of the money that is owed to us in the most cost-effective and customer-friendly manner possible. To this end, we employ the traditional cross-section of letters and telephone calls to encourage payment. However, recognizing that our objective is to maximize the amount collected, we also sometimes offer customers flexibility with respect to the application of payments in order to encourage larger or prompter payments. For instance, in certain cases we may vary from our general payment application priority (i.e., of applying payments first to finance charges, then to fees, and then to principal) by agreeing to apply payments first to principal and then to finance charges and fees or by agreeing to provide payments or credits of finance charges and principal to induce or in exchange for an appropriate customer payment. Application of payments in this manner also permits our collectors to assess real time the degree to which a customer’s payments over the life of an account have covered the principal credit extensions to the customer. This allows our collectors to readily identify our potential economic loss associated with the charge off of a particular account (i.e., the excess of principal loaned to the customer over payments received back from the customer throughout the life of the account). With this information, our collectors work cooperatively with our customers in a way intended to best protect us from economic loss on the customer relationship. Our selection of collection techniques, including, for example, the order in which we apply payments or the provision of payments or credits to induce or in exchange for customer payment, impacts the statistical performance of our portfolios that we reflect under the “Credit and Other Investments Segment” caption within Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

We consider management’s experience in operating professional collection agencies, coupled with our proprietary systems, to be a competitive advantage in minimizing delinquencies and charge offs. Our collectors employ various and evolving tools when engaging with our customers, and they routinely test and evaluate new tools in their drive toward improving our collections with a greater degree of efficiency. These tools include programs under which we may reduce or eliminate a customer’s annual percentage rate (“APR”) or waive a certain amount of accrued fees, provided the customer makes a minimum number or amount of payments. In some instances, we may agree to match a customer’s payments, for example, with commensurate payments or reductions of finance charges or waivers of fees. In other situations, we may actually settle with customers and adjust their finance charges and fees, for example, based on their commitment and their follow through on their commitment to pay certain portions of the balances they owe. Our collectors may also decrease a customer’s minimum payment under certain collection programs. Additionally, we employ re-aging techniques as discussed below. We also may occasionally use our marketing group to assist in determining various programs to assist in the collection process. Moreover, we voluntarily participate in the Consumer Credit Counseling Service (“CCCS”) program by waiving a certain percentage of a customer’s debt that is considered our “fair share” under the CCCS program. All of our programs are utilized based on the degree of economic success they achieve.

Table of Contents

We regularly monitor and adapt our collection strategies, techniques, technology and training to optimize our efforts to reduce delinquencies and charge offs. We use our operations systems to develop these proprietary collection strategies and techniques, and we analyze the output from these systems to identify the strategies and techniques that we believe are most likely to result in curing a delinquent account in the most cost-effective manner, rather than treating all accounts the same based on the mere passage of time.

As in all aspects of our risk management strategies, we compare the results of each of the above strategies with other collection strategies and devote resources to those strategies that yield the best results. Results are measured based on delinquency rates, expected losses and costs to collect. Existing strategies are then adjusted based on these results. We believe that routinely testing, measuring and adjusting collection strategies results in lower bad debt losses and operating expenses.

We discontinue charging interest and fees for most of our credit products when loans and fees receivable become contractually 90 or more days past due (and in certain circumstances where it is necessary in order to avoid so-called “negative amortization”), and we charge off loans and fees receivable when they become contractually more than 180 days past due or 120 days past due for the point-of-sale and direct-to-consumer finance products. For our rent-to-own products, we charge off receivables and impair associated rental merchandise if the customer has not made a payment within the previous 90 days. However, if a customer makes a payment greater than or equal to two minimum payments within a month of the charge-off date, we may reconsider whether charge-off status remains appropriate. For all of our products, we charge off receivables within 30 days of notification and confirmation of a customer’s bankruptcy or death. However, in some cases of death, we do not charge off receivables if there is a surviving, contractually liable individual or an estate large enough to pay the debt in full.

Our determination of whether an account is contractually past due is relevant to our delinquency and charge-off data included under the “Credit and Other Investments Segment” caption within Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Various factors are relevant in analyzing whether an account is contractually past due (e.g., whether an account has not satisfied its minimum payment due requirement), which for us is the trigger for moving receivables through our various delinquency stages and ultimately to charge-off status. For our point-of-sale and direct-to-consumer finance accounts, we consider an account to be delinquent if the customer has not made any required payment in full as of the payment due date. Accounts under our rent-to-own program are considered delinquent if the customer has not made full payment of any rental amount by the due date and has not returned the rental equipment to us. For credit card accounts, we consider a cardholder’s receivable to be delinquent if the cardholder has failed to pay a minimum amount, computed as the greater of a stated minimum payment or a fixed percentage of the statement balance (for example 3% to 10% of the outstanding balance in some cases or in other cases 1% of the outstanding balance plus any finance charges and late fees billed in the current cycle).

Additionally, in an effort to increase the value of our account relationships, we sometimes re-age customer accounts that meet our qualifications for re-aging. It is our policy to work cooperatively with customers demonstrating a willingness and ability to repay their indebtedness and who satisfy other criteria, but are unable to pay the entire past due amount. Generally, to qualify for re-aging, an account must have been opened for at least nine months and may not be re-aged more than once in a twelve-month period or twice in a five-year period. In addition, an account on a workout program may qualify for one additional re-age in a five-year period. The customer also must have made three consecutive minimum monthly payments or the equivalent cumulative amount in the last three billing cycles. If a re-aged account subsequently experiences payment defaults, it will again become contractually delinquent and will be charged off according to our regular charge-off policy. The practice of re-aging an account may affect delinquencies and charge offs, potentially delaying or reducing such delinquencies and charge offs.

Auto Finance Segment. Accounts that CAR purchases from approved dealers initially are collected by the originating branch or service center location using a combination of traditional collection practices. Auto Finance segment accounts that have been loaded into our data processing system are centrally serviced to leverage auto dialer processing for early stage collections. The collection process includes contacting the customer by phone or mail, skip tracing and using starter interrupt devices to minimize delinquencies. Uncollectible accounts in our CAR operation generally are returned to the dealer under an agreement with the dealer to charge the balance on the account against the dealer’s reserve account. We generally do not repossess autos in our CAR operation as a result of the agreements that we have with the dealers unless there are insufficient dealer reserves to offset the loss or if a dealer instructs us to.

Consumer and Debtor Protection Laws and Regulations

Credit and Other Investments Segment. Our U.S. business is regulated directly and indirectly under various federal and state consumer protection, collection and other laws, rules and regulations, including the federal Credit Card Accountability Responsibility and Disclosure Act of 2009 (the “CARD Act”), the federal Wall Street Reform and Consumer Protection Act, the federal Truth In Lending Act (“TILA”), the federal Equal Credit Opportunity Act, the federal Fair Credit Reporting Act, the

Table of Contents

federal Fair Debt Collection Practices Act, the Federal Trade Commission ("FTC") Act, the federal Gramm-Leach-Bliley Act and the federal Telemarketing and Consumer Fraud and Abuse Prevention Act. These laws, rules and regulations, among other things, impose disclosure requirements when consumer products are advertised, when an account is opened, when monthly billing statements are sent and when consumer obligations are collected. In addition, various statutes limit the liability of consumers for unauthorized use, prohibit discriminatory practices in consumer transactions, impose limitations on the types of charges that may be assessed and restrict the use of consumer credit reports and other account-related information. Many of our products are designed for customers at the lower end of the credit score range. We price our products to reflect the higher credit risk of our customers. Because of the inherently greater credit risks of these customers and the resulting higher interest and fees, we and our finance partners are subject to significant regulatory scrutiny. If regulators, including the FDIC (which regulates bank lenders), the CFPB and the FTC, object to the terms of these products, or to our marketing or collection practices, we could be required to modify or discontinue certain products or practices.

In the U.K., our credit card operations are subject to U.K. regulations that provide similar consumer protections to those provided under the U.S. regulatory framework. We are licensed and regulated by the Financial Conduct Authority ("FCA"), and we are governed by an extensive legislative and regulatory framework that includes the Consumer Credit Act, the Data Protection Act, Privacy and Electronic Communications Regulations, Consumer Protection and Unfair Trading regulations, Financial Services (Distance Marketing) Regulations, the Enterprise Act, Money Laundering Regulations, Financial Ombudsman Service and Advertising Standards Authority adjudications. The aforementioned legislation and regulations impose strict rules on the form and content of consumer contracts, the calculation and presentation of annual percentage rates ("APRs"), advertising in all forms, parties who can be contacted and disclosures to consumers, among others. The regulators, such as the FCA, provide guidance on consumer credit practices including collections. The FCA requires a comprehensive licensing process. We are currently undertaking steps to ensure that we continue to remain in compliance with all regulations.

Auto Finance Segment. This segment is regulated directly and indirectly under various federal and state consumer protection and other laws, rules and regulations, including the federal TILA, the federal Equal Credit Opportunity Act, the federal Fair Credit Reporting Act, the federal Fair Debt Collection Practices Act, the federal Gramm-Leach-Bliley Act and the federal Telemarketing and Consumer Fraud and Abuse Prevention Act. In addition, various state statutes limit the interest rates and fees that may be charged, limit the types of interest computations (e.g., interest bearing or pre-computed) and refunding processes, prohibit discriminatory practices in extending credit, impose limitations on fees and other ancillary products and restrict the use of consumer credit reports and other account-related information. Many of the states in which this segment operates have various licensing requirements and impose certain financial or other conditions in connection with these licensing requirements.

Privacy and Data Security Laws and Regulations . We are required to manage, use, and store large amounts of personally identifiable information, principally customers’ confidential personal and financial data, in the course of our business. We depend on our IT networks and systems, and those of third parties, to process, store, and transmit that information. In the past, consumer finance companies have been targeted for sophisticated cyber attacks. A security breach involving our files and infrastructure could lead to unauthorized disclosure of confidential information. We take numerous measures to ensure the security of our hardware and software systems as well as customer information.

We are subject to various U.S. federal and state laws and regulations designed to protect confidential personal and financial data. For example, we must comply with guidelines under the Gramm-Leach-Bliley Act that require each financial institution to develop, implement and maintain a written, comprehensive information security program containing safeguards that are appropriate to the financial institution’s size and complexity, the nature and scope of the financial institution’s activities and the sensitivity of any customer information at issue. Additionally, various federal banking regulatory agencies, and at least 46 states, the District of Columbia, Puerto Rico and the Virgin Islands, have enacted data security regulations and laws requiring customer notification in the event of a security breach.

Competition

Credit and Other Investments Segment. We face substantial competition from other consumer lenders, the intensity of which varies depending upon economic and liquidity cycles. Our point-of-sale and direct-to-consumer finance activities, rent-to-own and credit card businesses compete with national, regional and local bankcard and consumer credit issuers, other general-purpose credit card issuers and retail credit card and merchant credit issuers. Many of these competitors are substantially larger than we are, have significantly greater financial resources than we do and have significantly lower costs of funds than we have.

Auto Finance Segment. Competition within the auto finance sector is widespread and fragmented. Our auto finance operations target automobile dealers that oftentimes are not capable of accessing indirect lending from major financial

Table of Contents

institutions or captive finance companies. We compete mainly with a handful of national and regional companies focused on this credit segment (e.g., Credit Acceptance Corporation, Westlake Financial, Mid-Atlantic Finance, General Motors Financial Company, Inc. (formerly AmeriCredit Corp.), Drive Financial, Western Funding Inc., and America’s Car-Mart) and a large number of smaller, regional private companies with a narrow geographic focus. Individual dealers with access to capital may also compete in this segment through the purchase of receivables from peer dealers in their markets.

Employees

As of December 31, 2014, we had 319 employees, including 5 part-time employees, most of which are employed within the U.S., principally in Florida and Georgia. Also included in this employee count are 35 employees in the U.K. We consider our relations with our employees to be good. Our employees are not covered by a collective-bargaining agreement, and we have never experienced any organized work stoppage, strike or labor dispute.

Trademarks, Trade Names and Service Marks

We have registered and continue to register, when appropriate, various trademarks, trade names and service marks used in connection with our businesses and for private-label marketing of certain of our products. We consider these trademarks and service marks to be readily identifiable with, and valuable to, our business. This Annual Report on Form 10-K also contains trade names and trademarks of other companies that are the property of their respective owners.

Additional Information

We are headquartered in Atlanta, Georgia, and our principal executive offices are located at Five Concourse Parkway, Suite 400, Atlanta, Georgia 30328. Our headquarters telephone number is (770) 828-2000, and our website is www.Atlanticus.com . We make available free of charge on our website certain of our recent SEC filings, including our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and amendments to those filings as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

Certain corporate governance materials, including our Board of Directors committee charters and our Code of Business Conduct and Ethics, are posted on our website under the heading “For Investors.” From time to time, the corporate governance materials on our website may be updated as necessary to comply with rules issued by the SEC or NASDAQ, or as desirable to further the continued effective and efficient governance of our company.



ITEM 1A.	RISK FACTORS

An investment in our common stock or other securities involves a number of risks. You should carefully consider each of the risks described below before deciding to invest in our common stock or other securities. If any of the following risks develops into actual events, our business, financial condition or results of operations could be negatively affected, the market price of our common stock or other securities could decline and you may lose all or part of your investment.

Investors should be particularly cautious regarding investments in our common stock or other securities at the present time in light of the net contraction of our receivables levels over the last few years, uncertainties as to our business model going forward and our inability to achieve consistent earnings from our operations in recent years.

Our Cash Flows and Net Income Are Dependent Upon Payments from Our Loans and Fees Receivable and Other Credit Products

The collectibility of our loans and fees receivable is a function of many factors including the criteria used to select who is issued credit, the pricing of the credit products, the lengths of the relationships, general economic conditions, the rate at which customers repay their accounts or become delinquent, and the rate at which customers borrow funds from us. Deterioration in these factors, which we have experienced over the past few years, adversely impacts our business. In addition, to the extent we have over-estimated collectibility, in all likelihood we have over-estimated our financial performance. Some of these concerns are discussed more fully below.

Our portfolio of receivables is not diversified and originates from customers whose creditworthiness is considered sub-prime. Historically, we have obtained receivables in one of two ways—we have either solicited for the origination of the receivables or purchased pools of receivables from other issuers. In either case, substantially all of our receivables are from financially underserved borrowers—borrowers represented by credit risks that regulators classify as “sub-prime.” Our reliance on sub-prime receivables has negatively impacted and may in the future negatively impact, our performance. Our various past and current losses might have been mitigated had our portfolios consisted of higher-grade receivables in addition to our sub-prime receivables.

Table of Contents

We may not successfully evaluate the creditworthiness of our customers and may not price our credit products in a profitable manner. The creditworthiness of our target market generally is considered “sub-prime” based on guidance issued by the agencies that regulate the banking industry. Thus, our customers generally have a higher frequency of delinquencies, higher risks of nonpayment and, ultimately, higher credit losses than consumers who are served by more traditional providers of consumer credit. Some of the consumers included in our target market are consumers who are dependent upon finance companies, consumers with only retail store credit cards and/or lacking general purpose credit cards, consumers who are establishing or expanding their credit, and consumers who may have had a delinquency, a default or, in some instances, a bankruptcy in their credit histories, but who, in our view, have demonstrated creditworthiness. We price our credit products taking into account the perceived risk level of our customers. If our estimates are incorrect, customer default rates will be higher, we will receive less cash from the receivables and the value of our loans and fees receivable will decline, all of which will have a negative impact on performance. It also is unclear whether our current payment rates can be sustained given weakness in the employment outlook and economic environment at large.

Economic slowdowns increase our credit losses. During periods of economic slowdown or recession, we experience an increase in rates of delinquencies and frequency and severity of credit losses. Our actual rates of delinquencies and frequency and severity of credit losses may be comparatively higher during periods of economic slowdown or recession than those experienced by more traditional providers of consumer credit because of our focus on the financially underserved consumer market, which may be disproportionately impacted.

We are subject to foreign economic and exchange risks. Because of our operations in the U.K., we have exposure to fluctuations in the U.K. economy, and such fluctuations recently have been negative. We also have exposure to fluctuations in the relative values of the U.S. dollar and the British pound. Because the British pound has experienced a net decline in value relative to the U.S. dollar since we commenced our most significant operations in the U.K., we have experienced significant transaction and translation losses within our financial statements.

Because a significant portion of our reported income is based on management’s estimates of the future performance of our loans and fees receivable, differences between actual and expected performance of the receivables may cause fluctuations in net income. Significant portions of our reported income (or losses) are based on management’s estimates of cash flows we expect to receive on our loans and fees receivable, particularly for such assets that we report based on fair value. The expected cash flows are based on management’s estimates of interest rates, default rates, payment rates, cardholder purchases, servicing costs, and discount rates. These estimates are based on a variety of factors, many of which are not within our control. Substantial differences between actual and expected performance of the receivables will occur and cause fluctuations in our net income. For instance, higher than expected rates of delinquencies and losses could cause our net income to be lower than expected. Similarly, as we have experienced for our credit card receivables portfolios with respect to financing agreements secured by our loans and fees receivable, levels of loss and delinquency can result in our being required to repay our lenders earlier than expected, thereby reducing funds available to us for future growth. Because all of our credit card receivables structured financing facilities are now in amortization status—which for us generally means that the only meaningful cash flows that we are receiving with respect to the credit card receivables that are encumbered by such structured financing facilities are those associated with our contractually specified fee for servicing the receivables—recent payment and default trends have substantially reduced the cash flows that we receive from these receivables.

Due to our relative lack of historical experience with Internet customers, we may not be able to target successfully these customers or evaluate their creditworthiness. We have less historical experience with respect to the credit risk and performance of customers acquired over the Internet. As a result, we may not be able to target and evaluate successfully the creditworthiness of these potential customers should we engage in marketing efforts to acquire these customers. Therefore, we may encounter difficulties managing the expected delinquencies and losses and appropriately pricing our products.

We Are Substantially Dependent Upon Borrowed Funds to Fund the Receivables We Originate or Purchase

We finance our receivables in large part through financing facilities. All of our financing facilities are of finite duration (and ultimately will need to be extended or replaced) and contain financial covenants and other conditions that must be fulfilled in order for funding to be available. Moreover, some of our facilities currently are in amortization stages (and are not allowing for the funding of any new loans) based on their original terms. The cost and availability of equity and borrowed funds is dependent upon our financial performance, the performance of our industry generally and general economic and market conditions, and at times equity and borrowed funds have been both expensive and difficult to obtain.

Table of Contents

If additional financing facilities are not available in the future on terms we consider acceptable—an issue that has been made even more acute in the U.S. given recent regulatory changes that have reduced asset-level returns on credit card lending—we will not be able to grow our credit card operations and it will continue to contract in size.

Our Financial Performance Is, in Part, a Function of the Aggregate Amount of Receivables That Are Outstanding

The aggregate amount of outstanding receivables is a function of many factors including purchase rates, payment rates, interest rates, seasonality, general economic conditions, competition from credit card issuers and other sources of consumer financing, access to funding, and the timing, extent and success of our marketing efforts.

Our credit card operation currently is contracting. Growth is a product of a combination of factors, many of which are not in our control. Factors include:


•	the availability of funding on favorable terms;


•	the level and success of our marketing efforts;


•	the degree to which we lose business to competitors;


•	the level of usage of our credit products by our customers;


•	the availability of portfolios for purchase on attractive terms;


•	levels of delinquencies and charge offs;


•	the level of costs of soliciting new customers;


•	our ability to employ and train new personnel;


•	our ability to maintain adequate management systems, collection procedures, internal controls and automated systems; and


•	general economic and other factors beyond our control.

We have curtailed our U.S. credit card marketing efforts and have aggressively reduced credit lines and closed credit card accounts. In addition, the general economic downturn experienced in 2008 and 2009 significantly impacted not just the level of usage of our credit products by our customers but also levels of payments and delinquencies and other performance metrics. As a result, our credit card operation currently is contracting.

Reliance upon relationships with a few large retailers in our point-of-sale finance operations may adversely affect our revenues and operating results from these operations. Our three largest retail partners accounted for over 78.0% of our point-of-sale finance and rental revenues in 2014. Although we are adding new retail partners on a regular basis, it is likely that we will continue to derive a significant portion of this operations’ revenue from a relatively small number of partners in the future. If a significant partner reduces or terminates its relationship with us, these operations’ revenue could decline significantly and our operating results and financial condition could be harmed.

We Operate in a Heavily Regulated Industry

Changes in bankruptcy, privacy or other consumer protection laws, or to the prevailing interpretation thereof, may expose us to litigation, adversely affect our ability to collect our loans and fees receivable, or otherwise adversely affect our operations. Similarly, regulatory changes could adversely affect our ability or willingness to market credit cards and other products and services to our customers. Also, the accounting rules that govern our business are exceedingly complex, difficult to apply and in a state of flux. As a result, how we value our receivables and otherwise account for our business is subject to change depending upon the changes in, and, interpretation of, those rules. Some of these issues are discussed more fully below.

Reviews and enforcement actions by regulatory authorities under banking and consumer protection laws and regulations may result in changes to our business practices, may make collection of account balances more difficult or may expose us to the risk of fines, restitution and litigation. Our operations and the operations of the issuing banks through which we originate some of our credit products are subject to the jurisdiction of federal, state and local government authorities, including the CFPB, the SEC, the FDIC, the Office of the Comptroller of the Currency, the FTC, U.K. banking authorities, state regulators having jurisdiction over financial institutions and debt origination and collection and state attorneys general. Our business practices, including the terms of our products and our marketing, servicing and collection practices, are subject to both periodic and special reviews by these regulatory and enforcement authorities. These reviews can range from investigations of specific consumer complaints or concerns to broader inquiries into our practices generally. If as part of these reviews the regulatory authorities conclude that we are not complying with applicable law, they could request or impose a wide range of remedies including requiring changes in advertising and collection practices, changes in the terms of our products (such as decreases in interest rates or fees), the imposition of fines or penalties, or the paying of restitution or the taking of other

Table of Contents

remedial action with respect to affected customers. They also could require us to stop offering some of our products, either nationally or in selected states. To the extent that these remedies are imposed on the issuing banks through which we originate credit products, under certain circumstances we are responsible for the remedies as a result of our indemnification obligations with those banks. We also may elect to change practices or products that we believe are compliant with law in order to respond to regulatory concerns. Furthermore, negative publicity relating to any specific inquiry or investigation could hurt our ability to conduct business with various industry participants or to attract new accounts and could negatively affect our stock price, which would adversely affect our ability to raise additional capital and would raise our costs of doing business.

If any deficiencies or violations of law or regulations are identified by us or asserted by any regulator, or if the CFPB, the FDIC, the FTC or any other regulator requires us to change any of our practices, the correction of such deficiencies or violations, or the making of such changes, could have a material adverse effect on our financial condition, results of operations or business. In addition, whether or not we modify our practices when a regulatory or enforcement authority requests or requires that we do so, there is a risk that we or other industry participants may be named as defendants in litigation involving alleged violations of federal and state laws and regulations, including consumer protection laws. Any failure to comply with legal requirements by us or the issuing banks through which we originate credit products in connection with the issuance of those products, or by us or our agents as the servicer of our accounts, could significantly impair our ability to collect the full amount of the account balances. The institution of any litigation of this nature, or any judgment against us or any other industry participant in any litigation of this nature, could adversely affect our business and financial condition in a variety of ways.

Our rent-to-own operations are regulated by and subject to the requirements of various federal and state laws and regulations. These laws and regulations which may be amended or supplemented or interpreted by the courts from time to time, could expose us to significant compliance costs or burdens or force us to change our business practices in a manner that may be materially adverse to our operations, prospects or financial condition. Currently, 47 states and the District of Columbia specifically regulate rent-to-own transactions such as those conducted in our rent-to-own programs. At the present time, no federal law specifically regulates the rent-to-own industry, although federal legislation to regulate the industry has been proposed from time to time. Any adverse changes in existing laws, or the passage of new adverse legislation by states or the federal government could materially increase both our costs of complying with laws and the risk that we could be sued or be subject to government sanctions if we are not in compliance. In addition, new burdensome legislation might force us to change our business model and might reduce the economic potential of our rent-to-own product offerings.

Most of the states that regulate rent-to-own transactions have enacted disclosure laws that require rent-to-own companies to disclose to their customers the total number of payments, total amount and timing of all payments to acquire ownership of any item, any other charges that may be imposed by them and miscellaneous other items. The more restrictive state lease purchase laws limit the total amount that a customer may be charged for an item, or regulate the amount of deemed “interest” that rent-to-own companies may charge on rent-to-own transactions, generally defining “interest” as lease fees paid in excess of the “retail” price of the goods.

There has been increased attention in the United States, at both the state and federal levels, on consumer debt transactions in general, which may result in an increase in legislative and regulatory efforts directed at the rent-to-own industry. The federal government or states may enact additional or different legislation or regulation that would be disadvantageous or otherwise materially adverse to us.

In addition to the risk of lawsuits related to the laws that regulate rent-to-own and consumer lease transactions, we or our rent-to-own partners could be subject to lawsuits alleging violations of federal and state laws and regulations and consumer tort law, including fraud, consumer protection, information security and privacy laws, because of the consumer-oriented nature of the rent-to-own industry. A large judgment against us could adversely affect our financial condition and results of operations. Moreover, an adverse outcome from a lawsuit, even one against one of our competitors, could result in changes in the way we and others in the industry do business, possibly leading to significant costs or decreased revenues or profitability.

We are dependent upon banks to issue credit cards and provide certain other credit products. Our credit card and some of our other credit product programs are dependent on our issuing bank relationships, and their regulators could at any time limit their ability to issue some or all products on our behalf, or that we service on their behalf, or to modify those products significantly. Any significant interruption of those relationships would result in our being unable to originate new receivables and other credit products. It is possible that a regulatory position or action taken with respect to any of the issuing banks through which we have originated credit products or for whom we service receivables might result in the bank’s inability or unwillingness to originate future credit products on our behalf or in partnership with us. In the current state, such a disruption of our issuing bank relationships principally would adversely affect our ability to grow our point-of-sale and direct-to-consumer finance products and other consumer credit offerings and underlying receivables.

Table of Contents

Changes to consumer protection laws or changes in their interpretation may impede collection efforts or otherwise adversely impact our business practices. Federal and state consumer protection laws regulate the creation and enforcement of consumer credit card receivables and other loans. Many of these laws (and the related regulations) are focused on sub-prime lenders and are intended to prohibit or curtail industry-standard practices as well as non-standard practices. For instance, Congress enacted legislation that regulates loans to military personnel through imposing interest rate and other limitations and requiring new disclosures, all as regulated by the Department of Defense. Similarly, in 2009 Congress enacted legislation that required changes to a variety of marketing, billing and collection practices, and the Federal Reserve recently adopted significant changes to a number of practices through its issuance of regulations. Additionally, the CFPB is expected to be an active issuer of credit-related regulations in the near-term, and the scope and nature of those potential regulations are unknown. While our practices are in compliance with these changes, some of the changes (e.g., limitations on the ability to assess up-front fees) have significantly affected the viability of certain of our prior product offerings within the U.S. Changes in the consumer protection laws could result in the following:


•	receivables not originated in compliance with law (or revised interpretations) could become unenforceable and uncollectible under their terms against the obligors;


•	we may be required to credit or refund previously collected amounts;


•	certain fees and finance charges could be limited, prohibited or restricted, which would reduce the profitability of certain accounts;


•	certain of our collection methods could be prohibited, forcing us to revise our practices or adopt more costly or less effective practices;


•	limitations on the content of marketing materials could be imposed that would result in reduced success for our marketing efforts;


•	limitations on our ability to recover on charged-off receivables regardless of any act or omission on our part;


•	some of our products and services could be banned in certain states or at the federal level;


•	federal or state bankruptcy or debtor relief laws could offer additional protections to customers seeking bankruptcy protection, providing a court greater leeway to reduce or discharge amounts owed to us; and


•	a reduction in our ability or willingness to lend to certain individuals, such as military personnel.

Material regulatory developments are likely to adversely impact our business and results from operations.

Our Automobile Lending Activities Involve Risks in Addition to Others Described Herein

Automobile lending exposes us not only to most of the risks described above but also to additional risks, including the regulatory scheme that governs installment loans and those attendant to relying upon automobiles and their repossession and liquidation value as collateral. In addition, our most significant active Auto Finance segment operation acquires loans on a wholesale basis from used car dealers, for which we rely upon the legal compliance and credit determinations by those dealers.

Declines in automobile sales as we saw through 2012 can cause declines in the overall demand for automobile loans. While currently recovering fairly significantly, sales of both new and used cars declined through 2012. While the unavailability of funding may have had a greater impact on our business, the decline in demand in recent years was consequential as well because it adversely affected the volume of our lending transactions and our recoveries of repossessed vehicles at auction. Any such future declines in demand will adversely impact our business.

Funding for automobile lending may become difficult to obtain and expensive. In the event we are unable to renew or replace any Auto Finance segment facilities that bear refunding or refinancing risks when they become due, our Auto Finance segment could experience significant liquidity constraints and diminution in reported asset values as lenders retain significant cash flows within underlying structured financings or otherwise under security arrangements for repayment of their loans. If we cannot renew or replace future facilities or otherwise are unduly constrained from a liquidity perspective, we may choose to sell part or all of our auto loan portfolios, possibly at less than favorable prices.

Our automobile lending business is dependent upon referrals from dealers. Currently we provide substantially all of our automobile loans only to or through used car dealers. Providers of automobile financing have traditionally competed based on the interest rate charged, the quality of credit accepted and the flexibility of loan terms offered. In order to be successful, we not only need to be competitive in these areas, but also need to establish and maintain good relations with dealers and provide them with a level of service greater than what they can obtain from our competitors.

The financial performance of our automobile loan portfolio is in part dependent upon the liquidation of repossessed automobiles. In the event of certain defaults, we may repossess automobiles and sell repossessed automobiles at wholesale auction markets located throughout the U.S. Auction proceeds from these types of sales and other recoveries rarely

Table of Contents

are sufficient to cover the outstanding balances of the contracts; where we experience these shortfalls, we will experience credit losses. Decreased auction proceeds resulting from depressed prices at which used automobiles may be sold would result in higher credit losses for us. Additionally, higher gasoline prices (like those experienced during 2008) tend to decrease the auction value of certain types of vehicles, such as SUVs.

Repossession of automobiles entails the risk of litigation and other claims. Although we have contracted with reputable repossession firms to repossess automobiles on defaulted loans, it is not uncommon for consumers to assert that we were not entitled to repossess an automobile or that the repossession was not conducted in accordance with applicable law. These claims increase the cost of our collection efforts and, if correct, can result in awards against us.

We Routinely Explore Various Opportunities to Grow Our Business, to Make Investments and to Purchase and Sell Assets

We routinely consider acquisitions of, or investments in, portfolios and other assets as well as the sale of portfolios and portions of our business. There are a number of risks attendant to any acquisition, including the possibility that we will overvalue the assets to be purchased and that we will not be able to produce the expected level of profitability from the acquired business or assets. Similarly, there are a number of risks attendant to sales, including the possibility that we will undervalue the assets to be sold. As a result, the impact of any acquisition or sale on our future performance may not be as favorable as expected and actually may be adverse.

Portfolio purchases may cause fluctuations in our reported Credit and Other Investments segment’s managed receivables data, which may reduce the usefulness of this data in evaluating our business. Our reported Credit and Other Investments segment managed receivables data may fluctuate substantially from quarter to quarter as a result of recent and future credit card portfolio acquisitions. As of December 31, 2014, credit card portfolio acquisitions accounted for 26.8% of our total Credit and Other Investments segment managed receivables portfolio based on our ownership percentages.

Receivables included in purchased portfolios are likely to have been originated using credit criteria different from the criteria of issuing bank partners that have originated accounts on our behalf. Receivables included in any particular purchased portfolio may have significantly different delinquency rates and charge-off rates than the receivables previously originated and purchased by us. These receivables also may earn different interest rates and fees as compared to other similar receivables in our receivables portfolio. These variables could cause our reported managed receivables data to fluctuate substantially in future periods making the evaluation of our business more difficult.

Any acquisition or investment that we make will involve risks different from and in addition to the risks to which our business is currently exposed. These include the risks that we will not be able to integrate and operate successfully new businesses, that we will have to incur substantial indebtedness and increase our leverage in order to pay for the acquisitions, that we will be exposed to, and have to comply with, different regulatory regimes and that we will not be able to apply our traditional analytical framework (which is what we expect to be able to do) in a successful and value-enhancing manner.

Other Risks of Our Business

We are a holding company with no operations of our own . As a result, our cash flow and ability to service our debt is dependent upon distributions from our subsidiaries. The distribution of subsidiary earnings, or advances or other distributions of funds by subsidiaries to us, all of which are subject to statutory and could be subject to contractual restrictions, are contingent upon the subsidiaries’ cash flows and earnings and are subject to various business and debt covenant considerations .

Although our point-of-sale and direct-to-consumer finance offerings are an important part of our strategic plan, we have limited operating history with these offerings. In late 2013, we expanded into our point-of-sale and direct-to-consumer finance offerings, including our rent-to-own offerings. As with many early stage endeavors, these product offerings may experience under-capitalization, delays, lack of funding, and many other problems, delays, and expenses, many of which are beyond our control. These include, but are not limited to:


•	inability to establish profitable strategic relationships with merchants;


•	inability to raise sufficient capital to fund our anticipated growth in this area; and


•	competition from larger and more established competitors, such as banks and finance companies.

Unless we obtain a bank charter, we cannot issue credit cards other than through agreements with banks. Because we do not have a bank charter, we currently cannot issue credit cards other than through agreements with banks. Unless we

Table of Contents

obtain a bank or credit card bank charter, we will continue to rely upon banking relationships to provide for the issuance of credit cards to our customers. Even if we obtain a bank charter, there may be restrictions on the types of credit that the bank may extend. Our various issuing bank agreements have scheduled expiration dates. If we are unable to extend or execute new agreements with our issuing banks at the expirations of our current agreements with them, or if our existing or new agreements with our issuing banks were terminated or otherwise disrupted, there is a risk that we would not be able to enter into agreements with an alternate provider on terms that we consider favorable or in a timely manner without disruption of our business.

We are party to litigation. We are defendants in certain legal proceedings. This includes litigation relating to our former retail micro-loan operations and other litigation customary for a business of our nature. In each case we believe that we have meritorious defenses or that the positions we are asserting otherwise are correct. However, adverse outcomes are possible in these matters, and we could decide to settle one or more of our litigation matters in order to avoid the ongoing cost of litigation or to obtain certainty of outcome. Adverse outcomes or settlements of these matters could require us to pay damages, make restitution, change our business practices or take other actions at a level, or in a manner, that would adversely impact our business.

We face heightened levels of economic risk associated with new investment activities. We recently have made a number of investments in businesses that are not directly allied to our traditional lending activities to, or associated with, the underserved consumer credit market. In addition, some of these investments that we have made and may make in the future are or will be in debt or equity securities of businesses over which we exert little or no control, which likely exposes us to greater risks of loss than investments in activities and operations that we control. While we make only those investments we believe have the potential to provide a favorable return, because some of the investments are outside of our core areas of expertise, they entail risks beyond those described elsewhere in this Report. As occurred with respect to certain such investments in 2012 and 2011, these risks could result in the loss of part or all of our investments.

Because we outsource account-processing functions that are integral to our business, any disruption or termination of that outsourcing relationship could harm our business. We generally outsource account and payment processing, and in 2014, we paid Total System Services, Inc. $7.9 million for these services. If these agreements were not renewed or were terminated or the services provided to us were otherwise disrupted, we would have to obtain these services from an alternative provider. There is a risk that we would not be able to enter into a similar agreement with an alternate provider on terms that we consider favorable or in a timely manner without disruption of our business.

Unauthorized or unintentional disclosure of sensitive or confidential customer data could expose us to protracted and costly litigation, and civil and criminal penalties. To conduct our business, we are required to manage, use, and store large amounts of personally identifiable information, consisting primarily of confidential personal and financial data regarding our customers across all operations areas. We also depend on our IT networks and systems, and those of third parties, to process, store, and transmit this information. As a result, we are subject to numerous U.S. federal and state laws designed to protect this information. Security breaches involving our files and infrastructure could lead to unauthorized disclosure of confidential information.

We take a number of measures to ensure the security of our hardware and software systems and customer information. Advances in computer capabilities, new discoveries in the field of cryptography or other developments may result in the technology used by us to protect data being breached or compromised. In the past, consumer finance companies have been the subject of sophisticated and highly targeted attacks on their information technology. An increasing number of websites have reported breaches of their security.

If any person, including our employees or those of third-party vendors, negligently disregards or intentionally breaches our established controls with respect to such data or otherwise mismanages or misappropriates that data, we could be subject to costly litigation, monetary damages, fines, and/or criminal prosecution. We do not maintain cyber-security insurance liability coverage and as such we are exposed to the financial risk and losses associated with such incidents. Any unauthorized disclosure of personally identifiable information could subject us to liability under data privacy laws. Further, under credit card rules and our contracts with our card processors, if there is a breach of credit card information that we store, we could be liable to the credit card issuing banks for their cost of issuing new cards and related expenses. In addition, if we fail to follow credit card industry security standards, even if there is no compromise of customer information, we could incur significant fines. Security breaches could also harm our reputation with our customers, which could potentially cause decreased revenues, the loss of existing merchant credit partners, or difficulty in adding new merchant credit partners.

Internet and data security breaches also could impede us from originating loans over the Internet, cause us to lose customers or otherwise damage our reputation or business. Consumers generally are concerned with security and privacy,

Table of Contents

particularly on the Internet. As part of our growth strategy, we have originated loans over the Internet. The secure transmission of confidential information over the Internet is essential to maintaining customer confidence in our products and services offered online.

Advances in computer capabilities, new discoveries or other developments could result in a compromise or breach of the technology used by us to protect customer application and transaction data transmitted over the Internet. In addition to the potential for litigation and civil penalties described above, security breaches could damage our reputation and cause customers to become unwilling to do business with us, particularly over the Internet. Any publicized security problems could inhibit the growth of the Internet as a means of conducting commercial transactions. Our ability to solicit new loans over the Internet would be severely impeded if consumers become unwilling to transmit confidential information online.

Also, a party that is able to circumvent our security measures could misappropriate proprietary information, cause interruption in our operations, damage our computers or those of our users, or otherwise damage our reputation and business.

Regulation in the areas of privacy and data security could increase our costs. We are subject to various regulations related to privacy and data security/breach, and we could be negatively impacted by these regulations. For example, we are subject to the safeguards guidelines under the Gramm-Leach-Bliley Act. The safeguards guidelines require that each financial institution develop, implement and maintain a written, comprehensive information security program containing safeguards that are appropriate to the financial institution’s size and complexity, the nature and scope of the financial institution’s activities and the sensitivity of any customer information at issue. Broad-ranging data security laws that affect our business also have been adopted by various states. Compliance with these laws regarding the protection of customer and employee data could result in higher compliance and technology costs for us, as well as potentially significant fines and penalties for non-compliance.

In addition to the foregoing enhanced data security requirements, various federal banking regulatory agencies, and as many as 46 states, the District of Columbia, Puerto Rico and the Virgin Islands, have enacted data security regulations and laws requiring varying levels of customer notification in the event of a security breach.

Also, federal legislators and regulators are increasingly pursuing new guidelines, laws and regulations that, if adopted, could further restrict how we collect, use, share and secure customer information, which could impact some of our current or planned business initiatives.

Unplanned system interruptions or system failures could harm our business and reputation. Any interruption in the availability of our transactional processing services due to hardware and operating system failures will reduce our revenues and profits. Any unscheduled interruption in our services results in an immediate, and possibly substantial, loss of revenues. Frequent or persistent interruptions in our services could cause current or potential members to believe that our systems are unreliable, leading them to switch to our competitors or to avoid our websites or services, and could permanently harm our reputation.

Although our systems have been designed around industry-standard architectures to reduce downtime in the event of outages or catastrophic occurrences, they remain vulnerable to damage or interruption from earthquakes, floods, fires, power loss, telecommunication failures, computer viruses, computer denial-of-service attacks, and similar events or disruptions. Some of our systems are not fully redundant, and our disaster recovery planning may not be sufficient for all eventualities. Our systems also are subject to break-ins, sabotage, and intentional acts of vandalism. Despite any precautions we may take, the occurrence of a natural disaster, a decision by any of our third-party hosting providers to close a facility we use without adequate notice for financial or other reasons, or other unanticipated problems at our hosting facilities could cause system interruptions, delays, and loss of critical data, and result in lengthy interruptions in our services. Our business interruption insurance may not be sufficient to compensate us for losses that may result from interruptions in our service as a result of system failures.

Because of our loan to a small surface coal mining operation (which, due to loan agreement modifications, we were required to consolidate into our financial statements in 2011, but which has since ceased mining operations), we could be subject to (i) significant administrative, civil, and criminal financial and other penalties if this operation does not comply with environmental, health and safety regulations and (ii) liability to third parties for environmental contamination . The coal mining industry is subject to strict regulation by federal, state and local authorities with respect to matters such as employee health and safety, permitting and licensing requirements, the protection of the environment, the protection of historic and natural resources, plants and wildlife, reclamation and restoration of mining properties after mining is completed, and the effects that mining has on groundwater quality and availability. Federal and state authorities inspect coal mines, and in the aftermath of the April 5, 2010 accident at an underground mine in Central Appalachia, mining operations have experienced, and may in the future continue to experience, a significant increase in the frequency and scope of these inspections. Numerous

Table of Contents

governmental permits and approvals are required for mining operations. Mining operations are required to prepare and present to federal, state and/or local authorities data pertaining to the effect or impact that any proposed exploration for or production of coal may have upon the environment.

The costs, liabilities and requirements associated with the laws and regulations related to these and other environmental matters may be costly and time-consuming. Failure to comply with these laws and regulations may result in the assessment of administrative, civil, and criminal financial and other penalties, the imposition of cleanup and site restoration costs and liens and other enforcement measures.

We also could be subject to claims by third parties under federal and state statutes and/or common law doctrines resulting from damage to the environment or historic or natural resources or exposure to hazardous substances on the mine property or elsewhere. Liability for environmental contamination may be without regard to fault and may be strict, joint and several, so that we may be held responsible for the entire amount of the contamination or related damages. These and other similar unforeseen impacts that the former mining operation may have on the environment, as well as exposures to hazardous substances or wastes associated with the former mining operation, could result in costs and liabilities that could adversely affect us.

Even though this former coal mining operation ceased mining operations as of December 31, 2012 and has always been owned and primarily operated by third parties, our financial relationship with this former coal mining operation could subject us to these types of claims and penalties, particularly if these matters were not properly addressed by the owners and operators of the operation. If we are held responsible for sanctions, costs and liabilities in respect of these matters, our profitability could be materially and adversely affected.

Climate change and related regulatory responses may impact our business . Climate change as a result of emissions of greenhouse gases is a significant topic of discussion and may generate federal and other regulatory responses. It is impracticable to predict with any certainty the impact on our business of climate change or the regulatory responses to it, although we recognize that they could be significant. The most direct impact is likely to be an increase in energy costs, which would adversely impact consumers and their ability to incur and repay indebtedness. However, we are uncertain of the ultimate impact, either directionally or quantitatively, of climate change and related regulatory responses on our business.

