~~Index~~UNITED toSTATES ~~Financial Statements~~

~~UNITED~~SECURITIES ~~STATES~~AND EXCHANGE COMMISSION

~~SECURITIES~~Washington, ~~AND~~D.C. ~~EXCHANGE COMMISSION~~ 20549

~~Washington,~~FORM ~~D.C.~~10-K ~~20549~~

~~FORM~~þ ~~10-K~~ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

xFor ~~ANNUAL~~the ~~REPORT~~fiscal ~~PURSUANT~~year TOended ~~SECTION~~September 25, 132010 ~~OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

~~For~~or ~~the fiscal year ended September 25, 2009~~

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

¨For ~~TRANSITION~~the ~~REPORT~~transition ~~PURSUANT~~period from ~~TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~to

~~For~~Commission ~~the~~file ~~transition~~number ~~period from to~~333-122531

~~Commission~~THE ~~file~~MONEY ~~number~~TREE ~~333-122531~~INC

~~THE~~(Exact ~~MONEY~~name ~~TREE~~of ~~INC~~registrant as specified in its charter)

(Exact name of registrant as specified in its charter)

Georgia

58-2171386

State or other jurisdiction of

incorporation or organization

(I.R.S. Employer

Identification No.)

Georgia		58-2171386
State or other jurisdiction of incorporation or organization		(I.R.S. Employer Identification No.)

114 South Broad Street

~~114~~Bainbridge, ~~South~~Georgia ~~Broad~~39817 ~~Street~~

~~Bainbridge~~(Address, ~~Georgia~~including ~~39817~~zip code, of principal executive offices)

~~(Address,~~Registrant’s ~~including~~telephone ~~zip code~~number, ofincluding ~~principal~~area ~~executive~~code ~~offices~~(229) 246-6536

~~Registrant’s~~Securities ~~telephone~~registered ~~number,~~pursuant ~~including~~to ~~area code~~ Section 12(~~229~~b) ~~246-6536~~ of the act:

~~Securities~~None ~~registered pursuant to Section 12(b) of the act:~~

~~None~~Securities registered pursuant to section 12(g) of the Act:

~~Securities~~None ~~registered pursuant to section 12(g) of the Act:~~

~~None~~Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ¨ Yes þ No

Indicate by check mark if the registrant is anot ~~well-known~~required ~~seasoned~~to ~~issuer,~~file asreports ~~defined~~pursuant into ~~Rule~~Section 13 ~~405~~or Section 15(d) of the ~~Securities~~ Act. ¨ Yes xþ No

Indicate by check mark ifwhether the registrant is(1) has ~~not~~filed all reports required to ~~file reports~~be ~~pursuant~~filed toby Section 13 orof ~~Section~~ 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. ¨þ Yes x¨ No

Indicate by check mark whether the registrant ~~(1)~~ has ~~filed~~submitted ~~all~~electronically ~~reports~~and posted on its corporate Web site, if any, every Interactive Data File required to be ~~filed~~submitted byand ~~Section 13~~posted ofpursuant ~~15(d) of~~to ~~the~~Rule ~~Securities~~405 ~~Exchange~~of ~~Act~~Regulation S-T (§232.405 of ~~1934~~this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to ~~file~~submit ~~such reports),~~ and ~~(2) has~~post ~~been subject to~~ such ~~filing requirements for the past 90~~ ~~days~~files). x Yes ¨ ¨ No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K(§229.405 of this chapter) is ~~not~~ not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of the Form 10-K or any attachment to this Form 10-K. xþ

~~Indicate~~Large byaccelerated ~~check~~filer ~~mark~~¨ ~~whether~~Accelerated ~~the~~filer ~~registrant~~¨ ~~has~~Non-accelerated ~~submitted~~filer ~~electronically~~¨ ~~and posted~~(Do onnot ~~its~~check ~~corporate Web site,~~ if ~~any,~~a ~~every~~smaller ~~Interactive~~reporting ~~Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter~~company) ~~during~~Smaller ~~the~~reporting ~~preceding~~company ~~12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No ¨~~ þ

Indicate by check mark whether the registrant is a ~~large~~shell ~~accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting~~ company. ~~See~~(as ~~the~~defined ~~definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company”~~ in Rule 12b-2 of the ~~Exchange~~ Act). ¨ Yes þ No ~~(Check one):~~

~~Large~~State ~~accelerated~~the ~~filer~~aggregate ¨market ~~Accelerated~~value ~~filer~~of ¨the ~~Non~~voting and non-~~accelerated~~voting ~~filer~~common xequity ~~(Do~~held ~~not~~by ~~check~~non-affiliates ifcomputed aby ~~smaller~~reference ~~reporting~~to ~~company)~~the ~~Smaller~~price ~~reporting~~at which ~~company~~the ¨common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second quarter. Not Applicable

Indicate bythe ~~check~~number ~~mark~~of ~~whether~~shares ~~the~~outstanding ~~registrant~~of iseach aof ~~shell~~the ~~company~~registrant’s ~~(as~~classes ~~defined~~of incommon ~~Rule 12b-2~~stock, as of the ~~Act). ¨ Yes x No~~last practicable date.

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second quarter. Not Applicable


Class		Outstanding at November 25, 2010
Class A, Voting		2,686 Shares
Class B, Non-Voting		26,860 Shares

~~Indicate~~DOCUMENTS INCORPORATED ~~the~~BY ~~number~~REFERENCE ~~of shares outstanding of each of the registrant’s classes of common stock, as of the last practicable date.~~

Class		Outstanding at November 25, 2009
Class A, Voting		2,686 Shares
Class B, Non-Voting		26,860 Shares

None.

DOCUMENTS INCORPORATED BY REFERENCE

None.

~~Index~~THE toMONEY ~~Financial~~TREE ~~Statements~~INC.

~~THE~~ANNUAL ~~MONEY~~REPORT ~~TREE,~~ON ~~INC.~~FORM 10-K

~~ANNUAL~~FOR ~~REPORT~~FISCAL ONYEAR ~~FORM~~ENDED ~~10-K~~SEPTEMBER 25, 2010

~~FOR~~TABLE ~~FISCAL~~OF ~~YEAR ENDED SEPTEMBER 25, 2009~~ CONTENTS

TABLE OF CONTENTS


Item 1.	Business:	1

Item 1A.	Risk Factors:	10

Item 2.	Properties:	14

Item 3.	Legal Proceedings:	14

Item 4.	(Removed and Reserved).	14

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities:	15

Item 6.	Selected Financial Data:	15

Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17

Item 7A.	Quantitative and Qualitative Disclosures About Market Risk:	33

Item 8.	Financial Statements and Supplementary Data:	34

Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure:	58

Item 9A.	Controls and Procedures:	58

Item 10.	Directors and Executive Officers of the Registrant:	60

Item 11.	Executive Compensation:	61

Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters:	62

Item 13.	Certain Relationships and Related Transactions:	62

Item 14.	Principal Accounting Fees and Services:	63

Item 15.	Exhibits, Financial Statement Schedules:	64

Item 1.	Business	1
Item 1A.	Risk Factors	10
Item 2.	Properties	14
Item 3.	Legal Proceedings	14
Item 4.	Submission of Matters to a Vote of Security Holders	14
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	15
Item 6.	Selected Financial Data	15
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	33
Item 8.	Financial Statements and Supplementary Data	34
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	60
Item 9A.	Controls and Procedures	60
Item 10.	Directors and Executive Officers of the Registrant	61
Item 11.	Executive Compensation	62
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	66
Item 13.	Certain Relationships and Related Transactions	67
Item 14.	Principal Accounting Fees and Services	67
Item 15.	Exhibits, Financial Statement Schedules	68

~~Index~~PART toI ~~Financial Statements~~

~~PART~~Item I1. Business:

~~Item~~We 1originally incorporated in the State of Georgia in 1987 under the name The Money Tree Inc. ~~Business:~~Then, in 1995, pursuant to a corporate reorganization, we changed the name of the company to The Money Tree of Georgia Inc. and formed a new parent company called The Money Tree Inc. We have been engaged in the consumer finance business since our inception, primarily making, purchasing and servicing direct consumer loans, consumer sales finance contracts and motor vehicle installment sales contracts. Direct consumer loans are direct loans to customers for general use, which are collateralized by existing automobiles or consumer goods, or are unsecured. Consumer sales finance contracts consist of retail installment sales contracts for purchases of specific consumer goods by customers either from our branch locations or from a retail store and are collateralized by such consumer goods. Motor vehicle installment sales contracts are initiated by us or purchased from automobile dealers subject to our credit approval. Direct consumer loans and consumer sales finance contracts originate primarily in our branch office locations. As of September 25, 2010, direct consumer loans comprised 29.8%, motor vehicle installment sales contracts comprised 45.6%, and consumer sales finance contracts comprised 24.6% of the gross amount of our outstanding loans and contracts.

WeAs ~~originally~~of ~~incorporated in~~ the ~~State~~date of ~~Georgia~~this ~~in 1987 under the name The Money Tree Inc. Then~~report, ~~in 1995, pursuant to a corporate reorganization,~~ we ~~changed~~operate ~~the~~91 ~~name of the company to The Money Tree of Georgia Inc. and formed a new parent company called The Money Tree Inc. We have been engaged in the~~ consumer finance business since our inception, primarily making, purchasing and servicing direct consumer loans, consumer sales finance contracts and motor vehicle installment sales contracts. Direct consumer loans are direct loans to customers for general use, which are collateralized by existing automobiles or consumer goods, or are unsecured. Consumer sales finance contracts consist of retail installment sales contracts for purchases of specific consumer goods by customers either from our branch ~~locations~~offices or from a retail store and are collateralized by such consumer goods. Motor vehicle installment sales contracts are initiated by us or purchased from automobile dealers subject to our credit approval. Direct consumer loans and consumer sales finance contracts originate primarily in ~~our~~cities ~~branch~~located ~~office~~throughout ~~locations. As of September 25~~Georgia, ~~2009~~Florida, ~~direct~~Alabama ~~consumer loans comprised 32.9%, motor vehicle installment sales contracts comprised 44.6%,~~ and ~~consumer~~Louisiana ~~sales finance contracts comprised 22.5% of the gross amount of our outstanding loans~~ and ~~contracts,~~two ~~excluding~~used ~~amounts~~car lots in ~~bankruptcy~~Georgia.

As1 ~~of the date of this report, we operate 102 consumer finance branch offices in cities located throughout Georgia, Florida, Alabama and Louisiana and three used car lots in Georgia.~~

We operate our business through the following wholly-owned subsidiaries: The Money Tree of Georgia Inc.; The Money Tree of Louisiana, Inc.; The Money Tree of Florida Inc.; Small Loans, Inc.; and Home Furniture Mart Inc. Below is a map showing our branch office locations:

~~Index~~We tooperate ~~Financial~~our ~~Statements~~business through the following wholly-owned subsidiaries: The Money Tree of Georgia Inc.; The Money Tree of Louisiana, Inc.; The Money Tree of Florida Inc.; Small Loans, Inc.; and Home Furniture Mart Inc. Below is a map showing our branch office locations:

LOGO

~~Index~~We tofund ~~Financial~~our ~~Statements~~loan demand through a combination of cash collections from our loans, proceeds raised from the sale of debentures and demand notes and loans from various banks and other financial institutions.

WeOur ~~fund~~direct consumer ~~our~~loans ~~loan~~generally ~~demand~~serve ~~through~~individuals awith ~~combination~~limited access to other sources of ~~cash~~consumer ~~collections~~credit ~~from~~such ~~our~~as ~~loans~~banks, ~~proceeds raised~~savings ~~from~~and ~~the~~loans, ~~sale~~other ofconsumer ~~debentures~~finance businesses and ~~demand~~credit ~~notes~~cards. ~~and~~Direct consumer loans ~~from~~are ~~various~~general ~~banks~~loans ~~and~~made ~~other~~to ~~financial~~people ~~institutions.~~who need money typically for the following purposes:

~~Our~~• ~~direct consumer~~paying ~~loans~~some ~~generally~~unusual ~~serve~~or ~~individuals~~unforeseen with limited access to other sources of consumer credit such as banks, savings and loans, other consumer finance businesses and credit cards. Direct consumer loans are general loans made to people who need money typically for the following purposes: expense;

• paying ~~some~~off ~~unusual~~an oraccumulation ~~unforeseen~~of ~~expense~~small debts; or

• ~~paying~~purchasing ~~off~~furniture anand ~~accumulation of small debts; or~~appliances.

•To ~~purchasing~~the ~~furniture~~extent they are secured at all, direct consumer loans are generally secured by personal property and/or ~~appliances~~motor vehicles already owned by our customers. Automobile sales finance loans are made primarily in the Bainbridge and Dublin, Georgia locations (during the year ended September 25, 2010 the Columbus Georgia lot was closed). They are typically made in amounts from $3,000 to $30,000 on maturities of 24 to 54 months. Consumer sales finance contracts consist of retail installment sales contracts for purchases of specific consumer goods by customers either at our branch locations or at a retail store. The consumer goods purchased by the customer serve as collateral for these loans. We originate consumer sales finance contracts at our branch offices and sometimes purchase such contracts from retail dealers. These loans have maturities that typically range from three to 36 months and generally do not individually exceed $4,000 in principal amount. We generally charge the maximum interest rates allowed under applicable federal and state laws for our loans.

ToPrior ~~the~~to ~~extent~~making ~~they~~a ~~are~~loan ~~secured~~or atpurchasing ~~all,~~a ~~direct~~ consumer ~~loans~~sales ~~are~~finance ~~generally~~contract ~~secured by personal property and/~~or a motor ~~vehicles~~vehicle ~~already~~installment ~~owned~~sales bycontract, ~~our~~we ~~customers.~~undertake ~~Automobile~~a ~~sales~~credit ~~finance~~investigation ~~loans~~to ~~are~~determine ~~made primarily in~~ the ~~Bainbridge~~income, ~~Columbus~~existing ~~and Dublin~~indebtedness, length ~~Georgia~~and ~~locations~~stability ~~(subsequent~~of ~~to September 25~~employment, ~~2009~~and ~~the~~other ~~Columbus~~relevant ~~Georgia~~information ~~lot~~concerning ~~was~~the ~~closed)~~customer. ~~They~~When ~~are~~a ~~typically~~loan is made, inif ~~amounts~~it ~~from~~is ~~$3,000~~secured toat ~~$30~~all,~~000~~ onwe ~~maturities~~are ofgranted 24a tosecurity 54interest ~~months.~~in ~~Consumer sales~~personal ~~finance~~property ~~contracts~~or ~~consist~~automobiles of ~~retail~~the ~~installment~~borrower. ~~sales~~In ~~contracts~~making ~~for purchases of specific~~ direct consumer ~~goods~~loans, bywe ~~customers~~place ~~either~~emphasis atupon ~~our~~the ~~branch~~customer’s ~~locations~~ability orto atrepay arather ~~retail~~than ~~store.~~upon ~~The~~the ~~consumer~~potential ~~goods~~resale ~~purchased~~value byof the ~~customer~~underlying ~~serve as~~ collateral. ~~for these~~In ~~loans.~~making Wemotor ~~originate~~vehicle ~~consumer~~installment sales ~~finance contracts at our branch offices~~ and ~~sometimes~~consumer ~~purchase~~sales ~~such~~finance contracts ~~from~~we ~~retail~~place ~~dealers.~~additional emphasis ~~These~~upon ~~loans~~the ~~have~~marketability ~~maturities that typically range from three to 36 months~~ and ~~generally~~value doof ~~not~~the ~~individually exceed~~underlying ~~$4,000 in principal amount~~collateral. WeSee ~~generally~~“Lending ~~charge~~and ~~the~~Collection ~~maximum~~Operations” ~~interest~~below ~~rates~~for ~~allowed~~further ~~under~~discussion ~~applicable~~of ~~federal~~collateral ~~and state laws for our loans~~considerations.

~~Prior~~Our tobusiness consists mainly of making aloans ~~loan~~to orsalaried ~~purchasing~~people aand ~~consumer~~wage ~~sales~~earners ~~finance~~who ~~contract~~depend oron atheir ~~motor~~earnings ~~vehicle~~to ~~installment~~make ~~sales~~their ~~contract,~~repayments. Our weability ~~undertake~~to operate on a ~~credit~~profitable ~~investigation~~basis, therefore, depends to ~~determine~~a ~~the~~large ~~income,~~extent ~~existing~~on ~~indebtedness, length~~the ~~and~~continued ~~stability~~employment of ~~employment,~~these people and ~~other~~their ~~relevant~~ability ~~information~~to ~~concerning~~meet ~~the~~their ~~customer~~obligations as they become due. ~~When~~As a ~~loan~~result isof ~~made,~~the ifsustained itrecession isand ~~secured~~continued downturn atin ~~all,~~the weU.S. ~~are~~and ~~granted~~local aeconomies ~~security~~in ~~interest~~which inwe ~~personal~~operate ~~property~~with orresulting ~~automobiles~~unemployment ofand ~~the~~continued ~~borrower.~~increases Inin ~~making~~the ~~direct consumer~~number ~~loans~~of personal bankruptcies, weour ~~place~~collection ~~emphasis~~ratios ~~upon~~and ~~the~~profitability ~~customer’s~~have ~~ability~~been and continue to ~~repay~~be ~~rather~~significantly ~~than~~detrimentally affected. ~~upon~~See ~~the~~“Risk ~~potential~~Factors ~~resale~~– ~~value~~We ofsuffered ~~the~~significant ~~underlying~~credit ~~collateral.~~losses Inin ~~making~~2010 ~~motor~~due ~~vehicle~~to ~~installment~~continued ~~sales~~weak economic conditions, and ~~consumer~~there ~~sales~~is ~~finance~~no ~~contracts,~~guarantee ~~however,~~that wesuch ~~place increased~~credit ~~emphasis~~losses ~~upon~~will not continue during this downturn in the ~~marketability~~economy or that our operations and ~~value~~profitability ofwill ~~the~~not ~~underlying~~continue ~~collateral~~to be negatively affected.”

~~Our~~3 business consists mainly of making loans to salaried people and wage earners who depend on their earnings to make their repayments. Our ability to operate on a profitable basis, therefore, depends to a large extent on the continued employment of these people and their ability to meet their obligations as they become due. In the event of a sustained recession or a continued downturn in the U.S. and local economies in which we operate with resulting unemployment and continued increases in the number of personal bankruptcies, our collection ratios and profitability would be detrimentally affected. See “Risk Factors – We could suffer increased credit losses if there is a continued downturn in the economy.”

~~Index~~Below tois ~~Financial~~a ~~Statements~~chart detailing the relationships of our subsidiaries and other related entities:

LOGO

~~Below~~4 ~~is a chart detailing the relationships of our subsidiaries and other related entities:~~

~~Index~~Lending toand ~~Financial~~Collection ~~Statements~~Operations

~~Lending~~We seek to provide short-term loans to the segment of the population that has limited access to other sources of credit and ~~Collection~~is ~~Operations~~considered a higher credit risk. See “Risk Factors – Our typical customer base has ‘subprime’ credit ratings and higher than average credit risks which has resulted in increased loan defaults.” In evaluating the creditworthiness of potential customers, we primarily examine the individual’s discretionary income, length of current employment, duration of residence and credit experience. We make loans to individuals on the basis of the customer’s discretionary income and other factors and the loans are limited to amounts that we believe the customer can reasonably be expected to repay from that income. All of our new customers are required to complete standardized credit applications in person or by telephone at our local offices. We equip each of our local offices to perform immediate background, employment and credit checks. Generally, we perform loan approval at our headquarters; however, some branch managers have limited authority to approve loans up to certain amounts. When initiating a loan for a new customer, our employees verify the applicant’s employment and credit histories through telephone checks with employers or other employment references and a variety of credit services. We require substantially all new customers to submit a listing of personal property that will be pledged as collateral to secure the loan, but we do not rely on the value of such collateral in the loan approval process and typically do not perfect our security interest in collateral securing our loans by filing Uniform Commercial Code (UCC) financing statements. Instead, on many, but not all direct consumer loans, we charge a non-filing or non-recording insurance fee in connection with our direct consumer loans. These fees are equal in aggregate amount to the premiums paid by us to purchase non-filing insurance coverage from an unaffiliated insurance company. Under our non-filing insurance coverage, we are reimbursed for losses on direct consumer loans resulting from our policy of not perfecting our security interest in collateral pledged to secure the loans. However, not all losses on loans that carry this insurance qualify for a claim. Occurrences such as the pledged collateral being stolen, given away or never existing would disqualify a claim. Also, insufficient documentation of collection activity or if the debtor was unable to be located would disqualify a claim.

~~We seek to provide short~~Non-~~term~~file ~~loans~~insurance tois ~~the~~not ~~segment~~available offor ~~the~~motor ~~population~~vehicle ~~that~~installment ~~has~~sales ~~limited~~contracts ~~access to other sources of credit~~ and isconsumer ~~considered~~sales ~~a higher~~finance ~~credit risk~~contracts. ~~See~~We ~~“Risk~~must ~~Factors~~rely –on the ~~Our~~collateral ~~typical~~securing ~~customer~~the ~~base~~loan ~~has~~for ~~‘subprime’~~these ~~credit~~two ~~ratings~~products, and ~~higher~~any ~~than~~recovery ~~average~~on ~~credit~~such ~~risks~~collateral ~~which~~is ~~has~~very ~~resulted in increased loan defaults~~uncertain.” InAccordingly, ~~evaluating~~if the ~~creditworthiness~~customer ~~of potential~~were ~~customers,~~to wedefault ~~primarily~~in ~~examine~~ the ~~individual’s~~repayment ~~discretionary income, length~~ of ~~current~~the ~~employment~~loan, ~~duration~~we ofmay ~~residence~~not ~~and~~be ~~prior~~able ~~credit~~to ~~experience.~~recover Wethe ~~make~~outstanding ~~loans~~loan tobalance ~~individuals~~by resorting onto the ~~basis~~sale of ~~the~~collateral. ~~customer’s~~If ~~discretionary income~~repossession and ~~other~~sale ~~factors~~of ~~and~~ the ~~loans~~collateral ~~are~~occurs, ~~limited to amounts that we believe~~ the ~~customer~~proceeds ~~can reasonably be expected to repay~~ from ~~that~~the ~~income.~~sale ~~All of our new customers~~ are ~~required~~applied to ~~complete~~the ~~standardized~~loan ~~credit~~as ~~applications~~a inpayment ~~person~~and orin ~~by telephone~~many atcases ~~our~~are ~~local~~not ~~offices.~~sufficient ~~We equip each of our local offices~~ to ~~perform~~pay ~~immediate~~the ~~background,~~outstanding ~~employment~~balance ~~and~~of ~~credit~~the ~~checks~~loan. ~~Generally,~~If wethe ~~perform loan approval at our headquarters; however, some branch managers have limited authority to~~remaining ~~approve~~balance ~~loans~~after upthe tosale ~~certain~~of ~~amounts.~~the ~~When~~collateral ~~initiating~~is anot ~~loan~~recoverable ~~for~~through athe ~~new~~legal ~~customer~~process, ~~our employees verify~~ the ~~applicant’s~~balance ~~employment~~is ~~and~~considered ~~credit~~a ~~histories~~loss ~~through telephone checks with employers or other employment references~~ and ais ~~variety~~charged ~~of credit services~~off. WeSee ~~require~~“Provision ~~substantially~~for ~~all~~Credit ~~new~~Losses” ~~customers~~below tofor ~~submit~~further adiscussion ~~listing~~ of ~~personal property that will be pledged as collateral to secure~~ the ~~loan,~~charge-off ~~but~~process. weAlso dosee “Risk ~~not~~Factors ~~rely~~– onThe ~~the~~collectibility ~~value~~ of ~~such~~our ~~collateral~~finance inreceivables ~~the~~has ~~loan~~been ~~approval~~severely ~~process~~ and ~~generally~~negatively doaffected ~~not perfect~~by ~~our~~general ~~security~~economic ~~interest~~conditions inand ~~that collateral. Accordingly, if the customer were to default in the repayment of the loan,~~ we ~~may~~have not bebeen able to recover the ~~outstanding~~full ~~loan~~amount ~~balance~~of delinquent accounts by resorting to ~~the~~ sale of collateral or receipt of non-filing insurance proceeds.”

We believe that the development and continual reinforcement of personal relationships with customers improve our ability to monitor their creditworthiness, reduce credit risk and generate repeat loans. It is not unusual for us to have made a number of loans to the same customer over the course of several years, many of which were refinanced with a new loan after two or three payments. In determining whether to refinance existing loans, we typically require loans to be current in their payments, and repeat customers are generally required to complete a new credit application if they have not completed one within the prior two years.

In the fiscal year ended September 25, ~~2009~~ 2010, approximately 3437.901% of the total number of loans we made resulted from refinancing of existing loans. Refinancings accounted for approximately 1925.939% of the total volume of loans we made during that period. In the fiscal year ended September 25, ~~2008~~2009, approximately 34.49% of the total number of loans and 2219.59% of the total volume of loans we made resulted from refinancing of existing loans. A refinancing represents a new loan transaction with an existing customer in which a portion of the new loan is used to repay the balance of an existing loan and the remaining portion is advanced to the customer. We actively market the opportunity to refinance existing loans prior to maturity due to the established credit of these customers. The refinancings result in increased amounts borrowed by the customer and additional fees and income realized by us.

We5 typically do not perfect our security interest in collateral securing our loans by filing Uniform Commercial Code financing statements. We usually charge a non-filing or non-recording insurance fee in connection with our direct consumer loans. These fees are equal in aggregate amount to the premiums paid by us to purchase non-filing insurance coverage from an unaffiliated insurance company. Under our non-filing insurance coverage, we are reimbursed for losses on direct consumer loans resulting from our policy of not perfecting our security interest in collateral pledged to secure the loans. Non-file insurance is not available for motor vehicle installment sales contracts and consumer sales finance contracts. We must rely on the collateral securing the loan for these two products, and any recovery on such collateral is very uncertain. See “Risk Factors – The collectibility of our finance receivables may be affected by general economic conditions and we may not be able to recover the full amount of delinquent accounts by resorting to sale of collateral or receipt of non-filing insurance proceeds.”

Competition

We compete with several national and regional finance companies, as well as a variety of local finance companies, in the communities in which we operate. We believe that we compete effectively in the marketplace primarily based on our emphasis on customer service and the variety of services we provide.

Customer Service Training. We believe intensive training for all employees is integral to the success of our customer service emphasis. Our branch structure includes three positions at each branch office: customer service representative; manager trainee; and branch manager. Customer service representatives meet customers, take payments and input loans. In addition, customer service representatives are responsible for soliciting additional business from existing customers who visit a branch by refinancing current loans. Manager trainees collect past due loans and solicit loans. Branch managers oversee branch operations and the loan making process. When an employee is hired, he or she is required to successfully complete a one- to two-week training course in our headquarters for the position. Branch managers attend both the customer service representative and collection

~~Index~~Competition ~~to Financial Statements~~

~~training~~We ~~classes~~compete aswith ~~well~~several asnational aand ~~one-week~~regional ~~manager~~finance ~~training~~companies, ~~class~~as ~~(for~~well as a ~~total~~variety of ~~three~~local ~~weeks~~finance ofcompanies, ~~training).~~in ~~Branch~~the ~~managers~~communities ~~are~~in ~~also~~which ~~trained~~we onoperate. ~~location~~We inbelieve ~~their~~that ~~respective~~we ~~branches~~compete byeffectively ~~one~~in ~~of our~~the ~~traveling~~marketplace ~~trainers~~primarily ~~and~~based byon ~~a regional manager. Designated employees in~~ our ~~headquarters~~emphasis ~~also~~on ~~provide~~customer ~~answers~~service toand ~~questions by telephone that arise during~~ the ~~course~~variety of ~~dealing~~services ~~with~~we ~~customers at the branch offices~~provide.

~~Additional~~Customer ~~Services~~Service Training. We believe intensive training for all employees is integral to ~~Customers~~the success of our customer service emphasis. Our branch structure includes three positions at each branch office: customer service representative; manager trainee; and branch manager. Customer service representatives meet customers, take payments and input loans. In addition, tocustomer ~~the~~service ~~loan~~representatives ~~services~~are weresponsible ~~provide,~~for wesoliciting ~~offer~~additional ~~certain~~business ~~services~~from ~~typically~~existing ~~provided~~customers bywho ~~banks~~visit a branch by refinancing current loans. Manager trainees collect past due loans and solicit loans. Branch managers oversee branch operations and the loan making process. When an employee is hired, he or ~~other~~she ~~institutions~~is required to ~~consumers~~successfully ~~who~~complete doa ~~not~~one- ~~have~~to ~~relationships~~two-week training ~~with~~course ~~commercial~~in ~~banks~~our orheadquarters ~~such~~for ~~other~~the ~~institutions~~position. ~~Please~~Branch ~~see~~managers attend both the ~~“Certain~~customer ~~Relationships~~service representative and ~~Related~~collection ~~Transactions”~~training ~~section~~classes as well as a one-week manager training class (for a ~~discussion~~total of ~~conflicts~~three ~~and~~weeks ~~issues~~of ~~arising~~training). Branch ~~from~~managers ~~various~~are ~~relationships~~also ~~between~~trained ~~us,~~on ~~our~~location ~~executive~~in ~~officers~~their ~~and~~respective ~~our~~branches ~~affiliates.~~by Weone ~~believe~~of ~~that~~ our ~~ability~~traveling totrainers ~~service~~and ~~our~~by ~~customers’~~a ~~needs~~regional ~~distinguishes~~manager. usDesignated ~~from~~employees ~~most~~in of our ~~competitors~~headquarters ~~that~~also ~~solely~~provide ~~offer~~answers ~~loan~~to ~~services.~~questions ~~Listed~~by ~~below~~telephone ~~are~~that ~~a number~~arise ofduring ~~services~~the ~~offered~~course byof dealing uswith incustomers ~~this~~at ~~capacity~~the branch offices.

~~Direct~~Additional ~~Deposit~~Services to Customers. WeIn ~~(working~~addition into ~~conjunction~~the loan services we provide, we offer certain services typically provided by banks or other institutions to consumers who do not have relationships with ~~our~~commercial ~~bank)~~banks ~~are~~or ansuch ~~approved~~other institutions. Please see the “~~Authorized~~Certain ~~Payment~~Relationships ~~Agent~~and Related Transactions” section for ~~Social~~a ~~Security,~~discussion ~~Veterans~~of ~~Administration~~conflicts ~~(VA)~~and issues arising from various relationships between us, ~~military~~our executive officers and ~~retirement~~our ~~benefits~~affiliates. We ~~(working~~believe inthat ~~conjunction with~~ our ~~bank)~~ability ~~also~~to ~~accept~~service ~~direct~~our ~~deposit~~customers’ ofneeds ~~employee~~distinguishes ~~payroll~~us ~~checks~~from most ~~for~~of our ~~customers.~~competitors ~~This~~that ~~service~~solely ~~allows~~offer ~~customers~~loan toservices. ~~elect~~Listed tobelow ~~receive~~are ~~their~~a ~~benefits~~number orof ~~payroll~~services ~~checks~~offered atby aus ~~local~~in ~~branch~~this ~~office~~capacity.

~~Sale~~Direct ~~and Financing of Certain Consumer Goods~~Deposit. InWe ~~each~~(working ~~branch~~in ~~office~~conjunction ~~location~~with ~~(or~~our ~~next~~bank) ~~door~~are toan ~~the~~approved ~~branch~~“Authorized ~~office~~Payment inAgent” ~~the~~for ~~State~~Social ~~of Louisiana)~~Security, weVeterans ~~offer~~Administration ~~for sale certain furniture~~(VA), ~~appliances, electronics~~military and ~~other household items~~retirement benefits. ~~See~~We ~~“Regulation~~(working ~~and~~in ~~Supervision~~conjunction –with ~~State~~our ~~Laws.”~~bank) Wealso ~~receive~~accept adirect ~~mark-up~~deposit ~~for~~of ~~each~~employee ofpayroll ~~the~~checks ~~products~~for ~~sold~~our customers. InThis ~~addition,~~service weallows ~~offer~~customers ~~financing~~to elect to ~~eligible~~receive ~~consumers~~their ~~desiring~~benefits toor ~~finance~~payroll ~~the~~checks ~~purchase~~at ofa ~~these consumer~~local ~~goods~~branch office.

~~Motor~~Sale ~~Club~~and ~~Memberships.~~Financing Weof ~~offer~~Certain ~~motor~~Consumer ~~club membership from Interstate Motor Club, Inc~~Goods. toIn ~~all~~each ~~customers~~branch ~~possessing~~office alocation ~~valid~~(or ~~driver’s~~next ~~license.~~door ~~Reimbursement~~to ~~benefits~~the tobranch office ~~members~~in ~~include:~~the ~~bail~~State ~~bond;~~of ~~emergency~~Louisiana), ~~road~~we ~~service;~~offer ~~wrecker~~for ~~service;~~sale ~~emergency~~certain ~~ambulance~~furniture, ~~expense;~~appliances, ~~lock~~electronics and ~~key~~other ~~service;~~household ~~emergency~~items. ~~travel~~See ~~expense;~~“Regulation and ~~legal~~ ~~fees~~Supervision – State Laws.” We receive a ~~commission~~mark-up onfor ~~sales~~each of ~~motor~~the ~~club~~products ~~memberships~~sold. ~~Interstate~~In ~~Motor Club~~addition, we ~~Inc.~~offer isfinancing ~~owned~~to byeligible ~~Bradley~~consumers D.desiring ~~Bellville,~~to ~~our~~finance ~~President~~the ~~and~~purchase ~~a director; Jefferey V. Martin, one~~ of ~~our~~these ~~directors;~~consumer ~~and two of Mr~~goods. ~~Martin’s~~ ~~siblings. See “Certain Relationships and Related Transactions.”~~

~~Prepaid~~Motor ~~Telephone~~Club ~~Service~~Memberships. We offer ~~prepaid~~motor ~~telephone~~club ~~service~~membership from Interstate Motor Club, Inc. to all ofcustomers possessing ~~our~~a ~~customers~~valid driver’s license. WeReimbursement ~~receive~~benefits ato ~~commission~~members ~~for~~include: ~~each~~bail ~~customer~~bond; ~~who~~emergency ~~signs~~road upservice; ~~for~~wrecker ~~the~~service; emergency ambulance expense; lock and key service; asemergency ~~well~~travel asexpense; aand legal fees. We receive a commission ~~for~~on ~~each~~sales ~~monthly~~of ~~payment~~motor ~~collected~~club memberships. ~~The~~Interstate ~~telephone~~Motor ~~service~~Club, Inc. is ~~provided~~owned ~~through~~by ~~Budget~~Bradley ~~Phone~~D. Bellville, ~~Inc~~our President and a director; Jefferey V. Martin, one of our directors; and two of Mr. Martin’s siblings. See “Certain anRelationships ~~unaffiliated~~and ~~entity~~Related Transactions.”

~~Bank~~Prepaid ~~Draft~~Telephone Service. We offer ~~bank~~prepaid telephone ~~draft~~service ~~services~~ to all of our customers ~~whereby~~. ~~amounts~~We ~~owed~~receive toa uscommission ~~are~~for ~~automatically~~each ~~debited~~customer ~~from~~who ~~the~~signs ~~customer’s~~up ~~bank~~for ~~account~~the ~~and~~service ~~paid~~as towell usas on a ~~regular~~commission ~~periodic~~for ~~basis.~~each ~~This~~monthly ~~results~~payment incollected. ~~ease~~The oftelephone ~~payment~~service ~~for~~is ~~the~~provided ~~customer~~through ~~and~~Budget Phone, ~~we believe~~Inc., ~~reduced collections costs and added~~an ~~predictability~~unaffiliated ~~of cash flow~~entity.

~~Insurance~~Bank Draft. We offer bank draft services to all of our customers whereby amounts owed to us are automatically debited from the customer’s bank account and ~~Other~~paid ~~Benefits~~to us on a regular periodic basis. This results in ease of payment for the customer and, we believe, reduced collections costs and added predictability of cash flow.

WeInsurance ~~offer various credit~~ and ~~non-credit~~Other ~~insurance~~Benefits products in connection with our loans. We sell insurance products as a licensed agent for a non-affiliated insurance company pursuant to certain underwriting guidelines set by the insurance company. During our fiscal year ended September 25, 2009, we earned $8.4 million in commissions from the sale of insurance products.

We offer ~~credit~~various ~~life insurance,~~ credit ~~accident~~ and ~~sickness~~non-credit insurance ~~and~~products ~~collateral protection insurance. Credit life insurance is elected by those customers who prefer to have their indebtedness covered~~ in ~~the~~connection ~~event~~with ofour ~~death~~loans. ~~Credit~~We ~~accident~~sell ~~and sickness~~ insurance isproducts ~~available~~as toa ~~customers~~licensed ~~who~~agent ~~are gainfully employed~~ for a ~~minimum~~non-affiliated ofinsurance 30company ~~hours~~pursuant ~~per~~to ~~week, and provides coverage in~~certain ~~the~~underwriting ~~form~~guidelines ofset ~~continued payments on the loan made~~ by ~~us in~~ the ~~event~~insurance ~~the customer is unable to work for a period of time~~company. ~~Collateral~~During ~~protection insurance is written to protect~~ our ~~security~~fiscal ~~interest~~year inended ~~certain collateral. Examples of covered collateral are automobiles~~September 25, ~~trucks~~2010, ~~travel~~we ~~trailers~~earned ~~and certain boats~~$5.0 ~~When~~million ain ~~claim~~commissions isfrom ~~made,~~ the ~~insurance~~sale ~~proceeds~~of ~~are payable to us and any excess is payable to the customer. This~~ insurance ~~pays for partial losses as well as total losses of the collateral~~products.

We6 also offer non-credit accidental death and dismemberment insurance to customers. This type of insurance may have a term shorter or longer than the term of the loan and coverage may exceed the principal amount

~~Index~~We offer credit life insurance, credit accident and sickness insurance and collateral protection insurance. Credit life insurance is elected by those customers who prefer to ~~Financial~~have ~~Statements~~their indebtedness covered in the event of death. Credit accident and sickness insurance is available to customers who are gainfully employed for a minimum of 30 hours per week, and provides coverage in the form of continued payments on the loan made by us in the event the customer is unable to work for a period of time. Collateral protection insurance is written to protect our security interest in certain collateral. Examples of covered collateral are automobiles, trucks, travel trailers and certain boats. When a claim is made, the insurance proceeds are payable to us and any excess is payable to the customer. This insurance pays for partial losses as well as total losses of the collateral.

We also offer non-credit accidental death and dismemberment insurance to customers. This type of insurance may have a term shorter or longer than the term of the loan and coverage may exceed the principal amount of the loan. Proceeds of claims are payable to the customers and/or their beneficiaries. Customers are not required to purchase these insurance products from us in order to obtain any other product or service provided by us. See “Regulation and Supervision – State Laws.”

