Community Choice Financial Inc. and Subsidiaries

Consolidated Balance Sheets

March 31, 2016 and December 31, 2015

(In thousands, except per share data)

	March 31,			December 31,
	2016			2015
	(unaudited)
Assets
Current Assets
Cash and cash equivalents	$	108,659		$	98,941
Restricted cash	3,460			3,460
Finance receivables, net of allowance for loan losses of $16,467 and $20,552	94,817			119,704
Short-term investments, certificates of deposit	400			1,115
Card related pre-funding and receivables	2,067			1,674
Other current assets	18,321			17,024
Total current assets	227,724			241,918
Noncurrent Assets
Finance receivables, net of allowance for loan losses of $2,815 and $3,340	7,301			8,797
Property, leasehold improvements and equipment, net	41,390			46,085
Goodwill	146,877			152,568
Other intangible assets	1,482			1,913
Security deposits	2,564			3,098
Deferred tax asset, net	—			5,165
Total assets	$	427,338		$	459,544
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable and accrued liabilities	$	27,149		$	34,616
Money orders payable	8,338			11,233
Accrued interest	11,713			6,707
Current portion of capital lease obligation	1,421			1,567
Current portion of line of credit, net of deferred issuance costs	31,242			—
Current portion of related party Florida seller notes	—			10,097
Current portion of subsidiary notes payable, net of deferred issuance costs	42,177			211
Deferred revenue	4,608			3,154
Total current liabilities	126,648			67,585
Noncurrent Liabilities
Lease termination payable	1,023			1,322
Capital lease obligation	1,191			1,485
Stock repurchase obligation	—			3,130
Lines of credit, net of deferred issuance costs	5,468			26,625
Subsidiary notes payable, net of deferred issuance costs	917			35,506
Senior secured notes, net of deferred issuance costs	250,601			347,913
Deferred revenue	8,800			—
Deferred tax liability, net	848			—
Total liabilities	395,496			483,566
Commitments and Contingencies
Stockholders’ Equity
Preferred stock, par value $.01 per share, 3,000 shares authorized, no shares issued and outstanding	—			—
Common stock, par value $.01 per share, 300,000 authorized shares and 7,982 outstanding shares at March 31, 2016 and 8,982 outstanding shares at December 31, 2015	90			90
Additional paid-in capital	128,444			128,331
Retained deficit	(96,642		)	(152,443		)
Treasury Stock	(50		)	—
Total stockholders’ equity (deficit)	31,842			(24,022		)
Total liabilities and stockholders’ equity	$	427,338		$	459,544

See Notes to Unaudited Consolidated Financial Statements.

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Community Choice Financial Inc. and Subsidiaries

Consolidated Statements of Income

Three Months Ended March 31, 2016 and 2015

(In thousands)

(Unaudited)

	Three Months Ended
	March 31,
	2016			2015
Revenues:
Finance receivable fees	$	63,884		$	82,619
Credit service Fees	22,103			27,387
Check cashing fees	13,355			17,177
Card fees	2,148			2,292
Other	6,067			6,959
Total revenues	107,557			136,434
Operating expenses:
Salaries and benefits	18,279			20,561
Provision for loan losses	26,475			39,910
Occupancy	6,660			7,577
Advertising and marketing	2,678			4,802
Depreciation and amortization	2,734			2,393
Other	12,612			14,044
Total operating expenses	69,438			89,287
Operating gross profit	38,119			47,147
Corporate and other expenses
Corporate expenses	21,585			20,809
Depreciation and amortization	1,209			1,415
Interest expense, net	11,463			14,208
Loss on sale of subsidiary	1,569			—
Gain on debt extinguishment	(62,852		)	—
Total corporate and other expenses	(27,026		)	36,432
Income from operations, before tax	65,145			10,715
Provision for income taxes	9,344			4,272
Net income	$	55,801		$	6,443

See Notes to Unaudited Consolidated Financial Statements.

