UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2013

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 333-172244

TMX Finance LLC

(Exact Name of Registrant as Specified in its Charter)

Delaware		20-1106313
(State of Incorporation)		(I.R.S. Employer Identification No.)

15 Bull Street Savannah, Georgia		31401
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code: (912) 525-2675

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes o No x

(Note: The registrant has filed all reports pursuant to the Securities Exchange Act of 1934 as applicable for the preceding 12 months)

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer o		Accelerated Filer o

Non-Accelerated Filer x		Smaller reporting company o
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes o No o

Not applicable x

The Company has 100 outstanding limited liability company membership units, all of which are held by TMX Finance Holdings Inc.

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TMX FINANCE LLC
AND AFFILIATES

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2013

TABLE OF CONTENTS

		Page

PART I	FINANCIAL INFORMATION

Item 1.	Financial Statements	3

	Consolidated Balance Sheets as of March 31, 2013 (unaudited) and December 31, 2012	3

	Consolidated Statements of Income for the Three Months Ended March 31, 2013 (unaudited) and March 31, 2012 (unaudited)	4

	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2013 (unaudited) and March 31, 2012 (unaudited)	5

	Notes to Consolidated Financial Statements (unaudited)	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26

Item 4.	Controls and Procedures	26

PART II	OTHER INFORMATION

Item 1.	Legal Proceedings	26

Item 1A.	Risk Factors	26

Item 6.	Exhibits	27

	Signatures	28

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PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

TMX FINANCE LLC

AND AFFILIATES

Consolidated Balance Sheets

March 31, 2013 (unaudited) and December 31, 2012

(in thousands)

	March 31, 2013			December 31, 2012
	(unaudited)
Assets
Cash and cash equivalents	$	195,056		$	90,794

Title loans receivable	497,550			577,172
Allowance for loan losses	(82,149		)	(94,561		)
Unamortized loan origination costs	4,326			3,716
Title loans receivable, net	419,727			486,327
Interest receivable	31,166			38,055
Property and equipment, net	101,461			95,239
Debt issuance costs (net of accumulated amortization of $10,555 and $9,526 as of March 31, 2013 and December 31, 2012, respectively)	9,540			10,570
Goodwill	5,975			5,975
Note receivable from Sole Shareholder	950			1,077
Other assets	38,358			39,746
Total Assets	$	802,233		$	767,783

Liabilities and Equity
Senior secured notes (with net premium of $1,372 and $1,519 as of March 31, 2013 and December 31, 2012, respectively)	$	311,372		$	311,519
Revolving credit facility	25,000			25,000
Notes payable	37,368			37,336
Notes payable to related parties	19,397			19,628
Obligations under capital leases	1,695			1,971
Accounts payable and accrued expenses	52,396			61,341
Total Liabilities	447,228			456,795

Commitments and contingencies (Note 8)
Member’s equity and noncontrolling interests:
Total member’s equity (with retained earnings of $287,617 and $243,835 as of March 31, 2013 and December 31, 2012, respectively)	362,148			318,365
Noncontrolling interests	(7,143		)	(7,377		)
Total member’s equity and noncontrolling interests	355,005			310,988
Total Liabilities and Equity	$	802,233		$	767,783

See notes to consolidated financial statements (unaudited).

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TMX FINANCE LLC

AND AFFILIATES

Consolidated Statements of Income (unaudited)

For the Three Months Ended March 31, 2013 and 2012

(in thousands)

	Three Months Ended March 31,
	2013			2012
Interest and fee income	$	181,335		$	151,361
Provision for loan losses	(13,523		)	(11,462		)
Net interest and fee income	167,812			139,899

Costs, expenses and other:
Salaries and related expenses	58,893			45,635
Occupancy costs	19,872			14,433
Depreciation and amortization	4,953			3,970
Advertising	6,173			1,351
Other operating and administrative expenses	20,783			16,845
Interest, including amortization of debt issuance costs	13,121			11,675
Total expenses	123,795			93,909
Net income	44,017			45,990
Net income (loss) attributable to noncontrolling interests	234			(153		)

Net income attributable to member’s equity	$	43,783		$	46,143

See notes to consolidated financial statements (unaudited).

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TMX FINANCE LLC

AND AFFILIATES

Consolidated Statements of Cash Flows (unaudited)

For the Three Months Ended March 31, 2013 and 2012

(in thousands)

	Three Months Ended March 31,
	2013			2012
Cash Flows from Operating Activities
Net income	$	44,017		$	45,990
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	13,523			11,462
Depreciation and amortization	4,953			3,970
Amortization of discount, premium, debt issuance and upfront lease costs	943			916
Amortization of acquired intangibles	—			60
Net (gain) loss on disposal of property and equipment	(55		)	31
Changes in assets and liabilities:
Interest receivable	6,889			5,416
Other assets	1,653			1,375
Net change in loan origination costs	(610		)	(211		)
Accounts payable and accrued expenses	(8,945		)	(19,942		)
Net cash provided by operating activities	62,368			49,067

Cash Flows from Investing Activities
Net title loans collected	53,687			44,644
Purchase of property and equipment	(11,120		)	(12,050		)
Increase in restricted cash	(325		)	(375		)
Receipt of payments on note receivable from Sole Shareholder	127			113
Net cash provided by investing activities	42,369			32,332

Cash Flows from Financing Activities
Proceeds from notes payable issued by consolidated CSO Lenders	840			950
Repayments of notes payable by consolidated CSO Lenders	(800		)	—
Repayments of notes payable to related parties	(231		)	(217		)
Repayments of notes payable and capital leases	(284		)	(29		)
Distributions	—			(903		)
Net cash used in financing activities	(475		)	(199		)
Net increase in cash and cash equivalents	104,262			81,200
Cash and cash equivalents at beginning of period	90,794			38,141
Cash and cash equivalents at end of period	$	195,056		$	119,341

See notes to consolidated financial statements (unaudited).

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TMX FINANCE LLC

AND AFFILIATES

Notes to Consolidated Financial Statements (unaudited)

(1) Nature of Business, Principles of Consolidation, Seasonality and Significant Accounting Policies

Nature of Business

TMX Finance LLC and affiliates (collectively, unless the context indicates otherwise, the “Company”) is a specialty finance company that originates and services automobile title loans through 1,108 title-lending stores in 12 states as of March 31, 2013. Affiliates include wholly-owned subsidiaries and consolidated variable interest entities (“VIEs”) as described below. The Company operates as TitleMax in 870 stores, and in 167 stores, the Company operates under a TitleBucks brand. The Company also offers a second lien automobile product in Georgia and Florida, with operations conducted within 66 TitleMax stores under the EquityAuto Loan brand, and through 71 standalone stores under the InstaLoan brand. The Company is in the process of fully separating the EquityAuto Loan business into standalone stores under the InstaLoan brand with separate management and the addition of other loan products. Segment information is not presented since all of the Company’s revenue is attributed to a single reportable segment: specialty financial services.

Effective September 30, 2012, the former sole member of TMX Finance LLC transferred 100% of his membership interests to TMX Finance Holdings Inc. (“Parent”) in exchange for shares of common stock in the Parent. The former sole member of TMX Finance LLC is the sole beneficial owner of the common stock of the Parent (the “Sole Shareholder”).

The Company is subject to laws, regulations and supervision in each of the states in which it operates. Most states have laws that specifically regulate the Company’s products and services to establish allowable fees, interest and other economic terms. The terms of products and services offered by the Company vary between states to comply with each state’s specific laws and regulations. In addition to state laws and regulations, the Company’s business is subject to various local rules and regulations such as zoning regulation and permit licensing.

The interest rates and fees for the Company’s products and services are not currently regulated directly at the federal level, but laws and regulations governing the business are subject to change. On July 21, 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act was enacted into law. This act established the Consumer Financial Protection Bureau (“CFPB”) as a federal authority responsible for administering and enforcing the laws and regulations for consumer financial products and services. The legislation does not specifically target title lending, traditional pawn or installment lending for CFPB regulation. However, the CFPB is currently in the process of developing rules that could subject the Company to some form of regulatory oversight. The CFPB is specifically prohibited from instituting federal usury interest rate caps.