Provision for Credit Losses

Provision for credit losses (sometimes known as bad debt expense) is charged against income in amounts sufficient, in the opinion of senior management, to maintain an allowance for credit losses at a level considered adequate to cover the probable losses inherent in our finance receivable portfolio. Credit loss experience, contractual delinquency of finance receivables, ~~the value of underlying collateral~~ and management’s judgment are all factors used in assessing the overall adequacy of the allowance and the resulting provision for credit losses. Charge-offs are typically determined in one of ~~two~~ three ways. First, an account that is at least 180 days past due with no payments made within the last 180 days may be charged off. Second, an account may be determined by senior management to be uncollectible under certain circumstances, as in the event of death of the customer who did not elect to purchase credit life insurance for his loan contract or in situations when repossession and sale of collateral occurs on consumer sales finance and motor vehicle installment sales contracts and the balance is not recoverable through legal process or other methods. ~~In addition to these general means of designating an account to be charged off~~Third, ~~branch~~upon ~~managers~~receipt ~~may encounter other situations when charge-off is appropriate. We require that a supervisor visit each branch to review all~~ of ~~their accounts that are potential charge-off accounts on~~ a ~~monthly~~notice ~~basis. Then each supervisor meets with the operations manager for a final review. Prior to these visits, the branch manager is responsible for ensuring that all phases~~ of ~~the~~bankruptcy collection process have been followed. A comprehensive charge-off checklist has been developed to help the branch manager verify that all collection activities and procedures have been followed in order to have that account charged off. Senior management reviews the charge-off checklist to determine whether an account should be charged off or whether the branch manager should undertake further collection measures for the particular account. Direct consumer loans are charged off net of proceeds from non-filing insurance. We purchase non-filing insurance on certain direct consumer loans in lieu of filing a Uniform Commercial Code financing statement. Premiums collected are remitted to the insurance company to cover possible losses from ~~charge-offs as a result of not recording. Should we ever discontinue our practice of purchasing non-filing insurance,~~ the proceeds from these claims would not be available to us to offset future credit losses and additional provisions for credit losses would be required. For consumer sales finance and motor vehicle installment sales contractscustomer, ~~we are granted a security interest in~~ the ~~collateral~~account ~~for which the loan was made. In the event of default, the collateral on such contracts may be repossessed at 31 to 60 days’ delinquency (roughly two payments). After repossession, the collateral~~ is ~~sold~~charged ~~(typically~~off within 30 days~~) according to UCC-9 disposition of collateral rules and the proceeds of the sale are applied to the customer’s account~~. If the likelihood of collection on a judgment is favorable, a suit is filed for the deficiency balance remaining and, if granted, garnishment and/or execution follow for collection of the balance. If the collateral is not conducive to repossession because it is in unmarketable condition, judgment is sought without repossession and sale of collateral. If collection on a judgment is not favorable, the balance of the account is charged off. For the fiscal years ended September 25, 2009 and 2008, our charge-offs, net of recoveries, were $11.1 million and $8.6 million, respectively. We have experienced a significant increase in net charge-offs in 2008 and 2009 when compared to previous years. The declining economy, increase in cost of consumer goods, and the rise in unemployment levels have had a negative impact on our customer base. These factors have played a role in the significant increase of loan defaults occurring over the past two years. Although we continue to seek remedies through the legal process to attempt to collect past due amounts, sufficient evidence did not exist to defer the losses associated with these defaults.

~~Allowance~~In ~~For~~addition ~~Credit~~to ~~Losses~~these general means of designating an account to be charged off, branch managers may encounter other situations when charge-off is appropriate. We require that a supervisor visit each branch to review all of their accounts that are potential charge-off accounts on a monthly basis. Then each supervisor meets with the operations manager for a final review. Prior to these visits, the branch manager is responsible for ensuring that all phases of the collection process have been followed. A comprehensive charge-off checklist has been developed to help the branch manager verify that all collection activities and procedures have been followed in order to have that account charged off. Senior management reviews the charge-off checklist to determine whether an account should be charged off or whether the branch manager should undertake further collection measures for the particular account.

~~The~~Direct ~~allowance~~consumer ~~for~~loans ~~credit~~are ~~losses~~charged (aoff ~~deduction~~net ~~from~~of ~~finance~~proceeds ~~receivables~~from ~~reported~~non-filing ~~on our Consolidated Balance Sheet and sometimes known as a bad debt reserve) is determined by several factors~~insurance. ~~Historical~~We purchase ~~loss~~non-filing ~~experience~~insurance ~~coupled~~on ~~with~~many, ~~an evaluation~~but ofnot ~~loan~~all ~~delinquencies~~direct ~~are~~consumer ~~the~~loans ~~primary factors~~ in ~~the~~lieu ~~determination~~ of ~~the~~filing ~~allowance~~a ~~for~~UCC ~~credit~~financing ~~losses~~statement. AnPremiums ~~evaluation~~collected isare ~~performed~~remitted to ~~compare~~ the ~~amount~~insurance ofcompany ~~accounts charged off, net of recoveries of such accounts, in relation~~ to ~~the average~~cover ~~net~~possible ~~outstanding~~losses ~~finance~~from ~~receivables for the period being reviewed. For the fiscal years ended September 25, 2009 and 2008, the~~ charge-offs, ~~net~~as of recoveries, were $11.1 million and $8.6 million, respectively. These amounts represent 15.8% and 10.8% of the respective year’s net average outstanding receivables. As discussed above, the poor economic conditions have played a ~~role~~result ~~in the significant increase~~ of ~~loan~~not ~~defaults occurring over the past two years which has resulted~~recording. inShould ~~the~~we ~~subsequent~~ever ~~increase~~discontinue inour ~~the~~practice ~~relationship~~ of ~~net~~purchasing ~~charge~~non-~~offs~~filing toinsurance, ~~net~~the ~~outstanding~~proceeds ~~finance~~from ~~receivables.~~these ~~Management~~claims ~~has~~would ~~historically~~not ~~used~~be ~~this~~available ~~methodology~~ to ~~provide~~us ~~an adequate benchmark for determining the allowance due~~ to ~~our~~offset ~~loan~~future ~~portfolio~~credit ~~in the~~losses ~~consumer~~and ~~segment,~~additional ~~consisting~~provisions ~~primarily~~for ofcredit alosses ~~large~~would ~~number~~be ~~of smaller balance homogeneous loans~~required. ~~A review is also performed of loans that comprise the automotive segment to determine if the allowance should be adjusted based on possible exposure~~

7For consumer sales finance and motor vehicle installment sales contracts, we are granted a security interest in the collateral for which the loan was made. In the event of default, the collateral on such contracts may be repossessed at 31 to 60 days’ delinquency (roughly two payments). After repossession, the collateral is sold (typically within 30 days) according to UCC-9 disposition of collateral rules and the proceeds of the sale are applied to the customer’s account. If the likelihood of collection on a judgment is favorable, a suit is filed for the deficiency balance remaining and, if granted, garnishment and/or execution follow for collection of the balance. If the collateral is not conducive to repossession because it is in unmarketable condition, judgment is sought without repossession and sale of collateral. If collection on a judgment is not favorable, the balance of the account is charged off.

~~Index~~Additional toinformation concerning our provision for credit losses can be found in “Management’s Discussion and Analysis of Financial ~~Statements~~Condition and Results of Operations” under the subheading “Analysis of Allowance for Credit Losses” on page 22 of this report.

~~related~~Allowance to collectibility of these loans. In accordance with the auto sales contract, we may repossess the collateralized vehicle after 30 days without payment to protect the vehicle’s integrity and to minimize our loss. Net consumer segment charge-offs in fiscal year 2009 were 20.7% of the net outstanding finance receivables. In the automotive segment, net charge-offs to average outstanding receivables were 7.0%. Based on both the significantly higher levels of 2009 and 2008 charge-offs and the continued extreme adverse economic conditions, management revised its methodology in determining the adequacy of its allowance to rely much more heavily on current data available rather than simply looking at average charge-offs over the most recent three years, as was the past practice. During the fourth quarter of 2008, in conjunction with their initial Sarbanes-Oxley testing of controls over the charge-off process and the completion of its implementation of a new accounting system for ~~loans,~~Credit ~~management~~Losses performed an extensive analysis to determine the amount of past due loans over 180 days delinquent which had not been charged-off. The purpose of the analysis was to ascertain branch level controls over the determination of collectibility of past due loans. Although delinquent loans were being actively monitored and collection efforts were taking place including active and ongoing legal processes, management determined that there was not sufficient evidence to support the deferral of probable losses inherent in these loans, especially given the change in the economy and current liquidity crisis. Although the net charge offs as a percentage of the net finance receivables increased in fiscal year 2009 over the prior year’s percentage, we believe that this year’s percentage is distorted due to the significant decrease in the net outstanding finance receivables and the significant improvement in loan delinquencies during fiscal year 2009. Our liquidity issues have caused us to significantly curtail our historical level of lending and we have also tightened our lending guidelines resulting in fewer delinquencies. Based on these factors, management has decreased the allowance to the 2009 net charge-off rate by 570 basis points in the consumer segment and 50 basis points in the automotive segment to the aforementioned benchmark percentages. At September 25, 2009, we have established an allowance, expressed as a percentage of average net finance receivables, of 15.0% in the consumer segment and 6.5% in the automotive segment. The balance of the allowance for credit losses at September 25, 2009 and 2008 was $7.4 million and $8.9 million, respectively. While the balance of the allowance for credit losses has decreased, the percentage of the allowance in relation to the net average outstanding receivables has remained relatively constant at 11.7% and 11.6% at September 25, 2009 and 2008, respectively.

~~Regulation~~The allowance for credit losses (a deduction from finance receivables reported on our Consolidated Balance Sheet and ~~Supervision~~sometimes known as a bad debt reserve) is determined in order to reflect the risk of future charge-offs inherent in our ending finance receivables balance. Historical loss experience coupled with the levels of and trends in delinquencies are the primary factors in the determination of the allowance for credit losses. Other factors such as borrowers’ financial standing, effects of any changes in risk selection and lending policies and practices, and general economic conditions, to a lesser extent, are also considered. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations: Analysis of Allowance for Credit Losses” on page 22 for a detailed discussion of this allowance and the methodology management uses in its determination.

~~Federal~~Regulation ~~Laws~~and Supervision

~~Our~~Federal ~~lending~~Laws operations are subject to extensive federal regulation, including the Truth in Lending Act, the Equal Credit Opportunity Act and the Fair Credit Reporting Act. These laws generally require us to provide certain disclosures to prospective borrowers and protect against discriminatory lending practices and unfair credit practices.

~~The~~Our lending operations are subject to extensive federal regulation, including the Truth in Lending Act, ~~requires~~the usEqual toCredit ~~make~~Opportunity ~~certain~~Act ~~disclosures~~and tothe ~~our~~Fair ~~customers,~~Credit ~~including~~Reporting ~~the~~Act. ~~terms~~These oflaws ~~repayment,~~generally ~~the~~require ~~total~~us ~~finance~~to ~~charge,~~provide ~~the~~certain ~~annual~~disclosures ~~percentage~~to ~~rate~~prospective ~~charged~~borrowers and ~~other~~protect ~~information~~against ~~relating~~discriminatory lending topractices ~~the~~and ~~loan~~unfair credit practices.

The ~~Equal~~Truth ~~Credit~~in ~~Opportunity~~Lending Act ~~prohibits~~requires us ~~from~~to ~~discriminating~~make ~~against~~certain ~~loan~~disclosures ~~applicants~~to ~~based on race~~our customers, ~~color,~~including ~~sex,~~the ~~age~~terms orof ~~marital~~repayment, ~~status. Pursuant to Regulation B promulgated under~~ the ~~Equal~~total ~~Credit~~finance ~~Opportunity Act~~charge, wethe ~~are~~annual ~~required~~percentage torate ~~make~~charged ~~certain disclosures regarding consumer rights~~ and ~~advise~~other ~~consumers~~information ~~whose~~relating ~~credit~~to ~~applications are not approved of~~ the ~~reasons for the rejection~~loan.

The ~~Fair~~Equal Credit ~~Reporting~~Opportunity Act ~~requires~~prohibits us tofrom ~~provide~~discriminating ~~certain~~against ~~information~~loan toapplicants ~~consumers~~based ~~whose credit applications are not approved~~ on ~~the~~race, ~~basis of a report obtained from a consumer reporting agency. On December 4~~color, ~~2003~~sex, ~~President~~age ~~Bush~~or ~~signed~~marital ~~into law the Fair and Accurate Credit Transaction Act~~status. ~~The~~Pursuant ~~FACT~~to ~~Act~~Regulation ~~reauthorizes~~B ~~and~~promulgated ~~amends~~under the ~~Fair~~Equal Credit ~~Reporting Act~~ ~~and~~Opportunity ~~permanently extends the state preemption provisions of the Fair Credit Reporting~~ Act., ~~The~~we ~~FACT~~are ~~Act~~required ~~also~~to ~~creates~~make ~~new~~certain ~~provisions~~disclosures toregarding ~~strengthen~~ consumer rights byand ~~addressing~~to ~~the~~advise ~~problem~~consumers ofwhose ~~identity~~credit ~~theft,~~applications asare ~~well~~not approved as ~~limit~~to the ~~disclosure~~reasons ~~of medical information~~ for ~~credit~~the ~~purposes~~rejection.

The ~~Federal~~Fair ~~Trade~~Credit ~~Commission~~Reporting ~~(FTC)~~Act ~~Credit~~requires ~~Practices~~us ~~Rule~~to ~~prevents~~provide ~~consumer~~certain ~~lenders~~information to consumers whose credit applications are not approved on the basis of a report obtained from a consumer reporting agency. On December 4, 2003, President Bush signed into law the Fair and Accurate Credit Transaction Act. The FACT Act reauthorizes and amends the Fair Credit Reporting Act and permanently ~~using~~extends ~~certain~~the ~~household~~state ~~goods~~preemption asprovisions ~~collateral~~of onthe ~~direct~~Fair ~~cash~~Credit ~~loans~~Reporting Act. WeThe ~~collateralize~~FACT ~~such~~Act ~~loans~~also ~~with~~creates ~~non-household~~new ~~goods~~provisions ~~such~~to asstrengthen ~~automobiles,~~consumer ~~boats,~~rights ~~mobile~~by ~~homes~~addressing the problem of identity theft, ~~and~~as ~~other~~well ~~exempt~~as ~~items~~limit the disclosure of medical information for credit purposes.

WeThe ~~are~~Federal ~~subject~~Trade toCommission ~~the~~(FTC) ~~consumer~~Credit ~~privacy~~Practices ~~provisions~~Rule ofprevents ~~the~~consumer ~~Gramm-Leach-Bliley~~lenders ~~Act~~from ~~and,~~using ~~as such, are regulated by the FTC. The GLB Act~~certain ~~restricts~~household orgoods ~~prohibits~~as ~~our~~collateral ~~ability~~on todirect ~~offer~~cash ~~non-affiliated third parties access to nonpublic personal information generated by our business~~loans. ~~While~~We wecollateralize ~~do not currently share any~~ such ~~nonpublic~~loans ~~personal information~~ with non-~~affiliated~~household ~~third~~goods ~~parties, we~~such ~~may~~as doautomobiles, ~~so in the future. Required compliance with the GLB Act and these rules~~boats, ormobile ~~our failure to comply with them~~homes, ~~may~~and ~~increase~~other ~~the~~exempt ~~overall~~items. ~~cost to us in providing our~~

8We are subject to the consumer privacy provisions of the Gramm-Leach-Bliley Act and, as such, are regulated by the FTC. The GLB Act restricts or prohibits our ability to offer non-affiliated third parties access to nonpublic personal information generated by our business. While we do not currently share any such nonpublic personal information with non-affiliated third parties, we may do so in the future. Required compliance with the GLB Act and these rules, or our failure to comply with them, may increase the overall cost to us in providing our products and services and may limit potential future revenue opportunities. In addition, the GLB Act allows states to enact consumer privacy laws that may be more burdensome or restrictive than the GLB Act, the rules promulgated thereunder and other existing federal laws. The GLB Act, the FTC’s rules, or the adoption of other consumer privacy laws or regulations could have a material adverse effect on our business, financial condition and operating results.

We are subject to the USA PATRIOT Act of 2001, including Section 352 of the Money Laundering Abatement Act, reasonably expected to detect and cause the reporting of suspicious transactions in connection with the sale of debentures and demand notes by us, direct deposits made by customers and the issuance of money orders to customers. In addition to other procedures, for investments or other cash receipts greater than $10,000, we obtain a copy of a valid driver’s license or picture identification and complete the required IRS Form 8300.

~~Index~~The toDodd-Frank ~~Financial~~Wall ~~Statements~~Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) provides for a number of reforms and regulations that will affect our industry, the impact of which may not be known for several years until the legislation becomes fully effective. See “Risk Factors – The impact on us of the Dodd-Frank Act and its implementing regulations cannot be predicted at this time.”

~~products~~State ~~and~~Laws services and may limit potential future revenue opportunities. In addition, the GLB Act allows states to enact consumer privacy laws that may be more burdensome or restrictive than the GLB Act, the rules promulgated thereunder and other existing federal laws. The GLB Act, the FTC’s rules, or the adoption of other consumer privacy laws or regulations could have a material adverse effect on our business, financial condition and operating results.

WeGeneral are subject to the USA PATRIOT Act of 2001, including Section 352 of the Money Laundering Abatement Act, reasonably expected to detect and cause the reporting of suspicious transactions in connection with the sale of debentures and demand notes by us, direct deposits made by customers and the issuance of money orders to customers. In addition to other procedures, for investments or other cash receipts greater than $10,000, we obtain a copy of a valid driver’s license or picture identification and complete the required IRS Form 8300.

State ~~Laws~~laws require that each office in which a small loan business is conducted be licensed by the state and that the business be conducted according to the applicable statutes and regulations. The granting of a license depends on the financial responsibility, character and fitness of the applicant, and, where applicable, the applicant must show finding of a need through convenience and advantage documentation. As a condition to obtaining such license, the applicant must consent to state regulation and examination and to the making of periodic reports to the appropriate governing agencies. Licenses are revocable for cause, and their continuance depends upon compliance with the law and regulations issued pursuant thereto. We have never had any of our small loan business licenses revoked.

~~General~~We are also subject to state regulations governing insurance agents. State insurance regulations require that insurance agents be licensed and limit the premium amount charged for such insurance.

~~State~~Georgia ~~laws~~Laws require that each office in which a small loan business is conducted be licensed by the state and that the business be conducted according to the applicable statutes and regulations. The granting of a license depends on the financial responsibility, character and fitness of the applicant, and, where applicable, the applicant must show finding of a need through convenience and advantage documentation. As a condition to obtaining such license, the applicant must consent to state regulation and examination and to the making of periodic reports to the appropriate governing agencies. Licenses are revocable for cause, and their continuance depends upon compliance with the law and regulations issued pursuant thereto. We have never had any of our small loan business licenses revoked.

WeDirect consumer loans we make in Georgia are ~~also~~subject to the Georgia Industrial Loan Act. GILA governs loans of $3,000 or less and requires that lenders, like us, who are subject to ~~state~~GILA ~~regulations~~not ~~governing~~loan ~~insurance~~funds ~~agents~~for more than 36 months and 15 days. ~~State~~GILA ~~insurance~~provides ~~regulations~~for ~~require~~a maximum rate of interest and specifies permitted additional fees that can be charged for a loan, including loan fees, maintenance fees and late fees. Under GILA, a lender may also sell certain types of insurance. ~~agents~~GILA bepermits ~~licensed~~us to charge and collect from our customers premiums actually paid for insurance obtained for the customer, provided that the insurance is reasonably related to the type and ~~limit~~value of the ~~premium~~property issued and the amount ~~charged~~and ~~for~~term ~~such~~of the loan, and further provided that the insurance is obtained through an insurance company authorized to do business in Georgia and through a regular insurance agent licensed by the state insurance commissioner.

We also make a comparatively small number of direct consumer loans for amounts greater than $3,000 and for a longer period than 36 months and 15 days. These loans are not subject to GILA restrictions, but are made at an open, negotiated rate which, along with other terms of the loan, is subject only to the general Georgia ~~Laws~~usury laws.

~~Direct~~In ~~consumer~~connection ~~loans~~with ~~we make in Georgia are subject to~~ the ~~Georgia~~sale ~~Industrial~~and ~~Loan~~financing ~~Act. GILA governs loans~~ of ~~$3,000~~motor ~~or less and requires that lenders~~vehicles, ~~like~~we ~~us, who~~ are generally subject to ~~GILA~~the ~~not~~Georgia ~~loan~~Motor ~~funds~~Vehicle ~~for~~Sales ~~more~~Financing ~~than 36 months and 15 days~~Act. ~~GILA~~MVSFA ~~provides~~requires, ~~for~~among aother ~~maximum~~things, ~~rate~~that ofcertain ~~interest~~content and ~~specifies permitted additional fees that can~~ notices be ~~charged~~present ~~for~~in acontracts ~~loan, including loan fees, maintenance fees~~ and ~~late~~regulates ~~fees.~~the ~~Under~~specific ~~GILA,~~manner aof ~~lender~~execution ~~may~~and ~~also~~delivery ~~sell certain types~~ of ~~insurance~~contracts. ~~GILA~~MVSFA ~~permits~~also usregulates torelated ~~charge and collect from our customers premiums actually paid for~~ insurance ~~obtained for the customer~~purchased, ~~provided that~~ the ~~insurance~~amount ~~is reasonably related to the type and value~~ of ~~the~~certain ~~property~~finance ~~issued~~charges, ~~and~~ the ~~amount~~treatment ~~and term~~ of ~~the~~prepayment ~~loan,~~ and ~~further~~recovery ~~provided~~of ~~that~~deficiencies ~~the insurance is obtained through an insurance company authorized to do business~~ in ~~Georgia and through a regular insurance agent~~ ~~licensed~~repossession ~~by the state insurance commissioner~~cases.

WeLouisiana ~~also~~Laws make a comparatively small number of direct consumer loans for amounts greater than $3,000 and for a longer period than 36 months and 15 days. These loans are not subject to GILA restrictions, but are made at an open, negotiated rate which, along with other terms of the loan, is subject only to the general Georgia usury laws.

InWe ~~connection~~are ~~with~~registered ~~the~~as ~~sale~~a ~~and~~non-depository ~~financing~~licensed oflender ~~motor~~in ~~vehicles,~~Louisiana. Direct consumer loans and sales finance loans we ~~are~~make ~~generally~~in ~~subject~~Louisiana toare governed by the ~~Georgia~~Louisiana ~~Motor~~Consumer Credit Law. The Louisiana ~~Vehicle~~Office ~~Sales~~of ~~Financing~~Financial ~~Act~~Institutions regulates the Louisiana Consumer Credit Law. ~~MVSFA~~The ~~requires,~~Louisiana ~~among~~Consumer ~~other~~Credit ~~things,~~Law ~~that~~generally ~~certain~~regulates ~~content~~consumer loans made in Louisiana and ~~notices~~provides for maximum rates of interest that may be ~~present~~charged inbased ~~contracts~~upon outstanding ~~and~~loan ~~regulates~~balance (the ~~specific~~higher ~~manner~~the ofloan ~~execution~~balance ~~and~~the ~~delivery~~less ofthe ~~contracts~~interest rate allowed to be charged). ~~MVSFA~~The ~~also~~Louisiana ~~regulates~~Consumer ~~related~~Credit ~~insurance~~Law ~~purchased,~~specifies the permitted additional fees that may be charged in connection with a loan, including loan fees, ~~amount~~maintenance offees ~~certain~~and ~~finance~~late ~~charges~~fees. The Louisiana Consumer Credit Law allows us to request or require our customers to provide insurance in connection with consumer credit transactions. However, the ~~treatment~~maximum ofrates ~~prepayment~~to be charged for such insurance are set by statute. The Louisiana Consumer Credit Law prevents us from displaying or selling merchandise at our branch office locations and ~~recovery~~requires ofthat ~~deficiencies~~the space in ~~repossession~~which ~~cases~~we make our consumer loans be separated from any location in which we display or sell merchandise by walls that may be broken only by a passageway in which the public does not have access.

~~Louisiana~~9 ~~Laws~~

We are registered as a non-depository licensed lender in Louisiana. Direct consumer loans and sales finance loans we make in Louisiana are governed by the Louisiana Consumer Credit Law. The Louisiana Office of Financial Institutions regulates the Louisiana Consumer Credit Law. The Louisiana Consumer Credit Law generally regulates consumer loans made in Louisiana and provides for maximum rates of interest that may be charged based upon outstanding loan balance (the higher the loan balance the less the interest rate allowed to be charged). The Louisiana Consumer Credit Law specifies the permitted additional fees that may be charged in connection with a loan, including loan fees, maintenance fees and late fees. The Louisiana Consumer Credit Law allows us to request or require our customers to provide insurance in connection with consumer credit transactions. However, the

~~Index~~Alabama toLaws ~~Financial Statements~~

~~maximum~~Direct ~~rates~~consumer toloans beand ~~charged~~sales ~~for~~finance ~~such~~loans ~~insurance~~we make in Alabama are ~~set~~governed by ~~statute~~the Alabama Consumer Credit Act and the regulations promulgated thereunder, also referred to as the Mini-Code. The ~~Louisiana~~Alabama ~~Consumer~~State ~~Credit~~Banking ~~Law~~Department, ~~prevents~~Bureau usof ~~from~~Loans ~~displaying~~regulates orthe ~~selling~~Mini-Code. ~~merchandise~~The atMini-Code ~~our~~governs ~~branch~~loans ~~office~~of ~~locations~~$2,000 or less and ~~requires~~provides for maximum finance charges depending on the loan balance and specifies permitted additional fees that may be charged for a loan, including loan fees, maintenance fees and late fees. Furthermore, the ~~space~~Mini-Code inrequires ~~which~~that we ~~make~~refund ~~our~~or ~~consumer~~credit certain unearned finance charges when a customer renews or extends a loan. The Mini-Code also requires that loans beof ~~separated~~less ~~from~~than ~~any~~$1,000 ~~location~~be repaid in ~~which~~substantially weequal ~~display~~installments at periodic intervals over a period of not more than 36 months and 15 days for amounts financed of more than $300 and 24 months and 15 days for amounts financed of $300 or ~~sell~~less. ~~merchandise~~The byMini-Code ~~walls~~permits ~~that~~us ~~may~~to becharge ~~broken~~and ~~only~~collect insurance premiums from our customers so long as the insurance is offered and written by a ~~passageway~~licensed insurance company authorized to do business in ~~which~~Alabama. However, the ~~public~~maximum ~~does~~rates ~~not~~to ~~have~~be ~~access~~charged for such insurance are set by statute. The Mini-Code also requires us to obtain the prior written approval of the State Banking Department prior to conducting any other business on the premises.

We also make a small number of consumer loans for amounts greater than $2,000 in Alabama. ~~Laws~~Such loans are not subject to the Mini-Code, but are made at an open, negotiated rate which, along with other terms of the loan, is subject only to the general Alabama usury laws.

~~Direct~~Florida ~~consumer~~Laws loans and sales finance loans we make in Alabama are governed by the Alabama Consumer Credit Act and the regulations promulgated thereunder, also referred to as the Mini-Code. The Alabama State Banking Department, Bureau of Loans regulates the Mini-Code. The Mini-Code governs loans of $2,000 or less and provides for maximum finance charges depending on the loan balance and specifies permitted additional fees that may be charged for a loan, including loan fees, maintenance fees and late fees. Furthermore, the Mini-Code requires that we refund or credit certain unearned finance charges when a customer renews or extends a loan. The Mini-Code also requires that loans of less than $1,000 be repaid in substantially equal installments at periodic intervals over a period of not more than 36 months and 15 days for amounts financed of more than $300 and 24 months and 15 days for amounts financed of $300 or less. The Mini-Code permits us to charge and collect insurance premiums from our customers so long as the insurance is offered and written by a licensed insurance company authorized to do business in Alabama. However, the maximum rates to be charged for such insurance are set by statute. The Mini-Code also requires us to obtain the prior written approval of the State Banking Department prior to conducting any other business on the premises.

WeDirect ~~also~~consumer loans and sales finance loans we make in aFlorida ~~small~~are ~~number~~governed by the Florida Consumer Finance Act and are regulated by the Florida Department of ~~consumer~~Banking ~~loans~~and ~~for~~Finance. ~~amounts~~The ~~greater~~Florida Consumer Finance Act generally governs loans of less than $225,000 inand ~~Alabama.~~provides ~~Such~~for ~~loans~~maximum ~~are~~rates ~~not~~of ~~subject~~interest depending toupon the ~~Mini-Code,~~loan ~~but~~balance ~~are~~and ~~made~~specifies atpermitted anadditional ~~open,~~fees ~~negotiated~~that ~~rate~~may ~~which,~~be ~~along~~charged ~~with~~for ~~other terms~~a ofloan, ~~the~~including loan fees, ismaintenance ~~subject~~fees ~~only~~and late fees. The Florida Consumer Finance Act permits us to ~~the~~charge ~~general~~and ~~Alabama~~collect ~~usury~~insurance premiums from our customers so long as they are provided under a group or individual insurance policy which complies with the insurance laws of the State of Florida.

~~Florida~~Employees ~~Laws~~

~~Direct~~As ~~consumer loans and sales finance loans we make in Florida are governed by the Florida Consumer Finance Act and are regulated by the Florida Department~~ of ~~Banking and Finance. The Florida Consumer Finance Act generally governs loans of less than $~~September 25,~~000~~ ~~and~~2010, ~~provides~~we ~~for~~had ~~maximum~~296 ~~rates of interest depending upon the loan balance and specifies permitted additional fees that may be~~full-time ~~charged~~employees ~~for a loan, including loan fees, maintenance fees~~ and ~~late~~four ~~fees~~part-time employees. ~~The~~We ~~Florida~~do ~~Consumer~~not ~~Finance~~have ~~Act~~employment ~~permits~~agreements ~~us to charge and collect insurance premiums from our customers so long as they are provided under a group or individual insurance policy which complies~~ with ~~the~~any ~~insurance laws~~ of ~~the~~our ~~State of Florida~~employees.

~~Employees~~Item 1A. Risk Factors:

AsOur operations ofare ~~September 25,~~subject ~~2009,~~to wea ~~had~~number ~~370~~of ~~full-time~~risks. ~~employees~~You should carefully read and ~~five~~consider ~~part-time~~these ~~employees.~~risks, Wetogether dowith ~~not~~all ~~have~~other ~~employment~~information ~~agreements~~in ~~with~~ this report. If any of the following risks actually occur, our ~~employees~~business, financial condition or operating results and our ability to repay the debentures and demand notes could be materially adversely affected.

~~Item~~There ~~1A.~~is ~~Risk~~uncertainty ~~Factors:~~as to our ability to continue as a going concern.

~~Our~~The ~~operations~~opinion ~~are~~of ~~subject~~our toindependent aregistered ~~number~~accounting offirm ~~risks.~~for ~~You~~the ~~should~~fiscal ~~carefully~~year ~~read~~ended September 25, ~~and consider these risks~~2010, ~~together~~which ~~with~~is ~~all~~included ~~other~~in ~~information~~Item 8 inof this report, contains a going concern qualification. IfThis ~~any~~conclusion ofis ~~the~~based ~~following~~on ~~risks~~our ~~actually~~operating ~~occur~~losses, a deficiency in net interest margin and our shareholders’ deficit. Those ~~business~~factors, ~~financial~~as ~~condition~~well oras ~~operating~~uncertainty ~~results~~in ~~and~~securing ~~our~~financing ~~ability~~for tocontinued ~~repay~~operations, ~~the~~create ~~debentures~~an ~~and~~uncertainty ~~demand~~regarding ~~notes~~our ~~could~~ability beto ~~materially~~continue ~~adversely~~as ~~affected~~a going concern.

~~There~~We issuffered ~~uncertainty~~significant aslosses toduring ~~our~~fiscal ~~ability~~years to2009 ~~continue~~and as2010 aand ~~going~~we ~~concern~~anticipate such losses will likely continue in 2011.

~~The~~Our ~~opinion~~net oflosses ~~our~~were ~~independent registered~~approximately ~~accounting~~$12.9 ~~firm~~million ~~for~~and ~~the~~$12.1 ~~fiscal~~million ~~year~~during ~~ended~~fiscal ~~September 25,~~years 2009, ~~which~~and ~~is included in Item 8 of this report~~2010, ~~contains a going concern qualification~~respectively. ~~This~~We ~~conclusion~~anticipate isthat ~~based~~such onsignificant ~~our operating~~ losses, awill ~~deficiency~~likely incontinue ~~net interest margin and our shareholders’ deficit. Those factors, as well as uncertainty~~ in ~~securing financing for continued operations, create an uncertainty regarding our ability to continue as a going concern~~2011.

10We may be unable to meet our debenture and demand note redemption obligations which could force us to sell off our loan receivables and other operating assets or cease our operations.

We may issue demand notes, debentures, or similar debt instruments to investors in order to raise funds for our operations. As of September 25, 2010, we had a total of $71.2 million of debentures and $3.2 million of demand

~~Index~~ notes outstanding, which demand notes may be redeemed by our investors at any time. Of this amount, our subsidiary, The Money Tree of Georgia Inc., has $22.5 million of debentures and $0.3 million of demand notes outstanding. While the maturing debentures of our subsidiary are subject to ~~Financial~~substantially ~~Statements~~similar early redemption and automatic extension provisions as the debentures, we cannot predict with any accuracy the number of debenture holders who will elect to redeem such debentures at or prior to maturity. We intend to pay these and any other redemption obligations using our normal cash sources, such as collections on finance receivables and used car sales, as well as proceeds from the sale of the debentures and demand notes. We are substantially reliant upon the net offering proceeds we receive from the sale of the debentures and demand notes. However, during the fiscal year ended September 25, 2010, we redeemed $14.4 million in debentures, while only receiving $12.0 million from the sale of new debentures. Therefore, we have had to use funds from operations to fund these net redemptions. Our operations and other sources of funds may not provide sufficient available cash flow to meet our continued redemption obligations if the amount of redemptions continues at its current pace and we continue to suffer losses and use funds from operations to fund redemptions. If we are unable to repay or redeem the principal amount of debentures or demand notes when due, and we are unable to obtain additional financing or other sources of capital, we may be forced to sell off our loan receivables and other operating assets or we might be forced to cease our operations.

WeOur ~~suffered~~decreased ~~significant~~sales ~~losses~~of ~~during~~Debentures ~~fiscal~~and ~~years~~Demand ~~2008~~Notes, ~~and~~along ~~2009~~with ~~and~~the weincreased ~~anticipate~~redemptions ~~such~~of ~~losses~~these ~~will~~securities, has ~~likely~~resulted ~~continue~~ in ~~2010~~fewer loans being made to customers, which has significantly negatively affected our operations, financial position and liquidity.

~~Our~~For ~~net~~the ~~losses~~fiscal ~~were~~years ~~approximately~~ended September 25, 2010 and 2009, we sold $12.0 million and $1110.90 million of Debentures, respectively. Meanwhile, we had redemptions of Debentures of $14.4 million and $18.6 million during the same periods, respectively. For the fiscal years ~~2008~~ended September 25, 2010 and 2009, we sold $2.6 million and $3.0 million of Demand Notes, respectively. WeMeanwhile, ~~anticipate~~we ~~that~~had ~~such~~redemptions of Demand Notes of $2.6 million and $3.5 million during the same periods, respectively. These $11.5 million combined net redemptions during the past two years have required us to use significant ~~losses~~funds ~~will~~from ~~likely~~operations ~~continue~~to pay these net redemptions and corresponding interest payments. Accordingly, we have made significantly less loans to our customers resulting in ~~2010~~reduced net finance receivables balances and net interest and fee income. This decrease in sales of Debentures and Demand Notes, along with the increased redemptions of these securities, have significantly negatively affected our operations, financial position and liquidity.

WeIf ~~may~~we bedefault ~~unable~~in ~~to meet~~ our debenture ~~and~~ or demand note ~~redemption~~payment obligations, ~~which~~the ~~could~~indenture ~~force~~agreements usrelating to ~~sell~~our ~~off~~debentures ~~our~~and ~~loan~~demand ~~receivables~~notes provide that the trustee could accelerate all payments due under the debentures and ~~other~~demand ~~operating~~notes, ~~assets~~which orwould ~~cease~~further negatively affect our financial ~~operations~~position.

WeOur ~~may~~obligations ~~issue~~with ~~demand~~respect ~~notes, debentures, or similar debt instruments~~ to ~~investors~~the ~~in order to raise funds for our operations. As of September 25, 2009, we had a total of $73,602,821 of~~ debentures and ~~$3,146,707~~ of demand notes ~~outstanding,~~are ~~which~~governed ~~demand notes may be redeemed~~ by ~~our~~the ~~investors~~terms atof ~~any~~indenture agreements ~~time~~with U.S. OfBank ~~this~~National ~~amount~~Association, ~~our~~as ~~subsidiary, The Money Tree of Georgia Inc~~trustee., ~~has~~Under ~~issued~~the ~~$30~~indentures,~~730,844~~ ofin ~~debentures~~addition ~~and~~to ~~$441,747~~other ofpossible ~~demand~~events ~~notes. While the maturing debentures~~ of ~~our~~default, ~~subsidiary~~if ~~are~~we ~~subject~~fail to ~~substantially~~make ~~similar~~a ~~early~~payment ~~redemption~~of ~~and~~principal ~~automatic~~or ~~extension~~interest ~~provisions~~under ~~as the debentures, we cannot predict with~~ any ~~accuracy the number of~~ debenture ~~holders who will elect to redeem such debentures at~~ or ~~prior~~demand tonote ~~maturity. We intend to pay these~~ and ~~any~~this ~~other~~failure ~~redemption~~is ~~obligations~~not ~~using~~cured within ~~our~~30 ~~normal cash sources~~days, ~~such~~we aswill ~~collections~~be ondeemed ~~finance~~in ~~receivables~~default. ~~and~~Upon ~~used~~such ~~car~~a ~~sales~~default, asthe ~~well~~trustee asor ~~proceeds~~holders ~~from the sale~~ of ~~the~~25% ~~debentures~~in ~~and demand~~principal ~~notes. We are substantially reliant upon the net offering proceeds we receive from the sale~~ of the outstanding debentures ~~and~~or demand notes. ~~However,~~could ~~during~~declare ~~the~~all ~~fiscal~~principal ~~year~~and ~~ended~~accrued ~~September 25,~~interest ~~2009,~~immediately wedue ~~redeemed~~and ~~$18~~payable.6 ~~million~~Since inour ~~debentures, while only~~total ~~receiving~~assets ~~$10.0~~do ~~million~~not ~~from~~cover ~~the sale of new debentures. Therefore, we have had to use funds from operations to fund~~ these ~~net~~debt ~~redemptions.~~payment ~~Our operations and other sources of funds may not provide sufficient available cash flow to meet our continued redemption~~ obligations, ~~if the amount of redemptions continues at its current pace and~~ we ~~continue~~would tomost ~~suffer~~likely ~~losses~~be ~~and use funds from operations to fund redemptions. If we are~~ unable to ~~repay~~make orall ~~redeem~~payments under the ~~principal amount of~~ debentures or demand notes when due, and we ~~are unable to obtain additional financing or other sources of capital, we may be forced to sell off our loan receivables and other operating assets or we~~ might be forced to cease our operations.