Risks Relating to an Investment in Our Securities

The price of our common stock may fluctuate significantly, and this may make it difficult for you to resell your shares of our common stock when you want or at prices you find attractive. The price of our common stock on the NASDAQ Global Select Market constantly changes. We expect that the market price of our common stock will continue to fluctuate. The market price of our common stock may fluctuate in response to numerous factors, many of which are beyond our control. These factors include the following:


•	actual or anticipated fluctuations in our operating results;


•	changes in expectations as to our future financial performance, including financial estimates by securities analysts and investors;


•	the overall financing environment, which is critical to our value;


•	the operating and stock performance of our competitors and other sub-prime lenders;


•	announcements by us or our competitors of new products or services or significant contracts, acquisitions, strategic partnerships, joint ventures or capital commitments;


•	changes in interest rates;


•	the announcement of enforcement actions or investigations against us or our competitors or other negative publicity relating to us or our industry;


•	changes in GAAP, laws, regulations or the interpretations thereof that affect our various business activities and segments;


•	general domestic or international economic, market and political conditions;


•	changes in ownership by executive officers, directors and parties related to them who control a majority of our common stock;


•	additions or departures of key personnel; and


•	future sales of our common stock and the transfer or cancellation of shares of common stock pursuant to a share lending agreement.

Table of Contents

In addition, the stock markets from time to time experience extreme price and volume fluctuations that may be unrelated or disproportionate to the operating performance of companies. These broad fluctuations may adversely affect the trading price of our common stock, regardless of our actual operating performance.

Future sales of our common stock or equity-related securities in the public market, including sales of our common stock pursuant to share lending agreements or short sale transactions by purchasers of convertible senior notes, could adversely affect the trading price of our common stock and our ability to raise funds in new stock offerings. Sales of significant amounts of our common stock or equity-related securities in the public market, including sales pursuant to share lending agreements, or the perception that such sales will occur, could adversely affect prevailing trading prices of our common stock and could impair our ability to raise capital through future offerings of equity or equity-related securities. Future sales of shares of common stock or the availability of shares of common stock for future sale, including sales of our common stock in short sale transactions by purchasers of our convertible senior notes, may have a material adverse effect on the trading price of our common stock.

We have the ability to issue preferred stock, warrants, convertible debt and other securities without shareholder approval. Our common stock may be subordinate to classes of preferred stock issued in the future in the payment of dividends and other distributions made with respect to common stock, including distributions upon liquidation or dissolution. Our articles of incorporation permit our Board of Directors to issue preferred stock without first obtaining shareholder approval. If we issued preferred stock, these additional securities may have dividend or liquidation preferences senior to the common stock. If we issue convertible preferred stock, a subsequent conversion may dilute the current common shareholders’ interest. We have similar abilities to issue convertible debt, warrants and other equity securities.

Our executive officers, directors and parties related to them, in the aggregate, control a majority of our common stock and may have the ability to control matters requiring shareholder approval. Our executive officers, directors and parties related to them own a large enough share of our common stock to have an influence on, if not control of, the matters presented to shareholders. As a result, these shareholders may have the ability to control matters requiring shareholder approval, including the election and removal of directors, the approval of significant corporate transactions, such as any reclassification, reorganization, merger, consolidation or sale of all or substantially all of our assets and the control of our management and affairs. Accordingly, this concentration of ownership may have the effect of delaying, deferring or preventing a change of control of us, impede a merger, consolidation, takeover or other business combination involving us or discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of us, which in turn could have an adverse effect on the market price of our common stock.

The right to receive payments on our convertible senior notes is subordinated to the rights of our existing and future secured creditors. Our convertible senior notes are unsecured and are subordinate to existing and future secured obligations to the extent of the value of the assets securing such obligations. As a result, in the event of a bankruptcy, liquidation, dissolution, reorganization or similar proceeding of our company, our assets generally would be available to satisfy obligations of our secured debt before any payment may be made on the convertible senior notes. To the extent that such assets cannot satisfy in full our secured debt, the holders of such debt would have a claim for any shortfall that would rank equally in right of payment (or effectively senior if the debt were issued by a subsidiary) with the convertible senior notes. In such an event, we may not have sufficient assets remaining to pay amounts on any or all of the convertible senior notes.

As of December 31, 2014 , Atlanticus Holdings Corporation had outstanding: $50.1 million of secured indebtedness, which would rank senior in right of payment to the convertible senior notes; $11.9 million of senior unsecured indebtedness in addition to the convertible senior notes that would rank equal in right of payment to the convertible senior notes; and no subordinated indebtedness. Included in senior secured indebtedness are certain guarantees we have executed in favor of our subsidiaries. For more information on our outstanding indebtedness, See Note 9, "Notes Payable," and Note 16, "Related Party Transactions," to our consolidated financial statements included herein.

Our convertible senior notes are junior to the indebtedness of our subsidiaries. Our convertible senior notes are structurally subordinated to the existing and future claims of our subsidiaries’ creditors. Holders of the convertible senior notes are not creditors of our subsidiaries. Any claims of holders of the convertible senior notes to the assets of our subsidiaries derive from our own equity interests in those subsidiaries. Claims of our subsidiaries’ creditors will generally have priority as to the assets of our subsidiaries over our own equity interest claims and will therefore have priority over the holders of the convertible senior notes. Consequently, the convertible senior notes are effectively subordinate to all liabilities, whether or not secured, of any of our subsidiaries and any subsidiaries that we may in the future acquire or establish. Our subsidiaries’ creditors also may include general creditors and taxing authorities. As of December 31, 2014 , our subsidiaries had total liabilities of approximately $156.1 million (including the $50.1 million of senior secured indebtedness mentioned above),

Table of Contents

excluding intercompany indebtedness. In addition, in the future, we may decide to increase the portion of our activities that we conduct through subsidiaries.

Note Regarding Risk Factors

The risk factors presented above are all of the ones that we currently consider material. However, they are not the only ones facing our company. Additional risks not presently known to us, or which we currently consider immaterial, may also adversely affect us. There may be risks that a particular investor views differently from us, and our analysis might be wrong. If any of the risks that we face actually occurs, our business, financial condition and operating results could be materially adversely affected and could differ materially from any possible results suggested by any forward-looking statements that we have made or might make. In such case, the trading price of our common stock or other securities could decline, and you could lose part or all of your investment. We expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Table of Contents



ITEM 1B.	UNRESOLVED STAFF COMMENTS

None



ITEM 2.	PROPERTIES

We lease our principal executive offices (which include the primary operations of our Credit and Other Investments segment), and our lease is for 335,372 square feet, of which we have sub-leased 233,405 square feet. Our Auto Finance segment principally operates out of Lake Mary, Florida in approximately 9,600 square feet of leased space, with additional offices and branch locations in various states and territories. Our operations in the U.K. include approximately 2,140 of aggregate square feet of leased space in Crawley. We believe that our facilities are suitable to our business and that we will be able to lease or purchase additional facilities as our needs, if any, require.



ITEM 3.	LEGAL PROCEEDINGS

We are involved in various legal proceedings that are incidental to the conduct of our business. There are currently no pending material legal proceedings.



ITEM 4.	MINE SAFETY DISCLOSURES

None

Table of Contents

PART II



ITEM 5.	MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock is traded on the NASDAQ Global Select Market under the symbol “ATLC.” The following table sets forth, for the periods indicated, the high and low sales prices per share of our common stock as reported on the NASDAQ Global Select Market. As of February 20, 2015, there were 49 record holders of our common stock, which does not include persons whose stock is held in nominee or “street name” accounts through brokers, banks and intermediaries.




2013	High	Low
1st Quarter 2013	$3.68	$3.20
2nd Quarter 2013	$4.11	$3.40
3rd Quarter 2013	$3.85	$3.50
4th Quarter 2013	$3.75	$3.31

2014	High	Low
1st Quarter 2014	$3.59	$1.96
2nd Quarter 2014	$3.24	$2.24
3rd Quarter 2014	$2.96	$1.80
4th Quarter 2014	$2.77	$1.15

The closing price of our common stock on the NASDAQ Global Select Market on February 20, 2015 was $2.88.

ISSUER PURCHASES OF EQUITY SECURITIES

The following table sets forth information with respect to our repurchases of common stock during the three months ended December 31, 2014 :



	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased under the Plans or Programs (1)
October 1 - October 31	17,323	$	1.57	17,323	4,982,677
November 1 - November 30	14,977	$	1.66	14,977	4,967,700
December 1 - December 31	37,909	$	2.41	37,909	4,929,791
Total	70,209	$	2.04	70,209	4,929,791


(1)	Because withholding tax-related stock repurchases are permitted outside the scope of our 5,000,000 share Board-authorized repurchase plan, these amounts exclude shares of stock returned to us by employees in satisfaction of withholding tax requirements on vested stock grants. There were 43,961 such shares returned to us during the three months ended December 31, 2014 .

Pursuant to a share repurchase plan authorized by our Board of Directors on May 9, 2014, we are authorized to repurchase 5,000,000 shares of our common stock through June 30, 2016, of which 4,929,791 shares remained authorized for repurchase as of December 31, 2014 . We will continue to evaluate our stock price relative to other investment opportunities and, to the extent we believe that the repurchase of our stock represents an appropriate return of capital, we will repurchase shares of our stock.



ITEM 6.	SELECTED FINANCIAL DATA

As a “smaller reporting company,” as defined by Item 10 of Regulation S-K, we are not required to provide this information.

Table of Contents



ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our consolidated financial statements and the related notes included therein, where certain terms (including trust, subsidiary and other entity names and financial, operating and statistical measures) have been defined.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations includes forward-looking statements. We base these forward-looking statements on our current plans, expectations and beliefs about future events. There are risks, including the factors discussed in “Risk Factors” in Item 1A and elsewhere in this Report, that our actual experience will differ materially from these expectations. For more information, see “Cautionary Notice Regarding Forward-Looking Statements" at the beginning of this Report.

OVERVIEW

We are a provider of various credit and related financial services and products to or associated with the financially underserved consumer credit market—a market largely represented by credit risks that regulators classify as sub-prime.

Currently, within our Credit and Other Investments segment, we are applying the experiences and infrastructure from our 18-year operating history to originate consumer loans through multiple channels, including retail point-of-sale and direct solicitation. In our point-of-sale channel, we partner with retailers and service providers in various industries across the U.S. to provide credit to their customers for the purchase of goods and services or the rental of merchandise to their customers under rent-to-own arrangements. These products are often extended to customers who may have been declined under traditional financing options. We specialize in providing this "second-look" credit service. Using our infrastructure and technology platform, we also provide loan servicing, including underwriting, marketing, customer service and collections operations for third parties. Also through our Credit and Other Investments segment, we engage in testing and limited investment in consumer finance technology platforms as we seek to capitalize on our expertise and infrastructure.

Beyond these activities within our Credit and Other Investments segment, we continue to collect on portfolios of credit card receivables. These receivables include both receivables we originated through third-party financial institutions and portfolios of receivables we purchased from third-party financial institutions. One of our portfolios of credit card receivables is encumbered by non-recourse structured financing, and for this portfolio our principal remaining economic interest is the servicing compensation we receive as an offset against our servicing costs given that the likely future collections on the portfolio are insufficient to allow for full repayment of the financing.

Lastly, we report within our Credit and Other Investments segment the income earned from an investment in an equity-method investee that holds credit card receivables for which we are the servicer. Prior to December 2014 we also included income from an additional equity-method investee that held structured financing notes underlying credit card receivables for which we are the servicer. This investee was consolidated on our financial statements as of December 31, 2014 subsequent to our distribution of certain assets to an unrelated third-party partner for their interest.

We historically financed most of our credit card receivables through the asset-backed securitization markets. These markets deteriorated significantly in 2008, and the level of “advance rates,” or leverage against credit card receivable assets, in the current asset-backed securitization markets is below pre-2008 levels. Considering this reality coupled with constraints on credit card asset returns in the U.S., we no longer market or maintain open credit card accounts in the U.S. We do believe, however, that our point-of-sale and direct-to-consumer finance activities are generating and will continue to generate attractive returns on assets, thereby allowing us to secure debt financing under terms and conditions (including advance rates and pricing) that will allow us to achieve our desired returns on equity, and we continue to pursue growth in this area.

Table of Contents

A summary of our most significant business events during 2014 is as follows:


•	Continued growth in our point-of-sale operations through expanded merchant relationships and growth in our direct-to-consumer channels;


•	Gains recognized on loans and investments in consumer finance technology platforms of $4.4 million ;


•	Gains associated with our settlement with the IRS for a tax assessment of $9.1 million (plus interest) associated with our 2007 and 2008 net operating loss carry-backs;


•	Additional accruals of £3.0 million ( $4.7 million ) made associated with an ongoing review in the U.K. by HMRC associated with filings by one of our U.K. subsidiaries;


•	Fixed asset impairments of $2.7 million associated with software development costs in 2014 as planned uses for this software were discontinued; and


•	Gains associated with convertible note repurchases of $12.1 million .

As noted above, we had gains associated with investments previously made in consumer finance technology platforms. These include investments in companies engaged in mobile technologies, marketplace peer lending and other financial technologies. These investments are carried at a lower of cost or market valuation, and the remaining associated book value as of December 31, 2014 is negligible given variations in the ascribed values since acquisition. Some of these platforms have raised, and continue to seek, capital at valuations substantially in excess of our associated book value. However, none of these companies is publicly-traded, there is no foreseeable liquidity event, and ascribing value to these investments would be speculative. Based on the performance and/or marketability of these investments in future periods, we could have material gains for our remaining ownership in these or other investment assets.

Table of Contents

CONSOLIDATED RESULTS OF OPERATIONS



							Income
	For the Twelve Months Ended December 31,						Increases (Decreases)
(In Thousands)	2014			2013			from 2013 to 2014
Total interest income	$	73,676		$	69,521		$	4,155
Interest expense	(24,052		)	(23,872		)	(180		)
Fees and related income on earning assets:
Fees on credit products	18,662			23,879			(5,217		)
Changes in fair value of loans and fees receivable recorded at fair value	14,460			45,601			(31,141		)
Changes in fair value of notes payable associated with structured financings recorded at fair value	(7,418		)	(19,423		)	12,005
Rental revenue	58,457			19,759			38,698
Other	4,669			(707		)	5,376
Other operating income:
Servicing income	4,910			8,218			(3,308		)
Other income	2,084			3,394			(1,310		)
Gain on repurchase of convertible senior notes	12,068			—			12,068
Equity in income equity-method investees	6,983			8,437			(1,454		)
Total	$	164,499		$	134,807		$	29,692
Losses upon charge off of loans and fees receivable recorded at fair value, net of recoveries	(4,852		)	14,560			19,412
Provision for losses on loans and fees receivable recorded at net realizable value	30,828			29,678			(1,150		)
Other operating expenses:
Salaries and benefits	19,777			17,832			(1,945		)
Card and loan servicing	48,599			46,119			(2,480		)
Marketing and solicitation	2,381			8,719			6,338
Depreciation	69,096			17,965			(51,131		)
Other	25,975			22,713			(3,262		)
Net income (loss)	7,327			(17,665		)	24,992
Net income attributable to noncontrolling interests	(150		)	(76		)	(74		)
Net income (loss) attributable to controlling interests	7,177			(17,741		)	24,918

Year Ended December 31, 2014 , Compared to Year Ended December 31, 2013

Total interest income. Total interest income consists primarily of finance charges and late fees earned on our point-of-sale finance, credit card and auto finance receivables. Period-over-period results reflect continued growth in our point-of-sale finance products, offset, however, by continued net liquidations of our credit card and auto finance receivables over the past year. We are currently experiencing growth in our point-of-sale finance products and our CAR receivables—growth which we expect to result in net period over period growth in our total interest income within the next few quarters. Future periods' growth is also dependent on the addition of new retail partners for our point-of-sale operations as well as continued growth within existing partnerships and growth within our direct-to-consumer finance activities. This growth was delayed late in the first quarter of 2014 as a significant retail partner in our point-of-sale operations underwent a product shift that resulted in the suspension of new account originations with us for both our installment lending product as well as our rent-to-own product. This disruption lasted into the second quarter and continues to impact growth through lower originations.

Table of Contents

Interest expense. Variations in interest expense are due to our debt facilities being repaid commensurate with net liquidations of the underlying credit card, auto finance and installment loan receivables that serve as collateral for the facilities offset by new borrowings associated with growth in our point-of-sale finance operations as evidenced within Note 9, “Notes Payable,” to our consolidated financial statements. We anticipate additional debt financing over the next few quarters as we continue to grow, and as such, we expect our 2015 quarterly interest expense to be above those experienced in the prior periods. Offsetting this growth in interest expense will be reductions in interest costs associated with convertible senior notes that have been repurchased and canceled. In November 2014, we repurchased $46.1 million aggregate principal amount of 5.875% convertible senior notes due 2035 ("5.875% convertible senior notes"). In connection with this repurchase, we borrowed $20.0 million under a secured term loan with a related party. See Note 9, "Notes Payable" to our consolidated financial statements for more information.

Fees and related income on earning assets. The significant factors affecting our differing levels of fees and related income on earning assets include:


•	The growth in rental revenue we experienced with the addition of our rent-to-own program, which accelerated in the third quarter of 2013;


•	Reductions in fees on credit products, principally associated with the net liquidations of credit card accounts in the U.K.;


•	Recoveries of $4.4 million on investments in consumer finance technology platforms in excess of their carrying value in our "Other" category;


•	Our $2.4 million charge off of a note we had received from buyers of our buy-here-pay-here dealer operations in the second quarter of 2013, such charge off causing the loss in our prior year "Other" category; and


•	The effects of changes in the fair values of credit card receivables recorded at fair value and notes payable associated with structured financings recorded at fair value as described below.

As we continue to expand the rent-to-own product offerings, we expect continued increases in billings within the Rental revenue category. However, this growth in rental revenues slowed during the second quarter of 2014 (compared to the first quarter of 2014) due to a product shift by one of our large retail partners. Following the completion of this product shift, we have continued to experience monthly growth. As for our fees on credit products category, which is primarily influenced by the level of our originated U.K. credit card receivables, we expect a diminishing level of fee income for 2015 because we do not anticipate additional credit card originations in the U.K. Further, given expected future net liquidations of our credit card receivables for which we use fair value accounting, we expect our change in fair value of credit card receivables recorded at fair value and our change in fair value of notes payable associated with structured financings recorded at fair value amounts to gradually diminish (absent significant changes in the assumptions used to determine these fair values) in the future. These amounts, however, are subject to potentially high levels of volatility if we experience changes in the quality of our credit card receivables or if there are significant changes in market valuation factors (e.g., interest rates and spreads) in the future. Such volatility will be muted somewhat, however, by the offsetting nature of the receivables and underlying debt being recorded at fair value and with the expected reductions in the face amounts of such outstanding receivables and debt as we experience further credit card receivables liquidations and associated debt amortizing repayments.

Servicing income. We earn servicing compensation by servicing loan portfolios for third parties (including our equity-method investees). Unless and/or until we grow the number of contractual servicing relationships we have with third parties or our current relationships grow their loan portfolios, we will not experience significant growth and income within this category, and we currently expect to experience future quarterly declines relative to those experienced in prior periods.

Other income . Historically included within our other income category are ancillary and interchange revenues, which are now relatively insignificant for us due to our credit card account closures and net credit card receivables portfolio liquidations. Absent portfolio acquisitions, we do not expect significant ancillary and interchange revenues in the future. Also included within our other income category are certain reimbursements we receive in respect of one of our portfolios.

Gain on repurchase of convertible senior notes. In July 2014 we repurchased $80,000 aggregate principal amount of outstanding 5.875% convertible senior notes for $25,200 . In November 2014, we repurchased $46.1 million aggregate principal amount of 5.875% convertible senior notes for $19.1 million plus accrued interest. The purchases resulted in an aggregate gain of $12.1 million (net of the notes’ applicable share of deferred costs, which were written off in connection with the repurchase). Upon acquisition, all notes were retired.

As mentioned elsewhere in this Report, we plan to continue to evaluate and pursue a variety of activities, including the repurchase of our convertible senior notes.

Table of Contents

Equity in income of equity-method investees. Because our equity-method investees use the fair value option to account for their financial assets and liabilities, changes in fair value estimates can cause some volatility in the earnings of these investees. Although we increased our equity interest in one of our two equity-method investees in the second quarter of 2013, because of continued liquidations in their financial assets (a credit card receivables portfolio held by one equity-method investee and structured financing notes held by the other), absent additional investments in our existing or in new equity-method investees in the future, we expect gradually declining effects from our equity-method investments on our operating results. Further, in December 2014, we consolidated on our financial statements one of our equity-method investees subsequent to our distribution of certain assets to an unrelated third-party partner for their interest in the entity. As such, we expect even further diminishing effects from our equity-method investments on our operating results for 2015.

Losses upon charge off of loans and fees receivable recorded at fair value. This account reflects charge offs (net of recoveries) of the face amount of credit card receivables we record at fair value on our consolidated balance sheet. We have experienced a general trending decline in, and we expect future trending declines in, these charge offs as we continue to liquidate our credit card receivables. Additionally, net losses in both periods reflect the effects of reimbursements received in respect of one of our portfolios. In 2014, these reimbursements exceeded the charge-offs experienced within the portfolio as the reimbursements are not directly associated with the timing of actual charge offs.

Provision for losses on loans and fees receivable recorded at net realizable value. Our provision for losses on loans and fees receivable recorded at net realizable value covers, with respect to such receivables, the aggregate loss exposures on (1) principal receivable balances, (2) finance charges and late fees receivable underlying income amounts included within our total interest income category, and (3) other fees receivable. We have experienced year-over-year increases in this category between 2013 and 2014 due to the effects of initial elevated losses incurred on new credit product testing and more recently growth in our new installment lending product lines and additional reserves we have recorded associated with the closure of one of our merchant partners. The closure of this merchant partner resulted in our experiencing heightened risk for charge-offs of the underlying loans, particularly in cases where the consumer may not have received the full benefits expected from the merchant partner and for which we do not expect to be reimbursed by the merchant partner. We expect growth in new product receivables recorded at net realizable value to exceed any further liquidations of our auto finance receivables recorded at net realizable value. Accordingly, we expect increases in our provisions for losses on loans and fees receivable recorded at net realizable value in future quarters—such increases predominantly expected to reflect the effects of volume associated with our point-of-sale finance product offering (i.e., growth of new product receivables), rather than credit quality changes or deterioration. Testing associated with our credit card product in the U.K. resulted in slightly higher provisions through the first quarter of 2014, but, given that we have discontinued new originations in the U.K., we expect declines in provisions associated with this product offering, albeit not at levels expected to produce period over period declines for 2015. See Note 2, “Significant Accounting Policies and Consolidated Financial Statement Components,” to our consolidated financial statements and the discussions of our Credit and Other Investments and Auto Finance segments for further credit quality statistics and analysis.

Total other operating expense. Total other operating expense variances for the year ended December 31, 2014 , relative to the year ended December 31, 2013 , reflect the following:


•	modestly higher 2014 salaries and benefits costs resulting from increases required to grow our new credit product offerings;


•	card and loan servicing expenses that are higher in 2014 based on new product efforts, the cost of such efforts overshadowing the cost effects of continuing credit card and auto finance receivables portfolio liquidations;


•	decreases in marketing costs as our new product offerings require less direct-to-consumer marketing expenses as those seen under our historical credit card operations;


•	increased depreciation primarily associated with our rent-to-own program, totaling $63.1 million and $16.1 million for the years ended December 31, 2014 and 2013, respectively, with no amounts in prior periods;


•	impairments of $2.7 million associated with software development costs in 2014 as planned uses for this software were discontinued with no corresponding impairment costs in 2013; and

•

general decreases in other expenses including customer acquisition and underwriting costs offset by increases in third party costs associated with ongoing information technology upgrades and increases of £3.0 million ( $4.7 million ) related to provisions associated with an ongoing review in the U.K. by HMRC associated with filings by one of our U.K. subsidiaries to reclaim VAT that it paid on its inputs and that it believed and continues to believe were and are eligible to be reclaimed.

A portion of our operating costs are variable based on the levels of accounts we market and receivables we service (both for our own account and for others) and the pace and breadth of our search for, acquisition of and introduction of new business lines, products and services. However, a number of our operating costs are fixed and until recently have comprised a larger percentage of our total costs based on the ongoing contraction of our credit card and auto finance loans and fees

Table of Contents

receivable levels. This trend is gradually reversing, however, as we continue to grow our earning assets (including loans and fees receivable and rental merchandise) based principally on growth of our point-of-sale finance product offerings and to a lesser extent, growth within our CAR operations. We continue to perform extensive reviews of all areas of our businesses for cost savings opportunities to better align our costs with our portfolio of managed receivables.

Notwithstanding our cost-control efforts and focus, we expect increased levels of expenditures associated with growth in our point-of-sale finance operations. While we have greater control over our variable expenses, it is difficult (as explained above) for us to appreciably reduce our fixed and other costs associated with an infrastructure (particularly within our Credit and Other Investments segment) that was built to support levels of managed receivables that are significantly higher than both our current levels and the levels that we expect to see in the near future. At this point, our Credit and Other Investments segment cash inflows are sufficient to cover its direct variable costs and a portion, but not all, of its share of overhead costs (including, for example, corporate-level executive and administrative costs and our convertible senior notes interest costs). As such, if we are unable to contain overhead costs or expand revenue-earning activities to levels commensurate with such costs, then, depending upon the earnings generated from our Auto Finance segment and our liquidating credit card portfolios, we may experience continuing pressure on our ability to achieve profitability.

Noncontrolling interests. We reflect the ownership interests of noncontrolling holders of equity in our majority-owned subsidiaries as noncontrolling interests in our consolidated statements of operations. Unless we enter into significant new majority-owned subsidiary ventures with noncontrolling interest holders in the future, we expect to have negligible noncontrolling interests in our majority-owned subsidiaries and negligible allocations of income or loss to noncontrolling interest holders in future quarters.

Income Taxes. We experienced effective income tax benefit rates of 126.8% and 22.5% for the years ended December 31, 2014 and December 31, 2013 , respectively. Our effective income tax benefit rates resulted principally from (1) changes in valuation allowances against income statement-oriented federal, foreign and state deferred tax assets in both years ended December 31, 2014 and 2013, with the most significant benefits related to the complete release of all federal tax-related valuation allowances in the year ended December 31, 2014 and (2) the reversal of excess prior year interest accruals on our then-accrued prior year liabilities for uncertain tax positions, such reversal of excess interest accruals resulting from a favorable settlement (relative to accrued prior year liabilities for uncertain tax positions) reached with the Internal Revenue Service (“IRS”) in December 2014 and the favorable resolution of accrued prior year liabilities for uncertain state tax positions.

As indicated above, we report potential accrued interest and penalties related to our accrued liabilities for uncertain tax positions within our income tax benefit or expense line item on our consolidated statements of operations. We likewise report the reversal of such accrued interest and penalties within the income tax benefit or expense line item to the extent that we resolve our liabilities for uncertain tax positions in a manner favorable to our accruals therefor. During the year ended December 31, 2014, the effect of interest and penalties on our income tax benefit was a $10.9 million net increase in our income tax benefit (representing the net of the release of $11.2 million of prior year interest and penalty accruals and $0.3 million of new accruals in 2014 associated with uncertain tax liabilities in 2014). In contrast, our income tax benefit was reduced in the year ended December 31, 2013 by net interest and penalty accruals of $2.1 million (representing the net of the release of $1.0 million of prior year interest and penalty accruals and $3.1 million of new accruals in 2013 associated with uncertain tax liabilities in 2013).

As mentioned above, in December 2014 we reached a settlement with the IRS concerning the tax treatment of net operating losses that we incurred in 2007 and 2008 and carried back to obtain refunds of federal income taxes paid in earlier years dating back to 2003. Pursuant to the terms of the settlement, we agreed to a federal income tax assessment of $9.1 million associated with our 2007 and 2008 net operating loss carry-backs (upon which approximately $2.0 million of interest is expected to be charged when billed by the IRS). Our settlement with the IRS materially enhanced our 2014 reported income tax benefits in two ways as noted above. First, we released into 2014 income tax benefit prior year tax, interest and penalty liability accruals associated with then-uncertain tax positions that were resolved in a significantly favorable manner relative to the liabilities accrued therefor. Second, we reclassified to deferred tax liabilities as of December 31, 2014 significant levels of liabilities that had been classified as current liability accruals for uncertain tax positions as of December 31, 2013, thereby eliminating the need for valuation allowances that existed as of December 31, 2013 against net deferred tax assets at that date.

Credit and Other Investments Segment

Our Credit and Other Investments segment includes our activities relating to investments in and servicing of our point-of-sale and direct-to-consumer finance products and our various credit card receivables portfolios, as well as other product testing and investments that generally utilize much of the same infrastructure.

Table of Contents

The types of revenues we earn from our products and services primarily include finance charges, the accretion of discounts associated with our point-of-sale and direct-to-consumer finance installment loans or revolving credit offers, late fees, rental revenue, over-limit fees, annual fees, activation fees, monthly maintenance fees, returned-check fees and cash advance fees. Also, while insignificant currently, revenues also have included credit card fees associated with (1) our sale of ancillary products such as memberships, subscription services and debt waiver, as well as (2) interchange fees representing a portion of the merchant fee assessed by card associations based on cardholder purchase volumes underlying credit card receivables.

We record (i) the finance charges, discount accretion and late fees assessed on our Credit and Other Investments segment credit products in the interest income - consumer loans, including past due fees category on our consolidated statements of operations, (ii) the rental revenue, over-limit, annual, activation, monthly maintenance, returned-check, cash advance and other fees in the fees and related income on earning assets category on our consolidated statements of operations, and (iii) the charge offs (and recoveries thereof) within our provision for losses on loans and fees receivable on our consolidated statements of operations (for all credit product receivables other than those for which we have elected the fair value option) and within losses upon charge off of loans and fees receivable recorded at fair value on our consolidated statements of operations (for all of our other receivables for which we have elected the fair value option). Additionally, we show the effects of fair value changes for those credit card receivables for which we have elected the fair value option as a component of fees and related income on earning assets in our consolidated statements of operations.

Depreciation associated with rental merchandise (totaling $63.1 million and $16.1 million for the years ended December 31, 2014 and 2013, respectively) for which we receive rental revenue is included as a component of our overall depreciation in our consolidated statements of operations.

We historically have originated and purchased credit portfolios through subsidiary entities. Generally, if we control through direct ownership or exert a controlling interest in the entity, we consolidate it and reflect its operations as noted above. If we exert significant influence but do not control the entity, we record our share of its net operating results in the equity in income of equity-method investees category on our consolidated statements of operations.

Managed Receivables

We make various references within our discussion of the Credit and Other Investments segment to our managed receivables. In calculating managed receivables data, we include within managed receivables those receivables we manage for our consolidated subsidiaries, but we exclude from managed receivables any noncontrolling interest holders’ shares of the receivables. Additionally, we include within managed receivables only our economic share of the receivables that we manage for our equity-method investees.

Financial, operating and statistical data based on aggregate managed receivables are important to any evaluation of the performance of our credit portfolios, including our underwriting, servicing and collection activities and our valuing of purchased receivables. In allocating our resources and managing our business, management relies heavily upon financial data and results prepared on this “managed basis.” Analysts, investors and others also consider it important that we provide selected financial, operating and statistical data on a managed basis because this allows a comparison of us to others within the specialty finance industry. Moreover, our management, analysts, investors and others believe it is critical that they understand the credit performance of the entire portfolio of our managed receivables because it reveals information concerning the quality of loan originations and the related credit risks inherent within the portfolios.

Table of Contents

Reconciliation of the managed receivables data to our GAAP financial statements requires: (1) an understanding that our managed receivables data are based on billings and actual charge offs as they occur, without regard to any changes in our allowance for uncollectible loans and fees receivable or any changes in the fair value of loans and fees receivable and their associated structured financing notes; (2) inclusion of our economic share of (or equity interest in) the receivables we manage for our equity-method investees; (3) removal of any noncontrolling interest holders’ shares of the managed receivables underlying our GAAP consolidated results; (4) treatment of the transaction in which our 50%-owned equity-method investee acquired our structured financing trust notes (a) as a deemed sale of the trust receivables at their face amount, (b) followed by the 50%-owned equity-method investee’s deemed repurchase of such receivables for consideration equal to the discounted purchase price that it paid for the notes, and (c) as though the difference between the deemed face amount and the deemed discounted repurchase price of the receivables is to be treated as credit quality discount to be accreted into managed earnings as a reduction of net charge offs over the remaining life of the receivables; and (5) the exclusion from our managed receivables data of certain reimbursements received in respect of one of our portfolios which resulted in pre-tax income benefits within our total interest income, fees and related income on earning assets, losses upon charge off of loans and fees receivable recorded at fair value, net of recoveries, other income, servicing income, and equity in income of equity-method investees line items on our consolidated statements of operations totaling approximately $8.0 million for the three months ended December 31, 2014, $2.7 million for the three months ended September 30, 2014, $3.7 million for the three months ended June 30, 2014, $3.2 million for the three months ended March 31, 2014, $1.2 million for the three months ended December 31, 2013, $3.9 million for the three months ended September 30, 2013, $1.7 million for the three months ended June 30, 2013, and $5.6 million for the three months ended March 31, 2013. This last category of reconciling items above is excluded because it does not bear on our performance in managing our credit card portfolios, including our underwriting, servicing and collection activities and our valuing of purchased receivables; moreover, it is difficult to determine the future effects of any such reimbursements that may be received.

We typically have purchased credit card receivables portfolios at substantial discounts. In our managed basis statistical data, we apply a portion of these discounts against receivables acquired for which charge off is considered likely, including accounts in late stages of delinquency at the date of acquisition; this portion is measured based on our acquisition date estimate of the shortfall of cash flows expected to be collected on the acquired portfolios relative to the face amount of receivables represented within the acquired portfolios. We refer to the balance of the discount for each purchase not needed for credit quality as accretable yield, which we accrete into total yield in our managed basis statistical data using the interest method over the estimated life of each acquired portfolio. As of the close of each financial reporting period, we evaluate the appropriateness of the credit quality discount component and the accretable yield component of our acquisition discount based on actual and projected future results.

Asset quality. Our delinquency and charge-off data at any point in time reflect the credit performance of our managed receivables. The average age of the accounts underlying our receivables, the timing of portfolio purchases, the success of our collection and recovery efforts and general economic conditions all affect our delinquency and charge-off rates. The average age of the accounts underlying our receivables portfolio also affects the stability of our delinquency and loss rates. We consider this delinquency and charge-off data in our determination of the fair value of our credit card receivables underlying formerly off-balance-sheet securitization structures, as well as our allowance for uncollectible loans and fees receivable in the case of our other credit product receivables that we report at net realizable value. Our strategy for managing delinquency and receivables losses consists of account management throughout the customer relationship. This strategy includes credit line management and pricing based on the risks. See also our discussion of collection strategies under the “How Do We Collect from Our Customers?” in Item 1, “Business.”

Table of Contents

The following table presents the delinquency trends of the receivables we manage within our Credit and Other Investments segment, as well as charge-off data and other managed receivables statistics (in thousands; percentages of total):



	At or for the Three Months Ended
	2014												2013
	Dec. 31			Sept. 30			Jun. 30			Mar. 31			Dec. 31			Sept. 30			Jun. 30			Mar. 31
Period-end managed receivables	$	157,145		$	186,564		$	200,147		$	215,182		$	236,740		$	248,584		$	252,036		$	263,265
Percent 30 or more days past due	13.6		%	11.2		%	11.2		%	12.0		%	12.5		%	10.9		%	9.2		%	9.4		%
Percent 60 or more days past due	9.8		%	8.3		%	8.1		%	9.2		%	9.2		%	7.8		%	6.3		%	7.0		%
Percent 90 or more days past due	6.9		%	5.8		%	5.7		%	6.7		%	6.4		%	5.2		%	4.3		%	4.9		%
Average managed receivables	$	173,553		$	194,272		$	206,657		$	227,109		$	242,272		$	246,147		$	255,669		$	277,457
Total yield ratio	63.3		%	42.6		%	38.4		%	45.4		%	33.3		%	36.3		%	31.8		%	29.4		%
Combined gross charge-off ratio	21.4		%	21.4		%	25.5		%	23.8		%	19.1		%	14.6		%	16.9		%	18.5		%
Adjusted charge-off ratio	16.4		%	17.7		%	21.3		%	19.8		%	15.2		%	10.7		%	12.2		%	14.1		%

Managed receivables levels. The consistent quarterly declines in our period-end and average managed receivables over the last eight quarters reflect the net liquidating state of our credit card receivables portfolios given our closure of substantially all credit card accounts underlying the portfolios. Moreover, we have effectively curtailed our credit card marketing efforts. Nevertheless, because of the receivables growth we are experiencing and expect to continue to experience over the coming quarters associated with our point-of-sale and direct-to-consumer finance offerings, the rate of decline in our managed receivables has diminished, and we now expect the slower decline to continue over coming quarters. This trend was offset in the fourth quarter of 2014 by our distribution of certain assets to an unrelated third-party partner in a joint venture for their interest. See Note 9 "Notes Payable" for more information. Growth in future periods largely is dependent on the addition of new retail partners for our point-of-sale operations as well as continued growth within existing partnerships. This growth was delayed late in the first quarter of 2014 as a significant retail partner in our point-of-sale operations underwent a product shift that resulted in the suspension of new account originations with us for our installment lending product. This disruption lasted into the second quarter and continues to impact growth through lower originations. We anticipate that new originations with this retail partner will continue to lag behind our earlier experience with this retail partner, although we are seeing consistent monthly growth through existing and new retail partners.

Delinquencies. Delinquencies have the potential to impact net income in the form of net credit losses. Delinquencies also are costly in terms of the personnel and resources dedicated to resolving them. We intend for the account management strategies we use on our portfolios to manage and, to the extent possible, reduce the higher delinquency rates that can be expected in a more mature managed portfolio such as ours. These account management strategies include conservative credit line management, purging of inactive accounts and collection strategies intended to optimize the effective account-to-collector ratio across delinquency categories. We further describe these collection strategies under the heading “How Do We Collect from Our Customers?” in Item 1, “Business”. We measure the success of these efforts by measuring delinquency rates. These rates exclude accounts that have been charged off.

Given that the vast majority of our credit card accounts have been closed and there has been no significant new activity for these accounts in the past several quarters, we have noted declines in our delinquency statistics of our managed credit card accounts. The trend of increasing delinquency rates noted above is primarily due to growth in our point-of-sale finance operations which generally experience higher delinquency rates than those of our liquidating credit card portfolios. Additionally, our credit card originations in the U.K. have experienced higher than average delinquency rates.

Table of Contents

We expect our point-of-sale and direct-to-consumer finance and other new product offerings to become a larger component of our managed receivables base, given the acceleration of growth in these products. Further, we expect our delinquency rates to increase slightly as the risk profiles (and thus expected returns) for these receivables are higher than that experienced under our current mix of largely mature credit card receivables underlying closed credit card accounts.

Combined gross charge-off ratio and Adjusted charge-off ratio. We charge off our Credit and Other Investments segment receivables when they become contractually more than 180 days past due or 120 days past due for the point-of-sale and direct-to-consumer finance products. For our rent-to-own products, we charge off receivables and impair associated rental merchandise if the customer has not made a payment within the previous 90 days. However, if a customer makes a payment greater than or equal to two minimum payments within a month of the charge-off date, we may reconsider whether charge-off status remains appropriate. For all of our products, we charge off receivables within 30 days of notification and confirmation of a customer’s bankruptcy or death. However, in some cases of death, we do not charge off receivables if there is a surviving, contractually liable individual or an estate large enough to pay the debt in full.

Certain of our prior originated credit card offerings have higher charge offs relative to their average managed receivables balances, than do our other portfolios. Due to the recent higher rate of decline in these particular originated receivables relative to all of our other outstanding credit card receivables, as well as the longer weighted average age and maturity of our remaining managed receivables portfolio, all things being equal, one would expect reduced charge-off ratios for these receivables. However, this trend has been muted to some degree simply due to a change in the mix of our receivable balances due to growth within our point-of-sale finance operations that have higher charge-off rates than the liquidating credit card portfolios as well as increased charge-offs associated with credit card origination efforts in the U.K.

The continued growth in our point-of-sale finance operations continues to result in higher charge-off ratios than those experienced historically. In the next few quarters, we expect increasing charge off rates on a period-over-period comparison basis. This expectation is based on (1) the age, maturity and stability of our portfolio of generally liquidating receivables associated with closed credit card accounts, (2) higher expected charge off rates on our rapidly growing new product offerings, offset by lower charge offs associated with credit card origination efforts in the U.K. due to the cessation of marketing efforts for this product and (3) an overall decline in the managed receivables base as discussed above.

Total yield ratio . As noted previously, the mix of our managed receivables generally has shifted away from certain higher-yielding credit card receivables. Those particular originated receivables have higher delinquency rates and late and over-limit fee assessments than do our other portfolios, and thus have higher total yield ratios as well. Additionally, our total yield ratio has been adversely affected over the past several quarters by our Non-U.S. Acquired Portfolio acquisition. Its total yields are below average compared to our other portfolios, and the rate of decline in receivables in this portfolio has lagged behind the rate of decline in receivables in our other portfolios, thus continuing to suppress our total yield ratio.

Offsetting the historical impacts noted above, is growth in our newer, higher yielding products, including our point-of-sale finance product. While this growth has contributed to increases in our total yield ratio, we expect this growth will slow or even modestly reverse the trend of our declining charge-off rates as discussed above because we expect these accounts to season, mature, and charge off at higher rates than we currently experience on our liquidating pool of credit card receivables associated with closed credit card accounts. We anticipate continued growth in our higher yielding point-of-sale products over the next few quarters and continued accretive effects of this growth on our total yield ratios.

Although we have seen generally improving total yield ratio trend-lines, our first, third and fourth quarter 2014 total yield ratios were also positively impacted by the decline in the managed receivables base discussed above as well as recoveries on investments in securities in excess of their carrying value and our repurchase of convertible senior notes in the fourth quarter of 2014. Absent these items, our total yield ratio would have been 41.6%, 38.0% and 35.6% in the first, third and fourth quarters of 2014, respectively.

Table of Contents

Rental Merchandise

The following table presents certain trends associated with our merchandise leasing activities within our Credit and Other Investments segment (in thousands; percentages of total):



	At or for the three months ended
	2014												2013
	Dec. 31			Sept. 30			Jun. 30			Mar. 31			Dec. 31		Sept. 30
Period-end rental merchandise, net of accumulated amortization	$	14,177		$	12,268		$	11,082		$	22,052		28,849		16,976
Period-end rental merchandise accounts	100			98			96			99			83		42
Average rental merchandise, net of accumulated amortization	$	13,292		$	11,845		$	15,485		$	29,047		22,804		8,493
Other income ratio	(50.3		)%	37.9		%	(21.4		)%	(45.1		)%	46.7	%	38.1	%

Average rental merchandise. Rental merchandise offerings comprise a significant part of our point-of-sale finance suite of products. Our merchandise leasing activities accelerated during the third quarter of 2013, and prior to that quarter, we had no significant experience or trends with this particular type of product. Subject to the availability of capital on desirable terms, we expect significant ongoing quarterly growth in our rental merchandise activities in future quarters. As is noted in the table above, our rental merchandise has declined from levels experienced at year end 2013. Key drivers of this decline include: 1) depreciation of existing rental merchandise coupled with a decline in new originations due to the disruption of new account originations discussed above; 2) accelerated depreciation of certain rental merchandise due to early payoffs of outstanding rental contracts related to early payment incentives and seasonally strong payment patterns associated with year-end tax-refunds for most of our customers and 3) accelerated depreciation of certain rental merchandise due to impairments associated with accounts where the customer has not made a payment within the previous 90 days.