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Community Choice Financial Inc. and Subsidiaries

Consolidated Statements of Stockholders’ Equity

Three Months Ended March 31, 2016

(Dollars in thousands)

(Unaudited)

								Additional
	Common Stock				Treasury			Paid-In		Retained
	Shares		Amount		Stock			Capital		Deficit			Total
Balance, December 31, 2015	8,981,536		$	90	$	—		$	128,331	$	(152,443	)	$	(24,022	)
Reacquired stock	(1,000,000	)			(50		)						(50		)
Stock-based compensation expense	—		—		—			113		—			113
Net income	—		—		—			—		55,801			55,801
Balance, March 31, 2016	7,981,536		$	90	$	(50	)	$	128,444	$	(96,642	)	$	31,842

See Notes to Unaudited Consolidated Financial Statements.

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Community Choice Financial Inc. and Subsidiaries

Consolidated Statements of Cash Flows

Three months Ended March 31, 2016 and 2015

(In thousands)

(Unaudited)

	Three Months Ended
	March 31,
	2016			2015
Cash flows from operating activities
Net income	$	55,801		$	6,443
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	26,475			39,910
Loss on disposal of assets	50			16
Gain on debt extinguishment	(62,852		)	—
Loss on sale of subsidiary	1,569			—
Depreciation	3,672			3,215
Amortization of note discount and deferred debt issuance costs	616			691
Amortization of intangibles	271			592
Deferred income taxes	6,013			5,163
Change in fair value of stock repurchase obligation	—			(10		)
Stock-based compensation	113			258
Changes in assets and liabilities:
Short term investments	715			—
Card related pre-funding and receivables	(393		)	439
Restricted cash	—			(2,090		)
Other assets	(1,353		)	2,906
Deferred revenue	10,254			(687		)
Accrued interest	5,129			11,484
Money orders payable	(2,895		)	4,577
Lease termination payable	(299		)	—
Accounts payable and accrued expenses	(7,219		)	(8,455		)
Net cash provided by operating activities	35,667			64,452
Cash flows from investing activities
Net receivables originated	(6,349		)	(16,582		)
Net acquired assets, net of cash	—			(810		)
Purchase of leasehold improvements and equipment	(1,739		)	(5,954		)
Net cash used in investing activities	(8,088		)	(23,346		)
Cash flows from financing activities
Repurchase of senior secured notes	(36,437		)	—
Proceeds from subsidiary note	7,400			2,400
Payments on subsidiary note	(14		)	(187		)
Payments on related party Florida seller notes	—			(750		)
Payments on capital lease obligations	(275		)	(673		)
Proceeds on lines of credit	10,000			26,700
Debt issuance costs	1,465			(842		)
Net cash provided by (used in) financing activities	(17,861		)	26,648
Net increase in cash and cash equivalents	9,718			67,754
Cash and cash equivalents:
Beginning	98,941			77,734
Ending	$	108,659		$	145,488

See Notes to Unaudited Consolidated Financial Statements.

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Community Choice Financial Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(Dollars in thousands, except per share data)

Note 1. Ownership, Nature of Business, and Significant Accounting Policies

Nature of business: Community Choice Financial Inc. (together with its consolidated subsidiaries, “CCFI” or “the Company”) was formed on April 6, 2011, under the laws of the State of Ohio. As of March 31, 2016, the Company owned and operated 479 retail locations in 15 states and is licensed to deliver similar financial services over the internet in 31 states. Through its network of retail locations and over the internet, the Company provides customers a variety of financial products and services, including secured and unsecured, short and medium-term consumer loans, check cashing, prepaid debit cards, and other services that address the specific needs of its individual customers.

A summary of the Company’s significant accounting policies follows:

Basis of presentation: The accompanying interim unaudited consolidated financial statements of the Company have been prepared in accordance with the instructions to Form 10-Q and accounting principles generally accepted in the United States (“GAAP”) for interim financial information. They do not include all information and footnotes required by GAAP for complete financial statements. Although management believes that the disclosures are adequate to prevent the information from being misleading, the interim unaudited consolidated financial statements should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2015, included in the Company’s Annual Report on Form 10-K filed with the Securities & Exchange Commission on March 30, 2016. In the opinion of the Company’s management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair statement of the Company’s financial condition, have been included. The results for any interim period are not necessarily indicative of results to be expected for the year ending December 31, 2016.