IfOur weinternal ~~default~~controls inover ~~our~~financial ~~debenture~~reporting ormay ~~demand~~not ~~note~~be ~~payment~~effective ~~obligations,~~in ~~the~~preventing ~~indenture~~or ~~agreements~~detecting ~~relating~~misstatements toin our ~~debentures~~financial statements, and ~~demand~~if ~~notes~~we fail ~~provide~~to ~~that~~detect ~~the trustee~~material ~~could~~misstatements ~~accelerate~~in ~~all~~our ~~payments~~financial ~~due~~statements, ~~under~~our ~~the~~financial ~~debentures~~condition and ~~demand~~operating ~~notes,~~results ~~which~~could ~~would~~be ~~further~~severely and negatively ~~affect our financial position~~affected.

~~Our~~During ~~obligations~~our ~~with~~fiscal ~~respect~~years toended ~~the debentures and demand notes are governed by the terms of indenture agreements with U.S. Bank National Association~~September 25, ~~as trustee. Under the indentures~~2010, in2009 ~~addition~~and ~~to other possible events of default~~2008, if we ~~fail~~concluded tothat ~~make~~our asystem ~~payment~~ of ~~principal~~internal orcontrols ~~interest~~over ~~under~~financial ~~any~~reporting ~~debenture~~contained ora ~~demand~~material ~~note~~weakness and ~~this~~was ~~failure is~~ not ~~cured~~operating effectively. ~~within~~This 30resulted ~~days,~~in weerrors ~~will~~in beour ~~deemed~~financial ~~in default~~statements. ~~Upon~~There ~~such~~can abe ~~default,~~no ~~the~~assurance ~~trustee~~that ~~or holders of 25%~~ in ~~principal of~~ the ~~outstanding~~future ~~debentures~~our orsystem ~~demand~~of ~~notes~~internal ~~could~~controls ~~declare~~would ~~all~~detect ~~principal~~misstatements ~~and~~in ~~accrued~~our ~~interest~~financial ~~immediately due and payable~~statements. ~~Since~~If ~~our total assets do not cover these debt payment obligations,~~ we ~~would~~fail ~~most~~to ~~likely~~detect bematerial ~~unable~~misstatements toin ~~make all~~our ~~payments~~financial ~~under~~statements in the ~~debentures~~future, orour ~~demand~~financial ~~notes~~condition ~~when due,~~ and weoperating ~~might~~results could be ~~forced~~severely toand ~~cease~~negatively ~~our operations~~affected.

We suffered significant credit losses in ~~2009~~2010 due to continued ~~weakening~~weak economic conditions, and there is no guarantee that such credit losses will not continue during this downturn in the economy or that our operations and profitability will not continue to be negatively affected.

Because our business consists mainly of making loans to individuals who depend on their earnings to make their repayments, our ability to operate on a profitable basis depends to a large extent on the continued employment of those individuals and their ability to meet their financial obligations as they become due. In the current recession and continued downturn in the U.S. and local economies in which we operate, our customers have been affected by the resulting unemployment and increases in the number of personal bankruptcies. Therefore, we continue to experience increased credit losses and our collection ratios and profitability could continue to be materially and adversely affected. This recession has negatively affected our customers’ disposable income, confidence and spending patterns and preferences, which in turn are negatively impacting our sales of consumer goods and vehicles and our customers’ ability to repay their obligations to us. As a result, we continue to experience significant credit losses through loan charge-offs. For the fiscal year ended September 25, 2009, our charge-offs, net of recoveries, for our entire loan portfolio were $11.1 million, or 15.8% of average net finance receivables, and charge-offs for the direct consumer loans and consumer sales finance contract segments were 20.7% of the related average receivables. These high levels of charge-offs have had a negative impact on our operations and profitability. Should the current economic conditions continue or worsen, our operations and profitability will continue to be materially and adversely affected.

~~Index~~ to meet their financial obligations as they become due. In the current recession and continued downturn in the U.S. and local economies in which we operate, our customers have been affected by the resulting unemployment and increases in the number of personal bankruptcies. Therefore, we continue to ~~Financial~~experience ~~Statements~~increased credit losses and our collection ratios and profitability could continue to be materially and adversely affected. This recession has negatively affected our customers’ disposable income, confidence and spending patterns and preferences, which in turn are negatively impacting our sales of consumer goods and vehicles and our customers’ ability to repay their obligations to us. As a result, we continue to experience significant credit losses through loan charge-offs. For the fiscal year ended September 25, 2010, our charge-offs, net of recoveries, for our entire loan portfolio were $7.7 million, or 15.5% of average net finance receivables, and charge-offs for the direct consumer loans and consumer sales finance contract segments were 19.7% of the related average receivables. Although the net charge-offs for this fiscal year are less than in the previous year, these high levels of charge-offs have had a negative impact on our operations and profitability. Should the current economic conditions continue or worsen, our operations and profitability will continue to be materially and adversely affected.

Our significant shareholders’ deficit balance may limit our ability to obtain future financing, which could have a negative effect on our operations and our liquidity.

As of September 25, ~~2009~~2010, we had a shareholders’ deficit of $2445,~~847~~908,~~259,~~992 which means our total liabilities exceed our total assets. Bankruptcy law defines this as balance sheet insolvency. The existence of a significant shareholders’ deficit may limit our ability to obtain future debt or equity financing. If we are unable to obtain financing in the future, it will likely have a negative effect on our operations and our liquidity and our ability to continue as a going concern.

Our lack of a significant line of credit could affect our liquidity.

We have operated without a significant line of credit for the past several years. We have been seeking for several months to obtain a line of credit as an additional source of long-term financing. If we fail to obtain a line of credit, we will be more dependent on the proceeds from the debentures and demand notes for our continued liquidity. Since our sales of the debentures and demand notes have been significantly curtailed, our failure to obtain a line of credit would negatively affect our ability to meet our obligations.

The collectibility of our finance receivables has been severely and negatively affected by general economic conditions and we have not been able to recover the full amount of delinquent accounts by resorting to sale of collateral or receipt of non-filing insurance proceeds.

Our liquidity is dependent on, among other things, the collection of our finance receivables. We continually monitor the delinquency ~~status~~ status of our finance receivables and promptly institute collection efforts on delinquent accounts. Collections of our consumer finance receivables have been severely and negatively affected by general economic conditions. Since we do not ordinarily perfect our security interest in collateral for loans, we have not been able to recover the full amount of outstanding receivables by resorting to the sale of collateral or receipt of non-filing insurance proceeds.

Our typical customer base has “subprime” credit ratings and higher than average credit risks which has resulted in increased loan defaults.

We typically lend money to individuals who have difficulty receiving loans from banks and other financial institutions because of credit problems or other adverse financial circumstances. Therefore, we have a higher risk of loan default among our customers than other lending companies. If we continue to suffer increased loan defaults, our operations will be materially adversely affected.

If we or our operations suffer from severe negative publicity, we could be faced with significantly greater payment or redemption obligations from holders of the demand notes than we have cash available for such payments or redemptions.

Because our demand notes are payable or redeemable at any time by holders, we cannot control the amount or timing of such payments or redemptions. If we or our operations suffer from severe negative publicity, we may receive significantly greater payment or redemption requests in a short time period than we have cash available to fund such payments or redemptions. In such event, we could be declared in default on the demand notes and other debt instruments.

~~Our~~12 internal controls over financial reporting may not be effective in preventing or detecting misstatements in our financial statements, and if we fail to detect material misstatements in our financial statements, our financial condition and operating results could be severely and negatively affected.

During our fiscal year ended September 25, 2008, we concluded that our system of internal controls over financial reporting contained a material weakness and was not operating effectively. This resulted in errors in our previously issued quarterly financial statements. There can be no assurance that in the future our system of internal controls would detect misstatements in our financial statements. If we fail to detect material misstatements in our financial statements in the future, our financial condition and operating results could be severely and negatively affected.

Hurricanes or other adverse weather events could negatively affect local economies or cause disruption to our branch office locations, which could have an adverse effect on our business or results of operations.

~~Index~~Hurricanes or other adverse weather events could negatively affect local economies or cause disruption to our ~~Financial~~branch ~~Statements~~office locations, which could have an adverse effect on our business or results of operations.

Our operations are conducted in the States of Georgia, Florida, Alabama and Louisiana, including areas susceptible to hurricanes or tropical storms. Such weather events can disrupt our operations, result in damage to our branch office locations and negatively affect the local economies in which we operate. We cannot predict whether or to what extent future hurricanes will affect our operations or the economies in our market areas, but such weather events could result in a decline in loan originations and an increase in the risk of delinquencies, foreclosures or loan losses. Our business or results of operations may be adversely affected by these and other negative effects of future hurricanes.

Additional competition may decrease our liquidity and profitability.

We compete for business with a number of large national companies and banks that have substantially greater resources, lower cost of funds, and a more established market presence than we have. If these companies increase their marketing efforts to include our market niche of borrowers, or if additional competitors enter our markets, we may be forced to reduce our interest rates and fees in order to maintain or expand our market share. Any reduction in our interest rates or fees could have an adverse impact on our liquidity and profitability.

An increase in market interest rates may result in a reduction in our liquidity and increased losses or delay in our return to profitability and impair our ability to pay interest and principal on our debentures and demand notes.

Interest rates are currently at or near historic lows. Sustained, significant increases in interest rates could unfavorably impact our liquidity and increase our losses or delay ~~our~~a possible return to profitability by reducing the interest rate spread between the rate of interest we receive on loans and interest rates we must pay under our demand notes and debentures and any bank debt we incur. Any reduction in our liquidity and increase in our losses or delay in ~~our~~a possible return to profitability would diminish our ability to pay principal and interest on the debentures and demand notes.

We are subject to many laws and governmental regulations, and any changes in these laws or regulations may materially adversely affect our ~~financial~~ financial condition and business operations.

Our operations are subject to regulation by federal authorities and state banking, finance, consumer protection and insurance authorities and are subject to various laws and judicial and administrative decisions imposing various requirements and restrictions on our operations which, among other things, require that we obtain and maintain certain licenses and qualifications, and limit the interest rates, fees and other charges we may impose in our consumer finance business. Although we believe we are in compliance in all material respects with applicable laws, rules and regulations, we cannot assure you that we are or that any change in such laws, or in the interpretations thereof, will not make our compliance with such laws more difficult or expensive or otherwise adversely affect our financial condition or or business operations.

WeThe ~~are~~impact ~~devoting~~on ~~resources~~us ~~to comply with various provisions~~ of the ~~Sarbanes~~Dodd-~~Oxley~~Frank Act, ~~including~~and ~~Section 404 relating~~its toimplementing ~~internal~~regulations ~~controls~~cannot ~~testing~~be ~~and~~predicted ~~auditor~~at ~~attestation, and~~ this ~~may reduce the resources we have available to focus on our core business~~time.

~~For~~A ~~fiscal~~wide ~~year~~range ~~ended~~of ~~September 25,~~regulatory ~~2009,~~initiatives wedirected ~~are~~at ~~subject~~the tofinancial ~~the~~services ~~requirements~~industry ofhas ~~Section 404(A)~~been proposed in recent months. One of those initiatives, the ~~Sarbanes~~Dodd-~~Oxley~~Frank Act, ~~and~~was insigned ~~order~~into tolaw ~~ensure~~by ~~compliance~~President ~~with~~Obama ~~the~~on ~~various~~July 21, ~~provisions~~2010. ofThe ~~the Sarbanes~~Dodd-~~Oxley~~Frank Act represents a comprehensive overhaul of the financial services industry within the United States, weestablishes ~~have~~the ~~evaluated~~new ~~our~~federal Bureau ~~internal~~of ~~controls~~Consumer ~~over~~Financial ~~financial~~Protection ~~reporting~~(the to“BCFP”) ~~allow~~and ~~management~~will torequire ~~report~~the onBCFP, ~~our~~the ~~internal~~FDIC, ~~controls~~the ~~systems.~~SEC ~~Among~~and other ~~things~~federal agencies to implement numerous new rules, wemany of which may not be ~~able~~implemented tofor ~~conclude~~months onor aneven ~~ongoing~~years. ~~basis~~The ~~that~~Dodd-Frank weAct and ~~have~~the ~~effective internal~~resulting ~~controls~~regulations ~~over~~will ~~financial~~significantly ~~reporting~~impact inthe ~~accordance~~current ~~with~~regulatory ~~Section 404.~~structure ~~Any~~and ~~failure~~affect tothe ~~comply~~lending, ~~with~~deposit, ~~the~~investment, ~~various~~trading ~~requirements~~and operating activities of financial institutions. At this time, it is difficult to predict the ~~Sarbanes~~extent to which the Dodd-~~Oxley~~Frank Act or the resulting regulations will impact our business. However, compliance with these new laws and regulations may ~~require~~result ~~significant~~in ~~management~~additional ~~time~~cost and expenses, ~~and~~which ~~divert~~may ~~attention~~impact orour ~~resources away~~results ~~from~~of ~~our~~operations, ~~core~~financial ~~business~~condition or liquidity.

~~Beginning~~We ~~with~~are ~~the~~devoting ~~fiscal~~resources ~~year~~to ~~ending~~comply ~~September 25,~~with ~~2010,~~various ~~our~~provisions ~~independent~~of ~~registered~~the ~~public accounting~~Sarbanes-Oxley ~~firm~~Act, ~~will~~including beSection 404 ~~required~~relating to ~~attest to our~~ internal controls ~~systems~~testing, and this may ~~not~~reduce bethe ~~able~~resources orwe ~~willing~~have available to ~~issue~~focus aon ~~favorable assessment of~~ our ~~internal~~core ~~controls over financial reporting~~business.

WeFor fiscal year ended September 25, 2010, we are ~~controlled~~subject byto the ~~Martin~~requirements ~~family~~of Section 404(A) of the Sarbanes-Oxley Act, and doin order to ensure compliance with the various provisions of the Sarbanes-Oxley Act, we have evaluated our internal controls over financial reporting to allow management to report on our internal controls systems. Among other things, we may not be able to conclude on an ongoing basis that we have ~~any~~effective ~~independent~~internal ~~board~~controls ~~members~~over ~~overseeing~~financial reporting in accordance with Section 404. Any failure to comply with the various requirements of the Sarbanes-Oxley Act, may require significant management time and expenses, and divert attention or resources away from our ~~operations~~core business.

~~Our~~13 board of directors consists of Bradley D. Bellville, our President, and Jefferey V. Martin. We do not have any independent directors on our board. In addition, The Vance R. Martin Family Trust owns a majority of the outstanding shares of our voting capital stock. While W. Derek Martin, our former Chairman, is no longer an officer or actively involved in our operations, he serves as the sole trustee of the Trust. Therefore, the Martin family will be able to exercise significant control over our affairs, including the election of directors.

~~Index~~We toare ~~Financial~~controlled ~~Statements~~by Bradley D. Bellville and do not have any independent board members overseeing our operations.

~~Item~~Our 2board of directors consists of Bradley D. ~~Properties:~~Bellville, our President, and Jefferey V. Martin. We do not have any independent directors on our board. In addition, Mr. Bellville owns a majority of the outstanding shares of our voting capital stock. Therefore, Mr. Bellville will be able to exercise significant control over our affairs, including the election of directors.

AsItem ~~of the date of this report, we lease all 102 of our branch office locations, the three used car lots and our corporate headquarters in Bainbridge, Georgia~~2. Martin Family Group, LLLP owns and leases to us the real estate for thirteen of these branch office locations, one used car lot and our corporate headquarters. One of our shareholders is the president of Martin Investments, Inc. which is the managing general partner of Martin Family Group LLLP. In addition, Martin Sublease, L.L.C. leases from the owners, and subleases to us, 53 of these branch office locations and two used car lots. Properties:

~~Item~~As 3of the date of this report, we lease all 91 of our branch office locations, the two used car lots and our corporate headquarters in Bainbridge, Georgia. ~~Legal~~Martin ~~Proceedings:~~Family Group, LLLP owns and leases to us the real estate for thirteen of these branch office locations, one used car lot and our corporate headquarters. A former shareholder is the president of Martin Investments, Inc. which is the managing general partner of Martin Family Group LLLP. In addition, Martin Sublease, L.L.C. leases from the owners, and subleases to us, 37 of these branch office locations, one used car lot, and one auto finance collection office.

AsItem of the date of this report, neither we nor any of our officers or directors is a party to, and none of our property is presently the subject of, any pending or threatened legal proceeding or proceeding by a governmental authority that could have a material adverse effect on our business3. WeLegal ~~are a party to litigation and other contingent assets and liabilities arising in the normal course of business.~~ Proceedings:

~~Item~~As 4.of the ~~Submission~~date of ~~Matters~~this report, neither we nor any of our officers or directors is a party to, and none of our property is presently the subject of, any pending or threatened legal proceeding or proceeding by a ~~Vote~~governmental authority that could have a material adverse effect on our business. We are a party to litigation and other contingent assets and liabilities arising in the normal course of ~~Security~~business. ~~Holders:~~

NoItem ~~matters~~4. ~~were~~(Removed ~~submitted~~and ~~to a vote of the security holders during the quarter ended September 25, 2009~~Reserved).

~~Index~~PART toII ~~Financial Statements~~

~~PART~~Item II5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities:

~~Item~~Not 5applicable. ~~Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities:~~

~~Not~~Item ~~applicable~~6. Selected Financial Data:

~~Item~~The 6.following ~~Selected~~selected consolidated financial data should be read in conjunction with “Management’s Discussion and Analysis of Financial ~~Data:~~Condition and Results of Operations” and our audited consolidated financial statements and related notes included elsewhere in this report. The selected consolidated balance sheet data, as of September 25, 2010 and 2009, and the selected consolidated statement of operations data, for the fiscal years ended September 25, 2010 and 2009, have been derived from our audited consolidated financial statements and related notes included in this report. The selected consolidated balance sheet data, as of September 25, 2008, 2007, and 2006, and the selected consolidated statement of operations data, for the fiscal year ended September 25, 2008, 2007 and 2006, have been derived from our audited financial statements that are not included in this report.

~~The~~15 following selected consolidated financial data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our audited consolidated financial statements and related notes included elsewhere in this report. The selected consolidated balance sheet data, as of September 25, 2009 and 2008, and the selected consolidated statement of operations data, for the fiscal years ended September 25, 2009, 2008 and 2007, have been derived from our audited consolidated financial statements and related notes included in this report. The selected consolidated balance sheet data, as of September 25, 2007, 2006, and 2005, and the selected consolidated statement of operations data, for the fiscal year ended September 25, 2006 and 2005, have been derived from our audited financial statements that are not included in this report.

Index to Financial Statements


	As of, and for, the Fiscal Year Ended September 25,
	2010			2009			2008			2007			2006
Interest and fee income	$	11,807		$	15,589		$	19,280		$	19,481		$	20,048
Interest expense		(6,976	)		(7,611	)		(8,275	)		(8,026	)		(7,350	)

Net interest and fee income before provision for credit losses		4,831			7,978			11,005			11,455			12,698
Provision for credit losses		(5,682	)		(10,762	)		(13,043	)		(7,940	)		(4,718	)

Net revenue (loss) from interest and fees after provision for credit losses		(851	)		(2,784	)		(2,038	)		3,515			7,980
Insurance commissions		5,032			8,354			9,615			10,120			11,263
Commissions from motor club memberships⁽¹⁾		1,371			1,602			1,844			1,947			1,957
Delinquency fees		1,326			1,561			1,720			1,776			1,565
Income tax service income⁽²⁾		—			—			—			3			83
Other income		401			530			647			748			689

Net revenues before retail sales		7,279			9,263			11,788			18,109			23,537
Retail sales		9,419			16,019			17,164			19,002			17,972
Cost of sales		(5,840	)		(10,366	)		(11,131	)		(12,170	)		(11,611	)

Gross margin on retail sales		3,579			5,653			6,033			6,832			6,361
Net revenues		10,858			14,916			17,821			24,941			29,898
Operating expenses		(22,806	)		(28,278	)		(28,469	)		(27,604	)		(29,151	)

Net operating income (loss)		(11,948	)		(13,362	)		(10,468	)		(2,663	)		747
Other non-operating income		—			—			—			—			151
Loss on sale of property and equipment		(187	)		(11	)		(21	)		(19	)		(75	)

Income (loss) before income tax benefit (expense)		(12,135	)		(13,373	)		(10,669	)		(2,682	)		823
Income tax benefit (expense)		—			438			682			(1,109	)		(274	)

Net income (loss)	$	(12,135	)	$	(12,935	)	$	(9,987	)	$	(3,791	)	$	549

Ratio of earnings to fixed charges⁽³⁾			⁽⁴⁾			⁽⁴⁾			⁽⁴⁾			⁽⁴⁾		1.10

Cash and cash equivalents	$	2,115		$	2,922		$	12,541		$	17,854		$	12,920
Finance receivables⁽⁵⁾		42,319			56,281			68,601			72,276			73,178
Allowance for credit losses		(6,871	)		(8,925	)		(8,814	)		(5,150	)		(2,275	)

Finance receivables, net		35,448			47,356			59,787			67,126			70,903
Other receivables		493			717			957			861			1,013
Inventory		1,202			2,202			3,167			3,057			2,195
Property and equipment, net		3,369			4,227			4,906			4,220			4,581
Total assets		43,226			59,254			83,857			95,862			95,732
Senior debt		165			327			695			512			669
Senior subordinated debt		—			—			—			—			600
Subordinated debt, related parties		—			—			—			—			370
Debentures⁽⁶⁾		71,227			73,603			82,209			81,861			77,910
Demand notes⁽⁶⁾		3,175			3,147			3,658			5,991			8,137
Shareholders’ deficit	$	(45,909	)	$	(33,774	)	$	(20,839	)	$	(10,852	)	$	(7,060	)

	As of, and for, the Fiscal Year Ended September 25,
	2009			2008			2007			2006			2005
Interest and fee income	$	15,589		$	19,280		$	19,481		$	20,048		$	18,843
Interest expense		(7,611	)		(8,275	)		(8,026	)		(7,350	)		(6,355	)
Net interest and fee income before provision for credit losses		7,978			11,005			11,455			12,698			12,488
Provision for credit losses		(9,630	)		(13,812	)		(4,983	)		(4,737	)		(2,768	)
Net revenue (loss) from interest and fees after provision for credit losses		(1,652	)		(2,807	)		6,472			7,961			9,720
Insurance commissions		8,354			9,615			10,120			11,263			10,490
Commissions from motor club memberships(1)		1,602			1,844			1,947			1,957			1,475
Delinquency fees		1,561			1,720			1,776			1,565			1,676
Income tax service income(2)		—			—			3			83			162
Other income		530			647			748			689			797
Net revenues before retail sales		10,395			11,019			21,066			23,518			24,320
Retail sales		16,019			17,164			19,002			17,972			15,061
Cost of sales		(10,366	)		(11,131	)		(12,170	)		(11,611	)		(9,358	)
Gross margin on retail sales		5,653			6,033			6,832			6,361			5,703
Net revenues		16,048			17,052			27,898			29,879			30,023
Operating expenses		(28,426	)		(28,469	)		(27,604	)		(29,151	)		(29,205	)
Net operating income (loss)		(12,378	)		(11,417	)		294			728			818
Other non-operating income		—			—			—			151
Loss on sale of property and equipment		(11	)		(21	)		(19	)		(75	)		(81	)
Income (loss) before income tax benefit (expense)		(12,389	)		(11,439	)		275			804			737
Income tax benefit (expense)		438			(528	)		101			(274	)		(304	)
Net income (loss)	$	(11,951	)	$	(11,966	)	$	376		$	530		$	433
Ratio of earnings to fixed charges(3)		(4	)		(4	)		1.03			1.10			1.10
Cash and cash equivalents	$	2,922		$	12,541		$	17,854		$	12,920		$	9,619
Finance receivables(5)		63,715			76,606			79,549			79,797			77,292
Allowance for credit losses		(7,432	)		(8,876	)		(3,711	)		(3,139	)		(2,632	)
Finance receivables, net		56,283			67,730			75,838			76,658			74,660
Other receivables		717			957			861			1,013			1,099
Inventory		2,202			3,167			3,057			2,195			2,402
Property and equipment, net		4,227			4,906			4,220			4,581			4,850
Total assets		68,181			91,800			105,784			101,487			96,005
Senior debt		327			695			512			669			1,186
Senior subordinated debt		—			—			—			600			1,000
Subordinated debt, related parties		—			—			—			370			800
Debentures(6)		73,603			82,209			81,861			77,910			68,905
Demand notes(6)		3,147			3,658			5,991			8,137			12,867
Shareholders’ deficit	$	(24,847	)	$	(12,896	)	$	(930	)	$	(1,305	)	$	(1,835	)

⁽¹⁾	Received from Interstate Motor Club, Inc., an affiliated entity.

(12) Received from ~~Interstate~~Cash ~~Motor~~Check ~~Club,~~ Inc. of Ga., an affiliated entity.

(23) ~~Received~~The ~~from~~ratio ~~Cash~~of ~~Check~~earnings ~~Inc.~~to fixed charges represents the number of Gatimes fixed charges are covered by earnings. For purposes of this ratio, “earnings” is determined by adding pre-tax income to “fixed charges,” which consists of interest on all indebtedness and an ~~affiliated~~interest ~~entity~~factor attributable to rent expense.

(34) ~~The~~Calculation ~~ratio~~results ofin ~~earnings~~a todeficiency ~~fixed~~in ~~charges represents~~ the ~~number~~ratio of(i.e., ~~times~~less ~~fixed~~than ~~charges~~one-to-one ~~are covered by earnings~~coverage). ~~For~~The ~~purposes~~deficiency ofin ~~this ratio, “~~earnings” isto ~~determined~~cover byfixed ~~adding~~charges ~~pre-tax~~was ~~income~~$12,134,947, to$13,372,623; ~~“fixed charges~~$10,”669,231; ~~which~~and ~~consists~~$2,682,314 offor ~~interest~~the onyears ~~all~~ended ~~indebtedness~~September ~~and~~25, an2010, ~~interest~~2009, ~~factor~~2008, ~~attributable~~and to2007, ~~rent expense~~respectively.

(45) ~~Calculation~~Net ~~results~~of inunearned ainsurance ~~deficiency in the ratio (i.e.~~commissions, ~~less~~unearned ~~than~~finance ~~one-to-one coverage). The deficiency in earnings to cover fixed~~ charges ~~was $12,388,726 for the year ended September 25, 2009~~ and ~~$11,438,560~~unearned ~~for the year ended September 25, 2008~~discounts.

(56) ~~Net~~Issued, ofin ~~unearned~~part, ~~insurance~~by ~~commissions~~our subsidiary, ~~unearned~~The ~~finance~~Money ~~charges~~Tree ~~and~~of ~~unearned~~Georgia ~~discounts~~Inc. See Note 7 to our consolidated audited financial statements for the year ended September 25, 2010.

~~(6)~~16 ~~Issued, in part, by our subsidiary, The Money Tree of Georgia Inc. See Note 7 to our consolidated audited financial statements for the year ended September 25, 2009.~~

~~Index~~Item to7. Management’s Discussion and Analysis of Financial ~~Statements~~Condition and Results of Operations

~~Item~~Overview ~~7. Management’s Discussion and Analysis of Financial Condition and Results of Operations~~

~~The~~We ~~following~~make ~~discussion~~consumer ~~should~~finance beloans ~~read~~and provide other financial products and services through our branch offices in ~~conjunction~~Georgia, ~~with~~Alabama, ~~the~~Louisiana ~~information~~and ~~under~~Florida. ~~“Selected~~We ~~Consolidated~~sell ~~Financial~~retail ~~Data”~~merchandise, principally furniture, appliances and electronics, at certain of our ~~audited~~ ~~consolidated~~branch ~~financial~~office ~~statements~~locations and ~~related~~operate ~~notes~~two ~~and~~used ~~other~~automobile dealerships ~~financial~~in ~~data~~the ~~included~~State ~~elsewhere~~of inGeorgia. ~~this~~We ~~report~~also offer insurance products, prepaid phone services and automobile club memberships to our loan customers.

~~Overview~~We fund our consumer loan demand through a combination of cash collections from our consumer loans, proceeds raised from the sale of debentures and demand notes and loans from various banks and other financial institutions. Our consumer loan business consists of making, purchasing and servicing direct consumer loans, consumer sales finance contracts and motor vehicle installment sales contracts. Direct consumer loans generally serve individuals with limited access to other sources of consumer credit, such as banks, savings and loans, other consumer finance businesses and credit cards. Direct consumer loans are general loans made typically to people who need money for some unusual or unforeseen expense, for the purpose of paying off an accumulation of small debts or for the purchase of furniture and appliances. Consumer sales finance contracts consist of retail installment sales contracts for purchases of specific consumer goods by customers either from our branch locations or from a retail store and are collateralized by such consumer goods. Motor vehicle installment sales contracts are initiated by us or purchased from automobile dealers subject to our credit approval and are collateralized by such automobiles. The following table sets forth certain information about the components of our finance receivables:

We make consumer finance loans and provide other financial products and services through our branch offices in Georgia, Alabama, Louisiana and Florida. We sell retail merchandise, principally furniture, appliances and electronics, at certain of our branch office locations and operate three used automobile dealerships in the State of Georgia. We also offer insurance products, prepaid phone services and automobile club memberships to our loan customers.


*Description of Loans and Contracts*
	As of, or for, the Year Ended September 25,
	2010			2009
*Direct Consumer Loans:*
Number of Loans Made to New Borrowers		23,075			33,045
Number of Loans Made to Former Borrowers		57,651			64,774
Number of Loans Made to Existing Borrowers		45,653			50,504
Total Number of Loans Made		126,379			148,323
Total Volume of Loans Made	$	36,677,415		$	48,940,971
Average Size of Loans Made	$	290		$	330
Number of Loans Outstanding		36,715			47,619
Total of Loans Outstanding	$	14,790,670		$	20,098,661
Percent of Loans Outstanding		29.8	%		30.0	%
Average Balance on Outstanding Loans	$	403		$	422

We17 fund our consumer loan demand through a combination of cash collections from our consumer loans, proceeds raised from the sale of debentures and demand notes and loans from various banks and other financial institutions. Our consumer loan business consists of making, purchasing and servicing direct consumer loans, consumer sales finance contracts and motor vehicle installment sales contracts. Direct consumer loans generally serve individuals with limited access to other sources of consumer credit, such as banks, savings and loans, other consumer finance businesses and credit cards. Direct consumer loans are general loans made typically to people who need money for some unusual or unforeseen expense, for the purpose of paying off an accumulation of small debts or for the purchase of furniture and appliances. Please see “Business” for a more detailed discussion of the various types of loans we make to our customers. The following table sets forth certain information about the components of our finance receivables:

Description of Loans and Contracts
	As of, or for, the Year Ended September 25,
	2009			2008			2007
Direct Consumer Loans:
Number of Loans Made to New Borrowers		33,045			27,770			20,838
Number of Loans Made to Former Borrowers		64,774			57,862			55,117
Number of Loans Made to Existing Borrowers		50,504			85,329			110,364
Total Number of Loans Made		148,323			170,961			186,319
Total Volume of Loans Made	$	48,940,971		$	66,766,194		$	73,350,400
Average Size of Loans Made	$	330		$	391		$	394
Number of Loans Outstanding		52,684			66,862			76,284
Total of Loans Outstanding*	$	22,257,244		$	34,859,944		$	40,719,291
Percent of Loans Outstanding		32.9	%		42.3	%		46.6	%
Average Balance on Outstanding Loans	$	422		$	521		$	534

~~Index~~Description toof ~~Financial~~Loans ~~Statements~~and Contracts

Description of Loans and Contracts
	As of, or for, the Year Ended September 25,
	As of, or for, the Year Ended September 25,
	2010			2009
	2009			2008			2007
Motor Vehicle Installment Sales Contracts:
Motor Vehicle Installment Sales Contracts:
Total Number of Contracts Made		415			775
Total Number of Contracts Made		775			763			977
Total Volume of Contracts Made	$	6,929,116		$	14,097,733
Total Volume of Contracts Made	$	14,097,733		$	14,217,234		$	17,965,678
Average Size of Contracts Made	$	16,697		$	18,191
Average Size of Contracts Made	$	18,191		$	18,633		$	18,389
Number of Contracts Outstanding		2,330			2,742
Number of Contracts Outstanding		2,742			2,726			2,798
Total of Contracts Outstanding	$	22,584,170		$	30,151,923
Total of Contracts Outstanding*	$	30,151,923		$	30,707,329		$	32,259,968
Percent of Total Loans and Contracts		45.6	%		45.1	%
Percent of Total Loans and Contracts		44.6	%		37.3	%		36.9	%
Average Balance on Outstanding Contracts	$	9,693		$	10,996
Average Balance on Outstanding Contracts	$	10,996		$	11,265		$	11,530
Consumer Sales Finance Contracts:
Consumer Sales Finance Contracts:
Number of Contracts Made to New Customers		1,461			2,241
Number of Contracts Made to New Customers		2,241			865			137
Number of Loans Made to Former Customers		33			68
Number of Loans Made to Former Customers		68			3,161			2,684
Number of Loans Made to Existing Customers		2,736			3,112
Number of Loans Made to Existing Customers		3,112			3,211			3,120
Total Contracts Made		4,230			5,421
Total Contracts Made		5,421			7,237			5,941
Total Volume of Contracts Made	$	12,938,677		$	17,046,757
Total Volume of Contracts Made	$	17,046,757		$	18,883,178		$	16,869,906
Number of Contracts Outstanding		5,682			7,242
Number of Contracts Outstanding		6,596			7,532			7,067
Total of Contracts Outstanding	$	12,192,962		$	16,663,172
Total of Contracts Outstanding*	$	15,176,373		$	16,793,743		$	14,466,682
Percent of Total Loans and Contracts		24.6	%		24.9	%
Percent of Total Loans and Contracts		22.5	%		20.4	%		16.5	%
Average Balance of Outstanding Contracts	$	2,146		$	2,301
Average Balance of Outstanding Contracts	$	2,301		$	2,230		$	2,047

*Below ~~Contracts~~is ~~outstanding~~a ~~are~~table ~~exclusive~~showing ofour ~~the~~total gross ~~following~~outstanding ~~aggregate~~finance ~~amounts of bankrupt accounts~~receivables: ~~$6,762,101 for the year ended September 25, 2009; $6,794,358 for the year ended September 25, 2008; and $6,115,375 for the year ended September 25, 2007.~~

Below is a table showing our total gross outstanding finance receivables and bankrupt accounts:


	September 25, 2010		September 25, 2009
*Total Loans and Contracts Outstanding (gross):*
Direct Consumer Loans	$	14,790,670	$	20,098,661
Motor Vehicle Installment		22,584,170		30,151,923
Consumer Sales Finance		12,192,962		16,663,172

Total Gross Outstanding	$	49,567,802	$	66,913,756

	September 25,2009		September 25,2008		September 25,2007
Total Loans and Contracts Outstanding (gross):
Direct Consumer Loans	$	22,257,244	$	34,859,944	$	40,719,291
Motor Vehicle Installment		30,151,923		30,707,329		32,259,968
Consumer Sales Finance		15,176,373		16,793,743		14,466,682
Bankrupt Accounts		6,762,101		6,794,358		6,115,375
Total Gross Outstanding	$	74,347,641	$	89,155,374	$	93,561,316

~~Index~~Below is a roll-forward of the balance of each category of our outstanding finance receivables. Loans originated reflect the gross amount of loans made or purchased during the period presented inclusive of pre-computed interest, fees and insurance premiums. Collections represent cash receipts in the form of repayments made on our loans as reflected in our Consolidated Statements of Cash Flows. Refinancings represent the amount of the pay off of loans refinanced. Charge-offs represent the gross amount of loans charged off as uncollectible. Rebates/other adjustments primarily represent reductions to gross loan amounts of precomputed interest and insurance premiums resulting from loans refinanced and other loans paid off before maturity. See “Summary of Significant Accounting Policies – Income Recognition” in Note 2 to our Consolidated Financial Statements for further discussion related to rebates of interest.

Below is a roll-forward of the balance of each category of our outstanding finance receivables. Loans originated reflect the gross amount of loans made or purchased during the period presented inclusive of pre-computed interest, fees and insurance premiums. Collections represent cash receipts in the form of repayments made on our loans as reflected in our Consolidated Statements of Cash Flows. Refinancings represent the amount of the pay off of loans refinanced. Charge-offs represent the gross amount of loans charged off as uncollectible (charge-offs are shown net of non-filing insurance receipts in our Allowance for Credit Losses). Rebates represent reductions to gross loan amounts of precomputed interest and insurance premiums resulting from loans refinanced and other loans paid off before maturity. See “Summary of Significant Accounting Policies – Income Recognition” in Note 2 to our Consolidated Financial Statements for further discussion related to rebates of interest. Other adjustments primarily represent accounts transferred to and from the department that administers bankrupt accounts.


	Fiscal Year Ended September 25, 2010			Fiscal Year Ended September 25, 2009
*Direct Consumer Loans:*
Balance – beginning	$	20,098,661		$	33,068,727
Loans originated		36,677,415			48,940,971
Collections		(29,344,478	)		(40,671,119	)
Refinancings		(8,460,573	)		(10,912,645	)
Charge-offs, gross		(5,447,963	)		(8,589,238	)
Rebates/other adjustments		1,267,608			(1,738,035	)

Balance – end	$	14,790,670		$	20,098,661

*Consumer Sales Finance Contracts:*
Balance – beginning	$	16,663,172		$	17,373,830
Loans originated		12,938,677			17,046,757
Collections		(7,272,223	)		(7,760,796	)
Refinancings		(4,685,942	)		(5,635,286	)
Charge-offs, gross		(2,519,125	)		(3,966,748	)
Rebates/other adjustments		(2,931,597	)		(394,585	)

Balance – end	$	12,192,962		$	16,663,172

*Motor Vehicle Installment Sales Contracts:*
Balance – beginning	$	30,151,923		$	30,707,329
Loans originated		6,929,116			14,097,733
Collections		(10,538,981	)		(11,502,246	)
Refinancings		—			—
Charge-offs, gross		(1,942,229	)		(1,768,170	)
Rebates/other adjustments		(2,015,659	)		(1,382,723	)

Balance – end	$	22,584,170		$	30,151,923

*Total:*
Balance – beginning	$	66,913,756		$	81,149,886
Loans originated		56,545,208			80,085,461
Collections		(47,155,682	)		(59,934,161	)
Refinancings		(13,146,515	)		(16,547,931	)
Charge-offs, gross		(9,909,317	)		(14,324,156	)
Rebates/other adjustments		(3,679,648	)		(3,515,343	)

Balance – end	$	49,567,802		$	66,913,756

~~Index~~Below is a reconciliation of the amounts of the finance receivables originated and repaid (collections) from the receivable roll-forward to ~~Financial~~the amounts shown in our Consolidated Statements of Cash Flows.

