##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
 Form 10-K
  (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31,
    2010oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file number:
    001-35064
  IMPERIAL HOLDINGS,
    INC.
 (Exact name of registrant as
    specified in its charter)
  Florida(State or other jurisdiction
    of
    incorporation or organization)

30-0663473(I.R.S. Employer
    Identification No.)   701 Park
    of Commerce Boulevard, Suite 301
    Boca Raton, Florida 33487 (Address
    of principal executive offices, including zip
    code)
  (561) 995-4200
    (Registrants telephone number, including area code)
    Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, par value $0.01 per share

New York Stock Exchange   Securities registered pursuant to Section 12(g) of the
    Act:
 None
  o þ
  o þ
  o þ
  Regulation S-T o o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
  Large accelerated
    filer o

Accelerated
    filer o

Non-accelerated
    filer þ
    (Do not check if a smaller reporting company)

Smaller reporting
    company o   Rule 12b-2 o þ




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##### 





IMPERIAL
    HOLDINGS, INC.
    2010
    Form 10-K
    Annual Report
    Table of Contents
  PageItem



No.PART I1.

Business


21A.

Risk Factors


171B.

Unresolved Staff Comments


332.

Properties


333.

Legal Proceedings


334.

(Removed and Reserved)


33PART II5.

Market for Registrants Common Equity,
    Related Shareholder Matters and Issuer Purchases of Our Equity
    Securities


346.

Selected Financial Data


357.

Managements Discussion and Analysis of
    Financial Condition and Results of Operations


387A.

Quantitative and Qualitative Disclosures about
    Market Risk


668.

Financial Statements and Supplementary Data


679.

Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


679A.

Controls and Procedures


679B.

Other Information


68PART III10.

Directors, Executive Officers and Corporate
    Governance


6811.

Executive Compensation


7412.

Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


8113.

Certain Relationships and Related Transactions,
    and Director Independence


8214.

Principal Accountant Fees and Services


88PART IV15.

Exhibits and Financial Statement Schedules


88Signatures


89Table of Contents to Consolidated Financial
    Statements and Notes


F-1Exhibit Index


E-1




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CAUTIONARY
    STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
  Form 10-K Form 10-K
    
    our results of operations;
    our ability to continue to grow our businesses;
    our ability to obtain financing on favorable terms or at all;
    changes in laws and regulations applicable to premium finance
    transactions, life settlements or structured settlements;
    changes in mortality rates and the accuracy of our assumptions
    about life expectancies;
    increased competition for premium finance lending or for the
    acquisition of structured settlements;
    adverse developments in capital markets;
    loss of the services of any of our executive officers;
    the effects of United States involvement in hostilities with
    other countries and large-scale acts of terrorism, or the threat
    of hostilities or terrorist acts; and
    changes in general economic conditions, including inflation,
    changes in interest rates and other factors.  Form 10-K
  Form 10-K
 1




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##### Table of Contents



PART I  Item 1.
    Business  Overview
    Premium
    Finance Business
  Overview
    Form 10-K, Form 10-K,
    
    Agency Fees We charge the referring agent an
    agency fee for services related to premium finance loans. Agency
    fees as a percentage of the principal balance of the loans
    originated during the year ended December 31, 2010 and
    December 31, 2009 were 48.8% and 50.6%, respectively. These
    agency fees are charged when the loan is funded and collected on
    average within 46 days thereafter.
    Interest Income Substantially all of the
    interest rates we charge on our premium finance loans are
    floating rates that are calculated at the one-month LIBOR rate
    plus an applicable margin. In addition, our premium finance
    loans have a floor interest rate and are capped at 16.0% per
    annum. For loans with floating rates, each month the interest
    rate is recalculated to equal one-month LIBOR plus the
    applicable margin, and then, if necessary, adjusted so as to
    remain at or above the stated floor rate and not to exceed the
    capped rate of 16.0% per annum. The weighted average per annum
    interest rate for premium finance loans outstanding as of
    December 31, 2010 and December 31, 2009 was 11.4% and
    10.9%, respectively.
    Origination Fees On each premium finance loan
    we charge a loan origination fee that is added to the loan and
    is due upon the date of maturity or upon repayment of the loan.
    Origination fees as a percentage of the principal balance of the
    loans originated during the year ended December 31, 2010
    and December 31, 2009 were 41.5% and 44.7%, respectively. 2




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##### Table of Contents




    the use of third party medical underwriters to evaluate the
    medical condition and life expectancy of each insured;
    the use of actuarial tables published by the American Society of
    Actuaries;
    the subject policy be issued by an insurance company with a high
    financial strength rating from A.M. Best,
    Standard & Poors or other recognized rating
    agencies;
    a review of each loan for compliance with our internal
    guidelines as well as applicable laws and regulations; and
    the use of a personal guaranty to further support our
    underwriting efforts to protect against losses resulting from
    the issuing insurance company voiding a policy due to fraud or
    misrepresentations in the application process to obtain the life
    insurance policy.       3




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Sources
    of Revenue
    
    Agency fees.  For each premium finance loan,
    Imperial Life and Annuity Services, LLC (Imperial Life and
    Annuity), a licensed insurance agency and our wholly-owned
    subsidiary, receives an agency fee from the referring insurance
    agent. Historically, Imperial Life and Annuity typically charges
    and receives agency fees from the referring agent within
    approximately 46 days of our funding the loan. Referring
    insurance agents pay the agency fees to Imperial Life and
    Annuity for the due diligence performed in underwriting the
    premium finance transaction. The amount of the agency fee paid
    by a referring life insurance agent is negotiated with the
    referring agents based on a number of factors, including the
    size of the policy and the amount of premiums on the policy.
    Agency fees as a percentage of the principal balance of the
    loans originated during the year ended December 31, 2010
    and December 31, 2009 were 48.8% and 50.6%, respectively.
    During the year ended December 31, 2010 and
    December 31, 2009, 15.1% and 28.2%, respectively, of our
    revenue from our premium finance segment was from agency fees.  
    Interest income.  We receive interest income
    that accrues over the life of the loan and is due upon the date
    of maturity or upon repayment of the loan. The interest rates
    are typically floating rates that are calculated at the
    one-month LIBOR rate plus an applicable margin. In addition, our
    premium finance loans have a floor interest rate and are capped
    at 16.0% per annum. For loans with floating rates, each month
    the interest rate is recalculated to equal one-month LIBOR plus
    the applicable margin, and then, if necessary, adjusted so as to
    remain at or above the stated floor rate and at or below the
    capped rate of 16.0% per annum. The weighted average per annum
    interest rate for premium finance loans outstanding as of
    December 31, 2010 and December 31, 2009 were 11.4% and
    10.9%, respectively. During the year ended December 31,
    2010 and December 31, 2009, 27.2% and 21.9%, respectively,
    of our revenue from our premium finance segment was from
    interest income.  
    Origination fees.  We charge a loan origination
    fee on each premium finance loan we fund. The origination fee
    accrues over the term of the loan and is due upon the date of
    maturity or upon repayment of the loan. For the year ended
    December 31, 2010 and December 31, 2009, origination
    fees as a percentage of the principal balance of the loans
    originated during such periods were 41.5% and 44.7%,
    respectively. During the year ended December 31, 2010 and
    December 31, 2009, the per annum origination fee as a
    percentage of the principal balance of the loans originated was
    22.7% and 19.2%, respectively. During the year ended
    December 31, 2010 and December 31, 2009, 29.6% and
    32.2%, respectively, of our revenue from our premium finance
    segment was from origination fees.    
    the borrower or family member of the insured repays the loan
    upon maturity;
    the insured passes away prior to the loan maturity and the death
    benefit is used to repay the loan, with the remainder being paid
    to the borrower for the benefit of its beneficiaries; or
    upon default, we typically enter into an agreement with the
    borrower and the life insurance policy beneficiaries whereby
    they relinquish ownership of the life insurance policy and all
    interests therein to us in exchange for a release of the
    obligation to pay amounts due. Following relinquishment, if the
    loan is insured pursuant to lender protection insurance, then,
    subject to terms and conditions of the lender protection
    insurance policy, our lender protection insurer has the right to
    direct control or take beneficial ownership of the life
    insurance policy and we are paid a claim equal to the insured
    value of the life insurance policy serving as collateral
    underlying the loan. If the loan is not insured, we seek to sell
    the life insurance policy in the secondary market. 4




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Year Ended December 31,2010


2009


2008Repaid by the borrower


3



12



2Repaid from death benefit during term of loan


1



2



3Repaid from lender protection insurance claim


419



56



4Lender protection insurance claims in process


3



8



426



78



9   Cost
    of Financing
    Form 10-K,
  Year Ended December 31,2010


2009


2008Lender protection insurance cost


11.0
%


10.9
%


8.50
%Interest cost and other lender funding charges under credit
    facilities


16.0
%


18.2
%


13.70
%Total financing cost


27.0
%


29.1
%


22.2
%    5




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Year Ended December 31,2010


2009Credit Facilities:Acorn

$
3,988


$
9,179CTL*


24



49,744White Oak


21,219



26,595Cedar Lane


34,209



11,806Ableco






96,174Total credit facilities

$
59,440


$
193,498Promissory Notes:Amalgamated






9,627Skarbonka






17,615IMPEX


2,402



10,324Total promissory notes

$
2,402


$
37,566Skarbonka debenture payable


29,767



Total Debt

$
91,609


$
231,064Amount of Total Debt secured by loans with lender protection
    insurance that are non-recourse to Imperial

$
55,452


$
184,319% of Total Debt secured by loans with lender protection
    insurance that are non-recourse to Imperial


60.5
%


79.8
%     *
    
    Represents the balance remaining under our $30 million grid
    promissory note in favor of CTL Holdings. 6




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Premium
    Finance Transaction Process
    Step 1: Borrower Independently Obtains a Life Insurance Policy

   An individual, who desires to obtain
    life insurance, forms an irrevocable trust, generally for estate
    planning purposes.   An application to obtain a life
    insurance policy is submitted to an insurance company by the
    individual so that, when issued, the policy will be owned by the
    irrevocable trust whose beneficiaries have insurable interests
    in the life of the insured (primarily family members of the
    insured).   A life insurance policy is issued to the
    irrevocable trust and the life insurance agent/broker involved
    in the issuance of the policy receives a commission from the
    issuing life insurance agency.Step 2: Sales

   An independent insurance agent/broker
    contacts us regarding potentially obtaining a premium finance
    loan on behalf of a borrower.   We work with referring agents/brokers to
    obtain necessary information regarding the life insurance
    policy, such as life expectancy reports, medical evaluations and
    other information relevant to the valuation of the life
    insurance policy.   Our sales team manages the process and
    is the point of contact for the referring agent/broker.Step 3: Loan Underwriting

   We analyze the information we obtain
    regarding the life insurance policy using our proprietary models
    to determine its fair value.   We review all potential transactions for
    adherence to our internal guidelines, such as proof of payment
    of prior premiums from the borrowers own funds and rating
    of the issuing life insurance company and other items.   If the loan is to be insured with lender
    protection insurance, we consult with our lender protection
    insurer to determine the insured value of the loan, which is the
    amount we would receive in the event that we filed a lender
    protection insurance claim, and to provide the insurer with any
    information necessary for their own underwriting process.Step 4: Legal/Compliance

   We conduct an independent review of each
    file and verify that compliance, legal and fair value assessment
    processes have been completed in order to approve a loan.   We complete a compliance checklist of
    over 200 items by multiple departments.   We maintain and distribute documents
    necessary for compliance with HIPAA, legal and internal
    standards.   We confirm that the borrower has at
    least one independent professional trustee to ensure all future
    premiums will be paid. If there is no independent professional
    trustee, we require the borrower to amend the trust
    documentation to appoint one. 7




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Step 5: Funding

   When we approve a premium finance loan,
    the borrower executes a loan agreement and other related
    documents, which contain representations, warranties and
    guaranties from the insured and representations and warranties
    from the referring agent/broker in regard to the accuracy of the
    information provided to us and the issuing life insurance
    company.   Once the loan documentation is properly
    executed, we fund all funds directly to the borrower in one
    initial wire transfer. Loan proceeds advanced are never in
    excess of the premiums previously paid and future premiums that
    are scheduled to come due on the policy during the term of the
    loan nor do we pay any fees or other compensation to the
    borrower.   Upon funding, we charge the referring
    agent/broker an agency fee that is collected on average within
    46 days thereafter. The agency fee is charged to the
    referring agent/broker and is not part of the premium finance
    loan.   The borrower is not required to make any
    payment on the loan until maturity. At the end of the loan term,
    the borrower is required to repay the loan in full (including
    all interest and origination fees that accrue over the life of
    the loan).   We update our files with completed
    documentation.   Prior to our recently completed initial
    public offering, we relied upon debt financing to fund our
    loans. Using debt financing, we would receive funds under a
    credit facility prior to our wiring funds to the borrower. If
    the loan had lender protection insurance, we would pay the cost
    of the lender protection insurance premium to the lender
    protection insurer contemporaneously with the funding of the
    loan. With the net proceeds of our recently completed initial
    public offering, we will fund new premium finance loans without
    relying on debt financing.Step 6: Servicing

   We prepare and monitor internal and
    external reporting to accounting, lenders and others.   We verify premiums are paid and
    correctly applied.   We update files for medical history and
    ongoing premium payments.Step 7: Loan Maturity

   We send a notice to the borrower and
    trustee 60 days and 30 days prior to the maturity of a
    loan to provide advance notice that the premium finance loan is
    coming due.   Upon maturity of a loan, we are either
    (i) repaid our principal as well as our origination fees and
    interest income or (ii) the loan goes into default due to
    nonpayment by the borrower. 8




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   If the loan goes into default, we ask
    the borrower to liquidate the policy. To assist a borrower with
    its liquidation of a policy, we will introduce the borrower to
    potential buyers as well as to life settlement brokers. We
    receive no commission or fee for these introductions or any sale
    of the policy by the borrower. The liquidation proceeds are used
    to pay off our loan, including accrued interest and origination
    fees, and the balance is retained by the borrower. If the
    liquidation proceeds of a policy are less than the amount to pay
    off the loan, the borrower seeks our consent in order to
    liquidate the policy. We may either approve the sale of the
    policy for less than the amount due on the loan or may decide to
    take control of the policy. If the loan is covered by lender
    protection insurance, then the lender protection insurer, rather
    than us, must consent to the liquidation of the policy if the
    liquidation proceeds are going to be less than the loans
    insured value.   If the borrower is unable to liquidate
    the policy, we obtain all rights to the policy as lender.   If the loan has lender protection
    insurance, then, subject to the terms and conditions of the
    lender protection insurance policy, our lender protection
    insurer has the right to direct control or take beneficial
    ownership of the life insurance policy and we are paid a claim
    equal to the insured value of the life insurance policy serving
    as collateral underlying the loan. Following the payment of the
    insurance claim, we have no further economic or beneficial
    interest in the policy.   If the loan is not insured, we seek to
    sell the life insurance policy in the secondary market. With the
    net proceeds from our recently completed initial public
    offering, we have the option to retain for investment a number
    of the policies relinquished to us upon a default. When we
    retain for investment life insurance policies relinquished to us
    upon default, we will receive the death benefit of the policy
    upon the death of the insured as long as we continue to pay the
    premiums required to keep the policy in force and the policy is
    not contested.   Underwriting
    Procedures
  15-20% 80-85%
 9




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Form 10-K,
  Servicing
     10




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Our
    Proprietary Systems and Processes
    
    Store all of our data electronically, including policy
    information, premium schedules, past mortality experience,
    underwriting information, mortality probabilities and other data;
    Use our electronic data to generate financial models and
    analysis for an individual or group of life insurance policies;
    Create internal and external reports of our underwriting and
    policy valuation;
    Perform a comparative analysis of life insurance products based
    on a particular insureds age, gender, health information
    and life expectancy; and
    Identify the fair value of the life insurance policies that
    underlie our premium finance loans.      year-over-year sub-accounts
  Structured
    Settlements Business
  Overview
     11




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Marketing
    follow-up.
      Year Ended December 31,2010

2009

2008Number of transactions originated


565



396



276Average marketing cost per transaction

$
9.0


$
11.3


$
19.2    12




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Three Months EndedMay 31,

June 30,

Sep 30,

Dec 31,

Mar 31,

June 30,

Sep 30,

Dec 31,

Mar 31,

June 30,

Sep 30,

Dec 31,2008

2008

2008

2008

2009

2009

2009

2009

2010

2010

2010

2010Number of transactions with repeat customers


2



4



5



12



10



12



10



20



24



25



49



56Percentage of total transactions


5
%


7
%


7
%


11
%


13
%


13
%


10
%


17
%


22
%


18
%


34
%


31
%     Funding
    
    Strategic sale.  We have sold pools of
    structured settlements we acquired in the past. In September
    2010, we entered into an arrangement to provide us up to
    $50 million to finance the purchase of structured
    settlements. We also have other parties to whom we have sold
    structured settlement assets in the past and to whom we believe
    we can sell such assets in the future.
    Balance sheet.  We may purchase structured
    settlements and we may hold them for investment, servicing the
    asset and collecting the periodic payments or we may finance
    such assets through our $50 million arrangement described
    above. Although we have not used debt financing to fund the cost
    of acquisition of structured settlements, we will continue to
    evaluate alternative financing arrangements such as a warehouse
    line of credit.  Sources
    of Revenue
  mark-to-market
  Year Ended December 31,2010