Other income ratio. The numerator of our other income ratio equals gross revenues associated with our leasing activities less depreciation of our rental merchandise. The denominator of our other income ratio equals average rental merchandise as disclosed in the table above. The timing of new account originations significantly impacts our quarterly ratios either through rapid growth or a period of slow growth, as occurred during the second quarter of 2014 for the reasons discussed above. The disruption in new account originations and the impact of early payoffs mentioned above resulted in a negative other income ratio for the first and second quarters of 2014, as our rental merchandise balance and related payments declined. As a customer's previous rental payments (which are treated as rental revenues and included as a component of our other income ratio, sometimes in prior quarters) are applied when determining an early payoff amount, these early payoff amounts are often for less than the remaining book value of the associated depreciable asset, negatively impacting our other income ratio. This trend reversed in the third quarter of 2014 as our fourth quarter 2013 and first quarter 2014 vintages have substantially passed their early payoff and peak charge-off periods. The negative ratio we experienced in the fourth quarter of 2014 was similarly due to higher than anticipated early payoffs and charge-offs on accounts originated during the third quarter of 2014. Until such a time that we have consistent origination growth and a stable basis of inventory, we continue to expect fluctuations in our other income ratio based on the timing of these originations.

Definitions of Financial, Operating and Statistical Measures

Total yield ratio. Represents an annualized fraction, the numerator of which includes all finance charge and late fee income billed on all outstanding receivables, plus credit card fees (including over-limit fees, cash advance fees, returned check fees and interchange income), plus earned, amortized amounts of annual membership fees and activation fees with respect to certain of our credit card products, plus ancillary product income, plus amortization of the accretable yield component of our acquisition discounts for portfolio purchases, plus gains (or less losses) on debt repurchases and other activities within our Credit and Other Investments segment less any adjustments to finance and fee billings, and the denominator of which is average managed receivables.

Combined gross charge-off ratio. Represents an annualized fraction the numerator of which is the aggregate amounts of finance charge, fee and principal losses from customers unwilling or unable to pay their receivables balances, as well as from bankrupt and deceased customers, less current-period recoveries, and the denominator of which is average managed receivables. Recoveries on managed receivables represent all amounts received related to managed receivables that previously have been charged off, including payments received directly from customers and proceeds received from the sale of those charged-off receivables. Recoveries typically have represented less than 2% of average managed receivables.

Table of Contents

Adjusted charge-off ratio. Represents an annualized fraction the numerator of which is the principal amount of losses, net of recoveries as adjusted to apply discount accretion related to the credit quality of acquired portfolios to offset a portion of the actual face amount of net charge offs, and the denominator of which is average managed receivables. (Historically, upon our acquisitions of credit card receivables, a portion of the discount reflected within our acquisition prices has related to the credit quality of the acquired receivables—that portion representing the excess of the face amount of the receivables acquired over the future cash flows expected to be collected from the receivables. Because we treat the credit quality discount component of our acquisition discount as related exclusively to acquired principal balances, the difference between our net charge offs and our adjusted charge offs for each respective reporting period represents the total dollar amount of our charge offs that were charged against our credit quality discount during each respective reporting period.)

Auto Finance Segment

Our Auto Finance segment historically included a variety of auto sales and lending activities.

Our original platform, CAR, acquired in April 2005, principally purchases and/or services loans secured by automobiles from or for, and also provides floor-plan financing for, a pre-qualified network of independent automotive dealers and automotive finance companies in the buy-here, pay-here used car business. We have expanded these operations to also include certain installment lending products in addition to our traditional loans secured by automobiles. While not currently material, these loans could represent a meaningful investment in the future.

We also historically owned substantially all of JRAS, a buy-here, pay-here dealer we acquired in 2007 and operated from that time until our disposition of certain JRAS operating assets in the first quarter of 2011.

Additionally, our ACC platform acquired during 2007 historically purchased retail installment contracts from franchised car dealers. We ceased origination efforts within the ACC platform during 2009 and outsourced the collection of its portfolio of auto finance receivables.

Collectively, as of December 31, 2014 , we served more than 570 dealers through our Auto Finance segment in 36 states, the District of Columbia and two U.S. territories.

Managed Receivables Background

For reasons set forth above within our Credit and Other Investments segment discussion, we also provide managed receivables-based financial, operating and statistical data for our Auto Finance segment. Reconciliation of the auto finance managed receivables data to our GAAP financial statements requires an understanding that our managed receivables data are based on billings and actual charge offs as they occur, without regard to any changes in our allowance for uncollectible loans and fees receivable.

Table of Contents

Analysis of Statistical Data

Financial, operating and statistical metrics for our Auto Finance segment are detailed (dollars and numbers of accounts in thousands; percentages of total) in the following table:



	At or for the Three Months Ended
	2014												2013
	Dec. 31			Sept. 30			Jun. 30			Mar. 31			Dec. 31			Sept. 30			Jun. 30			Mar. 31
Period-end managed receivables	$	69,832		$	68,102		$	64,000		$	59,440		$	63,491		$	59,249		$	60,706		$	60,449
Percent 30 or more days past due	14.5		%	14.3		%	14.6		%	11.0		%	13.1		%	12.3		%	12.1		%	10.0		%
Percent 60 or more days past due	5.5		%	5.7		%	5.1		%	4.4		%	4.3		%	4.2		%	3.6		%	3.6		%
Percent 90 or more days past due	2.5		%	2.7		%	1.8		%	1.9		%	1.7		%	1.6		%	1.1		%	1.5		%
Average managed receivables	$	68,418		$	66,428		$	62,475		$	60,949		$	61,263		$	59,126		$	60,359		$	61,803
Total yield ratio	39.1		%	39.2		%	39.1		%	38.5		%	40.2		%	41.0		%	25.5		%	40.9		%
Combined gross charge-off ratio	4.7		%	2.2		%	0.5		%	1.0		%	4.0		%	4.4		%	4.1		%	2.2		%
Recovery ratio	3.3		%	1.5		%	2.1		%	2.1		%	1.6		%	1.8		%	2.2		%	5.1		%

Managed receivables. For all of the periods set forth above, only CAR continues to purchase/originate loans, but until the second quarter of 2014, it had not done so at growth levels significant enough to consistently offset the gradual liquidation of our ACC and JRAS portfolios’ managed receivables. ACC and JRAS managed receivables are substantially liquidated at this point, and we are beginning to see and expect stability in the level of our managed receivables, with growth through receivable purchase opportunities in the U.S. and U.S. Territories, as occurred during 2014. Although we are expanding our CAR operations, the Auto Finance segment faces strong competition from other specialty finance lenders, as well as the indirect effects on us of our buy-here, pay-here dealership customers' competition with more traditional franchise dealerships for consumers interested in purchasing automobiles.

Delinquencies. Delinquency rates abated in 2013 to levels below what we would normally anticipate and current levels we are experiencing more closely represent what we would expect going forward with some marginal increases noted within the overall buy-here pay-here market. Delinquency rates historically benefit in the first quarter of each year as seen above due to the benefits of seasonally strong payment patterns associated with year-end tax refunds for most of our customers. We are not generally concerned with modest fluctuations in delinquency rates and do not believe they will have a significantly positive or adverse impact on our results of operations; even at slightly elevated rates, we earn significant yields on CAR’s receivables and have significant dealer reserves (i.e., retainages or holdbacks on the amount of funding CAR provides to its dealer customers) to protect against meaningful credit losses.

Total yield ratio. With the exception of the second quarter of 2013, we experienced a general trend-line of improving total yield ratios compared to prior year periods throughout 2013 due in part to liquidation of the JRAS and ACC receivables, thereby causing the higher yielding CAR receivables to comprise a larger percentage of our average managed auto finance receivables. As JRAS and ACC receivables are no longer a significant component of the overall pool of receivables, we expect this ratio to remain relatively stable throughout 2015. The slight decrease in total yield experienced during the first quarter of 2014 was caused by disruptions due to new systems implementations during the quarter. The significant decrease in the second quarter of 2013 was caused by the adverse effects of a $2.4 million reserve associated with a note we had received from buyers of our JRAS buy-here, pay-here dealer operations that we sold in February 2011; excluding the impact of this reserve, our second quarter 2013 total yield ratio would have been 41.1% (and we would have had GAAP Auto Finance segment income during that quarter).

Combined gross charge-off ratio and recovery ratio. We charge off auto finance receivables when they are between 120 and 180 days past due, unless the collateral is repossessed and sold before that point, in which case we will record a charge off when the proceeds are received. The combined gross charge-off ratio represents an annualized fraction the numerator of which is the aggregate amounts of finance charge, fee and principal losses from customers unwilling or unable to pay their receivables balances, as well as from bankrupt and deceased customers, less current-period recoveries, and the denominator of

Table of Contents

which is average managed receivables. Because our ACC receivables and the receivables of our JRAS operations that we retained in connection with the sale of our JRAS operations have declined and are now largely insignificant relative to our total portfolio of auto finance receivables our combined gross charge-off ratio declined significantly in the first quarter of 2014. Additionally benefiting the second quarter of 2014 were larger than expected recoveries associated with our ACC receivables which further reduced our combined gross charge-off ratio. The rise in our combined gross charge-off ratio in the fourth quarter of 2014 was due to specific dealer related losses which accounted for substantially all of the increase for the quarter. While we generally anticipate our charge-offs to be incurred ratably across our portfolio of dealers, specific dealer related losses are difficult to predict and can negatively influence our combined gross charge-off ratio. We continually re-assess our dealers and will take appropriate action if we feel a particular dealer's risk characteristics adversely change. Our CAR receivables, which experience significantly lower charge offs, now comprise a more significant proportion of our average managed auto finance receivables—a factor that has contributed most significantly to our general trend-line of lower combined gross charge-off ratios. In the first quarter of 2013, we experienced recovery sales associated with our former JRAS operations, which helped to improve our recovery ratio and combined gross charge-off ratio in that quarter. We expect our recovery rate to fluctuate modestly from quarter to quarter due to the timing of the sale of repossessed autos.

Future Expectations

Our CAR operations continue to perform well in the current environment (achieving consistent profitability) and we expect to experience increasing profits for the foreseeable future. Because ACC’s and JRAS’s receivables are now substantially liquidated, the history of negative effects of these operations on our Auto Finance segment results should be abated in future periods. We continue to focus on growing our profitable CAR operations. New branch operations are contributing profits and we anticipate branch expansion in 2015.

Liquidity, Funding and Capital Resources

Until the third quarter of 2013, we experienced net liquidations of our managed receivables at faster rates than we were able to reduce our costs. This resulted from the significant level of fixed infrastructure costs that had built up to support our significant legacy credit card lending operations. Our infrastructure costs are still somewhat elevated, and while we had in the past been focused on cost reduction, our primary focus now is on growing our point-of-sale and direct-to-consumer finance offerings so that our revenues from these product offerings can cover our infrastructure costs and return us to consistent profitability. This growth was delayed late in the first quarter of 2014 as a significant retail partner in our point-of-sale operations underwent a product shift that resulted in the temporary suspension of new account originations with us for our installment lending product. This disruption lasted into the second quarter and continues to impact growth through lower originations. We anticipate that new originations with this retail partner will continue to lag behind our earlier experience with this retail partner, although we are seeing consistent monthly growth. Further, this disruption resulted in net contraction in our earning assets in both the first and second quarters of 2014.

Accordingly, we will continue to focus in the coming quarters on (i) containing costs (as opposed to our previous focus on reducing expenses) (ii) obtaining new retail partners and channels to continue growth of our point-of-sale finance offerings and (iii) obtaining the funding necessary to meet capital needs required by the growth of our new product offerings and to cover our infrastructure costs until our new product offerings generate enough revenues and cash flows to cover such costs.

Table of Contents

All of our Credit and Other Investments segment’s structured financing facilities are expected to amortize down with collections on the receivables within their underlying trusts and should not represent significant refunding or refinancing risks to our consolidated balance sheet. Additionally, we do not expect any imminent refunding or financing needs associated with our convertible senior notes given that the next redemption date for the remaining $0.5 million outstanding balance on our 3.625% convertible senior notes is May 30, 2015 and the remaining $93.3 million outstanding balance on our 5.875% convertible senior notes is not due for repayment until 2035. As such, the only facilities that could represent significant refunding or refinancing needs as of December 31, 2014 are those associated with the following notes payable in the amounts indicated (in millions):



Revolving credit facility (expiring May 17, 2015) that is secured by the financial and operating assets of the entity	$	4.0
Revolving credit facility (expiring December 3, 2016) that is secured by originated U.K. credit card receivables portfolio	3.9
Revolving credit facility (expiring October 4, 2017) that is secured by the financial and operating assets of our CAR operations	28.5
Senior secured term loan (expiring November 25, 2015) that is secured by certain assets of the Company with an annual rate equal to 9.0% and payable to a related party	20.0
Total	$	56.4

Further details concerning the above debt facilities are provided in Note 9, “Notes Payable,” and Note 10, “Convertible Senior Notes,” to our consolidated financial statements included herein. Based on the state of the debt capital markets, the performance of our assets that serve as security for the above facilities, and our relationships with lenders, we view imminent refunding or refinancing risks with respect to the above facilities as low in the current environment, and we believe that the quality of our new product offering assets should allow us to raise more capital through increasing the size of our facilities with our existing lenders and attract new lending relationships.

As noted elsewhere in this Report, in December 2014, we reached a settlement with the Internal Revenue Service (“IRS”) concerning the tax treatment of net operating losses that the Company incurred in 2007 and 2008 and carried back to obtain refunds of federal income taxes paid in earlier years dating back to 2003. Pursuant to the terms of the settlement, we agreed to a federal income tax assessment of $9.1 million associated with our 2007 and 2008 net operating loss carry-backs (upon which approximately $2.0 million of interest is expected to be charged when billed by the IRS). Upon receipt of this bill, we could be required to make immediate payment for the full amount owed or could be allowed to finance the payment over some future period.

At December 31, 2014 , we had $39.9 million in unrestricted cash held by our various business subsidiaries. Because the characteristics of our assets and liabilities change, liquidity management has been a dynamic process for us, driven by the pricing and maturity of our assets and liabilities. We historically have financed our business through cash flows from operations, asset-backed structured financings and the issuance of debt and equity. Details concerning our cash flows for the twelve months ended December 31, 2014 are as follows:

•

During the twelve months ended December 31, 2014 , we used $20.7 million of cash flows from operations compared to the use of $26.9 million of cash flows from operations during the twelve months ended December 31, 2013 . The decrease was principally related to cost reductions we implemented throughout 2014 and collections associated with reimbursements received in respect of one of our portfolios. These decreases in cash used were offset by (1) decreases in collections associated with our credit card finance charge receivables in the twelve months ended December 31, 2014 relative to the same period in 2013, given diminished receivables levels, and (2) increased purchases of rental merchandise associated with our point-of-sale finance operations during the twelve months ended December 31, 2014 .

•

During the twelve months ended December 31, 2014 , we generated $29.2 million of cash from our investing activities, compared to generating $49.7 million of cash from investing activities during the twelve months ended December 31, 2013 . This decrease is primarily due to the reduced levels of our outstanding investments and the cash returns thereof in 2014 based on the shrinking size of our liquidating credit card and auto finance receivable portfolios as well as increased levels of fixed asset spending associated with our point-of-sale finance operations, offset by growth in our point-of-sale finance product as well as our U.K. originated credit card receivables.

•

During the twelve months ended December 31, 2014 , we used $18.4 million of cash in financing activities, compared to our use of $40.7 million of cash in financing activities during the twelve months ended December 31, 2013 . In both periods, the data reflect net repayments of debt facilities corresponding with net declines in our loans and fees receivable that serve as the underlying collateral for the facilities (principally credit card and auto loans and

Table of Contents

fees receivable). Offsetting our use of cash in financing activities for both years are borrowings associated with our new credit products.

Beyond our immediate financing efforts discussed throughout this Report, we will continue to evaluate debt and equity issuances as a means to fund our investment opportunities. We expect to take advantage of any opportunities to raise additional capital if terms and pricing are attractive to us. Any proceeds raised under these efforts or additional liquidity available to us could be used to fund (1) the acquisition of additional financial assets associated with our point-of-sale and direct-to-consumer finance activities as well as the acquisition of credit card receivables portfolios, (2) further repurchases of our convertible senior notes and common stock, and (3) investments in certain financial and non-financial assets or businesses. Pursuant to a share repurchase plan authorized by our Board of Directors on May 9, 2014, we are authorized as of December 31, 2014 to repurchase an additional 4,929,791 shares of our common stock through June 30, 2016.

Commitments and Contingencies

We do not currently have any off-balance-sheet arrangements; however, we do have certain contractual arrangements that would require us to make payments or provide funding if certain circumstances occur (“contingent commitments”). We do not currently expect that these contingent commitments will result in any material amounts being paid by us. See Note 11, “Commitments and Contingencies,” to our consolidated financial statements included herein for further discussion of these matters.

Recent Accounting Pronouncements

See Note 2, “Significant Accounting Policies and Consolidated Financial Statement Components,” to our consolidated financial statements included herein for a discussion of recent accounting pronouncements.

Critical Accounting Estimates

We have prepared our financial statements in accordance with GAAP. These principles are numerous and complex. We have summarized our significant accounting policies in the notes to our consolidated financial statements. In many instances, the application of GAAP requires management to make estimates or to apply subjective principles to particular facts and circumstances. A variance in the estimates used or a variance in the application or interpretation of GAAP could yield a materially different accounting result. It is impracticable for us to summarize every accounting principle that requires us to use judgment or estimates in our application. Nevertheless, we describe below the areas for which we believe that the estimations, judgments or interpretations that we have made, if different, would have yielded the most significant differences in our consolidated financial statements.

On a quarterly basis, we review our significant accounting policies and the related assumptions, in particular, those mentioned below, with the audit committee of the Board of Directors.

Measurements for Loans and Fees Receivable at Fair Value and Notes Payable Associated with Structured Financings at Fair Value

Our valuation of loans and fees receivable, at fair value is based on the present value of future cash flows using a valuation model of expected cash flows and the estimated cost to service and collect those cash flows. We estimate the present value of these future cash flows using a valuation model consisting of internally developed estimates of assumptions third-party market participants would use in determining fair value, including estimates of net collected yield, principal payment rates, expected principal credit loss rates, costs of funds, discount rates and servicing costs. Similarly, our valuation of notes payable associated with structured financings, at fair value is based on the present value of future cash flows utilized in repayment of the outstanding principal and interest under the facilities using a valuation model of expected cash flows net of the contractual service expenses within the facilities. We estimate the present value of these future cash flows using a valuation model consisting of internally developed estimates of assumptions third-party market participants would use in determining fair value, including: estimates of net collected yield, principal payment rates and expected principal credit loss rates on the credit card receivables that secure the non-recourse notes payable; costs of funds; discount rates; and contractual servicing fees.

Table of Contents

The estimates for credit losses, payment rates, servicing costs, contractual servicing fees, costs of funds, discount rates and yields earned on credit card receivables significantly affect the reported amount of our loans and fees receivable, at fair value and our notes payable associated with structured financings, at fair value on our consolidated balance sheet, and they likewise affect our changes in fair value of loans and fees receivable recorded at fair value and changes in fair value of notes payable associated with structured financings recorded at fair value categories within our fees and related income on earning assets line item on our consolidated statement of operations.

Allowance for Uncollectible Loans and Fees

Through our analysis of loan performance, delinquency data, charge-off data, economic trends and the potential effects of those economic trends on our customers, we establish an allowance for uncollectible loans and fees receivable as an estimate of the probable losses inherent within those loans and fees receivable that we do not report at fair value. To the extent that actual results differ from our estimates of uncollectible loans and fees receivable, our results of operations and liquidity could be materially affected.

Rental Merchandise

Our rental merchandise includes consumer electronics, furniture, jewelry and other consumer goods that we initially record on our consolidated balance sheets at our cost. After our initial recording of the rental merchandise at cost, we reduce its carrying value for depreciation thereof. We depreciate our rental merchandise over contract rental periods, generally 12 months (monthly agreements) or 26 periods (bi-weekly agreements) under a $- 0 - salvage value assumption. These assumptions are periodically adjusted based on actual results and impairments as they occur. We follow this method to match, as closely as practicable, the recognition of depreciation expense with revenues associated with our customers' use of the rental merchandise. Currently, we do not maintain any levels of rental merchandise beyond what actually has been rented to our customers under our contracts with them.

Revenue Recognition for Rental Merchandise

Our rent-to-own terms with our customers typically provide for 26 , non-refundable, bi-weekly rental payments over a contract period of 12 months . Generally, the customer can take ownership of the merchandise by exercising a purchase option or making all required rental payments. We accrue periodic billed rental amounts (net of allowances for uncollectible billings) into revenues over the rental period to which the billed amounts relate, and we defer recognition in revenues of any advanced customer rental payments until the rental period in which they are properly recognizable under the terms of the contract. Additionally, we do not recognize a receivable for future periods' rental obligations due to us from our customers as our customers can terminate their rental agreements at any time with no further obligation to us, other than the return of rental merchandise.

Table of Contents



ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a “smaller reporting company,” as defined by Item 10 of Regulation S-K, we are not required to provide this information.



ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See the Index to Financial Statements in Item 15, “Exhibits and Financial Statement Schedules.”

Management’s Report on Internal Control over Financial Reporting

Management of Atlanticus Holdings Corporation is responsible for establishing and maintaining adequate internal control over financial reporting (as such term is defined in Act Rules 13a-15(f)) for Atlanticus Holdings Corporation and our subsidiaries. Our internal control over financial reporting is a process designed under the supervision of our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer) to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external reporting purposes in accordance with GAAP.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of internal control over financial reporting as of December 31, 2014, based on the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) Internal Control-Integrated Framework (2013 framework) .

Based on our evaluation under the COSO 2013 framework, management has concluded that internal control over financial reporting was effective as of December 31, 2014.



ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.



ITEM 9A.	CONTROLS AND PROCEDURES

As of December 31, 2014, an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Act) was carried out on behalf of Atlanticus Holdings Corporation and our subsidiaries by our management with the participation of our Chief Executive Officer and Chief Financial Officer. Based upon the evaluation, our Chief Executive Officer and Chief Financial Officer concluded that these disclosure controls and procedures were effective as of December 31, 2014.

During the fourth quarter of our year ended December 31, 2014, no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Act) occurred that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Management’s Report on Internal Control over Financial Reporting is set forth in Part II, Item 8 of this Annual Report on Form 10-K. This Annual Report does not include an attestation report of our independent public accounting firm regarding internal control over financial reporting. Management’s report is not subject to attestation by our independent public accounting firm pursuant to SEC rules that permit us to provide only management’s report in this Annual Report.

Table of Contents



ITEM 9B.	OTHER INFORMATION

None.

Table of Contents

PART III



ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this Item will be set forth in our Proxy Statement for the 2015 Annual Meeting of Shareholders in the sections entitled “Proposal One: Election of Directors,” “Executive Officers of Atlanticus,” “Section 16(a) Beneficial Ownership Reporting Compliance” and “Corporate Governance” and is incorporated by reference.



ITEM 11.	EXECUTIVE COMPENSATION

The information required by this Item will be set forth in our Proxy Statement for the 2015 Annual Meeting of Shareholders in the section entitled “Executive and Director Compensation” and is incorporated by reference.



ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by this Item will be set forth in our Proxy Statement for the 2015 Annual Meeting of Shareholders in the sections entitled “Security Ownership of Certain Beneficial Owners and Management” and "Equity Compensation Plan Information" and is incorporated by reference.



ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this Item will be set forth in our Proxy Statement for the 2015 Annual Meeting of Shareholders in the sections entitled “Related Party Transactions” and “Corporate Governance” and is incorporated by reference.



ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this Item will be set forth in our Proxy Statement for the 2015 Annual Meeting of Shareholders in the section entitled “Auditor Fees” and is incorporated by reference.

Table of Contents

PART IV



ITEM 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

The following documents are filed as part of this Report:

1. Financial Statements

INDEX TO FINANCIAL STATEMENTS



	Page
Report of Independent Public Accounting Firm	F-1
Consolidated Balance Sheets as of December 31, 2014 and 2013	F-2
Consolidated Statements of Operations for the Years Ended December 31, 2014 and 2013	F-3
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2014 and 2013	F-4
Consolidated Statements of Equity for the Years Ended December 31, 2014 and 2013	F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 2014 and 2013	F-6
Notes to Consolidated Financial Statements as of December 31, 2014 and 2013	F-8

2. Financial Statement Schedules

None.

Table of Contents

3. Exhibits



Exhibit Number	Description of Exhibit	Incorporated by Reference from Atlanticus’ SEC Filings Unless Otherwise Indicated(1)
2.1	Membership Interest Purchase Agreement between Atlanticus Holdings Corporation (formerly CompuCredit Holdings Corporation) and JCAP Transitory Acquisition Sub, LLC	August 9, 2012, Form 10-Q, exhibit 2.1
3.1	Articles of Incorporation	June 8, 2009, Proxy Statement/Prospectus, Annex B
3.1(a)	Articles of Amendment to Articles of Incorporation	November 30, 2012, Form 8-K exhibit 3.1
3.2	Amended and Restated Bylaws (as amended through November 30, 2012)	November 30, 2012, Form 8-K exhibit 3.2
4.1	Form of common stock certificate	July 7, 2009, Form 8-K, exhibit 3.3
4.2	Indenture dated May 27, 2005 with U.S. Bank National Association, as successor to Wachovia Bank, National Association	May 31, 2005, Form 8-K, exhibit 4.1
4.3	Supplemental Indenture dated June 30, 2009 with U.S. Bank National Association, as successor to Wachovia Bank, National Association	July 7, 2009, Form 8-K, exhibit 4.1
4.4	Indenture dated November 23, 2005 with U.S. Bank National Association, as successor to Wachovia Bank, National Association	November 28, 2005, Form 8-K, exhibit 4.1
4.5	Supplemental Indenture dated June 30, 2009 with U.S. Bank National Association, as successor to Wachovia Bank, National Association	July 7, 2009, Form 8-K, exhibit 4.2
10.1	Stockholders Agreement dated as of April 28, 1999	January 18, 2000, Form S-1, exhibit 10.1
10.2†	2014 Equity Incentive Plan	April 15, 2014, Definitive Proxy Statement on Schedule 14A, Appendix A
10.2(a)†	Form of Restricted Stock Agreement–Directors	May 15, 2014, Form 8-K, exhibit 10.2
10.2(b)†	Form of Restricted Stock Agreement–Employees	May 15, 2014, Form 8-K, exhibit 10.3
10.2(c)†	Form of Stock Option Agreement–Directors	May 15, 2014, Form 8-K, exhibit 10.4
10.2(d)†	Form of Stock Option Agreement–Employees	May 15, 2014, Form 8-K, exhibit 10.5
10.2(e)†	Form of Restricted Stock Unit Agreement–Directors	May 15, 2014, Form 8-K, exhibit 10.6
10.2(f)†	Form of Restricted Stock Unit Agreement–Employees	May 15, 2014, Form 8-K, exhibit 10.7
10.3†	Amended and Restated Employee Stock Purchase Plan	April 16, 2008, Definitive Proxy Statement on Schedule 14A, Appendix B
10.4†	Amended and Restated Employment Agreement for David G. Hanna	December 29, 2008, Form 8-K, exhibit 10.1
10.5†	Amended and Restated Employment Agreement for Richard W. Gilbert	December 29, 2008, Form 8-K, exhibit 10.3
10.6†	Employment Agreement for Jeffrey A. Howard	March 28, 2014, Form 10-K, exhibit 10.7
10.7†	Employment Agreement for William R. McCamey	March 28, 2014, Form 10-K, exhibit 10.8
10.8†	Amended and Restated Employment Agreement for Richard R. House, Jr.	December 29, 2008, Form 8-K, exhibit 10.4
10.8(a)†	Employment Arrangements with Richard R. House, Jr.	May 15, 2014, Form 10-Q, exhibit 10.1
10.9†	Outside Director Compensation Package	November 14, 2014, Form 10-Q, exhibit 10.1
10.10	Amended and Restated Note Purchase Agreement, dated March 1, 2010, among Merrill Lynch Mortgage Capital Inc., CCFC Corp. (formerly CompuCredit Funding Corp.), Atlanticus Services Corporation (formerly CompuCredit Corporation), and CompuCredit Credit Card Master Note Business Trust	June 25, 2010, Form 8-K/A, exhibit 10.1
10.11	Share Lending Agreement	November 22, 2005, Form 8-K, exhibit 10.1
10.11(a)	Amendment to Share Lending Agreement	March 6, 2012, Form 10-K, exhibit 10.12(a)

Table of Contents



Exhibit Number	Description of Exhibit	Incorporated by Reference from Atlanticus’ SEC Filings Unless Otherwise Indicated(1)
10.12	Agreement relating to the Sale and Purchase of Monument Business, dated April 4, 2007	August 1, 2007, Form 10-Q, exhibit 10.1
10.12(a)	Account Ownership Agreement for Partridge Acquired Portfolio Business Trust, dated April 4, 2007, with R Raphael & Sons PLC	August 1, 2007, Form 10-Q, exhibit 10.2
10.12(b)	Receivables Purchase Agreement for Partridge Acquired Portfolio Business Trust, dated April 4, 2007, with R Raphael & Sons PLC	August 1, 2007, Form 10-Q, exhibit 10.3
10.12(c)	Receivables Purchase Agreement for Partridge Acquired Portfolio Business Trust, dated April 4, 2007, with Partridge Funding Corporation	August 1, 2007, Form 10-Q, exhibit 10.4
10.12(d)	Master Indenture for Partridge Acquired Portfolio Business Trust, dated April 4, 2007, among Partridge Acquired Portfolio Business Trust, Deutsche Bank Trust Company Americas, Deutsche Bank AG, London Branch and CIAC Corporation (formerly CompuCredit International Acquisition Corporation)	August 1, 2007, Form 10-Q, exhibit 10.5
10.12(e)	Series 2007-One Indenture Supplement for Partridge Acquired Portfolio Business Trust, dated April 4, 2007	August 1, 2007, Form 10-Q, exhibit 10.6
10.12(f)	Transfer and Servicing Agreement for Partridge Acquired Portfolio Business Trust, dated April 4, 2007, among Partridge Funding Corporation, CIAC Corporation (formerly CompuCredit International Acquisition Corporation), Partridge Acquired Portfolio Business Trust and Deutsche Bank Trust Company Americas	August 1, 2007, Form 10-Q, exhibit 10.7
10.13	Assumption Agreement dated June 30, 2009 between Atlanticus Holdings Corporation (formerly CompuCredit Holdings Corporation) and Atlanticus Services Corporation (formerly CompuCredit Corporation)	July 7, 2009, Form 8-K, exhibit 10.1
10.14	Loan and Security Agreement, dated October 4, 2011 among CARS Acquisition LLC, et al and Wells Fargo Preferred Capital, Inc.	March 6, 2012, Form 10-K, exhibit 10.16(a)
10.14(a)	First Amendment to Loan and Security Agreement	August 13, 2013, Form 10-Q, exhibit 10.1
10.14(b)	Second Amendment and Joinder to Loan and Security Agreement	August 13, 2013, Form 10-Q, exhibit 10.2
10.14(c)	Third Amendment to Loan and Security Agreement	March 28, 2014, Form 10-K, exhibit 10.15(c)
10.14(d)	Fourth Amendment to Loan and Security Agreement	March 28, 2014, Form 10-K, exhibit 10.15(d)
10.14(e)	Fifth Amendment to Loan and Security Agreement	August 14, 2014, Form 10-Q, exhibit 10.1
10.14(f)	Agreement by Atlanticus Holdings Corporation (formerly CompuCredit Holdings Corporation) in favor of Wells Fargo Preferred Capital, Inc.	March 6, 2012, Form 10-K, exhibit 10.16(a)
10.15	Loan and Security Agreement, dated November 26, 2014, by and among Atlanticus Holdings Corporation, Certain Subsidiaries Named Therein, and Dove Ventures, LLC	Filed herewith
10.16	Loan and Security Agreement, dated June 23, 2014, by and among Atlanticus Holdings Corporation, certain Subsidiaries Named Therein and Bravo Ventures, LLC	June 23, 2014, Schedule TO, exhibit 99(b)
21.1	Subsidiaries of the Registrant	Filed herewith
23.1	Consent of BDO USA, LLP	Filed herewith
31.1	Certification of Principal Executive Officer pursuant to Rule 13a-14(a)	Filed herewith
31.2	Certification of Principal Financial Officer pursuant to Rule 13a-14(a)	Filed herewith
32.1	Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350	Filed herewith

Table of Contents



Exhibit Number	Description of Exhibit	Incorporated by Reference from Atlanticus’ SEC Filings Unless Otherwise Indicated(1)
101.INS	XBRL Instance Document	Filed herewith
101.SCH	XBRL Taxonomy Extension Schema Document	Filed herewith
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document	Filed herewith
101.LAB	XBRL Taxonomy Extension Label Linkbase Document	Filed herewith
101.PRE	XBRL Taxonomy Presentation Linkbase Document	Filed herewith
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document	Filed herewith


†	Management contract, compensatory plan or arrangement.


(1)	Documents incorporated by reference from SEC filings made prior to June 2009 were filed under CompuCredit Corporation (now Atlanticus Services Corporation) (File No. 000-25751), our predecessor issuer.

Table of Contents

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Atlanta, State of Georgia, on March 5, 2015 .



	Atlanticus Holdings Corporation

By:	/s/ David G. Hanna
	David G. Hanna Chief Executive Officer and Chairman of the Board

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons in the capacities and on the dates indicated.




Signature	Title	Date

/s/David G. Hanna David G. Hanna	Chief Executive Officer and Chairman of the Board (Principal Executive Officer)	March 5, 2015

/s/ William R. McCamey William R. McCamey	Chief Financial Officer and Treasurer (Principal Financial Officer)	March 5, 2015

/s/ Mitchell C. Saunders Mitchell C. Saunders	Chief Accounting Officer (Principal Accounting Officer)	March 5, 2015

/s/ Jefferey A. Howard Jefferey A. Howard	Director	March 5, 2015

/s/ Deal W. Hudson Deal W. Hudson	Director	March 5, 2015

/s/ Mack F. Mattingly Mack F. Mattingly	Director	March 5, 2015

/s/ Thomas G. Rosencrants Thomas G. Rosencrants	Director	March 5, 2015

Table of Contents

Report of Independent Registered Public Accounting Firm

The Board of Directors

Atlanticus Holdings Corporation

We have audited the accompanying consolidated balance sheets of Atlanticus Holdings Corporation as of December 31, 2014 and 2013 and the related consolidated statements of operations, comprehensive income (loss), equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Atlanticus Holdings Corporation at December 31, 2014 and 2013, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

/s/ BDO USA, LLP

Atlanta, Georgia

March 5, 2015

F-1

Table of Contents

Atlanticus Holdings Corporation and Subsidiaries

Consolidated Balance Sheets

(Dollars in thousands)



	December 31, 2014			December 31, 2013
Assets
Unrestricted cash and cash equivalents	$	39,925		$	50,873
Restricted cash and cash equivalents	22,741			18,871
Loans and fees receivable:
Loans and fees receivable, net (of $15,730 and $13,258 in deferred revenue and $19,957 and $24,214 in allowances for uncollectible loans and fees receivable at December 31, 2014 and December 31, 2013, respectively)	105,897			97,208
Loans and fees receivable, at fair value	18,255			12,080
Loans and fees receivable pledged as collateral under structured financings, at fair value	34,905			88,132
Rental merchandise, net of depreciation	14,177			28,849
Property at cost, net of depreciation	7,036			8,937
Investments in equity-method investees	15,833			35,134
Deposits	1,589			1,908
Prepaid expenses and other assets	7,997			10,243
Total assets	$	268,355		$	352,235
Liabilities
Accounts payable and accrued expenses	$	39,968		$	48,625
Notes payable, at face value	78,749			56,740
Notes payable to related parties	20,000			—
Notes payable associated with structured financings, at fair value	36,511			94,523
Convertible senior notes	64,752			95,934
Income tax liability	20,933			55,255
Total liabilities	260,913			351,077
Commitments and contingencies (Note 11)
Equity
Common stock, no par value, 150,000,000 shares authorized: 15,308,971 shares issued and outstanding (including 1,459,233 loaned shares to be returned) at December 31, 2014; and 15,594,325 shares issued and outstanding (including 1,672,656 loaned shares to be returned) at December 31, 2013	—			—
Additional paid-in capital	210,519			210,315
Accumulated other comprehensive loss	(1,841		)	(737		)
Retained deficit	(201,237		)	(208,414		)
Total shareholders’ equity	7,441			1,164
Noncontrolling interests	1			(6		)
Total equity	7,442			1,158
Total liabilities and equity	$	268,355		$	352,235

See accompanying notes.

F-2

Table of Contents

Atlanticus Holdings Corporation and Subsidiaries

Consolidated Statements of Operations

(Dollars in thousands, except per share data)



	For the Twelve Months Ended December 31,
	2014			2013
Interest income:
Consumer loans, including past due fees	$	73,330		$	69,265
Other	346			256
Total interest income	73,676			69,521
Interest expense	(24,052		)	(23,872		)
Net interest income before fees and related income on earning assets and provision for losses on loans and fees receivable	49,624			45,649
Fees and related income on earning assets	88,830			69,109
Losses upon charge off of loans and fees receivable recorded at fair value, net of recoveries	4,852			(14,560		)
Provision for losses on loans and fees receivable recorded at net realizable value	(30,828		)	(29,678		)
Net interest income, fees and related income on earning assets	112,478			70,520
Other operating income:
Servicing income	4,910			8,218
Other income	2,084			3,394
Gain on repurchase of convertible senior notes	12,068			—
Equity in income of equity-method investees	6,983			8,437
Total other operating income	26,045			20,049
Other operating expense:
Salaries and benefits	19,777			17,832
Card and loan servicing	48,599			46,119
Marketing and solicitation	2,381			8,719
Depreciation	69,096			17,965
Other	25,975			22,713
Total other operating expense	165,828			113,348
Loss before income taxes	(27,305		)	(22,779		)
Income tax benefit	34,632			5,114
Net income (loss)	7,327			(17,665		)
Net income attributable to noncontrolling interests	(150		)	(76		)
Net income (loss) attributable to controlling interests	$	7,177		$	(17,741	)
Net income (loss) attributable to controlling interests per common share—basic	$	0.51		$	(1.29	)
Net income (loss) attributable to controlling interests per common share—diluted	$	0.51		$	(1.29	)

See accompanying notes.

F-3

Table of Contents

Atlanticus Holdings Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss)

(Dollars in thousands)



	For the Twelve Months Ended December 31,
	2014			2013
Net income (loss)	$	7,327		$	(17,665	)
Other comprehensive loss (income):
Foreign currency translation adjustment	(1,758		)	562
Income tax benefit (expense) related to other comprehensive loss (income)	654			(145		)
Comprehensive income (loss)	6,223			(17,248		)
Comprehensive income attributable to noncontrolling interests	(150		)	(76		)
Comprehensive income (loss) attributable to controlling interests	$	6,073		$	(17,324	)

See accompanying notes.

F-4

Table of Contents

Atlanticus Holdings Corporation and Subsidiaries

Consolidated Statements of Equity

For the Twelve Months Ended December 31, 2014 and 2013

(Dollars in thousands)



	Common Stock
	Shares Issued		Amount		Additional Paid-In Capital			Accumulated Other Comprehensive Loss			Retained Deficit			Noncontrolling Interests			Total Equity
Balance at December 31, 2012	15,509,179		$	—	$	211,122		$	(1,154	)	$	(190,673	)	$	(108	)	$	19,187
Compensatory stock issuances, net of forfeitures	465,664		—		—			—			—			—			—
Contributions by owners of noncontrolling interests	—		—		—			—			—			26			26
Amortization of deferred stock-based compensation costs	—		—		589			—			—			—			589
Redemption and retirement of shares	(380,518	)	—		(1,396		)	—			—			—			(1,396		)
Other comprehensive loss	—		—		—			417			(17,741		)	76			(17,248		)
Balance at December 31, 2013	15,594,325		$	—	$	210,315		$	(737	)	$	(208,414	)	$	(6	)	$	1,158
Compensatory stock issuances, net of forfeitures	61,868		—		—			—			—			—			—
Distributions to owners of noncontrolling interests	—		—		—			—			—			(143		)	(143		)
Amortization of deferred stock-based compensation costs	—		—		1,432			—			—			—			1,432
Redemption and retirement of shares	(347,222	)	—		(257		)	—			—			—			(257		)
Tax effects of stock-based compensation plans	—		—		(971		)	—			—			—			(971		)
Other comprehensive income	—		—		—			(1,104		)	7,177			150			6,223
Balance at December 31, 2014	15,308,971		$	—	$	210,519		$	(1,841	)	$	(201,237	)	$	1		$	7,442

See accompanying notes.

F-5

Table of Contents

Atlanticus Holdings Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(Dollars in thousands)



	For the Twelve Months Ended December 31,
	2014			2013
Operating activities
Net income (loss)	$	7,327		$	(17,665	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation of rental merchandise	63,148			16,146
Depreciation, amortization and accretion, net	4,927			1,553
Losses upon charge off of loans and fees receivable recorded at fair value	14,183			27,843
Provision for losses on loans and fees receivable	30,828			29,678
Interest expense from accretion of discount on convertible senior notes	637			600
Income from accretion of discount associated with receivables purchases	(33,774		)	(29,907		)
Unrealized gain on loans and fees receivable and underlying notes payable held at fair value	(7,042		)	(26,178		)
Income from equity-method investments	(6,983		)	(8,437		)
Gain on repurchase of convertible senior notes	(12,068		)	—
Other non-cash adjustments to income	—			159
Changes in assets and liabilities:
Decrease (increase) in uncollected fees on earning assets	3,132			(2,466		)
Decrease in income tax liability	(34,705		)	(5,277		)
Decrease in deposits	319			14,489
Decrease (increase) in prepaid expenses	517			(43		)
(Decrease) increase in accounts payable and accrued expenses	(4,907		)	9,480
Additions to rental merchandise	(48,473		)	(44,996		)
Other	2,200			8,165
Net cash used in operating activities	(20,734		)	(26,856		)
Investing activities
Increase in restricted cash	(3,892		)	(5,948		)
Investment in equity-method investees	—			(3,750		)
Proceeds from equity-method investees	12,009			15,746
Investments in earning assets	(218,656		)	(196,903		)
Proceeds from earning assets	243,807			244,057
Purchases and development of property, net of disposals	(4,068		)	(3,487		)
Net cash provided by investing activities	29,200			49,715
Financing activities
Noncontrolling interests (distributions) contributions, net	(143		)	26
Purchase and retirement of outstanding stock	(257		)	(1,396		)
Proceeds from borrowings	115,545			48,981
Repayment of borrowings	(133,545		)	(88,326		)
Net cash used in financing activities	(18,400		)	(40,715		)
Effect of exchange rate changes on cash	(1,014		)	814
Net decrease in unrestricted cash	(10,948		)	(17,042		)
Unrestricted cash and cash equivalents at beginning of period	50,873			67,915
Unrestricted cash and cash equivalents at end of period	$	39,925		$	50,873
Supplemental cash flow information

F-6

Table of Contents



Cash paid for interest	$	24,421	$	23,208
Net cash income tax payments	$	73	$	163
Supplemental non-cash information
Issuance of stock options and restricted stock	$	931	$	1,512
Notes payable associated with capital leases	$	—	$	155

See accompanying notes.