Basis of consolidation: The accompanying consolidated financial statements include the accounts of CCFI. All significant intercompany accounts and transactions have been eliminated in consolidation.

Reclassifications: Certain amounts reported in the consolidated financial statements for the three months ended March 31, 2015, have been reclassified to conform to classifications presented in the consolidated financial statements for the three months ended March 31, 2016, without affecting the previously reported net income or stockholders’ equity.

Business segments: FASB Accounting Standards Codification (“ASC”) Topic 280 Segment Reporting requires that a public enterprise report a measure of segment profit or loss, certain specific revenue and expense items, segment assets, information about the way operating segments were determined and other items. The Company reports operating segments in accordance with FASB ASC Topic 280. Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in determining how to allocate resources and assess performance. The Company operates in two segments: Retail financial services and Internet financial services.

Revenue recognition: Transactions include loans, credit service fees, check cashing, bill payment, money transfer, money order sales, and other miscellaneous products and services. The full amount of the check cashing fee is recognized as revenue at the time of the transaction. Fees and direct costs incurred for the origination of loans are deferred and amortized over the loan period using the interest method. The Company acts in an agency capacity regarding bill payment services, money transfers, card products, and money orders offered and sold at its branches. The Company records the net amount retained as revenue because the supplier is the primary obligor in the arrangement, the amount earned by the Company is fixed, and the supplier is determined to have the ultimate credit risk. Revenue on loans determined to be troubled debt restructurings are recognized at the impaired loans’ original interest rates until the impaired loans are charged off or paid by the customer. Credit service organization (“CSO”) fees are recognized over the arranged credit service period.

Finance receivables: Finance receivables consist of short term and medium-term consumer loans.

Short-term consumer loans can be unsecured or secured with a maturity up to ninety days. Unsecured short-term loan products typically range in principal from $100 to $1,000, with a maturity between fourteen and thirty days, and include a written agreement to defer the presentment of the customer’s personal check or preauthorized debit for the aggregate amount of

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the advance plus fees. This form of lending is based on applicable laws and regulations, which vary by state. State statutes vary from charging fees of 15% to 20%, to charging interest at 25% per annum plus origination fees. The customers repay the cash advance by making cash payments or allowing a check or preauthorized debit to be presented. Secured consumer loans with a maturity of ninety days or less are included in this category and represented 18.9% and 17.7% of short-term consumer loans at March 31, 2016 and December 31, 2015, respectively.

Medium-term consumer loans can be unsecured or secured with a maturity greater than ninety days up to thirty-six months. Unsecured medium-term products typically range from $100 to $5,000, and are evidenced by a promissory note with a maturity between three and thirty-six months. These consumer loans vary in structure depending upon the applicable laws and regulations where they are offered. The medium-term consumer loans are payable in installments or provide for a line of credit with periodic payments. Secured consumer loans with a maturity greater than ninety days are included in this category and represented 13.4% and 13.7% of medium-term consumer loans at March 31, 2016, and December 31, 2015, respectively.

Allowance for loan losses: Provisions for loan losses are charged to income in amounts sufficient to maintain an adequate allowance for loan losses and an adequate accrual for losses related to guaranteed loans processed for third-party lenders. The factors used in assessing the overall adequacy of the allowance for loan losses, the accrual for losses related to guaranteed loans made by third-party lenders and the resulting provision for loan losses include an evaluation by product by market based on historical loan loss experience and delinquency of certain medium-term consumer loans. The Company evaluates various qualitative factors that may or may not affect the computed initial estimate of the allowance for loan losses, by using internal valuation inputs including historical loan loss experience, delinquency, overall portfolio quality, and current economic conditions.

For short term unsecured consumer loans, the Company’s policy is to charge off loans when they become past due. The Company’s policy dictates that, where a customer has provided a check or ACH authorization for presentment upon the maturity of a loan, if the customer has not paid off the loan by the due date, the Company will deposit the customer’s check or draft the customer’s bank account for the amount due. If the check or draft is returned as unpaid, all accrued fees and outstanding principal are charged-off as uncollectible. For short term secured loans, the Company’s policy requires that balances be charged off when accounts are thirty days past due.