2009

2008Number of transactions originated


565



396



276Face value of undiscounted future payments purchased

$
47,207


$
28,877


$
18,295Weighted average purchase discount rate


19.4
%


16.3
%


12.0
%Number of transactions sold


630



439



226Weighted average sale discount rate


8.9
%


11.5
%


10.8
%    13




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##### Table of Contents



Underwriting
    Procedures, Transaction Timeline and Process
        
    The individual who has a structured settlement contacts us
    seeking a lump-sum payment based on the settlement.
    After analyzing the settlement structure, we offer to provide a
    lump-sum amount to the individual in exchange for a set number
    of payments.
    We complete our underwriting process. Upon satisfactory review,
    our counsel secures a court date and notifies interested
    parties, including any beneficiaries, owners and issuers of the
    pending transaction.
    A court hearing is held and the judge approves or denies the
    motion to sell and assign to us the
    agreed-upon
    portion of the individuals structured settlement.
    Final review of the court-approved transaction takes place and
    we fund the payment to the individual.  Our
    Competitive Strengths
    
    Complementary mix of business lines.  Unlike
    many of our competitors who are focused on either structured
    settlements or premium financings, we operate in both lines of
    business. This diversification provides us with a complementary
    mix of business lines as the revenues generated by our
    structured settlement business are generally short-term cash
    receipts in comparison to the revenue from our premium financing
    business which is collected over a longer period.
    Scalable and cost-effective infrastructure.  We
    have created an efficient, cost-effective, scalable
    infrastructure that complements our businesses. We have
    developed proprietary systems and models that allow for
    cost-effective review of both premium finance and structured
    settlement transactions that utilize our underwriting standards
    and guidelines. Our systems allow us to efficiently process
    transactions while maintaining our underwriting standards. As a
    result of our investments in our infrastructure, we have
    developed a structured settlement business model that we believe
    has significant scalability to permit our structured settlement
    business to continue to grow efficiently.
    Barriers to entry.  We believe that there are
    significant barriers to entry into the premium financing and
    structured settlement businesses. With respect to premium
    finance, obtaining the requisite state licenses and developing a
    network of referring agents is time intensive and expensive.
    With respect to structured settlements, the various state
    regulations require special knowledge as well as a network of
    attorneys experienced in obtaining court approval of these
    transactions. Our management and key personnel from our premium
    finance and structured settlement businesses are experienced in
    these specialized businesses and, in many cases, have more than
    half a decade of experience working together at Imperial and at
    prior employers. Our management team has significant experience
    operating in this highly regulated industry. 14




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
    Strength and financial commitment of management team with
    proven track record.  Our senior management team
    is experienced in the premium finance and structured settlement
    industries. In the mid-1990s, several members of our management
    team worked together at Singer Asset Finance, where they were
    early entrants in structured settlement asset classes. After
    Singer was acquired in 1997 by Enhance Financial Services Group
    Inc., several members of our senior management team joined Peach
    Holdings, Inc. At Peach Holdings, they held senior positions,
    including Chief Operating Officer, Head of Life Finance and Head
    of Structured Settlements. In addition, Antony Mitchell, our
    chief executive officer, and Jonathan Neuman, our president and
    chief operating officer, each have invested a significant amount
    of their own capital in our company. This financial commitment
    aligns the interests of our principal executive officers with
    those of our shareholders.  Business
    Strategy
    
    Reduce or eliminate the use of debt financing in our premium
    finance business.  The capital generated by our
    recently completed initial public offering enables us to fund
    our premium finance loans and provides us with the option to
    retain our investments in life insurance policies that we
    acquire upon relinquishment by our borrowers without the need
    for additional debt financing. In contrast to our prior
    leveraged business model that made us reliant on third-party
    financing that was often unavailable or expensive, we will use
    equity capital from our recently completed initial public
    offering to engage in premium finance transactions at profit
    margins significantly greater than what we have historically
    experienced. In the future, we will consider debt financing for
    our premium finance transactions and structured settlement
    purchases only if such financing is available on attractive
    terms.
    Eliminate the use of lender protection
    insurance.  With the proceeds of our recently
    completed initial public offering, we no longer require debt
    financing and lender protection insurance for new premium
    finance business. As a result, we expect to experience
    considerable cost savings, and in addition expect to be able to
    originate more premium finance loans because we will not be
    subject to coverage limitations imposed by our lender protection
    insurer that have reduced the number of loans that we can
    originate.
    Continue to develop structured settlement
    database.  We intend to increase our marketing
    budget and grow our sales staff in order to increase the number
    of leads in our structured settlement database and to originate
    more structured settlement transactions. As our database of
    structured settlements grows, we expect that our sales staff
    will be able to increase our transaction volume due in part to
    repeat transactions from our existing customers.  Regulation
  Premium
    Financing Transactions
    
    require that premium finance lenders be licensed by the
    applicable jurisdiction;
    require certain disclosures to insureds;
    regulate the amount of late fees and finance charges that may be
    charged if a borrower is delinquent on its payments; or
    allow imposition of potentially significant penalties on lenders
    for violations of that jurisdictions insurance premium
    finance laws.   15




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state-by-state
    Structured
    Settlements
     16




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##### Table of Contents



Competition
  Premium
    Finance
    Structured
    Settlements
    Pre-Settlement
    Funding Business
      Employees
    Item 1A.
    Risk
    Factors  Risk
    Factor Relating to Capital Markets
  Difficult
    conditions in the credit and equity markets have adversely
    affected and may continue to adversely affect the growth of our
    business, our financial condition and results of
    operations.
   17




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Risk
    Factors Related to Premium Finance Transactions
  Uncertainty
    in valuing the life insurance policies collateralizing our
    premium finance loans can affect the fair value of the
    collateral and if the fair value of the collateral decreases, we
    will incur losses if the fair value of the collateral is less
    than the carrying value of the loan.
  Form 10-K,
     18




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Our
    success in operating our premium finance business will be
    dependent upon using equity financing rather than debt financing
    and lender protection insurance, and making accurate assumptions
    about life expectancies so that we may maintain adequate cash
    balances to pay premiums.
       19




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##### Table of Contents



The
    premium finance business is highly regulated; changes in
    regulation could materially adversely affect our ability to
    conduct our business.
    
    require that premium finance lenders be licensed by the
    applicable jurisdiction;
    require certain disclosure agreements and strictly govern the
    content thereof;
    regulate the amount of late fees and finance charges that may be
    charged if a borrower is delinquent on its payments; and/or
    allow imposition of potentially significant penalties on lenders
    for violations of such jurisdictions applicable insurance
    premium finance laws.      Our
    success in our premium finance business depends on maintaining
    relationships within our referral networks.
    If a
    regulator or court decides that trusts that are formed to own
    many of the life insurance policies that serve as collateral for
    our premium finance loans do not have an insurable interest in
    the life of the insured, such determination could have a
    material adverse effect on our business, financial condition and
    results of operations.
   20




---



##### Table of Contents



Premium
    finance loan originations are susceptible to practices which can
    invalidate the underlying life insurance policy and subject us
    to material fines or license suspension or
    revocation.
         21




---



##### Table of Contents



The
    life insurance policies that we own or that secure our premium
    finance loans may be subject to contest, rescission and/or
    non-cooperation by the issuing life insurance company, which may
    have a material adverse effect on our business, financial
    condition and results of operations.
    and/or
 22




---



##### Table of Contents



Premium
    financed life insurance policies are susceptible to a higher
    risk of fraud and misrepresentation in life insurance
    applications.
    Contractions
    in the secondary market for life insurance policies could make
    it more difficult for us to opportunistically sell policies that
    we have acquired.
  and/or
  Delays
    in payment and non-payment of life insurance policy proceeds may
    have a material adverse effect on our business, financial
    condition and results of operations.
   23




---



##### Table of Contents



Bankruptcy
    of the insured, a beneficiary of the trust owning the life
    insurance policy or the trust itself could prevent a claim under
    our lender protection insurance policy.
    Our
    lender protection insurance policies have significant exclusions
    and limitations.
    
    the lapse of the related life insurance policy due to the
    failure to pay sufficient premiums during the term of the
    applicable premium finance loan;
    certain losses relating to situations where the life insured has
    died and there has been a bankruptcy or insolvency of the life
    insurance company that issued the applicable policy;
    any loss caused by our fraudulent, illegal, criminal, malicious
    or grossly negligent acts;
    a surrender of the related life insurance policy to the issuing
    life insurance carrier or the sale of such policy or the
    beneficial interest therein, in each case without the prior
    written consent of the lender protection insurer;
    our failure to timely obtain necessary rights, free and clear of
    any lien or encumbrance, with respect to the applicable life
    insurance policy as required under the lender protection
    insurance policy;
    our failure to timely submit a properly completed proof of loss
    certificate to the lender protection insurance policy insurer;
    our failure to timely notify the lender protection insurance
    policy insurer of:  
    the occurrence of certain prohibited acts, as described in the
    lender protection insurance policy, or
    material non-compliance of the related loan with applicable
    laws, in each case after obtaining actual knowledge of such
    events;  
    our making of a claim under the lender protection insurance
    policy knowing the same to be fraudulent; or
    the related life insurance policy being contested prior to the
    effective date of the related coverage certificate issued under
    the lender protection insurance policy and we have actual
    knowledge of such contest. 24




---



##### Table of Contents



Failure
    to perfect a security interest in the underlying life insurance
    policy or the beneficial interests therein could result in our
    interest being subordinated to other creditors.
    Some
    life insurance companies are opposed to the financing of life
    insurance policies.
    We are
    dependent on the creditworthiness of the life insurance
    companies that issue the policies serving as collateral for our
    premium finance loans. If a life insurance company defaults on
    its obligation to pay death benefits on a policy we own, we
    would experience a loss of our investment, which would have a
    material adverse effect on our business, financial condition and
    results of operations.
    If a
    life insurance company is able to increase the premiums due on
    life insurance policies that we own or finance, it will
    adversely affect our returns on such life insurance
    policies.
   25




---



##### Table of Contents



Failure
    to protect our premium finance transaction clients
    confidential information and privacy could adversely affect our
    business.
    
    training and educating our employees regarding our obligations
    relating to confidential information;
    actively monitoring our record retention plans and any changes
    in state or federal privacy and compliance requirements;
    maintaining secure storage facilities for tangible
    records; and
    limiting access to electronic information.    Risk
    Factors Related to Structured Settlements
  We are
    dependent on third parties to purchase our structured
    settlements. Any inability to sell structured settlements or, in
    the alternative, to access additional capital to purchase
    structured settlements, may have a material adverse effect on
    our ability to grow our business, our financial condition and
    results of operations.
      Any
    change in current tax law could have a material adverse effect
    on our business, financial condition and results of
    operations.
   26




---



##### Table of Contents



Fluctuations
    in discount rates or interest rates may decrease our yield on
    structured settlement transactions.
    The
    insolvency of a holder of a structured settlement could have an
    adverse effect on our business, financial condition and results
    of operations.
  and/or
      If the
    identities of structured settlement holders become readily
    available, it could have an adverse effect on our structured
    settlement business, financial condition and results of
    operations.
   27




---



##### Table of Contents



Adverse
    judicial developments could have an adverse effect on our
    business, financial condition and results of
    operations.
  321 Henderson Receivables,
    LLC v. Tomahawk Tomahawk
  Risk
    Factors Relating to Our General Business
  Changes
    to statutory, licensing and regulatory regimes governing premium
    financing or structured settlements, including the means by
    which we conduct such business, could have a material adverse
    effect on our activities and revenues.
    Form 10-K
   28




---



##### Table of Contents



Regulation
    of life settlement transactions as securities under the federal
    securities laws could lead to increased compliance costs and
    could adversely affect our ability to acquire or sell life
    insurance policies.
    Negative
    press from media or consumer advocacy groups and as a result of
    litigation involving industry participants could have a material
    adverse effect on our business, financial condition and results
    of operations.
    We
    have limited operating experience.
    The
    loss of any of our key personnel could have a material adverse
    effect on our business, financial condition and results of
    operations.
       29




---



##### Table of Contents



We
    compete with a number of other finance companies and may
    encounter additional competition.
  and/or
  Risk
    Factors Relating to Our Common Stock
  If
    securities or industry analysts publish inaccurate or
    unfavorable research about our business, our stock price and
    trading volume could decline.
    Future
    sales of our common stock may affect the trading price of our
    common stock and the future exercise of options may lower the
    price of our common stock.
  180-day lock-up lock-up
  Being
    a public company will increase our expenses and administrative
    workload and will expose us to risks relating to evaluation of
    our internal controls over financial reporting required by
    Section 404 of the Sarbanes-Oxley Act of
    2002.
     30




---



##### Table of Contents



Our
    independent registered public accounting firm has in the past
    identified certain deficiencies in our internal controls that it
    considered to be control deficiencies and material weaknesses.
    If we fail to remediate these internal control deficiencies and
    material weaknesses and maintain an effective system of internal
    controls over financial reporting, we may not be able to
    accurately report our financial results.
     31




---



##### Table of Contents



Provisions
    in our executive officers employment agreements could
    impede an attempt to replace or remove our directors or
    otherwise effect a change of control, which could diminish the
    price of our common stock.
    Provisions
    in our articles of incorporation and bylaws could impede an
    attempt to replace or remove our directors or otherwise effect a
    change of control, which could diminish the price of our common
    stock.
      Certain
    laws of the State of Florida could impede an attempt to replace
    or remove our directors or otherwise effect a change of control,
    which could diminish the price of our common
    stock.
     32




---



##### Table of Contents



5-day
      Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties    Item 3.
    Legal
    Proceedings      Item 4.
    (Removed
    and Reserved) 33




---



##### Table of Contents



PART II  Item 5.
    Market
    for Our Common Stock, Related Shareholder Matters and Our
    Purchases of Our Equity Securities    Dividend
    Policy
      Use of
    Proceeds from Initial Public Offering
  Form S-1 No. 333-168785)
      Equity
    Compensation Plans
   34




---



##### Table of Contents



Item 6.
    Selected
    Financial Data  Form 10-K,
  Form 10-K. Form 10-K.
  Historical





Pro FormaPeriod fromDec. 15, 2006 -


Year EndedYears Ended December 31,


Dec. 31,


Dec. 31,2010


2009


2008


2007


2006


2010(Unaudited)(In thousands, except share data)IncomeAgency fee income

$
10,149


$
26,114


$
48,004


$
24,515


$
678


$
10,149Servicing income


413



















413Interest income


18,660



21,483



11,914



4,888



316



18,660Origination fee income


19,938



29,853



9,399



526







19,938Gain on sale of structured settlements


6,595



2,684



443











6,595Gain on forgiveness of debt


7,599



16,410















7,599Gain on sale of life settlements


1,951



















1,951Change in fair value of life settlements and structured
    settlement receivables


12,633



















12,633Change in equity investments


(1,284
)


















(1,284
)Other income


242



71



47



2







242Total income


76,896



96,615



69,807



29,931



994



76,896ExpensesInterest expense(3)


28,155



33,755



12,752



1,343







25,094
(1)Provision for losses on loans receivable


4,476



9,830



10,768



2,332







4,476Loss (gain) on loan payoffs and settlements, net


4,981



12,058



2,738



(225
)






4,981Amortization of deferred costs


24,465



18,339



7,569



126







24,465Selling, general and administrative expenses(3)


30,516



31,269



41,566



24,335



891



30,516Provision for income taxes























(2)Total expenses


92,593



105,251



75,393



27,911



891



89,532Net Income (loss)

$
(15,697
)

$
(8,636
)

$
(5,586
)

$
2,020


$
103


$
(12,636
)Earnings per ShareBasic and diluted





















$
(3.51
)Weighted Average Common Shares OutstandingBasic and diluted






















3,600,000     (1)
    
    Reflects a reduction of interest
    expense of $3.1 million for the year ended
    December 31, 2010, respectively, due to the conversion of
    our promissory note in favor of IMPEX Enterprises, Ltd. into
    shares of our common stock, which occurred prior to the closing
    of our recently completed initial public offering, and the
    conversion of our promissory note in favor of Branch Office of
    Skarbonka Sp. z o.o into a $30.0 million debenture, and the
    conversion of that $30.0 million debenture into shares of
    our common stock, which occurred immediately prior to the
    closing of our recently completed initial public offering.(2)
    
    The results of the Company being
    treated for the pro forma presentation as a C
    corporation resulted in no impact to the consolidated and
    combined balance sheet or statements of operations for the pro
    forma periods presented. The primary reasons for this are that
    the losses produce no current benefit and any net operating
    losses generated and other deferred assets (net of liabilities)
    would be fully reserved due to historical operating losses. The
    Company, therefore, has not recorded any pro forma tax provision.(3)
    