Principles of Consolidation

The Company conducts business in Texas and certain other states through wholly-owned subsidiaries, each of which is registered in the applicable state as a Credit Services Organization (“CSO”). These CSOs have entered into credit services organization agreements (“CSO Agreements”) with third-party lenders (the “CSO Lenders”) that make the loans to our customers. The CSO Agreements govern the terms by which the Company performs servicing functions and refers customers to the CSO Lenders for a possible extension of a loan. The Company processes loan applications and commits to reimburse the CSO Lenders for any loans or related fees that are not collected from those customers. Two of the CSO Lenders operate on an exclusive basis with the Company, and the Company has determined that they are VIEs of which the Company is the primary beneficiary. Therefore, the Company has consolidated these VIEs.

The Company is associated with several other entities that it must evaluate as potential variable interest entities. TY Investments (“TYI”) and Parker-Young (“PY) are owned 100% and 50%, respectively, by the Sole Shareholder. Each of these entities owns certain real estate that is leased to the Company. The Company evaluated these entities and determined that the Company does not have a variable interest and that neither has characteristics of a variable interest entity pursuant to the applicable accounting guidance. Both entities have sufficient equity at risk without the need for any additional subordinated financial support. The Company has therefore determined that TYI and PY are not variable interest entities. TitleMax Aviation, Inc., a Delaware corporation (“Aviation”), and TitleMax Construction, LLC (“Construction”) are other entities evaluated as potential variable interest entities. Aviation is owned by our Parent and has three aircraft and related debt. The aircraft are used by the Company to conduct its business. The Company and certain subsidiaries guarantee certain debt of Aviation. Construction is owned by the Sole Shareholder and directly handles the store improvement work for the Company. Aviation and Construction are VIEs of which the Company is the primary beneficiary; therefore, these entities have been consolidated.

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TMX FINANCE LLC

AND AFFILIATES

Notes to Consolidated Financial Statements (unaudited)

(1) Nature of Business, Principles of Consolidation, Seasonality and Significant Accounting Policies (continued)

Seasonality

The Company experiences fluctuating demand for its title-lending products throughout the year. Historically, the highest demand exists in the fourth quarter of each fiscal year. Also, the Company has historically experienced reductions in title loans receivable during the first quarter of each fiscal year, primarily associated with customers’ receipt of tax refund checks. Accordingly, the Company typically experiences a higher use of cash in the fourth quarter while generating more cash in the first quarter (exclusive of any other capital usage). Due to the seasonal nature of the business, results of operations for any fiscal quarter are not necessarily indicative of the results of operations that may be achieved for the full fiscal year.

Significant Accounting Policies

The accounting and reporting policies of the Company are in accordance with accounting principles generally accepted in the United States of America and conform to general practices within the consumer finance industry. The following is a description of significant accounting policies used in preparing the consolidated financial statements.

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with the accounting policies stated in the Company’s audited consolidated financial statements for the year ended December 31, 2012 and should be read in conjunction with the notes to those consolidated financial statements. These statements have also been prepared in accordance with the instructions to Form 10-Q and generally accepted accounting principles for interim financial information. The consolidated balance sheet data as of December 31, 2012 were derived from the Company’s audited consolidated financial statements. Accordingly, the accompanying unaudited consolidated financial statements do not include all information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. However, in the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results of the interim periods presented have been included. Results for any interim period are not necessarily indicative of the results for the entire year. Certain prior period amounts have been reclassified to conform to current period presentation, with no effect on net income or member’s equity and noncontrolling interests.

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to change relate to the determination of the allowance for loan losses and the valuation of repossessed assets.

Income Recognition

Interest and fee income is recognized using the interest method. Accrual of interest and fee income on title loans receivable is discontinued when no payment has been received for 35 days or more. The accrual of income is not resumed until the account is less than five days past due on a contractual basis, at which time management considers collectability to be probable.

Loan Losses

Provisions for loan losses are charged to income in amounts sufficient to maintain an adequate allowance for loan losses and an adequate accrual for losses related to guaranteed loans processed for our unconsolidated CSO Lender. Factors used in assessing the overall adequacy of the allowance for loan losses, the accrual for losses related to guaranteed loans processed for our unconsolidated CSO Lender and the resulting provision for loan losses include loan loss experience, contractual delinquency of title loans receivable, economic and other qualitative considerations and management’s judgment. While management uses the best information available to make its evaluation, future adjustments to the allowance may be necessary if there are significant changes in economic conditions. The Company charges-off an account when the customer is 61 days contractually past due.

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TMX FINANCE LLC

AND AFFILIATES

Notes to Consolidated Financial Statements (unaudited)

(1) Nature of Business, Principles of Consolidation, Seasonality and Significant Accounting Policies (continued)

Goodwill and Intangible Assets

Goodwill and indefinite-life intangible assets acquired in a business combination are recorded using the acquisition method of accounting and are tested for impairment annually, or more frequently if circumstances indicate potential impairment, on a reporting unit level. In testing for impairment, the Company first assesses qualitative factors as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. The first step of the impairment test, if necessary, is to compare the estimated fair value of the reporting unit to its carrying value. If the fair value is less than the carrying value, then a second step is performed to determine the fair value of goodwill and the amount of impairment loss, if any. In addition, intangible assets with finite lives are amortized over their estimated useful lives and reviewed for impairment whenever events or circumstances indicate the carrying value may not be fully recoverable.

Impairment of Long-Lived Assets

The Company annually or more frequently, if appropriate, evaluates whether events or circumstances have occurred that indicate the carrying amount of long-lived assets may warrant revision or may not be recoverable. When factors indicate that these long-lived assets should be evaluated for possible impairment, the Company assesses the recoverability by determining whether the carrying value of such long-lived assets will be recovered through the future undiscounted cash flows expected from uses of the assets and their eventual disposition.

Debt Issuance Costs

Costs incurred to obtain debt financing are amortized over the life of the related debt using a method that approximates the interest method. Amortization is included as a component of interest expense in the consolidated statements of income.

Income Taxes and Distributions

The Company, with the consent of the Sole Shareholder, elected in prior years to be taxed under sections of the federal and state income tax laws, which provide that, in lieu of corporate income taxes, the Parent separately accounts for the Company’s items of income, deduction, losses and credits. The consolidated financial statements generally do not include a provision for income taxes as long as these elections remain in effect. Certain subsidiaries operate in states that impose an entity-level tax that is a percentage of income. While the Company’s tax status and income tax elections remain in effect, the Company may occasionally make distributions to the Parent in amounts sufficient to pay some or all of the taxes due on the Company’s items of income, deductions, losses and credits. In April 2013, the Company made distributions of $24.0 million to the Parent to pay 2012 federal and state income taxes.

The Company may make future distributions to the Parent in addition to those required for income taxes. To the extent distributions are permitted under the terms of the indenture governing the Company’s senior secured notes, distributions from the Company to the Parent will provide the primary means for the Parent to make interest payments on its $100.0 million of 11.0% senior notes issued in October 2012 and due in October 2015. The maximum potential amount of distributions for purposes of funding the Parent’s interest payments is $11.0 million for each of the years ending December 31, 2013, 2014 and 2015. At March 31, 2013, the availability of permitted distributions for purposes other than estimated income tax payments was $5.0 million.

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TMX FINANCE LLC

AND AFFILIATES

Notes to Consolidated Financial Statements (unaudited)

(2) Credit Quality Information, Allowance for Losses on Title Loans Receivable and Liability Related to Unconsolidated CSO Lender Loans

The Company loans cash to customers in exchange for a fee and an agreement to repay the amount loaned. The Company’s loan portfolio includes balances outstanding from all title loans, including short-term single payment loans and multi-payment installment loans. The Company utilizes a variety of underwriting criteria to specifically monitor the performance of its portfolio of title loans and maintains an allowance at a level estimated to be adequate to absorb loan losses inherent in the portfolio. The allowance for losses on title loans receivable is presented in the consolidated balance sheets. In addition, the Company maintains a liability for estimated losses related to loans processed for the Company’s unconsolidated CSO Lender that are guaranteed under CSO Agreements. The liability for estimated losses related to these guaranteed loans is included in accounts payable and accrued expenses in the consolidated balance sheets.

The Company does not stratify the title loan portfolio when evaluating performance of the loans. Rather, the total portfolio is assessed for losses based on contractual delinquency, the value of underlying collateral, economic and other qualitative considerations and management’s judgment. The Company uses historical collection performance adjusted for recent portfolio performance trends to develop the expected loss rates used to establish the allowance and liability for loan losses. Increases in the allowance and liability for loan losses are recorded as provision for loan losses in the consolidated statements of income. The Company charges-off an account when the customer is 61 days contractually past due. Charge-offs on title loans receivable are equal to the loan balance (including interest and fees). Recoveries on losses previously charged to the allowance are credited to the allowance when collected.