F-7

Table of Contents

Atlanticus Holdings Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2014 and 2013


1.	Description of Our Business

Our accompanying consolidated financial statements include the accounts of Atlanticus Holdings Corporation (the “Company”) and those entities we control. We are primarily focused on providing financial services. Through our subsidiaries, we offer an array of financial products and services to a market largely represented by credit risks that regulators classify as “sub-prime.” As discussed further below, we reflect our business lines within two reportable segments: Credit and Other Investments; and Auto Finance. See also Note 3, “Segment Reporting,” for further details.

Within our Credit and Other Investments segment, we offer point-of-sale financing whereby we partner with retailers and service providers to provide credit to their customers for the purchase of goods and services or rental of merchandise to their customers under rent-to-own arrangements.

These services are often extended to customers who may have been declined under traditional financing options. We specialize in providing this "second look" credit service in various industries across the United States (“U.S.”). Using our infrastructure and technology platform, we also provide loan servicing activities, including underwriting, marketing, customer service and collections operations for third parties.

Also within this segment, we continue to collect on portfolios of credit card receivables. These receivables include both receivables we originated through third-party financial institutions and portfolios of receivables we purchased from third-party financial institutions. One of our portfolios of credit card receivables is encumbered by non-recourse structured financing, and for this portfolio our principal remaining economic interest is the servicing compensation we receive as an offset against our servicing costs given that the likely future collections on the portfolio are insufficient to allow for full repayment of the financing. We also report within our Credit and Other Investments segment the income earned from investments in two equity-method investees—one that holds credit card receivables for which we are the servicer and another that holds structured financing notes underlying credit card receivables for which we are the servicer. In December 2014, we consolidated the entity that held structured financing notes underlying credit card receivables for which we are the servicer. This was a result of our distribution of certain assets to an unrelated third-party partner in that entity for their interest. As such, as of December 31, 2014 only one equity-method investee remained.

Lastly, through our Credit and Other Investments segment, we engage in testing and limited investment activities in consumer finance technology platforms as we seek to capitalize on our expertise and infrastructure.

Within our Auto Finance segment, our CAR subsidiary operations principally purchase and/or service loans secured by automobiles from or for a pre-qualified network of independent automotive dealers and automotive finance companies in the buy-here, pay-here, used car business. We purchase auto loans at a discount and with dealer retentions or holdbacks that provide risk protection. Also within our Auto Finance segment, we manage portfolios of auto finance receivables that we previously originated through franchised and independent auto dealers in connection with prior business activities, as well as provide additional lending products, such as floor plan financing and additional installment lending products to certain dealers.


2.	Significant Accounting Policies and Consolidated Financial Statement Components

The following is a summary of significant accounting policies we follow in preparing our consolidated financial statements, as well as a description of significant components of our consolidated financial statements.

Basis of Presentation and Use of Estimates

We prepare our consolidated financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”), under which we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of our consolidated financial statements, as well as the reported amounts of revenues and expenses during each reporting period. We base these estimates on information available to us as of the date of the financial statements. Actual results could differ materially from these estimates. Certain estimates, such as credit losses, payment rates, costs of funds, discount rates and the yields earned on credit card receivables, significantly affect the reported amount of credit card receivables that we report at fair value and our notes payable associated with structured financings, at fair value; these estimates likewise affect the changes in these amounts reflected within our fees

F-8

Table of Contents

and related income on earning assets line item on our consolidated statements of operations. Additionally, estimates of future credit losses have a significant effect on loans and fees receivable, net, as shown on our consolidated balance sheets, as well as on the provision for losses on loans and fees receivable within our consolidated statements of operations.

We have eliminated all significant intercompany balances and transactions for financial reporting purposes.

Unrestricted Cash and Cash Equivalents

Unrestricted cash and cash equivalents consist of cash, money market investments and overnight deposits. We consider all highly liquid cash investments with low interest rate risk and original maturities of three months or less to be cash equivalents. Cash equivalents are carried at cost, which approximates market. We maintain unrestricted cash and cash equivalents for general operating purposes and to meet our longer term debt obligations. The majority of these cash balances are not insured.

Restricted Cash

Restricted cash as of December 31, 2014 and 2013 includes certain collections on loans and fees receivable, the cash balances of which are required to be distributed to noteholders under our debt facilities. Our restricted cash balances also include minimum cash balances held in accounts at the request of certain of our business partners.

Loans and Fees Receivable

Our loans and fees receivable include: (1) loans and fees receivable, net; (2) loans and fees receivable, at fair value; and (3) loans and fees receivable pledged as collateral under structured financings, at fair value.

Loans and Fees Receivable, Net . Our loans and fees receivable, net, currently consist of receivables carried at net realizable value associated with (a) originated United Kingdom ("U.K.") credit cards and U.S. point-of-sale financing and other credit products currently being marketed within our Credit and Other Investments segment and (b) our Auto Finance segment’s operations. Our Credit and Other Investments segment loans and fees receivable generally are unsecured, while our Auto Finance segment loans and fees receivable generally are secured by the underlying automobiles in which we hold the vehicle title.

As applicable, we show loans and fees receivable net of both an allowance for uncollectible loans and fees receivable and unearned fees (or “deferred revenue”). For example, our point-of-sale and auto finance loans and fees receivable include principal balances and associated fees and interest due from customers which are earned each period a loan is outstanding, net of the unearned portion of loan discounts which we recognize over the life of each loan.

For our loans and fees receivable carried at net realizable value (i.e., as opposed to those carried at fair value), we determine the necessary allowance for uncollectible loans and fees receivable by analyzing some or all of the following: historical loss rates; current delinquency and roll-rate trends; vintage analyses based on the number of months an account has been in existence; the effects of changes in the economy on our customers; changes in underwriting criteria; and estimated recoveries. A considerable amount of judgment is required to assess the ultimate amount of uncollectible loans and fees receivable, and we continuously evaluate and update our methodologies to determine the most appropriate allowance necessary.

Components of our loans and fees receivable, net (in millions) are as follows:



	Balance at December 31, 2013			Additions			Subtractions			Balance at December 31, 2014
Loans and fees receivable, gross	$	134.7		$	285.4		$	(278.5	)	$	141.6
Deferred revenue	(13.3		)	(36.2		)	33.8			(15.7		)
Allowance for uncollectible loans and fees receivable	(24.2		)	(30.8		)	35.0			(20.0		)
Loans and fees receivable, net	$	97.2		$	218.4		$	(209.7	)	$	105.9

F-9

Table of Contents



	Balance at December 31, 2012			Additions			Subtractions			Balance at December 31, 2013
Loans and fees receivable, gross	$	89.1		$	255.3		$	(209.7	)	$	134.7
Deferred revenue	(8.3		)	(34.9		)	29.9			(13.3		)
Allowance for uncollectible loans and fees receivable	(11.2		)	(29.7		)	16.7			(24.2		)
Loans and fees receivable, net	$	69.6		$	190.7		$	(163.1	)	$	97.2

As of December 31, 2014 and December 31, 2013 , the weighted average remaining accretion periods for the $ 15.7 million and $ 13.3 million , respectively, of deferred revenue reflected in the above tables were 11 months and 12 months , respectively.

A roll-forward (in millions) of our allowance for uncollectible loans and fees receivable by class of receivable is as follows:



For the Twelve Months Ended December 31, 2014	Credit Cards			Auto Finance			Other Unsecured Lending Products			Total
Allowance for uncollectible loans and fees receivable:
Balance at beginning of period	$	(11.6	)	$	(1.4	)	$	(11.2	)	$	(24.2	)
Provision for loan losses	(8.8		)	(0.9		)	(21.1		)	(30.8		)
Charge offs	18.1			2.5			16.8			37.4
Recoveries	(0.4		)	(1.4		)	(0.6		)	(2.4		)
Balance at end of period	$	(2.7	)	$	(1.2	)	$	(16.1	)	$	(20.0	)
Balance at end of period individually evaluated for impairment	$	—		$	(0.1	)	$	(3.0	)	$	(3.1	)
Balance at end of period collectively evaluated for impairment	$	(2.7	)	$	(1.1	)	$	(13.1	)	$	(16.9	)
Loans and fees receivable:
Loans and fees receivable, gross	$	6.7		$	70.7		$	64.2		$	141.6
Loans and fees receivable individually evaluated for impairment	$	—		$	0.2		$	5.0		$	5.2
Loans and fees receivable collectively evaluated for impairment	$	6.7		$	70.5		$	59.2		$	136.4

F-10

Table of Contents



For the Twelve Months Ended December 31, 2013	Credit Cards			Auto Finance			Other Unsecured Lending Products			Total
Allowance for uncollectible loans and fees receivable:
Balance at beginning of period	$	(4.6	)	$	(3.1	)	$	(3.5	)	$	(11.2	)
Provision for loan losses	(16.3		)	(0.3		)	(13.1		)	(29.7		)
Charge offs	9.5			3.6			5.6			18.7
Recoveries	(0.2		)	(1.6		)	(0.2		)	(2.0		)
Balance at end of period	$	(11.6	)	$	(1.4	)	$	(11.2	)	$	(24.2	)
Balance at end of period individually evaluated for impairment	$	—		$	—		$	—		$	—
Balance at end of period collectively evaluated for impairment	$	(11.6	)	$	(1.4	)	$	(11.2	)	$	(24.2	)
Loans and fees receivable:
Loans and fees receivable, gross	$	21.9		$	63.5		$	49.3		$	134.7
Loans and fees receivable individually evaluated for impairment	$	—		$	0.2		$	—		$	0.2
Loans and fees receivable collectively evaluated for impairment	$	21.9		$	63.3		$	49.3		$	134.5

The components (in millions) of loans and fees receivable, net as of the date of each of our consolidated balance sheets are as follows:



	December 31, 2014		December 31, 2013
Current loans receivable	$	116.1	$	103.3
Current fees receivable	3.4		6.0
Delinquent loans and fees receivable	22.1		25.4
Loans and fees receivable, gross	$	141.6	$	134.7

Delinquent loans and fees receivable reflect the principal, fee and interest components of loans we did not collect on or prior to the contractual due date. Amounts we believe we will not ultimately collect are included as a component in our overall allowance for uncollectible loans and fees receivable. We discontinue charging interest and fees for most of our credit products when loans and fees receivable become contractually 90 or more days past due. We charge off our Credit and Other Investments segment receivables when they become contractually more than 180 days past due or 120 days past due for the point-of-sale finance product. For our rent-to-own products, we charge off receivables and impair associated rental merchandise if the customer has not made a payment within the previous 90 days. However, if a customer makes a payment greater than or equal to two minimum payments within a month of the charge-off date, we may reconsider whether charge-off status remains appropriate. For all of our products, we charge off receivables within 30 days of notification and confirmation of a customer’s bankruptcy or death. However, in some cases of death, we do not charge off receivables if there is a surviving, contractually liable individual or an estate large enough to pay the debt in full.

Recoveries on accounts previously charged off are credited to the allowance for uncollectible loans and fees receivable and effectively offset our provision for losses on loans and fees receivable recorded at net realizable value on our consolidated statements of operations. (All of the above discussion relates only to our loans and fees receivable for which we use net realizable value (i.e., as opposed to fair value) accounting. For loans and fees receivable recorded at fair value, recoveries offset losses upon charge off of loans and fees receivable recorded at fair value, net of recoveries on our consolidated statements of operations.)

We consider loan delinquencies a key indicator of credit quality because this measure provides the best ongoing estimate of how a particular class of receivables is performing. An aging of our delinquent loans and fees receivable, gross (in millions) by class of receivable as of December 31, 2014 and December 31, 2013 is as follows:

F-11

Table of Contents



Balance at December 31, 2014	Credit Cards		Auto Finance		Other Unsecured Lending Products		Total
30-59 days past due	$	0.4	$	6.3	$	2.8	$	9.5
60-89 days past due	0.4		2.1		2.2		4.7
90 or more days past due	1.6		1.7		4.6		7.9
Delinquent loans and fees receivable, gross	2.4		10.1		9.6		22.1
Current loans and fees receivable, gross	4.3		60.6		54.6		119.5
Total loans and fees receivable, gross	$	6.7	$	70.7	$	64.2	$	141.6
Balance of loans 90 or more days past due and still accruing interest and fees	$	—	$	1.6	$	—	$	1.6



Balance at December 31, 2013	Credit Cards		Auto Finance		Other Unsecured Lending Products		Total
30-59 days past due	$	1.6	$	5.6	$	2.5	$	9.7
60-89 days past due	1.9		1.7		2.2		5.8
90 or more days past due	5.6		1.1		3.2		9.9
Delinquent loans and fees receivable, gross	9.1		8.4		7.9		25.4
Current loans and fees receivable, gross	12.8		55.1		41.4		109.3
Total loans and fees receivable, gross	$	21.9	$	63.5	$	49.3	$	134.7
Balance of loans 90 or more days past due and still accruing interest and fees	$	—	$	0.1	$	3.2	$	3.3

Loans and Fees Receivable, at Fair Value. Both categories of our loans and fees receivable held at fair value represent receivables underlying credit card securitization trusts that are consolidated onto our consolidated balance sheet, some portfolios of which are unencumbered (those labeled loans and fees receivables, at fair value) and some of which are still encumbered under structured financing facilities (those labeled loans and fees receivable pledged as collateral under structured financings, at fair value). Further details concerning our loans and fees receivable held at fair value are presented within Note 6, “Fair Values of Assets and Liabilities.”

Deposits

Deposits include various amounts required to be maintained with our landlords, third-party issuing and other banking relationships and retail electronic payment network providers associated with our ongoing credit card efforts in the U.K.

Prepaid Expenses and Other Assets

Prepaid expenses and other assets include amounts paid to third parties for marketing and other services. These prepaid amounts are expensed as the underlying related services are performed. Also included are (1) commissions paid associated with our various office leases which we amortize into expense over the lease terms, (2) deferred loan costs associated with our convertible senior note issuances and certain notes receivable and (3) ongoing deferred costs associated with service contracts.

Property at Cost, Net of Depreciation

We capitalize costs related to internal development and implementation of software used in our operating activities in accordance with applicable accounting literature. These capitalized costs consist almost exclusively of fees paid to third-party consultants to develop code and install and test software specific to our needs and to customize purchased software to maximize its benefit to us.

We record our property at cost less accumulated depreciation or amortization. We compute depreciation expense using the straight-line method over the estimated useful lives of our assets, which are approximately 40 years for buildings, five

F-12

Table of Contents

years for furniture, fixtures and equipment, and three years for software. We amortize leasehold improvements over the shorter of their estimated useful lives or the terms of their respective underlying leases.

We periodically review our property to determine if it is impaired. Accordingly we impaired $2.7 million of software costs associated with software development in 2014 as planned uses for this software were discontinued. We incurred no such impairment costs in 2013.

Investments in Equity-Method Investees

We account for investments using the equity method of accounting if we have the ability to exercise significant influence, but not control, over the investees. Significant influence is generally deemed to exist if we have an ownership interest in the voting stock of an incorporated investee of between 20% and 50% , although other factors, such as representation on an investee’s board of managers, specific voting and veto rights held by each investor and the effects of commercial arrangements, are considered in determining whether equity method accounting is appropriate. We record our interests in the income of our equity-method investees within the equity in income of equity-method investees category on our consolidated statements of operations.

We use the equity method for our 66.7% investment in a limited liability company formed in 2004 to acquire a portfolio of credit card receivables. We account for this investment using the equity method of accounting due to specific voting and veto rights held by each investor, which do not allow us to control this investee. We also used the equity method to account for our March 2011 investment to acquire a 50.0% interest in a joint venture with an unrelated third party that purchased the outstanding notes issued out of the structured financing trust underlying our non-U.S. acquired credit card receivables (the “Non-U.S. Acquired Portfolio”) until December 2014 at which point the entity was consolidated. The entity was consolidated as a result of our distribution of certain assets to an unrelated third-party partner in that entity for their interest. As such, as of December 31, 2014 only one equity-method investee remained.

We evaluate our investments in the equity-method investees for impairment each quarter by comparing the carrying amount of each investment to its fair value. Because no active market exists for the investees’ limited liability company membership interests, we evaluate our investments for impairment based on our evaluation of the fair value of the equity-method investees’ net assets relative to their carrying values. If we ever were to determine that the carrying values of our investments in equity-method investees were greater than their fair values, we would write the investments down to their fair values.

Rental Merchandise, Net of Depreciation

Our rental merchandise includes consumer electronics, furniture, jewelry and other consumer goods that we initially record on our consolidated balance sheets at our cost. After our initial recording of the rental merchandise at cost, we reduce its carrying value for depreciation thereof. We typically depreciate our rental merchandise over contract rental periods, generally 12 months (monthly agreements) or 26 periods (bi-weekly agreements) under a $- 0 - salvage value assumption. These assumptions are periodically adjusted based on actual results and impairments as they occur. We follow this method to match, as closely as practicable, the recognition of depreciation expense with revenues associated with our customers' use of the rental merchandise. Currently, we do not maintain any levels of rental merchandise beyond what actually has been rented to our customers under our contracts with them. We include a "Rental revenue" line item within our table below detailing our fees and related income on earning assets category on our consolidated statements of operations. Depreciation associated with our rental merchandise totaled $63.1 million and $16.1 million for the twelve months ended December 31, 2014 and 2013 , respectively.

Fees and Related Income on Earning Assets

Fees and related income on earning assets primarily include: (1) fees associated with our credit products, including the receivables underlying our U.S. point-of-sale finance activities, and our credit card receivables; (2) changes in the fair value of loans and fees receivable recorded at fair value; (3) changes in fair value of notes payable associated with structured financings recorded at fair value; (4) revenues associated with rent payments on rental merchandise; and (5) (losses) gains associated with our investments in securities.

The following summarizes our revenue recognition policies for the revenue from our rent-to-own program. Our rent-to-own terms with our customers typically provide for 26 , non-refundable, bi-weekly rental payments over a contract period of 12 months . Generally, the customer can take ownership of the merchandise by exercising a purchase option or making all required rental payments. We accrue periodic billed rental amounts (net of allowances for uncollectible billings) into revenues

F-13

Table of Contents

over the rental period to which the billed amounts relate, and we defer recognition in revenues of any advanced customer rental payments until the rental period in which they are properly recognizable under the terms of the contract. Additionally, we do not recognize a receivable for future periods' rental obligations due to us from our customers; our customers can terminate their rental agreements at any time with no further obligation to us, other than the return of rental merchandise. We include billed rental receivable amounts (net of allowances for uncollectible billings) within our loans and fees receivable, net consolidated balance sheet category.

We assess fees on credit card accounts underlying our credit card receivables according to the terms of the related cardholder agreements and, except for annual membership fees, we recognize these fees as income when they are charged to the cardholders’ accounts. We accrete annual membership fees associated with our credit card receivables into income on a straight-line basis over the cardholder privilege period. Similarly, fees on our other credit products are recognized when earned, which coincides with the time they are charged to the customer’s account.

The components (in thousands) of our fees and related income on earning assets are as follows:



	Twelve months ended December 31,
	2014			2013
Fees on credit products	$	18,662		$	23,879
Changes in fair value of loans and fees receivable recorded at fair value	14,460			45,601
Changes in fair value of notes payable associated with structured financings recorded at fair value	(7,418		)	(19,423		)
Rental revenue	58,457			19,759
Other	4,669			(707		)
Total fees and related income on earning assets	$	88,830		$	69,109

The above changes in fair value of loans and fees receivable recorded at fair value category exclude the impact of charge offs associated with these receivables which are separately stated on our consolidated statements of operations. See Note 6, “Fair Values of Assets and Liabilities,” for further discussion of these receivables and their effects on our consolidated statements of operations. Reflected within our Other category above during the twelve months ended December 31, 2013 is a $2.4 million write-off of a note we had received from buyers of our JRAS buy-here, pay-here dealer operations that we sold in February 2011.

Card and Loan Servicing Expenses

Card and loan servicing costs primarily include collections and customer service expenses. Within this category of expenses are personnel, service bureau, cardholder correspondence and other direct costs associated with our collections and customer service efforts. Card and loan servicing costs also include outsourced collections and customer service expenses. We expense card and loan servicing costs as we incur them, with the exception of prepaid costs, which we expense over respective service periods.

Marketing and Solicitation Expenses

We generally expense product solicitation costs, including printing, credit bureaus, list processing, telemarketing, postage and Internet marketing fees, as we incur these costs or expend resources.

Recent Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers.” ASU 2014-09 establishes a principles-based model under which revenue from a contract is allocated to the distinct performance obligations within the contract and recognized in income as each performance obligation is satisfied. Additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract is also required. ASU 2014-09 is effective for annual and interim reporting periods beginning after December 15, 2016 and early adoption is not permitted. Companies may use either a full retrospective or a modified retrospective approach to adopt ASU 2014-09. The Company has not yet determined the potential effects of the adoption of ASU 2014-09 on its consolidated financial statements.

F-14

Table of Contents

Subsequent Events

We evaluate subsequent events that occur after our consolidated balance sheet date but before our consolidated financial statements are issued. There are two types of subsequent events: (1) recognized, or those that provide additional evidence with respect to conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements; and (2) nonrecognized, or those that provide evidence with respect to conditions that did not exist at the date of the balance sheet but arose subsequent to that date. We have evaluated subsequent events occurring after December 31, 2014 , and based on our evaluation we did not identify any recognized or nonrecognized subsequent events that would have required further adjustments to our consolidated financial statements.


3.	Segment Reporting

We operate primarily within one industry consisting of two reportable segments by which we manage our business. Our two reportable segments are: Credit and Other Investments, and Auto Finance.

As of both December 31, 2014 and December 31, 2013 , we did not have a material amount of long-lived assets located outside of the U.S., and only a negligible portion of our 2014 and 2013 revenues were generated outside of the U.S.

We measure the profitability of our reportable segments based on their income after allocation of specific costs and corporate overhead; however, our segment results do not reflect any charges for internal capital allocations among our segments. Overhead costs are allocated based on headcounts and other applicable measures to better align costs with the associated revenues. Summary operating segment information (in thousands) is as follows:



Twelve months ended December 31, 2014	Credit and Other Investments			Auto Finance			Total
Interest income:
Consumer loans, including past due fees	$	49,091		$	24,239		$	73,330
Other	346			—			346
Total interest income	49,437			24,239			73,676
Interest expense	(22,762		)	(1,290		)	(24,052		)
Net interest income before fees and related income on earning assets and provision for losses on loans and fees receivable	$	26,675		$	22,949		$	49,624
Fees and related income on earning assets	$	88,555		$	275		$	88,830
Servicing income	$	4,246		$	664		$	4,910
Gain on repurchase of convertible senior notes	$	12,068		$	—		$	12,068
Depreciation of rental merchandise	$	(63,148	)	$	—		$	(63,148	)
Equity in income of equity-method investees	$	6,983		$	—		$	6,983
(Loss) income before income taxes	$	(32,107	)	$	4,802		$	(27,305	)
Income tax benefit (expense)	$	36,062		$	(1,430	)	$	34,632
Total assets	$	203,300		$	65,055		$	268,355

F-15

Table of Contents



Twelve months ended December 31, 2013	Credit and Other Investments			Auto Finance			Total
Interest income:
Consumer loans, including past due fees	$	46,050		$	23,215		$	69,265
Other	139			117			256
Total interest income	46,189			23,332			69,521
Interest expense	(22,470		)	(1,402		)	(23,872		)
Net interest income before fees and related income on earning assets and provision for losses on loans and fees receivable	$	23,719		$	21,930		$	45,649
Fees and related income on earning assets	$	71,286		$	(2,177	)	$	69,109
Servicing income	$	7,411		$	807		$	8,218
Gain on repurchase of convertible senior notes	$	—		$	—		$	—
Depreciation of rental merchandise	$	(16,146	)	$	—		$	(16,146	)
Equity in income of equity-method investees	$	8,437		$	—		$	8,437
(Loss) income before income taxes	$	(25,294	)	$	2,515		$	(22,779	)
Income tax benefit (expense)	$	6,349		$	(1,235	)	$	5,114
Total assets	$	292,748		$	59,487		$	352,235


4.	Shareholders' Equity

Retired Shares

During the years ended December 31, 2014 and 2013, we repurchased and contemporaneously retired 133,799 and 380,518 shares of our common stock at an aggregate cost of $0.3 million and $1.4 million , respectively, pursuant to open market purchases and the return of stock by holders of equity incentive awards to pay tax withholding obligations.

We had 1,459,233 loaned shares outstanding at December 31, 2014 ( 1,672,656 shares as of December 31, 2013), which were originally lent in connection with our November 2005 issuance of convertible senior notes. We retire lent shares as they are returned to us.


5.	Investments in Equity-Method Investees

Our equity-method investments outstanding at December 31, 2014 consist of our 66.7% interest in a joint venture formed to purchase a credit card receivable portfolio. Our 50.0% interest in a joint venture, which was formed to purchase the outstanding notes issued out of the structured financing trust underlying our Non-U.S. Acquired Portfolio, was consolidated as of December 31, 2014. This was a result of our distribution of certain assets to an unrelated third-party partner in that entity for their interest. Accordingly, as of December 31, 2014 only one equity-method investee was included in our financial statements. The results of operations associated with the joint venture prior to consolidation are included in the tables below.

In the following tables, we summarize (in thousands) combined balance sheet and results of operations data for our equity-method investees:

F-16

Table of Contents



	As of
	December 31, 2014		December 31, 2013
Loans and fees receivable pledged as collateral under structured financings, at fair value	$	22,571	$	35,241
Investments in non-marketable debt securities, at fair value	$	—	$	36,158
Total assets	$	23,831	$	74,145
Notes payable associated with structured financings, at fair value	$	—	$	12,125
Total liabilities	$	82	$	12,251
Members’ capital	$	23,749	$	61,894



	Twelve months ended December 31,
	2014		2013
Net interest income, fees and related income on earning assets	$	12,168	$	15,105
Total other operating income	$	117	$	109
Net income	$	11,006	$	13,439
Net income attributable to our equity investment in investee	$	6,983	$	8,437

In June 2013, we increased, from 50.0% to 66.7% our overall ownership in the first joint venture mentioned above, which was formed in 2004 to purchase a credit card receivables portfolio. We continue to account for this investment using the equity method of accounting due to specific voting and veto rights held by each investor, which do not allow us to control this investee. The additional June 2013 investment in this investee was made at a discount to the fair value of the investee's assets, thereby resulting in a gain of approximately $0.9 million for us in the three months ended June 30, 2013 based on the investee's reporting of substantially all of its assets at their fair values under its fair value option election.

The above tables include the economics associated with our aforementioned 50.0% interest in the joint venture that purchased in March 2011 the outstanding notes issued out of our Non-U.S. Acquired Portfolio structured financing trust prior to its consolidation in December 2014. Separate financial data for this entity are as follows:



	As of
	December 31, 2014		December 31, 2013
Investments in non-marketable debt securities, at fair value	$	—	$	36,158
Total assets	$	—	$	36,770
Total liabilities	$	—	$	—
Members’ capital	$	—	$	36,770



	Twelve months ended December 31,
	2014		2013
Net interest income, fees and related income on earning assets	$	6,603	$	7,404
Net income	$	6,558	$	7,358
Net income attributable to our equity investment in investee	$	3,279	$	3,679

As described in Note 9, “Notes Payable,” notes payable with a fair value of $36.2 million correspond with the $36.2 million investment in non-marketable debt securities, at fair value held by our equity method investee as noted in the above table as of December 31, 2013.


6.	Fair Values of Assets and Liabilities

We elected the fair value option with respect to our investments in equity securities as well as our credit card loans and fees receivable portfolios, the retained interests in which we historically recorded at fair value under securitization structures

F-17

Table of Contents

that were off balance sheet prior to accounting rules changes requiring their consolidation into our financial statements effective as of the beginning of 2010. With respect to our equity securities, we decided to carry these assets at fair value due to our intent to invest and redeem these investments with expected frequency. For our credit card loans and fees receivable portfolios underlying our formerly off-balance-sheet securitization structures, we elected the fair value option because, in contrast to substantially all of our other assets, we had significant experiences in determining the fair value of these assets in connection with our historic fair value accounting for our retained interests in their associated securitization structures. Because we elected to account for the credit card receivables underlying our formerly off-balance-sheet securitization structures at fair value, accounting rules require that we account for the notes payable issued by such securitization structures at fair value as well. For all of our other credit card receivables that have never been owned by our formerly off-balance-sheet securitization structures, we have not elected the fair value option, and we record such receivables at net realizable value within loans and fees receivable, net on our consolidated balance sheets.

For all of our other debt other than the notes payable underlying our formerly off-balance sheet credit card securitization structures, we have not elected the fair value option. Nevertheless, pursuant to applicable requirements, we include disclosures of the fair value of this other debt to the extent practicable within the disclosures below. Additionally, we have other liabilities that we are required to carry at fair value in our consolidated financial statements, and they also are addressed within the disclosures below.

Where applicable as noted above, we account for our financial assets and liabilities at fair value based upon a three-tiered valuation system. In general, fair values determined by Level 1 inputs use quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access. Fair values determined by Level 2 inputs use inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. Where inputs used to measure fair value may fall into different levels of the fair value hierarchy, the level in the fair value hierarchy within which the fair value measurement in its entirety has been determined is based on the lowest level input that is significant to the fair value measurement in its entirety.

Valuations and Techniques for Assets

Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. The table below summarizes (in thousands) by fair value hierarchy the December 31, 2014 and December 31, 2013 fair values and carrying amounts of (1) our assets that are required to be carried at fair value in our consolidated financial statements and (2) our assets not carried at fair value, but for which fair value disclosures are required:



Assets – As of December 31, 2014 (1)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Carrying Amount of Assets
Loans and fees receivable, net for which it is practicable to estimate fair value	$	—	$	—	$	111,010	$	101,753
Loans and fees receivable, net for which it is not practicable to estimate fair value (2)	$	—	$	—	$	—	$	4,144
Loans and fees receivable, at fair value	$	—	$	—	$	18,255	$	18,255
Loans and fees receivable pledged as collateral, at fair value	$	—	$	—	$	34,905	$	34,905

F-18

Table of Contents



Assets – As of December 31, 2013 (1)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Carrying Amount of Assets
Loans and fees receivable, net for which it is practicable to estimate fair value	$	—	$	—	$	94,579	$	92,924
Loans and fees receivable, net for which it is not practicable to estimate fair value (2)	$	—	$	—	$	—	$	4,284
Loans and fees receivable, at fair value	$	—	$	—	$	12,080	$	12,080
Loans and fees receivable pledged as collateral, at fair value	$	—	$	—	$	88,132	$	88,132


(1)	For cash, deposits and other short-term investments (including our investments in rental merchandise), the carrying amount is a reasonable estimate of fair value.


(2)	We do not disclose fair value for this portion of our loans and fees receivable, net because it is not practicable to do so. These loans and fees receivable consist of a variety of receivables that are largely start-up in nature and for which we have neither sufficient history nor a comparable peer group from which we can calculate fair value.

For those asset classes above that are required to be carried at fair value in our consolidated financial statements, gains and losses associated with fair value changes are detailed on our fees and related income on earning assets table within Note 2, “Significant Accounting Policies and Consolidated Financial Statement Components.” For our loans and fees receivable included in the above table, we assess the fair value of these assets based on our estimate of future cash flows net of servicing costs, and to the extent that such cash flow estimates change from period to period, any such changes are considered to be attributable to changes in instrument-specific credit risk.

F-19

Table of Contents

For Level 3 assets carried at fair value measured on a recurring basis using significant unobservable inputs, the following table presents (in thousands) a reconciliation of the beginning and ending balances for the twelve months ended December 31, 2014 and December 31, 2013 :



	Loans and Fees Receivable, at Fair Value			Loans and Fees Receivable Pledged as Collateral under Structured Financings, at Fair Value			Total
Balance at January 1, 2014	$	12,080		$	88,132		$	100,212
Total gains—realized/unrealized:
Net revaluations of loans and fees receivable pledged as collateral under structured financings, at fair value	—			11,991			11,991
Net revaluations of loans and fees receivable, at fair value	2,469			—			2,469
Settlements, net	(7,524		)	(52,748		)	(60,272		)
Impact of foreign currency translation	—			(1,240		)	(1,240		)
Net transfers between categories	11,230			(11,230		)	—
Net transfers in and/or out of Level 3	—			—			—
Balance at December 31, 2014	$	18,255		$	34,905		$	53,160
Balance at January 1, 2013	$	20,378		$	133,595		$	153,973
Total gains—realized/unrealized:
Net revaluations of loans and fees receivable pledged as collateral under structured financings, at fair value	—			38,066			38,066
Net revaluations of loans and fees receivable, at fair value	7,535			—			7,535
Settlements, net	(15,833		)	(83,727		)	(99,560		)
Impact of foreign currency translation	—			198			198
Net transfers in and/or out of Level 3	—			—			—
Balance at December 31, 2013	$	12,080		$	88,132		$	100,212

The unrealized gains and losses for assets within the Level 3 category presented in the tables above include changes in fair value that are attributable to both observable and unobservable inputs.

Net Revaluation of Loans and Fees Receivable. We record the net revaluation of loans and fees receivable (including those pledged as collateral) in the fees and related income on earning assets category in our consolidated statements of operations, specifically as changes in fair value of loans and fees receivable recorded at fair value. The net revaluation of loans and fees receivable is based on the present value of future cash flows using a valuation model of expected cash flows and the estimated cost to service and collect those cash flows. We estimate the present value of these future cash flows using a valuation model consisting of internally developed estimates of assumptions third-party market participants would use in determining fair value, including estimates of net collected yield, principal payment rates, expected principal credit loss rates, costs of funds, discount rates and servicing costs.

F-20

Table of Contents

For Level 3 assets carried at fair value measured on a recurring basis using significant unobservable inputs, the following table presents (in thousands) quantitative information about the valuation techniques and the inputs used in the fair value measurement as of December 31, 2014 and December 31, 2013:



Quantitative Information about Level 3 Fair Value Measurements
Fair Value Measurements	Fair Value at December 31, 2014		Valuation Technique	Unobservable Input	Range (Weighted Average)(1)
Loans and fees receivable, at fair value	$	18,255	Discounted cash flows	Gross yield	17.9% to 25.6% (21.0%)
				Principal payment rate	1.5% to 3.6% (2.3%)
				Expected credit loss rate	7.4% to 13.7% (9.9%)
				Servicing rate	7.4% to 15.1% (10.5%)
				Discount rate	15.9% to 16.2% (16.1%)
Loans and fees receivable pledged as collateral under structured financings, at fair value	$	34,905	Discounted cash flows	Gross yield	27.2	%
				Principal payment rate	2.7	%
				Expected credit loss rate	13.5	%
				Servicing rate	11.0	%
				Discount rate	15.9	%



Quantitative Information about Level 3 Fair Value Measurements
Fair Value Measurements	Fair Value at December 31, 2013		Valuation Technique	Unobservable Input	Range (Weighted Average)(2)
Loans and fees receivable, at fair value	$	12,080	Discounted cash flows	Gross yield	23.7	%
				Principal payment rate	3.5	%
				Expected credit loss rate	14.6	%
				Servicing rate	14.0	%
				Discount rate	15.9	%
Loans and fees receivable pledged as collateral under structured financings, at fair value	$	88,132	Discounted cash flows	Gross yield	17.0% to 27.5% (23.4%)
				Principal payment rate	1.7% to 3.2% (2.6%)
				Expected credit loss rate	9.9% to 18.0% (14.9%)
				Servicing rate	9.4% to 11.8% (10.3%)
				Discount rate	15.9% to 16.2% (16.0%)

(1) Our loans and fees receivable, pledged as collateral under structured financings, at fair value consist of a single portfolio with one set of assumptions as of December 31, 2014. As such, no range is given. With the consolidation of the underlying joint venture associated with our Non-U.S. Acquired Portfolio and concurrent distribution of certain assets in satisfaction of the outstanding notes as discussed in Note 5 "Investments in Equity-Method Investees" and Note 9 "Notes Payable," the remaining receivables were reclassified in December 2014 as loans and fees receivable, at

F-21

Table of Contents

fair value (from Loans and fees receivable pledged as collateral under structured financings, at fair value as of December 31, 2013).

(2) Our loans and fees, at fair value consist of a single portfolio with one set of assumptions as of December 31, 2013. As such, no range is given.

Valuations and Techniques for Liabilities

Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the liability. The table below summarizes (in thousands) by fair value hierarchy the December 31, 2014 and December 31, 2013 fair values and carrying amounts of (1) our liabilities that are required to be carried at fair value in our consolidated financial statements and (2) our liabilities not carried at fair value, but for which fair value disclosures are required:



Liabilities – As of December 31, 2014	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Carrying Amount of Liabilities
Liabilities not carried at fair value
CAR revolving credit facility	$	—	$	—	$	28,500	$	28,500
ACC amortizing debt facility	$	—	$	—	$	125	$	125
Amortizing debt facilities	$	—	$	—	$	42,200	$	42,200
Revolving credit facility	$	—	$	—	$	4,000	$	4,000
U.K. credit card accounts revolving credit facility	$	—	$	—	$	3,924	$	3,924
Senior secured term loan	$	—	$	—	$	20,000	$	20,000
5.875% convertible senior notes	$	—	$	37,662	$	—	$	64,302
Liabilities carried at fair value
Interest rate swap underlying CAR facility	$	—	$	—	$	—	$	—
Economic sharing arrangement liability	$	—	$	—	$	119	$	119
Notes payable associated with structured financings, at fair value	$	—	$	—	$	36,511	$	36,511



Liabilities - As of December 31, 2013	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Carrying Amount of Liabilities
Liabilities not carried at fair value
CAR revolving credit facility	$	—	$	—	$	22,000	$	22,000
ACC amortizing debt facility	$	—	$	—	$	928	$	928
Amortizing debt facilities	$	—	$	—	$	21,411	$	21,411
Revolving credit facility	$	—	$	—	$	4,000	$	4,000
U.K. credit card accounts revolving credit facility	$	—	$	—	$	8,245	$	8,245
Senior secured term loan	$	—	$	—	$	—	$	—
5.875% convertible senior notes	$	—	$	57,007	$	—	$	95,484
Liabilities carried at fair value
Interest rate swap underlying CAR facility	$	—	$	97	$	—	$	97
Economic sharing arrangement liability	$	—	$	—	$	354	$	354
Notes payable associated with structured financings, at fair value	$	—	$	—	$	94,523	$	94,523

F-22

Table of Contents

For our material notes payable, we assess the fair value of these liabilities based on our estimate of future cash flows generated from their underlying credit card receivables collateral, net of servicing compensation required under the note facilities, and to the extent that such cash flow estimates change from period to period, any such changes are considered to be attributable to changes in instrument-specific credit risk. Gains and losses associated with fair value changes for our notes payable associated with structured financing liabilities that are carried at fair value are detailed on our fees and related income on earning assets table within Note 2, “Significant Accounting Policies and Consolidated Financial Statement Components.” See Note 9, “Notes Payable,” for further discussion on our notes payable. For our 5.875% convertible senior notes due 2035 (“ 5.875% convertible senior notes”), we assess fair value based upon the most recent trade data available from third-party providers. Additionally, through an agreement with our now-divested Investments in Previously Charged-Off Receivables segment, we are obligated to remit net cash flows associated with certain balance transfer card receivables that we retained subsequent to the sale of the entity. We assess the fair value of this obligation based on the present value of future cash flows using a valuation model of expected cash flows related to these specific receivables. We do not disclose the fair value of our other debt as it is not practicable to do so. We have seen no data that would suggest that the fair value of our other Credit and Other Investments segment debt is materially different from its carrying amount. See Note 9, “Notes Payable,” for further discussion on our other notes payable.

For our material Level 3 liabilities carried at fair value measured on a recurring basis using significant unobservable inputs, the following table presents (in thousands) a reconciliation of the beginning and ending balances for the twelve months ended December 31, 2014 and 2013 .



	Notes Payable Associated with Structured Financings, at Fair Value
	2014			2013
Beginning balance, January 1	$	94,523		$	140,127
Transfers in due to consolidation of equity-method investees	(13,288		)	—
Total (gains) losses—realized/unrealized:
Net revaluations of notes payable associated with structured financings, at fair value	7,418			19,423
Repayments on outstanding notes payable, net	(50,815		)	(65,264		)
Impact of foreign currency translation	(1,327		)	237
Net transfers in and/or out of Level 3	—			—
Ending balance, December 31	$	36,511		$	94,523

The unrealized gains and losses for liabilities within the Level 3 category presented in the tables above include changes in fair value that are attributable to both observable and unobservable inputs. We provide below a brief description of the valuation techniques used for Level 3 liabilities.

Net Revaluation of Notes Payable Associated with Structured Financings, at Fair Value. We record the net revaluations of notes payable associated with structured financings, at fair value, in the changes in fair value of notes payable associated with structured financings line item within the fees and related income on earning assets category of our consolidated statements of operations. The net revaluation of these notes is based on the present value of future cash flows utilized in repayment of the outstanding principal and interest under the facilities using a valuation model of expected cash flows net of the contractual service expenses within the facilities. We estimate the present value of these future cash flows using a valuation model consisting of internally developed estimates of assumptions third-party market participants would use in determining fair value, including: estimates of net collected yield, principal payment rates and expected principal credit loss rates on the credit card receivables that secure the non-recourse notes payable; costs of funds; discount rates; and contractual servicing fees.

