Company: ATLCL
Filing Date: 2025-02-25
Form Type: CORRESP
Source: 0001437749-25-005072
Chunk: 6

Company: Atlanticus Holdings Corp
Filing Date: 2025-02-25
Form: CORRESP
Chunk 6
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 future merchant fees from merchants is eligible for the fair value option. Specifically tell us how you considered whether this contractual right was a recognized financial asset under ASC 825-10-15-4 or was otherwise eligible. If you do not believe it is eligible, please explain to us how that determination would impact your financial statements. |

Company Response:

We do not believe we have a contractual right to future merchant fees that would be appropriate to recognize as a financial asset under ASC 825-10-15-4. We do feel that the existence of the attributable economics of the merchant fee would be considered by an acquirer of the receivables. In other words, the acquirer of the receivable would either conclude that they could continue providing ongoing utility to the consumer by having a similar arrangement with the retail partner or would re-price the relationship with the retail partner to achieve similar overall economics. In many of our retail relationships, our bank partner is not the only provider of credit to the retail partner’s consumers. Our bank partners compete with other providers of credit that may offer similar or different terms to the consumer. As such, an acquirer of our receivables may already have an existing relationship with the retail partner that is priced differently than the existing products but ultimately achieves the same or similar net economics.

Were we to remove the impact of projected merchant fees from our fair value model, we do not believe it would create a material shift in the overall valuation of the receivables as 1) the fair value of projected merchant fees make up less than 1% of the current outstanding A/R and 2) we would be required to adjust other assumptions in the fair value model (through assumed asset repricings) in order to appropriately model returns that outside investors would expect from similar assets. In both cases, we believe that changing assumptions would result in immaterial changes to our overall model valuation.

Company Response:

See response to Comment 7.

Note 6. Fair Values of Assets and Liabilities, page F-16

| 9. | We note your response to prior comment 6 and your response to comment 15 in your response letter dated November 22, 2024. It is still unclear from your current disclosure that appears to indicate that the entire change in fair value of your loans is attributable to instrument-specific credit risk is appropriate, considering your disclosure that non-instrument-specific credit risk factors impact your fair value measurement. We also note that ASC 825-10-45-5 appears to provide an acceptable method of