    Includes amounts for related
    parties. Refer to our consolidated and combined financial
    statements for detail. 35




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##### Table of Contents



Historical


Pro FormaDecember 31,


December 31,2006


2007


2008


2009


2010


2010(In thousands, except share data)


(Unaudited)Assets:Cash and cash equivalents


5,351


$
1,495


$
7,644


$
15,891


$
14,224


$
14,224Restricted cash






1,675



2,221







691



691Certificate of deposit  restricted






562



659



670



880



880Agency fees receivable, net of allowance for doubtful accounts


136



5,718



8,871



2,165



562



562Deferred costs, net






672



26,650



26,323



10,706



10,706Interest receivable, net


244



2,972



8,604



21,034



13,140



13,140Loans receivable, net


3,909



43,650



148,744



189,111



90,026



90,026Structured settlements receivables, net






377



1,141



152



2,536



2,536Receivables from sales of structured Settlements














320



224



224Investment in life settlements, at estimated fair value














4,306



17,138



17,138Investment in life settlement fund






1,714







542







Investment in affiliates


















105



105Fixed assets, net


756



1,875



1,850



1,337



876



876Intangible assets


















160



160Prepaid expenses and other assets


30



835



4,180



887



1,457



1,457Deposits


37



456



476



982



692



692Total assets

$
10,463


$
62,001


$
211,040


$
263,720


$
153,417


$
153,417Liabilities:Accounts payable and accrued expenses(3)

$
505


$
3,437


$
5,533


$
3,170


$
3,425


$
3,425Payable for purchase of structured settlements


















224



224Lender protection insurance claims received in advance


















31,154



31,154Interest payable(3)






882



5,563



12,627



13,820



13,766
(2)Notes and debenture payable(3)






35,559



183,462



231,064



91,609



59,441
(2)Other liabilities


















7,984



7,984Total liabilities

$
505


$
39,878


$
194,558


$
246,861


$
148,216


$
115,994Member units  preferred (500,000 authorized in the
    aggregate)Member units  Series A preferred (90,796 issued
    and outstanding, actual; 0 issued and outstanding, pro forma)














4,035



4,035




(1)Member units  Series B preferred (50,000 issued
    and 25,000 outstanding, actual; 0 issued and outstanding, pro
    forma)














5,000



2,500




(1)Member units  Series C preferred (70,000 issued
    and outstanding, actual; 0 issued and outstanding, pro forma)


















7,000




(1)Member units  Series D preferred (7,000 issued
    and outstanding, actual; 0 issued and outstanding, pro forma)


















700




(1)Member units  Series E preferred (75,000 issued
    and 73,000 outstanding, actual; 0 issued and outstanding, pro
    forma and pro forma as adjusted)


















7,300




(1)Member units  common (500,000 authorized; 450,000
    issued and outstanding, actual; 0 issued and outstanding, pro
    forma)


9,855



20,000



19,945



19,924



11,462




(1)Common stock






















36Paid-in capital






















65,183
(1)(2)Retained earnings (accumulated deficit)


103



2,123



(3,463
)


(12,100
)


(27,796
)


(27,796
))(1)(2)Total members equity


9,958



22,123



16,482



16,859



5,201



37,423Total liabilities and members equity

$
10,463


$
62,001


$
211,040


$
263,720


$
153,417


$
153,417     (1)
    
    Reflects the conversion of all common and preferred limited
    liability company units of Imperial Holdings, LLC into shares of
    our common stock.(2)
    
    Reflects the issuance and conversion of a $30.0 million
    debenture into shares of our common stock immediately prior to
    the closing of our recently completed initial public offering.
    Also reflects the conversion of all principal and accrued
    interest outstanding under our promissory note in favor of IMPEX
    Enterprises, Ltd. into shares of common stock of Imperial
    Holdings, Inc. as a result of the corporate conversion.(3)
    
    Includes amounts payable to related parties. Refer to our
    consolidated and combined financial statements for details. 36




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##### Table of Contents



Premium
    Finance Segment  Selected Operating Data (dollars in
    thousands):
  Year Ended December 31,2010


2009


2008Period Originations:Number of loans originated


97



194



499Principal balance of loans originated

$
20,536


$
51,573


$
97,559Aggregate death benefit of policies underlying loans originated

$
462,350


$
942,312


$
2,283,223Selling general and administrative expenses

$
10,324


$
13,742


$
21,744Average Per Origination During Period:Age of insured at origination


74.0



74.9



74.9Life expectancy of insured (years)


14.1



13.2



13.2Monthly premium (year after origination)

$
13.7


$
16.0


$
14.9Death benefit of policies underlying loans originated

$
4,766.5


$
4,857.3


$
4,575.6Principal balance of the loan

$
211.7


$
265.8


$
195.5Interest rate charged


11.5
%


11.4
%


10.8
%Agency fee

$
103.2


$
134.6


$
96.2Agency fee as % of principal balance


48.8
%


50.6
%


49.2
%Origination fee

$
87.9


$
118.9


$
77.9Origination fee as % of principal balance


41.5
%


44.7
%


39.9
%End of Period Loan PortfolioLoans receivable, net

$
90,026


$
189,111


$
148,744Number of policies underlying loans receivable


325



692



702Aggregate death benefit of policies underlying loans receivable

$
1,517,161


$
3,091,099


$
2,895,780Number of loans with insurance protection


304



631



494Loans receivable, net (insured loans only)

$
84,996


$
177,137


$
118,864Average Per Loan:Age of insured in loans receivable


75.3



75.4



75.3Life expectancy of insured (years)


15.3



14.5



13.9Monthly premium

$
7.1


$
8.5


$
9.1Loan receivable, net

$
277.0


$
273.3


$
211.9Interest rate


11.4
%


10.9
%


10.4
%End of Period  Policies OwnedNumber of policies owned


41



27



Aggregate fair value

$
17,138


$
4,306


$
Monthly premium  average per policy

$
6.4


$
2.8


$
  37




---



##### Table of Contents



Structured
    Settlements Segment  Selected Operating Data (dollars
    in thousands):
  Year Ended December 31,2010


2009


2008Period Originations:Number of transactions


565



396



276Number of transactions from repeat customers


154



52



23Weighted average purchase discount rate


19.4
%


16.3
%


12.0
%Face value of undiscounted future payments purchased

$
47,207


$
28,877


$
18,295Amount paid for settlements purchased

$
12,506


$
10,947


$
8,010Marketing costs

$
5,077


$
4,460


$
5,295Selling, general and administrative (excluding marketing costs)

$
7,988


$
5,015


$
4,475Average Per Origination During Period:Face value of undiscounted future payments purchased

$
83.6


$
72.9


$
66.3Amount paid for settlement purchased

$
22.1


$
27.6


$
29.0Time from funding to maturity (months)


179.5



109.7



113.8Marketing cost per transaction

$
9.0


$
11.3


$
19.2Segment selling, general and administrative (excluding marketing
    costs) per transaction

$
14.1


$
12.7


$
16.2Period Sales:Number of transactions sold


630



439



226Gain on sale of structured settlements

$
6,595


$
2,684


$
443Average sale discount rate


8.9
%


11.5
%


10.8
%   Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  You should read the following discussion in conjunction with
    the consolidated and combined financial statements and
    accompanying notes and the information contained in other
    sections of this Annual Report on
    Form 10-K,
    particularly under the headings Risk Factors,
    Selected Financial Data and Business.
    This discussion and analysis is based on the beliefs of our
    management, as well as assumptions made by, and information
    currently available to, our management. The statements in this
    discussion and analysis concerning expectations regarding our
    future performance, liquidity and capital resources, as well as
    other non-historical statements in this discussion and analysis,
    are forward-looking statements. See Cautionary Statement
    Regarding Forward-Looking Statements. These
    forward-looking statements are subject to numerous risks and
    uncertainties, including those described under Risk
    Factors. Our actual results could differ materially from
    those suggested or implied by any forward-looking statements.
  Business
    Overview
     38




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##### Table of Contents



Premium
    Finance Business
  out-of-pocket
           39




---



##### Table of Contents



Acorn Capital FacilityYear Ended December 31,2010

2009

2008Number of loans held at end of period


15



49



112Loans receivable, net, balance at end of period

$
4,183


$
9,601


$
21,073Number of loans impacted during period


48



63



7  40




---



##### Table of Contents



Acorn Capital FacilityYear Ended December 31,2010


2009


2008


TotalGain on forgiveness of debt

$
7,599


$
16,410


$



$
24,009Loss on loan payoffs and settlements, net


(5,501
)


(10,182
)


(1,868
)


(17,551
)Impact on net income (loss)

$
2,098


$
6,228


$
(1,868
)

$
6,458
*     *
    
    The $6.5 million impact on net income is due to 27 policies
    on which we decided to continue to fund the premiums after ABRG
    elected not to continue to fund the premiums. With respect to
    the associated loans, we received a gain on forgiveness of debt
    with no offsetting loss on loan payoffs and settlements, net.  Structured
    Settlements
           41




---



##### Table of Contents



Principal
    Revenue and Expense Items
  Components
    of Revenue
  Agency
    Fee Income
    Year EndedDecember 31,2010

2009

2008Agency fees as a percentage of the principal balance of the
    loans originated


48.8
%


50.6
%


49.2
%   Interest
    Income
      Year EndedDecember 31,2010

2009

2008Weighted average per annum interest rate


11.4
%


10.9
%


10.4
%     Origination
    Fee Income
      Years EndedDecember 31,2010

2009

2008Origination fees as a percentage of the principal balance of the
    loans


41.5
%


44.7
%


39.9
%Origination fees per annum as a percentage of the principal
    balance of the loans


22.7
%


19.2
%


15.4
%  42




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##### Table of Contents



Gain on
    Sale of Structured Settlements
    Gain on
    the Forgiveness of Debt
    Change in
    Fair Value of Life Settlements and Structured Settlement
    Receivables.
  Financial
    Instruments
  Gain on
    Sale of Life Settlements
    Components
    of Expenses
  Interest
    Expense
      December 31,2010

2009

2008Weighted average interest rate under credit facilities


17.1
%


15.6
%


13.9
%Weighted average interest rate under promissory notes


16.5
%


16.5
%


15.9
%Total weighted average interest rate


17.0
%


15.7
%


14.2
%   Provision
    for Losses on Loans Receivable
   43




---



##### Table of Contents



Year Ended

Year EndedDecember 31, 2010

December 31, 2009Number of loans matured


426



78Number of loans impaired at maturity


251



32Loans not repaid at maturity


419



56Claims submitted to lender protection insurer


419



56Claims paid by lender protection insurer


419



56Amount of claims paid

$
153,330


$
24,555Net carrying value of loans at payoff

$
152,752


$
23,814Gain on LPIC payoffs (all loans)

$
578


$
741Gain on LPIC payoffs (impaired loans)

$
165


$
304Percent of claims paid by lender protection insurer


100
%


100
%     December 31,2010

2009

2008Percentage of total number of loans outstanding with lender
    protection insurance


93.9
%


91.2
%


70.4
%Percentage of total loans receivable, net balance covered by
    lender protection insurance


94.1
%


93.7
%


79.9
%    44




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##### Table of Contents



Year Ended December 31,


Year Ended December 31,2010


2009Provision for losses on loans receivable with lender protection
    insurance

$
2,553


$
7,008Provision (recoveries) for losses on loans receivable without
    lender protection insurance


1,923



2,822Total provision for losses on loans receivable

$
4,476


$
9,830   Loss on
    Loan Payoffs and Settlements, Net
    Amortization
    of Deferred Costs
    Selling,
    General and Administrative Expenses
    Critical
    Accounting Policies
  Critical
    Accountings Estimates
   45




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##### Table of Contents



Premium
    Finance Loans Receivable
  (ASC) 310-20, Receivables  Nonrefundable Fees and Other
    Costs
  Receivables
      Ownership
    of Life Insurance Policies
  ASC 325-30, instrument-by-instrument
     46




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##### Table of Contents



Valuation
    of Insurance Policies
               47




---



##### Table of Contents



Fair
    Value Measurement Guidance
  Fair Value Measurements and
    Disclosures
  Fair
    Value Option
  Financial
    Instruments instrument-by-instrument
  Revenue
    Recognition
    
    Agency Fees Agency fees are paid by the
    referring life insurance agents based on negotiations between
    the parties and are recognized at the time a premium finance
    loan is funded. Because agency fees are not paid by the
    borrower, such fees do not accrue over the term of the loan. We
    typically charge and receive agency fees from the referring
    agent within approximately 46 days of our funding the loan.
    A separate origination fee is charged to the borrower which is
    amortized into income over the life of the loan.
    Interest Income Interest income on premium
    finance loans is recognized when it is realizable and earned, in
    accordance with ASC 605, Revenue Recognition.
    Discounts on structured settlement receivables are accreted over
    the life of the settlement using the effective interest method.
    Origination Fee Income Loans often include
    origination fees which are fees payable to us on the date the
    loan matures. The fees are negotiated at the inception of the
    loan on a transaction by transaction basis. The fees are
    accreted into income over the term of the loan using the
    effective interest method.
    Gains on Sales of Structured Settlements Gains on sales of structured settlements are
    recorded when the structured settlements have been transferred
    to a third party and we no longer have continuing involvement,
    in accordance with ASC 860, Transfers and Servicing. 48




---



##### Table of Contents



Revenue Recognition
  Deferred
    Costs
    Loss
    in Loan Payoffs and Settlements, Net
    Income
    Taxes
  Income Taxes.
    Stock-Based
    Compensation
  Compensation  Stock
    Compensation.
 49




---



##### Table of Contents



Accounting
    Changes
    Results
    of Operations
   50




---



##### Table of Contents



Consolidated
    Results of Operations (in thousands)
  Year Ended December 31,2010


2009


2008IncomeAgency fee income

$
10,149


$
26,114


$
48,004Servicing fee income


413







Interest income


18,660



21,483



11,914Origination fee income


19,938



29,853



9,399Gain on sale of structured settlements


6,595



2,684



443Gain on forgiveness of debt


7,599



16,410



Gain on sale of life settlements


1,951







Change in fair value of life settlements


10,156







Change in fair value of structured receivables


2,477







Change in equity investments


(1,284
)






Other income


242



71



47Total income


76,896



96,615



69,807ExpensesInterest expense


28,156



33,755



12,752Provision for losses on loans receivable


4,476



9,830



10,768Loss (gain) on loan payoffs and settlements, net


4,981



12,058



2,738Amortization of deferred costs


24,465



18,339



7,569Selling, general and administrative expenses


30,515



31,269



41,566Total expenses


92,593



105,251



75,393Net loss

$
(15,697
)

$
(8,636
)

$
(5,586
)   Premium
    Finance Segment Results (in thousands)
  Year Ended December 31,2010


2009


2008Income

$
67,366


$
92,648


$
68,743Expenses


68,634



82,435



52,733Segment operating income (loss)

$
(1,268
)

$
10,213


$
16,010   Structured
    Settlement Segment Results (in thousands)
  Year Ended December 31,2010


2009


2008Income

$
9,530


$
3,967


$
1,064Expenses


13,066



9,475



9,770Segment operating loss

$
(3,536
)

$
(5,508
)

$
(8,706
)  51




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##### Table of Contents



Reconciliation
    of Segment Results to Consolidated Results (in
    thousands)
  Year Ended December 31,2010


2009


2008Segment operating income (loss)

$
(4,804
)

$
4,705


$
7,304Unallocated expenses:SG&A expenses


7,125



8,052



10,052Interest expense


3,768



5,289



2,838Net loss

$
(15,697
)

$
(8,636
)

$
(5,586
)   2010
    Compared to 2009
         52




---



##### Table of Contents



2009
    Compared to 2008
            Segment
    Information
   53




---



##### Table of Contents



Premium
    Finance Business
    Year Ended December 31,2010


2009


2008IncomeAgency fee income

$
10,146


$
26,114


$
48,004Interest income


18,326



20,271



11,340Origination fee income


19,938



29,853



9,399Gain on forgiveness of debt


7,599



16,410



Change in fair value of life settlements


10,156







Gain on sale of life settlements


1,951







Change in equity investments


(1,284
)






Servicing fee income


403







Other


131







67,366



92,648



68,743Direct segment expensesInterest expense


24,387



28,466



9,914Provision for losses


4,476



9,830



10,768Loss (gain) on loan payoff and settlements, net


4,981



12,058



2,738Amortization of deferred costs


24,465



18,339



7,569SG&A expense


10,325



13,742



21,74468,634



82,435



52,733Segment operating income (loss)

$
(1,268
)

$
10,213


$
16,010   2010
    Compared to 2009
  Income
  Agency Fee Income.
    Year EndedDecember 31,2010

2009Principal balance of loans originated

$
20,536


$
51,573Number of transactions originated


97



194Agency fees

$
10,146


$
26,114Agency fees as a percentage of the principal balance of loans
    originated