	Fiscal YearEndedSeptember 25,2009			Fiscal YearEndedSeptember 25,2008			Fiscal YearEndedSeptember 25,2007
	Fiscal YearEndedSeptember 25,2010			Fiscal YearEndedSeptember 25,2009
Direct Consumer Loans:
Finance Receivables Originated:
Balance – beginning	$	34,859,944		$	40,719,291		$	46,071,669
Direct consumer loans	$	36,677,415		$	48,940,971
Loans originated		48,940,971			66,766,194			73,350,400
Consumer sales finance		12,938,677			17,046,757
Collections		(40,671,119	)		(47,076,723	)		(52,252,511	)
Motor vehicle installment sales		6,929,116			14,097,733
Refinancings		(10,912,645	)		(14,791,503	)		(18,154,981	)
Total gross loans originated		56,545,208			80,085,461
Charge-offs, gross		(7,228,663	)		(7,357,665	)		(4,066,752	)
Non-cash items included in gross finance receivables*		(14,663,008	)		(21,745,038	)
Rebates/other adjustments		(2,731,244	)		(3,399,650	)		(4,228,534	)
Finance receivables originated – cash flows**	$	41,882,200		$	58,340,423
Balance – end	$	22,257,244		$	34,859,944		$	40,719,291
Loans Repaid:
Consumer Sales Finance Contracts:
Collections
Balance – beginning	$	16,793,743		$	14,466,682		$	11,813,566
Direct consumer loans	$	29,344,478		$	40,671,119
Loans originated		17,046,757			18,883,178			16,869,906
Consumer sales finance		7,272,223			7,760,796
Collections		(7,760,796	)		(7,267,346	)		(6,058,209	)
Motor vehicle installment sales		10,538,981			11,502,246
Refinancings		(5,635,286	)		(5,460,970	)		(4,993,560	)
Finance receivables repaid – cash flows	$	47,155,682		$	59,934,161
Charge-offs, gross		(3,383,645	)		(1,862,589	)		(1,110,556	)
Rebates/other adjustments		(1,884,400	)		(1,965,212	)		(2,054,465	)
Balance – end	$	15,176,373		$	16,793,743		$	14,466,682
Motor Vehicle Installment Sales Contracts:
Balance – beginning	$	30,707,329		$	32,259,968		$	31,280,840
Loans originated		14,097,733			14,217,234			17,965,678
Collections		(11,502,246	)		(13,286,462	)		(14,469,121	)
Refinancings		—			—			—
Charge-offs, gross		(1,768,170	)		(1,370,165	)		(1,185,753	)
Rebates/other adjustments		(1,382,723	)		(1,113,246	)		(1,331,676	)
Balance – end	$	30,151,923		$	30,707,329		$	32,259,968
Total Active Accounts:
Balance – beginning	$	82,361,016		$	87,445,941		$	89,166,075
Loans originated		80,085,461			99,866,606			108,185,984
Collections		(59,934,161	)		(67,630,531	)		(72,779,841	)
Refinancings		(16,547,931	)		(20,252,473	)		(23,148,541	)
Charge-offs, gross		(12,380,478	)		(10,590,419	)		(6,363,061	)
Rebates/other adjustments		(5,998,367	)		(6,478,108	)		(7,614,675	)
Balance – end	$	67,585,540		$	82,361,016		$	87,445,941
Total Bankrupt Accounts:
Balance – beginning	$	6,794,358		$	6,115,375		$	5,618,931
Charge-offs, gross		(1,782,967	)		(778,169	)		(790,514	)
Adjustments		1,750,710			1,457,152			1,286,958
Balance – end	$	6,762,101		$	6,794,358		$	6,115,375
Total Gross O/S Receivables	$	74,347,641		$	89,155,374		$	93,561,316

20* Includes precomputed interest and fees (since these amounts are included in the gross amount of finance receivables originated but are not advanced in the form of cash to customers) and refinanced receivable balances (since there is no cash generated from the repayment of original receivables refinanced).

**	Includes amounts advanced to customers in conjunction with refinancings, which were $4,414,821 for the fiscal year ended September 25, 2010 and $4,738,460 for the fiscal year ended September 25, 2009.

Segments and Seasonality

We segment our business operations into the following two segments:

•

consumer finance and sales; and

•

automotive finance and sales.

The consumer finance and sales segment is comprised primarily of small consumer loans and sales of consumer goods such as furniture, appliances and electronics. We typically experience our strongest financial performance for the consumer finance and sales segment during the holiday season, which is our first fiscal quarter ending December 25.

The automotive finance and sales segment is comprised exclusively of used vehicle sales and their related financing. We typically experience our strongest financial performance for the automotive finance and sales segment during our second fiscal quarter ending March 25 when demand for used cars is at the highest. Please refer to Note 16 in the “Notes to Consolidated Financial Statements” for a breakdown of our operations by segment.

Net Interest Margin

A principal component of our profitability is our net interest margin, which is the difference between the interest that we earn on finance receivables and the interest that we pay on borrowed funds. In some states, statutes regulate the interest rates that we may charge our customers, while, in other locations, competitive market conditions establish interest rates that we may charge. Differences also exist in the interest rates that we earn on the various components of our finance receivable portfolio.

~~Index~~Unlike our interest income, our interest expense is sensitive to ~~Financial~~general ~~Statements~~market interest rate fluctuations. These general market fluctuations directly impact our cost of funds. Our generally limited ability to increase the interest rates earned on new and existing finance receivables restricts our ability to react to increases in our cost of funds. Accordingly, increases in market interest rates generally will narrow our interest rate spread and lower our profitability, while decreases in market interest rates generally will widen our interest rate spread and increase our profitability. Significant increases in market interest rates will likely result in a reduction in our liquidity and profitability and impair our ability to pay interest and principal on the debentures.

~~Below~~The isdecrease in the net interest margin for the fiscal year ended September 25, 2010 was a ~~reconciliation~~result primarily of the ~~amounts~~reduction ofin outstanding loans, but was also affected by the suppressed average rate earned on outstanding finance receivables. ~~originated~~Our ~~and~~liquidity ~~repaid~~issues have caused us to tighten our lending guidelines which resulted in a significant decrease our direct consumer ~~(collections)~~loans. ~~from~~While ~~the~~we ~~receivable~~experienced ~~roll-forward~~decreases in consumer sales finance contracts and motor vehicle installment contracts, these contracts have longer terms and generally yield a lower interest rate as compared to ~~the~~direct ~~amounts~~consumer ~~shown~~loans. We also saw a slight decrease in the average interest rate paid on our ~~Consolidated~~debt ~~Statements~~in fiscal year 2010 as a result of ~~Cash~~higher ~~Flows~~rates paid on short-term borrowings during fiscal year 2009.

	Fiscal YearEndedSeptember 25,2009			Fiscal YearEndedSeptember 25,2008			Fiscal YearEndedSeptember 25,2007
Finance Receivables Originated:
Direct consumer loans	$	48,940,971		$	66,766,194		$	73,350,400
Consumer sales finance		17,046,757			18,883,178			16,869,906
Motor vehicle installment sales		14,097,733			14,217,234			17,965,678
Total gross loans originated		80,085,461			99,866,606			108,185,984
Non-cash items included in gross finance receivables*		(21,745,038	)		(26,531,233	)		(31,243,362	)
Finance receivables originated – cash flows**	$	58,340,423		$	73,335,373		$	76,942,622
Loans Repaid:
Collections
Direct consumer loans	$	40,671,119		$	47,076,723		$	52,252,512
Consumer sales finance		7,760,796			7,267,346			6,058,208
Motor vehicle installment sales		11,502,246			13,286,462			14,469,121
Finance receivables repaid – cash flows	$	59,934,161		$	67,630,531		$	72,779,841

The following table presents important data relating to our net interest margin:

* Includes precomputed interest and fees (since these amounts are included in the gross amount of finance receivables originated but are not advanced in the form of cash to customers) and refinanced receivable balances (since there is no cash generated from the repayment of original receivables refinanced).


	As of, or for, the Year Ended September 25,
	2010			2009
Average net finance receivables ⁽¹⁾	$	49,622,105		$	63,341,575
Average notes payable ⁽²⁾	$	74,549,637		$	78,753,900

Interest income	$	8,647,721		$	11,506,002
Loan fee income		3,159,787			4,083,072

Total interest and fee income		11,807,508			15,589,074
Interest expense		6,976,265			7,611,185

Net interest and fee income before provision for credit losses	$	4,831,243		$	7,977,889
Average interest rate earned		23.8	%		24.6	%
Average interest rate paid		9.4	%		9.7	%
Net interest rate spread		14.4	%		14.9	%
Net interest margin ⁽³⁾		9.7	%		12.6	%

**(1) ~~Includes~~Averages ~~amounts~~are ~~advanced~~computed tousing ~~customers~~month-end inbalances ~~conjunction~~of ~~with~~finance ~~refinancings,~~receivables ~~which~~(net ~~were~~of $4unearned interest/fees,~~738,460~~ ~~for~~insurance ~~the~~commissions, ~~fiscal~~and ~~year~~unearned ~~ended~~discounts) ~~September~~during ~~25,~~the ~~2009;~~year ~~$10,545,399~~presented. ~~for~~Net ~~the~~finance ~~fiscal~~receivables ~~year~~for ~~ended~~this ~~September~~purpose ~~25,~~include ~~2008;~~all ~~and~~outstanding ~~$10~~finance receivables,~~545,399~~ ~~for~~including ~~the~~accounts ~~fiscal~~in ~~year~~non-accrual ~~ended September 25, 2007~~status.

~~Segments~~ (2) Averages are computed using month-end balances of interest bearing debt (including senior debt, senior subordinated debt, subordinated debt to related parties, debentures and ~~Seasonality~~demand notes) during the year presented.

We(3) ~~segment~~Net ~~our~~interest ~~business~~margin ~~operations~~represents ~~into~~net interest and fee income (before the ~~following~~provision ~~two~~for ~~segments:~~credit losses) divided by average net finance receivables.

•21 ~~consumer finance and sales; and~~

• automotive finance and sales.

The automotive finance and sales segment is comprised exclusively of used vehicle sales and their related financing. We typically experience our strongest financial performance for the automotive finance and sales segment during our second fiscal quarter ending March 25 when used car sales are the highest. Please refer to Note 16 in the “Notes to Consolidated Financial Statements” for a breakdown of our operations by segment.

~~Index~~Rate/Volume toAnalysis ~~Financial Statements~~

~~Net~~The ~~Interest~~following ~~Margin~~table sets forth the effects of changing rates and volumes on our net interest income. Information is provided with respect to: (i) effects on interest income attributable to changes in volume (changes in volume multiplied by prior rate), (ii) effects on interest income attributable to changes in rate (changes in rate multiplied by prior volume), and (iii) changes in rate/volume (change in rate multiplied by change in volume).


	Increase (Decrease) Due to
	Volume						Rate						Rate/Volume						Total net increase (decrease)
	9/25/10			9/25/09			9/25/10			9/25/09			9/25/10			9/25/09			9/25/10			9/25/09
Earning assets:
Interest income on finance receivables:	$	(3,269,835	)	$	(2,517,649	)	$	(407,752	)	$	(1,005,772	)	$	(103,979	)	$	(167,574	)	$	(3,781,566	)	$	(3,690,995	)

Interest bearing liabilities:
Debentures & demand notes		(305,961	)		(874,693	)		(213,737	)		131,167			(9,466	)		(15,990	)		(529,164	)		(759,516	)
Other debt		(132,108	)		3,582			8,938			93,744			17,414			(1,935	)		(105,756	)		95,391

Total interest expense		(438,069	)		(871,111	)		(204,799	)		224,911			7,948			(17,925	)		(634,920	)		(664,125	)

Net interest income	$	(2,831,766	)	$	(1,646,538	)	$	(202,953	)	$	(1,230,683	)	$	(111,927	)	$	(149,649	)	$	(3,146,646	)	$	(3,026,870	)

~~Unlike~~Return our interest income, our interest expense is sensitive to general market interest rate fluctuations. These general market fluctuations directly impact our cost of funds. Our generally limited ability to increase the interest rates earned on ~~new~~Deficit and ~~existing~~Assets finance receivables restricts our ability to react to increases in our cost of funds. Accordingly, increases in market interest rates generally will narrow our interest rate spread and lower our profitability, while decreases in market interest rates generally will widen our interest rate spread and increase our profitability. Significant increases in market interest rates will likely result in a reduction in our liquidity and profitability and impair our ability to pay interest and principal on the debentures. See “Quantitative and Qualitative Disclosures About Market Risk” below.

~~The~~Below ~~decrease~~is ina ~~the~~table ~~net~~showing ~~interest~~certain ~~margin~~performance ratios for the fiscal ~~year~~years ended September 25, ~~2009~~2010 ~~was a result primarily of the suppressed average rate earned on outstanding finance receivables. Our liquidity issues have caused us to tighten our lending guidelines~~ and ~~significantly decrease our direct consumer loans, while we experienced only slight decreases in consumer sales finance contracts and motor vehicle installment contracts~~2009. These ~~contracts generally~~ratios ~~yield~~are atypically ~~lower~~reported ~~interest~~by ~~rate~~financial asinstitutions ~~compared to direct consumer loans. We also saw a slight increase~~ in ~~the~~connection ~~average~~with ~~interest~~their annual ~~paid~~financial ~~on our debt as a result of higher rates paid on short-term borrowings during fiscal year 2009~~performance.

The following table presents important data relating to our net interest margin:


Performance Ratios⁽¹⁾	2010			2009
Return on average assets ⁽²⁾		-24.3	%		-17.2	%
Return on average shareholders’ deficit ⁽³⁾		-29.3	%		-64.7	%
Average deficit to average assets ratio ⁽⁴⁾		-82.9	%		-26.5	%

	As of, or for, the Year Ended September 25,
	2009			2008			2007
Average net finance receivables (1)	$	70,353,355		$	79,929,788		$	79,247,445
Average notes payable (2)	$	78,753,900		$	87,985,623		$	87,680,692
Interest income	$	11,506,002		$	14,211,519		$	14,742,029
Loan fee income		4,083,072			5,068,550			4,738,711
Total interest and fee income		15,589,074			19,280,069			19,480,740
Interest expense		7,611,185			8,275,310			8,025,969
Net interest and fee income before provision for credit losses	$	7,977,889		$	11,004,759		$	11,454,771
Average interest rate earned		22.5	%		24.1	%		24.6	%
Average interest rate paid		9.7	%		9.4	%		9.2	%
Net interest rate spread		12.8	%		14.7	%		15.4	%
Net interest margin (3)		11.6	%		13.8	%		14.5	%

⁽¹⁾	Averages are computed using quarter end balances.

(12) ~~Averages~~Calculated ~~are~~as ~~computed using month-end balances of finance receivables (~~net ofincome ~~unearned~~divided ~~interest/fees,~~by ~~insurance~~average ~~commissions,~~total ~~and~~assets ~~unearned discounts)~~ during the ~~year~~fiscal ~~presented~~year. ~~Net finance receivables for this purpose include all outstanding finance receivables, including accounts in bankruptcy and non-accrual status.~~

(23) ~~Averages~~Calculated ~~are~~as ~~computed~~net ~~using~~income ~~month-end~~divided ~~balances~~by ofaverage ~~interest~~shareholders’ ~~bearing~~deficit ~~debt (including senior debt, senior subordinated debt, subordinated debt to related parties, debentures and demand notes)~~ during the ~~year~~fiscal ~~presented~~year.

(34) ~~Net~~Calculated ~~interest~~as ~~margin~~average ~~represents~~shareholders’ ~~net~~deficit ~~interest~~divided ~~and~~by ~~fee~~average ~~income~~total ~~(net~~assets ofduring the ~~provision~~fiscal ~~for credit losses) divided by average net finance receivables~~year.

22Analysis of Allowance for Credit Losses

At the end of each reporting period, management is required to take a “snapshot” of the risk of probable losses inherent in the finance receivables portfolio and to reflect that risk in our allowance calculations. We use a systematic approach to calculate the allowance for credit losses whereby we apply historical charge-off benchmarks to groups of loans and then adjust (either positively or negatively), as and if applicable, for relevant factors. This method prevents the calculation from becoming simply a mathematical exercise, but instead addresses matters affecting loan collectibility. Historically, the relevant items impacting our allowance have included, but are not limited to, a variety of factors, such as loan loss experience, borrowers’ ability to repay, collateral considerations and non-file insurance recoveries, levels of and trends in delinquencies, effects of any changes in risk selection and lending policies and practices, and general economic conditions impacting our portfolio. See “Risk Factors – We suffered significant credit losses in 2010 due to continued weak economic conditions, and there is no guarantee that such credit losses will not continue during this downturn in the economy or that our operations and profitability will not continue to be negatively affected.”

In the first step of our approach, a benchmark percentage is calculated based on historical ratios of charge-offs to average notes receivable. This percentage is derived by dividing the net amount of segmented finance receivables charged off (gross amount of charge-offs less the amount of recoveries of such charged off accounts

~~Index~~ from non-file insurance and other recoveries) by the average net outstanding finance receivables over a specific period of time and converting this to ~~Financial~~an ~~Statements~~annualized basis. Once this benchmark percentage is determined, a review is performed to detect upward or downward trends in the pertinent factors noted above. Such trends may lead us to adjust the benchmark percentage that is applied to the entire net finance receivable portfolio used in determining the balance of the allowance for credit losses.

~~Rate/Volume~~Two ~~Analysis~~additional matters that we consider when reviewing the risk included in our portfolio include insurance products and the non-accrual status of certain loans in our portfolio. We also offer insurance products in conjunction with the loan. In the event of the death or injury of the customer or damage to pledged collateral, the proceeds from the claims would generally pay off or continue payments on the loan. However, proceeds from these insurance claims are not considered a recovery since the loan was not charged off, so they are not considered in the allowance determination. The portion of our finance receivables that are in a non-accrual status, meaning the earning of interest and fees has been suspended because of their delinquency status, are considered to be impaired. However, we do not apply different loss rates to impaired or non-impaired loans since our adjusted benchmark percentage is applied to the entire net finance receivable portfolio.

~~The~~23 following table sets forth the effects of changing rates and volumes on our net interest income. Information is provided with respect to (i) effects on interest income attributable to changes in volume (changes in volume multiplied by prior rate), (ii) effects on interest income attributable to changes in rate (changes in rate multiplied by prior volume), and (iii) changes in rate/volume (change in rate multiplied by change in volume).

	Increase (Decrease) Due to																		Total net increase (decrease)
	Volume						Rate						Rate/Volume
	9/25/09			9/25/08			9/25/09			9/25/08			9/25/09			9/25/08			9/25/09			9/25/08
Earning assets:
Interest income on finance receivables:	$	(2,517,649	)	$	(136,473	)	$	(1,005,772	)	$	(55,899	)	$	(167,574	)	$	(8,299	)	$	(3,690,995	)	$	(200,671	)
Interest bearing liabilities:
Debentures & demand notes		(874,693	)		19,996			131,167			303,295			(15,990	)		746			(759,516	)		324,037
Other debt		3,582			(47,906	)		93,744			(16,611	)		(1,935	)		(10,179	)		95,391			(74,696	)
Total interest expense		(871,111	)		(27,910	)		224,911			286,684			(17,925	)		(9,433	)		(664,125	)		249,341
Net interest income	$	(1,646,538	)	$	(108,563	)	$	(1,230,683	)	$	(342,583	)	$	(149,649	)	$	1,134		$	(3,026,870	)	$	(450,012	)

Return on Deficit and Assets

Below is a table showing certain performance ratios for the fiscal years ended September 25, 2009 and 2008. These ratios are typically reported by financial institutions in connection with their annual financial performance.

Performance Ratios(1)	2009		2008
Return on average assets (2)	-16.4	%	-10.9	%
Return on average shareholders’ deficit (3)	-61.9	%	-181.6	%
Average deficit to average assets ratio (4)	-26.5	%	-6.0	%

(1) Averages are computed using quarter end balances.

(2) Calculated as net income divided by average total assets during the fiscal year.

(3) Calculated as net income divided by average shareholders’ deficit during the fiscal year.

(4) Calculated as average shareholders’ deficit divided by average total assets during the fiscal year.

Analysis of Allowance for Credit Losses

An allowance for credit losses is maintained primarily to account for the probable losses inherent in the finance receivables portfolio. The allowance is calculated based upon management’s estimate of the expected collectibility of loans outstanding based upon a variety of factors, including, without limitation, periodic analysis of the loan portfolio, historic loan loss experience, borrowers’ ability to repay and collateral considerations. We maintain an allowance for credit losses at a level that we consider adequate to provide for probable losses based on historical ratios of charge-offs to average notes receivable.

The following table shows these ratios of charge-offs to average notes receivable for the categories of our finance receivables. The average net finance receivables are computed using monthly balances, net of unearned interest, unearned insurance commissions and unearned discounts. Charge-offs are shown at gross amounts as presented in the receivable roll-forward above. Recoveries represent receipts from non-filing insurance claims and cash recoveries.

~~Index~~The following table shows these ratios of charge-offs to ~~Financial~~average ~~Statements~~notes receivable for the categories of our finance receivables.

	As of, or for, the Fiscal Year Ended September 25,
	As of, or for, the Year Ended September 25,
	2009			2008			2007
	2010			2009
Direct Consumer Loans and Consumer Sales Finance Contracts:
Direct Consumer
Average net finance receivables	$	45,172,898		$	54,074,302		$	53,453,781
Ending net outstanding finance receivables	$	13,268,023		$	19,524,349
Charge-offs – direct consumer	$	7,228,663		$	7,357,665		$	4,066,752
Average net outstanding finance receivables (1)	$	16,047,656		$	24,849,742
Charge-offs – consumer sales finance	$	3,383,645		$	1,862,589		$	1,110,556
Charge offs, gross (3)	$	5,567,738		$	8,589,238
Charge-offs – bankruptcy	$	1,782,967		$	778,169		$	790,514
Recoveries (2)	$	(2,728,546	)	$	(3,759,401	)
Total gross charge-offs	$	12,395,275		$	9,998,423		$	5,967,822
Charge offs, net of recoveries	$	2,839,192		$	4,829,837
Recoveries (all direct consumer)	$	(3,027,086	)	$	(2,739,668	)	$	(2,751,142	)
% of net charge offs to average net receivables
Charge-offs, net	$	9,368,189		$	7,258,755		$	3,216,680
12 month trend		17.7	%		19.4	%
Percent of net charge-offs to average receivables		20.7	%		13.4	%		6.0	%
Actual allowance %		16.7	%		19.4	%
Motor Vehicle Installment Sales Contracts:
Actual allowance	$	2,215,760		$	3,794,785
Average net finance receivables	$	25,180,457		$	25,855,486		$	25,793,664
Consumer Sales Finance
Charge-offs, gross	$	1,768,170		$	1,370,165		$	1,185,753
Ending net outstanding finance receivables	$	9,596,560		$	11,765,752
Recoveries		—			—			—
Average net outstanding finance receivables (1)	$	11,100,986		$	13,311,376
Charge-offs, net	$	1,768,170		$	1,370,165		$	1,185,753
Charge offs, gross	$	2,519,125		$	3,966,748
Percent of net charge-offs to average receivables		7.0	%		5.3	%		4.6	%
% of net charge offs to average net receivables
Total Receivables:
12 month trend		22.7	%		29.8	%
Average net finance receivables	$	70,353,355		$	79,929,788		$	79,247,445
Actual allowance %		25.2	%		29.8	%
Charge-offs, gross	$	14,163,445		$	11,368,588		$	7,153,575
Actual allowance	$	2,418,318		$	3,506,157
Recoveries (all direct consumer)	$	(3,027,086	)	$	(2,739,668	)	$	(2,751,142	)
Auto Sales Finance
Charge-offs, net	$	11,136,359		$	8,628,920		$	4,402,433
Ending net outstanding finance receivables	$	19,454,858		$	24,991,375
Percent of net charge-offs to average receivables		15.8	%		10.8	%		5.6	%
Average net outstanding finance receivables (1)	$	22,473,463		$	25,180,457
Charge offs, gross (3)	$	2,350,611		$	1,916,233
% of net charge offs to average net receivables
12 month trend		10.5	%		7.6	%
Actual allowance %		11.5	%		6.5	%
Actual allowance	$	2,237,297		$	1,624,439

~~During~~24 fiscal year 2009, we continued to experience a high level of net charge-offs in both the consumer and automotive segments. Increases in unemployment and the recessionary economy continued to negatively impact our customer base. Net charge-offs in the consumer segment increased approximately $2.1 million over 2008 and the automotive segment saw increases of $0.4 million. See “Risk Factors – We suffered significant credit losses in 2009 due to continued weakening economic conditions, and there is no guarantee such credit losses will not continue during this downturn in the economy or that our operations and profitability will not continue to be negatively affected.”

During fiscal year 2008, gross charge-offs of finance receivables in the consumer segment increased dramatically. During the fourth quarter of 2008, in conjunction with their initial Sarbanes-Oxley testing of controls over the charge-off process and the completion of its implementation of a new accounting system for loans, management performed an extensive analysis to determine the amount of past due loans over 180 days delinquent which had not been charged off. The purpose of the analysis was to determine branch level controls over the determination of collectibility of past due loans. Although delinquent loans were being actively monitored and collection efforts were taking place, which included active and ongoing legal processes, management determined that there was not sufficient evidence to support the deferral of probable losses inherent in these loans, especially given the change in the economy and current liquidity crisis. This resulted in an increase of approximately $4.0 million in consumer segment charge-offs and an increase of approximately $0.2 million in automotive segment charge-offs compared to fiscal year 2007.

Index to Financial Statements


	As of, or for, the Year Ended September 25,
	2010			2009
Total Receivables
Ending net outstanding finance receivables	$	42,319,341		$	56,281,476
Average net outstanding finance receivables (1)	$	49,622,105		$	63,341,575
Charge offs, gross (3)	$	10,437,474		$	14,472,219
Recoveries (2)	$	(2,728,546	)	$	(3,759,401	)

Charge offs, net of recoveries	$	7,708,928		$	10,712,818
% of net charge offs to average net receivables
12 month trend		15.5	%		16.9	%
Allowance as a %		16.2	%		15.9	%
Actual allowance	$	6,871,375		$	8,925,381

As(1) ofAverage September 25, 2009 and 2008, our allowance for credit losses was $7.4 million and $8.9 million, respectively. Based on both the significantly higher levels of 2009 and 2008 charge-offs and the continued extreme adverse economic conditions, management revised its methodology in determining the adequacy of its allowance to rely much more heavily on current data available rather than simply looking at average charge-offs over the most recent three years. In 2008, the revision in methodology in evaluating the sufficiency of the allowance resulted in an increase to the allowance and an additional provision of approximately $4.6 million. In 2009, the allowance decreased due to the decrease in net outstanding finance receivables ~~over~~are ~~the~~computed ~~course~~using of fiscal year 2009. Our liquidity issues have caused us to significantly curtail our historical level of lending and thus caused us to tighten our lending guidelines. This has resulted in a lower delinquency amount and factored into the ~~determination~~monthly ofbalances ~~the~~net ~~allowance. The allowance for credit losses has remained relatively constant at 11.7% and 11.6%~~ of ~~the~~unearned ~~net~~interest/fees, ~~outstanding~~unearned ~~finance~~insurance ~~receivables~~commissions ~~at September 25, 2009~~ and ~~2008,~~unearned ~~respectively~~discounts.

~~Delinquency~~(2) ~~Information~~Recoveries represent receipts from non-file insurance claims, cash recoveries and bankruptcy recoveries.

Our delinquency levels reflect, among other factors, changes in the mix of loans in the portfolio, the quality of receivables, the success of collection efforts, bankruptcy trends and general economic conditions. The delinquency information in the following tables is computed on the basis of the amount past due in accordance with the original payment terms of the loan (~~contractual method~~3). WeIncludes ~~use~~write ~~the~~downs ~~contractual~~incurred method for all external reporting purposes. Management closely monitors delinquency using this method to measure the quality of our loan portfolio and the probability of credit loss. We also use other tools, such as a recency report, which shows the date of the last full contractual payment received on the ~~loan,~~transfer to determine a particular customer’s willingness to pay. For example, if a delinquent customer has made a recent payment, we may decide to delay more serious collection measures, such as repossession of ~~collateral.~~loans However, such a payment will not change the non-accrual status of the account until all of the principal and interest amounts contractually due are brought current (we receive one or more full contractual payments and the account is less than 60 days contractually delinquent), at which time we believe future payments are reasonably assured. Our gross finance receivables on non-accrual status, including bankruptcy accounts, totaled approximately $14.6 million and approximately $17.8 million for the fiscal years ended September 25, 2009 and 2008, respectively. Suspended interest as a result of these non-accrual accounts totaled $0.9 million, $1.2 million and $1.1 million for the fiscal years ended September 25, 2009, 2008 and 2007, respectively. Generally, we do not refinance delinquent accounts. However, on occasion a past due account will qualify for refinancing. We use the following criteria for determining whether a delinquent account qualifies for refinancing: (1) a re-evaluation of the customer’s creditworthiness is performed to ~~ensure additional credit is warranted; and (2) a payment must have been received on the account within the last 10 days. Since we refinance delinquent~~ loans onheld ~~such an infrequent basis, we do not maintain any statistics relating to this type of refinancing. Below is certain information relating to the delinquency status of each category of our receivables~~ for ~~the years ended September 25, 2009 and 2008~~sale.

	As of September 25, 2009									BankruptAccounts			Total
	DirectConsumerSales			Consumer SalesFinanceContracts			Motor VehicleInstallment SalesContracts
Gross Loans and Contracts Receivable	$	22,257,244		$	15,176,373		$	30,151,923		$	6,762,101		$	74,347,641
Loans and Contracts 60-90 days past due	$	682,094		$	377,524		$	424,429		$	272,538		$	1,756,585
Percentage of Outstanding		3.06	%		2.49	%		1.41	%		4.03	%		2.36	%
Loans and Contracts greater than 90 days past due	$	4,774,562		$	2,153,578		$	787,638		$	4,221,045		$	11,936,823
Percentage of Outstanding		21.45	%		14.19	%		2.61	%		62.42	%		16.06	%
Loans and Contracts greater than 60 days past due	$	5,456,656		$	2,531,102		$	1,212,067		$	4,493,583		$	13,693,408
Percentage of Outstanding		24.52	%		16.68	%		4.02	%		66.45	%		18.42	%

As of September 25, 2010 and 2009, our allowance for credit losses was $6.9 million and $8.9 million, respectively, which represent 16.2% and 15.9% of the net outstanding finance receivables, respectively.

Although some of the uncertainty relative to the general economic conditions appeared to be diminishing at the end of fiscal 2009, net charge-offs again increased and totaled $10.7 million for the year ended September 25, 2009. We contemplated the use of a 24-month benchmark charge-off percentage at the end of fiscal year 2009 due to the similarities in fiscal years 2008 and 2009. Even though delinquencies were improving, due to the uncertainty still in existence at this time and the increase in net charge-offs, we again utilized 12-month benchmark percentages in computing the allowance at September 25, 2009 and recorded an allowance of 19.4% of direct consumer loans, 29.8% of consumer sales finance loans, and 6.5% of auto sales finance loans, or 15.9% of the total net outstanding receivables at September 25, 2009.

During fiscal year 2010, we experienced a significant decrease in overall net charge-offs compared to the prior year. Charge-offs, net of recoveries, were $7.7 million, a $3.0 million decrease from fiscal year 2009 net charge-offs. Due to our ongoing liquidity issues, we continued to closely monitor our loan originations, resulting in a decrease of $23.5 million in new loans made compared to 2009 totals. This contributed to a significant decrease in the average net outstanding receivables for the fiscal year ended September 25, 2010 when compared to the prior year.

In preparing the first step in our determination of the allowance for credit losses, we again utilized the most recent 12-month data in computing the benchmark charge-off percentages for the three segments of our finance receivable portfolio. This resulted in decreases in the direct consumer and consumer sales finance categories and an increase in the auto sales finance category when compared to the previous year’s benchmark percentages. General economic conditions and unemployment figures did not indicate a significantly positive future outlook. Delinquencies, while improving in the direct consumer category, worsened for the consumer sales finance contracts and auto sales finance contracts. We believe our tighter lending guidelines put in place over the past two years have had a positive impact on direct consumer loan delinquencies, but due to the longer term of sales finance contracts, we have not realized the same impact on these loans. We have, in some cases, chosen to forbear on repayment and are actively working with these customers to develop alternate payment plans and methods (i.e. bank drafts). After consideration of these and other relevant factors, including subsequent charge off and delinquency information, we adjusted the benchmark percentage in the direct consumer loan segment downward 100 basis points from the benchmark charge-off percentage of 17.7% and recorded an allowance of 16.7% of net direct consumer loans. For

~~Index~~ loans toin ~~Financial~~the ~~Statements~~consumer sales finance segment, we adjusted the benchmark charge-off percentage upward 250 basis points from 22.7% and recorded an allowance of 25.2% of net consumer sale finance contracts. Net charge-offs of auto sales finance contracts increased in fiscal year 2010, as did the benchmark percentage computation.

	As of September 25, 2008									BankruptAccounts			Total
	DirectConsumerSales			Consumer SalesFinanceContracts			Motor VehicleInstallment SalesContracts
Gross Loans and Contracts Receivable	$	34,859,944		$	16,793,743		$	30,707,329		$	6,794,358		$	89,155,374
Loans and Contracts 60-90 days past due	$	665,191		$	300,922		$	338,953		$	242,639		$	1,547,705
Percentage of Outstanding		1.91	%		1.79	%		1.10	%		3.57	%		1.74	%
Loans and Contracts greater than 90 days past due	$	7,486,842		$	3,212,367		$	285,407		$	4,093,590		$	15,078,206
Percentage of Outstanding		21.48	%		19.13	%		0.93	%		60.25	%		16.91	%
Loans and Contracts greater than 60 days past due	$	8,152,033		$	3,513,289		$	624,360		$	4,336,229		$	16,625,911
Percentage of Outstanding		23.39	%		20.92	%		2.03	%		63.82	%		18.65	%

The deterioration of the overall economy over the past several years and the increase in auto loan past due agings in fiscal year 2010 resulted in increased scrutiny over the loans in this portfolio. As a result, additional metrics were developed to track loan progress and management has, in some cases, made decisions to attempt to work with customers through forbearance or extension of terms rather than resorting to the repossession of the underlying collateral of these loans, which has caused additional deterioration in the portfolio quality. Consequently, we increased the auto sales finance benchmark charge-off percentage of 10.5% by 100 basis points to 11.5% of net outstanding receivables at September 25, 2010.

~~Results~~Delinquency ofInformation ~~Operations~~

~~Comparison~~Our delinquency levels reflect, among other factors, changes in the mix of ~~Fiscal~~loans ~~Years~~in ~~Ended~~the ~~September 25~~portfolio, ~~2009~~the quality of receivables, the results of collection efforts, bankruptcy trends and ~~2008~~general economic conditions. The delinquency information in the following tables is computed on the basis of the amount past due in accordance with the original payment terms of the loan (contractual method). We use the contractual method for all external reporting purposes. Management closely monitors delinquency using this method to measure the quality of our loan portfolio and the probability of credit loss. We also use other tools, such as a recency report, which shows the date of the last full contractual payment received on the loan, to determine a particular customer’s willingness to pay. For example, if a delinquent customer has made a recent payment, we may decide to delay more serious collection measures, such as repossession of collateral. However, such a payment will not change the non-accrual status of the account until all of the principal and interest amounts contractually due are brought current (we receive one or more full contractual payments and the account is less than 60 days contractually delinquent), at which time we believe future payments are reasonably expected.

~~Net~~Our ~~Revenues~~gross finance receivables on non-accrual status totaled approximately $6.1 million and approximately $7.7 million for the fiscal years ended September 25, 2010 and 2009, respectively. Additionally, auto sales finance contracts in various stages of repossession or legal process of $4.1 million and $5.3 million at September 25, 2010 and 2009, respectively, are also considered impaired. Suspended interest as a result of these non-accrual accounts totaled $0.7 million, and $0.9 million for the fiscal years ended September 25, 2010 and 2009, respectively. Generally, we do not refinance delinquent accounts. However, on occasion a past due account will qualify for refinancing. We use the following criteria for determining whether a delinquent account qualifies for refinancing: (1) a re-evaluation of the customer’s creditworthiness is performed to ensure additional credit is warranted; and (2) a payment must have been received on the account within the last 10 days. Since we refinance delinquent loans on such an infrequent basis, we do not maintain any statistics relating to this type of refinancing.

~~Net~~Below ~~revenues~~is ~~were~~certain ~~$16.0~~information ~~million~~relating ~~and~~to ~~$17.0~~the ~~million~~delinquency status of each category of our receivables for the ~~fiscal~~ years ended September 25, ~~2009~~2010 and ~~2008, respectively~~2009. ~~The~~Because ~~$1.0~~consumer ~~million~~bankrupt ~~decrease~~accounts inare ~~net~~fully ~~revenues~~charged ~~was~~off ~~primarily~~within a30 ~~result~~days, ofno ~~the~~accounts ~~significant decrease~~ in ~~interest~~bankruptcy ~~and~~are ~~fee income~~included ~~as well as other components of loan-related income. These decreases~~ in ~~income~~the ~~were~~direct ~~partially~~consumer ~~offset~~and byconsumer ~~significant~~sales ~~decreases~~finance ~~in the provision for credit losses~~categories.

~~Net~~26 ~~Interest and Fee Income Before Provision for Credit Losses~~

Net interest and fee income before provision for credit losses was $8.0 million and $11.0 million for the fiscal years ended September 25, 2009 and 2008, respectively. Total interest and fee income decreased $3.7 million. Liquidity issues caused us to curtail historical lending levels resulting in a 20% decrease in finance receivables originated in 2009 compared to 2008. Interest expense decreased $0.7 million from $8.3 million in 2008 to $7.6 million in 2009 due to a decrease in outstanding debt of $9.5 million during fiscal year 2009.