Delinquency experience of title loans receivable at March 31, 2013 and December 31, 2012 was as follows:

(in thousands)	March 31, 2013		December 31, 2012
1-30 days past due	$	67,298	$	91,699
31-60 days past due	10,553		16,471
Total past due	77,851		108,170
Current	419,699		469,002
Total	$	497,550	$	577,172

Title loans receivable on the consolidated balance sheets is net of unearned interest and fees of $4.1 million and $3.9 million as of March 31, 2013 and December 31, 2012, respectively.

Accrual of interest and fee income on title loans receivable is discontinued when no payment has been received for 35 days or more. The accrual of income is not resumed until the account is less than five days past due on a contractual basis, at which time management considers collectability to be probable. Title loans receivable in non-accrual status at March 31, 2013 and December 31, 2012 were as follows:

(in thousands)	March 31, 2013		December 31, 2012
Nonaccrual loans	$	58,164	$	84,520

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TMX FINANCE LLC

AND AFFILIATES

Notes to Consolidated Financial Statements (unaudited)

(2) Credit Quality Information, Allowance for Losses on Title Loans Receivable and Liability Related to Unconsolidated CSO Lender Loans (continued)

Changes in the allowance for loan losses for the three months ended March 31, 2013 and 2012 were as follows:

	Three Months Ended March 31,
(in thousands)	2013			2012
Beginning balance	$	94,561		$	73,103
Provision for loan losses	14,189			11,229
Charge-offs	(42,613		)	(31,375		)
Recoveries	16,012			11,168
Ending balance	$	82,149		$	64,125

Changes in the liability for losses on loans processed for the Company’s unconsolidated CSO Lender for the three months ended March 31, 2013 and 2012 were as follows:

	Three Months Ended March 31,
(in thousands)	2013			2012
Beginning balance	$	4,610		$	1,006
Provision for loan losses	(666		)	233
Ending balance	$	3,944		$	1,239

The aggregate provision for loan losses (in thousands) was $13,523 and $11,462 for the three months ended March 31, 2013 and 2012, respectively.

(3) Property and Equipment

Property and equipment at March 31, 2013 and December 31, 2012 consisted of the following:

(in thousands)	March 31, 2013			December 31, 2012
Leasehold improvements	$	59,292		$	55,009
Computers and software	26,786			26,667
Aircraft	23,288			23,288
Furniture and fixtures	21,673			20,761
Signs	21,018			19,971
Assets not placed in service	22,125			17,456
Assets under capital leases	1,965			2,240
Vehicles	320			335
Building	485			285
Land	120			70
Subtotal	177,072			166,082
Accumulated depreciation and amortization	(75,611		)	(70,843		)
Net property and equipment	$	101,461		$	95,239

Capitalized interest was $0.9 million at March 31, 2013 and December 31, 2012.

During the second quarter of 2012, the Company temporarily decided to stop development of a new proprietary store software system and explore other options for its store software solution. As of March 31, 2013, the Company is continuing to evaluate the best long-term solution for its store software system. It is reasonably possible that the Company could decide to implement a different store software system in the near term. This decision could require the Company to reevaluate the carrying amount of the proprietary store software system, which could result in a one-time, non-cash expense that could range from $13.0 million to $18.0 million.

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TMX FINANCE LLC

AND AFFILIATES

Notes to Consolidated Financial Statements (unaudited)

(4) Notes Payable and Notes Payable to Related Parties

Notes Payable

As of March 31, 2013, the Company has notes payable of $37.4 million, including three notes payable by TMX Finance LLC, a note payable by Aviation and 61 notes issued by the consolidated CSO Lenders.

The three notes payable by TMX Finance LLC are in the amounts of $6.0 million, $5.0 million and $1.0 million, and each bears interest at 13.0% with interest payable monthly. The principal amount of each of these notes is due in July 2013, although the $5.0 million note and $1.0 million note may each be extended for up to one additional year at the Company’s sole discretion.

The note payable by Aviation has a principal balance of $0.4 million as of March 31, 2013 and bears interest at 4.4% with payments of principal and interest due monthly.

The notes payable by the consolidated CSO Lenders total $25.0 million as of March 31, 2013. These notes bear interest ranging from 10% to 15% and allow the consolidated CSO Lenders to take one or more draws up to a total maximum principal of $28.6 million. The aggregate principal amount of all of these notes is due in 2013, but 22 notes with an aggregate principal amount of $11.9 million available for borrowing have automatic annual renewal provisions. One of the consolidated CSO Lenders has issued six notes payable to its sole member with an aggregate balance of $5.8 million as of March 31, 2013.

Notes Payable to Related Parties

As of March 31, 2013, the Company has notes payable to related parties of $19.4 million, consisting of three notes payable by Aviation to the Sole Shareholder in the amounts of $2.8 million, $11.2 million and $5.4 million. The $2.8 million note bears interest at 6.33% and is payable in monthly installments of $35,000 with a final payment of $2.1 million due in October 2015. The $11.2 million note bears interest at 5.12% and is payable in monthly installments of $104,000 with a final payment of $8.4 million due in December 2016. The $5.4 million note bears interest at 10% payable monthly, with the full principal amount due in December 2015.

(5) Guarantees

Senior Secured Notes

TMX Finance LLC and TitleMax Finance Corporation, as co-issuers (the “Issuers”), issued $250.0 million of senior secured notes in June 2010 and $60.0 million of senior secured notes in July 2011 (collectively, the “Notes”). The Notes are fully and unconditionally guaranteed, jointly and severally, on a senior secured basis by the Issuers and each of their existing and future domestic restricted subsidiaries, other than immaterial subsidiaries. This guarantee arose from the issuance of the Notes for the purpose of additional financing. The Notes are secured by first-priority liens on substantially all of the Issuers’ assets and require performance under the guarantee if there is a default on the Notes. Under this guarantee, the maximum potential amount of future, undiscounted payments is $412.7 million. The current carrying amount of the related liability at March 31, 2013 is $310.0 million.

Revolving Credit Facility

Subject to certain exceptions, the obligations under the Revolving Credit Facility are fully and unconditionally guaranteed, jointly and severally, on a senior secured basis by the Issuers and each of their existing and future domestic subsidiaries. This guarantee arose from entering into the credit agreement that provides the Revolving Credit Facility for the purpose of additional financing. The Revolving Credit Facility and the guarantees will rank senior in right of payment to all of the Issuers’ and the guarantors’ existing and future subordinated indebtedness and equal in right of payment with all of the Issuers’ and guarantors’ existing and future senior indebtedness, including the Notes. The obligations under the Revolving Credit Facility and the guarantees are secured by substantially all of the Issuers’ assets, subject to certain limitations. Under this guarantee, the maximum potential amount of future, undiscounted payments is approximately $30.8 million. The current carrying amount of the related liability at March 31, 2013 is $25.0 million.

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TMX FINANCE LLC

AND AFFILIATES

Notes to Consolidated Financial Statements (unaudited)

(5) Guarantees (continued)

CSO Agreements

Under the terms of the CSO Agreements with non-exclusive third-party lenders, the Company is contractually obligated to reimburse the lenders for the full amounts of the loans and certain related fees that are not collected from the customers. In certain cases, the lenders sell the related loans, and the Company’s obligation to reimburse for the full amounts of the loans and certain related fees that are not collected from the customers extends to the purchasers. Under this guarantee, the maximum potential amount of future, undiscounted payments is approximately $25.6 million. The value of the related liability at March 31, 2013 is approximately $3.9 million and is included in accounts payable and accrued expenses on the consolidated balance sheets and provision for loan losses on the consolidated statements of income.

Aircraft

The Sole Shareholder has a note payable to a finance company originating from the purchase of an aircraft. The note payable is unconditionally and absolutely guaranteed by TMX Finance LLC and certain of its wholly-owned subsidiaries. The note payable is collateralized by a security interest in the aircraft and requires performance under the guarantee if there is a default on the note payable and the collateral and Sole Shareholder’s guarantee are not sufficient to pay the entire amount of the note. The maximum potential amount of future, undiscounted payments for the note is $3.2 million. The current carrying amount of the related liability at March 31, 2013 is $2.8 million.