48.8
%


50.6
%   Interest Income.
 54




---



##### Table of Contents



Origination Fee Income.
  Gain on Forgiveness of Debt.
  Change in Fair Value of Life
    Settlements.
  Gain on Sale of Life Settlement.
  Change in equity investments.
  Expenses
  Interest Expense.
  Provision for Losses on Loans
    Receivable.
  Loss on Loan Payoffs and Settlements,
    Net.
 55




---



##### Table of Contents



Amortization of Deferred Costs.
  Selling, General and Administrative
    Expenses.
    Year EndedDecember 31,2010


200930 days or less from loan funding

$
559


$
2,01831  60 days from loan funding






61  90 days from loan funding






3291  120 days from loan funding






214Over 120 days from loan funding


207



21Total

$
766


$
2,285Allowance for doubtful accounts


(205
)


(120
)Agency fees receivable, net

$
561


$
2,165     Year EndedDecember 31,2010


2009Balance at beginning of period

$
120


$
769Bad debt expense


85



1,290Write-offs






(1,939
)Recoveries






Balance at end of period

$
205


$
120    56




---



##### Table of Contents



2009
    Compared to 2008
  Income
  Agency Fee Income.
  Year EndedDecember 31,2009

2008Principal balance of loans originated

$
51,573


$
97,559Number of transactions originated


194



499Agency fees

$
26,114


$
48,004Agency fees as a percentage of the principal balance of loans
    originated


50.6
%


49.2
%   Interest Income.
  Origination Fee Income.
  Gain on Forgiveness of Debt.
  Expenses
  Interest Expense.
  Provision for Losses on Loans
    Receivable.
  Loss on Loan Payoffs and Settlements,
    Net.
 57




---



##### Table of Contents



Amortization of Deferred Costs.
  Selling, General and Administrative
    Expenses.
    Year EndedDecember 31,2009


200830 days or less from loan funding

$
2,018


$
6,94631  60 days from loan funding






1,33861  90 days from loan funding


32



59291  120 days from loan funding


214



251Over 120 days from loan funding


21



513Total

$
2,285


$
9,640Allowance for doubtful accounts


(120
)


(769
)Agency fees receivable, net

$
2,165


$
8,871     Year EndedDecember 31,2009


2008Balance at beginning of period

$
769


$
288Bad debt expense


1,290



536Write-offs


(1,939
)


(55
)Recoveries






Balance at end of period

$
120


$
769    58




---



##### Table of Contents



Structured
    Settlements
    Year Ended December 31,2010


2009


2008IncomeGain on sale of structured settlements

$
6,595


$
2,684


$
443Interest income


334



1,212



574Change in fair value of structured settlement receivables


2,477







Servicing fee income


11







Other income


113



71



479,530



3,967



1,064Direct segment expensesSG&A expenses


13,066



9,475



9,770Segment operating loss

$
(3,536
)

$
(5,508
)

$
(8,706
)   2010
    Compared to 2009
  Income
  Interest Income.
  Gain on Sale of Structured Settlements.
  Change in Fair Value of Structured Settlement
    Receivables. Financial Instruments
  Expenses
  Selling, General and Administrative
    Expenses.
  2009
    Compared to 2008
  Income
  Interest Income.
 59




---



##### Table of Contents



Gain on Sale of Structured Settlements.
  Expenses
  Selling, General and Administrative
    Expenses.
  Liquidity
    and Capital Resources
       60




---



##### Table of Contents



Debt
    Financings Summary
    Outstanding


Accrued


Total PrincipalPrincipal


Interest


and InterestCredit Facilities:Acorn

$
3,988


$
1,254


$
5,242CTL(*)


24



1



25White Oak


21,219



8,231



29,450Cedar Lane


34,209



4,279



38,48859,440



13,765



73,205Promissory NotesIMPEX**


2,402



55



2,457Skarbonka debenture**


29,767







29,766Total

$
91,609


$
13,820


$
105,428     *
    
    Represents the balance remaining under our $30 million grid
    promissory note in favor of CTL Holdings.**
    
    Converted into common stock in connection with our initial
    public offering.     61




---



##### Table of Contents



WeightedAverage


YearInterest


Ending


Year Ending


Year EndingCredit Facilities

Rate


12/31/2011


12/31/2012


12/31/2013Acorn


14.5
%

$
5,242


$



$
CTL(*)


10.5
%


24







White Oak


21.5
%


29,415







Cedar Lane


15.6
%


21,544



16,862



83Totals





$
56,225


$
16,862


$
83Weighted average interest rate






18.6
%


15.60
%


     *
    
    Represents the balance remaining under our $30 million grid
    promissory note in favor of CTL Holdings.      White Oak
    Global Advisors, LLC Facility
     62




---



##### Table of Contents



Cedar
    Lane Capital LLC Facility
  1-year
    8.39%
    Fixed Rate Asset Backed Variable Funding Notes
     63




---



##### Table of Contents



Premium
    Finance Loan Maturities
    Year Ending

Year Ending

Year Ending12/31/2011

12/31/2012

12/31/2013Carrying value (loan principal balance, accreted origination
    fees, and accrued interest receivable)

$
89,152


$
22,215


$
270Weighted average per annum interest rate


10.50
%


9.10
%


11.00
%Per annum origination fee as a percentage of the principal
    balance of the loan at origination


19.20
%


17.70
%


9.90
%   Cash
    Flows
    Year Ended December 31,2010


2009


2008Statement of Cash Flows Data:Total cash provided by (used in):Operating activities

$
(27,796
)

$
(12,631
)

$
(2,157
)Investing activities


102,956



(29,315
)


(102,814
)Financing activities


(76,827
)


50,193



111,119Increase (decrease) in cash and cash equivalents

$
(1,667
)

$
8,247


$
6,148   Operating
    Activities
        Investing
    Activities
   64




---



##### Table of Contents



Financing
    Activities
        Contractual
    Obligations
    Due in Less


Due


Due


More thanTotal


than 1 Year


1-3 Years


3-5 Years


5 YearsCredit facilities(1)

$
59,441


$
43,971


$
15,470


$



$
Promissory note and convertible debenture(2)


32,168



32,168











Expected interest payments(3)


15,090



11,349



3,741







Operating leases


689



569



120







Total

$
107,388


$
88,057


$
19,331


$



$
     (1)
    
    Credit facilities include principal outstanding related to
    facilities that were used to fund premium finance loans.(2)
    
    This includes a promissory note and a debenture, which had
    principal of $2.4 million and $29.7 million,
    respectively, outstanding as of December 31, 2010, which
    were converted to shares of our common stock upon the closing of
    our recently completed initial public offering.(3)
    
    Expected interest payments are calculated based on outstanding
    balances of our credit facilities as of December 31, 2010
    and assumes repayment of principal and interest at the maturity
    date of the related premium finance loan, which may be prior to
    the final maturity of the credit facility.  Inflation
   65




---



##### Table of Contents



Off-Balance
    Sheet Arrangements
    Item 7A.
    Quantitative
    and Qualitative Disclosures about Market Risk    Credit
    Risk
      December 31,2010


2009


2008Percentage of total number of loans outstanding with lender
    protection insurance


93.9
%


91.2
%


70.4
%Percentage of total loans receivable, net balance covered by
    lender protection insurance


94.1
%


93.7
%


79.9
%       Percentage of

Percentage ofTotal Outstanding

Total Death

Moodys

S&PCarrier

Loan Balance

Benefit

Rating

RatingLincoln National Life Insurance Company


27.4
%


28.7
%

A2

AA-Principal Life Insurance Company


10.3
%


11.4
%

Aa3

A      66




---



##### Table of Contents



Interest
    Rate Risk
          Item 8.
    Financial
    Statements and Supplementary Data  Form 10-K page F-1.
  Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  Evaluation
    of Disclosure Controls and Procedures
  Rule 13a-15(e) Form 10-K
 67




---



##### Table of Contents



Managements
    Report on Internal Control Over Financial Reporting
      Changes
    in Internal Control Over Financial Reporting
    Limitations
    on Controls
    Item 9B.
    Other
    Information   PART III  Item 10.
    Directors
    and Executive Officers; Corporate Governance    Name

Age

PositionAntony Mitchell


45


Chief Executive Officer and Chair of the BoardJonathan Neuman


37


President, Chief Operating Officer and DirectorRichard S. OConnell, Jr.


53


Chief Financial Officer and Chief Credit OfficerDeborah Benaim


54


Senior Vice PresidentDavid A. Buzen


51


DirectorMichael A. Crow


48


DirectorWalter M. Higgins III


66


DirectorRobert Rosenberg


65


DirectorA. Penn Hill Wyrough


52


Director  68




---



##### Table of Contents



Antony
    Mitchell
    Jonathan
    Neuman
    Richard
    OConnell, Jr.
  1995-1998
  Deborah
    Benaim
   69




---



##### Table of Contents



David
    A. Buzen
    Michael
    A. Crow
    Walter
    M. Higgins III
    Robert
    Rosenberg
   70




---



##### Table of Contents



Over-the-Counter
  A.
    Penn Hill Wyrough
    Board
    Composition
  Rule 10A-3(b)(1)
    Number of
    Directors; Removal; Vacancies
      Majority
    Voting Policy
   71




---



##### Table of Contents




    the stated reasons why votes were withheld from the director and
    whether those reasons can be cured;
    the directors length of service, qualifications and
    contributions as a director;
    New York Stock Exchange listing requirements, and
    our corporate governance guidelines.    Board
    Committees
  Audit Committee.
  
    establishing, monitoring and assessing our policies and
    procedures with respect to business practices, including the
    adequacy of our internal controls over accounting and financial
    reporting;
    retaining our independent registered public accounting firm and
    conducting an annual review of the independence of our
    independent registered public accounting firm;
    pre-approving any non-audit services to be performed by our
    independent registered public accounting firm;
    reviewing the annual audited financial statements and quarterly
    financial information with management and the independent
    registered public accounting firm;
    reviewing with the independent registered public accounting firm
    the scope and the planning of the annual audit;
    reviewing the findings and recommendations of the independent
    registered public accounting firm and managements response
    to the recommendations of the independent registered public
    accounting firm;
    overseeing compliance with applicable legal and regulatory
    requirements, including ethical business standards;
    approving related party transactions;
    discussing policies with respect to risk assessment and risk
    management;
    preparing the audit committee report to be included in our
    annual proxy statement;
    establishing procedures for the receipt, retention and treatment
    of complaints received by us regarding accounting, internal
    accounting controls or auditing matters;
    establishing procedures for the confidential, anonymous
    submission by our employees of concerns regarding questionable
    accounting or auditing matters; and
    reviewing the committees performance and the adequacy of
    the audit committee charter on an annual basis.   72




---



##### Table of Contents



Compensation Committee.
  
    evaluating the performance of and determining the compensation
    for our executive officers, including our chief executive
    officer;
    administering and making recommendations to our board with
    respect to our equity incentive plans;
    overseeing regulatory compliance with respect to compensation
    matters;
    reviewing and approving employment or severance arrangements
    with senior management;
    reviewing our director compensation policies and making
    recommendations to our board;
    taking the required actions with respect to the compensation
    discussion and analysis to be included in our annual proxy
    statement;
    reviewing and approving the compensation committee report to be
    included in our annual proxy statement; and
    reviewing the committees performance and the adequacy of
    the compensation committee charter on an annual basis.    Corporate Governance and Nominating
    Committee.
  
    developing and recommending corporate governance principles and
    procedures applicable to our board and employees;
    recommending committee composition and assignments;
    overseeing periodic self-evaluations by the board, its
    committees, individual directors and management with respect to
    their respective performance;
    identifying individuals qualified to become directors;
    recommending director nominees;
    assisting in succession planning;
    recommending whether incumbent directors should be nominated for
    re-election to our board; and
    reviewing the committees performance and the adequacy of
    the corporate governance and nominating committee charter on an
    annual basis.   73




---



##### Table of Contents



Sections 240.14a-8 240.14a-11.
  SECTION 16(a)
    BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
    Item 11.
    Executive
    Compensation  Compensation
    Discussion and Analysis
  Overview
    
    Antony Mitchell, our chief executive officer;
    Jonathan Neuman, our president and chief operating officer;
    Richard OConnell, our chief financial officer;
    Deborah Benaim, our senior vice president;
    Robert Grobstein, our former chief financial and accounting
    officer; and
    Anne Dufour Zuckerman, our former general counsel.     74




---



##### Table of Contents



Compensation
    Objective
    Compensation
    Determination Process
      E-2 E-2
    Compensation
    Elements
   75




---



##### Table of Contents



Base Salaries.
  Annual Discretionary Cash Bonus
    Compensation.
  Retirement Benefits.
  Other Benefits and Executive Perquisites.
  Employment Agreement.
  Accounting
    and Tax Implications
  Form 10-K
 76




---



##### Table of Contents



Hiring
    of New Chief Financial Officer
    Executive
    Compensation
    Summary
    Compensation Table for 2009 and 2010
  Change inPension Valueand Non-Non-Equity

QualifiedIncentive

DeferredStock

Option

Plan

Compensation

All OtherName and Principal Position

Year

Salary

Bonus

Awards

Awards

Compensation

Earnings

Compensation(1)

TotalAntony Mitchell


2010


$



$



$



$



$



$



$
929,808
(1)

$
929,808Chief Executive Officer


2009


$



$



$



$



$



$



$
926,000
(1)

$
926,000Jonathan Neuman


2010


$
754,907


$
250,000


$



$



$



$



$



$
1,004,907President and Chief


2009


$
725,341


$



$



$



$



$



$



$
725,341Operating OfficerRichard OConnell(2)


2010


$
270,000


$



$



$



$



$



$



$
270,000Chief Financial OfficerDeborah Benaim


2010


$
324,750


$



$



$



$



$



$



$
324,750Senior Vice President


2009


$
312,184


$
200,000


$



$



$



$



$



$
512,184Anne Dufour Zuckerman(3)


2010


$
305,308


$



$



$



$



$



$



$
305,308Former General Counsel


2009


$
347,757


$



$



$



$



$



$



$
347,757Robert Grobstein(4)


2010


$
89,663


$



$



$



$



$



$



$
89,663Former Chief Financial Officer


2009


$
249,001


$



$



$



$



$



$



$
249,001     (1)
    
    In 2009 and 2010, Mr. Mitchell did not serve as a company
    employee and did not receive a salary. Mr. Mitchell
    provided services to the Company pursuant to the consulting
    arrangement with Warburg. Mr. Mitchell was paid these
    amounts by Warburg as described in more detail in our
    Compensation Discussion and Analysis. $76,000 and $79,800,
    respectively, of the $926,000 and $929,800, respectively, paid
    to Warburg was for expense reimbursements.(2)
    
    On January 4, 2010, we hired Richard S. OConnell to
    serve as our chief credit officer. Mr. OConnell began
    transitioning into the chief financial officer role in February
    2010 and became our chief financial officer in April 2010.(3)
    
    Ms. Zuckerman served as our general counsel until her
    departure from Imperial on November 8, 2010.(4)
    
    Mr. Grobstein served as our chief financial officer until
    his departure from Imperial on May 4, 2010.  Employment
    Agreements and Potential Payments Upon Termination or
    Change-in-Control
   77




---



##### Table of Contents



78




---



##### Table of Contents



Option

StockCash Severance

Awards

Awards

Total(1)Name

($)

($)

($)

($)Termination by Company Without Cause (except in the case of
    death or disability):Antony Mitchell

$
3,150,000
(2)









$
3,150,000Jonathan Neuman

$
3,150,000
(2)









$
3,150,000Deborah Benaim

$
112,500
(3)









$
112,500Richard OConnell

$
206,667
(4)









$
206,667Termination by the Executive for Good Reason:Antony Mitchell

$
3,150,000
(2)









$
3,150,000Jonathan Neuman

$
3,150,000
(2)









$
3,150,000Deborah Benaim














Richard OConnell














     (1)
    
    All of the employment agreements for the named executive
    officers include a provision that allows us to reduce their
    severance payments and any other payments to which the executive
    becomes entitled as a result of our change in control to the
    extent needed for the executive to avoid paying an excise tax
    under Internal Revenue Code Section 280G, unless, with respect
    to Messrs. Mitchell and Neuman, the named executive officer
    is better off, on an after-tax basis, receiving such payments
    and paying the excise taxes due.(2)
    
    If Messrs. Mitchell or Neuman become entitled to severance
    payments during the first three years each of their respective
    employment agreements are in effect, then the severance payments
    are equal to six times the base salary.(3)
    
    If Ms. Benaim is terminated from employment, we will
    continue to pay her base salary for a period of eighteen weeks.(4)
    
    If Mr. OConnell is terminated from employment, we
    will continue to pay his base salary for a period equal to four
    months, plus one month for each complete three months of service
    completed with us, subject to a maximum of twelve months of
    severance payments. 79




---



##### Table of Contents



Risk
    Considerations in our Compensation Program
    Omnibus
    Plan
  Imperial
    Holdings 2010 Omnibus Incentive Plan
    Director
    Compensation
    Compensation
    Committee Interlocks and Insider Participation
    COMPENSATION
    COMMITTEE REPORT
  Regulation S-K Form 10-K.
    