Provision for Credit Losses

Provision for credit losses was $9.6 million and $13.8 million for the fiscal years ended September 25, 2009 and 2008, respectively. Charge-offs, net of recoveries, increased by $2.5 million, from $8.6 million to $11.1 million, in fiscal year 2009 over 2008. Charge-offs expressed as a percentage of average net finance receivables increased to 15.8% in fiscal year 2009, compared to 10.8% in fiscal year 2008. However, we experienced a significant decrease in the dollar amount of net finance receivables outstanding, which is the basis for determining the allowance for credit losses. This and other factors led us to establish the allowance for credit losses at a level that resulted in a decrease at September 25, 2009 as compared to September 25, 2008, with a corresponding decrease in the provision for credit losses. See “Risk Factors – We suffered significant credit losses in 2009 due to continued weakening economic conditions, and there is no guarantee such credit losses will not continue during this downturn in the economy or that our operations and profitability will not continue to be negatively affected.”

Insurance and Other Products

Income from commissions on insurance products and motor club memberships decreased from $11.5 million in fiscal year 2008 to $10.0 million in fiscal year 2009. Of the total for fiscal year 2009, commissions on credit insurance products were $5.7 million and non-credit insurance products and motor club memberships were $4.3 million. Approximately 67.3% of our loans during this period included one or more of our insurance products or motor club memberships. Delinquency fees and other income were in aggregate $2.1 million and $2.4 million for fiscal years ended September 25, 2009 and 2008, respectively. This decrease is consistent with the decrease in all loan-related income components.

Index to Financial Statements


	As of September 25, 2010
	Direct Consumer			Consumer Sales Finance Contracts			Motor Vehicle Installment Sales Contracts*			Total*
Gross Loans and Contracts Receivable	$	14,790,670		$	12,192,962		$	22,584,170		$	49,567,802
Loans and Contracts greater than 180 days past due	$	1,376,014		$	1,174,751		$	590,940		$	3,141,705
Percentage of Outstanding		9.30	%		9.63	%		2.62	%		6.34	%
Loans and Contracts greater than 90 days past due	$	2,732,444		$	2,297,053		$	1,135,800		$	6,165,297
Percentage of Outstanding		18.47	%		18.84	%		5.03	%		12.44	%
Loans and Contracts greater than 60 days past due	$	3,329,271		$	2,848,657		$	1,501,803		$	7,679,731
Percentage of Outstanding		22.51	%		23.36	%		6.65	%		15.49	%

	As of September 25, 2009
	Direct Consumer			Consumer Sales Finance Contracts			Motor Vehicle Installment Sales Contracts*			Total*
Gross Loans and Contracts Receivable	$	20,098,661		$	16,663,172		$	30,151,923		$	66,913,756
Loans and Contracts greater than 180 days past due	$	3,358,791		$	1,410,284		$	—		$	4,769,075
Percentage of Outstanding		16.71	%		8.46	%		0.00	%		7.13	%
Loans and Contracts greater than 90 days past due	$	4,774,562		$	2,153,578		$	787,638		$	7,715,778
Percentage of Outstanding		23.76	%		12.92	%		2.61	%		11.53	%
Loans and Contracts greater than 60 days past due	$	5,456,656		$	2,531,102		$	1,212,067		$	9,199,825
Percentage of Outstanding		27.15	%		15.19	%		4.02	%		13.75	%

~~Gross~~* ~~Margin~~Motor onVehicle ~~Retail~~Installment Sales Contracts aging categories exclude accounts in legal or repossession process in the amounts of $4,072,212 at September 25, 2010 and $5,262,871 at September 25, 2009.

~~Gross~~Results margin on retail sales were $5.7 million and $6.0 million for the fiscal years ended September 25, 2009 and 2008, respectively. Sales and gross margins in the consumer segment were $6.6 million and $2.9 million, respectively for fiscal year 2009 and $7.4 million and $3.3 million, respectively, for fiscal year 2008. In the automotive segment, sales were $9.1 million, down $0.4 million from 2008 sales of ~~$9.5~~Operations million. Gross margins remained the same as 2008 gross margins of $2.4 million. We were encouraged by the small decreases in overall sales during fiscal year 2009 in light of the poor general economic conditions. We view this as a positive indicator for retail sales entering fiscal year 2010.

~~Operating~~Comparison ~~Expenses/Impairment~~of ~~loss from~~Years ~~write-down~~Ended ofSeptember 25, ~~goodwill~~2010 and 2009

~~Operating~~Net ~~expenses~~Revenues were $28.4 million and $28.5 million for the fiscal years ended September 25, 2009 and 2008, respectively. Although our lending activities and resulting income in the fiscal year ended September 25, 2009 decreased significantly, many components of operating expenses do not vary with income levels. Personnel expenses increased $0.2 million in 2009 over 2008 due to increases in health insurance costs. Facilities expense increased $0.2 million due to higher utility expenses and scheduled increases in facility leases. General and administrative expenses decreased by $0.2 million based on lower communication and supplies expenses. Other operating expenses decreased $0.3 million due to an impairment charge to goodwill of $1.0 million in fiscal year 2008, which was offset by $0.5 million in legal costs associated with the settlement of a lawsuit and increases in other professional expenses in 2009. We also recorded a loss of $0.1 million on the sale of finance receivables in 2009.

~~Income~~Net ~~Tax~~revenues ~~Expense~~were ~~(Benefit)~~$10.9 million and $14.9 million for the fiscal years ended September 25, 2010 and 2009, respectively. Interest and fee income and other ancillary product income were down from the prior year as a result of a significant decrease in finance receivable originations. We have experienced significant liquidity issues over the past two years due to the lack of net sales in our debt offerings. Because of this and the current economic environment, to preserve cash, we implemented tighter risk management controls in fiscal year 2009, which continued through September 25, 2010, resulting in fewer loans being made. Retail sales and the associated gross margin on these sales were also down from prior year levels. A significant decrease in the provision for credit losses partially offset the income and commission decreases. We expect our components of income to continue to fall short of historical levels until such time as we are able to raise sufficient capital to increase loan originations and subsequent interest, fee and commission income. We realized the benefits of reduced net charge-offs as a result of the smaller loan portfolio and tighter risk management controls over lending implemented in the past two years. However, delinquencies of finance receivables have increased slightly at September 25, 2010 which could require additional provisions for credit losses in fiscal year 2011. During the fiscal year ended September 25, 2010, we consolidated ten of our branch offices into other branch office locations due to overlapping service coverage. The primary objective of these consolidations was to reduce operating expenses. We believe that this had a minimal effect on overall revenues.

~~Income~~27 tax benefit was $0.4 million and income tax expense was $0.5 million for the fiscal years ended September 25, 2009 and 2008, respectively. For the fiscal year ended September 25, 2009, we increased the valuation allowance for our deferred income tax asset by $4.2 million compared to $4.8 million for the year ended September 25, 2008, resulting in a difference between income taxes calculated using expected annual federal and state rates and actual income tax expense.

Comparison of Fiscal Years Ended September 25, 2008 and 2007

Net Revenues

Net revenues were $17.0 million and $27.9 million for the fiscal years ended September 25, 2008 and 2007, respectively. The decrease in net revenues was primarily as a result of the significant increase in provision for credit losses. Decreases in insurance commissions, interest and fee income and gross margin on retail sales also contributed to the $10.9 million overall decrease.

Net Interest and Fee Income Before Provision for Credit Losses

Net interest and fee income before provision for credit losses was $11.0 million and $11.5 million for the fiscal years ended September 25, 2008 and 2007, respectively. Total interest and fee income decreased $0.2 million while interest expense increased $0.3 million, from $8.0 million in 2007 to $8.3 million in 2008.

Provision for Credit Losses

Provision for credit losses was $13.8 million and $5.0 million for the fiscal years ended September 25, 2008 and 2007, respectively. Charge-offs net of recoveries increased by $4.2 million in fiscal year 2008 over 2007. During the fourth quarter of 2008, in conjunction with their initial Sarbanes-Oxley testing of controls over the charge-off process and the completion of its implementation of a new accounting system for loans, management

~~Index~~Net toInterest ~~Financial~~and ~~Statements~~Fee Income Before Provision for Credit Losses

~~performed~~Net aninterest ~~extensive~~income ~~analysis~~before toprovision ~~determine~~for ~~the~~credit ~~amount~~losses ofwas ~~past~~$4.8 ~~due~~million ~~loans~~and ~~over 180 days delinquent which had not been charged off~~$8.0 ~~The~~million ~~purpose~~for of the ~~analysis~~years ~~was~~ended toSeptember 25, ~~determine~~2010 ~~branch level~~and ~~controls~~2009, ~~over~~respectively. ~~the~~Gross ~~determination~~interest ofand ~~collectibility~~fee ofincome ~~past~~decreased ~~due loans~~$3.8 ~~Although~~million ~~delinquent~~to ~~loans~~$11.8 ~~were~~million ~~being~~from ~~actively~~$15.6 ~~monitored~~million. ~~and~~This ~~collection~~was ~~efforts~~a ~~were~~result ~~taking~~of ~~place,~~an ~~which~~approximately ~~included~~29% ~~active~~decrease ~~and~~in ~~ongoing~~finance ~~legal~~receivables ~~processes,~~originated ~~management~~compared ~~determined~~to ~~that there~~the ~~was~~same ~~not~~period ~~sufficient~~last ~~evidence~~year tocaused ~~support~~by the liquidity ~~deferral~~issues ofdiscussed ~~probable~~above. ~~losses~~Interest ~~inherent~~income inwas ~~these~~also ~~loans,~~impacted ~~especially~~by ~~given~~a ~~the~~decrease ~~change~~ in the ~~economy~~average ~~and~~interest ~~current~~rate ~~liquidity~~earned ~~crisis.~~on ~~Accordingly,~~finance ~~management~~receivables ~~expanded~~caused ~~its~~by ~~analysis~~a ~~and~~significant ~~scrutiny~~decrease ~~of delinquent loans, which resulted~~ in ~~an abnormal amount of charge~~higher-~~offs~~earning indirect ~~fiscal~~consumer ~~year 2008~~loans. ~~Based~~We onexpect ~~both~~interest ~~the abnormal 2008 charge-offs~~ and ~~the~~fee ~~extreme~~income to ~~adverse~~continue ~~economic~~to ~~data~~be ~~published~~down in ~~the~~relation ~~fourth~~to ~~quarter~~historical oflevels ~~fiscal~~until ~~year~~we ~~2008,~~can ~~management~~sell ~~revised~~sufficient ~~its~~quantities ~~methodology in determining the adequacy~~ of ~~its~~debentures ~~allowance~~ and ~~now~~demand ~~relies~~notes ~~much~~to ~~more~~provide ~~heavily~~cash onto ~~current~~increase ~~data~~originations ~~available~~of ~~rather~~direct ~~than~~consumer ~~simply~~loans ~~looking~~and atconsequently ~~average~~increase ~~charge-offs~~interest ~~over~~and ~~the~~fee ~~most~~income. Interest ~~recent~~expense ~~three~~was ~~years~~$7.0 ~~The~~million ~~revision~~and in$7.6 ~~methodology~~million infor ~~evaluating~~ the ~~sufficiency~~years ~~of the~~ended ~~allowance~~September 25, ~~resulted~~2010 ~~in an increase to the allowance~~ and an2009, ~~additional~~respectively, ~~provision~~due ~~for~~primarily ~~credit~~to ~~losses~~decreased amounts of ~~approximately~~variable ~~$4.6~~rate ~~million~~subordinated indebentures ~~fiscal year 2009~~outstanding.

~~Insurance~~Provision ~~and~~for ~~Other~~Credit ~~Products~~Losses

~~Income~~Provision ~~from~~for ~~commissions~~credit onlosses ~~insurance products~~was $5.7 million and ~~motor~~$10.8 ~~club~~million ~~memberships~~for ~~decreased~~the ~~from~~years ~~$12.1~~ended ~~million~~September 25, in2010 ~~2007~~and to2009, ~~$11~~respectively.5 ~~million~~Net infinance ~~fiscal~~receivables ~~year~~charged ~~2008~~off decreased approximately $3.0 ~~During~~million compared ~~fiscal~~to ~~year~~the ~~2008~~previous year, ~~commissions~~which onwe ~~credit~~believe ~~insurance~~is ~~products~~a ~~were~~result ~~$6.6~~of ~~million~~the ~~and~~implementation ~~non-credit~~of ~~insurance~~tighter ~~products~~risk ~~and~~management ~~motor~~controls ~~club memberships~~over ~~were~~lending. The allowance was $46.9 million. ~~Approximately 65~~(16.82% of ~~our~~net ~~loans~~outstanding ~~during~~finance ~~this~~receivables) ~~period~~at ~~included~~September 25, ~~one~~2010 orcompared ~~more~~to $8.9 ofmillion ~~our~~(15.9%) at ~~insurance~~September 25, ~~products~~2009. orDelinquencies ~~motor~~increased ~~club~~slightly ~~memberships.~~in ~~Delinquency~~some ~~fees~~components ~~and~~of ~~other~~our ~~income~~finance ~~were~~receivables, inwhich ~~aggregate~~prompted ~~$2.3~~us ~~million~~to ~~and~~adjust ~~$2.5~~the ~~million~~allowance for ~~the~~ ~~fiscal~~credit ~~years~~losses ~~ended~~and corresponding provisions at September 25, 2010. ~~2008~~Should ~~and~~this ~~2007~~trend continue, ~~respectively.~~we ~~This~~could ~~decrease~~see ~~was~~an ~~partially~~increase ~~due~~in tonet ~~the~~charge-offs ~~decreases~~which incould ~~delinquency~~cause ~~fees~~us asto ~~well~~make asadditional ~~other~~provisions ~~miscellaneous~~to ~~charges~~the ~~and~~allowance ~~products~~for ~~included~~credit losses in ~~other~~fiscal ~~income~~year 2011.

~~Gross~~Insurance ~~Margin~~and onOther ~~Retail~~Products ~~Sales~~

~~Gross~~Income ~~margin~~from commissions on ~~retail~~insurance ~~sales~~products ~~were~~and motor club memberships decreased $63.06 million, ~~and~~to $6.84 million from $10.0 million, for the fiscal years ended September 25, ~~2008~~2010 and ~~2007~~2009, respectively. ~~Sales~~The ~~and~~decrease ~~gross~~in ~~margins~~volume of finance receivables originated during this period compared to last year resulted in lower commissions earned on the ~~consumer~~sale ~~segment~~of inthese products. Of the total decrease for fiscal year 2010, commissions on credit ~~2008~~insurance products were $72.46 million and ~~$3.3~~commissions ~~million,~~on ~~respectively,~~non-credit aninsurance ~~increase~~products ofand motor club memberships were $03.8 million. ~~and~~Approximately $065.31% ~~million~~of ~~over~~our ~~fiscal~~loans ~~year~~during ~~2007.~~this Inperiod ~~the~~included ~~automotive~~one ~~segment,~~or ~~sales~~more ~~were~~of $9our insurance products or motor club memberships.5 ~~million,~~We expect these commissions to continue to be down ~~$2.6~~in ~~million~~relation ~~from~~to ~~fiscal~~historical ~~year~~levels ~~2007,~~until ~~and~~we ~~gross~~can ~~margins~~sell ~~decreased~~sufficient ~~$1.1 million~~quantities ~~from~~of ~~$3.8~~debentures ~~million~~and demand notes to ~~$2.7~~provide ~~million.~~cash ~~The~~to ~~decline~~increase inoriginations ~~vehicle~~of ~~sales~~loans isand ~~consistent~~consequently ~~with~~increase commissions. ~~the~~Delinquency ~~auto~~fees ~~industry’s~~and ~~overall~~other ~~decrease~~income were in ~~sales~~aggregate ~~due~~$1.7 tomillion ~~the~~and ~~poor~~$2.1 ~~general~~million ~~economic~~for ~~conditions~~fiscal years ended September 25, 2010 and ~~decline~~2009, respectively. This decrease is consistent with the decrease in ~~consumer~~all ~~spending~~loan-related income components.

~~Operating~~Gross ~~Expenses~~Margin on Retail Sales

~~Operating~~Gross ~~expenses~~margins on retail sales were $283.56 million and $275.67 million for the ~~fiscal~~ years ended September 25, ~~2008~~2010 and ~~2007~~2009, respectively. Margins ~~Personnel~~in ~~expenses~~the ~~increased~~consumer segment were down $0.28 million ~~in 2008~~ over ~~2007~~last ~~due~~year ~~to increases~~while margins in ~~bonuses~~the ~~and~~automotive ~~other~~segment ~~incentives.~~were ~~Other~~down ~~operating expenses increased~~ $01.52 million ~~or 9%~~. ~~Although~~Sales wein ~~have~~the ~~continued~~consumer tosegment ~~refine~~were ~~our~~approximately ~~process~~$2.2 ~~for~~million ~~customer~~lower ~~solicitation~~than ~~that~~last ~~resulted~~year inwhile ~~savings~~vehicle insales ~~postage~~were ~~and other costs, we recorded an~~down ~~impairment~~approximately ~~charge to goodwill of~~ $14.04 million. inThese ~~fiscal~~decreases ~~year~~are ~~2008.~~consistent Wewith ~~also curtailed~~ the ~~advertising~~current ~~for~~retail ~~our~~industry, ~~securities~~as ~~offerings.~~economic ~~Travel~~conditions ~~and~~are ~~related~~having ~~cost~~a ~~were~~negative ~~also~~impact ~~down~~on ~~from~~consumer ~~prior~~spending. ~~year~~We ~~levels~~do ~~due~~not expect to asee ~~decreased~~any ~~number~~significant ofincrease ~~personnel~~in ~~required~~retail ~~to travel.~~sales ~~General~~in ~~and~~the ~~administrative~~near ~~expenses~~term, thus ~~increased~~our ~~approximately~~margin ~~$0.1~~on ~~million~~retail orsales 4%for asfiscal ayear ~~result~~2011 ofwill ~~the~~continue ~~cost~~to ~~associated~~be ~~with~~down ~~the~~or ~~implementation~~possibly offlat ain ~~new~~relation ~~computer~~to ~~system~~historical ~~for our branch operations~~levels.

~~Income~~Operating ~~Tax~~Expenses ~~Expense (Benefit)~~

~~Income~~Operating ~~tax~~expenses ~~expense~~were ~~was~~ $022.58 million and ~~income tax benefit was~~ $028.1 3 million for the fiscal years ended September 25, ~~2008~~2010 and ~~2007~~2009, respectively. ~~For~~During the fiscal year ended September 25, ~~2008~~2010, we ~~increased~~ ~~the~~consolidated ~~valuation~~ten ~~allowance~~branch ~~for~~locations ~~our~~into ~~deferred~~other ~~income~~locations ~~tax~~due ~~asset~~to byoverlapping service coverage, primarily as a cost-saving measure. Personnel expenses were approximately $43.81 million lower than the previous year, ~~resulting~~due primarily to decreases in astaffing ~~difference~~levels ~~between~~and ~~income~~associated ~~taxes~~costs, ~~calculated~~including ~~using~~health ~~expected~~insurance ~~annual~~expenses. ~~federal~~General and ~~state~~administrative ~~rates~~expenses were down $0.6 million due to decreases in telecommunications and ~~actual~~general ~~income~~office-related ~~tax~~costs. ~~expense~~Other operating expenses were down $1.7 million due to overall cost-saving measures implemented during the latter part of fiscal year 2009. In fiscal year 2009 we also incurred legal costs for defending and settling two lawsuits that contributed to the higher costs in fiscal year 2009 compared to fiscal year 2010.

~~Liquidity~~28 ~~and Capital Resources~~

Cash and cash equivalents decreased by approximately $9.6 million during fiscal year 2009 from a balance of $12.5 million at September 25, 2008 to $2.9 million at September 25, 2009, as compared to a decrease of approximately $5.3 million during fiscal year 2008 from a balance of $17.9 million at September 25, 2007 to $12.5 million at September 25, 2008. During 2009, we redeemed an unusually high amount of debentures ($18.6 million)

~~Index~~Income toTax ~~Financial~~Benefit ~~Statements~~

~~while~~Income ~~the~~tax ~~proceeds~~benefit ~~from~~was ~~the sale of debentures were~~ $~~10.~~0.4 million. ~~The~~for ~~primary~~the ~~source~~fiscal ofyear ~~cash~~ended ~~was~~September 25, ~~repayments from customers on finance receivables ($59~~2009.9 ~~million)~~We ~~while~~increased ~~cash~~the ~~used~~valuation allowance for ~~origination~~our ofdeferred ~~finance~~income ~~receivables~~tax ~~was~~asset by $584.36 million. ~~Other~~for ~~uses~~each of ~~cash~~the ~~were~~years ~~purchases~~ended ofSeptember 25, ~~property~~2010 and ~~equipment~~2009, ~~($0.7~~resulting ~~million),~~in ~~redemption~~a ofdifference ~~demand~~between ~~notes~~income ~~($0.5~~taxes ~~million)~~calculated using expected annual federal and ~~repayments~~state onrates ~~senior~~and ~~debt~~actual ~~($0.4~~income ~~million).~~tax benefit.

~~Below~~Liquidity isand aCapital ~~table~~Resources ~~showing the net effect of our cash flows from financing activities for our fiscal years ended September 25, 2009 and 2008:~~

	2009			2008
Senior debt – borrowing	$	3,959,931		$	2,805,819
Senior debt – repayments		(4,328,304	)		(2,622,592	)
Net	$	(368,373	)	$	183,227
Demand notes – borrowing	$	3,002,554		$	3,151,573
Demand notes – repayments		(3,514,007	)		(5,484,787	)
Net	$	(511,453	)	$	(2,333,214	)
Debentures – borrowing	$	10,028,146		$	15,435,214
Debentures – repayments		(18,634,536	)		(15,087,019	)
Net	$	(8,606,390	)	$	348,195

General

~~Cash~~Liquidity ~~payments~~is ~~for~~our ~~interest~~ability ~~for~~to ~~the~~meet ~~fiscal~~short-term ~~years~~financial obligations ~~ended~~whether ~~September 25~~through collection of receivables, ~~2009~~sales of debentures and demand notes or by generating additional funds through sales of assets to our competitors (such as our finance receivables or vehicle inventory). Continued liquidity is, ~~2008~~therefore, ~~were~~largely dependent on the collection of our receivables and the sale of debt securities that meet the investment requirements of the public. Our continuation as ~~follows:~~a going concern is dependent upon our ability to generate sufficient cash flow to meet our obligations on a timely basis, originate new loans and ultimately attain successful operations. We believe the cash flow from our operations coupled with sales of the debentures and demand notes will be sufficient to cover our liquidity needs and cash flow requirements during 2011. However, there can be no assurance that we will sell any debentures or demand notes or that our actions to preserve cash flows will be successful.

	2009		2008
Senior debt	$	176,312	$	78,174
Debentures and demand notes		8,826,819		7,671,351
Total interest payments	$	9,003,131	$	7,749,525

Liquidity management refers to our ability to generate sufficient cash to fund the following primary uses of cash:

~~Debentures~~• meet all of our debenture and ~~Demand~~demand ~~Notes~~note redemption obligations;

~~Historically,~~• wepay orinterest ~~our~~on ~~subsidiary,~~all ~~The Money Tree~~ of ~~Georgia Inc., have offered debentures and demand notes to investors as a significant source of~~ our ~~required capital. We rely on the sale of~~ debentures and demand notes ~~to fund redemption obligations, make interest payments and to fund other company working capital.~~ ;

~~During~~• ~~the~~pay fiscal year ended September 25, 2009, we (1) received gross proceeds of $10.0 million from the sale of debentures and $3.0 million from the sale of demand notes, and (2) paid $18.6 million for redemption of debentures and $3.5 million for redemption of demand notes. As of September 25, 2009, we and our subsidiary, The Money Tree of Georgia Inc., had $73.6 million of debentures and $3.1 million of demand notes outstanding, compared to $82.2 million of debentures and $3.6 million of demand notes outstanding as of September 25, 2008. Accrued interest payable on debentures and demand notes was $13.5 million and $14.9 million as of September 25, 2009 and 2008, respectively. This decrease is a result of the unusually high amount of debentures redeemed during fiscal year 2009. See “Risk Factors – We may be unable to meet our debenture and demand note redemption obligations which could force us to sell off our loan receivables and other operating ~~assets~~expenses; ~~or cease our operations.”~~ and

~~Debentures~~• ~~may~~fund beconsumer ~~redeemed~~finance atloan ~~our~~demand ~~investors’~~and ~~option~~used atautomobile ~~the~~vehicle ~~end of the interest adjustment period selected by them (one year, two years or four years) or at maturity~~inventory. ~~Demand notes may be redeemed by holders at any time.~~

~~Our~~The ~~obligations~~primary ~~with~~objective ~~respect~~for liquidity management is to ~~the~~ensure ~~debentures~~that ~~and~~at ~~demand~~all ~~notes~~times ~~are~~we ~~governed~~can bymeet the ~~terms~~redemption obligations of ~~indenture agreements~~our ~~with~~note Uholders.S. A ~~Bank~~secondary ~~National~~purpose ~~Association,~~is asprofit ~~trustee~~management. ~~Under~~Because ~~the~~profit ~~indentures,~~and inliquidity ~~addition~~are tooften ~~other~~conflicting ~~possible events of default~~objectives, if we ~~fail~~attempt to ~~make~~maximize aour ~~payment~~net ~~of principal or~~ interest ~~under~~margin ~~any~~by ~~debenture~~making oradequate, ~~demand~~but ~~note and this failure is~~ not ~~cured within 30 days~~excessive, weliquidity ~~will be deemed in default~~provisions. ~~Upon~~To ~~such a default,~~ the ~~trustee~~extent orwe ~~holders~~have ofadequate ~~25%~~cash to inmeet ~~principal~~our ofredemption ~~the~~obligations ~~outstanding debentures or demand notes could declare all principal~~ and ~~accrued~~pay interest ~~immediately~~to ~~due and payable. Since~~ our ~~total assets~~note ~~do not cover these debt payment obligations~~holders, we ~~would~~will ~~most~~use ~~likely~~remaining becash ~~unable~~ to make ~~all~~consumer ~~payments~~finance ~~under~~loans, ~~the~~purchase ~~debentures~~used orautomobile ~~demand~~vehicle ~~notes~~inventory ~~when due,~~ and weinvest ~~might~~in beother ~~forced~~sources toof ~~cease~~potential ~~our operations~~revenues.

29However, as noted elsewhere in this report, we have experienced significant liquidity issues due to the lack of net sales in our debt offerings during the fiscal year ended September 25, 2009 and continuing through the year ended September 25, 2010. The recessionary economy has negatively impacted investor confidence and, on two occasions during the past two years, we temporarily suspended the offering of our debt securities to the public while we restated previously issued financial statements to correct errors detected in those statements. Due to this, to preserve cash, we tightened our risk management controls related to new loans, resulting in a decrease in gross loan originations in fiscal year 2010 of $23.5 million as compared to the prior year. We also received gross proceeds of $12.0 million from the sale of debentures while paying $14.4 million for redemption of debentures issued by us and our subsidiary, The Money Tree of Georgia Inc. Also, for the years ended September 25, 2010 and 2009, respectively, the we have incurred net losses of $12,134,947 and $12,935,090, incurred negative cash flows from operating activities of $4,441,133 and $1,592,134, had a deficiency in net interest margin (net loss from interest and fees after provision for credit losses) of $851,341 and $2,783,793 and, as of September 25, 2010 and 2009, had a shareholders’ deficit of $45,908,992 and $33,774,045, respectively. These factors among others raise substantial

~~Index~~ doubt about the Company’s ability to ~~Financial~~continue ~~Statements~~as a going concern for a reasonable period of time. Consequently, our operations and other sources of funds may not provide sufficient available cash flow to meet our continued redemption obligations if the amount of redemptions continues at its current pace or we continue to suffer losses and must use funds from operations to fund redemptions.

~~Lack~~Our obligations with respect to the debentures and demand notes are governed by the terms of indenture agreements with U.S. Bank National Association, as trustee. Under the indentures, in addition to other possible events of default, if we fail to make a ~~Significant~~payment ~~Line~~of principal or interest under any debenture or demand note and this failure is not cured within 30 days, we will be deemed in default. Upon such a default, the trustee or holders of ~~Credit~~25% in principal of the outstanding debentures or demand notes could declare all principal and accrued interest immediately due and payable. Since our total assets do not cover these debt payment obligations, we would most likely be unable to make all payments under the debentures or demand notes when due, and we might be forced to cease our operations. See “Risk Factors – If we default in our debenture or demand note payment obligations, the indenture agreements relating to our debentures and demand notes provide that the trustee could accelerate all payments due under the debentures and demand notes, which would further negatively affect our financial positions” and “Risk Factors – We may be unable to meet our debenture and demand note redemption obligations which could force us to sell off our loan receivables and other operating assets or cease our operations.”

~~Although~~Changes wein ~~have~~our ~~been~~liquidity ~~without~~position aresult ~~significant~~from ~~line~~operating, ofinvesting ~~credit~~and ~~for~~financing ~~the~~activities. ~~past~~Cash ~~several~~flows ~~years,~~from weoperating activities are generally ~~evaluating~~ the ~~possibility~~cash ofeffects ~~obtaining a line~~ of ~~credit~~transactions orand other ~~forms~~events ofthat ~~capital~~enter tointo ~~meet~~the determination of our ~~future~~net ~~liquidity~~income, ~~needs.~~including Inpurchases ~~fiscal~~of ~~year~~used ~~2009~~automobiles, ~~loans~~electronics, ~~repaid~~furnishings ~~were~~and ~~approximately~~other ~~$60.0~~consumer ~~million.~~goods ~~This~~for ~~represents~~resale ~~approximately~~to ~~81% of~~ our ~~average gross outstanding finance receivables during the period~~customers. The primary ~~average~~investing ~~term~~activities ofinclude ~~our direct~~ consumer ~~loans~~loan isoriginations ~~less~~and ~~than~~purchases ~~seven~~and ~~months;~~collections ~~therefore,~~on ifsuch weconsumer ~~anticipate~~loans. ~~having~~Our ~~short-term~~financing ~~cash~~activities ~~flow~~focus ~~problems~~almost ~~over~~entirely ~~the~~on ~~next 12 months, we could curtail~~ the ~~amount~~sale of ~~funds~~debentures ~~we loan to our customers~~ and ~~focus~~demand ~~on collections to increase cash flow, while continuing to explore other financing options if any are available~~notes.

WeCash ~~are~~and ~~evaluating~~cash ~~the possibility~~equivalents ofdecreased ~~obtaining~~to a$2.1 ~~line~~million ofat ~~credit~~September 25, ~~for~~2010 ~~our~~from ~~long-term financing needs~~$2.9 Ifmillion weat ~~fail~~September 25, to2009. ~~secure~~The ~~a line~~ decrease of ~~credit,~~$0.8 wemillion ~~will~~during ~~continue~~the tofiscal beyear ~~heavily~~ended ~~reliant~~September 25, ~~upon~~2010 ~~the~~was ~~sale~~due ofto ~~debentures~~$4.4 ~~and~~million ~~demand~~of ~~notes~~net ~~for~~cash ~~our~~used ~~liquidity.~~in Ifoperations, weprimarily ~~are~~driven ~~unable~~by toan ~~sell sufficient~~operating ~~debentures~~loss ~~and~~of ~~demand~~$12.1 ~~notes~~million. ~~for~~This ~~any~~was ~~reason~~partially ~~and~~offset weby ~~fail~~net tocash ~~obtain~~of a$6.1 ~~line~~million ofprovided ~~credit~~from investing oractivities, ~~other~~as ~~source~~finance ofreceivables ~~financing,~~repaid ~~our~~exceeded ~~ability~~finance toreceivables ~~meet~~originated ~~our~~by ~~obligations,~~$5.3 ~~including~~million ~~our~~and ~~redemption~~we ~~obligations~~received ~~with~~proceeds ~~respect~~from to the ~~debentures~~sale ~~and~~of ~~demand~~finance ~~notes, could~~receivables beof ~~materially~~$1.0 ~~and~~million. ~~adversely affected~~$2.5 ~~Please~~million ~~see~~was ~~“Risk~~used ~~Factors~~in –financing ~~Our~~activities, ~~lack~~as ofwe aredeemed approximately ~~significant~~$14.4 ~~line~~million of ~~credit~~debentures ~~could~~while ~~affect~~the ~~our~~proceeds ~~liquidity”~~from ~~and~~the ~~“Risk~~sale ~~Factors~~of –debentures Wewere ~~may~~$12.0 bemillion. ~~unable~~The tocash ~~meet~~required ~~our~~to ~~debenture~~fund ~~and~~the ~~demand note~~ redemption ~~obligations~~of ~~which~~debentures ~~could~~caused ~~force~~ us to ~~sell~~tighten ~~off~~ our ~~loan~~risk ~~receivables~~management ~~and~~on ~~other~~lending ~~operating~~and ~~assets~~focus ormore ~~cease~~on ~~our~~collection ~~operations~~of finance receivables.”

~~Subsequent~~During ~~Events~~2011, we expect to continue to use a significant amount of cash to fund redemption obligations and pay interest on our securities. If we are unable to raise sufficient cash to fund these redemptions and make interest payments on outstanding debentures and demand notes, we may be forced to reduce new loans to customers. To the extent that we are required to continue using cash from operations (as opposed to net proceeds from sales of debentures and demand notes) to fund redemptions and make interest payments, we will make fewer loans to customers, which will result in a material adverse effect on our liquidity, financial condition and ability to continue as a going concern.

AsBelow ofis ~~September 26,~~a ~~2009,~~table weshowing ~~ceased~~the ~~sales~~net effect ~~operation~~of at our ~~Columbus,~~cash ~~Georgia used~~flows ~~car~~from ~~lot~~financing ~~due~~activities tofor ~~poor sales performance and operating losses. Collection activity will continue at this location. In conjunction with this action, we moved one of~~ our ~~two~~fiscal ~~loan~~years ~~offices~~ended ~~in Columbus~~September 25, ~~Georgia~~2010 toand ~~this~~2009: ~~facility.~~

As of November 25, 2009, we had redeemed $0.4 million more in debentures than we had sold and we had sold $0.1 million more demand notes than we had redeemed. These include amounts that were redeemed through our subsidiary, The Money Tree of Georgia Inc.


	2010			2009
Senior debt – borrowing	$	1,371,609		$	3,959,931
Senior debt – repayments		(1,533,501	)		(4,328,304	)

Net	$	(161,892	)	$	(368,373	)

Demand notes – borrowing	$	2,614,131		$	3,002,554
Demand notes – repayments		(2,585,925	)		(3,514,007	)

Net	$	28,206		$	(511,453	)

Debentures – borrowing	$	11,998,141		$	10,028,146
Debentures – repayments		(14,374,264	)		(18,634,536	)

Net	$	(2,376,123	)	$	(8,606,390	)

~~Recent Accounting~~30 ~~Pronouncements~~

Set forth below are recent accounting pronouncements that may have a future effect on operations.

In June 2009, the Financial Accounting Standards Board (FASB) issued new guidance effective for financial statements issued for periods ending after September 15, 2009. “The FASB Accounting Standards Codification” (“FASB ASC”) establishes the source of authoritative U.S. generally accepted accounting principles (GAAP) recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (SEC) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. On the effective date, the FASB ASC superseded all then existing non-SEC accounting and reporting standards. All other non-grandfathered non-SEC accounting literature not included in the ASC became non-authoritative. Our adoption of this guidance did not have a material impact on our consolidated financial statements.

In June 2009, the FASB issued revised guidance to improve the reporting for the transfer of financial assets resulting from (1) practices that have developed since the issuance of previous guidance that are not consistent with the original intent and key requirements of that guidance and (2) concerns of financial statement users that many of the financial assets (and related obligations) that have been derecognized should continue to be reported in the financial statements of transferors. These revisions to FASB ASC 860, “Transfers and Servicing,” must be applied as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period and for interim and annual reporting periods thereafter. Earlier application is prohibited. We do not expect that the adoption of this guidance will have a material impact on our consolidated financial statements.

~~Index~~Cash topayments ~~Financial~~for ~~Statements~~interest for the fiscal years ended September 25, 2010 and 2009 were as follows:

In June 2009, the FASB issued revised guidance to improve financial reporting by enterprises involved with variable interest entities and to provide more relevant and reliable information to users of financial statements. These revisions to FASB ASC 810, “Consolidation,” is effective as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. Earlier application is prohibited. We do not expect that the adoption of this guidance will have a material impact on our consolidated financial statements.


	2010		2009
Senior debt	$	67,809	$	176,312
Debentures and demand notes		7,556,075		8,826,819

Total interest payments	$	7,623,884	$	9,003,131

InDebentures ~~April 2009, the FASB issued revised guidance for recognizing~~ and ~~measuring~~Demand ~~pre-acquisition~~Notes contingencies in a business combination. These revisions which are a part of FASB ASC 805, “Business Combinations,” addresses application issues raised by preparers, auditors, and members of the legal profession on initial recognition and measurement, subsequent measurement and accounting, and disclosure of assets and liabilities arising from contingencies in a business combination. This guidance is effective for assets or liabilities arising from contingencies in business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. This guidance is not expected to have a material impact on our consolidated financial statements.

