Company: ATLCL
Filing Date: 2025-03-10
Form Type: CORRESP
Source: 0001437749-25-006744
Chunk: 11

Company: Atlanticus Holdings Corp
Filing Date: 2025-03-10
Form: CORRESP
Chunk 11
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 above scenarios as well as other historical consumer behavior. This historical behavior guides the expected cash flows associated with the receivable and, when the cash flows are discounted, constitutes our assessed fair value. Since our receivables are valued at the pool level and not the individual consumer level, the fair value of Day one fees associated with a new consumer are combined with potential upside or downside valuations of other consumers that may have purchases, payments, delinquencies, etc. This aggregation then produces an overall mark on our pool of receivables. Viewed in isolation, a consumer receivable has a Day one fair value equal to the gross receivable balance on Day one (effectively no fair value mark offsetting the receivable) whether that balance was comprised of a fee or a principal purchase, as the consumer has not exhibited behavior to indicate a more favorable or less favorable assessment should apply. However, when aggregated with the rest of the receivables in the pool, the Day one receivable is assigned the weighted fair value of the pool, which, for our General Purpose Credit Card receivables is currently in excess of the face value of the receivables. As a result, we do not have a negative fair value associated with our Day one acquisition of fees or principal receivables associated with our general purpose credit card receivables.

Confidential Treatment Requested by Atlanticus Holdings Corporation
AHC - 007

The following table illustrates the accounting entries associated with a single consumer in our general purpose credit card receivables. In the below example, the consumer accepts our bank partner’s credit terms (assumed $100 annual fee, 19% APR) and is issued a credit card.

| General Purpose Credit Card Consumer in a typical month                                                            
 Balance Sheet                                                                                                      |     |   |     |     |   |     |     |                  |
|:-------------------------------------------------------------------------------------------------------------------|:----|:--|----:|:----|:--|----:|:----|:-----------------|
| Dr. Loans at fair value                                                                                            |     | $ | 100 |     |   |     |     | Balance Sheet    |
| Cr. Fees and related income on consumer accounts                                                                   |     |   |     |     | $ | 100 |     | Income Statement |
| - To record a $100 annual fee                                                                                      |     |   |     |     |   |     |     |                  |
| Dr. Loans at fair value                                                                                            |     | $ |  50 |     |