 80




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##### Table of Contents



Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Shareholder Matters  and/or
    Number of SharesBeneficially


PercentName of Beneficial Owner

Owned


of Class5% Stockholders:Branch Office of Skarbonka Sp. z o.o.(1)


1,272,727



6.0
%Discovery Capital Management, LLC(2)


1,232,500



5.8
%Pine Trading, Ltd.(3)


2,006,400



9.5
%Executive Officers and DirectorsAntony Mitchell


684,334



3.2
%Jonathan Neuman


433,636



2.0
%Richard S. OConnell, Jr.


0



*Deborah Benaim


0



*David A. Buzen


5,000



*Michael A. Crow


0



*Walter M. Higgins III


0



*Robert Rosenberg


0



*A. Penn Hill Wyrough


0



*All, directors and executive officers as a group (nine persons)


1,122,970



5.3
%     *
    
    Less than one percent(1)
    
    Information from Schedule 13G filed on February 18,
    2011 filed jointly by Branch Office of Skarbonka Sp. z o. o.,
    Chase Ridge Ltd and Joseph Lewis who have shared voting and
    investment power over the shares. Joseph Lewis indirectly
    controls both Branch Office of Skarbonka Sp. z o. o. and Chase
    Ridge. Branch Office of Skarbonka Sp. z o.o. is a company
    organized in Poland whose business address is 58, rue Charles
    Martel,
    L-2134
    Luxembourg.(2)
    
    Information from Schedule 13G filed on February 18,
    2011 by Discovery Capital Management, LLC and Robert K. Citrone
    who have shared voting and investment power over the shares. The
    business address is 20 Marshall Street, South Norwalk, CT
    06854.(3)
    
    Information from Schedule 13G filed on February 18,
    2011. Pine Trading, Ltd. is a Bahamas international business
    corporation whose business address is Charlotte House, Shirley
    Street  1st floor, P.O. Box N-7529, Nassau,
    Bahamas. Pine Trading, Ltd. is controlled by David Haring 81




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##### Table of Contents



Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence  Related
    Party Transactions Policy and Procedure
    
    transactions that must be disclosed in proxy statements under
    SEC rules; and
    transactions that could potentially cause a non-employee
    director to cease to qualify as independent under New York Stock
    Exchange listing requirements.      
    whether the transaction is on terms no less favorable to us than
    terms generally available from an unrelated third party;
    the extent of the related partys interest in the
    transaction;
    whether the transaction would interfere with the performance of
    the officers or directors duties to us;
    in the case of a transaction involving a non-employee director,
    whether the transaction would disqualify the director from being
    deemed independent under New York Stock Exchange listing
    requirements; and
    such other factors that the audit committee deems appropriate
    under the circumstances.   82




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##### Table of Contents



Entity

RelationshipBranch Office of Skarbonka Sp. z o.o.

Controlled by Joseph Lewis, beneficial owner of more than 5% of
    our common stock.Cedarmount Trading, Ltd.

Controlled by Joseph Lewis and David Haring, beneficial owner of
    more than 5% of our common stock.CTL Holdings, LLC

Controlled by Joseph Lewis and David Haring.  Antony Mitchell,
    our chief executive officer, chair of the board and a beneficial
    owner of more than 5% of our common stock, is the manager of CTL
    Holdings, LLC.CTL Holdings II, LLC

Controlled by Antony Mitchell.CY Financial, Inc.

Controlled by Jonathan Neuman, our president and chief operating
    officer, as well as, a director and beneficial owner of more
    than 5% of our common stock.IFS Holdings, Inc.

Controlled by Antony Mitchell.Imex Settlement Corporation

Controlled by Antony Mitchell and David Haring.Imperial Life Financing, LLC

Controlled by Antony Mitchell and Jonathan Neuman.IMPEX Enterprises, Ltd.

Controlled by David Haring.Jasmund, Ltd.

Controlled by Joseph Lewis. Christopher Mangum, president and
    sole director of Premium Funding, Inc., a former member of our
    board of managers, is sole director, president and secretary of
    Jasmund, Ltd.Londo Ventures, Inc.

Controlled by David Haring.Monte Carlo Securities, Ltd.

Controlled by Joseph Lewis and David Haring.Premium Funding, Inc.

Controlled by Christopher Mangum and Joseph Lewis.Red Oak Finance, LLC

Controlled by Jonathan Neuman.Stone Brook Partners

Antony Mitchell is a general partner of Stone Brook Partners.Warburg Investment Corporation

Controlled by Antony Mitchell.Wertheim Group

Controlled in part by Carl Neuman, the father of Jonathan
    Neuman.   Certain
    Indebtedness
  
    On January 1, 2008, we entered into a Consolidated, Amended
    and Restated Revolving Balloon Promissory Note in the amount of
    $25.0 million with Amalgamated International Holdings, S.A.
    (Amalgamated), at an interest rate of 16.5%, which
    note consolidated seven notes previously executed by us in favor
    of Amalgamated in the aggregate amount of $19.5 million.
    This note was later cancelled and replaced effective as of
    August 31, 2009 with a new $25.0 million revolving
    note in favor of Amalgamated (the Amalgamated Note).
    The Amalgamated Note matures on August 1, 2011 and bears an
    interest rate of 16.5% per annum. The Amalgamated Note is
    cross-defaulted with our other indebtedness and indebtedness of
    certain of our related parties  Monte Carlo
    Securities, Ltd., CTL Holdings, LLC (CTL Holdings)
    and Imperial Life Financing, LLC. The largest aggregate amount
    of principal outstanding on the Amalgamated Note since its
    issuance was $19.5 million. As of December 31, 2010
    and December 31, 2009, the outstanding principal balance on
    the Amalgamated Note was $0 and $9.6 million, respectively,
    with accrued interest of $0 and $469,000, respectively. The
    amount of principal paid under the Amalgamated Note during year
    ended December 31, 2010 and year ended December 31,
    2009 was $10.3 million and $49.8 million, respectively
    and the amount of interest paid for the year ended
    December 31, 2010 and year ended December 31, 2009 was
    $566,000 and $0, respectively. During the year ended 2009,
    $8.4 million of principal and $1.2 million of accrued
    interest of the Amalgamated Note was sold by Amalgamated to one
    of our related parties  Branch 83




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##### Table of Contents



Office of Skarbonka Sp. z o.o (Skarbonka). The
    entire principal and interest balances under the Amalgamated
    Note have been paid in full.  
    On June 5, 2008 and on August 8, 2008, we executed two
    balloon promissory notes in favor of Jasmund, Ltd., in the
    original principal amount of $5.0 million and
    $1.6 million, respectively, and each at an interest rate of
    16.5% per annum. On December 3, 2008 and February 5,
    2009, the notes were replaced by notes in the amount of
    $5.4 million and $1.7 million, respectively, each in
    favor of Jasmund, Ltd. These notes were then consolidated,
    amended, restated and replaced by a May 22, 2009 note in
    favor Skarbonka, in the principal amount of $7.6 million at
    an interest rate of 16.5%. The May 22, 2009 note and
    $8.4 million of principal and $1.2 million of accrued
    interest of the Amalgamated Note sold to Skarbonka were
    subsequently consolidated into an August 31, 2009 revolving
    promissory note in favor of Skarbonka in the principal amount of
    $17.6 million, together with interest on the principal
    balance from time to time outstanding at a rate of 16.5% per
    annum. The August 31, 2009 note matures on August 1,
    2011. The note is cross-defaulted with our other indebtedness
    and indebtedness of Monte Carlo Securities, Ltd., CTL Holdings
    and Imperial Life Financing, LLC. The largest aggregate amount
    of principal outstanding on the August 31, 2009 note since
    its issuance was $17.6 million. As of December 31,
    2010 and December 31, 2009, respectively, the outstanding
    principal balance on the August 31, 2009 note was $0 and
    $17.6 million, respectively, with accrued interest of $0
    and $980,000, respectively. The amount of principal paid under
    the note for the year ended December 31, 2010 and year
    ended December 31, 2009 was $1.5 million and $0,
    respectively, and the amount of interest paid was $985,000 and
    $0, respectively. On November 1, 2010, the note was
    exchanged along with the common units and Series B
    preferred units owned by Premium Funding, Inc. for a
    $30.0 million debenture that matures October 4, 2011.
    The debenture will have an interest rate of 0%. Immediately
    prior to the closing of our recent offering, the debenture was
    converted into shares of our common stock.
    On October 3 and October 8, 2008, we executed two balloon
    promissory notes in favor of Cedarmount Trading, Ltd.
    (Cedarmount), each in the original principal amount
    of $4,450,000 at an interest rate of 16.5% per annum. On
    August 31, 2009, the notes were assigned by Cedarmount to
    IMPEX Enterprises, Ltd. (IMPEX). Also effective as
    of August 31, 2009, the notes were consolidated, amended,
    restated and replaced by a new revolving promissory note which
    we executed in favor of IMPEX for a principal amount of
    $10.3 million with interest on the principal balance from
    time to time outstanding at a rate of 16.5% per annum. The
    August 31, 2009 note matures on August 1, 2011. The
    note is cross-defaulted with our other indebtedness and
    indebtedness of Monte Carlo Securities, Ltd., CTL Holdings and
    Imperial Life Financing, LLC. The largest aggregate amount of
    principal outstanding on the August 31, 2009 note since
    issuance was $10.3 million. As of December 31, 2010
    and December 31, 2009 the outstanding principal balance was
    $2.4 million and $10.3 million, respectively, with
    accrued interest of $55,000 and $569,000, respectively. The
    amount of principal paid under the note for the year ended
    December 31, 2010 and year ended December 31, 2009 was
    $15.7 million and $0, respectively, and the amount of
    interest paid was $1.5 million and $0, respectively. As
    part of the corporate conversion, the note as well as the common
    units and Series B, C, D and E preferred units owned by
    Imex Settlement Corporation was converted into shares of common
    stock.
    On December 27, 2007, Imperial Life Financing, LLC
    (Life Financing), entered into a $50.0 million
    loan agreement with CTL Holdings. The proceeds of this loan were
    used by Life Financing to fund our origination of premium
    finance loans in exchange for participation interests in such
    loans. In April 2008, CTL Holdings entered into a participation
    agreement with Perella Weinberg Partners Asset Based Value
    Master Fund II, L.P. (Perella), in connection
    with which we executed a guaranty, whereby Perella contributed
    $10.0 million for a participation interest in CTL
    Holdings loans to Life Financing. In connection with
    Perellas purchase of the participation interest, we agreed
    to reimburse CTL Holdings sole owner, Cedarmount, for any
    amounts paid or allocated to Perella under the participation
    agreement which cause Cedarmounts rate of return paid by
    Life Financing to be less than 10.0% per annum on the funds
    Cedarmount advanced to CTL Holdings to make loans to us or cause
    Cedarmount not to recover its invested capital. In April 2008,
    the CTL Holdings loan agreement was amended and the authorized
    borrowings were increased from $50.0 million to
    $100.0 million. The first $50.0 million tranche 84




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(Tranche A) was restricted such that no further
    advances could be made with the exception of funding second year
    premiums. All new advances are made under the second
    $50.0 million tranche (Tranche B). The loans are
    payable as the corresponding premium finance loans mature and as
    of December 31, 2010, bear a weighted average annual
    interest rate of 10.8%. The agreement requires that each loan
    originated under the facility be covered by lender protection
    insurance. The agreement does not include any financial
    covenants but does contain certain nonfinancial covenants and
    restrictions. All of the assets of Life Financing serve as
    collateral under the credit facility. The largest aggregate
    amount of principal outstanding on the facility since issuance
    was $61.2 million. As of December 31, 2010 and
    December 31, 2009, the outstanding principal balance on the
    facility was $0 and $21.9 million, respectively, with
    accrued interest of $0 and $46,000, respectively. As of
    December 31, 2010, we had a receivable balance of
    approximately $0 from CTL Holdings, LLC which relates to lender
    protection insurance claims that were remitted directly by our
    lender protection insurer to CTL Holdings, LLC. The proceeds of
    these claims should have been paid directly to the Company
    rather than CTL Holdings, LLC. The amount of principal paid
    under the facility for the year ended December 31, 2010 and
    year ended December 31, 2009 was $22.3 million and
    $16.5 million, respectively, and the amount of interest
    paid under the facility was $0.8 million and
    $2.4 million, respectively.  
    On November 15, 2008, Life Financing executed a grid
    promissory note in favor of CTL Holdings, in the original
    principal amount equal to the lesser of $30.0 million or
    the amount outstanding from
    time-to-time
    a fixed interest rate per advance. The weighted average interest
    rate as of December 31, 2010 was 9.5%. The largest
    aggregate amount of principal outstanding on the note since
    issuance was $36.7 million. As of December 31, 2010
    and December 31, 2009, the outstanding principal balance on
    the note was approximately $24,000 and $25.9 million,
    respectively, with accrued interest of $1,000 and
    $2.8 million, respectively. The amount of principal paid
    under the facility for the year December 31, 2010 and the
    year ended December 31, 2009 was $36.7 million and $0,
    respectively, and the amount of accrued interest paid was
    $5.2 million and $0, respectively.
    On March 13, 2009, Imperial Life Financing II, LLC, a
    special purpose entity and wholly-owned subsidiary, entered into
    a financing agreement with CTL Holdings II, LLC to borrow funds
    to finance its purchase of premium finance loans originated by
    us or the participation interests therein. On July 23,
    2009, White Oak Global Advisors, LLC replaced CTL Holdings II,
    LLC as the administrative agent and collateral agent with
    respect to this facility. The original financing agreement
    provided for up to $15.0 million of multi-draw term loans.
    In September 2009, this financing agreement was amended to
    increase the commitment by $12.0 million to a total
    commitment of $27.9 million. The interest rate for each
    borrowing made under the agreement varies and the weighted
    average interest rate for the loans under this facility as of
    December 31, 2010 was 19.6%. The loans are payable as the
    corresponding premium finance loans mature. The agreement
    requires that each loan originated under the facility be covered
    by lender protection insurance. The agreement does not include
    any financial covenants but does contain certain nonfinancial
    covenants and restrictions. All of the assets of Imperial Life
    Financing II, LLC serve as collateral under this facility. The
    obligations of Imperial Life Financing II, LLC have been
    guaranteed by Imperial Premium Finance, LLC; however, except for
    certain expenses, the obligations are generally non-recourse to
    us except to the extent of Imperial Premium Finance, LLCs
    equity interest in Imperial Life Financing II, LLC. The largest
    aggregate amount of principal outstanding on the facility since
    issuance was $27.0 million. As of December 31, 2010
    and December 31, 2009, the outstanding principal balance on
    the note was $21.2 million and $26.6 million,
    respectively, with accrued interest of $8.2 million and
    $3.9 million, respectively. The amount of principal paid
    under the note for year ended December 31, 2010 and the
    year ended December 31, 2009 was $5.4 million and
    $391,000, respectively and the amount of interest paid under the
    facility was $1.9 million and $61,000, respectively.
    Antony Mitchell, our chief executive officer and a director, and
    Jonathan Neuman, our chief operating officer, president and a
    director, have each individually guaranteed obligations under
    the Acorn Capital Group, LLC credit facility, the CTL Holdings,
    LLC credit facility, the Ableco Finance LLC credit facility, the
    White Oak Global Advisors, LLC credit facility, the Cedar Lane
    Capital LLC credit facility and the claims settlement agreement
    with our lender protection insurer. These guaranties are not
    unconditional sources of credit support but are intended to
    protect against acts of fraud, willful misconduct or the special 85




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purpose entity commencing a bankruptcy filing. To the extent
    recourse is sought against Messrs. Mitchell and Neuman for
    such non-financial performance reasons, then our indemnification
    obligations to Messrs. Mitchell and Neuman may require us
    to indemnify them for losses they may incur under these
    guaranties.  Conversion
    of Notes to Series A Preferred Units
  