~~In May 2008~~Historically, ~~the~~we ~~FASB~~or ~~issued~~our ~~revised~~subsidiary, ~~guidance~~The ~~for~~Money ~~accounting~~Tree ~~for~~of ~~financial~~Georgia ~~guarantee insurance contracts~~Inc., ~~These~~have ~~revisions~~offered ~~which~~debentures ~~are~~and ademand ~~part~~notes ofto ~~FASB~~investors ~~ASC~~as ~~944,~~a ~~“Financial~~significant source ~~Services-Insurance,” clarifies the application~~ of ~~GAAP~~our ~~to financial~~required ~~guarantee~~capital. ~~insurance~~We ~~contracts~~rely ~~included~~on ~~within~~ the ~~scope~~sale of ~~the~~debentures ~~guidance.~~and ~~The~~demand ~~guidance~~notes isto ~~effective~~fund ~~for~~redemption ~~financial~~obligations, ~~statements~~make ~~issued~~interest ~~for~~payments ~~fiscal~~and, ~~years~~if ~~beginning~~excess ~~after~~funds ~~December 15,~~are ~~2008~~available, ~~and~~fund ~~all~~other ~~interim~~Company ~~periods~~working ~~within those fiscal years~~capital. We ~~do not expect this guidance will have a material impact on our consolidated financial statements.~~

InDuring ~~March~~the ~~2008~~year ended September 25, 2010, we (1) received gross proceeds of $12.0 million from the ~~FASB~~sales of debentures, and ~~issued~~(2) paid ~~new~~$14.4 ~~guidance~~million ~~concerning~~for ~~“Disclosures~~redemption ~~about~~of ~~Derivative~~debentures ~~Instruments~~for us and ~~Hedging~~our ~~Activities~~subsidiary,” ~~which~~The isMoney ~~included~~Tree inof ~~FASB~~Georgia, ~~ASC 815~~Inc. ~~This~~As ~~guidance~~of ~~requires~~September 25, ~~enhanced~~2010, ~~disclosures~~we ~~about~~and anthis ~~entity’s~~subsidiary ~~derivative~~had ~~and~~$71.2 ~~hedging~~million ~~activities~~of debentures and $3.2 million of demand notes outstanding ~~thereby~~compared ~~improves~~to ~~the~~$73.6 ~~transparency~~million of ~~financial~~debentures ~~reporting~~and $3.1 ~~This~~million ~~guidance~~of isdemand ~~effective~~notes ~~for~~outstanding ~~financial~~as ~~statements~~of ~~issued~~September 25, ~~for~~2009. ~~fiscal~~See ~~years~~“Risk ~~and~~Factors ~~interim~~– ~~periods~~Our ~~beginning~~decreased ~~after~~sales ~~November 15,~~of ~~2008~~Debentures and Demand Notes, along with ~~early~~the ~~application~~increased ~~encouraged.~~redemptions ~~This~~of ~~guidance~~these ~~encourages~~securities, ~~but~~has ~~does~~resulted ~~not~~in ~~require~~fewer loans being made to customers, ~~comparative~~which ~~disclosures~~has ~~for~~significantly ~~earlier~~negatively ~~periods~~affected atour ~~initial~~operations, ~~adoption~~financial position and liquidity.” ~~Management~~Accrued ~~does~~interest ~~not~~payable ~~expect~~on ~~this~~debentures ~~guidance~~and todemand ~~have~~notes awas ~~material~~$12.7 ~~impact~~million onand ~~our~~$13.5 million ~~consolidated~~as ~~financial~~of ~~statements~~September 25, 2010 and 2009, respectively. This decrease is a result of the decrease in outstanding amounts of debentures during fiscal year 2010

InDebentures ~~December~~may ~~2007,~~be ~~the~~redeemed ~~FASB~~at ~~issued~~our ~~new~~investors’ ~~guidance~~option ~~for~~at the ~~accounting~~end of ~~noncontrolling~~the ~~interests.~~interest ~~This~~adjustment ~~new~~period ~~guidance,~~selected ~~which~~by isthem ~~part~~(one ~~of FASB ASC 810~~year, ~~“Consolidations,”~~two ~~establishes~~years ~~accounting~~or ~~and~~four ~~reporting standards for the noncontrolling (minority~~years) ~~interest~~or inat ~~a subsidiary and for the deconsolidation of a subsidiary~~maturity. It ~~clarifies~~Demand ~~that~~notes amay ~~noncontrolling~~be ~~interest~~redeemed ~~in a subsidiary~~by isholders anat ~~ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. We have not yet determined the impact, if~~ any, ~~that this guidance will have on its consolidated financial statements~~time. ~~This~~ ~~guidance is effective for our fiscal year beginning September 26, 2009.~~

InLack ~~December 2007, the FASB issued revised guidance for the accounting~~ of business combinations. These revisions to FASB ASC 805, “Business Combinations,” require that the acquisition method of accounting (previously the purchase method) be used for all business combinations and that an acquirer be identified for each business combination. This guidance also establishes principles and requirements for how the acquirer: a) ~~recognizes~~Significant ~~and~~Line measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree; b) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and c) determines what information to disclose to enable users of ~~the~~ ~~financial~~Credit statements to evaluate the nature and financial effects of the business combination. The guidance will apply prospectively to business combinations for which the acquisition date is on or after September 26, 2009. While we have not yet evaluated this statement for the impact, if any, that this guidance will have on its consolidated financial statements, we will be required to expense costs related to any acquisitions after September 25, 2009.

InAlthough ~~June~~we ~~2009,~~have ~~the~~been ~~FASB~~without ~~issued~~a ~~SFAS~~significant ~~No. 167,~~line ~~“Amendments~~of tocredit ~~FASB~~for ~~Interpretation~~the ~~No. 46(R)”~~past ~~(SFAS~~several ~~167)~~years, ~~which~~we ~~has~~are ~~not~~evaluating ~~been~~the possibility of obtaining a ~~codified.~~line ~~SFAS~~of ~~167~~credit ~~amends~~or ~~FASB~~other ~~Interpretation~~forms Noof capital to meet our future liquidity needs. 46 ~~(revised~~In ~~December~~fiscal ~~2003)~~year 2010, ~~“Consolidation~~loans ofrepaid ~~Variable~~were ~~Interest~~approximately ~~Entities”~~$47.2 ~~(FIN~~million. ~~46(R))~~This torepresents ~~require~~approximately an81% ~~enterprise~~of toour ~~qualitatively~~average ~~assess~~gross ~~the~~outstanding ~~determination~~finance ofreceivables during the period. ~~primary~~The ~~beneficiary~~average term of ~~a variable~~our ~~interest~~direct ~~entity~~consumer ~~(VIE)~~loans ~~based~~is onless ~~whether~~than ~~the~~seven ~~entity~~months; ~~(1) has~~therefore, ~~the~~if ~~power~~we toanticipate ~~direct~~having ~~the~~short-term ~~activities~~cash offlow aproblems ~~VIE~~over ~~that~~the ~~most~~next ~~significantly~~12 ~~impact~~months, we could curtail the ~~entity’s~~amount ~~economic~~of ~~performance~~funds we loan to our customers and ~~(2) has~~focus on collections to increase cash flow, while continuing to explore other financing options if any are available.

31We are evaluating the possibility of obtaining a line of credit for our long-term financing needs. If we fail to secure a line of credit, we will continue to be heavily reliant upon the sale of debentures and demand notes for our liquidity. If we are unable to sell sufficient debentures and demand notes for any reason and we fail to obtain a line of credit or other source of financing, our ability to meet our obligations, including our redemption obligations with respect to the debentures and demand notes, could be materially and adversely affected. Please see “Risk Factors – Our lack of a significant line of credit could affect our liquidity” and “Risk Factors – If we are unable to meet our debenture and demand note redemption obligations, and we are unable to obtain additional financing or other sources of capital, we may be forced to sell off our loan receivables and other operating assets or we might be forced to cease our operations, and you could lose some or all of your investment.”

Subsequent Events

Between September 26, 2010 and November 25, 2010, we sold $2.9 million of debentures and $0.4 million of demand notes and we redeemed $1.6 million of debentures and $0.2 million of demand notes. These include amounts that were redeemed through our subsidiary, The Money Tree of Georgia Inc.

~~Index~~Recent toAccounting ~~Financial~~Pronouncements ~~Statements~~

~~the~~Set ~~obligation~~forth tobelow ~~absorb~~are ~~losses~~recent ofaccounting ~~the~~pronouncements ~~entity or the right to receive benefits from the entity~~ that ~~could~~may ~~potentially~~have ~~be significant to the VIE. Also, SFAS 167 requires an ongoing reconsideration of the primary beneficiary, and amends the events that trigger~~ a ~~reassessment~~future ofeffect whether an entity is a VIE. Enhanced disclosures are also required to provide information about an enterprise’s involvement in a VIE. SFAS No. 167 is effective for interim and annual reporting periods ending after November 15, 2009. We are currently evaluating the impact, if any, this standard will have on ~~our consolidated financial statements~~operations.

~~Critical~~In July 2010, the Financial Accounting ~~Policies~~Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2010-20, “Receivables (Topic 310): Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses.” The amendments to the FASB Accounting Standards Codification™ (FASB ASC) will enhance the current disclosure requirements to assist users of financial statements in assessing an entity’s credit risk exposure and evaluating the adequacy of an entity’s allowance for credit losses. ASU 2010-20 requires entities to disclose the nature of credit risk inherent in their finance receivables, the procedure for analyzing and assessing credit risk, and the changes in both the receivables and the allowance for credit losses by portfolio segment and class. ASU 2010-20 is effective for interim and annual reporting periods ending on or after December 15, 2010. We are currently evaluating the impact, if any, this guidance will have on our consolidated financial statements.

~~Our~~In ~~accounting~~April ~~and~~2010, ~~reporting~~the ~~policies~~FASB ~~conform~~issued ~~with~~ASU ~~GAAP~~No. 2010-18, ~~and~~“Receivables ~~predominant~~(Topic ~~practice~~310): ~~within~~Effect of a Loan Modification When the ~~financial~~Loan ~~services~~Is ~~industry~~Part of a Pool That Is Accounted for as a Single Asset.” This ASU codifies the consensus reached in EITF Issue No. 09-I, “Effect of a Loan Modification When the Loan Is Part of a Pool That Is Accounted for as a Single Asset.” The amendments ~~preparation~~to the FASB ASC provide that modifications of ~~financial~~loans ~~statements~~that are accounted for within a pool under Subtopic 310-30 do not result in ~~conformity~~the ~~with~~removal ~~GAAP~~of ~~requires~~those ~~management~~loans tofrom ~~make~~the ~~estimates~~pool ~~and~~even ~~assumptions~~if the modification of those loans would otherwise be considered ~~that~~a ~~affect~~troubled debt restructuring. An entity will continue to be required to consider whether the ~~amounts~~pool ~~reported~~of assets in which the ~~financial~~loan ~~statements~~is ~~and~~included is impaired if expected cash flows for the ~~accompanying~~pool ~~notes~~change. ~~Actual~~ASU ~~results~~2010-18 ~~could~~is ~~differ~~effective ~~from~~prospectively ~~those~~for modifications ~~estimates~~of loans accounted for within pools under Subtopic 310-30 occurring in the first interim or annual period ending on or after July 15, 2010. We adopted this guidance on September 25, 2010 and its adoption did not have a material impact on our consolidated financial statements.

WeIn ~~believe~~June 2009, ~~that~~ the ~~determination~~FASB ofissued ~~our~~revised ~~allowance~~guidance ~~for~~to ~~credit~~improve ~~losses~~the reporting ~~involves~~for athe ~~higher~~transfer ~~degree~~ of ~~judgment~~financial ~~and~~assets ~~complexity~~resulting ~~than~~from ~~our~~(1) practices ~~other~~that ~~significant~~have ~~accounting~~developed ~~policies.~~since ~~The~~the ~~allowance~~issuance ~~for~~of ~~credit~~previous ~~losses~~guidance ~~is calculated~~that ~~with~~are ~~the~~not ~~objective~~consistent ofwith ~~maintaining~~the aoriginal ~~reserve~~intent ~~level~~and ~~believed~~key byrequirements ~~management~~of tothat beguidance ~~sufficient~~and to(2) concerns of ~~absorb~~financial ~~estimated~~statement ~~credit~~users ~~losses.~~that ~~Management’s~~many ~~determination~~ of the ~~adequacy~~financial ofassets ~~the~~(and ~~allowance~~related isobligations) ~~based~~that onhave ~~periodic~~been ~~evaluations~~derecognized ofshould ~~the~~continue ~~loan portfolio~~to ~~and~~be ~~other~~reported ~~relevant~~in ~~factors.~~the ~~However,~~financial ~~this~~statements ~~evaluation~~of istransferors. ~~inherently~~These ~~subjective,~~revisions asto itFASB ~~requires~~ASC ~~material estimates including~~860, ~~among~~“Transfers ~~others~~and Servicing,” ~~expected~~must ~~default~~be ~~probabilities,~~applied ~~loss~~as ~~given~~of ~~default,~~ the ~~amounts~~beginning ~~and timing~~ of ~~expected~~each ~~future~~reporting ~~cash flows~~entity’s onfirst ~~impaired~~annual ~~loans,~~reporting ~~and~~period ~~general~~that ~~amounts~~begins ~~for~~after ~~historical~~November 15, ~~loss~~2009, ~~experience.~~for Weinterim ~~also~~periods ~~consider~~within ~~economic~~that ~~conditions,~~first ~~uncertainties~~annual inreporting ~~estimating~~period ~~losses~~ and ~~inherent~~for ~~risks~~interim inand ~~the~~annual reporting ~~loan~~periods ~~portfolio~~thereafter. ~~All~~Earlier ofapplication ~~these~~is ~~factors~~prohibited. ~~may~~We bedo ~~susceptible~~not toexpect ~~significant change.~~that To the ~~extent~~adoption ~~actual~~of ~~outcomes~~this ~~differ~~guidance ~~from~~will ~~management’s~~have ~~estimates,~~a ~~additional~~material ~~provisions for credit losses may be required that would adversely~~ impact ~~earnings~~on inour ~~future~~consolidated ~~periods~~financial statements.

~~Finance~~In ~~receivables~~June 2009, ~~are~~the ~~considered~~FASB ~~impaired~~issued ~~(i.e.,~~revised ~~income~~guidance ~~recognition~~to ~~ceases)~~improve asfinancial areporting ~~result~~by ofenterprises ~~past-due~~involved ~~status~~with orvariable ainterest entities ~~judgment~~and byto ~~management that,~~provide ~~although~~more ~~payments~~relevant ~~are~~and ~~current,~~reliable ~~such~~information ~~action~~to isusers ~~prudent~~of financial statements. ~~Finance~~These ~~receivables~~revisions onto ~~which~~FASB ~~payments~~ASC ~~are~~810, ~~past~~“Consolidation,” ~~due~~is 90effective ~~days~~as orof ~~more~~the ~~are~~beginning ~~considered~~of ~~impaired~~each ~~unless~~reporting ~~they~~entity’s ~~are~~first ~~well-secured~~annual ~~and~~reporting period inthat ~~the~~begins ~~process~~after ofNovember 15, ~~collection~~2009, orfor ~~renewal.~~interim ~~Any~~periods ~~losses~~within ~~incurred from~~that ~~finance~~first ~~receivables~~annual ~~that~~reporting ~~are~~period, ~~impaired~~and ~~are~~for ~~charged~~interim ~~off~~and atannual ~~180~~reporting ~~days~~periods ~~past~~thereafter. ~~due~~Earlier application is prohibited. ~~Related~~We ~~accrued~~do ~~interest~~not ~~and~~expect ~~fees~~that ~~are~~the ~~reversed~~adoption ~~against~~of ~~current~~this guidance ~~period~~will ~~income~~have a material impact on our consolidated financial statements.

~~When~~Critical aAccounting ~~loan~~Policies ~~is impaired, interest accrued but uncollected is generally reversed against interest income. Cash receipts on impaired loans are generally applied to reduce the unpaid principal balance.~~

We ~~recognize~~believe ~~deferred~~our ~~tax~~accounting ~~assets~~ and ~~liabilities~~reporting ~~for~~policies ~~the~~conform ~~future~~with ~~tax~~accounting ~~effects~~polices ofgenerally ~~temporary~~accepted ~~differences,~~in ~~net~~the ~~operating~~United ~~loss carry-forwards~~States ~~and~~of ~~tax~~America ~~credits.~~(GAAP) and ~~Deferred~~predominant ~~tax~~practice ~~assets~~within ~~are~~the ~~subject~~financial toservices ~~management’s~~industry. ~~judgment~~The ~~based~~preparation ~~upon~~of ~~available~~financial ~~evidence~~statements ~~that~~in ~~future~~conformity ~~realization~~with isGAAP ~~more~~requires ~~likely than not. If~~ management ~~determines that we may be unable~~ to ~~realize~~make ~~all~~estimates orand ~~part~~assumptions ofthat ~~net deferred~~affect ~~tax assets in~~ the ~~future,~~amounts areported ~~direct~~in ~~charge to income tax expense may be required to reduce~~ the ~~recorded~~financial ~~value~~statements of and the ~~net~~accompanying ~~deferred~~notes. ~~tax~~Actual ~~asset~~results tocould ~~the~~differ ~~expected~~from ~~realizable~~those ~~amount~~estimates.

InWe ~~2008,~~believe ~~management~~that ~~revised its methodology in determining~~ the ~~adequacy~~determination of ~~the~~our allowance for credit losses ~~and~~involves ~~now~~a ~~relies~~higher ~~much~~degree ~~more~~of ~~heavily on~~judgment ~~current~~and ~~data~~complexity ~~available rather~~ than ~~simply~~our ~~looking~~other atsignificant ~~average~~accounting ~~charge-offs~~policies. ~~over~~The ~~the~~allowance ~~most~~for ~~recent~~credit ~~three~~losses ~~years.~~is ~~Otherwise,~~calculated wewith ~~have~~the ~~not~~objective ~~substantially changed any aspect~~ of ~~our~~maintaining ~~overall~~a ~~approach~~reserve inlevel ~~the~~believed ~~application~~by ofmanagement ~~the~~to ~~foregoing policies. There have~~be ~~been~~sufficient noto ~~other~~absorb ~~material~~estimated ~~changes~~credit inlosses. ~~assumptions~~Management’s ordetermination ~~estimation~~of ~~techniques~~the ~~utilized~~adequacy asof ~~compared~~the toallowance ~~previous~~is ~~years.~~based ~~Please~~on ~~refer~~periodic toevaluations ~~Note~~of ~~2 in~~ the ~~notes~~loan toportfolios ~~our~~and ~~audited~~other ~~consolidated~~relevant ~~financial~~factors. ~~statements~~However, ~~for~~this ~~details~~evaluation ~~regarding~~is ~~our~~inherently ~~significant~~subjective, ~~accounting~~as ~~policies.~~it requires material

~~Impact~~32 ~~of Inflation and General Economic Conditions~~

Although inflation has not had a material adverse effect on our financial condition or results of operations, increases in the inflation rate are generally associated with increased interest rates. A significant and sustained increase in interest rates would likely unfavorably impact our profitability by reducing the interest rate spread between the rate of interest we receive on our customer loans and interest rates we pay to our note holders, banks and finance companies. Inflation may also negatively affect our operating expenses.

~~Index~~ estimates including, among others, expected default probabilities, loss given default, the amounts and timing of expected future cash flows on impaired loans, and general amounts for historical loss experience. We also consider economic conditions, uncertainties in estimating losses and inherent risks in the loan portfolio. All of these factors may be susceptible to ~~Financial~~significant ~~Statements~~change. To the extent actual outcomes differ from management’s estimates, additional provisions for credit losses may be required that would adversely impact earnings in future periods.

~~Contractual~~Finance ~~Commitments~~receivables are considered impaired (i.e., income recognition ceases) as a result of past-due status or a judgment by management that, although payments are current, such action is prudent. Finance receivables on which payments are past due 90 days or more are considered impaired unless they are well-secured and ~~Contingencies~~in the process of collection or renewal. Any losses incurred from finance receivables that are impaired are charged off at 180 days past due. Related accrued interest and fees are reversed against current period income.

~~Our~~When ~~operations are carried on in branch office locations which we occupy pursuant to lease agreements. The leases typically provide for~~ a ~~lease~~ ~~term~~loan ofis ~~five years. Please see Notes 11 and 14 in the notes to our audited consolidated financial statements for details relating to our rental commitments and contingent liabilities~~impaired, ~~respectively. Please also see “Properties”~~ ~~and~~interest ~~“Certain~~accrued ~~Relationships~~but ~~and~~uncollected ~~Related~~is ~~Transactions”~~generally ~~for~~reversed ~~further~~against ~~discussion~~interest ~~of our leases~~income. ~~Below~~Cash isreceipts aon ~~table~~impaired ~~showing~~loans ~~our~~are ~~contractual~~generally ~~obligations~~applied ~~under~~to ~~current~~reduce ~~debt~~the ~~financing~~unpaid ~~and~~principal ~~leasing~~balance. ~~arrangements as of September 25, 2009:~~

~~Contractual~~We ~~Obligations~~recognize deferred tax assets and liabilities for the future tax effects of temporary differences, net operating loss carry-forwards and tax credits. Deferred tax assets are subject to management’s judgment based upon available evidence that future realization is more likely than not. If management determines that we may be unable to realize all or part of net deferred tax assets in the future, a direct charge to income tax expense may be required to reduce the recorded value of the net deferred tax asset to the expected realizable amount.

	Payments Due by Period (in thousands)						3 – 5 years		More than5 years
	Total		Less than1 year		1 – 3 years
Long term debt	$	77,076	$	23,770	$	36,815	$	16,491	$	—
Operating leases		6,801		2,753		2,966		974		108
Total obligations	$	83,877	$	26,523	$	39,781	$	17,465	$	108

Please refer to Note 2 in the notes to our audited consolidated financial statements for details regarding our significant accounting policies.

~~Item~~Impact ~~7A.~~of ~~Quantitative~~Inflation and ~~Qualitative~~General ~~Disclosures~~Economic ~~About~~Conditions ~~Market Risk:~~

~~Our~~Although ~~profitability~~inflation ~~and~~has ~~financial~~not ~~performance~~had ~~are~~a ~~sensitive~~material toadverse ~~changes~~effect inon ~~the~~our ~~U.S. Treasury~~financial ~~yields~~condition ~~and~~or ~~the~~results ~~spread between the effective rate~~ of ~~interest~~operations, weincreases ~~receive~~in ~~on customer loans and~~ the ~~interest rates~~inflation werate ~~pay~~are ~~on our borrowings. Our finance income is~~ generally ~~not~~associated ~~sensitive~~with toincreased ~~fluctuations in market~~ interest rates. ~~The primary exposure that we face is changes in interest rates on our borrowings.~~ A significant ~~substantial~~ and sustained increase in ~~market~~ interest rates would likely ~~adversely~~unfavorably ~~affect~~impact our ~~growth and~~ profitability ~~since~~by wereducing ~~would be required to increase~~ the interest ~~rates~~rate wespread ~~pay~~between ~~to holders of debentures at~~ the ~~end~~rate of ~~each~~ interest ~~adjustment~~we ~~period.~~receive ~~We would also face pressure to increase interest rates~~ on our ~~demand~~customer ~~notes~~loans toand ~~stay competitive. The overall objective of our~~ interest ~~rate~~rates ~~risk~~we ~~management~~pay ~~strategy is~~ to ~~mitigate the effects of changing interest rates on~~ our ~~interest~~note ~~expense through the utilization of short-term~~holders, ~~variable~~banks ~~rate debt~~ and ~~medium-~~finance ~~and long-term fixed rate debt~~companies. WeInflation ~~have~~may ~~not~~also ~~entered~~negatively ~~into~~affect ~~any derivative instruments to manage~~ our ~~interest~~operating ~~rate risk~~expenses. ~~Please see Note 7 in the notes to our audited consolidated financial statements for information on our debt, including maturities and interest rates.~~

33Contractual Commitments and Contingencies

Our operations are carried on in branch office locations which we occupy pursuant to lease agreements. The leases typically provide for a lease term of five years. Please see Notes 11 and 14 in the notes to our audited consolidated financial statements for details relating to our rental commitments and contingent liabilities, respectively. Please also see “Properties” and “Certain Relationships and Related Transactions” for further discussion of our leases. Below is a table showing our contractual obligations under current debt financing and leasing arrangements as of September 25, 2010:

Contractual Obligations


	Payments Due by Period (in thousands)
	Total		Less than 1 year		1 – 3 years		3 – 5 years		More than 5 years
Long term debt	$	74,566	$	19,871	$	34,676	$	20,019	$	—
Operating leases		14,773		2,583		4,926		821		6,443

Total obligations	$	89,339	$	22,454	$	59,621	$	821	$	6,443

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk:

A smaller reporting company, as defined in Item 10 of Regulation S-K, is not required to provide the information required by this Item.

~~Index~~Item to8. Financial Statements and Supplementary Data:

~~Item~~Index 8.to Consolidated Financial Statements ~~and Supplementary Data:~~

Index to Consolidated Financial Statements


	Page
Report of Independent Registered Public Accounting Firm		35

Audited Consolidated Financial Statements

Consolidated Balance Sheets as of September 25, 2010 and 2009		36

Consolidated Statements of Operations for the years ended September 25, 2010 and 2009		37

Consolidated Statements of Shareholders’ Deficit for the years ended September 25, 2010 and 2009		38

Consolidated Statements of Cash Flows for the years ended September 25, 2010 and 2009		39

Notes to Consolidated Financial Statements		40

		Page
Report of Independent Registered Public Accounting Firm		35
Audited Consolidated Financial Statements
Consolidated Balance Sheets as of September 25, 2009 and 2008		36
Consolidated Statements of Operations for the years ended September 25, 2009, 2008 and 2007		37
Consolidated Statements of Shareholders’ Deficit for the years ended September 25, 2009, 2008 and 2007		38
Consolidated Statements of Cash Flows for the years ended September 25, 2009, 2008 and 2007		39
Notes to Consolidated Financial Statements		41

~~Index~~Report toof ~~Financial~~Independent ~~Statements~~Registered Public Accounting Firm

~~Report~~To ofthe ~~Independent~~Directors ~~Registered~~and ~~Public~~Shareholders ~~Accounting Firm~~

ToThe ~~the~~Money ~~Directors~~Tree Inc. and ~~Shareholders~~subsidiaries

We have audited the accompanying consolidated balance sheets of The Money Tree Inc. and subsidiaries (the “Company”) as of September 25, 2010 and 2009, and the related consolidated statements of operations, shareholders’ deficit, and cash flows for each of the years in the two-year period ended September 25, 2010. The Company’s management is responsible for these consolidated financial statements. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We ~~have~~conducted ~~audited~~our ~~the~~audits ~~accompanying~~in ~~consolidated~~accordance ~~balance~~with ~~sheets~~the standards of ~~The~~the ~~Money~~Public ~~Tree~~Company ~~Inc.~~Accounting ~~and subsidiaries~~Oversight Board (~~the~~United ~~“Company”~~States). asThose ofstandards ~~September 25,~~require ~~2009~~that we ~~and~~plan ~~2008,~~ and perform the ~~related~~audit to obtain reasonable assurance about whether the consolidated financial statements are free of ~~operations,~~material ~~shareholders’~~misstatement. ~~deficit~~The Company is not required to have, ~~and~~nor ~~cash~~were ~~flows~~we ~~for~~engaged ~~each~~to perform, an audit of ~~the~~its ~~three~~internal ~~years~~control over infinancial ~~the~~reporting. ~~period~~Our ~~ended~~audit ~~September 25,~~included ~~2009. These~~consideration ~~consolidated~~of internal control over financial ~~statements~~reporting as a basis for designing audit procedures that are appropriate in the ~~responsibility~~circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s ~~management.~~internal ~~Our~~control ~~responsibility~~over isfinancial toreporting. Accordingly, we express anno such opinion. An audit also includes examining, on ~~these~~a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, ~~based~~assessing onthe accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

WeIn ~~conducted~~ our ~~audits~~opinion, inthe ~~accordance~~consolidated ~~with~~financial ~~the~~statements ~~standards~~referred ofto ~~the~~above ~~Public~~present ~~Company~~fairly, ~~Accounting~~in ~~Oversight~~all ~~Board~~material ~~(United~~respects, ~~States).~~the ~~Those~~financial ~~standards~~position ~~require~~of ~~that~~The weMoney ~~plan~~Tree Inc. and ~~perform~~subsidiaries ~~the~~as ~~audit~~of toSeptember 25, ~~obtain~~2010 ~~reasonable~~and ~~assurance~~2009, ~~about~~and ~~whether~~ the ~~consolidated~~results ~~financial statements are free~~ of ~~material~~their ~~misstatement.~~operations Anand ~~audit~~their ~~includes~~cash ~~examining,~~flows onfor aeach ~~test~~of ~~basis, evidence supporting~~ the ~~amounts~~years ~~and disclosures~~ in the ~~consolidated~~ ~~financial~~two-year ~~statements.~~period Anended ~~audit~~September 25, ~~also~~2010, ~~includes~~in ~~assessing~~conformity ~~the~~with accounting principles generally ~~used~~accepted ~~and~~in ~~significant estimates made by management, as well as evaluating~~ the ~~overall~~United ~~financial~~States ~~statement~~of ~~presentation~~America. ~~We believe that our audits provide a reasonable basis for our opinion.~~

InThe ~~our~~accompanying ~~opinion, the~~ consolidated financial statements ~~referred~~for tothe ~~above~~year ~~present~~ended ~~fairly~~September 25, 2010 inhave ~~all~~been ~~material respects,~~prepared assuming the ~~financial~~Company ~~position~~will ofcontinue ~~The~~as ~~Money~~a ~~Tree~~going ~~Inc~~concern. ~~and~~As ~~subsidiaries~~discussed asin ofNote ~~September 25,~~2 ~~2009~~to ~~and~~the ~~2008,~~consolidated ~~and~~financial statements, the ~~results~~Company ofhas ~~their~~incurred recurring losses from operations and ~~their~~negative cash flows ~~for~~from ~~each~~operating activities ofand ~~the~~has ~~three~~a ~~years~~net shareholders’ deficit that raise substantial doubt about its ability to continue as a going concern. Management’s plans in ~~the~~regards ~~period~~to ~~ended~~these ~~September 25,~~matters ~~2009,~~are also described in ~~conformity~~ ~~with~~Note U2.S. ~~generally~~The ~~accepted~~consolidated ~~accounting~~financial statements ~~principles~~do not contain any adjustments that might result from the outcome of these uncertainties.

~~The~~/s/ ~~accompanying~~Carr, ~~consolidated financial statements for the year ended September~~Riggs ~~25,~~& ~~2009 have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements~~Ingram, ~~the Company has suffered recurring losses from operations and has a net capital~~LLC deficiency that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regards to these matters are also described in Note 2. The consolidated financial statements do not contain any adjustments that might result from the outcome of these uncertainties.

~~/s/ Carr, Riggs & Ingram, LLC~~ Tallahassee, Florida ~~December 23, 2009~~

35December 23, 2010

~~Index~~The toMoney ~~Financial~~Tree ~~Statements~~Inc. and Subsidiaries

~~The~~Consolidated ~~Money~~Balance ~~Tree~~Sheets ~~Inc. and Subsidiaries~~

Consolidated Balance Sheets


*September 25,*	2010			2009
Assets
Cash and cash equivalents	$	2,115,538		$	2,921,777
Finance receivables, net		35,448,066			47,356,095
Other receivables		492,696			716,661
Inventory		1,201,953			2,201,966
Property and equipment, net		3,369,242			4,226,555
Other assets		598,286			1,831,146

Total assets	$	43,225,781		$	59,254,200


Liabilities and Shareholders’ Deficit

Liabilities
Accounts payable and other accrued liabilities	$	1,835,034		$	2,489,269
Accrued interest payable		12,733,503			13,462,931
Demand notes		3,174,913			3,146,707
Senior debt		164,625			326,517
Variable rate subordinated debentures		71,226,698			73,602,821

Total liabilities		89,134,773			93,028,245

Commitments and contingencies (see Notes 11 and 14)

Shareholders’ deficit
Common stock:
Class A voting, no par value; 500,000 shares authorized, 2,686 shares issued and outstanding		1,677,647			1,677,647
Class B non-voting, no par value; 1,500,000 shares authorized, 26,860 shares issued and outstanding		—			—
Accumulated deficit		(47,586,639	)		(35,451,692	)

Total shareholders’ deficit		(45,908,992	)		(33,774,045	)

Total liabilities and shareholders’ deficit	$	43,225,781		$	59,254,200

September 25,	2009			2008
Assets
Cash and cash equivalents	$	2,921,777		$	12,541,302
Finance receivables, net		56,282,881			67,730,473
Other receivables		716,661			956,752
Inventory		2,201,966			3,167,021
Property and equipment, net		4,226,555			4,906,189
Other assets		1,831,146			2,498,205
Total assets	$	68,180,986		$	91,799,942
Liabilities and Shareholders’ Deficit
Liabilities
Accounts payable and other accrued liabilities	$	2,489,269		$	3,278,870
Accrued interest payable		13,462,931			14,854,877
Demand notes		3,146,707			3,658,160
Senior debt		326,517			694,890
Variable rate subordinated debentures		73,602,821			82,209,211
Total liabilities		93,028,245			104,696,008
Commitments and contingencies (see Notes 11 and 14)
Shareholders’ deficit
Common stock:
Class A voting, no par value; 500,000 shares authorized, 2,686 shares issued and outstanding		1,677,647			1,677,647
Class B non-voting, no par value; 1,500,000 shares authorized, 26,860 shares issued and outstanding		—			—
Accumulated deficit		(26,524,906	)		(14,573,713	)
Total shareholders’ deficit		(24,847,259	)		(12,896,066	)
Total liabilities and shareholders’ deficit	$	68,180,986		$	91,799,942

See accompanying notes to the consolidated financial statements.

~~See~~36 ~~accompanying notes to the consolidated financial statements.~~

~~Index~~The toMoney ~~Financial~~Tree ~~Statements~~Inc. and Subsidiaries

~~The~~Consolidated ~~Money~~Statements ~~Tree~~of ~~Inc.~~Operations ~~and Subsidiaries~~

Consolidated Statements of Operations


*Years ended September 25,*	2010			2009
Interest and fee income	$	11,807,508		$	15,589,074
Interest expense		(6,976,265	)		(7,611,185	)

Net interest and fee income before provision for credit losses		4,831,243			7,977,889
Provision for credit losses		(5,682,584	)		(10,761,682	)

Net loss from interest and fees after provision for credit losses		(851,341	)		(2,783,793	)
Insurance commissions		5,032,468			8,354,410
Commissions from motor club memberships from company owned by related parties		1,371,284			1,601,482
Delinquency fees		1,325,813			1,561,013
Other income		401,153			529,541

Net revenue before retail sales		7,279,377			9,262,653

Retail sales		9,418,891			16,019,081
Cost of sales		(5,840,077	)		(10,365,638	)

Gross margin on retail sales		3,578,814			5,653,443

Net revenues		10,858,191			14,916,096

Operating expenses
Personnel expense		(12,677,870	)		(15,732,538	)
Facilities expense		(3,881,025	)		(3,981,370	)
General and administrative expenses		(2,454,029	)		(3,062,752	)
Other operating expenses		(3,793,408	)		(5,501,562	)

Total operating expenses		(22,806,332	)		(28,278,222	)

Net operating loss		(11,948,141	)		(13,362,126	)
Loss on sale of property and equipment		(186,806	)		(10,497	)

Loss before income tax benefit		(12,134,947	)		(13,372,623	)
Income tax benefit		—			437,533

Net loss	$	(12,134,947	)	$	(12,935,090	)

Net loss per common share, basic and diluted	$	(410.71	)	$	(437.79	)

Years ended September 25,	2009			2008			2007
Interest and fee income	$	15,589,074		$	19,280,069		$	19,480,740
Interest expense		(7,611,185	)		(8,275,310	)		(8,025,969	)
Net interest and fee income before provision for credit losses		7,977,889			11,004,759			11,454,771
Provision for credit losses		(9,629,722	)		(13,812,192	)		(4,982,494	)
Net revenue (loss) from interest and fees after provision for credit losses		(1,651,833	)		(2,807,433	)		6,472,277
Insurance commissions		8,354,410			9,615,005			10,120,463
Commissions from motor club memberships from company owned by related parties		1,601,482			1,844,341			1,946,476
Delinquency fees		1,561,013			1,719,608			1,775,728
Income tax service agreement income from company owned by related parties		—			—			3,310
Other income		529,541			647,406			747,829
Net revenue before retail sales		10,394,613			11,018,927			21,066,083
Retail sales		16,019,081			17,164,407			19,001,858
Cost of sales		(10,365,638	)		(11,131,463	)		(12,170,317	)
Gross margin on retail sales		5,653,443			6,032,944			6,831,541
Net revenues		16,048,056			17,051,871			27,897,624
Operating expenses
Personnel expense		(15,732,538	)		(15,530,590	)		(15,349,102	)
Facilities expense		(3,981,370	)		(3,807,540	)		(3,760,048	)
General and administrative expenses		(3,062,752	)		(3,287,831	)		(3,150,330	)
Other operating expenses		(5,649,625	)		(4,852,247	)		(4,978,335	)
Impairment loss from writedown of goodwill		—			(991,243	)		(365,824	)
Total operating expenses		(28,426,285	)		(28,469,451	)		(27,603,639	)
Net operating income (loss)		(12,378,229	)		(11,417,580	)		293,985
Loss on sale of property and equipment		(10,497	)		(20,980	)		(19,012	)
Income (loss) before income tax benefit (expense)		(12,388,726	)		(11,438,560	)		274,973
Income tax benefit (expense)		437,533			(527,806	)		100,664
Net income (loss)	$	(11,951,193	)	$	(11,966,366	)	$	375,637
Net income (loss) per common share, basic and diluted	$	(404.49	)	$	(405.01	)	$	12.71

See accompanying notes to the consolidated financial statements.

~~See~~37 ~~accompanying notes to the consolidated financial statements.~~

~~Index~~The toMoney ~~Financial~~Tree ~~Statements~~Inc. and Subsidiaries

~~The~~Consolidated ~~Money~~Statements ~~Tree~~of ~~Inc.~~Shareholders’ ~~and~~Deficit ~~Subsidiaries~~

Consolidated Statements of Shareholders’ Deficit


	Common Stock
	Class A Voting				Class B Non-voting							Total
	Shares		Stated Value		Shares		Stated Value		Accumulated Deficit			Shareholders’ Deficit
Balance at September 25, 2008		2,686	$	1,677,647		26,860		—	$	(22,516,602	)	$	(20,838,955	)
Net loss		—		—		—		—		(12,935,090	)		(12,935,090	)

Balance at September 25, 2009		2,686		1,677,647		26,860		—		(35,451,692	)		(33,774,045	)
Net loss		—		—		—		—		(12,134,947	)		(12,134,947	)

Balance at September 25, 2010		2,686	$	1,677,647		26,860	$	—	$	(47,586,639	)	$	(45,908,992	)

	Common Stock						AccumulatedDeficit			TotalShareholders’Deficit
	Class A Voting			Class B Non-voting
	Shares	Stated Value		Shares	StatedValue
Balance at September 25, 2006	2,686	$	1,677,647	26,860	$	—	$	(2,982,984	)	$	(1,305,337	)
Net income	—		—	—		—		375,637			375,637
Balance at September 25, 2007	2,686		1,677,647	26,860		—		(2,607,347	)		(929,700	)
Net loss	—		—	—		—		(11,966,366	)		(11,966,366	)
Balance at September 25, 2008	2,686		1,677,647	26,860		—		(14,573,713	)		(12,896,066	)
Net loss	—		—	—		—		(11,951,193	)		(11,951,193	)
Balance at September 25, 2009	2,686	$	1,677,647	26,860	$	—	$	(26,524,906	)	$	(24,847,259	)

See accompanying notes to the consolidated financial statements.