(6) Fair Value Measurement and Fair Value of Financial Instruments

Fair value is the price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The fair value hierarchy describes three levels of inputs that may be used to measure fair value:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active and other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The Company has loans that are transferred to repossessed assets and are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment).

The following table presents the repossessed assets value carried on the consolidated balance sheets by level within the fair value hierarchy (as described above) for which a nonrecurring change in fair value has been recorded:

(in thousands)	Total		Active Markets For Identical Assets (Level 1)		Observable Inputs (Level 2)		Unobservable Inputs (Level 3)		Total Losses
Repossessed assets — March 31, 2013	$	5,690	$	—	$	—	$	5,690	$	3,101
Repossessed assets — December 31, 2012	$	6,355	$	—	$	—	$	6,355	$	3,803

The fair value of repossessed assets was determined based on comparable recent used vehicle sales and known changes in the broad used vehicle market.

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TMX FINANCE LLC

AND AFFILIATES

Notes to Consolidated Financial Statements (unaudited)

(6) Fair Value Measurement and Fair Value of Financial Instruments (continued)

The Company’s financial instruments consist primarily of cash and cash equivalents, restricted cash, title loans receivable (net), a note receivable from the Sole Shareholder, the Revolving Credit Facility, the Notes and other notes payable. For all such instruments, other than the Notes, the carrying amounts in the consolidated financial statements approximate their fair values.

The fair values of cash and cash equivalents are measured using level 1 inputs. Title loans receivable are originated at prevailing market rates. Given the short-term nature of these loans, they are continually repriced at current market rates. The fair values of title loans receivable are measured using level 3 inputs. The fair values of the Revolving Credit Facility and notes payable and receivable are estimated using level 2 inputs based on rates currently available for debt with similar terms and remaining maturities. The fair value of the Notes is estimated using level 2 inputs based on the market yield on trades of the Notes at the end of each reporting period. The fair value of the Notes was $407.8 million and $390.8 million as of March 31, 2013 and December 31, 2012, respectively.

(7) Related Party Transactions

The Company leases the corporate office from PY and various retail spaces from TYI and certain employees. Rental payments paid to these entities for operating leases amounted to approximately $0.2 million and $0.1 million for the three months ended March 31, 2013 and 2012, respectively.

Interest expense on notes payable to related parties was $0.3 million for each of the three months ended March 31, 2013 and 2012. Interest income on the note receivable from Sole Shareholder was approximately $30,000 and $45,000 for the three months ended March 31, 2013 and 2012, respectively.

(8) Contingencies

The Company is involved in various legal proceedings. These proceedings are, in the opinion of management, ordinary routine matters incidental to the normal business conducted by the Company. Legal proceedings brought against the Company include, but are not limited to, allegations of violations of state or federal consumer protections, disputes regarding repossessions, and employment related matters. For example, TitleMax of Missouri, Inc. is a party to a putative class action lawsuit alleging that the entity failed to pay certain employees overtime compensation as required by Missouri law. In the opinion of management, an appropriate accrual has been established related to the above referenced legal matters. Outcomes of such proceedings are not expected to have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.

(9) Guarantor Condensed Consolidating Financial Statements

The payment of principal and interest on the Notes is guaranteed by the wholly-owned subsidiaries of the Issuers other than immaterial subsidiaries (the “Subsidiary Guarantors”). It is not guaranteed by Construction, Aviation or the Company’s consolidated CSO Lenders (the “Non-Guarantor Subsidiaries”). The separate financial statements of the Subsidiary Guarantors are not included herein because the Subsidiary Guarantors are the Company’s wholly-owned consolidated subsidiaries and are jointly, severally, fully and unconditionally liable for the obligations represented by the Notes. The Company believes that the consolidating financial information for the Issuers, the combined Subsidiary Guarantors and the combined Non-Guarantor Subsidiaries provide information that is more meaningful in understanding the financial position of the Subsidiary Guarantors than separate financial statements of the Subsidiary Guarantors.

The following consolidating financial statements present consolidating financial data for the Issuers, the combined Subsidiary Guarantors, the combined Non-Guarantor Subsidiaries and an elimination column for adjustments to arrive at the information for the Company on a consolidated basis as of March 31, 2013 and December 31, 2012 and for each of the three months ended March 31, 2013 and 2012. Investments in subsidiaries are accounted for by the Company using the equity method for purposes of this presentation. Results of operations of subsidiaries are therefore reflected in the parent company’s investment accounts and earnings. The principal elimination entries set forth below eliminate investments in subsidiaries and intercompany balances and transactions.

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TMX FINANCE LLC

AND AFFILIATES

Notes to Consolidated Financial Statements (unaudited)

(9) Guarantor Condensed Consolidating Financial Statements (continued)

Consolidating Balance Sheet

March 31, 2013

(in thousands)

	Issuers		Guarantors			Non- Guarantors		Eliminations			Consolidated
Assets
Cash and cash equivalents	$	—	$	192,481		$	2,575	$	—		$	195,056

Title loans receivable	—		462,816			34,734		—			497,550
Allowance for loan losses	—		(76,520		)	—		(5,629		)	(82,149		)
Unamortized loan origination costs	—		4,326			—		—			4,326
Title loans receivable, net	—		390,622			34,734		(5,629		)	419,727
Interest receivable	—		30,999			167		—			31,166
Property and equipment, net	—		82,039			19,422		—			101,461
Debt issuance costs, net of accumulated amortization	9,540		—			—		—			9,540
Goodwill	—		5,975			—		—			5,975
Note receivable from Sole Shareholder	950		—			—		—			950
Other assets	127		46,929			2,408		(11,106		)	38,358
Investment in affiliates	766,219		—			—		(766,219		)	—
Total Assets	$	776,836	$	749,045		$	59,306	$	(782,954	)	$	802,233

Liabilities and Equity
Senior secured notes, net	$	311,372	$	—		$	—	$	—		$	311,372
Revolving credit facility	25,000		—			—		—			25,000
Notes payable	12,000		—			25,368		—			37,368
Notes payable to related parties	—		—			19,397		—			19,397
Obligations under capital leases	—		1,695			—		—			1,695
Accounts payable and accrued expenses	9,264		47,356			12,597		(16,821		)	52,396
Total Liabilities	357,636		49,051			57,362		(16,821		)	447,228
Total member’s equity and noncontrolling interests	419,200		699,994			1,944		(766,133		)	355,005
Total Liabilities and Equity	$	776,836	$	749,045		$	59,306	$	(782,954	)	$	802,233

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TMX FINANCE LLC

AND AFFILIATES

Notes to Consolidated Financial Statements (unaudited)

(9) Guarantor Condensed Consolidating Financial Statements (continued)

Consolidating Balance Sheet

December 31, 2012

(in thousands)

	Issuers		Guarantors			Non- Guarantors		Eliminations			Consolidated
Assets
Cash and cash equivalents	$	—	$	88,801		$	1,993	$	—		$	90,794

Title loans receivable	—		542,771			34,401		—			577,172
Allowance for loan losses	—		(88,986		)	—		(5,575		)	(94,561		)
Unamortized loan origination costs	—		3,716			—		—			3,716
Title loans receivable, net	—		457,501			34,401		(5,575		)	486,327
Interest receivable	—		37,893			162		—			38,055
Property and equipment, net	—		75,474			19,765		—			95,239
Debt issuance costs, net of accumulated amortization	10,570		—			—		—			10,570
Goodwill	—		5,975			—		—			5,975
Note receivable from Sole Shareholder	1,077		—			—		—			1,077
Other assets	29		48,841			1,996		(11,120		)	39,746
Investment in affiliates	729,325		—			—		(729,325		)	—
Total Assets	$	741,001	$	714,485		$	58,317	$	(746,020	)	$	767,783

Liabilities and Equity
Senior secured notes, net	$	311,519	$	—		$	—	$	—		$	311,519
Revolving credit facility	25,000		—			—		—			25,000
Notes payable	12,000		—			25,336		—			37,336
Notes payable to related parties	—		—			19,628		—			19,628
Obligations under capital leases	—		1,971			—		—			1,971
Accounts payable and accrued expenses	19,547		46,540			11,970		(16,716		)	61,341
Total Liabilities	368,066		48,511			56,934		(16,716		)	456,795
Total member’s equity and noncontrolling interests	372,935		665,974			1,383		(729,304		)	310,988
Total Liabilities and Equity	$	741,001	$	714,485		$	58,317	$	(746,020	)	$	767,783