    We issued a series of notes, dated December 19, 2007,
    January 10, 2008, April 8, 2008, October 10, 2008
    and December 24, 2008, in favor of Red Oak Finance, LLC, a
    Florida limited liability company (Red Oak). The
    notes were in the original principal amounts of $1,000,000,
    $500,000, $500,000, $62,500 and $450,000, respectively, each at
    a 10.0% per annum interest rate. The largest aggregate amount of
    principal outstanding on the notes since issuance was
    $2.5 million. Since issuance of the notes, the amount of
    principal paid under the notes was $253,000, the amount of
    interest paid under the notes was $319,000. On June 30,
    2009, we converted $2,260,000 of these notes into 50,855
    Series A Preferred Units. The Series A Preferred Units
    are non-voting and can be redeemed at any time by us for an
    amount equal to the applicable unreturned preferred capital
    amount allocable to the Series A Preferred Units sought to
    be redeemed, plus any accrued and unpaid preferred return. The
    cumulative rate of preferred return is equal to 16.5% of the
    outstanding units, per annum. The dividends payable at
    December 31, 2010 and December 31, 2009 were $642,000
    and $189,000, respectively. The Series A Preferred Units
    were converted into common stock in connection with our initial
    public offering and all dividends in arrears were extinguished
    pursuant to our plan of conversion.
    We issued a series of notes, dated August 1, 2008,
    August 6, 2008, December 23, 2008 and
    December 30, 2008, in favor of IFS Holdings, Inc., a
    Florida corporation. The notes were in the original principal
    amounts of $200,000, $75,000, $750,000 and $750,000,
    respectively, each at a 16.0% per annum interest rate. The
    largest aggregate amount of principal outstanding on the notes
    since issuance was $1.8 million. Since issuance of the
    notes, the amount of principal paid under the notes was $0, the
    amount of interest paid under the notes was $163,000. On
    June 30, 2009, we converted $1,775,000 of these notes into
    39,941 Series A Preferred Units. The Series A
    Preferred Units are non-voting and can be redeemed at any time
    by us for an amount equal to the applicable unreturned preferred
    capital amount allocable to the Series A Preferred Units
    sought to be redeemed, plus any accrued and unpaid preferred
    return. The cumulative rate of preferred return is equal to
    16.5% of the outstanding units, per annum. The dividends payable
    at December 31, 2010 and December 31, 2009 were
    $504,000 and $155,000, respectively. The Series A Preferred
    Units were converted into common stock in connection with our
    initial public offering and all dividends in arrears were
    extinguished pursuant to our plan of conversion.  Issuance
    of Series B, C, D, E and F Preferred Units
  
    In December 2009, Premium Funding, Inc. and Imex Settlement
    Corporation each contributed $2.5 million to us in
    consideration for the issuance of 25,000 Series B Preferred
    Units. The Series B Preferred Units are non-voting and can
    be redeemed at any time by us for an amount equal to the
    applicable unreturned preferred capital amount allocable to the
    Series B Preferred Units sought to be redeemed, plus any
    accrued and unpaid preferred return. The cumulative rate of
    preferred return is equal to 16.0% of the outstanding units, per
    annum. The dividends payable at December 31, 2010 and
    December 31, 2009 were $437,000 and $4,000, respectively.
    On November 1, 2010, the Series B Preferred Units
    owned by Premium Funding, Inc. were exchanged along with the
    common units owned by Premium Funding, Inc. and a promissory
    note issued to Skarbonka for $30.0 million debenture that
    matures October 4, 2011. The debenture will have an
    interest rate of 0%. Immediately prior to the closing of our
    recent offering, the debenture was converted into shares of our
    common stock. The Series B Preferred Units were converted into
    common stock in connection with our initial public offering and
    all dividends in arrears were extinguished pursuant to our plan
    of conversion.
    In March 2010, Imex Settlement Corporation contributed
    $7.0 million to us in consideration for the issuance of
    70,000 Series C Preferred Units. The Series C
    Preferred Units are non-voting and can be redeemed at any time
    by us for an amount equal to the applicable unreturned preferred
    capital amount allocable to the 86




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Series C Preferred Units sought to be redeemed, plus any
    accrued and unpaid preferred return. The cumulative rate of
    preferred return is equal to 16.0% of the outstanding units, per
    annum. The dividends payable at December 31, 2010 were
    $904,000. The Series C Preferred Units were converted into
    common stock in connection with our initial public offering and
    all dividends in arrears were extinguished pursuant to our plan
    of conversion.  
    In June 2010, Imex Settlement Corporation purchased from us
    7,000 Series D Preferred Units for an aggregate purchase
    price of $700,000. The Series D Preferred Units are
    non-voting and can be redeemed at any time by us for an amount
    equal to the applicable unreturned preferred capital amount
    allocable to the Series D Preferred Units sought to be
    redeemed, plus any accrued and unpaid preferred return. The
    cumulative rate of preferred return is equal to 16.0% of the
    outstanding units, per annum. The dividends payable at
    December 31, 2010 were $59,000. The Series D Preferred
    Units were converted into common stock in connection with our
    initial public offering and all dividends in arrears were
    extinguished pursuant to our plan of conversion.
    On December 31, 2010, Imex Settlement Corporation owned
    73,000 Series E Preferred Units for an aggregate purchase
    price of $7,300,000. The Series E Preferred Units are
    non-voting and can be redeemed at any time by us for an amount
    equal to the applicable unreturned preferred capital amount
    allocable to the Series E Preferred Units sought to be
    redeemed, plus any accrued and unpaid preferred return. The
    cumulative rate of preferred return is equal to 16.0% of the
    outstanding units, per annum. The dividends payable at
    December 31, 2010 were $302,000. The Series E
    Preferred Units were converted into common stock in connection
    with our initial public offering and all dividends in arrears
    were extinguished pursuant to our plan of conversion.
    Executed on January 10, 2011, and effective as of
    December 31, 2010, Imex Settlement Corporation owned
    110,000 Series F Preferred Units for an $11,000,000
    promissory note. The Series F Preferred Units are
    non-voting and can be redeemed at any time by us for an amount
    equal to the applicable unreturned preferred capital amount
    allocable to the Series F Preferred Units sought to be
    redeemed, plus any accrued and unpaid preferred return. The
    cumulative rate of preferred return is equal to 16.0% of the
    outstanding units, per annum. The Series F Preferred Units
    and the $11,000,000 promissory note were extinguished as a
    result of the corporate conversion.  Other
    Transactions
  
    Antony Mitchell, our chief executive officer, is the owner of
    Warburg. Pursuant to an oral arrangement between us and Warburg,
    Antony L. Mitchell serves as our chief executive officer and we
    provide Warburg with (i) office space; (ii) equipment;
    and (iii) personnel. During the year ended
    December 31, 2010 and 2009, we incurred fees of $869,000
    and $926,000, respectively, under this arrangement. The
    arrangement with Warburg has terminated.
    We have previously engaged Greenberg Traurig, LLP to provide us
    with legal services. The spouse of Anne Dufour Zuckerman, our
    former general counsel, is a shareholder of Greenberg Traurig,
    LLP, although Mr. Zuckerman does not receive any direct
    benefit from the relationship with us. We have paid Greenberg
    Traurig, LLP $823,000, $1,595,000 and $1,062,000 during the
    years ended December 31, 2010, 2009 and 2008, respectively,
    for legal services.   87




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##### Table of Contents



Item 14.
    Principal
    Accountant Fees and Services    Year Ended

Year EndedDecember 31, 2010

December 31, 2009Audit Fees

$
386,900


$
342,380Audit-Related Fees






Tax Fees






All Other Fees


884,967



Total

$
1,271,867


$
342,380   Audit
    Fees
  Form 10-K,
  All Other
    Fees
    Policy on
    Pre-Approval of Services Performed by Independent registered
    public accounting firm
   PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules    page F-1 Form 10-K.
      page E-1 Form 10-K.
 88




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##### Table of Contents



SIGNATURES      By
    /s/  Antony
    Mitchell   Title:
    Chief Executive Officer      Signature

Title

Date/s/  Antony
    MitchellAntony
    Mitchell

Chief Executive Officer and Director (Principal Executive
    Officer)

March 30, 2011/s/  Richard
    S. OConnell, Jr.Richard
    S. OConnell, Jr.

Chief Financial Officer and
    Chief Credit Officer
    (Principal Financial Officer)

March 30, 2011/s/  Jerome
    A. ParsleyJerome
    A. Parsley

Director of Finance and Accounting (Principal Accounting Officer)

March 30, 2011/s/  Jonathan
    NeumanJonathan
    Neuman

President, Chief Operating Officer and Director

March 30, 2011/s/  David
    A. BuzenDavid
    A. Buzen

Director

March 30, 2011/s/  Michael
    A. CrowMichael
    A. Crow

Director

March 30, 2011/s/  Walter
    M. Higgins IIIWalter
    M. Higgins III

Director

March 30, 2011/s/  Robert
    RosenbergRobert
    Rosenberg

Director

March 30, 2011/s/  A.
    Penn Hill WyroughA.
    Penn Hill Wyrough

Director

March 30, 2011  89




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##### Table of Contents



INDEX TO
    FINANCIAL STATEMENTS  Audited
    Consolidated and Combined Financial Statements as of
    December 31, 2009 and 2010 and for each of the three years
    in the period ended December 31, 2010 of Imperial Holdings,
    Inc. and its Subsidiaries
  Report of Grant Thornton LLP, Independent
    Registered Public Accounting Firm


F-1Consolidated and Combined Balance Sheets as of
    December 31, 2009 and 2010


F-2Consolidated and Combined Statements of
    Operations for the years ended December 31, 2008, 2009 and
    2010


F-3Consolidated and Combined Statements of
    Members Equity for the years ended December 31, 2008,
    2009 and 2010


F-4Consolidated and Combined Statements of Cash
    Flows for the years ended December 31, 2008, 2009 and
    2010


F-5Notes to Consolidated and Combined Financial
    Statements


F-6    90




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##### Table of Contents



Report of
    Independent Registered Public Accounting Firm           GRANT THORNTON LLP
    F-1




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##### Table of Contents



Imperial
    Holdings, Inc. and Subsidiaries
  CONSOLIDATED
    AND COMBINED BALANCE SHEETS
 December 31,
  2010


2009ASSETSAssetsCash and cash equivalents

$
14,224,014


$
15,890,799Restricted cash


690,727



Certificate of deposit  restricted


879,974



669,835Agency fees receivable, net of allowance for doubtful accounts


561,456



2,165,087Deferred costs, net


10,706,022



26,323,244Prepaid expenses and other assets


1,721,946



885,985Deposits


692,285



982,417Interest receivable, net


13,140,180



21,033,687Loans receivable, net


90,026,383



189,111,302Structured settlements receivables, net


2,535,764



151,543Receivables from sales of structured settlements


223,955



320,241Investment in life settlements (life insurance policies), at
    estimated fair value


17,137,601



4,306,280Investment in life settlement fund






542,324Fixed assets, net


876,337



1,337,344Total assets

$
153,416,644


$
263,720,088LIABILITIES AND MEMBERS EQUITYLiabilitiesAccounts payable and accrued expenses

$
3,425,162


$
2,713,543Accrued expenses  related parties


70,833



455,485Payable for purchase of structured settlements


223,955



Other liabilities


7,913,548



Lender protection insurance claims received in advance


31,153,755



Interest payable


13,764,613



8,251,023Interest payable  related parties


54,769



4,376,299Notes payable and debenture payable, net of discount


89,207,172



203,124,509Notes payable  related parties


2,401,727



27,939,972Total liabilities


148,215,534



246,860,831Member units  preferred (500,000 authorized in the
    aggregate)Member units  Series A preferred (90,796 issued
    and outstanding as of December 31, 2010 and 2009,
    respectively)


4,035,000



4,035,000Member units  Series B preferred (25,000 and
    50,000 issued and outstanding as of December 31, 2010 and
    2009, respectively)


2,500,000



5,000,000Member units  Series C preferred (70,000 and
    zero issued and outstanding as of December 31, 2010 and
    2009, respectively)


7,000,000



Member units  Series D preferred (7,000 and zero
    issued and outstanding as of December 31, 2010 and 2009,
    respectively)


700,000



Member units  Series E preferred (73,000 and
    zero issued and outstanding as of December 31, 2010 and
    2009, respectively)


7,300,000



Member units  common (500,000 authorized; 337,500 and
    450,000 issued and outstanding as of December 31, 2010 and
    2009, respectively)


11,462,427



19,923,709Accumulated deficit


(27,796,317
)


(12,099,452
)Total members equity


5,201,110



16,859,257Total liabilities and members equity

$
153,416,644


$
263,720,088    F-2




---



##### Table of Contents



Imperial
    Holdings, Inc. and Subsidiaries
  CONSOLIDATED
    AND COMBINED STATEMENTS OF OPERATIONS
 For
    the Years Ended December 31,
  2010


2009


2008Agency fee income

$
10,148,761


$
26,113,814


$
48,003,586Interest income


18,660,137



21,482,837



11,914,251Origination fee income


19,937,683



29,852,722



9,398,679Gain on sale of structured settlements


6,595,008



2,684,328



442,771Gain on forgiveness of debt


7,599,051



16,409,799



Change in fair value of life settlements


10,156,387







Change in fair value structured receivables


2,476,690







Gain on sale of life settlements


1,951,176







Change in equity investments


(1,283,810
)






Servicing fee income


413,250







Other income


241,756



71,348



47,400Total income


76,896,089



96,614,848



69,806,687Interest expense


21,819,910



23,928,017



7,475,714Interest expense  related parties


6,335,434



9,826,781



5,276,600Provision for losses on loans receivable


4,476,177



9,830,318



10,767,928Loss on loan payoffs and settlements, net


4,981,314



12,058,007



2,737,620Amortization of deferred costs


24,464,923



18,339,220



7,568,541Selling, general and administrative expenses


29,645,703



30,242,699



36,964,956Selling, general and administrative  related parties


869,493



1,026,209



4,601,454Total expenses


92,592,954



105,251,251



75,392,813Net loss

$
(15,696,865
)

$
(8,636,403
)

$
(5,586,126
)    F-3




---



##### Table of Contents






Imperial
    Holdings, Inc. and Subsidiaries
  CONSOLIDATED
    AND COMBINED STATEMENTS OF MEMBERS EQUITY
 For
    the Years Ended December 31, 2010, 2009 and
    2008
  RetainedMember Units 


Member Units 


Member Units 


Member Units 


Member Units 


Member Units 


EarningsCommon


Preferred A


Preferred B


Preferred C


Preferred D


Preferred E


(Accumulated)Units


Amounts


Units


Amounts


Units


Amounts


Units


Amounts


Units


Amounts


Units


Amounts


Deficit


TotalBalance, December 31, 2007


450,000


$
20,000,000










































$
2,123,077


$
22,123,077Member distributions






(54,512
)














































(54,512
)Net loss


















































(5,586,126
)


(5,586,126
)Balance, December 31, 2008


450,000



19,945,488











































(3,463,049
)


16,482,439Member distributions






(21,779
)














































(21,779
)Conversion of debt










90,796



4,035,000







































4,035,000Proceeds from sale of preferred units


















50,000



5,000,000































5,000,000Net loss


















































(8,636,403
)


(8,636,403
)Balance, December 31, 2009


450,000


$
19,923,709



90,796


$
4,035,000



50,000


$
5,000,000


























$
(12,099,452
)

$
16,859,257Proceeds from sale of preferred units


























70,000



7,000,000



7,000



700,000



73,000



7,300,000







15,000,000Repurchase of common and preferred units


(112,500
)


(8,461,282
)










(25,000
)


(2,500,000
)






























(10,961,282
)Net loss


















































(15,696,865
)


(15,696,865
)Balance, December 31, 2010


337,500


$
11,462,427



90,796


$
4,035,000



25,000


$
2,500,000



70,000


$
7,000,000



7,000


$
700,000



73,000


$
7,300,000


$
(27,796,317
)

$
5,201,110     F-4




---



##### Table of Contents



Imperial
    Holdings, Inc. and Subsidiaries
  CONSOLIDATED
    AND COMBINED STATEMENTS OF CASH FLOWS
 For
    the Years Ended December 31,
  2010


2009


2008Cash flows from operating activitiesNet loss

$
(15,696,865
)

$
(8,636,403
)

$
(5,586,126
)Adjustments to reconcile net loss to net cash used in operating
    activities:Depreciation


722,128



888,446



794,306Provision for doubtful accounts


84,730



1,289,353



1,046,178Provision for losses on loans receivable


4,476,177



9,830,318



10,767,928Loss of loan payoffs and settlements, net


4,981,314



12,058,007



2,737,620Origination fee income


(19,937,683
)


(29,852,722
)


(9,398,679
)Gain on sale of structured settlements


(6,595,008
)


(2,684,328
)


(442,771
)Change in fair value of life settlements


(10,156,387
)






Change in fair value of structured receivables


(2,476,690
)






Gain on forgiveness of debt


(7,599,051
)


(16,409,799
)


Interest income


(18,660,137
)


(21,482,837
)


(11,914,251
)Amortization of deferred costs


24,464,923



18,339,220



7,568,541Change in equity investments


1,283,810







Change in assets and liabilities:Certificate of deposit


(200,000
)


(10,681
)


(97,456
)Deposits


54,012







(19,717
)Agency fees receivable


1,518,901



5,416,509



(4,199,501
)Structured settlements receivables


7,117,611



4,658,300



(704,720
)Prepaid expenses and other assets


(3,538,388
)


2,003,955



(2,201,314
)Accounts payable and accrued expenses


8,931,110



(536,823
)


2,360,622Interest payable


3,429,167



12,498,302



7,132,789Net cash used in operating activities


(27,796,326
)


(12,631,183
)


(2,156,551
)Cash flows from investing activitiesPurchase of fixed assets, net of disposals


(261,121
)


(375,452
)


(769,328
)Purchase of intangible assets


(160,000
)