For medium term secured and unsecured consumer loans which have a term of one year or less, the Company’s policy requires that balances be charged off when accounts are sixty days past due. For medium term secured and unsecured consumer loans which have an initial maturity of greater than one year, the Company’s policy requires that balances be charged off when accounts are ninety-one days past due.

In certain markets, the Company reduced interest rates and favorably changed payment terms for medium-term consumer loans to assist borrowers in avoiding default and to mitigate risk of loss. These reduced interest rates and changed payment terms were limited to loans that the Company believed the customer had the ability to pay in the foreseeable future. These loans were accounted for as troubled debt restructurings and represent the only loans considered impaired due to the nature of the Company’s charge-off policy.

Recoveries of amounts previously charged off are recorded to the allowance for loan losses or the accrual for third-party losses in the period in which they are received.

Change in accounting principle: As of January 1, 2016, the Company adopted new guidance related to the presentation of deferred debt issuance costs in its balance sheet. Under the new guidance, deferred debt issuance costs are reported as a direct deduction from the carrying amount of the related debt. Previously, deferred debt issuance costs were presented as a noncurrent asset. The new presentation requirements have been applied retrospectively and amounts reported in the December 2015 consolidated balance sheet have been adjusted to apply the new guidance. The change in accounting principle resulted in a reduction of noncurrent assets of $6,828, an increase in current assets of $13, a reduction of current liabilities of $3, and a reduction of noncurrent liabilities of $6,812 in the December 31, 2015 balance sheet.

Fair value of financial instruments: Financial assets and liabilities measured at fair value are grouped in three levels. The levels prioritize the inputs used to measure the fair value of the assets or liabilities. These levels are:

· Level 1—Quoted prices (unadjusted) in active markets for identical assets or liabilities.

· Level 2—Inputs other than quoted prices that are observable for assets and liabilities, either directly or indirectly. These inputs include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are less attractive.

· Level 3—Unobservable inputs for assets and liabilities reflecting the reporting entity’s own assumptions.

The Company follows the provisions of ASC 820-10, which applies to all assets and liabilities that are being measured and reported on a fair value basis. ASC 820-10 requires a disclosure that establishes a framework for measuring fair value within GAAP and expands the disclosure about fair value measurements. This standard enables a reader of consolidated financial statements to assess the inputs used to develop those measurements by establishing a hierarchy for ranking the quality

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and reliability of the information used to determine fair values. The standard requires that assets and liabilities carried at fair value be classified and disclosed in one of the three categories.

In determining the appropriate levels, the Company performed a detailed analysis of the assets and liabilities that are subject to ASC 820-10. At each reporting period, all assets and liabilities for which the fair value measurement is based on significant unobservable inputs are classified as Level 3. The Company’s financial instruments consist primarily of cash and cash equivalents, finance receivables, short-term investments, and lines of credit. For all such instruments, other than senior secured notes, notes payable, and stock repurchase obligation at March 31, 2016, and December 31, 2015, the carrying amounts in the consolidated financial statements approximate their fair values. Finance receivables are short term in nature and are originated at prevailing market rates and lines of credit bear interest at current market rates. The fair value of finance receivables at March 31, 2016 and December 31, 2015 approximates carrying value and is measured using internal valuation inputs including historical loan loss experience, delinquency, overall portfolio quality, and current economic conditions.

The fair value of the Company’s 10.75% senior secured notes due 2019 (the “2019 notes”) and the 12.75% senior secured notes due 2020 (the “2020 notes”) were determined based on market yield on trades of the 2019 notes at the end of that reporting period.

The fair value of related party Florida seller notes payable was determined based on applicable market yields of similar debt and the fair value of the stock repurchase obligation was determined based on a probability-adjusted Black Scholes option valuation model.