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TMX FINANCE LLC

AND AFFILIATES

Notes to Consolidated Financial Statements (unaudited)

(9) Guarantor Condensed Consolidating Financial Statements (continued)

Consolidating Statement of Income

Three Months Ended March 31, 2013

(in thousands)

	Issuers			Guarantors			Non- Guarantors		Eliminations			Consolidated
Interest and fee income	$	—		$	179,749		$	1,586	$	—		$	181,335
Provision for loan losses	—			(13,523		)	—		—			(13,523		)
Aircraft service revenue	—			—			878		(878		)	—
Net interest and fee income and aircraft service revenue	—			166,226			2,464		(878		)	167,812

Costs, expenses and other:
Salaries and related expenses	—			58,893			—		—			58,893
Occupancy costs	—			19,793			79		—			19,872
Other operating and administrative expenses	50			31,730			1,007		(878		)	31,909
Interest, including amortization of debt issuance costs	11,952			25			1,144		—			13,121
Total expenses	12,002			110,441			2,230		(878		)	123,795
Net (loss) income before equity in income of affiliates	(12,002		)	55,785			234		—			44,017
Equity in income from affiliates	55,785			—			—		(55,785		)	—
Net income (loss)	$	43,783		$	55,785		$	234	$	(55,785	)	$	44,017

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TMX FINANCE LLC

AND AFFILIATES

Notes to Consolidated Financial Statements (unaudited)

(9) Guarantor Condensed Consolidating Financial Statements (continued)

Consolidating Statement of Income

Three Months Ended March 31, 2012

(in thousands)

	Issuers			Guarantors			Non- Guarantors			Eliminations			Consolidated
Interest and fee income	$	—		$	150,685		$	676		$	—		$	151,361
Provision for loan losses	—			(11,462		)	—			—			(11,462		)
Aircraft service revenue	—			—			902			(902		)	—
Net interest and fee income and aircraft service revenue	—			139,223			1,578			(902		)	139,899

Costs, expenses and other:
Salaries and related expenses	—			45,627			8			—			45,635
Occupancy costs	—			14,362			71			—			14,433
Other operating and administrative expenses	75			22,107			886			(902		)	22,166
Interest, including amortization of debt issuance costs	10,991			(81		)	765			—			11,675
Total expenses	11,066			82,015			1,730			(902		)	93,909
Net (loss) income before equity in income of affiliates	(11,066		)	57,208			(152		)	—			45,990
Equity in income from affiliates	57,208			—			—			(57,208		)	—
Net income (loss)	$	46,142		$	57,208		$	(152	)	$	(57,208	)	$	45,990

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TMX FINANCE LLC

AND AFFILIATES

Notes to Consolidated Financial Statements (unaudited)

(9) Guarantor Condensed Consolidating Financial Statements (continued)

Consolidating Statement of Cash Flows

Three Months Ended March 31, 2013

(in thousands)

	Issuers			Guarantors			Non- Guarantors			Consolidated
Net cash (used in) provided by operating activities	$	(21,500	)	$	83,081		$	787		$	62,368

Cash Flows from Investing Activities
Net title loans repaid (originated)	—			54,020			(333		)	53,687
Purchase of property and equipment	—			(11,120		)	—			(11,120		)
Increase in restricted cash	—			(325		)	—			(325		)
Receipt of payments on note receivable from Sole Shareholder	127			—			—			127
Net activity with affiliates	21,373			(21,700		)	327			—

Net cash provided by (used in) investing activities	21,500			20,875			(6		)	42,369

Cash Flows from Financing Activities
Proceeds from notes payable issued by consolidated CSO Lenders	—			—			840			840
Repayments of notes payable and capital leases	—			(276		)	(1,039		)	(1,315		)

Net cash used in financing activities	—			(276		)	(199		)	(475		)

Net increase in cash and cash equivalents	—			103,680			582			104,262
Cash and cash equivalents at beginning of period	—			88,801			1,993			90,794

Cash and cash equivalents at end of period	$	—		$	192,481		$	2,575		$	195,056

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TMX FINANCE LLC

AND AFFILIATES

Notes to Consolidated Financial Statements (unaudited)

(9) Guarantor Condensed Consolidating Financial Statements (continued)

Consolidating Statement of Cash Flows

Three Months Ended March 31, 2012

(in thousands)

	Issuers			Guarantors			Non- Guarantors			Consolidated
Net cash (used in) provided by operating activities	$	(20,496	)	$	69,050		$	513		$	49,067

Cash Flows from Investing Activities
Net title loans collected (originated)	—			45,941			(1,297		)	44,644
Purchase of property and equipment	—			(12,050		)	—			(12,050		)
Increase in restricted cash	—			(375		)	—			(375		)
Receipt of payments on note receivable to sole member	113			—			—			113
Net activity with affiliates	20,383			(20,965		)	582			—

Net cash provided by (used in) investing activities	20,496			12,551			(715		)	32,332

Cash Flows from Financing Activities
Repayments of notes payable and capital leases	—			(19		)	(227		)	(246		)
Distributions to sole member	—			(903		)	—			(903		)
Proceeds from notes payable issued by consolidated CSO Lenders	—			—			950			950

Net cash (used in) provided by financing activities	—			(922		)	723			(199		)

Net increase in cash and cash equivalents	—			80,679			521			81,200
Cash and cash equivalents at beginning of period	—			37,220			921			38,141

Cash and cash equivalents at end of period	$	—		$	117,899		$	1,442		$	119,341

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

This section is intended to provide information that will assist you in understanding our consolidated financial statements, the changes in those financial statements from period to period and the primary factors contributing to those changes. The following discussion and analysis should be read in conjunction with our consolidated financial statements and related notes that appear elsewhere in this report.

The “Company,” “we,” “us” and “our” refer to TMX Finance LLC and its affiliates on a consolidated basis unless the context indicates otherwise.

Forward-Looking Information and Factors That May Affect Future Results

The Securities and Exchange Commission, or “SEC,” encourages companies to disclose forward-looking information so that investors can better understand a company’s future prospects and make informed investment decisions. This section and other written or oral statements that we make from time to time contain forward-looking statements that set forth anticipated results based on management’s plans and assumptions. We have tried, wherever possible, to identify such statements by using words such as “anticipate,” “assume,” “believe,” “budget,” “continue,” “could,” “estimate,” “expect,” “future,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “will” and similar terms and phrases in connection with any discussion of our future operating or financial performance or business plans and prospects. In particular, these include statements relating to the future of our industry, our business strategy, and expectations concerning our future market position, operations, margins, profitability, capital expenditures, liquidity, capital resources and other financial and operating information.

Such forward-looking statements involve substantial risks and uncertainties. We cannot guarantee that any forward-looking statement will be realized. Achievement of anticipated results is subject to substantial risks, uncertainties and inaccurate assumptions. Should known or unknown risks or uncertainties materialize or should underlying assumptions prove inaccurate, actual results could vary materially from past results and from anticipated, estimated or projected results. Our annual report on Form 10-K for the year ended December 31, 2012 describes in the section captioned “Risk Factors” various important factors that could cause actual results to differ materially from projected and historical results. We incorporate that section into this filing, and you should refer to it. You should understand that it is not possible to predict or identify all such factors. Consequently, you should not consider such factors to be a complete set of all potential risks or uncertainties.

Forward-looking statements speak only as of the date they are made, and we do not intend to update our forward-looking statements unless we are required to do so under applicable law. You are advised, however, to review any further disclosures we make on related subjects in our subsequent Forms 10-K, 10-Q and 8-K and other reports to the SEC.

Company Overview

We are a privately-owned automobile title-lending company with 1,108 company-owned stores in 12 states as of March 31, 2013. We serve individuals who generally have limited access to consumer credit from banks, thrift institutions, credit card lenders and other traditional sources of consumer credit. We provide our customers with access to loans secured by a lien on the customers’ automobiles while allowing the customers to retain use of the vehicles during the term of the loans. As of March 31, 2013, we served more than 415,000 customers and had approximately $497.6 million in title loans receivable. We believe that we are the largest automobile title lender in the United States based on title loans receivable.

Our business provides a simple, quick and confidential way for consumers to meet their liquidity needs. We offer title loans in amounts ranging from $100 to $5,000 at rates that we believe, based on market research, are up to 50% less than those offered by other comparable title lenders, with an average loan size of approximately $1,300. Our title loans do not impact our customers’ credit ratings as we do not run credit checks on our TitleMax and TitleBucks customers, and we do not make negative credit reports if we are unable to collect loan balances.