Collection (purchase) of investment


(727,333
)


(904,237
)


1,714,216Premiums paid on investments in policies


(744,858
)






Purchases of investment policies


(1,323,620
)






Proceeds from loan payoffs and lender protection insurance
    claims received in advance


128,846,594



36,108,662



3,543,032Originations of loans receivable, net


(24,743,836
)


(64,143,742
)


(107,301,524
)Proceeds from sale of investments, net


2,070,494







Net cash provided by (used) in investing activities


102,956,320



(29,314,769
)


(102,813,604
)Cash flows from financing activitiesProceeds from sale of preferred units


15,000,000



5,000,000



Member contributions










349,000Member distributions






(21,779
)


(54,512
)Payments of cash pledged as restricted deposits


(454,607
)


1,536,111



(546,165
)Payment of financing fees


(6,009,566
)


(17,168,828
)


(22,608,882
)Repayment of borrowings under credit facilities


(40,826,692
)


(22,665,616
)


(15,289,740
)Repayment of borrowings from affiliates


(93,216,144
)


(2,826,418
)


(794,773
)Borrowings under credit facilities


24,247,130



73,402,645



131,823,862Borrowings from affiliates


24,433,100



12,937,108



18,239,793Net cash (used in) provided by financing activities


(76,826,779
)


50,193,223



111,118,583Net (decrease) increase in cash and cash equivalents


(1,666,785
)


8,247,271



6,148,428Cash and cash equivalents, at beginning of year


15,890,799



7,643,528



1,495,100Cash and cash equivalents, at end of year

$
14,224,014


$
15,890,799


$
7,643,528Supplemental disclosures of non-cash financing activities:Conversion of debt to preferred member units

$



$
4,035,000


$
Deferred costs paid directly by credit facility

$



$
14,600,305


$
10,926,246Repurchase of common and preferred units

$
10,961,282


$



$
Repayment of borrowings paid directly by our lender protection
    insurance carrier

$
63,967,983


$



$
Supplemental disclosures of cash flow information:Cash paid for interest during the period

$
26,742,597


$
20,311,173


$
7,994,775    F-5




---



##### Table of Contents



Imperial
    Holdings, Inc. and Subsidiaries
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
 December 31,
    2010
  NOTE 1 
    ORGANIZATION
    AND DESCRIPTION OF BUSINESS ACTIVITIES      Premium
    Finance
    Structured
    Settlements
      NOTE 2 
    SUMMARY
    OF SIGNIFICANT ACCOUNTING POLICIES  Principles
    of Consolidation and Combination
    Premium
    Finance Loans Receivable
  (ASC) 310-20, Receivables  Nonrefundable Fees and Other
    Costs
 F-6




---



##### Table of Contents



Imperial
    Holdings, Inc. and Subsidiaries
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
    Receivables
      Ownership
    of Life Insurance Policies
  ASC 325-30, instrument-by-instrument
       F-7




---



##### Table of Contents



Imperial
    Holdings, Inc. and Subsidiaries
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
                  Use
    of Estimates
   F-8




---



##### Table of Contents



Imperial
    Holdings, Inc. and Subsidiaries
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
  Cash
    and Cash Equivalents
    Loans
    Receivable
  310-20, Receivables  Nonrefundable Fees and Other
    Costs
  Loan
    Impairment Valuation
  Receivables
        Agency
    Fees Receivable
   F-9




---



##### Table of Contents



Imperial
    Holdings, Inc. and Subsidiaries
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
    Deferred
    Costs
    Interest
    Income and Origination Income
  Revenue
    Recognition
      Revenue Recognition ASC 310-20,
  Fixed
    Assets
   F-10




---



##### Table of Contents



Imperial
    Holdings, Inc. and Subsidiaries
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
  Intangible
    Assets
    Agency
    Fee Income
    Loss
    in Loan Payoffs and Settlements, Net
    Advertising
    Expense
    Investment
    in Life Settlements
  ASC 325-30, Investments in Insurance Contracts instrument-by-instrument
  Investment
    in Other Companies
    Fair
    Value Measurements
  Fair Value Measurements and
    Disclosures
 F-11




---



##### Table of Contents



Imperial
    Holdings, Inc. and Subsidiaries
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
    Level 1
  Level 2
  Level 3
        Fair
    Value Option
  Financial
    Instruments, instrument-by-instrument
 F-12




---



##### Table of Contents



Imperial
    Holdings, Inc. and Subsidiaries
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
    Revenue
    Recognition
    
    Agency Fees Agency fees are paid by the
    referring life insurance agents based on negotiations between
    the parties and are recognized at the time a premium finance
    loan is funded. Because agency fees are not paid by the
    borrower, such fees do not accrue over the term of the loan. We
    typically charge and receive agency fees from the referring
    agent within approximately 46 days of our funding the loan.
    A separate origination fee is charged to the borrower which is
    amortized into income over the life of the loan.
    Interest Income Interest income on premium
    finance loans is recognized when it is realizable and earned, in
    accordance with ASC 605, Revenue Recognition.
    Discounts on structured settlement receivables are accreted over
    the life of the settlement using the effective interest method.
    Origination Fee Income Loans often include
    origination fees which are fees payable to us on the date the
    loan matures. The fees are negotiated at the inception of the
    loan on a transaction by transaction basis. The fees are
    accreted into income over the term of the loan using the
    effective interest method.
    Gains on Sales of Structured Settlements Gains on sales of structured settlements are
    recorded when the structured settlements have been transferred
    to a third party and we no longer have continuing involvement,
    in accordance with ASC 860, Transfers and Servicing.  Revenue Recognition
  Income
    Taxes
    Income Taxes
 F-13




---



##### Table of Contents



Imperial
    Holdings, Inc. and Subsidiaries
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
      Stock-Based
    Compensation
  Compensation  Stock
    Compensation
  Earnings
    Per Share
  Earnings Per Share
  Restricted
    Cash
    Servicing
    Income
   F-14




---



##### Table of Contents



Imperial
    Holdings, Inc. and Subsidiaries
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
  Gain
    on Sale of Life Settlements
    Risks
    and Uncertainties
    Reclassifications
    Recent
    Accounting Pronouncements
  No. 2010-20, Disclosures about the Credit Quality of Financing
    Receivables and the Allowance for Credit Losses 2010-20).
       F-15




---



##### Table of Contents



Imperial
    Holdings, Inc. and Subsidiaries
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
    No. 2010-26, Accounting for Costs Associated with Acquiring or
    Renewing Insurance Contracts (ASU No. 2010-26) No. 2010-26
    NOTE 3 
    DEFERRED
    COSTS  paid-in-capital.
         F-16




---



##### Table of Contents



Imperial
    Holdings, Inc. and Subsidiaries
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
    NOTE 4 
    DEPOSITS        NOTE 5 
    FIXED
    ASSETS    2010


2009Computer software and equipment

$
2,031,786


$
1,885,904Furniture, fixtures and equipment


1,025,841



1,025,841Leasehold improvements


629,590



531,8963,687,217



3,443,641Less: Accumulated depreciation


2,810,880



2,106,297Fixed assets, net

$
876,337


$
1,337,344     NOTE 6 
    LOANS
    RECEIVABLE    2010


2009Loan principal balance

$
76,939,236


$
167,691,534Loan origination fees, net


20,263,497



33,044,935Discount, net






(26,403
)Loan impairment valuation


(7,176,350
)


(11,598,764
)Loans receivable, net

$
90,026,383


$
189,111,302  F-17




---



##### Table of Contents



Imperial
    Holdings, Inc. and Subsidiaries
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
    2010


2009Loan principal balance, beginning

$
167,691,534


$
147,937,524Loan originations


20,536,025



51,572,637Subsequent year premiums paid net of reimbursement


4,207,811



15,875,702Loan write-offs


(5,377,510
)


(12,997,742
)Loan payoffs


(108,217,616
)


(29,607,625
)Loans transferred to investments in life settlements


(1,901,008
)


(5,088,962
)Loan principal balance, ending

$
76,939,236


$
167,691,534   ASC 310-20, Receivables  Nonrefundable Fees and Other
    Costs
  Receivables
    2010


2009Loan receivable, net


32,372,062



54,656,898Interest receivable, net


4,479,527



6,439,133Investment in impaired loans


36,851,589



61,096,031       Loans


InterestReceivable


Receivable


TotalBalance at beginning of period

$
11,598,764


$
1,788,544


$
13,387,308Provision for loan losses


2,276,043



2,200,134



4,476,177Charge-offs


(8,204,790
)


(2,648,441
)


(10,853,231
)Recoveries


1,506,333







1,506,333Balance at end of period

$
7,176,350


$
1,340,237


$
8,516,587  F-18




---



##### Table of Contents



Imperial
    Holdings, Inc. and Subsidiaries
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
    Loans


InterestReceivable


Receivable


TotalBalance at beginning of period

$
8,861,910


$
1,441,552


$
10,303,462Provision for loan losses


8,616,097



1,214,221



9,830,318Charge-offs


(5,879,243
)


(867,229
)


(6,746,472
)Recoveries










Balance at end of period

$
11,598,764


$
1,788,544


$
13,387,308     Loans


InterestReceivable


Receivable


TotalBalance at beginning of period

$
2,250,580


$
81,057


$
2,331,637Provision for loan losses


8,927,947



1,839,981



10,767,928Charge-offs


(2,316,617
)


(479,486
)


(2,796,103
)Recoveries










Balance at end of period

$
8,861,910


$
1,441,552


$
10,303,462     Uninsured


InsuredLoans


Loans


TotalAllowance for loan losses:Balance at beginning of period


1,982,641



9,616,123


$
11,598,764Provision for loan losses






2,276,043



2,276,043Charge-offs


(2,601,174
)


(5,603,616
)


(8,204,790
)Recoveries


1,506,333







1,506,333Ending balance

$
887,800


$
6,288,550


$
7,176,350Ending balance: individually evaluated for impairment


887,800



6,228,550



7,176,350Ending balance: collectively evaluated for impairment


0



0



0Ending balance: loans acquired with deteriorated credit quality


0



0



0Loan receivablesEnding balance


5,030,661



84,995,722



90,026,383Ending balance: individually evaluated for impairment


5,030,661



84,995,722



90,026,383Ending balance: collectively evaluated for impairment


0



0



0Ending balance: loans acquired with deteriorated credit quality


0



0



0  F-19




---



##### Table of Contents



Imperial
    Holdings, Inc. and Subsidiaries
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
    Uninsured

Insured(1)Unpaid



UnpaidS&P

Principal



PrincipalDesignation

Balance

Percent

Balance

PercentAAA

$




0.00%


$
571,090



0.79%AA+






0.00%



1,065,918



1.48%AA






0.00%



277,828



0.39%AA-


2,720,099



53.79%



40,847,422



56.83%A+


2,336,402



46.21%



9,977,875



13.88%A1






0.00%



2,234,667



3.11%A






0.00%



16,443,035



22.87%BB-






0.00%



464,900



0.65%Total

$
5,056,501



100.00%


$
71,882,735



100.00%     (1)
    
    All of the Companys insured loans have lender protection
    coverage with Lexington Insurance Company. As of
    December 31, 2010, Lexington had a financial strength
    rating of A+ by Standard & Poors (S&P).    Unpaid



Average

InterestRecorded

Principal

Related

Recorded

IncomeInvestment

Balance

Allowance

Investment

RecognizedWith no related allowance recorded:Uninsured Loans

$
2,630,384


$
1,872,484


$



$
3,400,988



436,096Insured Loans

$
61,537,248


$
42,694,690


$



$
85,200,145



7,058,357With an allowance recorded:Uninsured Loans


3,376,396



3,184,017



887,800



5,367,185



644,091Insured Loans


35,622,535



29,188,045



6,288,550



41,460,731



5,001,636TotalUninsured Loans

$
6,006,780


$
5,056,501


$
887,800


$
8,768,173


$
1,080,187Insured Loans

$
97,159,783


$
71,882,735


$
6,288,550


$
126,660,876


$
12,059,993     Greater Than30-59 Days


60-89 Days


90 Days


TotalPast Due


Past Due


Past Due


Past DueUninsured Loans

$
38,901


$



$
815,761


$
854,662Insured Loans


3,034,354



102,225







3,136,579Total

$
3,073,255


$
102,225


$
815,761


$
3,991,241    F-20




---



##### Table of Contents



Imperial
    Holdings, Inc. and Subsidiaries
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
               F-21




---



##### Table of Contents



Imperial
    Holdings, Inc. and Subsidiaries
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
  NOTE 7 
    ORIGINATION
    FEES    2010


2009Loan origination fees gross

$
30,182,958


$
57,641,266Un-accreted origination fees


(10,189,349
)


(25,211,898
)Amortized loan originations costs


269,888



615,567Total

$
20,263,497


$
33,044,935     NOTE 8 
    AGENCY
    FEES RECEIVABLE      Year EndedDecember 31,2010


2009Balance at beginning of period

$
119,886


$
768,806Bad debt expense


84,730



1,290,241Write-offs






(1,939,161
)Recoveries






Balance at end of period

$
204,616


$
119,886   NOTE 9 
    STRUCTURED
    SETTLEMENTS    December 31,


December 31,2010


2009Structured settlements  at cost

$
1,090,090


$
151,543Structured settlements  at fair value


1,445,674



Structured settlements receivable, net

$
2,535,764


$
151,543    F-22




---



##### Table of Contents



Imperial
    Holdings, Inc. and Subsidiaries
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
          8.39%
    Fixed Rate Asset Backed Variable Funding Notes
     F-23




---



##### Table of Contents



Imperial
    Holdings, Inc. and Subsidiaries
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
    back-up
  NOTE 10 
    INVESTMENT
    IN LIFE SETTLEMENTS (LIFE INSURANCE POLICIES)      Number ofLife Settlement


Fair


FaceRemaining Life Expectancy (In Years)

Contracts


Value


Value0-1





$



$
1-2










2-3










3-4


1



883,985



2,000,0004-5


1



628,449



2,200,000Thereafter


39



15,625,168



201,082,000Total


41


$
17,137,602


$
205,282,000    F-24




---



##### Table of Contents



Imperial
    Holdings, Inc. and Subsidiaries
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
    2011


4,476,7332012


4,880,3592013


4,890,0942014


4,783,5912015


5,221,452Thereafter


46,155,485$
70,407,714   NOTE 11 
    INVESTMENT
    IN LIFE SETTLEMENT FUND    NOTE 12 
    FAIR
    VALUE MEASUREMENTS    Level 1
  Level 2
  Level 3
 F-25




---



##### Table of Contents



Imperial
    Holdings, Inc. and Subsidiaries
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
    TotalLevel 1


Level 2


Level 3


Fair ValueAssets:Investment in life settlements

$



$



$
17,137,601


$
17,137,601Structured settlement receivables

$



$



$
1,445,674


$
1,445,674$



$



$
18,583,275


$
18,583,275       TotalLevel 1

Level 2

Level 3

Fair ValueAssets:Investment in life settlements

$



$



$
4,306,280


$
4,306,280     Life Settlements:Balance, December 31, 2009

$
4,306,280Purchase of policies


1,323,622Acquired in foreclosure


2,676,949Change in unrealized appreciation


11,322,730Realized change in fair value


(421,486
)Sale of policies


(2,070,494
)Balance, December 31, 2010

$
17,137,601Unrealized appreciation, December 31, 2010

$
10,127,629Structured Settlements:Balance, December 31, 2009

$
Purchase of contracts


9,864,645Change in unrealized appreciation


2,476,690Realized change in fair value


(1,771,658
)Sale of policies


(9,079,982
)Collections


(44,021
)Balance, December 31, 2010

$
1,445,674Unrealized appreciation, December 31, 2010

$
705,032  F-26




---



##### Table of Contents



Imperial
    Holdings, Inc. and Subsidiaries
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
    Balance, December 31, 2008

$
Change in unrealized appreciation


Acquisition of policies


4,306,280Balance, December 31, 2009

$
4,306,280Unrealized appreciation, December 31, 2009

$
     NOTE 13 
    LENDER
    PROTECTION INSURANCE CLAIMS RECEIVED IN ADVANCE       F-27




---



##### Table of Contents



Imperial
    Holdings, Inc. and Subsidiaries
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
      NOTE 14 
    NOTES AND
    DEBENTURE PAYABLE    Total Notes PayableDecember 31,


December 31,2010


2009Cedar Lane

$
34,209,496


$
11,806,000Skarbonka debenture


29,766,667



White Oak, Inc.