	March 31, 2016
	Carrying
	Amount		Fair Value		Level
Financial assets:
Cash and cash equivalents	$	108,659	$	108,659	1
Restricted cash	3,460		3,460		1
Finance receivables	102,118		102,118		3
Short-term investments, certificates of deposit	400		400		2
Financial liabilities:
10.75% Senior secured notes	241,927		107,658		1
12.75% Senior secured notes	12,500		6,599		2
Subsidiary Note payable	43,540		43,540		2
Lines of Credit	37,200		37,200		2

	December 31, 2015
	Carrying
	Amount		Fair Value		Level
Financial assets:
Cash and cash equivalents	$	98,941	$	98,941	1
Restricted cash	3,460		3,460		1
Finance receivables	128,501		128,501		3
Short-term investments, certificates of deposit	1,115		1,115		2
Financial liabilities:
10.75% Senior secured notes	328,716		77,248		1
12.75% Senior secured notes	25,000		9,063		2
Related party Florida seller notes	10,097		10,097		2
Subsidiary Note payable	36,154		36,154		2
Lines of Credit	27,200		27,200		2
Stock repurchase obligation	3,130		3,130		2

Treasury Stock: Treasury stock is reported at cost and consists of 1,000 common shares at March 31, 2016. There were no shares held in treasury at December 31, 2015.

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Subsequent events: The Company has evaluated its subsequent events (events occurring after March 31, 2016) through the issuance date of May 12, 2016.

Note 2. Finance Receivables, Credit Quality Information and Allowance for Loan Losses

Finance receivables representing amounts due from customers for advances at March 31, 2016, and December 31, 2015, consisted of the following:

	March 31,			December 31,
	2016			2015
Short-term consumer loans	$	57,910		$	76,631
Medium-term consumer loans	65,138			78,665
Gross receivables	$	123,048		$	155,296
Unearned advance fees, net of deferred loan origination costs	(1,648		)	(2,903		)
Finance receivables before allowance for loan losses	121,400			152,393
Allowance for loan losses	(19,282		)	(23,892		)
Finance receivables, net	$	102,118		$	128,501

Finance receivables, net
Current portion	$	94,817		$	119,704
Non-current portion	7,301			8,797
Total finance receivables, net	$	102,118		$	128,501

Changes in the allowance for loan losses by product type for the three months ended March 31, 2016, are as follows:

														Allowance as
	Balance									Balance		Receivables		a percentage
	1/1/2016		Provision		Charge-Offs			Recoveries		3/31/2016		3/31/2016		of receivable
Short-term consumer loans	$	3,676	$	7,731	$	(26,918	)	$	18,349	$	2,838	$	57,910	4.90	%
Medium-term consumer loans	20,216		11,978		(17,980		)	2,230		16,444		65,138		25.24	%
	$	23,892	$	19,709	$	(44,898	)	$	20,579	$	19,282	$	123,048	15.67	%

The provision for loan losses for the three months ended March 31, 2016, also includes losses from returned items from check cashing of $1,565.

The provision for short-term consumer loans of $7,731 is net of debt sales of $417 for the three months ended March 31, 2016.

The Company evaluates all short-term and medium-term consumer loans collectively for impairment, except for medium-term loans that have been modified and classified as troubled debt restructurings, which are individually evaluated for impairment. In certain markets, the Company reduced interest rates and favorably changed payment terms for medium-term consumer loans to assist borrowers in avoiding default and to mitigate risk of loss. The provision and subsequent charge off related to these loans totaled $356 and is included in the provision for medium-term consumer loans for the three months ended March 31, 2016. For these loans evaluated for impairment, there were $377 payment defaults during the three months ended March 31, 2016. The troubled debt restructurings during the three months ended March 31, 2016 are subject to an allowance of $96 with a net carrying value of $288 at March 31, 2016.

Changes in the allowance for loan losses by product type for the three months ended March 31, 2015 are as follows:

														Allowance as
	Balance									Balance		Receivables		a percentage
	1/1/2015		Provision		Charge-Offs			Recoveries		3/31/2015		3/31/2015		of receivable
Short-term consumer loans	$	5,141	$	11,642	$	(35,561	)	$	22,802	$	4,024	$	76,952	5.23	%
Medium-term consumer loans	25,222		18,038		(24,186		)	2,660		21,734		87,644		24.80	%
	$	30,363	$	29,680	$	(59,747	)	$	25,462	$	25,758	$	164,596	15.65	%

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The provision for loan losses for the three months ended March 31, 2015, also includes losses from returned items from check cashing of $2,256.