F-23

Table of Contents

For material Level 3 liabilities carried at fair value measured on a recurring basis using significant unobservable inputs, the following table presents (in thousands) quantitative information about the valuation techniques and the inputs used in the fair value measurement for the periods ended December 31, 2014 and December 31, 2013:



Quantitative Information about Level 3 Fair Value Measurements
Fair Value Measurements	Fair Value at December 31, 2014 (in Thousands)		Valuation Technique	Unobservable Input	Range (Weighted Average)
Notes payable associated with structured financings, at fair value	$	36,511	Discounted cash flows	Gross yield	27.2	%
				Principal payment rate	2.7	%
				Expected credit loss rate	13.5	%
				Discount rate	15.9	%



Quantitative Information about Level 3 Fair Value Measurements
Fair Value Measurements	Fair Value at December 31, 2013 (in Thousands)		Valuation Technique	Unobservable Input	Range (Weighted Average)
Notes payable associated with structured financings, at fair value	$	94,523	Discounted cash flows	Gross yield	17.0% to 27.5% (23.4%)
				Principal payment rate	1.7% to 3.2% (2.6%)
				Expected credit loss rate	9.9% to 18.0% (14.9%)
				Discount rate	15.9% to 20.6% (17.7%)

Other Relevant Data

Other relevant data (in thousands) as of December 31, 2014 and December 31, 2013 concerning certain assets and liabilities we carry at fair value are as follows:



As of December 31, 2014	Loans and Fees Receivable at Fair Value		Loans and Fees Receivable Pledged as Collateral under Structured Financings at Fair Value
Aggregate unpaid principal balance within loans and fees receivable that are reported at fair value	$	22,785	$	41,449
Aggregate fair value of loans and fees receivable that are reported at fair value	$	18,255	$	34,905
Aggregate fair value of receivables carried at fair value that are 90 days or more past due (which also coincides with finance charge and fee non-accrual policies)	$	93	$	39
Aggregate excess of balance of unpaid principal receivables within loans and fees receivable that are reported at fair value and are 90 days or more past due (which also coincides with finance charge and fee non-accrual policies) over the fair value of such loans and fees receivable	$	647	$	1,695

F-24

Table of Contents



As of December 31, 2013	Loans and Fees Receivable at Fair Value		Loans and Fees Receivable Pledged as Collateral under Structured Financings at Fair Value
Aggregate unpaid principal balance within loans and fees receivable that are reported at fair value	$	16,620	$	109,945
Aggregate fair value of loans and fees receivable that are reported at fair value	$	12,080	$	88,132
Aggregate fair value of receivables carried at fair value that are 90 days or more past due (which also coincides with finance charge and fee non-accrual policies)	$	31	$	299
Aggregate excess of balance of unpaid principal receivables within loans and fees receivable that are reported at fair value and are 90 days or more past due (which also coincides with finance charge and fee non-accrual policies) over the fair value of such loans and fees receivable	$	728	$	4,555



Notes Payable	Notes Payable Associated with Structured Financings, at Fair Value as of December 31, 2014		Notes Payable Associated with Structured Financings, at Fair Value as of December 31, 2013
Aggregate unpaid principal balance of notes payable	$	121,236	$	219,619
Aggregate fair value of notes payable	$	36,511	$	94,523


7.	Property

Details (in thousands) of our property on our consolidated balance sheets are as follows:



	As of December 31,
	2014			2013
Software	$	67,974		$	64,383
Furniture and fixtures	7,250			7,147
Data processing and telephone equipment	39,340			39,157
Leasehold improvements	28,061			28,052
Total cost	142,625			138,739
Less accumulated depreciation	(135,589		)	(129,802		)
Property, net	$	7,036		$	8,937

As of December 31, 2014 , the weighted-average remaining depreciable life of our depreciable property was 5.4 years .


8.	Leases

We lease premises and certain equipment under cancelable and non-cancelable leases, some of which contain renewal options under various terms. Total rental expense for continuing operations associated with these operating leases was $3.2 million in 2014 and $3.9 million in 2013. During the fourth quarter of 2006, we entered into a 15 -year lease in Atlanta, Georgia for 335,372 square feet (net of space which was surrendered to the landlord through our exercise of a termination option), 233,405 square feet of which we have subleased, and the remainder of which houses our corporate offices. In connection with this lease, we received a $21.2 million construction allowance for the build-out of our new corporate offices. We are amortizing the construction allowance as a reduction of rent expense over the term of the lease. As of December 31, 2014, the future minimum rental commitments (in thousands) for all non-cancelable operating leases with initial or remaining terms of more than one year (both gross and net of any sublease income) are as follows:

F-25

Table of Contents



	Gross		Sublease Income			Net
2015	$	9,023	$	(5,659	)	$	3,364
2016	7,607		(5,835		)	1,772
2017	8,085		(6,007		)	2,078
2018	9,224		(5,963		)	3,261
2019	9,311		(5,966		)	3,345
Thereafter	23,165		(15,142		)	8,023
Total	$	66,415	$	(44,572	)	$	21,843

In addition, we occasionally lease certain equipment under cancelable and non-cancelable leases, which are accounted for as capital leases in our consolidated financial statements. As of December 31, 2014, we had no material non-cancelable capital leases with initial or remaining terms of more than one year.


9.	Notes Payable

Notes Payable Associated with Structured Financings, at Fair Value

Scheduled (in millions) in the table below are (1) the carrying amounts of structured financing notes secured by certain credit card receivables and reported at fair value as of both December 31, 2014 and December 31, 2013 , (2) the outstanding face amounts of structured financing notes secured by certain credit card receivables and reported at fair value as of December 31, 2014 , and (3) the carrying amounts of the credit card receivables and restricted cash that provide the exclusive means of repayment for the notes (i.e., lenders have recourse only to the specific credit card receivables and restricted cash underlying each respective facility and cannot look to our general credit for repayment) as of December 31, 2014 and December 31, 2013 .



	Carrying Amounts at Fair Value as of
	December 31, 2014		December 31, 2013
Amortizing securitization facility issued out of our upper-tier originated portfolio master trust (stated maturity of December 2015), outstanding face amount of $121.2 million bearing interest at a weighted average 4.9% interest rate (4.2% as of December 31, 2013), which is secured by credit card receivables and restricted cash aggregating $36.5 million ($58.4 million as of December 31, 2013) in carrying amount	$	36.5	$	58.3
Amortizing term securitization facility (denominated and referenced in U.K. sterling and a stated maturity of April 2015) issued out of our Non-U.S. Acquired Portfolio securitization trust	—		36.2
Total structured financing notes reported at fair value that are secured by credit card receivables and to which we are subordinated	$	36.5	$	94.5

In December 2014, the joint venture that was formed to purchase the outstanding notes issued out of the structured financing trust underlying our Non-U.S. Acquired Portfolio was consolidated. This was a result of our distribution of certain assets to an unrelated third-party partner in that entity for their interest.

Contractual payment allocations within these credit cards receivable structured financings provide for a priority distribution of cash flows to us to service the credit card receivables, a distribution of cash flows to pay interest and principal due on the notes, and a distribution of all excess cash flows (if any) to us. Each of the structured financing facilities in the above table is amortizing down along with collections of the underlying receivables and there are no provisions within the debt agreements that allow for acceleration or bullet repayment of the facilities prior to their scheduled expiration dates. The aggregate carrying amount of the credit card receivables and restricted cash that provide security for the $36.5 million in fair value of structured financing notes in the above table is $36.5 million , which means that we have no aggregate exposure to pre-tax equity loss associated with the above structured financing arrangement at December 31, 2014 .

Beyond our role as servicer of the underlying assets within the credit cards receivable structured financings, we have provided no other financial or other support to the structures, and we have no explicit or implicit arrangements that could require us to provide financial support to the structures.

F-26

Table of Contents

Notes Payable, at Face Value and Notes Payable to Related Parties

Other notes payable outstanding as of December 31, 2014 and December 31, 2013 that are secured by the financial and operating assets of either the borrower, another of our subsidiaries or both, include the following, scheduled (in millions); except as otherwise noted, the assets of our holding company (Atlanticus Holdings Corporation) are subject to creditor claims under these scheduled facilities:



	As of
	December 31, 2014		December 31, 2013
Revolving credit facilities at a weighted average rate equal to 3.7% (4.7% at December 31, 2013) secured by the financial and operating assets of CAR and another of our borrowing subsidiaries with a combined aggregate carrying amount of $75.4 million ($83.5 million at December 31, 2013)
Revolving credit facility (expiring October 4, 2017) (1) (2)	$	28.5	$	22.0
Revolving credit facility (expiring May 17, 2015) (2)	4.0		4.0
Amortizing facilities at a weighted average rate equal to 5.4% (8.8% at December 31, 2013) secured by certain receivables, rental streams and restricted cash with a combined aggregate carrying amount of $42.2 million ($16.5 million as of December 31, 2013)
Amortizing debt facility (expiring December 15, 2014) (3) (4)	—		3.3
Amortizing debt facility (expiring April 20, 2015) (3) (4)	—		5.8
Amortizing debt facility (expiring July 15, 2015) (3) (4)	0.5		8.3
Amortizing debt facility (expiring August 28, 2015) (3) (5)	30.0		3.5
Amortizing debt facility (expiring October 30, 2015) (3) (5)	7.8		—
Amortizing debt facility (expiring August 1, 2016) (3) (5)	3.9		0.5
Other facilities
Senior secured term loan to related parties (expiring November 25, 2015) that is secured by certain assets of the Company with an annual rate equal to 9.0% (6)	20.0		—
Amortizing debt facility (expiring November 6, 2016) that is secured by our ACC Auto Finance segment receivables and restricted cash with an aggregate carrying amount of $0.4 million ($2.5 million as of December 31, 2013) (7)	0.1		0.9
Revolving credit facility associated with our credit card accounts in the U.K. that can be drawn to the extent of outstanding eligible principal receivables up to £5.0 million, expiring December 1, 2016 with an annual rate equal to the lender’s cost of funds plus 7.0% (9.2% as of December 31, 2014 and 9.1% as of December 31, 2013) secured by certain receivables and restricted cash with a combined aggregate carrying amount of $4.1 million ($9.6 million as of December 31, 2013)	3.9		8.2
Vendor-financed software and equipment purchases that are secured by certain equipment	—		0.2
Total notes payable outstanding	$	98.7	$	56.7


(1)	Loan is subject to certain affirmative covenants, including a coverage ratio, a leverage ratio and a collateral performance test, the failure of which could result in required early repayment of all or a portion of the outstanding balance by our CAR Auto Finance operations.


(2)	Loans are from the same lender and are cross-collateralized; thus, combined security interests are subject to claims upon the default of either lending arrangement. The assets of Atlanticus Holdings Corporation are not subject to creditor claims arising due to asset performance-related covenants under this loan.


(3)	Loans are subject to certain affirmative covenants tied to default rates and other performance metrics the failure of which could result in required early repayment of the remaining unamortized balances of the notes.


(4)	Loans are from the same lender and are cross-collateralized; thus, combined security interests are subject to claims upon the default of either lending arrangement.


(5)	These notes were modified to either extend the maturity date, increase the loaned amount or both.

F-27

Table of Contents


(6)	See Note 16 "Related Party Transactions" for additional information regarding this note.

(7)

The terms of this lending agreement provide for the application of all excess cash flows from the underlying auto finance receivables portfolio (above and beyond interest costs and contractual servicing compensation to our outsourced third-party servicer) to reduce the outstanding principal balance of the debt, and the outstanding principal balance was repaid in the fourth quarter of 2012. Now that we have repaid the principal portion of the note, the lending agreement requires that we remit 37.5% of future cash flows (net of contractual servicing compensation) generated on the auto finance receivables portfolio to the note holders as additional compensation for the use of their capital. Based on current estimates of this additional compensation, we currently are accruing interest expense on this liability based on current expectations of future collections, and the amount disclosed in the above table represents our accrued interest expense liability under this lending agreement. The assets of Atlanticus Holdings Corporation are not subject to creditor claims arising under this loan.


10.	Convertible Senior Notes

In May 2005, we issued $250.0 million aggregate principal amount of 3.625% convertible senior notes due 2025 (“ 3.625% convertible senior notes”), and in November 2005, we issued $300.0 million aggregate principal amount of 5.875% convertible senior notes due 2035. These notes (net of repurchases since the issuance dates) are reflected within convertible senior notes on our consolidated balance sheets. In May 2012, substantially all of the holders of our 3.625% convertible senior notes exercised a then-existing put right. No such put rights exist under our 5.875% convertible senior notes.

In July 2014 we repurchased $80,000 aggregate principal amount of outstanding 5.875% convertible senior notes for $25,200 . In November 2014, we repurchased $46.1 million aggregate principal amount of 5.875% convertible senior notes for $19.1 million plus accrued interest from unrelated third parties. The purchases resulted in an aggregate gain of $12.1 million (net of the notes’ applicable share of deferred costs, which were written off in connection with the repurchase). Upon acquisition, the notes were retired.

The following summarizes (in thousands) components of our consolidated balance sheets associated with our convertible senior notes:



	As of
	December 31, 2014			December 31, 2013
Face amount of 3.625% convertible senior notes	$	450		$	450
Face amount of 5.875% convertible senior notes	93,280			139,467
Discount	(28,978		)	(43,983		)
Net carrying value	$	64,752		$	95,934
Carrying amount of equity component included in additional paid-in capital	$	108,714		$	108,714
Excess of instruments’ if-converted values over face principal amounts	$	—		$	—

During certain periods and subject to certain conditions, the remaining $93.3 million of outstanding 5.875% convertible senior notes as of December 31, 2014 (as referenced in the table above) will be convertible by holders into cash and, if applicable, shares of our common stock at an adjusted effective conversion rate of 40.63 shares of common stock per $1,000 principal amount of notes, subject to further adjustment; the conversion rate is based on an adjusted conversion price of $24.61 per share of common stock. Upon any conversion of the notes, we will deliver to holders of the notes cash of up to $1,000 per $1,000 aggregate principal amount of notes and, at our option, either cash or shares of our common stock in respect of the remainder of the conversion obligation, if any. The maximum number of shares of common stock that any note holder may receive upon conversion is fixed at 40.63 shares per $1,000 aggregate principal amount of notes, and we have a sufficient number of authorized shares of our common stock to satisfy both this conversion obligation and the conversion obligation under the 3.625% convertible senior notes should they arise. Beginning with the six -month period commencing on January 30, 2009, we could pay contingent interest on the notes during a six -month period if the average trading price of the notes is above a specified level. Thus far we have not paid any contingent interest on these notes. In addition, holders of the notes may require us to repurchase the notes upon certain specified events.

In conjunction with the offering of the 5.875% convertible senior notes, we entered into a 30 year share lending agreement with Bear, Stearns International Limited (“BSIL”) and Bear, Stearns & Co. Inc, as agent for BSIL, pursuant to which

F-28

Table of Contents

we lent BSIL 5,677,950 shares of our common stock that we exclude from all earnings per share computations and for which we received a fee upon consummation of the agreement of $0.001 per loaned share. The obligations of Bear Stearns were assumed by JP Morgan in 2008. JP Morgan (as the guarantor of the obligation) is required to return the loaned shares to us at the end of the 30 -year term of the share lending agreement or earlier upon the occurrence of specified events. Such events include the bankruptcy of JP Morgan, its failure to make payments when due, its failure to post collateral when required or return loaned shares when due, notice of its inability to perform obligations, or its untrue representations. If an event of default occurs, then the borrower (JP Morgan) may settle the obligation in cash. Further, in the event that JP Morgan’s credit rating drops below A/A2, it would be required to post collateral for the market value of the lent shares ( $3.4 million based on the 1,459,233 of shares remaining outstanding under the share lending arrangement as of December 31, 2014). JP Morgan has agreed to use the loaned shares for the purpose of directly or indirectly facilitating the hedging of our convertible senior notes by the holders thereof or for such other purpose as reasonably determined by us. We deem it highly remote that any event of default will occur and therefore cash settlement, while an option, is an unlikely scenario.

We analogize the share lending agreement to a prepaid forward contract, which we have evaluated under applicable accounting guidance. We determined that the instrument was not a derivative in its entirety and that the embedded derivative would not require separate accounting. The net effect on shareholders’ equity of the shares lent pursuant to the share lending agreement, which includes our requirement to lend the shares and the counterparties’ requirement to return the shares, is the fee received upon our lending of the shares.

Accounting for Convertible Senior Notes

Because our convertible senior notes are Instrument C convertible notes, the accounting for the issuance of the notes includes (1) allocation of the issuance proceeds between the notes and additional paid-in capital, (2) establishment of a discount to the face amount of the notes equal to the portion of the issuance proceeds that are allocable to additional paid-in capital, (3) creation of a deferred tax liability related to the discount on the notes, and (4) an allocation of issuance costs between the portion of such costs considered to be associated with the notes and the portion of such costs considered to be associated with the equity component of the notes’ issuances (i.e., additional paid-in capital). We are amortizing the discount to the remaining face amount of the notes into interest expense over the expected life of the notes, which results in a corresponding release of associated deferred tax liability (and which ended May 2012 for our 3.625% convertible senior notes). Amortization for the years ended December 31, 2014 and 2013 totaled $0.6 million and $0.6 million , respectively. Actual incurred interest (based on the contractual interest rates within the two convertible senior notes series) totaled $8.0 million and $8.2 million for the years ended December 31, 2014 and 2013, respectively. We will amortize the discount remaining at December 31, 2014 into interest expense over the expected term of the 5.875% convertible senior notes (currently expected to be October 2035). The weighted average effective interest rate for the 3.625% and 5.875% convertible senior notes was 9.2% for all periods presented.


11.	Commitments and Contingencies

General

Under our point-of-sale finance products, we give consumers the ability to borrow up to the maximum credit limit assigned to each individual’s account. Our unfunded commitments under these products aggregated $112.0 million at December 31, 2014 . We have never experienced a situation in which all of our customers have exercised their entire available line of credit at any given point in time, nor do we anticipate this will ever occur in the future. Moreover, there would be a concurrent increase in assets should there be any exercise of these lines of credit. We also have the effective right to reduce or cancel these available lines of credit at any time.

Additionally our CAR operations provide floor-plan financing for a pre-qualified network of independent automotive dealers and automotive finance companies in the buy-here, pay-here used car business. The financings allow dealers and finance companies to borrow up to the maximum pre-approved credit limit allowed in order to finance ongoing inventory needs. These loans are secured by the underlying auto inventory and, in certain cases where we have other lending products outstanding with the dealer, are secured by the collateral under those lending arrangements as well, including any outstanding dealer reserves. As of December 31, 2014 , CAR had unfunded outstanding floor-plan financing commitments totaling $8.9 million . Each draw against unused commitments is reviewed for conformity to pre-established guidelines.

In the normal course of business through the origination of unsecured credit card receivables, we incur off-balance-sheet risks. These risks include commitments of £0.6 million ( $0.9 million ) at December 31, 2014 to purchase receivables associated with cardholders who have the right to borrow in excess of their current balances up to the maximum credit limit on their credit card accounts. We have never experienced a situation in which all of our customers have exercised their entire available line of credit at any given point in time, nor do we anticipate this will ever occur in the future. Moreover, there would

F-29

Table of Contents

be a concurrent increase in assets should there be any exercise of these lines of credit. We also have the effective right to reduce or cancel these available lines of credit at any time. At December 31, 2014 , the available lines of credit mentioned above are related to cards issued under programs in the U.K.

Under agreements with third-party originating and other financial institutions we have pledged security (collateral) related to their issuance of consumer credit and purchases thereunder, of which $4.4 million remains pledged to support various ongoing contractual obligations. In addition, in connection with our Non-U.S. Acquired Portfolio acquisition, Atlanticus Services Corporation guarantees certain obligations of its subsidiaries and its third-party originating financial institution to one of the European payment systems ( $0.4 million as of December 31, 2014). Those obligations include, among other things, compliance with one of the European payment system’s operating regulations and by-laws. Atlanticus Services Corporation also guarantees certain performance obligations of its servicer affiliate to the indenture trustee and the trust created under the structured financing relating to our Non-U.S. Acquired Portfolio.

Under agreements with third-party originating and other financial institutions, we have agreed to indemnify the financial institutions for certain liabilities associated with the financial institutions’ activities on our behalf—such indemnification obligations generally being limited to instances in which we either (a) have been afforded the opportunity to defend against any potentially indemnifiable claims or (b) have reached agreement with the financial institutions regarding settlement of potentially indemnifiable claims. As of December 31, 2014 , we have assessed the likelihood of any potential payments related to the aforementioned contingencies as remote. We will accrue liabilities related to these contingencies in any future period if and in which we assess the likelihood of an estimable payment as probable. In October 2013, we were released from certain contingent liabilities which resulted in the release of $4.4 million of cash previously held in escrow and previously included on our consolidated balance sheet as a deposit within our prepaid expenses and other assets category.

Total System Services, Inc. provides certain services to Atlanticus Services Corporation in both the U.S. and the U.K. as a system of record provider under agreements that extend through October 2015 and April 2016, respectively. If Atlanticus Services Corporation were to terminate its U.S. or U.K. relationship with Total System Services, Inc. prior to the contractual termination period, it would incur significant penalties ( $3.3 million and $2.3 million as of December 31, 2014 , respectively).

Currently, HM Revenue and Customs (“HMRC”) within the U.K. is in the preliminary stages of conducting a review principally into filings by one of our U.K. subsidiaries to reclaim valued-added taxes (“VAT”) that it paid on its inputs and that it believed and continues to believe were and are eligible to be reclaimed. Some of these filings have been honored and refunds have therefore been issued to our U.K. subsidiary, and some of the filings have been delayed along with associated refunds pending the outcome of the HMRC review. Given the nature and current early stage of the review and the uncertainties associated therewith, we cannot currently confirm that our U.K. subsidiary will not be required to return to HMRC any VAT refunds it previously received. Accordingly, we have accrued a £3.0 million ( $4.7 million ) liability to HMRC which reflects our current estimate of the potential liability associated with this HMRC review on our future consolidated results of operations or consolidated financial position.

We also are subject to certain minimum payments under cancelable and non-cancelable lease arrangements. For further information regarding these commitments, see Note 8, "Leases."

Litigation

We are involved in various legal proceedings that are incidental to the conduct of our business, none of which are material to us.


12.	Income Taxes

Deferred tax assets and liabilities reflect the effects of tax losses, credits, and the future income tax effects of temporary differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases and are measured using enacted tax rates that apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

F-30

Table of Contents

The current and deferred portions (in thousands) of federal, foreign and state income tax benefit or expense as the case may be are as follows:



	For the Year Ended December 31,
	2014			2013
Federal income tax benefit:
Current tax benefit (expense)	$	1,231		$	(52	)
Deferred tax benefit	33,222			3,270
Total federal income tax benefit	34,453			3,218
Foreign income tax benefit (expense):
Current tax expense	(87		)	(42		)
Deferred tax benefit	977			892
Total foreign income tax benefit	890			850
State and other income tax benefit:
Current tax benefit (expense)	(203		)	7
Deferred tax benefit (expense)	(508		)	1,039
Total state and other income tax benefit (expense)	(711		)	1,046
Total income tax benefit	$	34,632		$	5,114

We experienced effective income tax benefit rates of 126.8% and 22.5% for the years ended December 31, 2014 and December 31, 2013 , respectively. Our effective income tax benefit rates resulted principally from (1) changes in valuation allowances against income statement-oriented federal, foreign and state deferred tax assets in both years ended December 31, 2014 and 2013, with the most significant benefits related to the complete release of all federal tax-related valuation allowances in the year ended December 31, 2014 and (2) the reversal of excess prior year interest accruals on our then-accrued prior year liabilities for uncertain tax positions, such reversal of excess interest accruals resulting from a favorable settlement (relative to accrued prior year liabilities for uncertain tax positions) reached with the Internal Revenue Service (“IRS”) in December 2014 and the favorable resolution of accrued prior year liabilities for uncertain state tax positions.

As referenced above, in December 2014 we reached a settlement with the IRS concerning the tax treatment of net operating losses that we incurred in 2007 and 2008 and carried back to obtain refunds of federal income taxes paid in earlier years dating back to 2003. Pursuant to the terms of the settlement, we agreed to a federal income tax assessment of $9.1 million associated with our 2007 and 2008 net operating loss carry-backs (upon which approximately $2.0 million of interest is expected to be charged when billed by the IRS). Our settlement with the IRS materially enhanced our 2014 reported income tax benefits in two ways as noted above. First, we released into 2014 income tax benefit prior year tax, interest and penalty liability accruals associated with then-uncertain tax positions that were resolved in a significantly favorable manner relative to the liabilities accrued therefor. Second, we reclassified to deferred tax liabilities as of December 31, 2014 significant levels of liabilities that had been classified as current liability accruals for uncertain tax positions as of December 31, 2013, thereby eliminating the need for valuation allowances that existed as of December 31, 2013 against net deferred tax assets at that date.

The following table reconciles our effective tax benefit rates for 2014 and 2013 to the federal statutory rate:

F-31

Table of Contents



	For the Year Ended December 31,
	2014		2013
Statutory tax benefit rate	35.0	%	35.0	%
Increase (decrease) in statutory tax benefit rate resulting from:
Changes in valuation allowances	59.3	%	(9.7	)%
Interest and penalties related to uncertain tax positions	37.3	%	(0.6	)%
Foreign income taxes	(3.3	)%	(1.6	)%
Permanent and other differences	0.2	%	(0.5	)%
State and other income taxes, net	(1.7	)%	(0.1	)%
Effective tax benefit rate	126.8	%	22.5	%

As of December 31, 2014 and December 31, 2013, the significant components (in thousands) of our deferred tax assets and liabilities were:



	As of December 31,
	2014			2013
Deferred tax assets:
Software development costs/fixed assets	$	3,089		$	3,304
Goodwill and intangible assets	5,824			6,702
Provision for loan loss	18,892			16,236
Equity-based compensation	452			125
Other	2,190			—
Accruals for state taxes and interest associated with unrecognized tax benefits	1,092			5,329
Federal net operating loss carry-forward	84,909			121,524
Federal credit carry-forward	4,428			1,073
Foreign net operating loss carry-forward	689			706
State tax benefits	35,617			36,354
	157,182			191,353
Valuation allowances	(34,224		)	(52,601		)
	122,958			138,752
Deferred tax liabilities:
Prepaid expenses	(317		)	(296		)
Other	—			(1,696		)
Equity in income of equity-method investees	(1,152		)	(4,796		)
Mark-to-market	(278		)	(342		)
Credit card fair value election differences	(43,438		)	(32,476		)
Deferred costs	(535		)	(332		)
Interest on debentures	(15,417		)	(18,772		)
Convertible senior notes	(10,867		)	(16,091		)
Cancellation of indebtedness income	(56,162		)	(65,949		)
	(128,166		)	(140,750		)
Net deferred tax liability	$	(5,208	)	$	(1,998	)

As noted above, deferred tax liability balances as of December 31, 2013 are net of amounts that were required at that date to be reclassified as current liabilities associated with then-uncertain tax positions.

Certain of our deferred tax assets relate to federal, foreign and state net operating losses as noted in the above table, and we have no other net operating losses or credit carry-forwards other than those noted herein. Our $34.2 million of deferred tax asset valuation allowances are primarily the result of uncertainties regarding the future realization of recorded tax benefits, principally net operating losses and credits from operations in various states and foreign jurisdictions (including U.S.

F-32

Table of Contents

territories), and it is more likely than not that these recorded tax benefits will not be utilized to reduce future state and foreign tax liabilities in these jurisdictions.

We conduct business globally, and as a result, one or more of our subsidiaries files federal, state and/or foreign income tax returns. In the normal course of business we are subject to examination by taxing authorities throughout the world, including such major jurisdictions as the U.S., the U.K., and various U.S. territories. With a few exceptions of a non-material nature, we are no longer subject to federal, state, local, or foreign income tax examinations for years prior to 2011.

Reconciliation (in thousands) of unrecognized tax benefits from the beginning to the end of 2014 and 2013 is as follows:



	2014			2013
Balance at January 1,	$	(54,775	)	$	(54,643	)
Reductions based on tax positions related to prior years	2,108			2,943
Additions based on tax positions related to prior years	(90		)	(1		)
Additions based on tax positions related to the current year	(16		)	(11		)
Interest and penalties accrued	(348		)	(3,063		)
Settlement	47,876			—
Balance at December 31,	$	(5,245	)	$	(54,775	)

Unrecognized tax benefits that, if recognized, would affect the effective tax rate totaled $5.2 million and $17.4 million at December 31, 2014 and 2013, respectively.

Absent the effects of potential agreements to extend statutes of limitations periods, the total amount of unrecognized tax benefits with respect to certain of our unrecognized tax positions will significantly change as a result of the lapse of applicable limitations periods in the next 12 months. However, it is not reasonably possible to determine which (if any) limitations periods will lapse in the next 12 months due to the effect of existing and new tax audits and tax agency determinations. Moreover, the net amount of such change cannot be reasonably estimated because our operations over the next 12 months may cause other changes to the total amount of unrecognized tax benefits. Due to the complexity of the tax rules underlying our uncertain tax position liabilities, and the unclear timing of tax audits, tax agency determinations, and other events (such as the outcomes of tax controversies involving related issues with unrelated taxpayers), we cannot establish reasonably reliable estimates for the periods in which the cash settlement of our uncertain tax position liabilities will occur.


13.	Net Income (Loss) Attributable to Controlling Interests Per Common Share

We compute net loss attributable to controlling interests per common share by dividing loss attributable to controlling interests by the weighted-average common shares (including participating securities) outstanding during the period, as discussed below. Diluted computations applicable in financial reporting periods in which we report income reflect the potential dilution to the basic income per common share computations that could occur if securities or other contracts to issue common stock were exercised, were converted into common stock or were to result in the issuance of common stock that would share in our results of operations. In performing our net loss attributable to controlling interests per common share computations, we apply accounting rules that require us to include all unvested stock awards that contain non-forfeitable rights to dividends or dividend equivalents, whether paid or unpaid, in the number of shares outstanding in our basic and diluted calculations. Common stock and certain unvested share-based payment awards earn dividends equally, and we have included all outstanding restricted stock awards in our basic and diluted calculations for current and prior periods.

F-33

Table of Contents

The following table sets forth the computations of net loss per common share (in thousands, except per share data):



	For the Twelve Months Ended December 31,
	2014		2013
Numerator:
Net income (loss) attributable to controlling interests	$	7,177	$	(17,741	)
Denominator:
Basic (including unvested share-based payment awards) (1)	13,983		13,774
Effect of dilutive stock compensation arrangements (2)	1		—
Diluted (including unvested share-based payment awards) (1)	13,984		13,774
Net income (loss) attributable to controlling interests per common share—basic	$	0.51	$	(1.29	)
Net income (loss) attributable to controlling interests per common share—diluted	$	0.51	$	(1.29	)


(1)	Shares related to unvested share-based payment awards we included in our basic and diluted share counts are 517,676 for the year ended December 31, 2014 , compared to 272,479 shares for the year ended December 31, 2013 .


(2)	The effect of dilutive stock compensation arrangements is shown only for informational purposes where we are in a net loss position. In such situations, the effect of including outstanding options and restricted stock would be anti-dilutive, and they are thus excluded from all loss period calculations.

As their effects were anti-dilutive, we included none of our stock options in our net loss per share computations for the year ended December 31, 2013.

For the years ended December 31, 2014 and 2013 , there were no shares potentially issuable and thus includible in the diluted net loss attributable to controlling interests per common share calculations under our 3.625% convertible senior notes and 5.875% convertible senior notes. However, in future reporting periods during which our closing stock price is above the respective $20.22 and $24.61 conversion prices for the 3.625% convertible senior notes and 5.875% convertible senior notes, and depending on the closing stock price at conversion, the maximum potential dilution under the conversion provisions of such notes is 22,246 and 3.8 million shares, respectively, which could be included in diluted share counts in net income per common share calculations. See Note 10, “Convertible Senior Notes,” for a further discussion of these convertible securities.

14. Stock-Based Compensation

We currently have two stock-based compensation plans, the Employee Stock Purchase Plan (the “ESPP”) and the 2014 Equity Incentive Plan (the “2014 Plan”). As of December 31, 2014 , 42,863 shares remained available for issuance under the ESPP and 727,500 shares remained available for issuance under the 2014 Plan.

Exercises and vestings under our stock-based compensation plans resulted in $971,000 in income tax-related charges to additional paid-in capital during the year ended December 31, 2014 with no such charges or benefits for the year ended December 31, 2013 .

Restricted Stock and Restricted Stock Unit Awards

During the twelve months ended December 31, 2014 and 2013 , we granted 61,868 and 441,572 shares of restricted stock (net of any forfeitures), respectively, with aggregate grant date fair values of $0.2 million and $1.5 million , respectively. When we grant restricted stock, we defer the grant date value of the restricted stock and amortize that value (net of the value of anticipated forfeitures) as compensation expense with an offsetting entry to the additional paid-in capital component of our consolidated shareholders’ equity. Our restricted stock vests over a range of 12 to 60 months (or other term as specified in the grant) and is amortized to salaries and benefits expense ratably over applicable vesting periods. As of December 31, 2014 , our unamortized deferred compensation costs associated with non-vested restricted stock awards were $0.5 million with a weighted-average remaining amortization period of 1.2 years .

F-34

Table of Contents

Stock Options

Our 2014 Plan provides that we may grant options on or shares of our common stock (and other types of equity awards) to members of our Board of Directors, employees, consultants and advisors. The exercise price per share of the options may be less than, equal to, or greater than the market price on the date the option is granted. The option period may not exceed 5 years from the date of grant. The vesting requirements for options could range from 0 to 5 years . We had expense of $423,757 and $0 related to stock option-related compensation costs during the twelve months ended December 31, 2014 and 2013 , respectively. When applicable, we recognize stock option-related compensation expense for any awards with graded vesting on a straight-line basis over the vesting period for the entire award. Information related to options outstanding is as follows:



	December 31, 2014
	Number of Shares	Weighted- Average Exercise Price		Weighted- Average of Remaining Contractual Life (in years)	Aggregate Intrinsic Value
Outstanding at December 31, 2013	—	$	—
Issued	450,000	$	2.52
Outstanding at December 31, 2014	450,000	$	2.52	4.2	$	13,500
Exercisable at December 31, 2014	15,000	$	2.27	4.3	$	1,350

As of December 31, 2014 , we had $0.2 million of unamortized deferred compensation costs associated with non-vested stock options.

F-35

Table of Contents


15.	Employee Benefit Plans

We maintain a defined contribution retirement plan (“401(k) plan”) for our U.S. employees that provides for a matching contribution by us. All full time U.S. employees are eligible to participate in the 401(k) plan. Our U.K. credit card subsidiary offers eligible employees membership in a Group Personal Pension Plan which is set up with Friends Provident. This plan is a defined contribution plan in which all permanent employees who have completed three months of continuous service are eligible to join the plan. Company matching contributions are available to U.K. employees who contribute a minimum of 3% of their salaries under our Group Personal Pension Plan and to U.S. employees who participate in our 401(k) plan. We made matching contributions under our U.S. and U.K. plans of $253,000 and $271,000 in 2014 and 2013, respectively.

Also, all employees, excluding executive officers, are eligible to participate in the ESPP to which we referred above. Under the ESPP, employees can elect to have up to 10% of their annual wages withheld to purchase our common stock up to a fair market value of $10,000 . The amounts deducted and accumulated by each participant are used to purchase shares of common stock at the end of each one-month offering period. The price of stock purchased under the ESPP is approximately 85% of the fair market value per share of our common stock on the last day of the offering period. Employees contributed $17,877 to purchase 8,746 shares of common stock in 2014 and $26,754 to purchase 8,391 shares of common stock in 2013 under the ESPP. The ESPP covers up to 150,000 shares of common stock. Our charge to expense associated with the ESPP was $14,000 and $6,000 in 2014 and 2013, respectively.


16.	Related Party Transactions

Under a shareholders’ agreement into which we entered with David G. Hanna, Frank J. Hanna, III, Richard R. House, Jr., Richard W. Gilbert and certain trusts that were Hanna affiliates, following our initial public offering (1) if one or more of the shareholders accepts a bona fide offer from a third party to purchase more than 50% of the outstanding common stock, each of the other shareholders that is a party to the agreement may elect to sell his shares to the purchaser on the same terms and conditions, and (2) if shareholders that are a party to the agreement owning more than 50% of the common stock propose to transfer all of their shares to a third party, then such transferring shareholders may require the other shareholders that are a party to the agreement to sell all of the shares owned by them to the proposed transferee on the same terms and conditions.

In June 2007 we entered into a sublease for 1,000 square feet of excess office space at our Atlanta headquarters with HBR Capital, Ltd. ("HBR"), a company co-owned by David G. Hanna and Frank J. Hanna, III. The sublease rate of $25.29 per square foot is the same as the rate that we pay on the prime lease. This sublease expires in May 2022.

In January 2013, HBR began leasing four employees from us. HBR reimburses us for the full cost of the employees, based on the amount of time devoted to HBR. In the twelve months ended December 31, 2014 , we received $202,169 of reimbursed costs from HBR associated with these leased employees.

On November 26, 2014, we and certain of our subsidiaries entered into a Loan and Security Agreement with Dove Ventures, LLC, a Nevada limited liability company (“Dove”). The agreement provides for a senior secured term loan facility in an amount of up to $40.0 million at any time outstanding, consisting of (i) an initial term loan of $20.0 million , and (ii) additional term loans available in the sole discretion of Dove and upon our request, provided that the aggregate amount of all outstanding term loans does not exceed $40.0 million . On November 26, 2014, Dove funded the initial term loan of $20.0 million . On November 28, 2014, we used the proceeds of the initial term loan to repurchase $46.1 million in aggregate principal amount of our 5.875% convertible senior notes. The aggregate purchase price for these notes was $19.1 million plus accrued interest and resulted in an aggregate gain of $12.1 million (net of the notes’ applicable share of deferred costs, which were written off in connection with the repurchase).

Our obligations under the agreement are guaranteed by certain subsidiary guarantors and secured by a pledge of certain assets of ours and the subsidiary guarantors. The loans bear interest at the rate of 9.0% per annum, payable monthly in arrears. The principal amount of these loans is payable in a single installment on November 25, 2015 . Future loans under the agreement can be used for additional repurchases of our outstanding notes and other purposes approved by Dove. The agreement includes customary affirmative and negative covenants, as well as customary representations, warranties and events of default. Subject to certain conditions, the Company can prepay the principal amounts of these loans without premium or penalty.

Dove is a limited liability company owned by three trusts. David G. Hanna is the sole shareholder and the President of the corporation that serves as the sole trustee of one of the trusts, and David G. Hanna and members of his immediate family are the beneficiaries of this trust. Frank J. Hanna, III is the sole shareholder and the President of the corporation that serves as

F-36

Table of Contents

the sole trustee of the other two trusts, and Frank J. Hanna, III and members of his immediate family are the beneficiaries of these other two trusts.

F-37

Exhibit 10.15

LOAN AND SECURITY AGREEMENT

by and among

ATLANTICUS HOLDINGS CORPORATION

as Borrower,

CERTAIN SUBSIDIARIES NAMED HEREIN,

as Guarantors,

and

DOVE VENTURES, LLC

as Lender

Dated as of November 26, 2014



		TABLE OF CONTENTS
			Page
1	DEFINITIONS AND CONSTRUCTION		1
	1.1	Definitions	1
	1.2	Accounting Terms	11
	1.3	Code	11
	1.4	Construction	11
	1.5	Schedules and Exhibits	11
2	LOAN AND TERMS OF PAYMENT		11
	2.1	Term Loans	11
	2.2	Payments	12
	2.3	Interest Rates: Rates, Payments, and Calculations	13
	2.4	Promissory Notes	13
3	CONDITIONS; TERM OF AGREEMENT		13
	3.1	Conditions Precedent to the Closing Date	13
	3.2	Term	14
	3.3	Effect of Termination	14
	3.4	Early Termination by Borrower	15
4	CREATION OF SECURITY INTEREST		15
	4.1	Grant of Security Interest	15
	4.2	Collection of Accounts, General Intangibles, and Negotiable Collateral	16
	4.3	Filing of Financing Statements; Commercial Tort Claims; Delivery of Additional Documentation Required	16
	4.4	Power of Attorney	16
	4.5	Right to Inspect	17
	4.6	Control Agreements	17
5	REPRESENTATIONS AND WARRANTIES		17
	5.1	No Encumbrances	17
	5.2	Equipment	17
	5.3	Location of Inventory and Equipment	17
	5.4	Inventory Records	18
	5.5	State of Incorporation; Location of Chief Executive Office; Organizational Identification Number; Commercial Tort Claims	18
	5.6	Due Organization and Qualification; Subsidiaries	18
	5.7	Due Authorization; No Conflict	18
	5.8	Litigation	19
	5.9	No Material Adverse Change	19
	5.1	Fraudulent Transfer	19
	5.11	Employee Benefits	19
	5.12	Environmental Condition	19
	5.13	Intellectual Property	19
	5.14	Leases	19
	5.15	Deposit Accounts and Securities Accounts	19
	5.16	Complete Disclosure	20
	5.17	Indebtedness	20
	5.18	Transaction Documents	20
	5.19	Licenses; Regulatory Approvals	20



6	AFFIRMATIVE COVENANTS		20
	6.1	Accounting System	20
	6.2	Financial Statements, Reports, Certificates	20
	6.3	Maintenance of Properties	21
	6.4	Taxes	21
	6.5	Insurance	21
	6.6	Location of Inventory and Equipment	22
	6.7	Compliance with Laws	22
	6.8	Leases	22
	6.9	Existence	22
	6.1	Environmental	22
	6.11	Disclosure Updates	22
	6.12	Formation of Subsidiaries	23
	6.13	Licenses; Regulatory Approval	23
	6.14	Retirement of Convertible Bonds	23
7	NEGATIVE COVENANTS		23
	7.1	Indebtedness	23
	7.2	Liens	24
	7.3	Restrictions on Fundamental Changes	26
	7.4	Disposal of Assets	26
	7.5	Change Name	27
	7.6	Nature of Business	27
	7.7	Prepayments and Amendments	27
	7.8	Change of Control	27
	7.9	Distributions	27
	7.1	Accounting Methods	27
	7.11	Investments	27
	7.12	Transactions with Affiliates	28
	7.13	Use of Proceeds	28
8	EVENTS OF DEFAULT		28
9	THE LENDER’S RIGHTS AND REMEDIES		30
	9.1	Rights and Remedies	30
	9.2	Remedies Cumulative	31
10	TAXES AND EXPENSES		31
11	WAIVERS; INDEMNIFICATION		32
	11.1	Demand; Protest; etc	32
	11.2	The Lender’s Liability for Collateral	32
	11.3	Indemnification	32
12	GUARANTY		33
	12.1	Guaranty; Limitation of Liability	33
	12.2	Guaranty Absolute	33
	12.3	Waivers and Acknowledgments	34
	12.4	Subrogation	35
	12.5	Subordination	36
	12.6	Continuing Guaranty; Assignments	36
13	NOTICES		37



14	CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER		37
15	GENERAL PROVISIONS		38
	15.1	Successors	38
	15.2	Amendments and Waivers	38
	15.3	No Waivers; Cumulative Remedies	38
	15.4	Effectiveness	39
	15.5	Section Headings	39
	15.6	Interpretation	39
	15.7	Severability of Provisions	39
	15.8	Counterparts; Electronic Execution	39
	15.9	Revival and Reinstatement of Obligations	39
	15.10	Integration	39

iii

EXHIBITS



Exhibit A	Form of Term Note
Exhibit B	Form of Compliance Certificate
Schedule 4.1	Commercial Tort Claims

LOAN AND SECURITY AGREEMENT

THIS LOAN AND SECURITY AGREEMENT (this “ Agreement ”), is entered into as of November 26, 2014, by and among ATLANTICUS HOLDINGS CORPORATION, a Georgia corporation, as Borrower (“ Borrower ”), certain Subsidiaries of Borrower as guarantors, and DOVE VENTURES, LLC, a Nevada limited liability company, as lender (together with any successors or assigns thereto, “Lender”).

The parties agree as follows:


1.	DEFINITIONS AND CONSTRUCTION.

1.1 Definitions . As used in this Agreement, the following terms shall have the following definitions:

“ Account ” means an account (as that term is defined in the Code).