~~See~~38 ~~accompanying notes to the consolidated financial statements.~~

~~Index~~The toMoney ~~Financial~~Tree ~~Statements~~Inc. and Subsidiaries

~~The~~Consolidated ~~Money~~Statements ~~Tree~~of ~~Inc.~~Cash ~~and~~Flows ~~Subsidiaries~~

Consolidated Statements of Cash Flows


*Years ended September 25,*	2010			2009
Cash flows from operating activities
Net loss	$	(12,134,947	)	$	(12,935,090	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Provision for credit losses		5,682,584			10,761,682
Depreciation		751,249			880,119
Amortization		254			4,524
Loss on sale of property and equipment		186,806			10,497
Change in assets and liabilities:
Other receivables		223,965			240,091
Inventory		1,000,013			965,055
Other assets		1,232,606			662,535
Accounts payable and other accrued liabilities		(654,235	)		(789,601	)
Accrued interest payable		(729,428	)		(1,391,946	)

Net cash used in operating activities		(4,441,133	)		(1,592,134	)

Cash flows from investing activities
Finance receivables originated		(41,882,200	)		(58,340,423	)
Finance receivables repaid		47,155,682			59,934,161
Purchase of property and equipment		(185,298	)		(706,512	)
Proceeds from sale of property and equipment		104,556			495,530
Proceeds from sale of finance receivables		951,963			76,069

Net cash provided by investing activities		6,144,703			1,458,825

Cash flows from financing activities
Net proceeds (repayments) on:
Senior debt		(161,892	)		(368,373	)
Demand notes		28,206			(511,453	)
Proceeds-variable rate subordinated debentures		11,998,141			10,028,146
Payments-variable rate subordinated debentures		(14,374,264	)		(18,634,536	)

Net cash used in financing activities		(2,509,809	)		(9,486,216	)

Net change in cash and cash equivalents		(806,239	)		(9,619,525	)
Cash and cash equivalents, beginning of year		2,921,777			12,541,302

Cash and cash equivalents, end of year	$	2,115,538		$	2,921,777


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid during the year for:
Interest	$	7,623,884		$	9,003,131

Years ended September 25,	2009			2008			2007
Cash flows from operating activities
Net income (loss)	$	(11,951,193	)	$	(11,966,366	)	$	375,637
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Provision for credit losses		9,629,722			13,812,192			4,982,494
Depreciation		880,119			793,776			794,418
Amortization		4,524			5,714			5,714
Impairment loss from write-down of goodwill		—			991,243			365,824
Deferred income tax expense (benefit)		—			1,210,000			(565,000	)
Loss on sale of property and equipment		10,497			20,980			19,012
Loss on sale of finance receivables		148,063			—			—
Change in assets and liabilities:
Other receivables		240,091			(93,396	)		151,586
Inventory		965,055			(110,246	)		(861,312	)
Other assets		662,535			(753,777	)		360,762
Accounts payable and other accrued liabilities		(789,601	)		(741,186	)		494,778
Accrued interest payable		(1,391,946	)		525,785			2,747,680
Net cash (used in) provided by operating activities		(1,592,134	)		3,694,719			8,871,593
Cash flows from investing activities
Finance receivables originated		(58,340,423	)		(73,335,373	)		(76,942,622	)
Finance receivables repaid		59,934,161			67,630,531			72,779,841
Purchase of property and equipment		(706,512	)		(1,586,379	)		(1,032,849	)
Proceeds from sale of property and equipment		495,530			85,319			580,338
Proceeds from sale of finance receivables		76,069			—			—
Net cash provided by (used in) investing activities		1,458,825			(7,205,902	)		(4,615,292	)
Cash flows from financing activities
Net proceeds (repayments) on:
Senior debt		(368,373	)		183,227			(156,886	)
Demand notes		(511,453	)		(2,333,214	)		(2,145,476	)
Repayments on senior subordinated debt		—			—			(600,000	)
Repayments on junior subordinated debt to related parties		—			—			(370,000	)
Proceeds-variable rate subordinated debentures		10,028,146			15,435,214			14,132,396
Payments-variable rate subordinated debentures		(18,634,536	)		(15,087,019	)		(10,181,582	)
Net cash (used in) provided by financing activities		(9,486,216	)		(1,801,792	)		678,452
Net change in cash and cash equivalents		(9,619,525	)		(5,312,975	)		4,934,753
Cash and cash equivalents, beginning of year		12,541,302			17,854,277			12,919,524
Cash and cash equivalents, end of year	$	2,921,777		$	12,541,302		$	17,854,277

See accompanying notes to the consolidated financial statements.

~~See~~39 ~~accompanying notes to the consolidated financial statements.~~

~~Index~~The toMoney ~~Financial~~Tree ~~Statements~~Inc. and Subsidiaries

~~The~~Notes ~~Money~~to ~~Tree~~Consolidated ~~Inc.~~Financial ~~and~~Statements ~~Subsidiaries~~

~~Consolidated~~NOTE ~~Statements~~1 of– ~~Cash~~NATURE ~~Flows~~OF ~~(continued)~~BUSINESS

Years ended September 25,	2009		2008		2007
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest	$	9,003,131	$	7,749,525	$	5,278,289
Income taxes	$	—	$	268,642	$	198,897

The business of The Money Tree Inc. and subsidiaries (the “Company”) consists of the operation of finance company offices which originates direct consumer loans and sales finance contracts in 91 locations throughout Georgia, Alabama, Louisiana and Florida; sales of merchandise (principally furniture, appliances, and electronics) at certain finance company locations; and the operation of two used automobile dealerships in Georgia. The Company also earns revenues from commissions on premiums written for certain insurance products, when requested by loan customers, as an agent for a non-affiliated insurance company. Revenues are generated from commissions on the sales of automobile club memberships from a company owned by related parties and commissions from sales of prepaid telephone and prepaid cellular services.

~~See~~The ~~accompanying~~Company’s ~~notes~~loan portfolio consists of consumer sales finance contracts receivables, auto sales finance contracts and direct consumer loan receivables. Consumer sales finance contracts receivables consist principally of retail installment sale contracts collateralized primarily by consumer goods sold by our consumer good dealerships, subject to credit approval, in the ~~consolidated~~locations ~~financial~~where ~~statements~~the Company operates offices. Auto sales finance contracts are motor vehicle installment contracts collateralized by motor vehicles sold by our auto segment dealerships. Direct consumer loan receivables are loans originated directly to customers for general use which are collateralized by existing automobiles or consumer goods, or are unsecured.

40NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Financial Statement Presentation

The consolidated financial statements include the accounts of The Money Tree Inc. and its subsidiaries, all of which are wholly owned by The Money Tree Inc. All significant intercompany accounts and transactions are eliminated in consolidation. Subsequent events have been evaluated through the date the consolidated financial statements were issued.

In preparing the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP), management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the balance sheet and the reported amounts of revenues and expenses for the reporting period. Actual results could vary from those estimates. Significant estimates include the determination of the allowance for credit losses relating to the Company’s finance receivables. This evaluation is inherently subjective, and, as such, there is at least a reasonable possibility that recorded estimates could change by a material amount in the near term.

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The operations of the Company in 2010 reflect continued losses resulting, in part, from continuing pressure from an uncertain economy and the negative impact of the turmoil in the credit markets. For the years ended September 25, 2010 and 2009, respectively, the Company has incurred net losses of $12,134,947 and $12,935,090, incurred negative cash flows from operating activities of $4,441,133 and $1,592,134, had a deficiency in net interest margin (net loss from interest and fees after provision for credit losses) of $851,341 and $2,783,793 and, as of September 25, 2010 and 2009, had a shareholders’ deficit of $45,908,992 and $33,774,045, respectively. These factors among others raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time.

Our obligations with respect to the debentures and demand notes are governed by the terms of indenture agreements with U.S. Bank National Association, as trustee. Under the indentures, in addition to other possible events of default, if we fail to make a payment of principal or interest under any debenture or demand note and this failure is not cured within 30 days, we will be deemed in default. Upon such a default, the trustee or holders of 25% in principal of the outstanding debentures or demand notes could declare all principal and accrued interest immediately due and payable. Since our total assets do not cover these debt payment obligations, we would most likely be unable to make all payments under the debentures or demand notes when due, and we might be forced to cease our operations.

~~Index~~The toMoney ~~Financial~~Tree ~~Statements~~Inc. and Subsidiaries

~~The~~Notes ~~Money~~to ~~Tree~~Consolidated ~~Inc.~~Financial ~~and~~Statements ~~Subsidiaries~~

~~Notes~~NOTE to2 ~~Consolidated~~– ~~Financial~~SUMMARY ~~Statements~~OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

~~NOTE~~The 1Company –has ~~NATURE~~closely OFmonitored ~~BUSINESS~~and managed its liquidity position, understanding that this is of critical importance in the current economic environment; however, the current economic environment makes the cash forecast difficult to predict.

The ~~business~~average term of ~~The~~our ~~Money~~direct ~~Tree~~consumer ~~Inc.~~loans is less than seven months and, ~~subsidiaries~~therefore, ~~(the “Company”)~~if ~~consists~~we ofanticipate having short-term cash flow problems, we could continue to curtail the ~~operation~~amount of ~~finance~~funds ~~company~~we ~~offices~~loan ~~which~~to our ~~originates~~customers ~~direct~~and ~~consumer~~focus ~~loans~~on ~~and~~collections ~~sales~~to ~~finance~~increase ~~contracts~~cash inflow. ~~102~~During ~~locations~~the ~~throughout~~year ~~Georgia~~ended September 25, ~~Alabama~~2010, ~~Louisiana~~the Company reduced its debt and ~~Florida;~~related ~~sales~~accrued ofinterest ~~merchandise~~by ~~(principally furniture,~~$3.2 ~~appliances,~~million and ~~electronics)~~tightened atits ~~certain~~risk ~~finance~~management ~~company~~controls ~~locations;~~related ~~and~~to ~~the~~new ~~operation~~loans, resulting in a decrease in loan originations of ~~three~~$16.5 ~~used~~million ~~automobile~~from ~~dealerships~~the inprior ~~Georgia~~year. The Company’s ~~also~~continuation ~~earns~~as ~~revenues~~a ~~from~~going ~~commissions~~concern onis ~~premiums~~dependent ~~written~~upon ~~for~~its ~~certain~~ability ~~insurance~~to ~~products~~generate sufficient cash flow, either through cash generated from operations or ~~when~~the ~~requested~~plans byto ~~loan~~raise ~~customers~~capital in the public or private markets, asto anmeet ~~agent~~its ~~for~~obligations on a ~~non-affiliated~~timely ~~insurance~~basis, ~~company~~originate new loans and to ultimately attain successful operations. ~~Revenues~~Management ~~are~~cannot ~~also~~provide ~~generated~~any ~~from~~assurance ~~commissions~~that our plans can be implemented on terms that are favorable to the ~~sales~~Company, ofor ~~automobile~~at ~~club~~all. ~~memberships~~The ~~from~~consolidated afinancial ~~company~~statements ~~owned~~do bynot ~~related~~include ~~parties~~any ~~and~~adjustments ~~commissions~~that ~~from~~might ~~sales~~result ~~of prepaid~~from ~~telephone~~the ~~and~~outcome ~~prepaid~~of ~~cellular~~this ~~services~~uncertainty.

~~The~~Cash ~~Company’s loan portfolio consists of consumer sales finance contracts receivables~~ and ~~direct~~Cash ~~consumer~~Equivalents loan receivables. Consumer sales finance contracts receivables consist principally of retail installment sale contracts collateralized by used automobiles and consumer goods which are initiated by automobile and consumer good dealerships, subject to credit approval, in the locations where the Company operates offices. Direct consumer loan receivables are loans originated directly to customers for general use which are collateralized by existing automobiles or consumer goods, or are unsecured.

~~NOTE~~Cash 2equivalents –are ~~SUMMARY~~short-term, OFhighly ~~SIGNIFICANT~~liquid investments ~~ACCOUNTING~~with ~~POLICIES~~original maturities of three months or less when purchased.

~~Basis~~Finance ofReceivables ~~Financial Statement Presentation~~

~~The~~Finance ~~consolidated~~receivables ~~financial~~are ~~statements~~stated ~~include~~at the ~~accounts~~amount of ~~The~~unpaid ~~Money~~principal ~~Tree~~and ~~Inc~~accrued interest on certain loans where interest is recognized on an interest accrual basis. ~~and~~Finance ~~its~~receivables ~~subsidiaries,~~with ~~all~~precomputed offinance ~~which~~charges are ~~wholly~~stated ~~owned~~at bythe ~~The~~gross ~~Money~~amount ~~Tree~~reduced ~~Inc.~~by ~~All~~unearned ~~significant~~interest, ~~intercompany~~unearned ~~accounts~~insurance commissions and ~~transactions~~unearned ~~are~~discounts. ~~eliminated~~In ~~in consolidation.~~addition ~~Subsequent~~to ~~events~~these ~~have~~reductions, ~~been~~all ~~evaluated~~finance ~~through~~receivables ~~the~~are ~~date~~stated net of the ~~financial~~allowance ~~statements~~for ~~were~~credit ~~issued~~losses.

InIncome ~~preparing~~Recognition the consolidated financial statements in conformity with U.S. generally accepted accounting principles (GAAP), management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the balance sheet and the reported amounts of revenues and expenses for the reporting period. Actual results could vary from those estimates. Significant estimates include the determination of the allowance for credit losses relating to the Company’s finance receivables. This evaluation is inherently subjective, and, as such, there is at least a reasonable possibility that recorded estimates could change by a material amount in the near term.

~~The~~Interest ~~accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets~~ and ~~the satisfaction~~Fee ofIncome liabilities in the normal course of business. The operations of the Company in 2009 reflect continued pressure from an uncertain economy and the negative impact of the turmoil in the credit markets. For the years ended September 25, 2009 and 2008, respectively, the Company has incurred net losses of $11,951,193 and $11,966,366, and has had a deficiency in net interest margin (net loss from interest and fees after provision for credit losses) of $1,651,833 and $2,807,433 and, as of September 25, 2009 and 2008, had a shareholders’ deficit of $24,847,259 and $12,896,066, respectively. These factors among others raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time.

~~The~~GAAP ~~Company~~requires ~~has~~that ~~closely~~an ~~monitored~~interest ~~and~~yield ~~managed~~method ~~its~~be ~~liquidity~~used ~~position,~~to calculate ~~understanding~~income ~~that~~recognized ~~this~~on isaccounts ofwhich ~~critical importance~~have inprecomputed finance charges. An interest yield method is used by the ~~current~~Company ~~economic~~on ~~environment~~each individual precomputed account to calculate income for ongoing accounts; however, ~~the~~state ~~current~~regulations ~~economic~~often ~~environment~~allow interest ~~makes~~refunds ~~the~~to ~~cash~~be ~~forecast~~made ~~difficult~~according to ~~predict~~the Rule of 78s method for payoffs and renewals when customers take such actions on their accounts. ~~The~~Since ~~average~~the ~~term~~majority of ~~our~~the ~~direct~~Company’s ~~consumer~~precomputed ~~loans~~accounts isare ~~less~~paid ~~than~~off ~~seven~~or ~~months~~renewed ~~and,~~prior ~~therefore~~to maturity, ifthe result weis ~~anticipate~~that ~~having short-term~~most ~~cash~~precomputed ~~flow~~accounts ~~problems,~~are weadjusted ~~could~~to ~~curtail~~a Rule of 78s basis effective yield. Renewals and refinancings require that the ~~amount~~borrower ofmeet ~~funds~~the weunderwriting ~~loan~~guidelines similar to ~~our~~a ~~customers~~new customer and, ~~focus~~as ona ~~collections~~result, tothe ~~increase~~interest ~~cash~~rate ~~flow.~~and effective ~~During~~yield, as well as the ~~year~~other ~~ended~~terms ~~September 25,~~of ~~2009,~~the refinanced loans are at least as favorable to the ~~Company~~lender ~~reduced~~as ~~its~~comparable ~~debt~~loans with customers with similar risks who are not refinancing; therefore, all renewals and ~~related~~refinancings ~~accrued~~are ~~interest~~treated byas new ~~$10~~loans.9 ~~million~~Further ~~and~~any ~~tightened~~unamortized ~~its~~net ~~risk~~fees ~~management~~or ~~controls~~costs ~~related~~and toany ~~new~~prepayment ~~loans,~~penalties ~~resulting~~from inthe aoriginal ~~decrease~~loan are recognized in interest income when the new loan ~~originations~~is granted. Rebates of ~~$15.0~~interest, ~~million~~if ~~from~~applicable, are charged to interest income at the ~~prior~~time ~~year~~of the new loan. The ~~Company’s~~new ~~continuation~~loan asis originated utilizing a ~~going~~portion ~~concern~~of isthe ~~dependent~~proceeds ~~upon~~to ~~its~~pay ~~ability~~off ~~to generate~~the ~~sufficient~~existing ~~cash~~loan ~~flow~~and the remaining portion advanced to ~~meet~~the ~~its~~customer. ~~obligations~~The ondifference abetween ~~timely~~income ~~basis,~~previously ~~originate~~recognized ~~new~~under ~~loans~~the interest yield method and the Rule of 78s method is recognized as an adjustment to ~~ultimately~~interest ~~attain~~income ~~successful~~at ~~operations~~the time of the rebate. ~~The~~Adjustments ~~consolidated~~to ~~financial~~interest ~~statements~~income dofor ~~not~~the ~~include~~fiscal ~~any~~years ~~adjustments~~ended ~~that~~September 25, ~~might~~2010 ~~result~~and ~~from~~2009 ~~the~~were ~~outcome~~$967,614 ~~of this~~and ~~uncertainty~~$1,325,777, respectively.

~~Cash~~Recognition of interest income is suspended on accounts with precomputed interest charges when the account becomes more than 90 days delinquent. Accrual of interest income on other finance receivables is suspended when no payment has been received an account for 60 days or more on a contractual basis. Loans are returned to active status and ~~Cash~~earning ~~Equivalents~~or accrual of income is resumed when all of the principal and interest amounts contractually due are brought current (one or more full contractual monthly payments are received and the account is less than 90 or 60 days contractually delinquent), at which time management believes future payments are reasonably assured. Interest accrued on loans charged off is reversed against interest income in the current period. Any amounts charged off that related to prior periods are not material for any period presented.

~~Cash~~41 ~~equivalents are short-term, highly liquid investments with original maturities of three months or less when purchased.~~

~~Index~~The toMoney ~~Financial~~Tree ~~Statements~~Inc. and Subsidiaries

~~The~~Notes ~~Money~~to ~~Tree~~Consolidated ~~Inc.~~Financial ~~and~~Statements ~~Subsidiaries~~

~~Notes~~NOTE to2 ~~Consolidated~~– ~~Financial~~SUMMARY ~~Statements~~OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

~~NOTE~~Insurance 2Commissions ~~– SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)~~

~~Finance~~The ~~Receivables~~Company receives commissions from independent insurers for policies issued to the Company’s finance customers. These insurance commissions are deferred and systematically amortized to income over the life of the related insurance contract since the insurance and lending activities are integral parts of the same transaction. Commissions for credit and non-credit insurance products are recognized over the risk period based on the method applicable to the insurance coverage’s risk exposure, which generally coincides with the term of the related loan contract. Insurance commissions for products that have constant risk exposure are earned using the straight-line method. Insurance commissions for insurance products with declining risk exposure or coverage are recognized using the Rule of 78s method that approximates the interest method. The auto and accidental death and dismemberment policies are earned over the policy’s predetermined schedule of coverage. The Company retains advance commissions that vary by products at the time the policies are written. Retrospective commissions are paid to the Company on an earned premium basis, net of claims and other expenses. Contingencies exist only to the extent of refunds due on early termination of policies that exceed the amount of advanced commissions retained. These refunds are netted against the gross amount of premiums written.

~~Finance~~Commissions ~~receivables~~earned ~~are~~from ~~stated~~Interstate atMotor ~~the~~Club, ~~amount~~Inc., ofa ~~unpaid~~related ~~principal~~party, ~~and accrued interest~~ on ~~certain~~the ~~loans~~sale ~~where~~of ~~interest~~motor isclub ~~recognized~~memberships ~~on an interest accrual basis. Finance receivables with precomputed finance charges~~ are ~~stated~~recognized at the ~~gross~~time ~~amount~~the ~~reduced~~membership byis sold. ~~unearned~~The ~~interest,~~Company ~~unearned~~has ~~insurance~~no ~~commissions~~obligations ~~and~~related ~~unearned~~to ~~discounts.~~refund Inof ~~addition~~membership tofees ~~these~~on ~~reductions,~~cancellations. ~~all~~Claims ~~finance~~filed ~~receivables~~by members are ~~stated~~the ~~net~~responsibility of the ~~allowance~~issuer ~~for~~of ~~credit~~the ~~losses~~membership.

~~For~~Retail ~~loans~~Sales acquired at a discount, the initial investment, which is accounted for in the aggregate, includes the amount paid to the seller plus any fees paid or less any fees received. The initial investment frequently differs from the related loan’s principal amount at the date of purchase. This difference is recognized as an adjustment of yield over the life of the loan. All other costs incurred in connection with acquiring loans, or committing to purchase loans are charged to expense as incurred.

~~Collectibility~~ Retail sales include sales of ~~the~~used ~~acquired~~automobiles, ~~loans~~home isfurnishings, electronic ~~continually~~equipment, ~~evaluated~~and ~~throughout~~appliances. Warranties on selected used vehicles are available as an add-on item through an unaffiliated warranty company. Home furnishings, electronic equipment and appliances carry their own manufacturer’s warranties. Retail sales revenues are recognized at the ~~life~~time of ~~the~~sale ~~acquired~~when ~~loan~~title and risk of loss is transferred to the customer. IfWarranty ~~upon~~revenues ~~subsequent~~are ~~evaluation:~~recognized at the time of sale.

•Loan ~~the~~Origination ~~estimate~~Fees ofand ~~the~~Costs ~~total probable collections is more favorable, the amount of the discount to be amortized is adjusted accordingly.~~

•Non-refundable ~~the~~loan ~~estimate~~origination fees and certain direct origination costs are deferred and recognized as an adjustment of ~~amounts~~the ~~probable~~loan yield over the contractual life of ~~collection~~the isrelated ~~less~~loan. ~~favorable,~~Unamortized amounts are recognized in income at the time loans ~~may~~are berenewed ~~considered~~or topaid bein ~~impaired~~full.

•Credit itLosses is not possible to estimate the amount and timing of collection, then amortization ceases, and the cost-recovery method is implemented, which requires that all payments be applied to the principal amount of loan first and when that is reduced to zero, any additional amounts are recognized as income.

~~Income~~The ~~Recognition~~allowance for credit losses is determined by several factors. Recent loss experience is the primary factor in the determination of the allowance for credit losses. An evaluation is performed by loan segment to compare the amount of accounts charged off, net of recoveries of such accounts, in relation to the average net outstanding finance receivables for the period being reviewed. Further, the Company adjusts, when deemed appropriate, the allowance to reflect any enhancement or deterioration in the quality of the loan portfolio, primarily based on a review of loan delinquencies and to a lesser extent other qualitative factors. Management believes this evaluation process provides an adequate allowance for credit losses due to the Company’s direct consumer and consumer sales finance loan portfolios which consist of a large number of smaller balance homogeneous loans. Also, a separate review of loans that comprise the automotive segment is performed monthly to determine if the allowance should be adjusted based on possible exposure related to collectibility of these loans.

~~GAAP~~Provision ~~requires~~for ~~that~~credit anlosses ~~interest~~is ~~yield~~charged ~~method~~against ~~be used to calculate~~ income in ~~recognized~~amounts onsufficient, ~~accounts~~in ~~which have precomputed finance charges. An interest yield method is used by~~ the ~~Company~~opinion onof ~~each~~senior ~~individual~~management, ~~precomputed account~~ to ~~calculate~~maintain ~~income~~an allowance for ~~ongoing~~credit ~~accounts;~~losses ~~however,~~at ~~state~~a ~~regulations~~level ~~often~~considered ~~allow~~adequate ~~interest refunds~~ to becover ~~made according to~~ the ~~Rule~~probable oflosses ~~78s~~inherent ~~method~~in ~~for~~our ~~payoffs~~finance ~~and~~receivable ~~renewals when customers take such actions on their accounts~~portfolio. ~~Since~~Charge-offs ~~the majority of the Company’s precomputed accounts~~ are ~~paid~~typically ~~off~~determined orin one ~~renewed~~of ~~prior~~three toways. ~~maturity~~First, ~~the~~an ~~result is~~account that ~~most~~is ~~precomputed~~at ~~accounts~~least ~~are~~180 ~~adjusted~~days topast adue ~~Rule~~on ofa ~~78s~~contractual basis ~~effective~~with ~~yield.~~no ~~Renewals~~payments ~~and~~made ~~refinancings~~within ~~require that~~ the ~~borrower~~last ~~meet~~180 ~~the~~days ~~underwriting~~may ~~guidelines~~be ~~similar~~charged tooff. aSecond, ~~new~~an ~~customer~~account ~~and,~~may asbe adetermined ~~result,~~by ~~the~~senior ~~interest~~management ~~rate~~to ~~and~~be ~~effective~~uncollectible under ~~yield~~certain circumstances, as ~~well~~in as the ~~other~~event ~~terms~~ of ~~the~~death ~~refinanced~~of ~~loans are at least as favorable to~~ the ~~lender~~customer ~~as comparable loans with customers with similar risks~~ who ~~are~~did not ~~refinancing;~~elect ~~therefore,~~to ~~all~~purchase ~~renewals~~credit ~~and~~life ~~refinancings~~insurance ~~are~~for ~~treated~~his asloan ~~new~~contract ~~loans. Further any unamortized net fees~~ or ~~costs and any prepayment penalties from the original loan are recognized~~ in ~~interest~~situations ~~income~~ when ~~the~~repossession ~~new~~and ~~loan~~sale ~~is granted. Rebates~~ of ~~interest,~~collateral ifoccurs ~~applicable,~~on ~~are~~consumer ~~charged~~sales tofinance ~~interest~~and ~~income~~motor atvehicle installment ~~the~~sales ~~time~~contracts ofand the ~~new loan.~~balance ~~The new loan~~ is ~~originated~~not ~~utilizing~~recoverable athrough ~~portion~~legal ofprocess ~~the~~or ~~proceeds~~other ~~to pay off the existing loan and the remaining portion advanced to the customer~~methods. ~~The~~Third, ~~difference~~upon ~~between~~receipt ~~income previously recognized under the interest yield method and the Rule~~ of ~~78s~~ ~~method~~a isnotice ~~recognized as an adjustment to interest income at the time~~ of ~~the~~bankruptcy ~~rebate.~~filing ~~Adjustments~~from ~~to interest income for~~ the ~~fiscal years ended September 25~~customer, ~~2009,~~the ~~2008,~~account ~~and~~is ~~2007~~charged ~~were~~off ~~$1,325,777,~~within ~~$2,227,772,~~30 ~~and $2,504,285, respectively~~days.

~~Recognition~~42 of interest income is suspended on accounts with precomputed interest charges when the account becomes more than 90 days delinquent. Accrual of interest income on other finance receivables is suspended when no payment has been made on an account for 60 days or more on a contractual basis. Loans are returned to active status and earning or accrual of income is resumed when all of the principal and interest amounts contractually due are brought current (one or more full contractual monthly payments are received and the account is less than 90 or 60 days contractually delinquent), at which time management believes future payments are reasonably assured. Interest accrued on loans charged off is reversed against interest income in the current period. Any amounts charged off that related to prior periods are not material for any period presented.

For loans acquired at a discount, the initial investment, which is accounted for in the aggregate, includes the amount paid to the seller plus any fees paid or less any fees received. The initial investment frequently differs from the related loan’s principal amount at the date of purchase. This difference is recognized as an adjustment of yield over the life of the loan. All other costs incurred in connection with acquiring loans, or committing to purchase loans are charged to expense as incurred.

~~Index~~The toMoney ~~Financial~~Tree ~~Statements~~Inc. and Subsidiaries

~~The~~Notes ~~Money~~to ~~Tree~~Consolidated ~~Inc.~~Financial ~~and~~Statements ~~Subsidiaries~~

~~Notes~~NOTE to2 ~~Consolidated~~– ~~Financial~~SUMMARY ~~Statements~~OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

~~NOTE~~Direct 2consumer –loans ~~SUMMARY~~are OFcharged ~~SIGNIFICANT~~off ~~ACCOUNTING~~net ~~POLICIES~~of proceeds from non-filing insurance (~~CONTINUED~~see description of non-filing insurance below). We purchase non-filing insurance on certain direct consumer loans in lieu of filing a Uniform Commercial Code (UCC) financing statement. Premiums collected are remitted to the insurance company to cover possible losses from charge-offs as a result of not recording. Proceeds from these claims, as well as cash and bankruptcy recoveries, are netted against gross charge offs and reflected as recoveries in the determination of the allowance for credit losses.

~~The~~For ~~discount~~consumer onsales anfinance ~~acquired~~and ~~loan~~motor isvehicle ~~amortized~~installment ~~over~~sales ~~the~~contracts, ~~period~~we are granted a security interest in the collateral for which the loan was made. In the event of default, the collateral on such contracts may be repossessed at 31 to 60 days’ delinquency (roughly two payments). After repossession, the collateral is sold (typically within 30 days) according to UCC-9 disposition of collateral rules and the proceeds of the sale are ~~probable~~applied to the customer’s account. If the likelihood of collection on a judgment is favorable, a suit is filed for the deficiency balance remaining and, if granted, garnishment and/or execution follow for collection of the balance. ~~Discounts~~If ~~are~~the ~~amortized~~collateral ~~using~~is not conducive to repossession because it is in unmarketable condition, judgment is sought without repossession and sale of collateral. If collection on a judgment is not favorable, the ~~interest~~balance ~~method~~of the account is charged off.

The Company receives commissions from independent insurers for policies issued to finance customers. These insurance commissions are deferred and systematically amortized to income over the life of the related insurance contract since the insurance and lending activities are integral parts of the same transaction. Commissions for credit and nonNon-~~credit~~file insurance products are recognized over the risk period based on the method applicable to the insurance coverage’s risk exposure, which generally coincides with the term of the related loan contract. Insurance commissions for products that have constant risk exposure are earned using the straight-line method. Insurance commissions for insurance products with declining risk exposure or coverage are recognized using the Rule of 78s method that approximates the interest method. The auto and accidental death and dismemberment policies are earned over the policy’s predetermined schedule of coverage. The Company retains advance commissions that vary by products at the time the policies are written. Retrospective commissions are paid to the Company on an earned premium basis, net of claims and other expenses. Contingencies exist only to the extent of refunds due on early termination of policies that exceed the amount of advanced commissions retained. These refunds are netted against the gross amount of premiums written.

~~Commissions~~Non-file ~~earned~~premiums ~~from~~are ~~Interstate~~charged ~~Motor~~on ~~Club,~~direct ~~Inc.,~~consumer loans at inception and renewal in lieu of recording and perfecting the Company’s security interest in the assets pledged on such loans and are remitted to a third-party insurance company for non-filing insurance coverage. Non-file insurance is not available for motor vehicle installment sales contracts and consumer sales finance contracts. Certain losses related ~~party~~to such direct consumer loans, onwhich ~~the~~are ~~sale~~not ofrecoverable ~~motor~~through ~~club~~life, ~~memberships~~accident and health, property, or unemployment insurance claims, are ~~recognized~~reimbursed atthrough ~~the~~non-filing ~~time~~insurance ~~the~~claims ~~membership~~subject isto ~~sold~~policy limitations. ~~The~~These limitations ~~Company~~include: ~~has~~ no ~~obligations~~loans ~~related~~may exceed $5,000 to ~~refund~~any ofone ~~membership~~customer; ~~fees~~no onloans ~~cancellations~~may exceed 36 months in term; and no fraudulent loans. ~~Claims~~When ~~filed~~accounts covered by ~~members~~non-filing insurance are ~~the~~deemed ~~responsibility~~uncollectible, ofthey are charged off and the claim filed ~~issuer~~with the insurance carrier, usually within 30 days. Proof of coverage and documentation of collection activity are submitted with the ~~membership~~claim. Recoveries from non-filing insurance are reflected in the accompanying consolidated financial statements as a reduction in credit losses and receivables related to such claim recoveries are included in other receivables (see Note 3).

~~Retail sales include sales of used automobiles, home furnishings, electronic equipment, and appliances. Warranties~~Inventory on selected used vehicles are available as an add-on item through an unaffiliated warranty company. Home furnishings, electronic equipment and appliances carry their own manufacturer’s warranties. Retail sales revenues are recognized at the time of sale when title and risk of loss is transferred to the customer. Warranty revenues are recognized at the time of sale.

~~Loan~~Inventory is valued at the lower of cost (specific identification for used automobiles and first-in, first-out basis for home ~~Origination~~furnishings ~~Fees~~and electronics) or market. Inventory generally consists of home furnishings, electronics and ~~Costs~~used automobiles.

~~Non-refundable loan origination fees~~ Property and ~~certain~~equipment, ~~direct~~net origination costs are deferred and recognized as an adjustment of the loan yield over the contractual life of the related loan. Unamortized amounts are recognized in income at the time loans are renewed or paid in full.

~~Credit~~Property ~~Losses~~and equipment are recorded at cost. Depreciation is provided by the straight-line method over the estimated useful lives of the assets ranging from 5 to 10 years. Leasehold improvements are recorded at cost and amortized using the straight-line method over the shorter of the estimated useful life of the assets or the lease term. Such amortization is included in depreciation expense in the accompanying consolidated statements of cash flows.

~~The~~Impairment ~~allowance for credit losses is determined by several factors. Recent historical loss experience is the primary factor in the determination~~ of ~~the allowance for credit losses. An evaluation is performed to compare the amount of accounts charged off, net of recoveries of such accounts, in relation to the average~~Long-Lived ~~net~~Assets outstanding finance receivables for the period being reviewed. Further, the Company adjusts the allowance to reflect any enhancement or deterioration in the quality of the loan portfolio, primarily based on a review of loan delinquencies. Management believes this evaluation process provides an adequate allowance for credit losses due to the Company’s loan portfolio in the consumer segment consisting of a large number of smaller balance homogeneous loans. Also, a review of loans that comprised the automotive segment is performed monthly to determine if the allowance should be adjusted based on possible exposure related to collectibility of these loans. In accordance with the auto sales contract, the Company may repossess the collateralized vehicle after 30 days without payment to protect the vehicle’s integrity and to minimize the Company’s loss. Management routinely evaluates the inherent risks and change in the composition of the loan portfolio based on their extensive experience in the consumer finance industry in consideration of estimating the adequacy of the allowance. Also considered are delinquency trends, economic conditions, and industry factors. In most instances, an insurance product is purchased in conjunction with the loan. In the event of the death or injury of the customer or damage to pledged collateral, the proceeds from the claims would generally pay off or continue payments on the loan, thereby negating any consideration in the allowance determination. In (other ~~instances,~~than ~~a non-filing or non-recording insurance policy is made in conjunction with the loan, (see description of non-filing insurance below~~Goodwill). Proceeds from these claims are netted against charge-offs as recoveries in the determination of the allowance. Provisions for credit losses are charged to income in amounts sufficient to maintain an allowance for credit losses at a level considered adequate to cover the probable loss inherent in the finance receivable portfolio. Each month, regional management reviews potential accounts for charge-off with local branch management. A comprehensive charge-off checklist is utilized to assist management in verifying that all collection activity and procedures have been followed. Once completed, it is submitted to senior management for final review.

43The Company periodically evaluates whether events or circumstances have occurred that indicate the carrying amount of long-lived assets and certain identifiable intangible assets may warrant revision or may not be recoverable. When factors indicate that these long-lived assets and certain identifiable intangible assets should be evaluated for possible impairment, the Company assesses the recoverability by determining whether the carrying value of such assets will be recovered through the future undiscounted cash flows expected from the use of the asset and its eventual disposition. Amounts paid for covenants not to compete are amortized on a straight-line basis over a period of seven years. In management’s opinion, there has been no impairment of value of long-lived assets and certain identifiable intangible assets at September 25, 2010 and 2009.

~~Index~~The toMoney ~~Financial~~Tree ~~Statements~~Inc. and Subsidiaries

~~The~~Notes ~~Money~~to ~~Tree~~Consolidated ~~Inc.~~Financial ~~and~~Statements ~~Subsidiaries~~

~~Notes~~NOTE to2 ~~Consolidated~~– ~~Financial~~SUMMARY ~~Statements~~OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

~~NOTE~~Income 2Taxes ~~– SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)~~

The Company’s ~~charge-off~~provides ~~policy~~for ~~requires~~income ~~that~~taxes ~~balances~~under ~~be charged off when they are 180 days since last payment, unless upon review by management,~~ the ~~balance~~asset is deemed collectible by garnishment of wages, bankruptcy proceedings or other collection methods. Also, an account may be charged off if it is determined by senior management that the account is uncollectible due to certain circumstances, as in the death of the customer who did not elect to purchase credit life insurance for the loan contract or in situations when repossession and ~~sale~~liability ~~of collateral occurs and the balance is not recoverable through the legal process or other methods~~method. ~~Loan~~Under ~~balances~~this ~~charged off exclude accrued interest~~method, ~~which~~deferred ~~is reversed against interest~~ income. ~~Accounts~~taxes ~~that~~ are torecognized befor ~~disbursed~~expected ~~under~~future atax ~~plan~~consequences of ~~bankruptcy~~temporary ~~are~~differences ~~monitored separately from other~~between ~~accounts.~~financial ~~The~~statement ~~charge-off~~carrying ~~policy~~amounts ~~generally~~and ~~coincides with~~ the ~~bankruptcy~~tax ~~plan~~bases ~~period while payments are scheduled under the loan. Direct consumer loans are charged off net~~ of ~~proceeds~~existing ~~from~~assets ~~non-filing insurance (see discussion below). For consumer sales finance~~ and ~~motor~~liabilities ~~vehicle~~using ~~installment~~tax ~~sales~~rates ~~contracts,~~expected ~~the Company is granted a security interest~~ in the ~~collateral~~years ~~for~~in which ~~the~~those ~~loan~~temporary ~~was~~differences ~~made.~~are Inexpected ~~the~~to ~~event of default, the collateral on such contracts may~~ be ~~repossessed~~recovered ator ~~31 to 60 days delinquency (roughly two payments)~~settled. ~~After~~Valuation ~~repossession,~~allowances ~~the collateral is sold according to UCC-9 disposition of collateral rules and the proceeds of the sale~~ are ~~applied to the customer’s account. If the likelihood of collection on a judgment is favorable~~established, a suit is filed for the deficiency balance remaining and, if granted, garnishment and/or execution follows for collection of the balance. If the collateral is not conducive for repossession because of it being in unmarketablewhen ~~condition~~necessary, ~~judgment~~to isreduce ~~sought~~deferred ~~without~~tax ~~repossession~~assets ~~and~~to ~~sale of collateral. If collection on a judgment is not favorable,~~ the ~~balance~~amount ofexpected ~~the~~to ~~account~~be ~~is charged off~~realized.