The provision for short-term consumer loans of $11,642 is net of debt sales of $631 for the three months ended March 31, 2015.

The Company evaluates all short-term and medium-term consumer loans collectively for impairment, except for medium-term loans that have been modified and classified as troubled debt restructurings, which are individually evaluated for impairment. In certain markets, the Company reduced interest rates and favorably changed payment terms for medium-term consumer loans to assist borrowers in avoiding default and to mitigate risk of loss. The provision and subsequent charge off related to these loans totaled $504 and is included in the provision for medium-term consumer loans for the three months ended March 31, 2015. For these loans evaluated for impairment, there were $1,252 payment defaults during the three months ended March 31, 2015. The troubled debt restructurings during the three months ended March 31, 2015 are subject to an allowance of $201 with a net carrying value of $470 at March 31, 2015.

The Company has subsidiaries that facilitate third party lender loans. Changes in the accrual for third-party lender losses for the three months ended March 31, 2016, and 2015 were as follows:

	Three months ended March 31,
	2016			2015
Balance, beginning of period	$	2,610		$	4,434
Provision for loan losses	5,201			7,974
Charge-offs, net	(5,595		)	(9,305		)
Balance, end of period	$	2,216		$	3,103

Total gross finance receivables for which the Company has recorded an accrual for third-party lender losses totaled $31,233 and $40,552 at March 31, 2016, and December 31, 2015, respectively, and the corresponding guaranteed consumer loans are disclosed as an off-balance sheet arrangement. The provision for third party lender losses of $5,201 for the three months ended March 31, 2016 is net of debt sales of $352.

The Company considers the near term repayment performance of finance receivables as its primary credit quality indicator. The Company performs credit checks through consumer reporting agencies on certain borrowers. If a third-party lender provides the advance, the applicable third-party lender decides whether to approve the loan and establishes all of the underwriting criteria and terms, conditions, and features of the customer’s loan agreement.

The aging of receivables at March 31, 2016, and December 31, 2015, are as follows:

	March 31, 2016				December 31, 2015
Current finance receivables	$	110,330	89.7	%	$	138,346	89.1	%
Past due finance receivables (1 - 30 days)
Short-term consumer loans	1,144		0.9	%	1,268		0.8	%
Medium-term consumer loans	6,782		5.5	%	9,433		6.1	%
Total past due finance receivables (1 - 30 days)	7,926		6.4	%	10,701		6.9	%
Past due finance receivables (31 - 60 days)
Medium-term consumer loans	2,921		2.4	%	3,225		2.1	%
Total past due finance receivables (31 - 60 days)	2,921		2.4	%	3,225		2.1	%
Past due finance receivables (61 - 90 days)
Medium-term consumer loans	1,871		1.5	%	3,024		1.9	%
Total past due finance receivables (61 - 90 days)	1,871		1.5	%	3,024		1.9	%
Total delinquent	12,718		10.3	%	16,950		10.9	%
	$	123,048	100.0	%	$	155,296	100.0	%

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Note 3. Related Party Transactions and Balances

Certain senior members of management have an interest in a vendor from which the Company purchases telecommunications services. The $788 and $140, respectively, in hardware and services for the three months ended March 31, 2016 and 2015 were provided to the Company by the vendor at a reduced rate. If the Company were to source the services from another vendor, the overall cost of the services would likely increase.

The Company has a consulting agreement with a related party for information technology consulting services. Consulting services provided to the Company for the three months ended March 31, 2016, and 2015 were $138 and $81, respectively.

There were no additional significant new, or changes to existing, related party transactions during the three months ended March 31, 2016.

Note 4. Goodwill and Other Intangible Assets

The Company performed a goodwill impairment test for the Retail services segment as required when a portion of a segment is sold. See the Sale of Subsidiary described in Note 10. The test resulted in no impairment of goodwill as of February 1, 2016.