“ Account Debtor ” means any Person who is obligated on an Account, chattel paper, or a General Intangible.

“ Additional Documents ” has the meaning set forth in Section 4.3(c) .

“ Additional Term Loan ” has the meaning set forth in Section 2.1(b) .

“A dditional Term Note ” has the meaning set forth in Section 2.1(b) .

“ Affiliate ” means, as applied to any Person, any other Person who, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. For purposes of this definition, “control” means the possession, directly or indirectly through one or more intermediaries, of the power to direct the management and policies of a Person, whether through the ownership of Stock, by contract, or otherwise; provided, however , that, for purposes of Section 7.12 hereof: (a) any Person which owns directly or indirectly 10% or more of the Stock having ordinary voting power for the election of directors or other members of the governing body of a Person or 10% or more of the partnership or other ownership interests of a Person (other than as a limited partner of such Person) shall be deemed an Affiliate of such Person, (b) each director (or comparable manager) of a Person shall be deemed to be an Affiliate of such Person, and (c) each partnership or joint venture in which a Person is a partner or joint venturer shall be deemed an Affiliate of such Person. For purposes of this Agreement, the Lender shall be deemed to not to be an Affiliate of any Credit Party.

“ Agreement ” has the meaning set forth in the preamble hereto.

“ Approved Accounting Firms ” means any of the following independent certified public accounting firms: BDO USA, LLP, any independent certified public accounting firm of nationally recognized standing or any other independent certified public accounting firm acceptable to the Lender in its reasonable discretion.

“ Authorized Person ” means any officer or employee of Borrower certified by Borrower to be an “Authorized Person”.

“ Bankruptcy Code ” means title 11 of the United States Code, as in effect from time to time.

“ Benefit Plan ” means a “defined benefit plan” (as defined in Section 3(35) of ERISA) for which Borrower or any Subsidiary or ERISA Affiliate of Borrower has been an “employer” (as defined in Section 3(5) of ERISA) within the past six years.

“ Board of Directors ” means, with respect to any Person, the Board of Directors (or comparable managers) of such Person or any committee thereof duly authorized to act on behalf of the board of directors (or comparable managers).

“ Books ” means all of each Credit Party’s now owned or hereafter acquired books and records (including all of their Records indicating, summarizing, or evidencing their assets (including the Collateral) or liabilities, all of each Credit Party’s Records relating to their business operations or financial condition, and all of their goods or General Intangibles related to such information).

“ Borrower ” has the meaning set forth in the preamble to this Agreement.

“ Business Day ” means any day that is not a Saturday, Sunday, or other day on which banks are authorized or required to close in the state of Nevada.

“ Capital Lease ” means a lease under which any Credit Party is liable that is required to be capitalized for financial reporting purposes in accordance with GAAP as in effect on the date hereof.

“ Cash Equivalents ” means (a) marketable direct obligations issued by, or unconditionally guaranteed by, the United States or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within 1 year from the date of acquisition thereof, (b) marketable direct obligations issued by any state of the United States or any political subdivision of any such state or any public instrumentality thereof maturing within 1 year from the date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either Standard & Poor’s Rating Group (“S&P”) or Moody’s Investors Service, Inc. (“Moody’s”), (c) commercial paper maturing no more than 270 days from the date of creation thereof and, at the time of acquisition, having a rating of at least A-1 from S&P or at least P-1 from Moody’s, (d) certificates of deposit or bankers’ acceptances maturing within 1 year from the date of acquisition thereof issued by any bank organized under the laws of the United States or any state thereof having at the date of acquisition thereof combined capital and surplus of not less than $250,000,000, (e) Deposit Accounts maintained with (i) any bank that satisfies the criteria described in clause (d) above, or (ii) any other bank organized under the laws of the United States or any state thereof so long as the amount maintained with any such other bank is less than or equal to $100,000 and is insured by the Federal Deposit Insurance Corporation, and (f) Investments in money market funds substantially all of whose assets are invested in the types of assets described in clauses (a) through (e) above.

“ Change of Control ” means and shall be deemed to have occurred, if (a) after the Closing Date, a majority of the seats (other than vacant seats) on the board of directors of Borrower shall at any time be occupied by persons who were not (i) members of the board of directors of Borrower on the Closing Date, (ii) nominated by the board of directors of Borrower after the Closing Date or (iii) appointed by the directors referred to in clause (a)(i) or (ii) after the Closing Date, (b) on or at any time after the Closing Date, any person or group (within the meaning of Rule 13d-5 of the Securities and Exchange Act of 1934, as in effect on the date hereof) other than a Permitted Holder shall own, directly or indirectly, beneficially or of record, shares representing more than 35% of the aggregate ordinary voting power represented by the issued and outstanding capital stock of Borrower; or (c) any event constituting a “change in control” under instruments governing any other Indebtedness in a principal amount in excess of $1,000,000. Notwithstanding the foregoing, a “person” or “group” shall not be deemed to have

beneficial ownership of securities subject to a stock purchase agreement, merger or amalgamation agreement or similar agreement (or voting or option agreement related thereto) until the consummation of the transactions contemplated by such agreement

“ Closing Date ” means the date that all conditions precedent set forth in Section 3.1 have been satisfied and the Initial Term Loan is made.

“ Code ” means the Nevada Uniform Commercial Code, as in effect from time to time; provided , however , that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection, priority, or remedies with respect to the Lender’s Lien on any Collateral is governed by the Uniform Commercial Code as enacted and in effect in a jurisdiction other than the State of Nevada, the term “Code” shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection, priority, or remedies.

“ Collateral ” means all assets and interests in assets and proceeds thereof now owned or hereafter acquired by any Credit Party in or upon which a Lien is granted hereunder or under any of the Loan Documents.

“ Collections ” means all cash, checks, notes, instruments, and other items of payment (including insurance proceeds, proceeds of cash sales, rental proceeds, and tax refunds).

“ Commercial Tort Claim Assignment ” has the meaning set forth in Section 4.3(b) .

“ Compliance Certificate ” means a certificate substantially in the form of Exhibit B delivered by the chief financial officer of Borrower to the Lender.

“ Control Agreement ” means a control agreement, in form and substance reasonably satisfactory to the Lender, executed and delivered by Borrower or one of its Subsidiaries, the Lender, and the applicable securities intermediary (with respect to a Securities Account) or bank (with respect to a Deposit Account).

“ Convertible Bonds ” means Borrower’s 5.875% Convertible Bonds due 2035.

“ Credit Parties ” means, collectively, the Borrower and the Guarantors and “ Credit Party ” means any of them.

“ Default ” means an event, condition, or default that, with the giving of notice, the passage of time, or both, would be an Event of Default.

“ Deposit Account ” means any deposit account (as that term is defined in the Code).

“ Dollars ” or “ $ ” means United States dollars.

“ Environmental Actions ” means any complaint, summons, citation, notice, directive, order, claim, litigation, investigation, judicial or administrative proceeding, judgment, letter, or other communication from any Governmental Authority, or any third party involving violations of Environmental Laws or releases of Hazardous Materials from (a) any assets, properties, or businesses of any Credit Party, or any of their predecessors in interest, (b) from adjoining properties or businesses, or (c) from or onto any facilities which received Hazardous Materials generated by any Credit Party, or any of their predecessors in interest.

“ Environmental Law ” means any applicable federal, state, provincial, foreign or local statute, law, rule, regulation, ordinance, code, binding and enforceable guideline, binding and enforceable written policy or rule of common law now or hereafter in effect and in each case as amended, or any judicial or administrative interpretation thereof, including any judicial or administrative order, consent decree or judgment, in each case, to the extent binding on any Credit Party, relating to the environment, the effect of the environment on employee health, or Hazardous Materials, including the Comprehensive Environmental Response Compensation and Liability Act, 42 USC §9601 et seq. (“CERCLA”); the Resource Conservation and Recovery Act, 42 USC §6901 et seq. (“RCRA”); the Federal Water Pollution Control Act, 33 USC § 1251 et seq ; the Toxic Substances Control Act, 15 USC § 2601 et seq ; the Clean Air Act, 42 USC § 7401 et seq. ; the Safe Drinking Water Act, 42 USC § 3803 et seq .; the Oil Pollution Act of 1990, 33 USC § 2701 et seq. ; the Emergency Planning and the Community Right-to-Know Act of 1986, 42 USC § 11001 et seq. ; the Hazardous Material Transportation Act, 49 USC § 1801 et seq. ; and the Occupational Safety and Health Act, 29 USC §651 et seq. (to the extent it regulates occupational exposure to Hazardous Materials); any state and local or foreign counterparts or equivalents, in each case as amended from time to time.

“ Environmental Liabilities and Costs ” means all liabilities, monetary obligations, losses, damages, punitive damages, consequential damages, treble damages, costs and expenses (including all reasonable fees, disbursements and expenses of counsel, experts, or consultants, and costs of investigation and feasibility studies), fines, penalties, sanctions, and interest incurred as a result of any claim or demand, or Remedial Action required, by any Governmental Authority or any third party, and which relate to any Environmental Action.

“ Environmental Lien ” means any Lien in favor of any Governmental Authority for Environmental Liabilities and Costs.

“ Equipment ” means equipment (as that term is defined in the Code), and includes machinery, machine tools, motors, furniture, furnishings, fixtures, vehicles (including motor vehicles), computer hardware, tools, parts, and goods (other than consumer goods, farm products, or Inventory), wherever located, including all attachments, accessories, accessions, replacements, substitutions, additions, and improvements to any of the foregoing.

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute thereto.

“ ERISA Affiliate ” means (a) any Person subject to ERISA whose employees are treated as employed by the same employer as the employees of any Credit Party under IRC Section 414(b), (b) any trade or business subject to ERISA whose employees are treated as employed by the same employer as the employees of any Credit Party under IRC Section 414(c), (c) solely for purposes of Section 302 of ERISA and Section 412 of the IRC, any organization subject to ERISA that is a member of an affiliated service group of which any Credit Party is a member under IRC Section 414(m), or (d) solely for purposes of Section 302 of ERISA and Section 412 of the IRC, any Person subject to ERISA that is a party to an arrangement with any Credit Party and whose employees are aggregated with the employees of any Credit Party under IRC Section 414(o).

“ Event of Default ” has the meaning set forth in Section 8 .

“ Exchange Act ” means the Securities Exchange Act of 1934, as in effect from time to time.

“ Excluded Stock ” means the Stock of (a) Fortiva Funding III, LLC; (b) Fortiva Funding IV, LLC; (c) Atlanticus Funding II, LLC; (d) Atlanticus Funding IV, LLC; (e) CreditLogistics India Private Limited; (f) CCR Reinsurance Ltd.; and (g) Stock of any Subsidiary not organized or formed under the laws of the United States or of any State thereof, to the extent such Stock exceeds 65% of the outstanding voting Stock of such Subsidiary.

“ Excluded Subsidiaries ” shall mean any Subsidiary of Borrower that is not a Guarantor.

“ Extraordinary Receipts ” means any Collections received by Borrower or any of its Subsidiaries not in the ordinary course of business, including, (a) foreign, United States, state or local tax refunds, (b) pension plan reversions, (c) proceeds of insurance, (d) judgments, proceeds of settlements or other consideration of any kind in connection with any cause of action, (e) condemnation awards (and payments in lieu thereof), (f) indemnity payments, and (g) any purchase price adjustment received in connection with any purchase agreement.

“ Facility Amount ” means up to $40,000,000.

“ Funding Date ” means the date that an Additional Term Loan is made in accordance with Section 2.1(c) .

“ GAAP ” means generally accepted accounting principles as in effect from time to time in the United States, consistently applied.

“ General Intangibles ” means general intangibles (as that term is defined in the Code), including payment intangibles, contract rights, rights to payment, rights arising under common law, statutes, or regulations, choses or things in action, goodwill, patents, trade names, trade secrets, trademarks, servicemarks, copyrights, blueprints, drawings, purchase orders, customer lists, monies due or recoverable from pension funds, route lists, rights to payment and other rights under any royalty or licensing agreements, infringement claims, computer programs, information contained on computer disks or tapes, software, literature, reports, catalogs, insurance premium rebates, tax refunds, and tax refund claims and any other personal property other than Accounts, Deposit Accounts, goods, Investment Property, and Negotiable Collateral.

“ Governing Documents ” means, with respect to any Person, the certificate or articles of incorporation, by-laws, or other organizational documents of such Person.

“ Governmental Authority ” means any federal, state, local, or other governmental or administrative body, instrumentality, board, department, or agency or any court, tribunal, administrative hearing body, arbitration panel, commission, or other similar dispute-resolving panel or body.

“ Guarantors ” means, collectively, CIAC Corporation, a Nevada corporation, Atlanticus Services Corporation, a Georgia corporation, Wilton Acquisitions, LLC, a Georgia limited liability company, CC Serve Corporation, a Georgia corporation, Access Financing, LLC, a Georgia limited liability company, Mobile Tech Investments, LLC, a Georgia limited liability company, and ACC Holdings, LLC, a Georgia limited liability company, and “ Guarantor ” means any one of them.

“ Hazardous Materials ” means (a) substances that are defined or listed in, or otherwise classified pursuant to, any applicable laws or regulations as “hazardous substances,” “hazardous materials,” “hazardous wastes,” “toxic substances,” or any other formulation intended to define, list, or classify substances by reason of deleterious properties such as ignitability, corrosivity, reactivity,

carcinogenicity, reproductive toxicity, or “EP toxicity”, (b) oil, petroleum, or petroleum derived substances, natural gas, natural gas liquids, synthetic gas, drilling fluids, produced waters, and other wastes associated with the exploration, development, or production of crude oil, natural gas, or geothermal resources, (c) any flammable substances or explosives or any radioactive materials, and (d) asbestos in any form or electrical equipment that contains any oil or dielectric fluid containing levels of polychlorinated biphenyls in excess of 50 parts per million.

“ Hedge Agreement ” means any and all agreements, or documents now existing or hereafter entered into by Borrower or any of its Subsidiaries that provide for an interest rate, credit, commodity or equity swap, cap, floor, collar, forward foreign exchange transaction, currency swap, cross currency rate swap, currency option, or any combination of, or option with respect to, these or similar transactions, for the purpose of hedging Borrower’s or any of its Subsidiaries’ exposure to fluctuations in interest or exchange rates, loan, credit exchange, security, or currency valuations or commodity prices.

“ Indebtedness ” means (a) all obligations for borrowed money, (b) all obligations evidenced by bonds, debentures, notes, or other similar instruments and all reimbursement or other obligations in respect of letters of credit, bankers acceptances, interest rate swaps, or other financial products, (c) all obligations as a lessee under Capital Leases, (d) all obligations or liabilities of others secured by a Lien on any asset of a Person or its Subsidiaries, irrespective of whether such obligation or liability is assumed, (e) all obligations to pay the deferred purchase price of assets (other than trade payables incurred in the ordinary course of business and repayable in accordance with customary trade practices), (f) all obligations owing under Hedge Agreements, and (g) any obligation guaranteeing or intended to guarantee (whether directly or indirectly guaranteed, endorsed, co-made, discounted, or sold with recourse) any obligation of any other Person that constitutes Indebtedness under any of clauses (a) through (f) above.

“ Indemnified Liabilities ” has the meaning set forth in Section 11.3 .

“ Indemnified Person ” has the meaning set forth in Section 11.3 .

“ Initial Term Loan ” has the meaning set forth in Section 2.1(a) .

“ Initial Term Note ” has the meaning set forth in Section 2.1(a) .

“ Insolvency Proceeding ” means any proceeding commenced by or against any Person under any provision of the Bankruptcy Code or under any other state or federal bankruptcy or insolvency law, assignments for the benefit of creditors, formal or informal moratoria, compositions, extensions generally with creditors, or proceedings seeking reorganization, arrangement, or other similar relief.

“ Intangible Assets ” means, with respect to any Person, that portion of the book value of all of such Person’s assets that would be treated as intangibles under GAAP.

“ Inventory ” means inventory (as that term is defined in the Code).

“ Investment ” means, with respect to any Person, any investment by such Person in any other Person (including Affiliates) in the form of loans, guarantees, advances, or capital contributions (excluding (a) commission, travel, and similar advances to officers and employees of such Person made in the ordinary course of business, and (b) bona fide Accounts arising in the ordinary course of business consistent with past practice), purchases or other acquisitions of Indebtedness, Stock, or all or substantially all of the assets of such other Person (or of any division or business line of such other Person), and any other items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP.

“ Investment Property ” means investment property (as that term is defined in the Code).

“ IRC ” means the Internal Revenue Code of 1986, as in effect from time to time.

“ Lender ” has the meaning set forth in the preamble to this Agreement; provided , however , in the event of a sale by the Lender of less than all of the Term Loans to any other Person, “Lender” means all holders of the Term Loans in the aggregate, or, where the context suggests otherwise in this Agreement the Person serving in the role of “agent” or “lead lender” as designated by the holders of a majority of the principal amount of the Term Loans.

“ Lender Expenses ” means all (a) costs or expenses (including taxes, and insurance premiums) required to be paid by a Credit Party under any of the Loan Documents that are paid, advanced, or incurred by the Lender, (b) fees or charges paid or incurred by the Lender in connection with the Lender’s transactions with Borrower or their Subsidiaries, including, fees or charges for photocopying, notarization, couriers and messengers, telecommunication, public record searches (including tax lien, litigation, and UCC searches), filing, recording, publication, appraisal or business valuations, real estate surveys, real estate title policies and endorsements, environmental audits and greens fees, (c) costs and expenses incurred by Lender in the disbursement of funds to or for the account of Borrower (by wire transfer or otherwise), (d) charges paid or incurred by Lender resulting from the dishonor of checks, (e) reasonable costs and expenses paid or incurred by the Lender to correct any default or enforce any provision of the Loan Documents, or in gaining possession of, maintaining, handling, preserving, storing, shipping, selling, preparing for sale, or advertising to sell the Collateral, or any portion thereof, irrespective of whether a sale is consummated, (f) audit fees and expenses of the Lender related to audit examinations of the Books up to the amount of any limitation contained in this Agreement, (g) reasonable costs and expenses of third party claims or any other suit paid or incurred by the Lender in enforcing or defending the Loan Documents or in connection with the transactions contemplated by the Loan Documents or the Lender’s relationship with Borrower or any Subsidiary of Borrower, (h) the Lender’s reasonable costs and expenses (including attorneys fees) incurred in advising, structuring, drafting, reviewing, administering, syndicating, or amending the Loan Documents, and (i) the Lender’s reasonable costs and expenses (including attorneys, accountants, consultants, and other advisors fees and expenses) incurred in terminating, enforcing (including attorneys, accountants, consultants, and other advisors fees and expenses incurred in connection with a “workout,” a “restructuring,” or an Insolvency Proceeding concerning Borrower or any Subsidiary of Borrower or in exercising rights or remedies under the Loan Documents), or defending the Loan Documents, irrespective of whether suit is brought, or in taking any Remedial Action concerning the Collateral.

“ Lender-Related Person ” means the Lender, together with the Lender’s Affiliates, officers, directors, employees, attorneys, and agents.

“ Lender’s Liens ” means the Liens granted by Borrower or its Subsidiaries to the Lender under this Agreement or the other Loan Documents.

“ Lien ” means any interest in an asset securing an obligation owed to, or a claim by, any Person other than the owner of the asset, irrespective of whether (a) such interest is based on the common law, statute, or contract, (b) such interest is recorded or perfected, and (c) such interest is contingent upon the occurrence of some future event or events or the existence of some future circumstance or circumstances. Without limiting the generality of the foregoing, the term “Lien” includes the lien or security interest arising from a mortgage, deed of trust, encumbrance, pledge, hypothecation, assignment, deposit arrangement, security agreement, conditional sale or trust receipt, or from a lease, consignment, or bailment for security purposes and also includes reservations, exceptions, encroachments, easements,

rights-of-way, covenants, conditions, restrictions, leases, and other title exceptions and encumbrances affecting Real Property.

“ Loan Documents ” means this Agreement, the Control Agreements, the Pledge Agreement, any note or notes executed by any Credit Party in connection with this Agreement and payable to the Lender, and any other agreement entered into, now or in the future, by any Credit Party and the Lender in connection with this Agreement.

“ Material Adverse Change ” means (a) a material adverse change in the business, operations, results of operations, assets, liabilities or financial condition of Borrower and its Subsidiaries, taken as a whole, (b) a material impairment of Borrower’s and its Subsidiaries’, taken as a whole, ability to perform its obligations generally under the Loan Documents to which it is a party or of the Lender’s ability to enforce the Obligations or realize upon the Collateral, or (c) a material impairment of the enforceability or priority of the Lender’s Liens with respect to the Collateral as a result of an action or failure to act on the part of a Credit Party.

“ Negotiable Collateral ” means letters of credit, letter of credit rights, instruments, promissory notes, drafts, documents, and chattel paper (including electronic chattel paper and tangible chattel paper).

“ Net Cash Proceeds ” means, with respect to any sale or disposition by any Person or any Subsidiary thereof of property or assets, the amount of Collections received (directly or indirectly) from time to time (whether as initial consideration or through the payment of deferred consideration) by or on behalf of such Person or such Subsidiary, in connection therewith after deducting therefrom only (i) the amount of any Indebtedness secured by any Permitted Lien on any asset (other than (A) Indebtedness owing to the Lender under this Agreement or the other Loan Documents and (B) Indebtedness assumed by the purchaser of such asset) which is required to be, and is, repaid in connection with such disposition, (ii) reasonable direct costs and direct expenses related thereto incurred by such Person or such Subsidiary in connection therewith (including reasonable legal expenses, accounting expenses, investment banking services, and sales commissions), and (iii) taxes paid or payable to any taxing authorities by such Person or such Subsidiary (or by a direct or indirect member or shareholder of such Person or Subsidiary) in connection therewith, in each case to the extent, but only to the extent, that the amounts so deducted are, at the time of receipt of such cash, actually paid or payable and are properly and directly attributable to such transaction. For the avoidance of doubt, taxes properly and directly attributable to such transaction do not include any income or franchise taxes.

“ Obligations ” means the Initial Term Loan, each Additional Term Loan, if any, principal, interest (including any interest that, but for the commencement of an Insolvency Proceeding, would have accrued), premiums, liabilities (including all amounts charged to Borrower’s loan account pursuant hereto), obligations (including indemnification obligations), fees, charges, costs, Lender Expenses (including any fees or expenses that, but for the commencement of an Insolvency Proceeding, would have accrued), lease payments, guaranties, covenants, and duties of any kind and description owing by the Credit Parties to the Lender pursuant to or evidenced by the Loan Documents and irrespective of whether for the payment of money, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, and including all interest not paid when due and all Lender Expenses that any Credit Party is required to pay or reimburse by the Loan Documents, by law, or otherwise. Any reference in this Agreement or in the Loan Documents to the Obligations shall include all extensions, modifications, renewals, or alterations thereof, both prior and subsequent to any Insolvency Proceeding.

“ Permitted Dispositions ” means (a) (i) sales or other dispositions of Equipment that is substantially worn, damaged, or obsolete in the ordinary course of business and (ii) sales or other dispositions of other property or assets for cash in an aggregate amount not less than the fair market value of such property or assets, provided that the Net Cash Proceeds of such Dispositions do not exceed $1,000,000 in the aggregate in any twelve-month period, (b) sales of Inventory to buyers in the ordinary course of business, (c) the use or transfer of money or Cash Equivalents in a manner that is not prohibited by the terms of this Agreement or the other Loan Documents, (d) the licensing, on a non-exclusive basis, of patents, trademarks, copyrights, and other intellectual property rights in the ordinary course of business, (e) dispositions in the ordinary course of business of defaulted Accounts and their underlying receivables in connection with the compromise, settlement or collection thereof, and (f) sales, transfers, or dispositions of property or assets permitted by Section 7.11 hereof.

“ Permitted Holder ” mean, collectively, David G. Hanna, Frank J. Hanna III, members of their immediate families, their respective estate, heirs and legatees, and the legal representatives of any of the foregoing, including, without limitation, the trustee of any trust of which one or more of the foregoing are the sole beneficiaries.

“ Permitted Investments ” means (a) Investments in cash and Cash Equivalents, (b) Investments in negotiable instruments for collection, (c) advances made in connection with purchases of goods or services in the ordinary course of business, (d) Investments received in settlement of amounts due to Borrower or any Subsidiary of Borrower effected in the ordinary course of business or owing to Borrower or any Subsidiary of Borrower as a result of Insolvency Proceedings involving an Account Debtor or upon the foreclosure or enforcement of any Lien in favor of Borrower or any Subsidiary of Borrower, (e) Investments by any Credit Party in any other Credit Party, provided that the proceeds of such Investments in the hands of the investee Credit Party shall not (except for Permitted Liens) be encumbered to the benefit of any creditor other than the Lender, and (f) Investments arising under Hedge Agreements so long as such hedging arrangements are used in the ordinary course of business operations as a risk management strategy or to hedge against changes resulting from market operations and not as a means to speculate for investment purposes on trends and shifts in financial or commodities markets.

“ Permitted Liens ” means Liens permitted by Section 7.2 .

“ Permitted Protest ” means the right of Borrower or any of its Subsidiaries to protest any Lien (other than any Lien that secures the Obligations), taxes (other than payroll taxes or taxes that are the subject of a United States federal tax lien), or rental payment, provided that (a) a reserve with respect to such obligation is established on the Books in such amount as is required under GAAP, (b) any such protest is instituted promptly and prosecuted diligently by Borrower or any of its Subsidiaries, as applicable, in good faith, and (c) the Lender is reasonably satisfied that, while any such protest is pending, there will be no impairment of the enforceability, validity, or priority of any of the Lender’s Liens.

“ Person ” means natural persons, corporations, limited liability companies, limited partnerships, general partnerships, limited liability partnerships, joint ventures, trusts, land trusts, business trusts, or other organizations, irrespective of whether they are legal entities, and governments and agencies and political subdivisions thereof.

“ Pledge Agreement ” means one or more stock pledge agreements executed and delivered by one or more of the Credit Parties in favor of the Lender, in each case, in form and substance reasonably satisfactory to the Lender.

“ Purchase Money Indebtedness ” means Indebtedness (other than the Obligations, but including obligations under Capital Leases), incurred at the time of, or within 20 days after, the acquisition of any fixed assets for the purpose of financing all or any part of the acquisition cost thereof.

“ Real Property ” means any estates or interests in real property now owned or hereafter acquired by any Credit Party and the improvements thereto.

“ Record ” means information that is inscribed on a tangible medium or which is stored in an electronic or other medium and is retrievable in perceivable form.

“ Remedial Action ” means all actions taken to (a) clean up, remove, remediate, contain, treat, monitor, assess, evaluate, or in any way address Hazardous Materials in the indoor or outdoor environment, (b) prevent or minimize a release or threatened release of Hazardous Materials so they do not migrate or endanger or threaten to endanger public health or welfare or the indoor or outdoor environment, (c) restore or reclaim natural resources or the environment, (d) perform any pre-remedial studies, investigations, or post-remedial operation and maintenance activities, or (e) conduct any other actions with respect to Hazardous Materials authorized by Environmental Laws.

“ Reporting Addendum ” has the meaning given such term in Section 3.1(c)(vi) .

“ SEC ” means the United States Securities and Exchange Commission and any successor thereto.

“ Securities Account ” means a “securities account” as that term is defined in the Code.

“ Solvent ” means, with respect to any Person on a particular date, that, at fair valuations, the sum of such Person’s assets is greater than all of such Person’s debts.

“ Stock ” means all shares, options, warrants, interests, participations, membership interests, or other equivalents (regardless of how designated) of or in a Person, whether voting or nonvoting, including common stock, preferred stock, or any other “equity security” (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the SEC under the Exchange Act).

“ Subsidiary ” of a Person means a corporation, partnership, limited liability company, or other entity in which that Person directly or indirectly owns or controls the shares of Stock having ordinary voting power to elect a majority of the Board of Directors (or appoint other comparable managers) of such corporation, partnership, limited liability company, or other entity.

“ Supporting Obligation ” means a letter-of-credit right or secondary obligation that supports the payment or performance of an Account, chattel paper, document, General Intangible, instrument, or Investment Property.

“ Term Loan ” has the meaning set forth in Section 2.1(b) .

“ Term Note ” has the meaning set forth in Section 2.1(b) .

“ Termination Date ” means the earliest of (a) December 31, 2014, if the Closing Date has not occurred on or before such date, (b) the prepayment of the Term Loans in full, (c) the date, if any, of the acceleration of the maturity of the Term Loans pursuant to Section 9.1(a) and (d) that date which is 364 days after the Closing Date.

“ Transaction Documents ” means, collectively, all agreements, documents and instruments executed and/or delivered in connection therewith; provided, that the term “Transaction Documents” as used herein shall not include any of the Loan Documents.

“ United States ” means the United States of America.

“ Voidable Transfer ” has the meaning set forth in Section 15.9 .

1.2 Accounting Terms . All accounting terms not specifically defined herein shall be construed in accordance with GAAP. When used herein, the term “financial statements” shall include the notes and schedules thereto.

1.3 Code . Any terms used in this Agreement that are defined in the Code shall be construed and defined as set forth in the Code unless otherwise defined herein, provided, however, that to the extent that the Code is used to define any term herein and such term is defined differently in different Articles of the Code, the definition of such term contained in Article 9 shall govern.

1.4 Construction . Unless the context of this Agreement or any other Loan Document clearly requires otherwise, references to the plural include the singular, references to the singular include the plural, the terms “includes” and “including” are not limiting, and the term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or.” The words “hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Agreement or any other Loan Document refer to this Agreement or such other Loan Document, as the case may be, as a whole and not to any particular provision of this Agreement or such other Loan Document, as the case may be. Section, subsection, clause, schedule, and exhibit references herein are to this Agreement unless otherwise specified. Any reference in this Agreement or in the other Loan Documents to any agreement, instrument, or document shall include all alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements, thereto and thereof, as applicable (subject to any restrictions on such alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements set forth herein). Any reference herein to the satisfaction or repayment in full of the Obligations shall mean the repayment in full in cash (or cash collateralization in accordance with the terms hereof) of all Obligations other than contingent indemnification Obligations. Any reference herein to any Person shall be construed to include such Person’s successors and assigns. Any requirement of a writing contained herein or in the other Loan Documents shall be satisfied by the transmission of a Record and any Record transmitted shall constitute a representation and warranty as to the accuracy and completeness of the information contained therein.

1.5 Schedules and Exhibits . All of the schedules and exhibits attached to this Agreement shall be deemed incorporated herein by reference.

2. LOAN AND TERMS OF PAYMENT.

2.1 Term Loans .

(a) Initial Term Loan . Subject to the terms and conditions of this Agreement, on the Closing Date Lender shall make a term loan (the “ Initial Term Loan ”) to Borrower in a principal amount of $20,000,000. The Term Loan shall be evidenced by one or more promissory notes aggregating to the principal amount of the Term Loan and substantially in the form of Exhibit A attached hereto and incorporated herein by reference (together with all amendments, consolidations, modifications, renewals

and supplements thereto the “ Initial Term Note ”). The Term Loan shall be due and payable in a single installment, payable on the Termination Date.

(b) Additional Term Loans . At the request of the Borrower, the Lender, in the exercise of its sole and absolute discretion, may agree to make additional term loans (each an “ Additional Term Loan ” and, together with the Initial Term Loan, the “ Term Loans ”), which additional Term Loans shall be governed by the terms of this Agreement in the event the Lender and the Borrower so agree under the terms of any Note evidencing such Additional Term Loans (together with the Initial Term Note and with all amendments, consolidations, modifications, renewals and supplements thereto, each an “ Additional Term Note ” and, together with the Initial Term Note, collectively the “ Term Notes ”). Such Additional Term Loans shall be evidenced by such other Loan Documents as may be agreed upon by such Bank and the Borrower from time to time. Any such Additional Term Loan shall be in a minimum principal amount of $5,000,000 and in an integral multiple of $1,000,000.

(c) Borrowing Procedure . Borrower may request that a Term Loan be made hereunder upon an irrevocable written request by an Authorized Person delivered to Lender (i) in the case of the Initial Term Loan, not later than 9:00 a.m. (Atlanta time) on the Closing Date and (ii) in the case of any Additional Term Loan, not later than ten (10) days prior to the Business Day that is the requested Funding Date for such Additional Term Loan. Such Notice shall specify the principal amount of the Term Loan being requested (which, when aggregate with any other outstanding Term Loans, may not be in excess of the Facility Amount), the proposed Funding Date for such Loan and, in the case of any Additional Term Loan, the proposed use of the proceeds of such Additional Term Loan. Lender shall make the proceeds of the Initial Term Loan available to Borrower on the Closing Date by transferring immediately available funds equal to the proceeds thereof to such account as Borrower shall specify to Lender. In the event that Lender elects in its sole and absolute discretion to make an Additional Term Loan, Lender shall make the proceeds of such Additional Term Loan available to Borrower on the Funding Date therefor by transferring immediately available funds equal to such proceeds thereof to such account as Borrower shall specify to Lender and that Lender shall approve.

(d) Termination . Notwithstanding the foregoing, the outstanding unpaid principal balance and all accrued and unpaid interest under all Term Loans shall be due and payable on the Termination Date. All amounts outstanding under each Term Loan shall constitute Obligations.

2.2 Payments .

(a) Payments by Borrower . Except as otherwise expressly provided herein, all payments by Borrower shall be made to such account as Lender as Lender shall specify and shall be made in immediately available funds, no later than 2:00 p.m. (Atlanta time) on the date specified herein. Any payment received by Lender later than 2:00 p.m. (Atlanta time), shall be deemed to have been received on the following Business Day and any applicable interest or fee shall continue to accrue until such following Business Day.

(b) Optional Prepayments . Borrower may prepay, without premium or penalty, the principal amount of the Term Loans, provided that : no Default or Event of Default shall have occurred and be continuing or would result therefrom, (i) Borrower shall provide Lender not less than 5 Business Days prior written notice of such prepayment, and (ii) each such prepayment shall be in a minimum amount of $500,000 and integral multiples of $500,000 in excess thereof, or, if less, an amount equal to the remaining aggregate principal balance of the Term Loans. Each prepayment pursuant to this Section 2.2(b) shall be applied in accordance with Section 2.2(d) .

(i) Immediately upon any voluntary or involuntary sale or disposition by any Credit Party of property or assets (other than sales or dispositions which qualify as Permitted Dispositions), Borrower shall prepay the outstanding Obligations in accordance with clause (d) below in an amount equal to 100% of the Net Cash Proceeds received by such Person in connection with such sales

or dispositions. Nothing contained in this subclause (i) shall permit Borrower or any of its Subsidiaries to sell or otherwise dispose of any property or assets other than in accordance with Section 7.4 .

(ii) Upon the incurrence or issuance by Borrower or any of its Subsidiaries of any Indebtedness (other than Indebtedness expressly permitted to be incurred or issued pursuant to clauses (a) through (m) of Section 7.1 ), Borrower shall prepay the outstanding Obligations in accordance with clause (d) below in an amount equal to 100% of all Net Cash Proceeds received therefrom immediately upon receipt thereof by Borrower or such Subsidiary.

(iii) Immediately upon the receipt by Borrower or any of its Subsidiaries of any Extraordinary Receipts in any fiscal year, Borrower shall prepay the outstanding Obligations in accordance with clause (d) below in an amount equal to 50% of such Extraordinary Receipts, net of (A) any reasonable direct expenses incurred in collecting such Extraordinary Receipts and (B) claims of other of lenders whose Indebtedness has a claim to such Extraordinary Receipts that has priority over Lender.

(d) Application of Payments . All payments or prepayments made on the Term Loans shall be applied first to the outstanding accrued and unpaid interest thereon and second to the principal balances of the Term Loans on a pro rata basis.

2.3 Interest Rates: Rates, Payments, and Calculations .

(a) Interest Rates . Except as provided in clause (b) below, the Term Loans and all other Obligations shall bear interest at a rate equal to nine percent (9%) per annum.

(b) Default Rate . Upon the occurrence and during the continuation of an Event of Default (and at the election of Lender), all Obligations shall bear interest on the outstanding principal balance thereof at a per annum rate equal to 5 percentage points above the per annum rate otherwise applicable hereunder, and

(c) Payment . Interest on the Obligations shall be payable on the earliest of (i) the first day of each month for the preceding month, (ii) the occurrence of an Event of Default in consequence of which the Lender has elected to accelerate the maturity of all or any portion of the Obligations, or (iii) termination of this Agreement pursuant to the terms hereof. All fees payable hereunder shall be payable when set forth herein or otherwise on demand. Any interest not paid when due shall constitute an Event of Default under Section 8.2 .

(d) Computation . All interest and fees chargeable under the Loan Documents shall be computed on the basis of a 360 day year for the actual number of days elapsed.

(e) Intent to Limit Charges to Maximum Lawful Rate . In no event shall the interest rate or rates payable under this Agreement, plus any other amounts paid in connection herewith, exceed the highest rate permissible under any law that a court of competent jurisdiction shall, in a final determination, deem applicable. Borrower and the Lender, in executing and delivering this Agreement, intend legally to agree upon the rate or rates of interest and manner of payment stated within it; provided , however , that, anything contained herein to the contrary notwithstanding, if said rate or rates of interest or manner of payment exceeds the maximum allowable under applicable law, then, ipso facto, as of the date of this Agreement, Borrower is and shall be liable only for the payment of such maximum as allowed by law, and payment received from Borrower in excess of such legal maximum, whenever received, shall be applied to reduce the principal balance of the Obligations to the extent of such excess.

2.4 Promissory Notes . Borrower agrees, at the request of the Lender, to execute and deliver to Lender a promissory note or notes, in conformity with the terms of this Agreement, in registered form to evidence any Term Loan, in form and substance reasonably satisfactory to Lender, payable to the order of Lender and otherwise duly completed.

3. CONDITIONS; TERM OF AGREEMENT.

3.1 Conditions Precedent to the Closing Date . The obligation of the Lender to make the Initial Term Loan shall be subject to the following conditions precedent:

(a) this Agreement has been duly executed and delivered by the Borrower, each Guarantor and the Lender;

(b) the Closing Date shall occur on or before December 31, 2014;

(c) Lender shall have received each of the following documents, in form and substance reasonably satisfactory to the Lender, duly executed (to the extent applicable), and each such document shall be in full force and effect:

(i) the Pledge Agreement, together with all certificates representing the shares of Stock pledged thereunder, as well as Stock powers with respect thereto endorsed in blank;

(ii) one or more Term Notes aggregating to the principal amount of the Initial Term Loan;

(iii) a certificate from the Secretary of each Credit Party (A) attesting to the resolutions of such Credit Party’s Board of Directors authorizing its execution, delivery, and performance of this Agreement and the other Loan Documents to which such Credit Party is a party, (B) authorizing specific officers of such Credit Party to execute the same, and (C) attesting to the incumbency and signatures of such specific officers of such Credit Party;

(iv) copies of each Credit Party’s Governing Documents, as amended, modified, or supplemented to the Funding Date, certified by the Secretary of such Credit Party;

(v) a certificate of status with respect to Borrower, dated not earlier than 10 days prior to the Closing Date, such certificate to be issued by the appropriate officer of the jurisdiction of organization of Borrower, which certificate shall indicate that such Borrower is in good standing in such jurisdiction; and

(vi) a reporting addendum (the “ Reporting Addendum ”) containing the information required by Sections 5.3 , 5.5(a) , 5.5(b) , 5.6(b) , 5.8 , 5.12 , 5.15 , 5.17 and 7.1.

(d) The Lender shall have received a certificate of insurance, together with the endorsements thereto, as are required by Section 6.5 , the form and substance of which shall be satisfactory to The Lender;

(e) Borrower shall have paid all Lender Expenses incurred in connection with the transactions evidenced by this Agreement;

(f) Borrower and each of its Subsidiaries shall have received all licenses, approvals or evidence of other actions required by any Governmental Authority in connection with the execution and delivery by Borrower or its Subsidiaries of the Loan Document or with the consummation of the transactions contemplated thereby;

(g) the representations and warranties contained in this Agreement and the other Loan Documents shall be true and correct in all material respects on and as of the date of such extension of credit, as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date);

(h) no Default or Event of Default shall have occurred and be continuing on the date of such extension of credit, nor shall either result from the making thereof;

(i) no injunction, writ, restraining order, or other order of any nature restricting or prohibiting, directly or indirectly, the extending of such credit shall have been issued and remain in force by any Governmental Authority against any Credit Party, the Lender, or any of their Affiliates; and

(j) no Material Adverse Change shall have occurred.

3.2 Term . This Agreement shall continue in full force until the later to occur of (a) the termination of any and all obligations of the Lender to fund the Initial Term Loan hereunder and (b) the repayment in full of the Obligations. The foregoing notwithstanding, the Lender shall have the right to terminate this Agreement, and any obligation to make the Initial Term Loan, prior to the Funding Date immediately and without notice upon the occurrence and during the continuation of an Event of Default.

3.3 Effect of Termination . On the date of termination of this Agreement, all Obligations immediately shall become due and payable without notice or demand to be held by the Lender. No

termination of this Agreement, however, shall relieve or discharge Borrower or its Subsidiaries of their duties, Obligations, or covenants hereunder or under any other Loan Document and the Lender’s Liens in the Collateral shall remain in effect until all Obligations have been paid in full and any obligation of the Lender to fund the Initial Term Loan has been terminated. When this Agreement has been terminated and all of the Obligations have been paid in full and any and all obligations of the Lender to fund any loans hereunder have been terminated, the Lender will, at Borrower’s sole expense, execute and deliver any termination statements, lien releases, mortgage releases, re-assignments of trademarks, discharges of security interests, and other similar discharge or release documents (and, if applicable, in recordable form) as are reasonably necessary to release, as of record, the Lender’s Liens and all notices of security interests and liens previously filed by the Lender with respect to the Obligations.

3.4 Early Termination by Borrower . Borrower has the option, at any time upon 15 days prior written notice by Borrower to the Lender, to terminate this Agreement by paying to the Lender, in cash, the Obligations, in full. If Borrower has sent a notice of termination pursuant to the provisions of this Section, then Borrower shall be obligated to repay the Obligations, in full, on the date set forth as the date of termination of this Agreement in such notice.

4. CREATION OF SECURITY INTEREST.

4.1 Grant of Security Interest . In order to secure prompt repayment of any and all of the Obligations in accordance with the terms and conditions of the Loan Documents and in order to secure prompt performance by the Credit Parties of each of their covenants and duties under the Loan Documents, each Credit Party hereby grants to the Lender a continuing security interest in all of its right, title, and interest in and to each the following property, whether currently existing, hereafter acquired or arising and wheresoever located (collectively, the “Collateral”):

(a) all of its Accounts,

(b) all of its Books,

(d) all of its Deposit Accounts,

(e) all of its Equipment,

(f) all of its General Intangibles,

(g) all of its Inventory,

(h) all of its Investment Property (including all of its securities and Securities Accounts),

(i) all of its Negotiable Collateral,

(j) all of its Supporting Obligations,

(k) money or other assets of each such Credit Party that now or hereafter come into the possession, custody, or control of the Lender, and

(l) the proceeds and products, whether tangible or intangible, of any of the foregoing, including proceeds of insurance covering any or all of the foregoing, and any and all Accounts, Books, Deposit Accounts, Equipment, General Intangibles, Inventory, Investment Property, Negotiable Collateral, Real Property, Supporting Obligations, money, or other tangible or intangible property resulting from the sale, exchange, collection, or other disposition of any of the foregoing, or any portion thereof or interest therein, and the proceeds thereof.