We conduct business in Texas and certain other states through wholly-owned subsidiaries, each of which is registered in the applicable state as a Credit Services Organization, or “CSO.” These CSOs have entered into credit services organization agreements, or “CSO Agreements,” with third-party lenders, or the “CSO Lenders,” that make the loans to our customers. The CSO Agreements govern the terms by which we perform servicing functions and refer customers to the CSO Lenders for a possible extension of a loan. We process loan applications and commit to reimburse the CSO Lenders for any loans or related fees that are not collected from those customers.

Our growth strategy includes increasing our title loans receivable in our existing stores, opening new stores in existing markets and expanding our store base into new markets with favorable characteristics. We seek to develop and maintain a large presence in each of the markets in which we operate. Our strategy has enabled consistent growth throughout the Company’s history that has included fluctuating market conditions.

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During the first quarter of 2013, we continued to execute our growth strategy and opened 74 new stores while closing only one store. During the first quarter of 2012, we opened 45 new stores. The new stores opened during the first quarter of 2013 include 20 in Texas, 15 in Arizona, six in Virginia and 19 in Georgia (14 of which were opened under the InstaLoan brand). For the first quarter of 2013, the Company had revenues of $181.3 million, an increase of $29.9 million or 19.7%, and net income of $44.0 million, a decrease of $2.0 million or 4.3%, from the corresponding results for the first quarter of 2012. The decrease in net income was primarily due to increased costs related to the addition of 307 new stores during the 12 months ended March 31, 2013 compared to 200 new stores during the 12 months ended March 31, 2012, as well as an increase in our net charge-off rates.

Key Performance Indicators

We measure our performance through certain key performance indicators, or “KPIs,” that drive our revenue and profitability. Our KPIs include total originations, average originations per store, total title loans receivable balance, average receivable balance per store and net charge-off rate as a percent of aggregate originations over the period. We influence our KPIs through operational execution, information systems and proper incentives for our field-level employees. Externally, our KPIs are affected by competition and macroeconomic conditions, including availability of credit, consumer confidence, consumer spending habits, unemployment and state and federal regulations.

The following table reflects our results as measured by these KPIs:

	Three months ended March 31,
(dollars in thousands)	2013			2012
Originations	$	169,033		$	137,689
Average originations per store	157			175
Total title loans receivable	497,550			425,009
Average title loans receivable per store	449			531
Net charge-offs as a percent of originations	15.7		%	14.7		%

In addition, we closely monitor same-store interest and fee income. The Company considers interest and fee income from stores open more than 13 months in its calculation of same-store interest and fee income. The following summarizes the Company’s same-store interest and fee income for the three months ended March 31, 2013 and 2012:

	Three months ended March 31,
(dollars in thousands)	2013			2012
Interest and fee income	$	161,498		$	134,634
Interest and fee income growth	20.0		%	22.6		%
Number of stores open more than 13 months	778			611

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Results of Operations

Store Software System

In May 2012, our new proprietary store software system, which is used in approximately 22.5% of our stores as of March 31, 2013, incurred significant service outages. These outages caused us to review the status of the system as a long-term solution for our existing and future stores. Based on this review, we initially determined and announced that we would discontinue further development of the system and write-off the related capitalized costs. However, after the service outages in May, we stabilized the platform and obtained vendor quotes to correct technical deficiencies. Based on this additional information, we decided to reevaluate whether we will continue development of the proprietary system or purchase a new packaged software system to meet our future needs. This evaluation remains on-going. We determined that we are not required to record an impairment charge related to our proprietary store software during the three months ended March 31, 2013 because the undiscounted future cash flows from the asset group are greater than the carrying amount. However, depending on the outcome of our full evaluation, it is reasonably possible that we could decide to implement a different store software system and discontinue the development of our proprietary system. This decision could result in a one-time, non-cash expense that could range from $13.0 million to $18.0 million.

Three months ended March 31, 2013 Compared to Three months ended March 31, 2012

Interest and fee income

Interest and fee income was $181.3 million for the first quarter of 2013 compared to $151.4 million for the first quarter of 2012. The increase of $29.9 million, or 19.7%, was primarily due to the addition of a significant number of new stores over the last 12 months and strong same-store performance. Interest and fee income from stores open less than 13 months increased $3.0 million in the first quarter of 2013 compared to the first quarter of 2012 and accounted for 10.0% of the total increase in the first quarter of 2013. Same-store interest and fee income increased $26.9 million, or 20.0% compared to the same period of the prior year. The Company considers interest and fee income from stores open more than 13 months in its calculation of same-store interest and fee income.

Provision for loan losses

Our provision for loan losses was $13.5 million for the first quarter of 2013 compared to $11.5 million for the first quarter of 2012, an increase of $2.0 million, or 17.4%. The provision for loan losses is based on loan loss experience, contractual delinquency of title loans receivable, economic and other qualitative considerations and management’s judgment. Approximately $0.5 million of the increase relates to a 22.8% increase in loan originations, and the remaining increase of $1.5 million was due to an increase in our loan loss charge-off rate. Net charge-offs as a percent of originations increased to 15.7% for the first quarter of 2013 from 14.7% for the first quarter of 2012. The net charge-offs and originations include loans made by our CSO Lenders that we guarantee. Our net charge-off rate has increased during the last 12 months, due primarily to the addition of a significant number of new stores and rapid loan growth. During this period, we have worked to manage our charge-offs in the face of the significant increase in new stores and loan volume and we will continue to monitor net charge-off rates and make adjustments as necessary to maximize loan portfolio growth and long-term profitability.

Costs, expenses and other

Salaries and related expenses

Salaries and related expenses were $58.9 million for the first quarter of 2013 compared to $45.6 million for the first quarter of 2012. This represents an increase of $13.3 million, or 29.2%. This increase was mostly due to growth-related increases in headcount, primarily related to operational personnel necessary to service the higher volume of loans and as a result of opening new stores. Also contributing to the increase was higher corporate headcount, primarily in the areas of operations, construction and legal. In addition, a significant portion of our operations employees’ compensation is incentive-based, which increased $4.0 million due to higher profitability at the store, district and regional levels.

Occupancy costs

Occupancy costs were $19.9 million for the first quarter of 2013 compared to $14.4 million for the first quarter of 2012. This increase of $5.5 million, or 38.2%, was primarily due to increases in rent, utilities, and maintenance costs associated with opening new stores as well as expanding corporate office space.

Depreciation and amortization

Depreciation and amortization for the first quarter of 2013 was $5.0 million compared to $4.0 million for the first quarter of 2012. The increase of $1.0 million, or 25.0%, was primarily attributable to remodeling and relocating stores, fitting out new stores and expanding corporate office space.

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Advertising

Advertising expense for the first quarter of 2013 was $6.2 million compared to $1.4 million for the first quarter of 2012. The increase of $4.8 million was primarily due to increased television advertising, internet advertising and online lead generation related to our upgraded website.

Other operating and administrative expenses

Other operating and administrative expenses for the first quarter of 2013 were $20.8 million compared to $16.8 million for the first quarter of 2012. The increase of $4.0 million, or 23.8%, was primarily attributable to growth-related increases in costs associated with collateral collection, technology services and office supplies and postage.

Interest expense, net, including amortization of debt issuance costs

Interest expense, net, including amortization of debt issuance costs, was $13.1 million for the first quarter of 2013 compared to $11.7 million for the first quarter of 2012. This represents an increase of $1.4 million, or 12.0%. During the first quarter of 2013, we incurred interest of $0.6 million on our $25.0 million revolving line of credit obtained on June 27, 2012. Also contributing to the increase in interest expenses was an increase in notes payable issued by TMX Finance LLC and our consolidated CSO Lenders. We expect interest expense to increase in the future relative to prior periods due to the higher average outstanding debt balance.

Net income

As a result of the above factors, net income was $44.0 million for the first quarter of 2013, a decrease of 4.3% from net income of $46.0 million for the first quarter of 2012.

Liquidity and Capital Resources

We manage our liquidity and capital positions to satisfy several objectives. Near-term liquidity is managed to ensure adequate working capital is available to fund seasonal growth in loans and related interest receivable in an amount that exceeds increases in accounts payable and accrued expenses. Growth in working capital is driven by demand for our loan products and is funded on a near-term basis through operating cash flows without the need for reliance on other sources. Long-term capital needs are managed by assessing the growth capital needs of the Company and balancing those needs against the available internal and external capital resources. Long-term capital needs have historically been funded through credit facilities and issuances of debt securities. We manage the risk that we may not be able to refinance our debt securities through proper timing of refinancing transactions ahead of scheduled maturities and, to a lesser extent, as market conditions permit.