~~Non-file~~Governmental ~~insurance~~Regulation

~~Non-file~~The ~~premiums are charged on direct consumer loans at inception and renewal in lieu of recording and perfecting the~~ Company’s ~~security~~is ~~interest~~subject into ~~the~~various ~~assets~~state ~~pledged on such loans~~ and ~~are~~federal ~~remitted~~laws ~~to a third-party insurance company for non-filing insurance coverage. Non-file insurance is not available for motor vehicle installment sales contracts~~ and ~~consumer~~regulations ~~sales finance contracts. Certain losses related to such direct consumer loans,~~ which ~~are not recoverable through life~~, ~~accident~~among ~~and~~other ~~health~~things, ~~property,~~impose orlimits ~~unemployment~~on ~~insurance claims,~~interest ~~are reimbursed through non-filing insurance claims subject to policy limitations. These limitations include: no loans may exceed $5~~rates,~~000~~ toother ~~any one customer; no loans may exceed 36 months in term; and no fraudulent loans. When accounts~~charges, ~~covered by non-filing~~ insurance ~~are deemed uncollectible~~premiums, ~~they are charged off~~ and ~~the~~require ~~claim~~licensing ~~filed with the insurance carrier, usually within 30 days. Proof of coverage~~ and ~~documentation of collection activity are submitted with the claim~~qualification. ~~Recoveries~~ from non-filing insurance are reflected in the accompanying consolidated financial statements as a reduction in credit losses and receivables related to such claim recoveries are included in other receivables (see Note 3).

~~Inventory~~Fair Value of Financial Instruments

~~Inventory~~The isfollowing ~~valued~~methods ~~at the~~and ~~lower~~assumptions ofare ~~cost~~used ~~(first-in,~~by ~~first-out~~the ~~basis)~~Company orin ~~market.~~estimating ~~Inventory~~fair ~~generally~~values ~~consists~~for offinancial ~~home~~instruments: ~~furnishings, electronics and used automobiles.~~

~~Property~~Cash and ~~equipment~~cash equivalents. Cash consists of cash on hand and with banks, ~~net~~either in commercial accounts, or money market accounts. The carrying value of cash and cash equivalents approximates fair value due to the relatively short period between the acquisition of the instruments and their expected realization.

~~Property~~Finance ~~and equipment are recorded at cost~~receivables. ~~Depreciation~~Finance isreceivables ~~provided~~are byreported ~~the~~net ~~straight-line method over the estimated useful lives~~ of ~~the~~unearned ~~assets~~interest, ~~ranging~~insurance ~~from~~commissions, 5discounts toand 10allowances ~~years.~~for ~~Leasehold~~credit ~~improvements~~losses, which are ~~recorded~~considered ~~at cost and amortized using the straight~~short-~~line~~term ~~method~~because ~~over~~ the average ~~shorter of the estimated useful~~ life ofis ~~the~~approximately ~~assets~~five ormonths, ~~the~~assuming ~~lease term~~prepayments. ~~Such~~ ~~amortization~~The isdiscounted ~~included~~cash inflows ~~depreciation~~of ~~expense in~~ the ~~accompanying~~loans ~~consolidated~~approximate ~~statements~~the ofnet ~~cash~~finance ~~flows~~receivables.

~~Goodwill~~Subordinated debentures. Fair value approximates $70,428,000 compared to the carrying value of $71,227,000 based on the calculation of the present value of the expected future cash flows associated with the debentures. The debenture holder also may redeem the debenture for 100 percent of the principal on demand subject to a 90-day interest penalty.

~~During~~Demand ~~the~~notes. ~~years~~The ~~ended~~carrying ~~September 25,~~value ~~2008~~approximates ~~and~~fair ~~2007~~value indue ~~conjunction~~to ~~with~~rights ~~the~~to ~~annual~~withdraw ~~goodwill impairment testing process,~~ the ~~Company~~ ~~recorded~~balance ~~impairment~~at ~~charges~~any ~~in the amount of $991,243 and $365,824, respectively~~time. ~~No goodwill was recorded as of September 25, 2009 and 2008.~~

44Senior debt. The carrying value of the Company’s senior debt approximates fair value due to the relatively short period of time from origination of the instruments and their expected payment.

Advertising Costs

Advertising costs are expensed as incurred. Advertising expenses totaled $325,676 and $412,823 for the years ended September 25, 2010 and 2009, respectively.

Allocation of Expenses to Related Party

Employees of The Money Tree Inc. perform services in support of Interstate Motor Club, an affiliate of the Company. The Company assesses Interstate Motor Club an administration fee that approximates the cost of support provided to Interstate Motor Club.

Net Income (loss) Per Common Share

Net income (loss) per common share is computed based upon weighted–average common shares outstanding. There are no potentially dilutive securities issued or outstanding.

Reclassifications

Certain reclassifications have been made to the prior period financial statements to conform with the method of presentation used in 2010.

~~Index~~The toMoney ~~Financial~~Tree ~~Statements~~Inc. and Subsidiaries

~~The~~Notes ~~Money~~to ~~Tree~~Consolidated ~~Inc.~~Financial ~~and~~Statements ~~Subsidiaries~~

~~Notes~~NOTE to2 ~~Consolidated~~– ~~Financial~~SUMMARY ~~Statements~~OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

~~NOTE~~Recent 2Accounting –Pronouncements ~~SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)~~

~~Impairment~~In ofJuly ~~Long~~2010, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2010-~~Lived~~20, ~~Assets~~“Receivables (~~other~~Topic ~~than~~310): ~~Goodwill~~Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses.” The amendments to the FASB Accounting Standards Codification™ (FASB ASC) will enhance the current disclosure requirements to assist users of financial statements in assessing an entity’s credit risk exposure and evaluating the adequacy of an entity’s allowance for credit losses. ASU 2010-20 requires entities to disclose the nature of credit risk inherent in their finance receivables, the procedure for analyzing and assessing credit risk, and the changes in both the receivables and the allowance for credit losses by portfolio segment and class. ASU 2010-20 is effective for interim and annual reporting periods ending on or after December 15, 2010. We are currently evaluating the impact, if any, this guidance will have on our consolidated financial statements.

~~The~~In ~~Company~~April ~~periodically~~2010, ~~evaluates~~the ~~whether~~FASB ~~events~~issued ASU orNo. 2010-18, ~~circumstances~~“Receivables ~~have~~(Topic ~~occurred~~310): ~~that~~Effect ~~indicate~~of a Loan Modification When the ~~carrying~~Loan ~~amount~~Is Part of ~~long-lived~~a ~~assets~~Pool ~~and~~That ~~certain identifiable~~Is ~~intangible~~Accounted ~~assets~~for ~~may~~as ~~warrant~~a ~~revision~~Single orAsset”. ~~may~~This ~~not~~ASU becodifies ~~recoverable.~~the ~~When~~consensus ~~factors~~reached ~~indicate~~in ~~that~~EITF ~~these~~Issue ~~long~~No. 09-~~lived~~I, “Effect ~~assets~~of ~~and~~a ~~certain~~Loan ~~identifiable~~Modification ~~intangible~~When ~~assets~~the ~~should~~Loan beIs ~~evaluated~~Part ~~for~~of ~~possible~~a ~~impairment,~~Pool ~~the~~That ~~Company~~Is ~~assesses~~Accounted ~~the recoverability~~for byas ~~determining~~a ~~whether~~Single Asset.” The amendments to the ~~carrying~~FASB ~~value~~ASC provide that modifications of ~~such~~loans ~~assets~~that ~~will~~are beaccounted ~~recovered~~for ~~through~~within ~~the~~a ~~future~~pool ~~undiscounted~~under ~~cash~~Subtopic ~~flows~~310-30 ~~expected~~do ~~from~~not result in the ~~use~~removal of those loans from the ~~asset~~pool ~~and~~even ~~its~~if ~~eventual~~the ~~disposition~~modification of those loans would otherwise be considered a troubled debt restructuring. ~~Amounts~~An ~~paid~~entity ~~for~~will ~~covenants~~continue ~~not~~to be required to ~~compete~~consider ~~are~~whether the pool of assets in which the loan ~~amortized~~is onincluded ais ~~straight-line~~impaired ~~basis~~if ~~over~~expected acash ~~period~~flows offor ~~seven~~the ~~years~~pool change. InASU ~~management’s~~2010-18 ~~opinion,~~is ~~there~~effective ~~has~~prospectively ~~been~~for nomodifications ~~impairment~~ of ~~value~~loans ofaccounted ~~long~~for within pools under Subtopic 310-~~lived~~30 ~~assets~~occurring ~~and~~in ~~certain~~the ~~identifiable~~first ~~intangible~~interim ~~assets~~or atannual period ending on or after July 15, 2010. We adopted this guidance for the fiscal year ended September 25, ~~2009~~2010 and ~~2008~~its adoption did not have a material impact on our consolidated financial statements.

~~Income~~In ~~Taxes~~June 2009, the FASB issued revised guidance to improve the reporting for the transfer of financial assets resulting from (1) practices that have developed since the issuance of previous guidance that are not consistent with the original intent and key requirements of that guidance and (2) concerns of financial statement users that many of the financial assets (and related obligations) that have been derecognized should continue to be reported in the financial statements of transferors. These revisions to FASB ASC 860, “Transfers and Servicing,” must be applied as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period and for interim and annual reporting periods thereafter. Earlier application is prohibited. We do not expect that the adoption of this guidance will have a material impact on our consolidated financial statements.

~~The~~In ~~Company~~June 2009, ~~provides for~~the ~~income~~FASB ~~taxes~~issued ~~under~~revised ~~the~~guidance ~~asset~~to ~~and~~improve ~~liability~~financial ~~method.~~reporting by ~~Under~~enterprises ~~this~~involved ~~method,~~with ~~deferred~~variable ~~income~~interest ~~taxes~~entities ~~are~~and ~~recognized~~to ~~for~~provide ~~expected~~more ~~future~~relevant ~~tax~~and ~~consequences~~reliable ofinformation ~~temporary~~to ~~differences~~users ~~between~~of financial ~~statement~~statements. ~~carrying~~These ~~amounts~~revisions ~~and~~to ~~the~~FASB ~~tax~~ASC ~~bases~~810, “Consolidation,” is effective as of ~~existing~~the beginning of each ~~assets~~reporting ~~and~~entity’s ~~liabilities~~first ~~using~~annual ~~tax~~reporting ~~rates~~period ~~expected~~that inbegins ~~the~~after ~~years~~November 15, in2009, ~~which~~for ~~those~~interim ~~temporary~~periods ~~differences~~within ~~are~~that ~~expected~~first toannual bereporting ~~recovered~~period, orand ~~settled.~~for ~~Valuation~~interim ~~allowances~~and ~~are~~annual ~~established,~~reporting ~~when~~periods ~~necessary,~~thereafter. toEarlier ~~reduce~~application ~~deferred~~is prohibited. ~~tax~~We ~~assets~~do tonot expect that the ~~amount~~adoption ~~expected~~of ~~to be~~this ~~realized~~guidance will have a material impact on our consolidated financial statements.

~~Governmental~~45 ~~Regulation~~

The Company is subject to various state and federal laws and regulations which, among other things, impose limits on interest rates, other charges, insurance premiums, and require licensing and qualification.

Fair Value of Financial Instruments

The following methods and assumptions are used by the Company in estimating fair values for financial instruments:

Cash and cash equivalents. Cash consists of cash on hand and with banks, either in commercial accounts, or money market accounts. The carrying value of cash and cash equivalents approximates fair value due to the relatively short period between the acquisition of the instruments and their expected realization.

Finance receivables. Finance receivables are reported net of unearned interest, insurance commissions, discounts and allowances for credit losses, which are considered short-term because the average life is approximately five months, assuming prepayments. The discounted cash flows of the loans approximate the net finance receivables.

Subordinated debentures. Fair value approximates $76,372,000 compared to the carrying value of $73,603,000 based on the calculation of the present value of the expected future cash flows associated with the debentures. The debenture holder also may redeem the debenture for 100 percent of the principal on demand subject to a 90-day interest penalty.

Demand notes. The carrying value approximates fair value due to rights to withdraw the balance at any time.

Senior debt. The carrying value of the Company’s senior debt approximates fair value due to the relatively short period of time from origination of the instruments and their expected payment.

Advertising Costs

Advertising costs are expensed as incurred. Advertising expenses totaled $412,823, $616,055, and $704,972 for the years ended September 25, 2009, 2008, and 2007, respectively.

Allocation of Expenses to Related Party

Net Income (loss) Per Common Share

Net income (loss) per common share is computed based upon weighted–average common shares outstanding. There are no potentially dilutive securities issued or outstanding.

Reclassifications

Certain reclassifications have been made to the prior period financial statements to conform with the method of presentation used in 2009.

~~Index~~The toMoney ~~Financial~~Tree ~~Statements~~Inc. and Subsidiaries

~~The~~Notes ~~Money~~to ~~Tree~~Consolidated ~~Inc.~~Financial ~~and~~Statements ~~Subsidiaries~~

~~Notes~~NOTE to3 ~~Consolidated~~– ~~Financial~~FINANCE ~~Statements~~RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES

~~NOTE~~Finance 2receivables –consisted ~~SUMMARY~~of OFthe ~~SIGNIFICANT~~following: ~~ACCOUNTING POLICIES (CONTINUED)~~

Recent Accounting Pronouncements


*September 25,*	2010			2009
Finance receivables, direct consumer	$	14,790,670		$	20,098,661
Finance receivables, consumer sales finance		12,192,962			16,663,172
Finance receivables, auto sales finance		22,584,170			30,151,923

Total gross finance receivables		49,567,802			66,913,756
Unearned insurance commissions		(1,662,796	)		(1,996,614	)
Unearned finance charges		(5,926,738	)		(9,243,875	)
Accrued interest receivable		341,173			608,209

Finance receivables, before allowance for credit losses		42,319,441			56,281,476
Allowance for credit losses		(6,871,375	)		(8,925,381	)

Finance receivables, net	$	35,448,066		$	47,356,095

InAn ~~June 2009,~~analysis the Financial Accounting Standards Board (FASB) issued new guidance effective for financial statements issued for periods ending after September 15, 2009. “The FASB Accounting Standards Codification” (“FASB ASC”) establishes the source of ~~authoritative GAAP recognized by~~ the ~~FASB~~allowance to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (SEC) under authority of federal securities laws are also sources of authoritative GAAP for ~~SEC~~credit ~~registrants.~~losses Onis ~~the~~as ~~effective~~follows: date, the FASB ASC superseded all then-existing non-SEC accounting and reporting standards. All other non-grandfathered non-SEC accounting literature not included in the ASC became non-authoritative. Our adoption of this guidance did not have a material impact on our consolidated financial statements.


*Years ended September 25,*	2010			2009
Beginning balance	$	8,925,381		$	8,813,728
Provisions for credit losses		5,682,584			10,761,682
Charge-offs:
Direct consumer		(5,447,963	)		(8,589,238	)
Consumer sales finance		(2,519,125	)		(3,966,748	)
Motor vehicle sales finance		(1,942,229	)		(1,768,170	)
Write-downs incurred on the transfer of loans to loans held for sale		(528,157	)		(148,063	)
Recoveries - non-file insurance (direct consumer)		1,874,343			2,795,483
Recoveries - other		854,203			963,918
Other		(27,662	)		62,789

Ending balance	$	6,871,375		$	8,925,381

InIt ~~June 2009,~~is the ~~FASB issued~~Company’s ~~revised~~experience ~~guidance~~that toa ~~improve~~substantial ~~financial~~portion ~~reporting~~of bythe ~~enterprises~~loan ~~involved~~portfolio ~~with~~generally ~~variable~~is ~~interest~~renewed ~~entities~~or ~~and~~repaid tobefore contractual ~~provide~~maturity ~~more relevant and reliable information to users of financial statements~~dates. ~~These~~During ~~revisions~~the toyears ~~FASB~~ended ~~ASC 810~~September 25, ~~“Consolidation,”~~ is2010 ~~effective~~and as2009, ofcash ~~the~~collections ~~beginning~~ of ~~each~~receivables ~~reporting~~(including ~~entity’s~~principal, ~~first~~renewals ~~annual~~and ~~reporting~~finance ~~period~~charges ~~that~~since ~~begins~~finance ~~after~~receivables ~~November 15,~~are ~~2009,~~recorded ~~for~~and ~~interim~~tracked ~~periods~~at ~~within~~their ~~that~~gross ~~first~~precomputed amount) ~~annual~~totaled ~~reporting period~~$60,302,197 and ~~for~~$76,482,092, ~~interim~~respectively, and ~~annual~~ ~~reporting~~these ~~periods~~cash ~~thereafter.~~collections ~~Earlier~~were ~~application~~104 ispercent ~~prohibited.~~and We103 dopercent ~~not expect that the adoption~~ of ~~this~~average ~~guidance~~gross ~~will~~finance ~~have~~receivable abalances, ~~material impact on our consolidated financial statements~~respectively.

In46 April 2009, the FASB issued revised guidance for recognizing and measuring pre-acquisition contingencies in a business combination. These revisions, which are a part of FASB ASC 805, “Business Combinations,” address application issues raised by preparers, auditors, and members of the legal profession on initial recognition and measurement, subsequent measurement and accounting, and disclosure of assets and liabilities arising from contingencies in a business combination. This guidance is effective for assets or liabilities arising from contingencies in business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. This guidance is not expected to have a material impact on our consolidated financial statements.

In May 2008, the FASB issued revised guidance for accounting for financial guarantee insurance contracts. These revisions, which are a part of FASB ASC 944, “Financial Services-Insurance,” clarify the application of GAAP to certain financial guarantee insurance contracts included within the scope of the guidance. The guidance is effective for financial statements issued for fiscal years beginning after December 15, 2008, and all interim periods within those fiscal years. We do not expect this guidance will have a material impact on our consolidated financial statements.

In March 2008, the FASB issued new guidance concerning “Disclosures about Derivative Instruments and Hedging Activities,” which is included in FASB ASC 815. This guidance requires enhanced disclosures about an entity’s derivative and hedging activities and thereby improves the transparency of financial reporting. This guidance is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. This guidance encourages, but does not require, comparative disclosures for earlier periods at initial adoption. Management does not expect this guidance to have a material impact on our consolidated financial statements.

In December 2007, the FASB issued new guidance for the accounting of noncontrolling interests. This new guidance, which is part of FASB ASC 810, “Consolidations,” establishes accounting and reporting standards for the noncontrolling (minority) interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. We have not yet determined the impact, if any, that this guidance will have on its consolidated financial statements. This guidance is effective for our fiscal year beginning September 26, 2009.

~~Index~~The toMoney ~~Financial~~Tree ~~Statements~~Inc. and Subsidiaries

~~The~~Notes ~~Money~~to ~~Tree~~Consolidated ~~Inc.~~Financial ~~and~~Statements ~~Subsidiaries~~

~~Notes~~NOTE to3 ~~Consolidated~~– ~~Financial~~FINANCE ~~Statements~~RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES (Continued)

~~NOTE~~Consumer 2finance –receivables ~~SUMMARY~~in OFa ~~SIGNIFICANT~~non-accrual ~~ACCOUNTING~~status ~~POLICIES~~totaled ~~(CONTINUED)~~$6,138,839 and $7,715,778 at September 25, 2010 and 2009, respectively. Because of their delinquency status, the Company considers these loans to be impaired. Additionally, the Company has automotive finance contracts in various stages of the repossession or legal process of $4,072,212 and $5,262,871 at September 25, 2010 and 2009, respectively, that are considered impaired. Consequently, the amount of loans in non-accrual status and in the repossession or legal process represents the Company’s investment in impaired loans. Since the Company’s portfolio of finance receivables is comprised primarily of small balance, homogenous loans, individual impairment is not performed, but rather evaluated as a group within the segments of direct consumer, consumer sales finance and automotive sales finance. The allowance for credit losses related to the entire portfolio of loans was $6,871,375 and $8,925,381 at September 25, 2010 and 2009, respectively.

InThe ~~December~~Company ~~2007,~~ceases the ~~FASB~~accrual ~~issued revised guidance for the accounting~~ of ~~business~~interest ~~combinations.~~income ~~These revisions~~on tointerest-bearing ~~FASB~~finance ~~ASC~~receivables ~~805,~~when ~~“Business~~no ~~Combinations,” require~~payment ~~that~~has ~~the~~been ~~acquisition~~made ~~method of accounting (previously the purchase method) be used~~ for ~~all~~60 ~~business~~days ~~combinations~~or ~~and~~more. ~~that an acquirer be identified for each business~~Recognition ~~combination.~~of ~~This~~interest ~~guidance~~income ~~also~~suspends ~~establishes~~at ~~principles~~90 ~~and~~days ~~requirements~~contractual ~~for~~delinquency ~~how~~on ~~the~~accounts ~~acquirer:~~with a)precomputed ~~recognizes~~interest ~~and~~charges. ~~measures~~Suspended ininterest ~~its~~totaled ~~financial statements the identifiable assets acquired~~$746,895 ~~the~~and ~~liabilities assumed~~$916,802 and any noncontrolling interest in the acquiree; b) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and c) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. The guidance will apply prospectively to business combinations for ~~which~~ the ~~acquisition~~years ~~date~~ended ~~is on or after~~ September 2625, ~~2009.~~2010 ~~While~~and ~~we have not yet evaluated this statement for the impact~~2009, ~~if any, that this guidance will have on its consolidated financial statements, we will be required to expense costs related to any acquisitions after September 25, 2009~~respectively.

InFinance ~~June~~receivables ~~2009,~~charged ~~the~~off ~~FASB~~are ~~issued~~reduced ~~SFAS~~by ~~No. 167,~~proceeds ~~“Amendments~~from tonon-filing ~~FASB Interpretation No~~insurance. ~~46(R)”~~ ~~(SFAS~~The ~~167),~~Company ~~which~~purchases ~~has~~non-filing ~~not~~insurance ~~been~~on ~~codified.~~certain ~~SFAS~~loans ~~167~~in ~~amends~~lieu ~~FASB Interpretation No. 46~~of ~~(revised~~filing ~~December~~a ~~2003),~~Uniform ~~“Consolidation~~Commercial ofCode ~~Variable~~lien. ~~Interest~~Premiums ~~Entities”~~collected ~~(FIN~~are ~~46(R))~~remitted to ~~require~~the aninsurance ~~enterprise~~company to ~~qualitatively~~cover ~~assess~~possible ~~the~~losses ~~determination~~from ofcharge-offs ~~the~~as ~~primary~~a ~~beneficiary~~result of anot ~~variable~~recording ~~interest~~these ~~entity~~liens. ~~(VIE)~~Amounts ~~based~~recovered onfrom ~~whether~~non-filing ~~the entity~~insurance ~~(1) has~~claims ~~the~~totaled ~~power~~$1,874,343 and to$2,795,483 ~~direct~~for the ~~activities~~years ofended aSeptember 25, ~~VIE~~2010 ~~that most significantly impact the entity’s economic performance~~ and ~~(2) has~~2009, ~~the~~respectively. ~~obligation~~If tothis ~~absorb~~insurance ~~losses~~product ofwas ~~the~~discontinued, ~~entity~~these orproceeds ~~the~~would ~~right~~not ~~to receive benefits from the entity that could potentially~~ be ~~significant~~available to ~~the~~offset ~~VIE.~~future ~~Also,~~credit ~~SFAS~~losses ~~167~~and ~~requires~~additional anprovisions ~~ongoing~~for ~~reconsideration~~credit oflosses ~~the~~would ~~primary~~be required. ~~beneficiary,~~Amounts ~~and~~receivable ~~amends~~from the ~~events~~insurance ~~that~~company ~~trigger~~related ~~a reassessment of whether an entity is a VIE. Enhanced disclosures are also required~~ to ~~provide~~non-filing ~~information~~insurance ~~about~~claims anwere ~~enterprise’s~~$298,848 ~~involvement~~and in$421,132 aat ~~VIE. SFAS No.~~September ~~167~~25, is2010 ~~effective for interim~~ and ~~annual~~2009, ~~reporting periods ending after November 15~~respectively, ~~2009.~~and We are ~~currently~~included ~~evaluating~~in ~~the~~other ~~impact,~~receivables ifin ~~any,~~the ~~this~~accompanying ~~standard will~~consolidated ~~have~~balance ~~on our consolidated financial statements~~sheets.

~~NOTE~~The 3Company –also ~~FINANCE~~realizes ~~RECEIVABLES~~recoveries ~~AND~~of ~~ALLOWANCE~~accounts ~~FOR~~previously ~~CREDIT~~charged ~~LOSSES~~off as a result of subsequent collection efforts and through receipts of disbursements from bankruptcy proceedings. These are recognized as recoveries when received and totaled $854,203 and $963,918 for the years ended September 25, 2010 and 2009, respectively.

~~Finance~~NOTE ~~receivables~~4 ~~consisted~~– ofINVENTORY ~~the following:~~

September 25,	2009			2008
Finance receivables, direct consumer	$	29,019,345		$	41,654,302
Finance receivables, consumer sales finance		15,176,373			16,793,743
Finance receivables, auto sales finance		30,151,923			30,707,329
Total gross finance receivables		74,347,641			89,155,374
Unearned insurance commissions		(1,996,614	)		(2,793,425	)
Unearned finance charges		(9,243,875	)		(10,621,034	)
Accrued interest receivable		608,209			865,885
Finance receivables, before allowance for credit losses		63,715,361			76,606,800
Allowance for credit losses		(7,432,480	)		(8,876,327	)
Finance receivables, net	$	56,282,881		$	67,730,473

Inventory consisted of the following:


*September 25,*	2010		2009
Used automobiles	$	622,296	$	1,159,473
Home furnishings and electronics		579,657		1,042,493

Total inventory	$	1,201,953	$	2,201,966

~~Index~~The toMoney ~~Financial~~Tree ~~Statements~~Inc. and Subsidiaries

~~The~~Notes ~~Money~~to ~~Tree~~Consolidated ~~Inc.~~Financial ~~and~~Statements ~~Subsidiaries~~

~~Notes~~NOTE to5 ~~Consolidated~~– ~~Financial~~PROPERTY ~~Statements~~AND EQUIPMENT, NET

~~NOTE~~Property 3and –equipment ~~FINANCE~~consisted ~~RECEIVABLES~~of ~~AND~~the ~~ALLOWANCE~~following: ~~FOR CREDIT LOSSES (CONTINUED)~~

An analysis of the allowance for credit losses is as follows:


*September 25,*	2010			2009
Furniture and equipment	$	4,685,217		$	6,025,876
Airplane		174,000			174,000
Automotive equipment		354,511			550,181
Leasehold improvements		2,563,570			2,833,393

		7,777,298			9,583,450
Accumulated depreciation		(4,408,056	)		(5,356,895	)

Total property and equipment, net	$	3,369,242		$	4,226,555

Years ended September 25,	2009			2008			2007
Beginning balance	$	8,876,327		$	3,710,679		$	3,139,359
Provisions for credit losses		9,629,722			13,812,192			4,982,494
Charge-offs, net of insurance recoveries		(11,367,962	)		(8,825,129	)		(4,583,650	)
Recoveries		231,604			196,208			181,218
Other		62,789			(17,623	)		(8,742	)
Ending balance	$	7,432,480		$	8,876,327		$	3,710,679

Depreciation expense totaled $751,249 and $880,119 for the years ended September 25, 2010 and 2009, respectively.

ItNOTE is6 ~~the~~– ~~Company’s~~ACCOUNTS ~~experience~~PAYABLE ~~that~~AND aOTHER ~~substantial~~ACCRUED ~~portion~~LIABILITIES of the loan portfolio generally is renewed or repaid before contractual maturity dates. During the years ended September 25, 2009, 2008, and 2007, cash collections of receivables (including principal, renewals and finance charges since finance receivables are recorded and tracked at their gross precomputed amount) totaled $76,482,092, $87,883,004, and $95,928,382, respectively, and these cash collections were 104 percent, 102 percent, and 102 percent of average gross finance receivable balances (excluding accounts in bankruptcy), respectively.

~~Finance~~Accounts ~~receivables~~payable ~~in a non-accrual status, including accounts in bankruptcy, totaled $14,477,879, $17,778,974,~~ and ~~$20,132,798~~other ataccrued ~~September 25,~~liabilities ~~2009,~~consisted ~~2008 and 2007, respectively. Because~~ of ~~their delinquency status,~~ the ~~Company~~following: considers these loans to be impaired. Consequently, the amount of loans in non-accrual status represents the Company’s investment in impaired loans. Since the Company’s portfolio of finance receivables is comprised primarily of small balance, homogenous loans, individual impairment is not performed, but rather evaluated as a group. The allowance for credit losses related to the entire portfolio of loans was $7,432,480, $8,876,327, and $3,710,679 at September 25, 2009, 2008 and 2007, respectively.

The Company ceases the accrual of interest income on interest-bearing finance receivables when no payment has been made for 60 days or more. Recognition of interest income suspends at 90 days contractual delinquency on accounts with precomputed interest charges. Suspended interest totaled $916,802, $1,167,918, and $1,149,545 for the years ended September 25, 2009, 2008, and 2007, respectively.


*September 25,*	2010		2009
Accounts payable	$	242,878	$	150,144
Insurance payable, loan related		369,753		414,470
Accrued payroll		367,218		472,772
Accrued payroll taxes		28,007		35,642
Sales tax payable		670,021		1,072,007
Other liabilities		157,157		344,234

Total accounts payable and other accrued liabilities	$	1,835,034	$	2,489,269

~~Finance~~48 receivables charged off are net of proceeds from non-filing insurance. The Company purchases non-filing insurance on certain loans in lieu of filing a Uniform Commercial Code lien. Premiums collected are remitted to the insurance company to cover possible losses from charge-offs as a result of not recording these liens. Amounts recovered from non-filing insurance claims totaled $2,795,483, $2,543,460, and $2,569,924, for the years ended September 25, 2009, 2008, and 2007, respectively. If this insurance product was discontinued, these proceeds would not be available to offset future credit losses and additional provisions for credit losses would be required. Amounts receivable from the insurance company related to non-filing insurance claims were $421,132 and $514,897 at September 25, 2009 and 2008, respectively, and are included in other receivables in the accompanying consolidated balance sheets.

NOTE 4 – INVENTORY

Inventory consisted of the following:

September 25,	2009		2008
Used automobiles	$	1,159,473	$	1,529,078
Home furnishings and electronics		1,042,493		1,637,943
Total inventory	$	2,201,966	$	3,167,021

~~Index~~The toMoney ~~Financial~~Tree ~~Statements~~Inc. and Subsidiaries

~~The~~Notes ~~Money~~to ~~Tree~~Consolidated ~~Inc.~~Financial ~~and~~Statements ~~Subsidiaries~~

~~Notes~~NOTE to7 ~~Consolidated~~– ~~Financial~~DEBT ~~Statements~~

~~NOTE~~Debt 5consisted –of ~~PROPERTY~~the ~~AND~~following: ~~EQUIPMENT, NET~~

Property and equipment consisted of the following:


*September 25,*	2010		2009
Senior debt: due to banks and commercial finance companies, collateralized by inventory and certain automotive equipment, and certain notes include personal guarantees of a shareholder, interest at base rate plus 4.5% (9.5% at September 25, 2010), due in 2011. The carrying values of the collateral at September 25, 2010 and 2009 were $164,625 and $362,206, respectively.	$	164,625	$	326,517

Total senior debt		164,625		326,517

Variable rate subordinated debentures issued by The Money Tree of Georgia Inc.: due to individuals, unsecured, interest at 4.0% to 8.7%, due at various dates through 2014.		22,490,296		30,730,844
Variable rate subordinated debentures issued by The Money Tree Inc.: due to individuals, unsecured, interest at 5.0% to 8.7%, due at various dates through 2014.		48,736,402		42,871,977

Total subordinated debentures		71,226,698		73,602,821

Demand notes issued by The Money Tree of Georgia Inc.: due to individuals, unsecured, interest at 3.0% to 4.0%, due on demand.		303,746		441,747
Demand notes issued by The Money Tree Inc.: due to individuals, unsecured, interest at 3.0% to 4.0%, due on demand.		2,871,167		2,704,960

Total demand notes		3,174,913		3,146,707

Total debt	$	74,566,236	$	77,076,045

September 25,	2009			2008
Furniture and equipment	$	6,025,876		$	6,978,418
Airplane		174,000			609,155
Automotive equipment		550,181			543,154
Leasehold improvements		2,833,393			2,698,008
		9,583,450			10,828,735
Accumulated depreciation		(5,356,895	)		(5,922,546	)
Total property and equipment, net	$	4,226,555		$	4,906,189

There are no pre-payment penalties on the senior debt or subordinated debt. At the Company’s discretion, these debt obligations could be satisfied by paying the outstanding principal balance plus accrued interest.

~~Depreciation~~Effective ~~expense totaled $880~~December 25,~~119,~~ ~~$793~~2005,~~776,~~ the Company terminated the sale of debentures and ~~$794~~demand notes through its subsidiary,~~418,~~ ~~for~~The ~~the~~Money ~~years~~Tree ~~ended~~of ~~September 25, 2009,~~Georgia ~~2008~~Inc. and ~~2007,~~commenced ~~respectively~~the sale of debentures and demand notes from the parent company.

~~NOTE~~Interest 6on –the ~~ACCOUNTS~~debentures ~~PAYABLE~~is ~~AND~~earned ~~OTHER~~daily ~~ACCRUED~~and ~~LIABILITIES~~is payable at any time upon request of the holder. Interest on the demand notes is payable only at the time demand is made by the holder for repayment of the note.

~~Accounts~~49 ~~payable and other accrued liabilities consisted of the following:~~

September 25,	2009		2008
Accounts payable	$	150,144	$	271,815
Insurance payable, loan related		414,470		639,167
Accrued payroll		472,772		507,484
Accrued payroll taxes		35,642		38,420
Money orders		—		530,888
Sales tax payable		1,072,007		1,210,579
Other liabilities		344,234		80,517
Total accounts payable and other accrued liabilities	$	2,489,269	$	3,278,870

~~Index~~The toMoney ~~Financial~~Tree ~~Statements~~Inc. and Subsidiaries

~~The~~Notes ~~Money~~to ~~Tree~~Consolidated ~~Inc.~~Financial ~~and~~Statements ~~Subsidiaries~~

~~Notes~~NOTE to7 ~~Consolidated~~– ~~Financial~~DEBT ~~Statements~~(CONTINUED)

~~NOTE~~The 7debentures –may ~~DEBT~~be redeemed at the holder’s option at the end of the interest adjustment period selected (one year, two years or four years) or at maturity. Redemption prior to maturity or interest adjustment period is at the Company’s discretion and subject to a 90 day interest penalty. Demand notes may be redeemed by holders at any time. The Company intends to meet its obligation to repay such debt with cash generated from sales of the debentures and demand notes, cash on hand, income from operations or working capital.

~~Debt~~Our ~~consisted~~obligations with respect to the debentures and demand notes are governed by the terms of indenture agreements with U.S. Bank National Association, as trustee. Under the ~~following:~~indentures, in addition to other possible events of default, if we fail to make a payment of principal or interest under any debenture or demand note and this failure is not cured within 30 days, we will be deemed in default. Upon such a default, the trustee or holders of 25% in principal of the outstanding debentures or demand notes could declare all principal and accrued interest immediately due and payable. Since our total assets do not cover these debt payment obligations, we would most likely be unable to make all payments under the debentures or demand notes when due, and we might be forced to cease our operations.

September 25,	2009		2008
Senior debt: due to banks and commercial finance companies, collateralized by inventory and certain automotive equipment, and certain notes include personal guarantees of a shareholder, interest at prime plus 2%, due in 2010. The carrying values of the collateral at September 25, 2009 and 2008 were $362,206 and $725,910, respectively.	$	326,517	$	694,890
Total senior debt		326,517		694,890
Variable rate subordinated debentures issued by The Money Tree of Georgia Inc.: due to individuals, unsecured, interest at 4.25% to 9.6%, due at various dates through 2013.		30,730,844		45,020,194
Variable rate subordinated debentures issued by The Money Tree Inc.: due to individuals, unsecured, interest at 6.0% to 8.7%, due at various dates through 2013.		42,871,977		37,189,017
Total subordinated debentures		73,602,821		82,209,211
Demand notes issued by The Money Tree of Georgia Inc.: due to individuals, unsecured, interest at 3.0% to 4.0%, due on demand.		441,747		613,442
Demand notes issued by The Money Tree Inc.: due to individuals, unsecured, interest at 3.0% to 4.0%, due on demand.		2,704,960		3,044,718
Total demand notes		3,146,707		3,658,160
Total debt	$	77,076,045	$	86,562,261

Aggregate debt maturities at September 25, 2010 are as follows:


	2011		2012		2013		2014		Total
Senior debt, banks and finance companies	$	164,625	$	—	$	—	$	—	$	164,625
Variable rate subordinated debentures		16,531,512		19,459,017		15,216,749		20,019,420		71,226,698
Demand notes		3,174,913		—		—		—		3,174,913

	$	19,871,050	$	19,459,017	$	15,216,749	$	20,019,420	$	74,566,236

~~Effective December 25,~~Interest ~~2005,~~expense ~~the~~totaled ~~Company~~$6,976,265 ~~terminated the sale of debentures~~ and ~~demand notes through its subsidiary~~$7,611,185 ~~The~~for ~~Money~~the ~~Tree~~years ofended ~~Georgia~~September 25, ~~Inc.~~2010 and ~~commenced~~2009, ~~the sale of debentures and demand notes from the parent company~~respectively.

~~Interest~~NOTE on8 ~~the~~– ~~debentures~~COMMON isSTOCK ~~earned daily and is payable at any time upon request of the holder. Interest on the demand notes is payable only at the time demand is made by the holder for repayment of the note.~~

50The common stock of the Company is comprised of the following: Class A voting shares, no par value, 500,000 authorized, 2,686 shares issued and outstanding; and Class B non-voting shares, no par value, 1,500,000 authorized, 26,860 shares issued and outstanding.

NOTE 9 – INCOME TAXES

The Company accounts for income taxes in accordance with ASC 740, “Income Taxes”; accordingly deferred income taxes are provided at the enacted marginal rates on the difference between the financial statement and income taxes bases of assets and liabilities. Deferred income tax provisions or benefits are based on the change in the deferred tax assets and liabilities from period to period.

~~Index~~The toMoney ~~Financial~~Tree ~~Statements~~Inc. and Subsidiaries

~~The~~Notes ~~Money~~to ~~Tree~~Consolidated ~~Inc.~~Financial ~~and~~Statements ~~Subsidiaries~~

~~Notes~~NOTE to9 ~~Consolidated~~– ~~Financial~~INCOME ~~Statements~~TAXES (CONTINUED)

~~NOTE~~The 7provision –for ~~DEBT~~income ~~(CONTINUED)~~taxes for the years ended September 25, 2010 and 2009 consisted of the following:

The debentures may be redeemed at the holder’s option at the end of the interest adjustment period selected (one year, two years or four years) or at maturity. Redemption prior to maturity or interest adjustment period is at the Company’s discretion and subject to a 90 day interest penalty. Demand notes may be redeemed by holders at any time. The Company intends to meet its obligation to repay such debt with cash generated from sales of the debentures and demand notes, cash on hand, income from operations or working capital.


*Years ended September 25,*	2010	2009
Current tax expense (benefit)
Federal

Filing Compare · Money Tree, Inc.