Notwithstanding anything herein to the contrary, in no event shall the security interest granted hereunder attach to any Excluded Stock and the term “Investment Property” shall expressly exclude the Excluded Stock.

The Lender’s Liens in and to the Collateral shall attach to all Collateral without further act on the part of the Lender or any Credit Party. Anything contained in this Agreement or any other Loan Document to the contrary notwithstanding, except for Permitted Dispositions, Borrower and its Subsidiaries have no authority, express or implied, to dispose of any item or portion of the Collateral.

4.2 Collection of Accounts, General Intangibles, and Negotiable Collateral . At any time after the occurrence and during the continuation of an Event of Default, the Lender or the Lender’s designee may (a) notify Account Debtors of the Credit Parties that the Credit Parties’ Accounts, chattel paper, or General Intangibles have been assigned to the Lender or that the Lender has a security interest therein, or (b) collect the Credit Parties’ Accounts, chattel paper, or General Intangibles directly and charge the collection costs and expenses to the loan account.

4.3 Filing of Financing Statements; Commercial Tort Claims; Delivery of Additional Documentation Required .

(a) The Credit Parties authorize the Lender to file any financing statement necessary or desirable to effectuate the transactions contemplated by the Loan Documents, and any continuation statement or amendment with respect thereto (including without limitation any financing statements that (i) indicate the Collateral (A) as all assets of such Credit Party or words of similar effect, regardless of whether any particular asset of such Credit Party falls within the scope of Article 9 of the Code or whether any portion of the assets of such Credit Party constitute part of the Collateral, or (B) as being of an equal or lesser scope or with greater detail, and (ii) contain any other information required by part 5 of Article 9 of the Code for the sufficiency or filing office acceptance of any financing statement or amendment, including (x) whether such Credit Party is an organization, the type of organization and any organization identification number issued to such Credit Party, and (y) in the case of a financing statement filed as a fixture filing or indicating Collateral as as-extracted collateral or timber to be cut, a sufficient description of real property to which the Collateral relates), in any appropriate filing office without the signature of any Credit Party where permitted by applicable law.

(b) If any Credit Party acquires any commercial tort claims after the date hereof in which the expected recovery is expected to exceed $250,000, such Credit Party shall promptly (but in any event within 3 Business Days after such acquisition) deliver to the Lender a written description of such commercial tort claim and shall deliver a written agreement, in form and substance satisfactory to the Lender, pursuant to which such Credit Party shall grant a perfected security interest in all of its right, title and interest in and to such commercial tort claim to the Lender, as security for the Obligations (a “ Commercial Tort Claim Assignment ”).

(c) At any time upon the request of the Lender, the Credit Parties shall execute or deliver to the Lender any and all financing statements, original financing statements in lieu of continuation statements, amendments to financing statements, fixture filings, security agreements, pledges, assignments, Commercial Tort Claim Assignments, endorsements of certificates of title, and all other documents (collectively, the “ Additional Documents ”) that the Lender may reasonably request, in form and substance reasonably satisfactory to the Lender, to create, perfect, and continue perfected or to better perfect the Lender’s Liens in the assets of the Credit Parties (whether now owned or hereafter arising or acquired, tangible or intangible, real or personal), to create and perfect Liens in favor of the Lender in any owned Real Property acquired after the Closing Date, and in order to fully consummate all of the transactions contemplated hereby and under the other Loan Documents. To the maximum extent permitted by applicable law, each Credit Party authorizes the Lender to execute any such Additional Documents in the applicable Credit Party’s name and authorizes the Lender to file such executed Additional Documents in any appropriate filing office.

4.4 Power of Attorney . Each Credit Party hereby irrevocably makes, constitutes, and appoints the Lender (and any of the Lender’s officers, employees, or agents designated by the Lender) as such Credit Party’s true and lawful attorney, with power to (a) if such Credit Party refuses to, or fails timely

to execute and deliver any of the documents described in Section 4.3 , sign the name of such Credit Party on any of the documents described in Section 4.3 , (b) at any time that an Event of Default has occurred and is continuing, sign such Credit Party’s name on any invoice or bill of lading relating to the Collateral, drafts against Account Debtors, or notices to Account Debtors, (c) endorse such Credit Party’s name on any of its payment items (including all of its Collections) that may come into the Lender’s possession, (d) at any time that an Event of Default has occurred and is continuing, make, settle, and adjust all claims under such Credit Party’s policies of insurance and make all determinations and decisions with respect to such policies of insurance, and (e) at any time that an Event of Default has occurred and is continuing, settle and adjust disputes and claims respecting such Credit Party’s Accounts, chattel paper, or General Intangibles directly with Account Debtors, for amounts and upon terms that the Lender determines to be reasonable, and the Lender may cause to be executed and delivered any documents and releases that the Lender determines to be necessary. The appointment of the Lender as each Credit Party’s attorney, and each and every one of its rights and powers, being coupled with an interest, is irrevocable until all of the Obligations have been fully and finally repaid and performed and the Lender’s obligations to extend credit hereunder are terminated.

4.5 Right to Inspect . The Lender (through any of its officers, employees, or agents) shall have the right, (a) so long as no Default or Event of Default shall have occurred and be continuing, upon reasonable notice, during regular business hours and without unreasonable disruption of the business of the Borrower and its Subsidiaries, and (b) after the occurrence and during the continuance of a Default or an Event of Default, at any time and without prior notice, in each case, from time to time hereafter to inspect the Books and make copies or abstracts thereof and to check, test, and appraise the Collateral, or any portion thereof, in order to verify Borrower’s and its Subsidiaries’ financial condition or the amount, quality, value, condition of, or any other matter relating to, the Collateral.

4.6 Control Agreements . The Credit Parties agree that they will, upon the request of the Lender, take any or all reasonable steps in order for the Lender to obtain control in accordance with Sections 8-106, 9-104, 9-105, 9-106, and 9-107 of the Code with respect to (a) any Securities Account or Deposit Account having an average monthly balance of $100,000 or more and (b) all electronic chattel paper, Investment Property, and letter-of-credit rights. Upon the occurrence and during the continuance of a Default or Event of Default, the Lender may notify any bank or securities intermediary to liquidate the applicable Deposit Account or Securities Account or any related Investment Property maintained or held thereby and remit the proceeds thereof to Lender.

5. REPRESENTATIONS AND WARRANTIES.

In order to induce the Lender to enter into this Agreement, each Credit Party makes the following representations and warranties to the Lender which shall be true, correct, and complete, in all material respects, as of the date hereof, and shall be true, correct, and complete, in all material respects, as of the Funding Date, as though made on and as of the Funding Date (except to the extent that such representations and warranties relate solely to an earlier date) and such representations and warranties shall survive the execution and delivery of this Agreement:

5.1 No Encumbrances . Each Credit Party has good and indefeasible title to, or a valid leasehold interest in, its personal property assets and good and marketable title to, or a valid leasehold interest in, its Real Property, in each case, free and clear of Liens except for Permitted Liens.

5.2 Equipment . All of the material Equipment of the Credit Parties is used or held for use in their business and is fit for such purposes, ordinary wear and tear excepted.

5.3 Location of Inventory and Equipment . The Inventory and Equipment of Borrower and its Subsidiaries are not stored with a bailee, warehouseman, or similar party and are located only at, or in-transit between, the locations identified on the Reporting Addendum.

5.4 Inventory Records . Each Credit Party keeps correct and accurate records itemizing and describing the type, quality, and quantity of its and its Subsidiaries’ material Inventory and the book value thereof.

5.5 State of Incorporation; Location of Chief Executive Office; Organizational Identification Number; Commercial Tort Claims .

(a) The jurisdiction of organization of each Credit Party is set forth on the Reporting Addendum.

(b) The chief executive officer of each Credit Party is located at the address indicated on the Reporting Addendum.

(c) As of the Funding Date, the Credit Parties do not hold any commercial tort claims, except as set forth on Schedule 4.1 .

5.6 Due Organization and Qualification; Subsidiaries .

(a) Each Credit Party is duly organized and existing and in good standing under the laws of the jurisdiction of its organization and qualified to do business in any state where the failure to be so qualified reasonably could be expected to result in a Material Adverse Change.

(b) Set forth on the Reporting Addendum is a complete and accurate list of each Credit Party’s direct Subsidiaries as of the Funding Date, showing: (i) the jurisdiction of their organization, (ii) the number of shares of each class of common and preferred Stock authorized for each of such Subsidiaries, and (iii) the number and the percentage of the outstanding shares of each such class owned directly or indirectly by the applicable Credit Party. All of the outstanding capital Stock of each such Subsidiary has been validly issued and is fully paid and non-assessable.

(c) Except as set forth on the Reporting Addendum, there are no subscriptions, options, warrants, or calls relating to any shares of Borrower’s Subsidiaries’ capital Stock, including any right of conversion or exchange under any outstanding security or other instrument. Neither Borrower nor any of its Subsidiaries is subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of Borrower’s Stock or any security convertible into or exchangeable for any such Stock.

5.7 Due Authorization; No Conflict .

(a) The execution, delivery, and performance by each Credit Party of this Agreement and the other Loan Documents to which it is a party have been duly authorized by all necessary action on the part of such Credit Party.

(b) The execution, delivery, and performance by each Credit Party of this Agreement and the other Loan Documents to which it is a party do not and will not (i) violate any provision of federal, state, or local law or regulation applicable to such Credit Party, the Governing Documents of such Credit Party, or any order, judgment, or decree of any court or other Governmental Authority binding on such Credit Party, (ii) conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under any material contractual obligation of such Credit Party, (iii) result in or require the creation or imposition of any Lien of any nature whatsoever upon any properties or assets of such Credit Party, other than Permitted Liens, or (iv) require any approval of such Credit Party’s interestholders or any approval or consent of any Person under any material contractual obligation of such Credit Party, other than consents or approvals that have been obtained and that are still in force and effect.

(c) Other than the filing of financing statements, and the recordation of certain of Loan Documents, the execution, delivery, and performance by each Credit Party of this Agreement and the other Loan Documents to which such Credit Party is a party do not and will not require any registration with, consent, or approval of, or notice to, or other action with or by, any Governmental Authority, other than consents or approvals that have been obtained and that are still in force and effect.

(d) This Agreement and the other Loan Documents to which each Credit Party is a party, and all other documents contemplated hereby and thereby, when executed and delivered by such Credit Party will be the legally valid and binding obligations of such Credit Party, enforceable against

such Credit Party in accordance with their respective terms, except as enforcement may be limited by equitable principles or by bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or limiting creditors’ rights generally.

(e) Upon the filing of financing statements, the Lender’s Liens shall be validly created, perfected, and first priority Liens, subject only to Permitted Liens, to the extent such Liens can be perfected by the filing of financing statements and the delivery of stock certificates.

5.8 Litigation . Other than those matters disclosed on the Reporting Addendum, and other than matters that reasonably could not be expected to result in a Material Adverse Change, there are no actions, suits, or proceedings pending or, to the best knowledge of the Credit Parties, threatened in writing against Borrower or any of its Subsidiaries.

5.9 No Material Adverse Change . All financial statements relating to Borrower and its Subsidiaries that have been delivered by Borrower to the Lender have been prepared in accordance with GAAP (except, in the case of unaudited financial statements, for the lack of footnotes and being subject to year-end audit adjustments) and present fairly in all material respects, Borrower’s and its Subsidiaries’ consolidated financial condition as of the date thereof and their consolidated results of operations for the period then ended. Since December 31, 2013, there has not been a Material Adverse Change with respect to Borrower and its Subsidiaries.

5.10 Fraudulent Transfer . No transfer of property is being made by Borrower or any of its Subsidiaries and no obligation is being incurred by the Borrower or any of its Subsidiaries in connection with the transactions contemplated by this Agreement or the other Loan Documents with the intent to hinder, delay, or defraud either present or future creditors of Borrower or its Subsidiaries.

5.11 Employee Benefits . None of the Credit Parties or any of their ERISA Affiliates maintains or contributes to any Benefit Plan.

5.12 Environmental Condition . Except as set forth on the Reporting Addendum, (a) to Credit Parties’ knowledge, none of the Credit Parties’ properties or assets has ever been used by the Credit Parties, or by previous owners or operators in the disposal of, or to produce, store, handle, treat, release, or transport, any Hazardous Materials, where such production, storage, handling, treatment, release or transport was in violation, in any material respect, of applicable Environmental Law and where such violation would reasonably be expected to result in a Material Adverse Change, (b) to the Credit Parties’ knowledge, none of Borrower’s nor its Subsidiaries’ properties or assets has ever been designated or identified in any manner pursuant to any environmental protection statute as a Hazardous Materials disposal site, (c) none of the Credit Parties have received notice that a Lien arising under any Environmental Law has attached to any revenues or to any Real Property owned or operated by the Credit Parties, and (d) none of the Credit Parties have received a summons, citation, notice, or directive from the United States Environmental Protection Agency or any other federal or state governmental agency concerning any action or omission by any Credit Party resulting in the releasing or disposing of Hazardous Materials into the environment.

5.13 Intellectual Property . Each Credit Party owns, or holds licenses in, all trademarks, trade names, copyrights, patents, patent rights, and licenses that are necessary to the conduct of its business as currently conducted.

5.14 Leases . Borrower and its Subsidiaries enjoy peaceful and undisturbed possession under all leases material to their business and to which they are parties or under which they are operating and all of such leases are valid and subsisting and no material default by Borrower or its Subsidiaries exists under any of them, in each case, except for leases the loss of which, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Change.

5.15 Deposit Accounts and Securities Accounts . Set forth on the Reporting Addendum is a listing of all of Borrower’s and its Subsidiaries’ Deposit Accounts and Securities Accounts, including, with respect to each bank or securities intermediary (a) the name and address of such Person, and (b) the account numbers of the Deposit Accounts or Securities Accounts maintained with such Person.

5.16 Complete Disclosure . All factual information (taken as a whole) furnished by or on behalf of the Credit Parties in writing to the Lender (including all information contained in the Schedules hereto, in the Reporting Addendum or in the other Loan Documents) for purposes of or in connection with this Agreement, the other Loan Documents or any transaction contemplated herein or therein is, and all other such factual information (taken as a whole) hereafter furnished by or on behalf of the Credit Parties in writing to the Lender will be, true and accurate in all material respects on the date as of which such information is dated or certified and not incomplete by omitting to state any fact necessary to make such information (taken as a whole) not misleading in any material respect at such time in light of the circumstances under which such information was provided.

5.17 Indebtedness . Set forth on the Reporting Addendum is a true and complete list of all Indebtedness of Borrower and each of its Subsidiaries outstanding immediately prior to the Closing Date that is to remain outstanding after the Funding Date and the Reporting Addendum accurately reflects the aggregate principal amount of such Indebtedness and describes the principal terms thereof.

5.18 Transaction Documents . As of the Closing Date and the Funding Date, Borrower has delivered to the Lender a complete and correct copy of the Transaction Documents (including all schedules, exhibits, amendments, supplements, modifications, assignments and all other documents delivered pursuant thereto or in connection therewith). No Person party thereto is in default in any material respect in the performance or compliance with any provisions thereof. All such documents comply with, and the transactions contemplated thereby have been consummated in accordance with, all applicable laws. The Transaction Documents are in full force and effect as of the Closing Date and the Funding Date and have not been terminated, rescinded or withdrawn. The execution, delivery and performance by the Credit Parties of the such documents do not and will not require any registration with, consent, or approval of, or notice to, or other action with or by, any Governmental Authority, other than consents or approvals that have been obtained and that are still in full force and effect. To the best of Credit Parties’ knowledge, none of the representations or warranties of any other Person in any Transaction Document contains any untrue statement of a material fact or omit any fact necessary to make the statements therein not misleading.

5.19 Licenses; Regulatory Approvals . Except as described on the Reporting Addendum hereof, Borrower and each of its Subsidiaries have all licenses and regulatory approvals necessary to the conduct of their business and in order to comply with all applicable law.

6. AFFIRMATIVE COVENANTS.

The Credit Parties covenant and agree that, until the payment in full of the Obligations, the Credit Parties shall and shall cause each of their Subsidiaries to do all of the following:

6.1 Accounting System . Maintain a system of accounting that enables the Credit Parties to produce financial statements in accordance with GAAP and maintain records pertaining to the Collateral that contain information as from time to time reasonably may be requested by the Lender.

6.2 Financial Statements, Reports, Certificates . Deliver to the Lender:

(a) as soon as available, but in any event within 50 days after the end of each of Borrower’s fiscal quarters (other than the fourth fiscal quarter),

(i) an unaudited consolidated balance sheet, income statement, and statement of cash flow covering Borrower and its Subsidiaries’ operations during such period, and

(ii) a Compliance Certificate,

(b) as soon as available, but in any event within 90 days after the end of each of Borrower’s fiscal years,

(i) Consolidated financial statements of Borrower and its Subsidiaries for each such fiscal year, audited by an Approved Accounting Firm and certified, without any qualifications, (including any (A) “going concern” or like qualification or exception, or (B) qualification or exception as

to the scope of such audit), by such accountants (other than with respect to the Consolidated nature of such financial statements) to have been prepared in accordance with GAAP (such audited financial statements to include a balance sheet, income statement, and statement of cash flow and, if prepared, such accountants’ letter to management),

(ii) a Compliance Certificate, and

(c) as soon as available, but in any event within 30 days after the end of each month (other than a month that is the end of one of Borrower’s fiscal quarters), a Compliance Certificate;

(d) promptly, but in any event within 5 days after any Credit Party has knowledge of any event or condition that constitutes a Default or an Event of Default, notice thereof and a statement of the curative action that Borrower proposes to take with respect thereto,

(e) promptly after the commencement thereof, but in any event within 5 days after the service of process with respect thereto on any Credit Party, notice of all actions, suits, or proceedings brought by or against any Credit Party before any Governmental Authority in which there is a reasonable probability of an adverse decision which, if determined adversely to such Credit Party or such Subsidiary, reasonably could be expected to result in a Material Adverse Change, and

(f) upon the request of the Lender, any other information reasonably requested relating to the Collateral or the financial condition of Borrower or its Subsidiaries.

Documents required to be delivered pursuant to Section 6.2(a) or (b) shall be deemed to have been delivered on the date (i) on which the Borrower files such documents with the SEC and such documents are publicly available on the SEC’s EDGAR filing system or any successor thereto, or (ii) on which the Borrower posts such documents, or provides a link thereto on the Borrower’s website.

6.3 Maintenance of Properties . Maintain and preserve all of their properties which are necessary or useful in the proper conduct to their business in good working order and condition, ordinary wear and tear excepted (except where the failure to do so could not be expected to result in a Material Adverse Change), and comply at all times with the provisions of all leases to which it is a party as lessee (except for leases the loss of which, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Change), so as to prevent any loss or forfeiture thereof or thereunder.

6.4 Taxes . Cause all assessments and taxes, whether real, personal, or otherwise, due or payable by, or imposed, levied, or assessed against the Credit Parties, or any of their respective assets to be paid in full, before delinquency or before the expiration of any extension period, except to the extent that the validity of such assessment or tax shall be the subject of a Permitted Protest. Borrower will and will cause its Subsidiaries to make timely payment or deposit of all tax payments and withholding taxes required of them by applicable laws, including those laws concerning F.I.C.A., F.U.T.A., state disability, and local, state, and federal income taxes, and will, upon request, furnish the Lender with proof satisfactory to the Lender indicating that the applicable Borrower or Subsidiary of Borrower has made such payments or deposits.

6.5 Insurance .

(a) At the Credit Parties’ expense, maintain insurance respecting their and their Subsidiaries’ assets wherever located, covering loss or damage by fire, theft, explosion, and all other hazards and risks as ordinarily are insured against by other Persons engaged in the same or similar businesses. The Credit Parties also shall maintain public liability insurance. All such policies of insurance shall be in such amounts and with such insurance companies as are reasonably satisfactory to the Lender. The Credit Parties shall deliver a certificate of insurance with respect to all such policies to the Lender with an endorsement naming the Lender as a loss payee (under a satisfactory lender’s loss payable endorsement) or additional insured, as appropriate. Each policy of insurance or endorsement shall contain a clause requiring the insurer to give not less than 30 days (10 days in the case of non-

payment) prior written notice to the Lender in the event of cancellation of the policy for any reason whatsoever.

(b) The Credit Parties will not, and will not suffer or permit their respective Subsidiaries to, take out separate insurance concurrent in form or contributing in the event of loss with that required to be maintained under this Section 6.5 , unless the Lender is included thereon as an additional insured or loss payee under a lender’s loss payable endorsement. The Credit Parties promptly shall notify the Lender whenever such separate insurance is taken out, specifying the insurer thereunder and full particulars as to the policies evidencing the same, and copies of such policies promptly shall be provided to the Lender.

6.6 Location of Inventory and Equipment . Keep Borrower’s and its Subsidiaries’ chief executive offices only at the locations identified on the Reporting Addendum; provided, however, that Borrower or any Subsidiary may change its chief executive office by written notice to the Lender not less than 30 days prior to the date such chief executive office is relocated, so long as such new location is within either the continental United States or same country as its original location.

6.7 Compliance with Laws . Other than laws, rules, regulations, and orders the non-compliance with which, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Change, comply with the requirements of all applicable laws, rules, regulations, and orders of any Governmental Authority, including, but not limited to, the Fair Labor Standards Act, the Americans With Disabilities Act, and all laws, rules, regulations, and orders relating to truth in lending, billing practices, fair credit reporting, equal credit opportunity, debt collection practices, and consumer debtor protections.

6.8 Leases . Pay when due all rents and other amounts payable under any leases to which any Credit Party is a party or by which any Credit Party’s properties and assets are bound, unless (a) such payments are the subject of a Permitted Protest or (b) the failure to make such payments would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Change.

6.9 Existence . At all times preserve and keep in full force and effect Credit Party’s valid existence and good standing and any rights and franchises material to their businesses, except to the extent that the failure to maintain any such existence, right, or franchise is a Permitted Disposition.

6.10 Environmental .

(a) Keep any property either owned or operated by any Credit Party free of any Environmental Liens or post bonds or other financial assurances sufficient to satisfy the obligations or liability evidenced by such Environmental Liens, except to the extent that such obligations or liabilities would not reasonably be expected to result in a Material Adverse Change, (b) comply with Environmental Laws, except to the extent that the failure to comply would not reasonably be expected to result in a Material adverse Change, and provide to the Lender documentation of such compliance which the Lender reasonably requests, (c) promptly notify the Lender of any release of a Hazardous Material in any reportable quantity from or onto property owned or operated by any Credit Party and take any Remedial Actions required to abate said release or otherwise to come into compliance with applicable Environmental Law, and (d) promptly, but in any event within 5 days of its receipt thereof, provide the Lender with written notice of any of the following: (i) notice that an Environmental Lien has been filed against any of the real or personal property owned in fee by any Credit Party, (ii) commencement of any Environmental Action or notice that an Environmental Action will be filed against any Credit Party, and (iii) notice of a violation, citation, or other administrative order which reasonably could be expected to result in a Material Adverse Change.

6.11 Disclosure Updates . Promptly and in no event later than 5 Business Days after obtaining knowledge thereof, notify the Lender if any written information, exhibit, or report furnished to the Lender contained, at the time it was furnished, any untrue statement of a material fact or omitted to state any material fact necessary to make the statements contained therein not misleading in light of the circumstances in which made. The foregoing to the contrary notwithstanding, any notification pursuant

to the foregoing provision will not cure or remedy the effect of the prior untrue statement of a material fact or omission of any material fact nor shall any such notification have the effect of amending or modifying this Agreement or any of the Schedules hereto.

6.12 Formation of Subsidiaries . At the time that any Credit Party forms any direct or indirect Subsidiary or acquires any direct or indirect Subsidiary after the Closing Date, such Credit Party shall (a) unless such new Subsidiary either (i) shall have no assets and conduct no business or (ii) will be acquiring and/or originating receivables or acquiring goods to hold for lease and will be incurring Indebtedness for such purposes, cause such new Subsidiary to provide to the Lender a joinder to this Agreement, together with such other security documents, as well as appropriate financing statements, all in form and substance satisfactory to the Lender (including being sufficient to grant the Lender a first priority Lien (subject to Permitted Liens) in and to the assets of such newly formed or acquired Subsidiary), (b) provide to the Lender a pledge agreement and appropriate certificates and powers or financing statements, hypothecating all of the direct or beneficial ownership interest in such new Subsidiary, in form and substance satisfactory to the Lender, and (c) provide to the Lender all other documentation, including one or more opinions of counsel satisfactory to the Lender, which in its opinion is appropriate with respect to the execution and delivery of the applicable documentation referred to above (including policies of title insurance or other documentation with respect to all property subject to a mortgage). Any document, agreement, or instrument executed or issued pursuant to this Section 6.12 shall be a Loan Document.

6.13 Licenses; Regulatory Approval . Obtain and maintain all material licenses and regulatory approvals necessary in the conduct of their business and in order to comply with all applicable law.

6.14 Retirement of Convertible Bonds . Immediately upon the purchase of any Convertible Bonds, cancel and retire such Convertible Bonds.


7.	NEGATIVE COVENANTS.

Each Credit Party covenants and agrees that, until termination of any and all obligations of the Lender to fund any loans hereunder and payment in full of the Obligations, such Credit Party will not and will not permit any of its Subsidiaries to do any of the following:

7.1 Indebtedness . Create, incur, assume, suffer to exist, guarantee, or otherwise become or remain, directly or indirectly, liable with respect to any Indebtedness, except:

(a) Indebtedness evidenced by this Agreement and the other Loan Documents,

(b) Indebtedness outstanding on the Closing Date and set forth on the Reporting Addendum,

(d) Indebtedness (including Guarantees) in respect of (i) performance, surety, bid, appeal or similar bonds, completion guarantees or similar instruments, including letters of credit and bankers acceptances (not incurred for the purpose of borrowing money), in each case provided in the ordinary course of business, (ii) Hedging Agreements entered into in the ordinary course of business as a risk management strategy and (iii) agreements providing for indemnification, adjustment of purchase price or similar obligations, or from guarantees or letters of credit, surety bonds or performance bonds securing any obligations pursuant to such agreement, incurred in connection with the disposition of any business, assets or Subsidiary of Borrower;

(e) Capital Lease Obligations and Indebtedness created, incurred or assumed in respect of the purchase, improvement, repair or construction of property, provided that such Indebtedness is created, incurred or assumed within 180 days after the earlier of (x) the placement in service of such property or (y) the final payment on such property, and provided that the aggregate amount of the

Indebtedness and created, incurred or assumed pursuant to this paragraph (e) at any time outstanding shall not exceed $500,000;

(f) Indebtedness incurred to pay premiums for insurance policies maintained by Borrower or any of its Subsidiaries in the ordinary course of business not exceeding in aggregate the amount of such unpaid premiums;

(g) Indebtedness of any Person acquired by Borrower or any of its Subsidiaries in an acquisition permitted by Section 7.11 (“ Acquisition Indebtedness ”) and assumed by Borrower or such Subsidiary pursuant to such acquisition, provided that (i) such Indebtedness was not incurred in contemplation of such acquisition, and (ii) such Indebtedness in respect thereof shall not be secured by any assets other than some or all of the assets securing the acquired Indebtedness prior to such acquisition;

(h) refinancings, renewals, or extensions of Indebtedness permitted under clauses (b), (e) and (g) of this Section 7.1 (and continuance or renewal of any Permitted Liens associated therewith) so long as: (i) the terms and conditions of such refinancings, renewals, or extensions do not, in the Lender’s reasonable judgment, materially impair the prospects of repayment of the Obligations by the Credit Parties or materially impair Borrower’s or any Credit Party’s creditworthiness, (ii) such refinancings, renewals, or extensions do not result in an increase in the principal amount of, or interest rate with respect to, the Indebtedness so refinanced, renewed, or extended or add one or more Credit Parties as liable with respect thereto if such additional Credit Parties were not liable with respect to the original Indebtedness, (iii) such refinancings, renewals, or extensions do not result in a shortening of the average weighted maturity of the Indebtedness so refinanced, renewed, or extended, nor are they on terms or conditions, that, taken as a whole, are materially more burdensome or restrictive to the applicable Credit Party, (iv) if the Indebtedness that is refinanced, renewed, or extended was subordinated in right of payment to the Obligations, then the terms and conditions of the refinancing, renewal, or extension Indebtedness must include subordination terms and conditions that are at least as favorable to the Lender as those that were applicable to the refinanced, renewed, or extended Indebtedness, and (v) the Indebtedness that is refinanced, renewed, or extended is not recourse to any Person that is liable on account of the Obligations other than those Persons which were obligated with respect to the Indebtedness that was refinanced, renewed, or extended;

(i) Guarantees with respect to bonds issued to support workers’ compensation, unemployment or other insurance or self-insurance obligations, and similar obligations, in each case, incurred by Borrower or any of its Subsidiaries in the ordinary course of business;

(j) Indebtedness in the form of any earnout or other similar contingent payment obligation incurred in connection with an acquisition permitted hereunder;

(k) Indebtedness arising in the ordinary course of business in respect of netting services, overdraft protections, cash management services and otherwise in connection with deposit accounts;

(l) Guarantees (i) of Indebtedness otherwise permitted to be incurred hereunder or (ii) granted in the ordinary course of business of the obligations of suppliers, customers, franchisees and licensees of Borrower or any of its Subsidiaries;

(m) Indebtedness incurred by Excluded Subsidiaries to fund the origination or purchase of receivables or the purchase of goods to be held for lease, in either case in the ordinary course of business; and

(n) Other Indebtedness of Borrower or any of its Subsidiaries in an aggregate face and/or principal amount at any time outstanding not in excess of $1,000,000.

7.2 Liens . Create, incur, assume, or suffer to exist, directly or indirectly, any Lien on or with respect to any of its assets, of any kind, whether now owned or hereafter acquired, or any income or profits therefrom, except (including Liens that are replacements of Permitted Liens to the extent that the original Indebtedness is refinanced, renewed, or extended under Section 7.1(h) and so long as the

replacement Liens only encumber those assets that secured the refinanced, renewed, or extended Indebtedness):

(a) Liens for taxes, assessments or other governmental charges or levies not yet due and payable or as to which the period of grace, if any, related thereto has not expired or which are subject to a Permitted Protest;

(b) builder’s, architects’, engineer’s, laborer’s, supplier of materials’, mechanics’, materialmen’s, carriers’, warehousemen’s, processor’s, landlord’s and similar Liens arising in the ordinary course of business and securing obligations of such Person that are either (i) not overdue for a period of more than 60 days, or, (ii) if more than 60 days overdue, (A) as to which no action has been taken to enforce such Lien or (B) that are subject to a Permitted Protest;

(c) Liens arising in connection with workers’ compensation, unemployment insurance, pensions and social security benefits and similar programs;

(d) (i) Liens incurred or deposits made in the ordinary course of business to secure the performance of bids, tenders, statutory obligations, fee and expense arrangements with trustees and fiscal agents, leases, governmental contracts, permits, licenses, trade contracts, performance and return-of-money bonds and other similar obligations (exclusive of obligations incurred in connection with the borrowing of money or the payment of the deferred purchase price of property) and (ii) Liens securing surety, indemnity, performance, appeal and release bonds, provided that full provision for the payment of all such obligations has been made on the books of such Person if and to the extent required by GAAP;

(e) imperfections of title, statutory exceptions to title, restrictive covenants, rights of way, easements, servitudes, mineral interest reservations, municipal and zoning by-laws and ordinances or similar laws or rights reserved to or vested in any governmental office or agency to control or regulate the use of any real property, general real estate taxes and assessments not yet delinquent and other encumbrances on real property that (i) do not arise out of the incurrence of any Indebtedness for money borrowed and (ii) do not interfere with or impair in any material respect the operation, in the ordinary course of business, of the real property on which such Lien is imposed;

(f) bankers’ Liens, rights of setoff and other similar Liens existing solely with respect to cash and Cash Equivalents on deposit in one or more accounts maintained by any Credit Party or Subsidiary, in each case granted in the ordinary course of business in favor of the bank or banks with which such accounts are maintained, securing amounts owing to such bank with respect to cash management and operating account arrangements, including those involving pooled accounts and netting arrangements;

(g) leases or subleases granted to others not interfering in any material respect with the business of Borrower or any Subsidiary of Borrower and any interest or title of a lessor under any lease (whether a Capital Lease or an operating lease) permitted by this Agreement or the Loan Documents;

(h) Liens arising from the granting of a lease or license to enter into or use any asset of Borrower or any Subsidiary of Borrower to any Person in the ordinary course of business of Borrower or any Subsidiary of Borrower that does not interfere in any material respect with the use or application by Borrower or any Subsidiary of Borrower of the asset subject to such license in the business of Borrower or such Subsidiary;

(i) Liens attaching solely to cash earnest money deposits made by Borrower or any Subsidiary of Borrower in connection with any letter of intent or purchase agreement entered into it in connection with an acquisition permitted hereunder;

(j) Liens arising from precautionary UCC financing statements (or analogous personal property security filings or registrations in other jurisdictions) regarding operating leases;

(k) Liens on insurance policies and proceeds thereof to secure premiums thereunder;

(l) Liens existing as of the Closing Date and that are listed on the Reporting Addendum, and replacement Liens on the same assets; provided that (A) such Liens shall apply only to the property or assets to which they apply on the Closing Date and (B) such Liens shall secure only (x)

those obligations that they secured on the Closing Date and (y) refinancings of such secured obligations permitted hereunder so long as the principal amount of obligations secured under this clause (iv) does not exceed the sum of the principal amount of such secured obligations being refinanced plus the amount of any premium required to be paid thereon as a result of, and any interest, fees and costs incurred in, such refinancing;

(m) Liens securing Indebtedness permitted by Section 7.1(e) , provided that any such Lien shall apply only to the property that is the subject of such Indebtedness;

(n) Liens securing Indebtedness permitted by Section 7.1(f) , provided that such Liens attach only to insurance policies and proceeds thereof;

(o) Liens securing Indebtedness assumed or incurred pursuant to Section 7.1(g) in connection with any acquisition permitted hereunder, provided that (A) such Liens attach only to property or assets acquired in connection with such acquisition, (B) such Liens were not created in contemplation of such acquisition and (C) such Liens shall secure only those obligations that they secure at the time of such acquisition in respect thereof;

(p) Liens on property or assets of Excluded Subsidiaries;

(q) Liens created under any agreement relating to the sale, transfer or other disposition of assets permitted hereunder, provided that such Liens relate solely to the assets to be sold, transferred or otherwise disposed;

(r) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods;

(s) Liens securing judgments for the payment of money not constituting an Event of Default under Section 8.8 or securing appeal or other surety bonds relating to such judgments;

(t) Any interest or title of a lessor or sublessor under any lease of real estate permitted hereunder;

(u) Liens not otherwise permitted by the foregoing clauses of this Section 7.2 or the succeeding clause of this Section 7.2 securing obligations in an aggregate amount outstanding at any time not in excess of $500,000; and

(v) Liens in favor of a Credit Party securing Indebtedness permitted under Section 7.1(c) and which, if on assets of a Credit Party, have been subordinated to the Liens of the Lender on terms reasonably satisfactory to the Lender.

7.3 Restrictions on Fundamental Changes .

(a) Enter into any merger, consolidation, reorganization, or recapitalization, or reclassify its Stock.

(b) Liquidate, wind up, or dissolve itself (or suffer any liquidation or dissolution).

(c) Convey, sell, lease, license, assign, transfer, or otherwise dispose of, in one transaction or a series of transactions, all or any substantial part of its assets;

provided , however , that (i) any Subsidiary of Borrower may convey, sell, lease, license, assign, transfer, or otherwise dispose of, in one transaction or a series of transactions, all or any substantial part of its assets to the Borrower or any other Credit Party, (ii) any Subsidiary of Borrower may merge or consolidate with the Borrower (so long as the Borrower is the surviving entity) or any other Subsidiary of Borrower ( provided , however , that if any such Subsidiary is a Credit Party, the surviving entity shall be a Credit Party), (ii) any Subsidiary of Borrower may be liquidated or dissolved into its parent entity; (iii) Borrower may merge with any other Person to consummate an acquisition permitted by Section 7.11 hereof provided that Borrower is the surviving entity and (iv) any Subsidiary of Borrower may merge with any other Person to consummate an acquisition permitted by Section 7.11 hereof provided that the entity surviving such merger is a wholly-owned Subsidiary of Borrower and is a Credit Party.

7.4 Disposal of Assets . Other than Permitted Dispositions, convey, sell, lease, license, assign, transfer, or otherwise dispose of any of the assets of any Credit Party.

7.5 Change Name . Change any Credit Party’s name, organizational identification number, state of organization, or organizational identity; provided, however, that a Credit Party may change its name upon at least 30 days prior written notice by Borrower to the Lender of such change and so long as, at the time of such written notification, such Credit Party provides any financing statements necessary to perfect and continue perfected the Lender’s Liens.

7.6 Nature of Business . (a) Make any change in the principal nature of its or their business, or (b) engage in collections policies or procedures (including the timing, amount and implementation of such policies and procedures) which (i) are inconsistent with past practices of the Credit Parties, or (ii) would violate any law, rule, regulation, policy, or order relating to truth in lending, billing practices, fair credit reporting, equal credit opportunity, debt collection practices, or consumer debtor protection.

7.7 Prepayments and Amendments . Except in connection with a refinancing permitted by Section 7.1(h) :

(a) optionally prepay, redeem, defease, purchase, or otherwise acquire any Indebtedness of any Credit Party, other than (i) the Convertible Bonds in accordance with the Transaction Documents and (ii) the Obligations in accordance with this Agreement and the Loan Documents;

(b) directly or indirectly, amend, modify, alter, increase, or change any of the material terms or conditions of any agreement, instrument, document, indenture, or other writing evidencing or concerning Indebtedness permitted under Sections 7.1(b) , or

(c) amend, modify, supplement, or restate (i) any of their Governing Documents, including by the filing or modification of any certificate of designation, or any agreement or arrangement entered into by it with respect to any of its Stock, or enter into any new agreement with respect to any of its Stock, in each case, in a manner that would be adverse to the interests of the Lender, or (ii) any material terms or conditions of any Transaction Document in a manner that is materially adverse to the Credit Parties or materially adverse to the interests of the Lender except to the extent necessary to comply with applicable law.

7.8 Change of Control . Cause, permit, or suffer, directly or indirectly, any Change of Control.

7.9 Distributions . Other than distributions or declaration and payment of dividends by a Subsidiary of a Credit Party to a Credit Party, make any distribution or declare or pay any dividends (in cash or other property, other than common Stock) on, or purchase, acquire, redeem, or retire any Stock of any Credit Party , of any class, whether now or hereafter outstanding; provided, however, that (a) any Subsidiary of a Credit Party may pay dividends or make distributions to such Credit Party or any other Subsidiary of Borrower, and (b) the Borrower may purchase and retire its Stock (i) in a manner similar to its historic practices with respect to vestings under its stock compensation plans, or (ii) as otherwise approved in advance by Lender.

7.10 Accounting Methods . Modify or change their fiscal year or their method of accounting (other than as may be required to conform to GAAP) in any material respect or enter into, modify, or terminate any agreement currently existing, or at any time hereafter entered into with any third party accounting firm or service bureau for the preparation or storage of Borrower’s or its Subsidiaries’ accounting records without said accounting firm or service bureau agreeing to provide the Lender information regarding Borrower’s and its Subsidiaries’ financial condition.

7.11 Investments . Directly or indirectly, make or acquire any Investment, or incur any liabilities (including contingent obligations) for or in connection with any Investment other than:

(a) Permitted Investments;

(b) loans, advances or other Investments made by (i) Borrower or any Subsidiary of Borrower to or in any Credit Party or any wholly-owned Subsidiary of Borrower, provided that any such Investments by a Credit Party to or in any such Subsidiary that is not a Credit Party are either (A) used to fund the origination or purchase of receivables or the purchase of goods to be held for lease, in either case in the ordinary course of business or (B) in an aggregate amount not to exceed $1,000,000 outstanding at

any time and (ii) any Subsidiary of Borrower that is not a Credit Party to or in Borrower or any other Subsidiary of Borrower;

(d) Investments consisting of non-cash consideration received in connection with a sale of assets permitted under Section 7.4 ;

(e) Investments in existence on the Closing Date by Borrower and each of its Subsidiaries in the Stock of their respective Subsidiaries;

(f) Investments consisting of Stock, securities or notes received in settlement of accounts receivable incurred in the ordinary course of business from a customer that Borrower or any Subsidiary of Borrower has reasonably determined is unable to make cash payments in accordance with the terms of such account receivable;

(g) accounts receivable created or acquired, and deposits, prepayments and other credits to suppliers made, in the ordinary course of business;

(h) prepaid expenses and lease, utility, workers’ compensation, performance and other similar deposits made in the ordinary course of business;

(i) Investments constituting Guarantees permitted under Section 7.1 and Investments permitted under Section 7.11(k) ;

(j) Investments consisting of Hedging Agreements permitted hereunder;

(k) any Credit Party may acquire all or substantially all of the assets of a Person or line of business, unit or division of such Person, or not less than 100% of the Stock of such a Person (other than directors’ qualifying shares) (in each case referred to herein as the “Acquired Entity”), provided that (i) the aggregate acquisition amount is less than $5,000,000, (ii) the Acquired Entity shall be in a similar line of business as that of Borrower and its Subsidiaries, (iii) at the time of such transaction both before and immediately after giving effect thereto, no Event of Default or Default shall have occurred and be continuing, (iv) within thirty (30) days after the consummation of such acquisition (or such longer time as the Lender may approve), the Acquired Entity and each Subsidiary of the Acquired Entity shall become a Credit Party; and Borrower and each Credit Party shall comply, and shall cause their respective Subsidiaries to comply, with the other provisions of Section 6.12 applicable to such Acquired Entity or Subsidiary, or to its Stock, substantially concurrently with the consummation of such acquisition or by such later date reasonably agreed by the Lender with respect to specific compliance items (any acquisition of an Acquired Entity meeting all of the criteria set forth in this paragraph (k) being referred to herein as a “ Permitted Acquisition ”); and

(l) other Investments in an aggregate amount not to exceed $1,000,000 during the term of the Agreement.

7.12 Transactions with Affiliates . Directly or indirectly enter into or permit to exist any transaction with any Affiliate of Borrower except for transactions that (a) are (i) in the ordinary course of such Credit Party’s business, (ii) upon fair and reasonable terms, (iii) are fully disclosed to the Lender, and (iv) are no less favorable to Credit Parties than would be obtained in an arm’s length transaction with a non-Affiliate, (b) distributions and dividends permitted hereunder, or (c) reasonable compensation of officers and directors.

7.13 Use of Proceeds . Use the proceeds of (a) the Initial Term Loan for any purpose other than to pay a portion of the purchase price of the Convertible Bonds pursuant to the Transaction Documents and (b) any Additional Term Loan for any purpose not approved by Lender in writing.