Our principal sources of near-term liquidity are cash on hand, working capital, cash flows from operations and borrowings under our new $25.0 million secured revolving credit facility described below. Cash and cash equivalents were $195.1 million at March 31, 2013 compared to $90.8 million at December 31, 2012.

In June 2010 and July 2011, we issued $250.0 million and $60.0 million, respectively, of senior secured notes due 2015. These senior secured notes, or “the Notes,” were offered only to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended, or the “Securities Act,” and to non-U.S. persons outside of the United States in compliance with Regulation S under the Securities Act.

The indenture governing our Notes, or the “Indenture,” limits our ability to incur additional indebtedness. However, we were permitted to obtain a $25.0 million senior secured revolving loan facility that is equal in priority with the Notes. In June 2012, we entered into a credit agreement, or the “Credit Agreement,” to obtain a senior secured revolving credit facility of up to $25.0 million, or the “Revolving Credit Facility,” that matures June 15, 2015. Subject to certain exceptions, the obligations under the Revolving Credit Facility are fully and unconditionally guaranteed by TMX Finance LLC, TitleMax Finance Corporation and each of their existing and future domestic subsidiaries. The Revolving Credit Facility and the guarantees rank equal in right of payment with the Notes. The Credit Agreement contains certain covenants that are substantially similar to those in the Indenture. The Credit Agreement also contains a financial covenant that requires the maintenance of a minimum earnings to fixed charge ratio of 2:1.

The Indenture and Credit Agreement permit us to incur additional debt as long as the new debt does not cause us to maintain less than a 3:1 earnings to fixed charge ratio, as defined in the Indenture. In addition, if our earnings to fixed charge ratio is below 3:1, we are permitted to incur up to $10.0 million of additional indebtedness and an incremental $25.0 million of guarantees under our CSO Agreements. As of March 31, 2013, our earnings to fixed charge ratio was below 3:1. We may seek to draw on the additional permitted sources of borrowing in the foreseeable future to continue to facilitate our growth strategy. For a description of our outstanding borrowings, see “—Other Indebtedness.”

Additional covenants in the Indenture and Credit Agreement restrict, among other things, our ability to dispose of assets, incur guarantee obligations, prepay other indebtedness, make dividends and other restricted payments, create liens, make equity or debt

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investments, make acquisitions, modify terms of the Indenture, engage in mergers or consolidations, change the business we conduct, engage in certain transactions with affiliates and make distributions to the Sole Shareholder. Such restrictions, together with our highly leveraged nature, could limit our ability to respond to changing market conditions, fund our capital spending program, provide for unexpected capital investments or take advantage of business opportunities.

We are in compliance with the covenants in the Indenture and Credit Agreement as of March 31, 2013. The Indenture requires us to maintain an earnings to fixed charge ratio above 3:1 for us to incur additional indebtedness, including the issuance of guarantees under our CSO Agreements. We do not anticipate a significant decline in demand for our products and services, but any such decline or other unexpected changes in financial condition could cause our earnings to fixed charge ratio to remain below 3:1 for an extended period of time. If we are unable to incur additional indebtedness for growth in our CSO operations, our net income may decrease due to impairment of assets and less revenue from CSO operations, which could adversely affect our ability to obtain new credit under favorable terms. To the extent that we experience short-term or long-term funding disruptions, we have the ability to address these risks through various means, including adjustments to short-term lending to customers, reductions in capital spending, reductions in expenses and potential equity contributions from our Parent, all of which could be expected to generate additional liquidity.

To the extent permitted by the Indenture and Credit Agreement, we expect to make periodic distributions to our Parent in amounts sufficient to pay some or all of the taxes due on the Company’s items of income, deductions, losses and credits which have been allocated for reporting on the Sole Shareholder’s income tax return. We may also make distributions to our Parent in addition to those required for personal income taxes. In April 2013, we made distributions of $24.0 million related to income taxes for 2012. At March 31, 2013, the availability of permitted distributions for purposes other than estimated income tax payments was $5.0 million.

The Indenture requires us, within 95 days after the end of each fiscal year, to make “excess cash flow offers” (as defined in the Indenture) to all holders of Notes to purchase the maximum principal amount of Notes that may be purchased with the lesser of $30.0 million or 75% of our excess cash flow (as defined in the Indenture) for the applicable fiscal year. We made an excess cash flow offer in April 2013 at 102% of the principal amount of the Notes, but no holders of the Notes accepted the offer.

In November 2012, the Parent issued $100 million of 11.0% PIK Notes due October 15, 2015, or the “PIK Notes,” to unrelated parties. Under the terms of the indenture governing the PIK Notes, interest on the PIK Notes is payable in cash to the extent distributions are available under the terms of the indenture governing the Company’s Notes. If distributions are not permitted under the terms of the indenture governing the Company’s Notes, the Parent may issue additional PIK notes in a principal amount to satisfy the interest due. Distributions from the Company to the Parent, when permitted, will provide the primary means for the Parent to make any cash interest payments on the PIK Notes. The maximum potential amount of distributions for purposes of funding the Parent’s interest payments is $11.0 million for each of the years ending December 31, 2013, 2014 and 2015.

Cash flows from operating activities

Net cash provided by operating activities was $62.4 million for the first quarter of 2013 compared to $49.1 million for the first quarter of 2012. The increase of $13.3 million, or 27.1%, was primarily due to a $15.3 million increase in adjustments to reconcile net income to cash provided by operating activities, offset by a $2.0 million decrease in net income. The increase in adjustments to reconcile net income to cash provided by operating activities was primarily related to changes in accounts payable and accrued expenses. In the first quarter of 2013, the decrease in accounts payable and accrued expenses was $8.9 million compared to a $20.0 million decrease in the first quarter of 2012. This difference is due to the timing of payments in the respective periods.

Cash flows from investing activities

Net cash provided by investing activities was $42.4 million for the first quarter of 2013 compared to $32.3 million for the first quarter of 2012. The increase of $10.1 million, or 31.3%, was primarily attributable to a $9.1 million increase in net title loans collected. In addition, cash used for purchases of property and equipment was $1.0 million less in the first quarter of 2013 compared to the first quarter of 2012.

Cash flows from financing activities

Net cash used in financing activities for the first quarter of 2013 was $0.5 million compared to $0.2 million for the first quarter of 2012. The increase of $0.3 million was primarily due to an increase in repayments of notes payable and capital leases.

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Other Indebtedness

As of March 31, 2013, we have $56.8 million of notes payable in the aggregate, consisting of one unsecured note payable to a bank, three unsecured notes payable to other unrelated entities, three unsecured notes payable to the Sole Shareholder and several notes payable to third parties issued by our two consolidated CSO Lenders.

The note payable to a bank and the three notes payable to the Sole Shareholder are payable by Aviation. The note payable to a bank has a principal balance of $0.4 million as of March 31, 2013 and incurs interest at 4.4%. The three notes payable to the Sole Shareholder are in the amounts of $11.2 million, $5.4 million and $2.8 million as of March 31, 2013. The $11.2 million note has a fixed interest rate of 5.12% and is payable in monthly installments of $104,000, including interest and principal, with a final payment of $8.4 million due in December 2016. The $5.4 million note has a fixed interest rate of 10% payable monthly, with the full principal amount due in December 2015. The $2.8 million note is collateralized by an aircraft owned by Aviation and guaranteed by the Company. This note has a fixed interest rate of 6.33% and is payable in monthly installments of $35,000, including interest and principal, with a final payment of $2.1 million due in October 2015.

The three notes payable to other unrelated entities are in the amounts of $6.0 million, $5.0 million and $1.0 million as of March 31, 2013. Each of these notes bears interest at 13% with interest payable monthly. The principal amount of each of these notes is due in July 2013, although the $5.0 million note and the $1.0 million note may be extended for up to one additional year at our sole discretion.