Intangible amortization expense for the three months ended March 31, 2016, and 2015 were $271 and $592, respectively. There were no additional significant changes to goodwill and other intangible assets during the three months ended March 31, 2016.

Note 5. Pledged Assets and Debt

Lines of credit at March 31, 2016 and December 31, 2015, consisted of the following:

	March 31, 2016						December 31, 2015
			Deferred						Deferred
			Issuance		Net				Issuance		Net
	Principal		Costs		Principal		Principal		Costs		Principal
$7,000 Revolving credit, secured, prime plus 1.00% with 5.00% floor, due July 2017, collateralized by all of Insight Capital, LLC’s assets	$	5,500	$	32	$	5,468	$	—	$	—	$	—
$31,700 Revolving credit, secured, interest rate as defined below, due March 2017, collateralized by all Guarantor Company assets	31,700		458		31,242		27,200		575		26,625
	37,200		490		36,710		27,200		575		26,625
Less current maturities	31,700		458		31,242		—		—		—
Long-term portion	$	5,500	$	32	$	5,468	$	27,200	$	575	$	26,625

The deferred issuance costs of $13 were greater than the carrying value of the $7,000 Revolving credit facility as of December 31, 2015 and is included in Other Current Assets on the Consolidated Balance Sheet.

The interest rate is one-month LIBOR plus 14% with a 15% floor, and there is a make-whole payment if the revolving principal balance falls below 85% of the aggregate commitment on or before September 27, 2016. The 1-month LIBOR was 0.44% and 0.24% at March 31, 2016 and December 31, 2015, respectively, and the prime rate was 3.50% and 3.25% at March 31, 2016 and December 31, 2015, respectively.

Senior secured notes payable at March 31, 2016, and December 31, 2015, consisted of the following:

	March 31, 2016						December 31, 2015
			Deferred						Deferred
			Issuance		Net				Issuance		Net
	Principal		Costs		Principal		Principal		Costs		Principal
$395,000 Senior Note payable, 10.75 %, collateralized by all Guarantor Company assets, semi-annual interest payments with principal due April 2019	$	241,927	$	3,545	$	238,382	$	328,716	$	5,207	$	323,509
$25,000 Senior Note payable, 12.75 %, collateralized by all Guarantor Company assets, semi-annual interest payments with principal due May 2020	12,500		281		12,219		25,000		596		24,404
	254,427		3,826		250,601		353,716		5,803		347,913
Less current maturities	—		—		—		—		—		—
Long-term portion	$	254,427	$	3,826	$	250,601	$	353,716	$	5,803	$	347,913

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For the three months ended March 31, 2016, the Company repurchased $99,289 of our senior secured notes resulting in a $62,852 gain on debt extinguishment. The Company may continue to repurchase its outstanding debt, including in the open market through privately negotiated transactions, by exercising redemption rights, or otherwise and any such repurchases may be material.

Non-guarantor notes payable at March 31, 2016, and December 31, 2015, consisted of the following related party Florida seller notes:

	March 31, 2016						December 31, 2015
			Deferred						Deferred
			Issuance		Net				Issuance
	Principal		Costs		Principal		Principal		Costs		Principal
$8,000 non-guarantor term note, secured, 10.00%, quarterly interest payments with principal due August 2016	$	—	$	—	$	—	$	7,905	$	—	$	7,905
$9,000 non-guarantor term note, secured, 10.00%, quarterly principal and interest payments due August 2016	—		—		—		2,192		—		2,192
	—		—		—		10,097		—		10,097
Less current maturities	—		—		—		10,097		—		10,097
Long-term portion	$	—	$	—	$	—	$	—	$	—	$	—

As part of the consideration of the Company’s sale of its Buckeye Check Cashing of Florida II subsidiary on January 31, 2016, the Company was released from its liability for the two previously outstanding non-guarantor notes payable totaling $10,097. The notes were incurred in connection with the Company’s initial acquisition of this entity.