8.	EVENTS OF DEFAULT.

Any one or more of the following events shall constitute an event of default (each, an “ Event of Default ”) under this Agreement:

8.1 If Borrower fails to pay when due and payable or when declared due and payable, all or any portion of the principal amount of the Term Loans;

8.2 if Borrower fails to pay when due and payable any interest on the Term Loans (including any interest which, but for the provisions of the Bankruptcy Code, would have accrued on such amounts), fees and charges due the Lender, reimbursement of Lender Expenses, or other amounts constituting Obligations) and such failure shall continue unremedied for a period of three (3) Business Days;

8.3 If any Credit Party:

(a) fails to perform, keep, or observe any term, provision, covenant, or agreement contained in Sections 4.5 , 6.11 , 6.12 , 6.14 and 7.1 through 7.13 , of this Agreement and such failure continues for a period of 10 days after the earlier of the date (i) any officer of any Credit Party becomes aware of such failure, or (ii) notice thereof shall have been given to the Borrower by the Lender;

(b) fails or neglects to perform, keep, or observe any other term, provision, covenant, or agreement contained in this Agreement, or in any of the other Loan Documents (giving effect to any grace periods, cure periods, or required notices, if any, expressly provided for in such Loan Documents); in each case, other than any such term, provision, covenant, or agreement that is the subject of another provision of this Section 8 (in which event such other provision of this Section 8 shall govern), and such failure continues for a period of 30 days after the earlier of the date (i) any officer of any Credit Party becomes aware of such failure, or (ii) notice thereof shall have been given to the Borrower by the Lender;

8.4 If any portion of any Credit Party’s assets with a value in excess of $500,000 is attached, seized, subjected to a writ or distress warrant, or levied upon, or comes into the possession of any third Person and the same is not discharged before the earlier of 30 days after the date it first arises or 5 days prior to the date on which such property or asset is subject to forfeiture by such Credit Party;

8.5 If an Insolvency Proceeding is commenced by any Credit Party;

8.6 If an Insolvency Proceeding is commenced against any Credit Party, and any of the following events occur: (a) such Credit Party consents to the institution of the Insolvency Proceeding against it, (b) the petition commencing the Insolvency Proceeding is not timely controverted, (c) the petition commencing the Insolvency Proceeding is not dismissed within 60 calendar days of the date of the filing thereof, (d) an interim trustee is appointed to take possession of all or any substantial portion of the properties or assets of, or to operate all or any substantial portion of the business of, such Credit Party, or (e) an order for relief shall have been entered therein;

8.7 If any Credit Party is enjoined, restrained, or in any way prevented by court order from continuing to conduct all or any material part of its business affairs;

8.8 If one or more judgments or other claims involving an aggregate amount of $500,000 or more becomes a Lien or encumbrance upon any of any Credit Party’s assets and either (i) enforcement proceedings shall have been commenced by any creditor upon any such judgment or order, or (ii) there shall be a period of 30 consecutive days after entry thereof during which a stay of enforcement of any such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect;

8.9 (a) If there is a default in one or more agreements to which Borrower or any of its Subsidiaries is a party with one or more third Persons relative to any Indebtedness involving an aggregate amount of $1,000,000 or more, and such default (i) occurs at the final maturity of obligations thereunder, or (ii) results in a right by such third Person(s), irrespective of whether exercised, to accelerate the maturity of Borrower’s or such Subsidiary’s obligations thereunder; or

(b) If there is a default in any other material agreement to which Borrower or any Subsidiary of Borrower is a party with one or more third Persons and such default results in a right by such third Person(s), irrespective of whether exercised, to terminate such agreement and such default, individually or in the aggregate together with all other such defaults, which would result in a Material Adverse Change;

8.10 If any Credit Party makes any payment on account of Indebtedness that has been contractually subordinated in right of payment to the payment of the Obligations, except to the extent such payment is permitted by the terms of the subordination provisions applicable to such Indebtedness;

8.11 If any material misstatement or material misrepresentation exists as of the date when made or deemed made, in any warranty, representation, written statement, or Record made to the Lender by any Credit Party;

8.12 If the obligation of (a) any Guarantor under Section 12 is limited or terminated by operation of law or by such Guarantor thereunder;

8.13 If this Agreement or any other Loan Document that purports to create a Lien, shall, for any reason, fail or cease to create a valid and perfected and, except to the extent permitted by the terms hereof or thereof, first priority Lien on or security interest in the Collateral covered hereby or thereby, except as a result of a disposition of the applicable Collateral in a transaction permitted under this Agreement or except as a result of the election of the Lender not to perfect such Lien; or

8.14 Any material provision of any Loan Document shall at any time for any reason be declared to be null and void, or the validity or enforceability of any provision of any Loan Document shall be contested by any Credit Party, or a proceeding shall be commenced by any Credit Party, or by any Governmental Authority having jurisdiction over any Credit Party, seeking to establish the invalidity or unenforceability of any provision of any Loan Document, or any Credit Party shall deny that it has any liability or obligation purported to be created under any Loan Document.

9. THE LENDER’S RIGHTS AND REMEDIES.

9.1 Rights and Remedies . Upon the occurrence, and during the continuation, of an Event of Default, the Lender (at its election but without notice of its election and without demand) is entitled do any one or more of the following, all of which are authorized by each Credit Party:

(a) Declare all or any portion of the Obligations, whether evidenced by this Agreement, by any of the other Loan Documents, or otherwise, immediately due and payable;

(b) If the Funding Date has not occurred, terminate this Agreement and any of the other Loan Documents as to any future liability or obligation of the Lender, including, but not limited to, any obligation of the Lender to fund the Initial Term Loan, but without affecting any of the Lender’s Liens in the Collateral and without affecting the Obligations;

(c) Settle or adjust disputes and claims directly with any Credit Party’s Account Debtors for amounts and upon terms which the Lender considers advisable, and in such cases, the Lender will credit such Credit Party with only the net amounts received by the Lender in payment of such disputed Accounts after deducting all Lender Expenses incurred or expended in connection therewith;

(d) Cause the Credit Parties to hold all of their returned Inventory in trust for the Lender and segregate all such Inventory from all other assets of the Credit Parties or in any Credit Party’s possession;

(e) Without notice to or demand upon any Credit Party, make such payments and do such acts as the Lender considers necessary or reasonable to protect its security interests in the Collateral. Each Credit Party agrees to assemble the Collateral if the Lender so requires, and to make the Collateral available to the Lender at a place that the Lender may designate which is reasonably convenient to both parties. Each Credit Party authorizes the Lender to enter the premises where the Collateral is located, to take and maintain possession of the Collateral, or any part of it, and to pay, purchase, contest, or compromise any Lien that in the Lender’s determination appears to conflict with the priority of the Lender’s Liens in and to the Collateral and to pay all expenses incurred in connection therewith and to charge Borrower’s loan account therefor. With respect to any owned or leased premises of any Credit Party, each Credit Party hereby grants the Lender a license to enter into possession of such premises and to occupy the same, without charge, in order to exercise any of the Lender’s rights or remedies provided herein, at law, in equity, or otherwise;

(f) Without notice to any Credit Party (such notice being expressly waived), and without constituting an acceptance of any collateral in full or partial satisfaction of an obligation (within the meaning of the Code), set off and apply to the Obligations any and all (i) balances and deposits of any Credit Party held by the Lender, or (ii) Indebtedness at any time owing to or for the credit or the account of any Credit Party held by the Lender;

(g) Hold, as cash collateral, any and all balances and deposits of any Credit Party held by the Lender to secure the full and final repayment of all of the Obligations;

(h) Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell (in the manner provided for herein) the Collateral. Each Credit Party hereby grants to the Lender a license or other right to use, without charge, such Credit Party’s labels, patents, copyrights, trade secrets, trade names, trademarks, service marks, and advertising matter, or any property of a similar nature, as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral and such Credit Party’s rights under all licenses and all franchise agreements shall inure to the Lender’s benefit;

(i) Sell the Collateral at either a public or private sale, or both, by way of one or more contracts or transactions, for cash or on terms, in such manner and at such places (including any Credit Party’s premises) as the Lender determines is commercially reasonable. It is not necessary that the Collateral be present at any such sale and the Lender may credit bid and purchase at any public sale;

(j) Seek the appointment of a receiver or keeper to take possession of all or any portion of the Collateral or to operate same and, to the maximum extent permitted by law, seek the appointment of such a receiver without the requirement of prior notice or a hearing; and

(k) Shall have all other rights and remedies available at law or in equity or pursuant to any other Loan Document.

Except in those circumstances where no notice is required under the Code, the Lender shall give Borrower (for the benefit of the applicable Credit Party) a notice in writing of the time and place of public sale, or, if the sale is a private sale or some other disposition other than a public sale is to be made of the Collateral, the time on or after which the private sale or other disposition is to be made. The notice shall be personally delivered or mailed, postage prepaid, to Borrower as provided in Section 13 , at least 10 days before the earliest time of disposition set forth in the notice; however, no notice needs to be given prior to the disposition of any portion of the Collateral that is perishable or threatens to decline speedily in value or that is of a type customarily sold on a recognized market.

The foregoing to the contrary notwithstanding, upon the occurrence of any Event of Default described in Sections 8.5 or 8.6 , in addition to the remedies set forth above, without any notice to any Credit Party or any other Person or any act by the Lender, any obligation of the Lender to fund any loans hereunder shall automatically terminate and the Obligations then outstanding, together with all accrued and unpaid interest thereon and all fees and all other amounts due under this Agreement and the other Loan Documents, shall automatically and immediately become due and payable, without presentment, demand, protest, or notice of any kind, all of which are expressly waived by the Credit Parties.

9.2 Remedies Cumulative . The rights and remedies of the Lender under this Agreement, the other Loan Documents, and all other agreements shall be cumulative. The Lender shall have all other rights and remedies not inconsistent herewith as provided under the Code, by law, or in equity. No exercise by the Lender of one right or remedy shall be deemed an election, and no waiver by the Lender of any Event of Default shall be deemed a continuing waiver. No delay by the Lender shall constitute a waiver, election, or acquiescence by it.

10. TAXES AND EXPENSES.

If any Credit Party fails to pay any monies (whether taxes, assessments, insurance premiums, or, in the case of leased properties or assets, rents or other amounts payable under such leases) due to third Persons, or fails to make any deposits or furnish any required proof of payment or deposit, all as required under the terms of this Agreement, then, the Lender, in its sole discretion and without prior notice to any Credit Party, may do any or all of the following: (a) make payment of the same or any part thereof, or (b) in the case of the failure to comply with Section 6.5 hereof, obtain and maintain insurance policies of the type described in Section 6.5 and take any action with respect to such policies as the Lender deems prudent. Any such amounts paid by the Lender shall constitute Lender Expenses and any such payments shall not constitute an agreement by the Lender to make similar payments in the future or a waiver by the Lender of any Event of Default under this Agreement. The Lender need not inquire as to, or contest the validity of, any such expense, tax, or Lien and the receipt of the usual official notice for the payment thereof shall be conclusive evidence that the same was validly due and owing.


11.	WAIVERS; INDEMNIFICATION.

11.1 Demand; Protest; etc. Each Credit Party waives demand, protest, notice of protest, notice of default or dishonor, notice of payment and nonpayment, nonpayment at maturity, release, compromise, settlement, extension, or renewal of documents, instruments, chattel paper, and guarantees at any time held by the Lender on which any such Credit Party may in any way be liable.

11.2 The Lender’s Liability for Collateral . Each Credit Party hereby agrees that: (a) so long as the Lender complies with its obligations, if any, under the Code, the Lender shall not in any way or manner be liable or responsible for: (i) the safekeeping of the Collateral, (ii) any loss or damage thereto occurring or arising in any manner or fashion from any cause, (iii) any diminution in the value thereof, or (iv) any act or default of any carrier, warehouseman, bailee, forwarding agency, or other Person, and (b) all risk of loss, damage, or destruction of the Collateral shall be borne by the Credit Parties.

11.3 Indemnification . Each Credit Party shall pay, indemnify, defend, and hold the Lender-Related Persons (each, an “Indemnified Person”) harmless (to the fullest extent permitted by law) from and against any and all claims, demands, suits, actions, investigations, proceedings, and damages, and all reasonable attorneys fees and disbursements and other costs and expenses actually incurred in connection therewith or in connection with the enforcement of this indemnification (as and when they are incurred and irrespective of whether suit is brought), at any time asserted against, imposed upon, or incurred by any of them (a) in connection with or as a result of or related to the execution, delivery, enforcement, performance, or administration (including any restructuring or workout with respect hereto) of this Agreement, any of the other Loan Documents, or the transactions contemplated hereby or thereby or the monitoring of Borrower’s and its Subsidiaries’ compliance with the terms of the Loan Documents, and (b) with respect to any investigation, litigation, or proceeding related to this Agreement, any other Loan Document, or the use of the proceeds of the credit provided hereunder (irrespective of whether any Indemnified Person is a party thereto), or any act, omission, event, or circumstance in any manner related thereto (all the foregoing, collectively, the “Indemnified Liabilities”). The foregoing to the contrary notwithstanding, Credit Parties shall have no obligation to any Indemnified Person under this Section 11.3 with respect to any Indemnified Liability that a court of competent jurisdiction finally determines to have resulted from the gross negligence or willful misconduct of such Indemnified Person. This provision shall survive the termination of this Agreement and the repayment of the Obligations. If any Indemnified Person makes any payment to any other Indemnified Person with respect to an Indemnified Liability as to which the Credit Parties were required to indemnify the Indemnified Person receiving such payment, the Indemnified Person making such payment is entitled to be indemnified and reimbursed by the Credit Parties with respect thereto. WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY

OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY OTHER PERSON.

12. GUARANTY

12.1 Guaranty; Limitation of Liability .

(a) Each Guarantor, jointly and severally, hereby absolutely, unconditionally and irrevocably guarantees the punctual payment and performance when due, whether at scheduled maturity or on any date of a required prepayment or by acceleration, demand or otherwise, of all Obligations of each other Credit Party now or hereafter existing under or in respect of the Loan Documents (including, without limitation, any extensions, modifications, substitutions, amendments or renewals of any or all of the foregoing Obligations), whether direct or indirect, absolute or contingent, and whether for principal, interest, premiums, fees, indemnities, contract causes of action, costs, expenses or otherwise (such Obligations being the “ Guaranteed Obligations ”), and agrees to pay any and all expenses (including, without limitation, reasonable fees and expenses of counsel) incurred by the Lender in enforcing any rights under this Guaranty or any other Loan Document. Without limiting the generality of the foregoing, each Guarantor’s liability shall extend to all amounts that constitute part of the Guaranteed Obligations and would be owed by any other Credit Party to Lender under or in respect of the Loan Documents but for the fact that they are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving such other Credit Party. This is a guaranty of payment and performance and not of collection.

(b) Each Guarantor, and by its acceptance of this Guaranty, the Lender, hereby confirms that it is the intention of all such Persons that this Guaranty and the Obligations of each Guarantor hereunder not constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Code, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar foreign, federal or state law to the extent applicable to this Guaranty and the Obligations of each Guarantor hereunder. To effectuate the foregoing intention, the Lender and the Guarantors hereby irrevocably agree that the Obligations of each Guarantor under this Guaranty at any time shall be limited to the maximum amount as will result in the Obligations of such Guarantor under this Guaranty not constituting a fraudulent transfer or conveyance after giving full effect to the liability under such Guaranty as set forth in this Article 12 and its related contribution rights but before taking into account any liabilities under any other guarantee by such Guarantor. For purposes of the foregoing, all guarantees of such Guarantor other than the Guaranty under this Agreement and any guarantee of Indebtedness that is secured by Liens on the Collateral will be deemed to be enforceable and payable after the Guaranty hereunder and any such guarantee of Debt that is secured by Liens on the Collateral shall be deemed to be enforceable and payable simultaneously with the Guaranty hereunder. To the fullest extent permitted by applicable law, this Section 12.1(b) shall be for the benefit solely of creditors and representatives of creditors of each Guarantor and not for the benefit of such Guarantor or the holders of any Stock of such Guarantor.

(c) Each Guarantor hereby unconditionally and irrevocably agrees that in the event any payment shall be required to be made to Lender under this Guaranty or any other guaranty, such Guarantor will contribute, to the maximum extent permitted by law and Section 12.1(b) , such amounts to each other Guarantor and each other guarantor so as to maximize the aggregate amount paid to Lender under or in respect of the Loan Documents.

12.2 Guaranty Absolute .

(a) Each Guarantor guarantees that the Guaranteed Obligations will be paid strictly in accordance with the terms of the Loan Documents, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of Lender with respect thereto. The Obligations of each Guarantor under or in respect of this Guaranty are independent of the Guaranteed Obligations or any other Obligations of any other Credit Party under or in respect of the Loan Documents, and a separate action or actions may be brought and prosecuted against each Guarantor to

enforce this Guaranty, irrespective of whether any action is brought against the Borrower or any other Credit Party or whether the Borrower or any other Credit Party is joined in any such action or actions. The liability of each Guarantor under this Guaranty shall be irrevocable, absolute and unconditional irrespective of, and each Guarantor hereby irrevocably waives any defenses it may now have or hereafter acquire in any way relating to, any or all of the following:

(i) any lack of validity or enforceability of any Loan Document or any agreement or instrument relating thereto;

(ii) any change in the time, manner or place of payment of, or in any other term of, all or any of the Guaranteed Obligations or any other Obligations of any other Credit Party under or in respect of the Loan Documents, or any other amendment or waiver of or any consent to departure from any Loan Document, including, without limitation, any increase in the Guaranteed Obligations resulting from the extension of additional credit to any Credit Party or any of its Subsidiaries or otherwise;

(iii) the validity, perfection, non-perfection or lapse in perfection, priority or avoidance of any security interest or Lien, the release of any or all collateral securing, or purporting to secure, the Guaranteed Obligations or any other impairment of such collateral, or any taking, release or amendment or waiver of, or consent to departure from, any other guaranty, for all or any of the Guaranteed Obligations;

(iv) any manner of application of Collateral or any other collateral, or proceeds thereof, to all or any of the Guaranteed Obligations, or any manner of sale or other disposition of any Collateral or any other collateral for all or any of the Guaranteed Obligations or any other Obligations of any Credit Party under the Loan Documents or any other assets of any Credit Party or any of its Subsidiaries whether or not such action constitutes an election of remedies and even if such action operates to impair or extinguish any right of reimbursement or subrogation or other right or remedy that any Guarantor would otherwise have;

(v) any change, restructuring or termination of the corporate structure or existence of any Credit Party or any of its Subsidiaries;

(vi) any failure of Lender to disclose to any Credit Party any information relating to the business, condition (financial or otherwise), operations, performance, properties or prospects of any other Credit Party now or hereafter known to Lender (each Guarantor waiving any duty on the part of the Lender to disclose such information);

(vii) the failure of any other Person to execute or deliver this Guaranty, any Guaranty Supplement or any other guaranty or agreement or the release or reduction of liability of any Guarantor or other guarantor or surety with respect to the Guaranteed Obligations; or

(viii) any other circumstance (including, without limitation, any statute of limitations) or any existence of or reliance on any representation by Lender that might otherwise constitute a defense available to, or a discharge of, any Credit Party or any other guarantor or surety.

(b) This Guaranty shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Guaranteed Obligations is rescinded or must otherwise be returned by the Lender or any other Person upon the insolvency, bankruptcy or reorganization of the Borrower or any other Credit Party or otherwise, all as though such payment had not been made.

12.3 Waivers and Acknowledgments .

(a) Each Guarantor hereby unconditionally and irrevocably waives promptness, diligence, notice of acceptance, presentment, demand for performance, notice of nonperformance, default, acceleration, protest or dishonor and any other notice with respect to any of the Guaranteed Obligations and this Guaranty and any requirement that the Lender protect, secure, perfect or insure any Lien or any property subject thereto or exhaust any right or take any action against any Credit Party or any other Person or any Collateral.

(b) Each Guarantor hereby unconditionally and irrevocably waives any right to revoke this Guaranty and acknowledges that this Guaranty is continuing in nature and applies to all Guaranteed Obligations, whether existing now or in the future.

(c) Each Guarantor hereby unconditionally and irrevocably waives (i) any defense arising by reason of any claim or defense based upon an election of remedies by Lender that in any manner impairs, reduces, releases or otherwise adversely affects the subrogation, reimbursement, exoneration, contribution or indemnification rights of such Guarantor or other rights of such Guarantor to proceed against any of the other Credit Parties, any other guarantor or any other Person or any Collateral and (ii) any defense based on any right of set-off or counterclaim against or in respect of the Obligations of such Guarantor hereunder.

(d) Each Guarantor acknowledges that the Lender may, without notice to or demand upon such Guarantor and without affecting the liability of such Guarantor under this Guaranty, foreclose under any mortgage by nonjudicial sale, and each Guarantor hereby waives any defense to the recovery by the Lender against such Guarantor of any deficiency after such nonjudicial sale and any defense or benefits that may be afforded by applicable law.

(e) Each Guarantor hereby unconditionally and irrevocably waives any duty on the part of Lender to disclose to such Guarantor any matter, fact or thing relating to the business, condition (financial or otherwise), operations, performance, properties or prospects of any other Credit Party or any of its Subsidiaries now or hereafter known by Lender.

(f) Each Guarantor acknowledges that it will receive substantial direct and indirect benefits from the financing arrangements contemplated by the Loan Documents and that the waivers set forth in Section 12.2 and this Section 12.3 are knowingly made in contemplation of such benefits.

12.4 Subrogation . Each Guarantor hereby unconditionally and irrevocably agrees not to exercise any rights that it may now have or hereafter acquire against the Borrower, any other Credit Party or any other insider guarantor that arise from the existence, payment, performance or enforcement of such Guarantor’s Obligations under or in respect of this Guaranty or any other Loan Document, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of Lender against the Borrower, any other Credit Party or any other insider guarantor or any Collateral, whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from the Borrower, any other Credit Party or any other insider guarantor, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim, remedy or right, unless and until all of the Guaranteed Obligations and all other amounts payable under this Guaranty shall have been paid in full in cash and any and all obligations of the Lender to fund any loans hereunder shall have expired or been terminated. If any amount shall be paid to any Guarantor in violation of the immediately preceding sentence at any time prior to the latest of (a) the payment in full in cash of the Guaranteed Obligations and all other amounts payable under this Guaranty, or (b) the Termination Date, such amount shall be received and held in trust for the benefit of Lender, shall be segregated from other property and funds of such Guarantor and shall forthwith be paid or delivered to Lender in the same form as so received (with any necessary endorsement or assignment) to be credited and applied to the Guaranteed Obligations and all other amounts payable under this Guaranty, whether matured or unmatured, in accordance with the terms of the Loan Documents, or to be held as Collateral for any Guaranteed Obligations or other amounts payable under this Guaranty thereafter arising. If (i) any Guarantor shall make payment to Lender of all or any part of the Guaranteed Obligations, (ii) all of the Guaranteed Obligations and all other amounts payable under this Guaranty shall have been paid in full in cash, and (iii) the Termination Date shall have occurred, Lender will, at such Guarantor’s request and expense, execute and deliver to such Guarantor appropriate documents, without recourse and without representation or warranty, necessary to evidence the transfer

by subrogation to such Guarantor of an interest in the Guaranteed Obligations resulting from such payment made by such Guarantor pursuant to this Guaranty.

12.5 Subordination . Each Guarantor hereby subordinates any and all debts, liabilities and other Obligations owed to such Guarantor by each other Credit Party (the “ Subordinated Obligations ”) to the Guaranteed Obligations to the extent and in the manner hereinafter set forth in this Section 12.5 :

(a) Prohibited Payments, Etc . Except following notice from the Lender given during the continuance of a Default (including the commencement and continuation of any Insolvency Proceeding relating to any other Credit Party), each Guarantor may receive payments from any other Credit Party on account of the Subordinated Obligations. After notice from the Lender given after the occurrence and during the continuance of any Default (including the commencement and continuation of any Insolvency Proceeding relating to any other Credit Party), however, unless the Lender otherwise agrees, no Guarantor shall demand, accept or take any action to collect any payment on account of the Subordinated Obligations.

(b) Prior Payment of Guaranteed Obligations . In any Insolvency Proceeding, each Guarantor agrees that the Lender shall be entitled to receive payment in full in cash of all Guaranteed Obligations (including all interest and expenses accruing after the commencement of an Insolvency Proceeding, whether or not constituting an allowed claim in such proceeding (“ Post Petition Interest ”)) before such Guarantor receives payment of any Subordinated Obligations.

(c) Turn-Over . After the occurrence and during the continuance of any Default (including the commencement and continuation of any Insolvency Proceeding relating to any other Credit Party), each Guarantor shall, if Lender so requests, collect, enforce and receive payments on account of the Subordinated Obligations as trustee for the Lender and deliver such payments to the Lender on account of the Guaranteed Obligations (including all Post Petition Interest), together with any necessary endorsements or other instruments of transfer, but without reducing or affecting in any manner the liability of such Guarantor under the other provisions of this Guaranty.

(d) Lender Authorization . After the occurrence and during the continuance of any Default (including the commencement and continuation of any Insolvency Proceeding relating to any other Credit Party), the Lender is authorized and empowered (but without any obligation to so do), in its discretion, (i) in the name of each Guarantor, to collect and enforce, and if such Guarantor fails to do so, to submit claims in respect of, Subordinated Obligations and to apply any amounts received thereon to the Guaranteed Obligations (including any and all Post Petition Interest), and (ii) to require each Guarantor (A) to collect and enforce, and to submit claims in respect of, Subordinated Obligations and (B) to pay any amounts received on such obligations to the Lender for application to the Guaranteed Obligations (including any and all Post Petition Interest).

12.6 Continuing Guaranty; Assignments .

(a) This Guaranty is a continuing guaranty and shall (a) remain in full force and effect until the latest of (i) the payment in full in cash of the Guaranteed Obligations and all other amounts payable under this Guaranty and (ii) the Termination Date, (b) be binding upon the Guarantor, its successors and assigns and (c) inure to the benefit of and be enforceable by the Lender and its successors, transferees and assigns. Without limiting the generality of clause (c) of the immediately preceding sentence, Lender may assign or otherwise transfer all or any portion of its rights and obligations under this Agreement (including, without limitation, the Term Loans owing to it and any Term Notes held by it) to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to Lender herein or otherwise, in each case as and to the extent provided in Section 12.6 . No Guarantor shall have the right to assign its rights hereunder or any interest herein without the prior written consent of the Lender (except in connection with a transaction expressly permitted under Section 7.3 of this Agreement) and any such attempted assignment without such consent shall be null and void.

13. NOTICES.

Unless otherwise provided in this Agreement, all notices or demands by Credit Parties or the Lender to the other relating to this Agreement or any other Loan Document shall be in writing and (except for financial statements and other informational documents which may be sent by first-class mail, postage prepaid) shall be personally delivered or sent by registered or certified mail (postage prepaid, return receipt requested), overnight courier, electronic mail to Credit Parties in care of Borrower or to the Lender, as the case may be, at its address set forth below:



If to Borrower:	ATLANTICUS HOLDINGS CORPORATION
	Five Concourse Parkway
	Suite 400
	Atlanta, GA 30328
	Attn: Chief Financial Officer
	Email: william.mccamey@atlanticus.com



With a copy to:	GREENBERG TRAURIG, LLP
	3333 Piedmont Road NE
	Suite 2500
	Atlanta, GA 30305
	Attn: James Altenbach
	Email: a ltenbachj@gtlaw.com



If to Lender:	DOVE VENTURES, LLC
	101 Convention Center Drive, Suite 850
	Las Vegas, NV 89109
	Attn: Joshua C. Miller
	Email: jmiller@key-state.com



With a copy to:	TROUTMAN SANDERS LLP
	600 Peachtree St. NE
	Suite 5200
	Atlanta, GA 30350
	Attn: Hazen H. Dempster
	Email: hazen.dempster@troutmansanders.com

The Lender and Borrower may change the address at which they are to receive notices hereunder, by notice in writing in the foregoing manner given to the other party. All notices or demands sent in accordance with this Section 13 , other than notices by the Lender in connection with enforcement rights against the Collateral under the provisions of the Code, shall be deemed received on the earlier of the date of actual receipt or 3 Business Days after the deposit thereof in the mail. Each Credit Party acknowledges and agrees that notices sent by the Lender in connection with the exercise of enforcement rights against Collateral under the provisions of the Code shall be deemed sent when deposited in the mail or personally delivered, or, where permitted by law, transmitted by facsimile or any other method set forth above.


14.	CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN

DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEVADA.

(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN CLARK COUNTY, NEVADA, PROVIDED , HOWEVER , THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT LENDER’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE LENDER ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH CREDIT PARTY AND THE LENDER WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 14(b) .

(c) THE CREDIT PARTIES AND THE LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. THE CREDIT PARTIES AND THE LENDER REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

15. GENERAL PROVISIONS.

15.1 Successors . This Agreement shall bind and inure to the benefit of the respective successors and assigns of each of the parties; provided, however, that the Credit Parties may not assign this Agreement or any rights or duties hereunder without the Lender’s prior written consent and any prohibited assignment shall be absolutely void ab initio. No consent to assignment by the Lender shall release any Credit Party from its Obligations. The Lender may assign this Agreement and the other Loan Documents, or any participation therein, and its rights and duties hereunder, in whole or in part, with the consent of the Borrower (such consent not to be unreasonably withheld) provided , however , that no consent or approval by the Borrower or any Credit Party is required in connection with any assignment by Lender if (a) there then exists an Event of Default or (b) such assignment is to an Affiliate of the assigning Lender.

15.2 Amendments and Waivers . No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent with respect to any departure by any Credit Party therefrom, shall be effective unless the same shall be in writing and signed by the Lender and Borrower (on behalf of all Credit Parties) and then any such waiver or consent shall be effective, but only in the specific instance and for the specific purpose for which given. Lender may, with the consent of the Borrower (such consent not to be unreasonably withheld) amend this Agreement to the extent necessary or appropriate to provide for multiple lenders hereunder and for a lead lender or agent for such lenders.

15.3 No Waivers; Cumulative Remedies . No failure by the Lender to exercise any right, remedy, or option under this Agreement or any other Loan Document, or delay by the Lender in exercising the same, will operate as a waiver thereof. No waiver by the Lender will be effective unless

it is in writing, and then only to the extent specifically stated. No waiver by the Lender on any occasion shall affect or diminish the Lender’s rights thereafter to require strict performance by the Credit Parties of any provision of this Agreement. The Lender’s rights under this Agreement and the other Loan Documents will be cumulative and not exclusive of any other right or remedy that the Lender may have.

15.4 Effectiveness . This Agreement shall be binding and deemed effective when executed by the Credit Parties and the Lender.

15.5 Section Headings . Headings and numbers have been set forth herein for convenience only. Unless the contrary is compelled by the context, everything contained in each Section applies equally to this entire Agreement.

15.6 Interpretation . Neither this Agreement nor any uncertainty or ambiguity herein shall be construed against the Lender or the Credit Parties, whether under any rule of construction or otherwise. On the contrary, this Agreement has been reviewed by all parties and shall be construed and interpreted according to the ordinary meaning of the words used so as to accomplish fairly the purposes and intentions of all parties hereto.

15.7 Severability of Provisions . Each provision of this Agreement shall be severable from every other provision of this Agreement for the purpose of determining the legal enforceability of any specific provision.

15.8 Counterparts; Electronic Execution . This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Agreement. Delivery of an executed counterpart of this Agreement by facsimile or other electronic method of transmission shall be equally as effective as delivery of an original executed counterpart of this Agreement. Any party delivering an executed counterpart of this Agreement by facsimile or other electronic method of transmission also shall deliver an original executed counterpart of this Agreement but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Agreement. The foregoing shall apply to each other Loan Document mutatis mutandis.

15.9 Revival and Reinstatement of Obligations . If the incurrence or payment of the Obligations by any Credit Party or the transfer to the Lender of any property should for any reason subsequently be declared to be void or voidable under any state or federal law relating to creditors’ rights, including provisions of the Bankruptcy Code relating to fraudulent conveyances, preferences, or other voidable or recoverable payments of money or transfers of property (collectively, a “Voidable Transfer”), and if the Lender is required to repay or restore, in whole or in part, any such Voidable Transfer, or elects to do so upon the reasonable advice of its counsel, then, as to any such Voidable Transfer, or the amount thereof that the Lender is required or elects to repay or restore, and as to all reasonable costs, expenses, and attorneys fees of the Lender related thereto, the liability of the Credit Parties automatically shall be revived, reinstated, and restored and shall exist as though such Voidable Transfer had never been made.

15.10 Integration . This Agreement, together with the other Loan Documents, reflects the entire understanding of the parties with respect to the transactions contemplated hereby and shall not be contradicted or qualified by any other agreement, oral or written, before the date hereof.

[Signature pages to follow]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered as of the date first above written.



	BORROWER:
	ATLANTICUS HOLDINGS CORPORATION

	By: /s/ William R. McCamey
	Name: William R. McCamey Title: Chief Financial Officer



	GUARANTORS:
	ACC HOLDING, LLC

	By: /s/ William R. McCamey
	Name: William R. McCamey Title: Manager


	ACCESS FINANCING, LLC

	By: /s/ Brian Stone
	Name: Brian Stone Title: President


	ATLANTICUS SERVICES CORPORATION

	By: /s/ William R. McCamey
	Name: William R. McCamey Title: Chief Financial Officer

LOAN AND SECURITY AGREEMENT SIGNATURE PAGE



	CC SERVE CORPORATION

	By: /s/ William R. McCamey
	Name: William R. McCamey Title: Vice President


	CIAC CORPORATION

	By: /s/ William R. McCamey
	Name: William R. McCamey Title: Vice President


	MOBILE TECH INVESTMENTS, LLC

	By: /s/ Brian Stone
	Name: Brian Stone Title: President


	WILTON ACQUISITIONS, LLC

	By: /s/ Mitch Saunders
	Name: Mitch Saunders Title: Manager

[Signature continue on following page]

LOAN AND SECURITY AGREEMENT SIGNATURE PAGE



	LENDER:
	DOVE VENTURES, LLC, as Lender By: /s/ Josh Miller Josh Miller Secretary

LOAN AND SECURITY AGREEMENT SIGNATURE PAGE

EXHIBIT A

FORM OF TERM NOTE

$[____________] Las Vegas, Nevada [____________], 201_

FOR VALUE RECEIVED, the undersigned ATLANTICUS HOLDINGS CORPORATION , a Georgia corporation (hereinafter referred to as “Maker”), promises to pay to the order of DOVE VENTURES, LLC , a Nevada limited liability company (hereinafter to as the “Holder”), at Holder’s office located at 101 Convention Center Drive, Suite 850, Las Vegas, Nevada 89109, or at such other place as Holder may from time to time designate in writing, the principal sum of [____________] Dollars (U.S. $[__________]), payable in full on the Termination Date. Capitalized terms used herein but not defined have the meaning given to such terms in the Loan Agreement referenced below.

Interest on the principal balance from time to time outstanding hereunder shall accrue at the rates and shall be payable in the manner set forth in that certain Loan and Security Agreement dated November 26, 2014 (as may be further amended, restated, supplemented or otherwise modified from time to time, the “Loan Agreement”), by and among Maker, certain Subsidiaries of Maker as guarantors, and Holder, as Lender. In no contingency or event whatsoever shall the interest rate charged pursuant to the terms of this Note or the Loan Agreement exceed the highest rate permissible under any law which a court of competent jurisdiction shall, in a final determination, deem applicable hereto. In the event that such a court determines that Holder has received interest hereunder in excess of the highest applicable rate, Holder shall promptly refund such excess interest to Maker.

This Note is one of the Term Notes referred to in the Loan Agreement and is subject to all of the terms and conditions of the Loan Agreement, including, but not limited to, those relating to prepayments hereon, and those relating to the acceleration of the indebtedness represented hereby upon the occurrence of an Event of Default. Payment of this Note is secured by the Collateral.

In the event that all or any portion of the indebtedness evidenced hereby shall be collected by or through an attorney-at-law, Holder shall be entitled to collect from Maker all costs of collection, including reasonable attorneys’ fees.

Maker hereby waives presentment, demand for payment, protest and notice of protest, notice of dishonor and all other notices in connection with this Note. This Note shall be payable without right of setoff, any defense or want or failure of consideration, nonperformance of any condition precedent, nondelivery or delivery for a special purpose or any other defense of any nature whatsoever.

THE VALIDITY OF THIS NOTE, THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF, AND THE RIGHTS OF THE HOLDER HEREOF WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR RELATED HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEVADA.

THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS NOTE SHALL BE TRIED AND LITIGATED IN THE STATE AND

TO THE EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN CLARK COUNTY, NEVADA. MAKER AND THE HOLDER WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS PARAGRAPH.

MAKER AND THE HOLDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS NOTE, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. MAKER REPRESENTS THAT IT HAS REVIEWED THIS WAIVER AND IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.

[Signatures being on following page]

IN WITNESS WHEREOF, the undersigned has caused this Note to be executed under seal by its duly authorized officer as of the day and year first written above.

ATLANTICUS HOLDINGS CORPORATION, a Georgia corporation

By:_________________________________________

Name:

Title:

EXHIBIT B

FORM OF COMPLIANCE CERTIFICATE

Pursuant to that certain Loan and Security Agreement (the “Loan Agreement”) dated as of November 26, 2014, by and among ATLANTICUS HOLDINGS CORPORATION, a Georgia corporation (“Borrower”), the Subsidiaries of Borrower party thereto and Dove Ventures, LLC, a Nevada limited liability company, as Lender (the “Lender”) (capitalized terms used herein and not otherwise defined having the meanings given such terms in the Loan Agreement), the undersigned, being the chief financial officer of Borrower (and in that capacity and not in my individual capacity), hereby certifies to the Lender as follows:

1. The undersigned is the chief financial officer of Borrower and, in that capacity, is authorized and empowered to issue this certificate for and on behalf of Borrower.

2. Borrower is, on the date hereof, in compliance with all the terms and conditions set forth in the Loan Agreement on its part to be observed and performed, which terms and conditions are incorporated herein by reference; and

3. On the date hereof, no Default or Event of Default has occurred or is continuing.

IN WITNESS WHEREOF, the undersigned has set his hand and seal this _____ day of _______, 201__.

_________________________________(SEAL)

Name:

Title:

Atlanticus Holdings Corporation

SCHEDULE 4.1

COMMERCIAL TORT CLAIMS

None

Exhibit 21.1



Subsidiaries of the Registrant
Name		State or other Jurisdiction of Incorporation or Organization
ACC Holding, LLC		Georgia
Access Financing, LLC		Georgia
Agea Capital, LLC		Georgia
Agea Financial, LLC		Georgia
Agea Holdings, LLC		Georgia
Atlanticus Funding II, LLC		Georgia
Atlanticus Funding IV, LLC		Georgia
Atlanticus Holdings Corporation		Georgia
Atlanticus Services Corporation		Georgia
Cahaba Energy, LLC		Georgia
CAR Financial Services Guam, Inc.		Guam
CAR Financial Services, Inc.		Georgia
CAR Financial Services Saipan, Inc.		Saipan
CAR Funding II, Inc.		Nevada
Card Services, Inc.		Georgia
CARDS Credit Services, LLC		South Carolina
CARDS, LLC		South Carolina
CARS Acquisition, LLC		Georgia
CCFC Corp.		Nevada
CCIS, LLC		Georgia
CCR Reinsurance, Ltd.		Turks and Caicos Islands
CCUK Finance Limited		United Kingdom
CCUK Holdings Limited		United Kingdom
CIAC Corporation		Nevada
Consumer Auto Receivables Servicing, LLC		Georgia
CreditLogistics India Private Limited		India
Ecache Acquisitions, LLC		Georgia
Express Financial, LLC		Georgia
Fortiva Capital, LLC		Georgia
Fortiva Financial, LLC		Georgia
Fortiva Funding III, LLC		Georgia
Fortiva Funding IV, LLC		Georgia
Fortiva Funding, LLC		Georgia
Fortiva Funding V, LLC		Georgia
Fortiva Holdings, LLC		Georgia
JJG, LLC		Georgia
JJG SPV, LLC		Georgia
Knightsbridge, LLC (1)		Delaware



Mobile Tech Investments, LLC (2)		Georgia
Partridge Funding Corporation		Nevada
Perimeter Investment Solutions, LLC		Georgia
Polygon Servicing, LLC		Georgia
TCK, LLC		Delaware
Transistor Holdings, LLC (3)		Delaware
Wilton Acquisitions, LLC		Georgia
YBUY Capital, LLC		Georgia
YBUY Financial, LLC		Georgia
YBUY Funding I, LLC		Georgia
YBUY Funding, LLC		Georgia
YBUY Holdings, LLC		Georgia
YBUY Operations, LLC		Georgia

(1) The Company owns 50% of Knightsbridge, LLC

(2) The Company owns 89.8% of Mobile Tech Investments, LLC

(3) The Company owns 66.7% of Conductor, LLC, Transistor Holdings, LLC and Transistor, LLC

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

Atlanticus Holdings Corporation

Atlanta, Georgia

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-150988-99 and 333-196041) of Atlanticus Holdings Corporation of our report dated March 5, 2015 , relating to the consolidated financial statements, which appears in the Annual Report on Form 10-K.

/s/ BDO USA, LLP

Atlanta, Georgia

March 5, 2015

Exhibit 31.1

CERTIFICATIONS

I, David G. Hanna, certify that:

1. I have reviewed this Report on Form 10-K of Atlanticus Holdings Corporation;

2. Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the periods covered by this Report; and

3. Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Report.

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:



	a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;



	b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;



	c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and



	d)	disclosed in this Report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the fourth fiscal period in the case of an annual Report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):



	a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and



	b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 5, 2015




	/s/ DAVID G. HANNA
	David G. Hanna
	Chief Executive Officer and Chairman of the Board

Exhibit 31.2

CERTIFICATIONS

I, William R. McCamey, certify that:

1. I have reviewed this Report on Form 10-K of Atlanticus Holdings Corporation;



	a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;



	b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;



	c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and



	d)	disclosed in this Report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the fourth fiscal period in the case of an annual Report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;



	a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and



	b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 5, 2015




	/s/ WILLIAM R. McCAMEY
	William R. McCamey
	Chief Financial Officer and Treasurer

Exhibit 32.1

CERTIFICATION

The undersigned, as the Chief Executive Officer and Chairman of the Board, and as the Chief Financial Officer, respectively, of Atlanticus Holdings Corporation, certify that, to the best of their knowledge and belief, the Annual Report on Form 10-K for the period ended December 31, 2014 , which accompanies this certification fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and the information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of Atlanticus Holdings Corporation at the dates and for the periods indicated. The foregoing certifications are made pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350) and shall not be relied upon for any other purpose.

This 5th day of March, 2015 .




	/s/ DAVID G. HANNA
	David G. Hanna
	Chief Executive Officer and
	Chairman of the Board

	/s/ WILLIAM R. McCAMEY
	William R. McCamey
	Chief Financial Officer and Treasurer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Atlanticus Holdings Corporation and will be retained by Atlanticus Holdings Corporation and furnished to the Securities and Exchange Commission or its staff upon request.