As of March 31, 2013, our consolidated CSO Lenders had outstanding a total of $25.0 million of notes payable. One consolidated CSO Lender had 39 notes due in 2013 that bear interest ranging from 10% to 15% and are secured by the assets of the consolidated CSO Lender. These notes allow the consolidated CSO Lender to take one or more draws up to a total maximum principal of $16.7 million. As of March 31, 2013, a total of $14.1 million was drawn under these notes. As of March 31, 2013, the other consolidated CSO Lender had 22 unsecured notes due in 2013 that bear interest ranging from 12% to 14% and allow draws up to a total maximum principal of $11.9 million. As of March 31, 2013, a total of $10.9 million was drawn under these notes. Each of these notes has an automatic annual renewal provision.

Management believes that our available short-term and long-term capital resources will be sufficient to fund our anticipated cash requirements, including working capital requirements, capital expenditures, scheduled principal and interest payments, payments pursuant to any excess cash flow offers and income tax obligations of our Sole Shareholder, for at least the next 12 months.

Capital Expenditures

Capital expenditures during the three months ended March 31, 2013 and 2012 were $11.1 million and $12.1 million, respectively, which we used to open new stores and develop our software systems. We do not have any material capital expenditure commitments as of March 31, 2013. However, we will continue to open additional stores and further improve our software systems, which will require ongoing capital expenditures.

Seasonality

Our business is seasonal due to fluctuating demand for our title loans during the year. Historically, we have experienced our highest demand in the fourth quarter of each fiscal year, with approximately 30% of our annual originations occurring in this period. Also, we have historically experienced a reduction of 9% to 15% in our title loans receivable in the first quarter of each fiscal year, primarily associated with our customers’ receipts of tax refund checks. Accordingly, we typically experience a higher use of cash in the fourth quarter while generating more cash in the first quarter (exclusive of any other capital usage). Due to the seasonality of our business, results of operations for any fiscal quarter are not necessarily indicative of the results of operations that may be achieved for the full fiscal year or any future period.

Critical Accounting Policies

In the ordinary course of business, we make a number of estimates, assumptions and judgments relating to the reporting of results of operations and financial condition in the preparation of our consolidated financial statements in conformity with generally accepted accounting principles in the U.S., or “GAAP.” We evaluate these estimates on an ongoing basis. We base these estimates, assumptions and judgments on information currently available to us and on various other factors that we believe are reasonable under the circumstances. Actual results could vary under different estimates, assumptions, judgments or conditions. A summary of the more significant accounting policies that require the use of estimates and judgments in preparing the financial statements is provided in the Company’s audited consolidated financial statements for the year ended December 31, 2012 in our annual report on Form 10-K for such year filed with the SEC.

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Off-Balance Sheet Arrangements with Unconsolidated CSO Lender

Under the terms of the CSO Agreements with non-exclusive third-party lenders, we are contractually obligated to reimburse the lenders for the full amounts of the loans and certain related fees that are not collected from the customers. In certain cases, the lenders sell the related loans, and our obligation to reimburse for the full amounts of the loans and certain related fees that are not collected from the customers extends to the purchasers. As of March 31, 2013, the total amount of loans and related fees guaranteed by us was approximately $25.6 million. The value of the related liability at March 31, 2013 was approximately $3.9 million and is included in accounts payable and accrued expenses on the consolidated balance sheets and provision for loan losses on the consolidated statements of income.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The Company does not have any financial instruments that expose it to material cash flow or earnings fluctuations as a result of market risks.

ITEM 4. CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures, as defined in Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the “Exchange Act,” that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Accounting Officer, as appropriate, to allow timely decisions regarding required disclosure. The Company’s management carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Accounting Officer, of the effectiveness of our disclosure controls and procedures as of March 31, 2013. Based on the evaluation, our Chief Executive Officer and Chief Accounting Officer have concluded that the Company’s disclosure controls and procedures were effective as of March 31, 2013.

Changes in Internal Control Over Financial Reporting

There were no changes in the Company’s internal control over financial reporting, as defined in Rule 15d-15(f) under the Exchange Act, during the three months ended March 31, 2013 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

The Company’s annual report on Form 10-K for the year ended December 31, 2012 contains a description of all material pending legal proceedings to which the Company was a party or of which any of its property was the subject as of December 31, 2012. There have not been any material subsequent developments or status assessments by management related to those legal proceedings.

ITEM 1A. RISK FACTORS.

The Company’s business, results of operations and financial condition are subject to numerous risks and uncertainties described under the heading “Risk Factors” in the Company’s annual report on Form 10-K, which risk factors are incorporated herein by reference. You should carefully consider these risk factors in conjunction with the other information contained in this report. Should any of these risks materialize, the Company’s business, financial condition and future prospects could be negatively impacted.

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ITEM 6. EXHIBITS.

Exhibits marked with an asterisk (*) are incorporated by reference to exhibits or appendices previously filed with the SEC, as indicated by the references in parentheses. All other exhibits are filed or furnished herewith. Our current, quarterly and annual Reports are filed with the SEC under File No. 333-172244. Our Registration Statements have the file numbers noted wherever such statements are identified in the following list of exhibits.

Exhibit No.		Description of Exhibit
3.1*		Certificate of Formation of TMX Finance LLC, dated September 25, 2003 (Exhibit 3.1 to TMX Finance LLC’s Registration Statement on Form S-4, dated February 14, 2011, is incorporated herein by this reference)

3.2*		First Amendment to the Certificate of Formation of TMX Finance LLC, dated June 18, 2010 (Exhibit 3.2 to TMX Finance LLC’s Registration Statement on Form S-4, dated February 14, 2011, is incorporated herein by this reference)

3.3*		Amended and Restated Operating Agreement of TMX Finance LLC, dated June 21, 2010 (Exhibit 3.3 to TMX Finance LLC’s Registration Statement on Form S-4, dated February 14, 2011, is incorporated herein by this reference)

4.1*		Indenture, dated June 21, 2010, among TMX Finance LLC and TitleMax Finance Corporation as Issuers, the guarantors party thereto, and Wells Fargo Bank, National Association as Trustee and Collateral Agent, including the guarantee and the form of 13.25% senior secured note due 2015 (Exhibit 4.1 to TMX Finance LLC’s Registration Statement on Form S-4, dated February 14, 2011, is incorporated herein by this reference)

4.2*		First Supplemental Indenture, dated May 13, 2011, among TMX Finance LLC and TitleMax Finance Corporation as Issuers, the guarantors party thereto, and Wells Fargo Bank, National Association as Trustee and Collateral Agent, including the guarantee and the form of 13.25% senior secured note due 2015 (Exhibit 4.2 to TMX Finance LLC’s Registration Statement on Form S-4, dated September 16, 2011, is incorporated herein by this reference)

4.3*		Second Supplemental Indenture, dated June 5, 2012, among TMX Finance LLC and TitleMax Finance Corporation as Issuers, the guarantors party thereto, and Wells Fargo Bank, National Association as Trustee and Collateral Agent (exhibit 4.3 to TMX Finance LLC’s Quarterly Report on Form 10-Q, dated August 20, 2012, is incorporated herein by this reference)

4.4*		Third Supplemental Indenture, dated July 20, 2012, among TMX Finance LLC and TitleMax Finance Corporation as Issuers, the guarantors party thereto, and Wells Fargo Bank, National Association as Trustee and Collateral Agent (exhibit 4.4 to TMX Finance LLC’s Quarterly Report on Form 10-Q, dated August 20, 2012, is incorporated herein by this reference)

4.5		Fourth Supplemental Indenture, dated April 5, 2013, among TMX Finance LLC and TitleMax Finance Corporation as Issuers, the guarantors party thereto, and Wells Fargo Bank, National Association as Trustee and Collateral Agent

31.1		Certification Pursuant to Rule 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, signed by the Chief Executive Officer

31.2		Certification Pursuant to Rule 15d-14(a) as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, signed by the Chief Financial Officer

32.1		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed by the Chief Executive Officer

32.2		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed by the Chief Financial Officer

101		Interactive Data File: (i) Consolidated Balance Sheets as of March 31, 2013 and December 31, 2012; (ii) Consolidated Statements of Income for the Years Ended March 31, 2013, 2011 and 2010; (iii) Consolidated Statements of Cash flows for the Years Ended March 31, 2013, 2011 and 2010; and (iv) Notes to Consolidated Financial Statements

† Executive compensation plan or agreement.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: May 14, 2013

	TMX FINANCE LLC
	(registrant)

	By:	/s/ ELIZABETH C. NELSON
		Elizabeth C. Nelson
		Chief Accounting Officer

TMX Finance LLC 10-Q