21,218,775



26,594,974Acorn Capital Group


3,987,889



9,178,805CTL Holdings, LLC


24,345



49,743,657Ableco Finance






96,173,950Other Note Payable






9,627,12389,207,172



203,124,509Related Party


2,401,727



27,939,972Total

$
91,608,899


$
231,064,481   Cedar
    Lane
   F-28




---



##### Table of Contents



Imperial
    Holdings, Inc. and Subsidiaries
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
    Skarbonka
    Debenture
      White
    Oak,
    Inc.
        Acorn
    Capital Group
   F-29




---



##### Table of Contents



Imperial
    Holdings, Inc. and Subsidiaries
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
          CTL
    Holdings LLC
       F-30




---



##### Table of Contents



Imperial
    Holdings, Inc. and Subsidiaries
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
        Ableco
    Finance
    Other
    Note Payable
     F-31




---



##### Table of Contents



Imperial
    Holdings, Inc. and Subsidiaries
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
    Related
    Party
          Maturities
    Acorn


CTL


White Oak


Cedar Lane


Total2011


3,987,889



24,345



21,218,775



18,739,593


$
43,970,6022012














15,387,547



15,387,5472013














82,355



82,355$
3,987,889


$
24,345


$
21,218,775


$
34,209,495


$
59,440,504    F-32




---



##### Table of Contents



Imperial
    Holdings, Inc. and Subsidiaries
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
  NOTE 15 
    SEGMENT
    INFORMATION          Year EndedDecember 31


December 31


December 312010


2009


2008Premium financeIncomeAgency fee income

$
10,145,719


$
26,113,814


$
48,003,586Interest income


18,326,283



20,271,581



11,339,822Origination fee income


19,937,683



29,852,722



9,398,679Gain on forgiveness of debt


7,599,051



16,409,799



Change in fair value of life settlements and structured
    receivables


10,156,387







Gain on sale of life settlements


1,951,176Change in equity investments


(1,283,810
)Servicing fee income


402,523







Other income


130,770



398



67,365,782



92,648,314



68,742,087Direct segment expensesInterest expense


24,387,699



28,466,092



9,913,856Provision for losses


4,476,177



9,830,318



10,767,928Loss (gain) on loans payoff and settlements, net


4,981,314



12,058,007



2,737,620Amortization of deferred costs


24,464,923



18,339,220



7,568,541SG&A expense


10,323,641



13,741,737



21,744,46868,633,754



82,435,374



52,732,413Segment operating income

$
(1,267,972
)

$
10,212,940


$
16,009,674Structured settlementsIncomeInterest income


333,854



1,211,256



574,429Gain on sale of structured settlements

$
6,595,008


$
2,684,328


$
442,771Change in fair value of life settlements and structured
    receivables


2,476,691







Servicing fee income


10,727







Other income


114,027



70,950



47,400 F-33




---



##### Table of Contents



Imperial
    Holdings, Inc. and Subsidiaries
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
  Year EndedDecember 31


December 31


December 312010


2009


20089,530,307



3,966,534



1,064,600Direct segment expensesSG&A expenses


13,065,588



9,474,887



9,770,400Segment operating loss

$
(3,535,281
)

$
(5,508,353
)

$
(8,705,800
)ConsolidatedSegment operating income (loss)

$
(4,803,252
)

$
4,704,587


$
7,303,874Unallocated expensesSG&A expenses


7,125,968



8,052,284



10,051,542Interest expense


3,767,645



5,288,706



2,838,45810,893,613



13,340,990



12,890,000Net loss

$
(15,696,865
)

$
(8,636,403
)

$
(5,586,126
)     December 31


December 312010


2009Direct segment assetsPremium finance

$
141,518,356


$
245,574,288Structured settlements


3,527,344



9,201,017145,045,700



254,775,305Other unallocated assets


8,370,944



8,944,783$
153,416,644


$
263,720,088     NOTE 16 
    RELATED
    PARTY TRANSACTIONS    NOTE 17 
    COMMITMENTS
    AND CONTINGENCIES      Year Ending December 31,2011

$
569,2852012


119,582$
688,867  F-34




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##### Table of Contents



Imperial
    Holdings, Inc. and Subsidiaries
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
          NOTE 18 
    PREFERRED
    EQUITY         F-35




---



##### Table of Contents



Imperial
    Holdings, Inc. and Subsidiaries
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
                NOTE 19 
    EMPLOYEE
    BENEFIT PLAN    NOTE 20 
    SUMMARY
    OF QUARTERLY FINANCIAL DATA 
    (UNAUDITED)   F-36




---



##### Table of Contents



Imperial
    Holdings, Inc. and Subsidiaries
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
    Fiscal 20101st Quarter


2nd Quarter


3rd Quarter


4th QuarterRevenues

$
19,746,409


$
20,624,182


$
20,021,225


$
16,504,273Income/(Loss) from Operations

$
(7,486,524
)

$
(2,095,110
)

$
(6,823,682
)

$
708,451Net Income/(Loss)

$
(7,486,524
)

$
(2,095,110
)

$
(6,823,682
)

$
708,451   Fiscal 20091st Quarter


2nd Quarter


3rd Quarter


4th QuarterRevenues

$
29,952,342


$
25,933,843


$
17,475,892


$
23,252,771Loss from Operations

$
(162,509
)

$
(1,599,525
)

$
(3,667,978
)

$
(3,206,391
)Net Loss

$
(162,509
)

$
(1,599,525
)

$
(3,667,978
)

$
(3,206,391
)   NOTE 21 
    SUBSEQUENT
    EVENTS           F-37




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##### Table of Contents



Imperial
    Holdings, Inc. and Subsidiaries
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
          Pro
    Forma Information (Unaudited)
     F-38




---



##### Table of Contents



Imperial
    Holdings, Inc. and Subsidiaries
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
      Year EndedDecember 31,2010Numerator (basic and diluted):Pro forma net loss

$
(12,634,788
)Denominator (basic and diluted):Weighted average common shares outstanding


Add: Common shares from conversion of all outstanding common and
    preferred units and IMPEX debt


2,300,273Add: Common shares from phantom stock agreements


27,000Add: Common shares from conversion of $30.0 million
    debenture


1,272,727Pro forma weighted average common shares outstanding


3,600,000Pro forma net loss per share:Basic and diluted

$
(3.51
)  F-39




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##### Table of Contents



Imperial
    Holdings, Inc. and Subsidiaries
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
    As of December 31, 2010Pro Forma


Pro Forma AsActual


Adjustments


Adjusted(3)(Unaudited)Assets:Cash and cash equivalents

$
14,224


$
174,358


$
188,582Restricted cash


691







691Certificate of deposit  restricted


880







880Agency fees receivable, net of allowance for doubtful accounts


562







562Deferred costs, net


10,706







10,706Interest receivable, net


13,140







13,140Loans receivable, net


90,026







90,026Structured settlements receivables, net


2,536







2,536Receivables from sales of structured Settlements


224







224Investment in life settlements, at estimated fair value


17,138







17,138Investment in life settlement fund










Investment in affiliates


105







105Fixed assets, net


876







876Intangible assets


160







160Prepaid expenses and other assets


1,457







1,457Deposits


692







692Total assets

$
153,417


$
174,358


$
327,775Liabilities:Accounts payable and accrued expenses(4)

$
3,425


$



$
3,425Payable for purchase of structured settlements


224







224Lender protection insurance claims received in advance


31,154







31,154Interest payable(4)


13,820



(54
)(2)


13,766
(2)Notes and debenture payable(4)


91,609



(32,168
)(2)


59,441
(2)Lender protection insurance claims received in advance


7,984







7,984Total liabilities

$
148,216


$
(32,222
)

$
115,994Member units  preferred (500,000 authorized in the
    aggregate)Member units  Series A preferred (90,796 issued
    and outstanding, actual; 0 issued and outstanding, pro
    forma)


4,035



(4,035
)(1)


Member units  Series B preferred (50,000 issued
    and 25,000 outstanding, actual; 0 issued and outstanding, pro
    forma)


2,500



(2,500
)(1)


Member units  Series C preferred (70,000 issued
    and outstanding, actual; 0 issued and outstanding, pro
    forma)


7,000



(7,000
)(1)


Member units  Series D preferred (7,000 issued
    and outstanding, actual; 0 issued and outstanding, pro
    forma)


700



(700
)(1)


Member units  Series E preferred (75,000 issued
    and 73,000 outstanding, actual; 0 issued and outstanding, pro
    forma and pro forma as adjusted)


7,300



(7,300
)(1)



(1)



(1)


Member units  common (500,000 authorized; 450,000
    issued and outstanding, actual; 0 issued and outstanding, pro
    forma)


11,462



(11,462
)(1)


Common stock






212



212Paid-in capital






239,365
(1)(2)(3)


239,365Retained earnings (accumulated deficit)


(27,796
)



(1)(2)(3)


(27,796
)Total members/stockholders equity


5,201



206,580



211,781Total liabilities and members/stockholders equity

$
153,417


$
174,358


$
327,775     (1)
    
    Reflects the conversion of all common and preferred limited
    liability company units of Imperial Holdings, LLC into shares of
    our common stock. F-40




---



##### Table of Contents



Imperial
    Holdings, Inc. and Subsidiaries
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
   (2)
    
    Reflects the issuance and conversion of a $30.0 million
    debenture into shares of our common stock immediately prior to
    the closing of our recently completed initial public offering.
    Also reflects the conversion of all principal and accrued
    interest outstanding under our promissory note in favor of IMPEX
    Enterprises, Ltd. into shares of common stock of Imperial
    Holdings, Inc. as a result of the corporate conversion.(3)
    
    Reflects our sale of 17,602,614 shares of common stock at
    an initial public offering price of $10.75 per share after the
    deduction of the underwriting discounts and commissions and the
    estimated offering expenses payable by us. This resulted in net
    proceeds of approximately $174.4 million.(4)
    
    Includes amounts payable to related parties. Refer to our
    consolidated and combined financial statements for detail. F-41




---



##### Table of Contents



EXHIBIT INDEX  In reviewing the agreements included as exhibits to this
    Annual Report on
    Form 10-K,
    please remember they are included to provide you with
    information regarding their terms and are not intended to
    provide any other factual or disclosure information about us,
    our subsidiaries or other parties to the agreements. The
    agreements contain representations and warranties by each of the
    parties to the applicable agreement. These representations and
    warranties have been made solely for the benefit of the other
    parties to the applicable agreement and:
  
    should not in all instances be treated as categorical
    statements of fact, but rather as a way of allocating the risk
    to one of the parties if those statements prove to be
    inaccurate;
    have been qualified by disclosures that were made to the
    other party in connection with the negotiation of the applicable
    agreement, which disclosures are not necessarily reflected in
    the agreement;
    may apply standards of materiality in a way that is different
    from what may be viewed as material to you or other investors;
    and
    were made only as of the date of the applicable agreement or
    such other date or dates as may be specified in the agreement
    and are subject to more recent developments.  Accordingly, these representations and warranties may not
    describe the actual state of affairs as of the date they were
    made or at any other time. We acknowledge that, notwithstanding
    the inclusion of the foregoing cautionary statements, we are
    responsible for considering whether additional specific
    disclosures of material information regarding material
    contractual provisions are required to make the statements in
    this registration statement not misleading.
  ExhibitNo.

Description***3
.1

Articles of Incorporation of Registrant***3
.2

Bylaws of Registrant****4
.1

Form of Common Stock Certificate@4
.2

Form of Warrant to purchase common stock****~10
.1

Employment Agreement between the Registrant and Antony Mitchell
    dated November 8, 2010***~10
.2

Employment Agreement between the Registrant and Jonathan Neuman
    dated September 29, 2010****~10
.3

Employment Agreement between the Registrant and Rory
    OConnell dated November 4, 2010****~10
.4

Employment Agreement between the Registrant and Deborah Benaim
    dated November 8, 2010***~10
.5

Imperial Holdings 2010 Omnibus Incentive Plan***~10
.6

2010 Omnibus Incentive Plan Form of Stock Option Award Agreement******+10
.7

Omnibus Claims Settlement Agreement dated as of
    September 8, 2010 by and between Imperial PFC Financing,
    LLC and Lexington Insurance Company******10
.8

Pledge and Security Agreement dated September 8, 2010 by
    Imperial Premium Finance, LLC****10
.9

Guarantor Security Agreement dated November 2009 by Imperial
    Premium Finance, LLC****10
.10

Guarantor Security Agreement dated March 13, 2009 by
    Imperial Premium Finance, LLC**10
.11

Settlement Agreement dated as of May 19, 2009 among
    Sovereign Life Financing, LLC, Imperial Premium Finance, LLC and
    Acorn Capital Group, LLC***10
.11.1

Assignment Agreement dated June 10, 2009 between Acorn
    Capital Group, LLC and Asset Based Resource Group, LLC assigning
    rights to the Settlement Agreement dated as of May 19, 2009
    among Sovereign Life Financing, LLC, Imperial Premium Finance,
    LLC and Acorn Capital Group, LLC****10
.12

Second Amended and Restated Financing Agreement dated as of
    March 12, 2010 by and among Imperial PFC Financing II, LLC
    as Borrower, Cedar Lane Capital LLC as Lender and EBC Asset
    Management, Inc. as Administrative Agent and Collateral Agent*****+10
.13

Letter Agreement dated September 14, 2009 among Imperial
    Holdings, LLC, Lexington Insurance Company and National
    Fire & Marine Insurance Company****10
.14

Master Trust Indenture dated as of September 24, 2010
    by and among Imperial Settlements Financing 2010, LLC as the
    Issuer, Portfolio Financial Servicing Company as the Initial
    Master Servicer, and Wilmington Trust Company as the
    Trustee and Collateral Trustee




---



##### Table of Contents



ExhibitNo.

Description****10
.15

Series 2010-1
    Supplement dated as of September 24, 2010 to the Master
    Trust Indenture dated as of September 24, 2010 by and
    among Imperial Settlements Financing 2010, LLC as the Issuer,
    Portfolio Financial Servicing Company as the Initial Servicer,
    and Wilmington Trust Company as the Trustee and Collateral
    Trustee****10
.16

Financing Agreement dated as of March 13, 2009 by and among
    Imperial Life Financing II, LLC as Borrower, the Lenders from
    time to time party thereto, and CTL Holdings II LLC as
    Collateral Agent and Administrative Agent*****+10
.17

Letter Agreement dated March 13, 2009 among Imperial
    Holdings, LLC, Lexington Insurance Company and National
    Fire & Marine Insurance Company***10
.18

First Amendment to Financing Agreement dated as of
    April 30, 2009 by and among Imperial Life Financing II, LLC
    as Borrower, the Lenders from time to time party thereto, and
    CTL Holdings II LLC as Collateral Agent and
    Administrative Agent***10
.19

Notice of Resignation and Appointment dated as of April 30,
    2009 among CTL Holdings II LLC, White Oak Global Advisors,
    LLC and the Lenders party to the Financing Agreement dated
    March 13, 2009***10
.20

Second Amendment to Financing Agreement dated as of
    July 23, 2009 among Imperial Life Financing II, LLC as
    Borrower, the Lenders from time to time party thereto, and White
    Oak Global Advisors, LLC as Collateral Agent and Administrative
    Agent***10
.21

Third Amendment and Consent to Financing Agreement dated as of
    September 11, 2009 among Imperial Life Financing II, LLC as
    Borrower, the Lenders from time to time party thereto, and White
    Oak Global Advisors, LLC as Collateral Agent and Administrative
    Agent***10
.22

Fourth Amendment to Financing Agreement dated as of
    December 1, 2009 among Imperial Life Financing II, LLC as
    Borrower, the Lenders from time to time party thereto, and White
    Oak Global Advisors, LLC as Collateral Agent and Administrative
    Agent**10
.23

Marketing Agreement between Imperial Litigation Funding, LLC as
    Originator and Plaintiff Funding Holding Inc d/b/a Law Cash as
    Funder**10
.24

Agreement dated November 13, 2009 among GWG Life
    Settlements, LLC and Imperial Premium Finance, LLC as Selling
    Advisor21
.1

Subsidiaries of the Registrant23
.1

Consent of Grant Thornton LLP31
.1

Rule 13a-14(a)/15d-14(a)
    Certification of the Chief Executive Officer (Section 302
    of the Sarbanes-Oxley Act of 2002).31
.2

Rule 13a-14(a)/15d-14(a)
    Certification of the Chief Financial Officer (Section 302
    of the Sarbanes-Oxley Act of 2002).32
.1

Certification of the Chief Executive Officer pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.32
.2

Certification of the Chief Financial Officer pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.     **
    
    Filed as exhibit to registration statement on
    Form S-1
    on August 12, 2010.***
    
    Filed as exhibit to amendment No. 1 to registration
    statement on
    Form S-1
    on October 1, 2010.****
    
    Filed as exhibit to amendment No. 2 to registration
    statement on
    Form S-1
    on November 10, 2010.*****
    
    Filed as exhibit to amendment No. 3 to registration
    statement on
    Form S-1
    on November 12, 2010.******
    
    Filed as exhibit to amendment No. 4 to registration
    statement on
    Form S-1
    on November 19, 2010.@
    
    Filed as an exhibit to amendment No. 7 to registration
    statement on
    Form S-1
    on January 12, 2011.~
    
    Compensatory plan or arrangement.+
    
    Certain portions of the exhibit have been omitted pursuant to a
    request for confidential treatment. An unredacted copy of the
    exhibit has been filed separately with the United States
    Securities and Exchange Commission pursuant to a request for
    confidential treatment.