Subsidiary notes payable at March 31, 2016, and December 31, 2015, consisted of the following:

	March 31, 2016						December 31, 2015
			Deferred						Deferred
			Issuance		Net				Issuance		Net
	Principal		Costs		Principal		Principal		Costs		Principal
$35,000 Note, secured, 16.5%, collateralized by acquired loans, due January 2017	$	35,000	$	289	$	34,711	$	35,000	$	425	$	34,575
$7,400 Note, secured, 18.5%, collateralized by acquired loans, due December 2016	7,400		146		7,254		—		—		—
$1,425 Term note, secured, 4.25%, collateralized by financed asset, due July 2019	981		11		970		995		12		983
$489 Term note, secured, 8.50%, collateralized by financed asset, due July 2016	159		—		159		159		—		159
	43,540		446		43,094		36,154		437		35,717
Less current maturities	42,615		438		42,177		214		3		211
Long-term portion	$	925	$	8	$	917	$	35,940	$	434	$	35,506

The proceeds from the $7,400 subsidiary note will be used by a non-guarantor subsidiary for consumer loan acquisitions from guarantor subsidiaries.

There were no additional significant changes to pledged assets or debt during the three months ended March 31, 2016.

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Note 6. Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities at March 31, 2016, and December 31, 2015, consisted of the following:

	March 31,		December 31,
	2016		2015
Accounts payable	$	1,995	$	4,403
Accrued payroll and compensated absences	6,473		7,673
Wire transfers payable	1,587		1,795
Accrual for third-party losses	2,216		2,610
Unearned CSO Fees	3,607		4,990
Deferred rent	1,046		1,229
Bill payment	1,428		4,611
Lease termination	1,106		1,180
Federal and state tax	3,128		—
Other	4,563		6,125
	$	27,149	$	34,616

Note 7. Operating and Capital Lease Commitments and Total Rental Expense

Rental expense, including common area maintenance and real estate tax expense, totaled $7,054 and $7,909 for the three months ended March 31, 2016, and 2015, respectively.

There were no additional significant changes to operating and capital lease commitments during the three months ended March 31, 2016.

Note 8. Concentrations of Credit Risks

The Company’s portfolio of finance receivables is comprised of loan agreements with customers living in thirty-four states and consequently such customers’ ability to honor their contracts may be affected by economic conditions in those states. Additionally, the Company is subject to regulation by federal and state governments that affect the products and services provided by the Company. To the extent that laws and regulations are passed that affect the Company’s ability to offer loans or similar products in any of the states in which it operates, the Company’s financial position could be adversely affected.

The following table summarizes the allocation of the portfolio balance by state at March 31, 2016 and December 31, 2015:

	March 31, 2016				December 31, 2015
	Balance		Percentage of		Balance		Percentage of
State	Outstanding		Total Outstanding		Outstanding		Total Outstanding
Alabama	$	13,738	11.2	%	$	16,375	10.6	%
Arizona	10,987		8.9		14,137		9.1
California	49,086		39.9		56,586		36.4
Florida	1,799		1.5		8,052		5.2
Virginia	11,796		9.6		14,726		9.4
Other retail segment states	20,497		16.6		25,412		16.4
Other internet segment states	15,145		12.3		20,008		12.9
Total	$	123,048	100.0	%	$	155,296	100.0	%

The other retail segment states are: Illinois, Indiana, Kansas, Kentucky, Michigan, Missouri, Ohio, Oregon, Tennessee, and Utah.

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There were no significant stock option, restricted stock unit, or stock appreciation right activities during the three months ended March 31, 2016.

Note 12. Business Segments

The Company has elected to organize and report on its operations as two operating segments: Retail financial services and Internet financial services.

The following tables present summarized financial information for the Company’s segments:

	As of and for the three months ended March 31, 2016
	Retail		% of		Internet		% of		Unallocated						% of
	Financial Services		Revenue		Financial Services		Revenue		(Income) Expenses			Consolidated			Revenue
Total Assets	$	356,127			$	71,211			$	—		$	427,338
Goodwill	146,877				—				—			146,877
Other Intangible Assets	348				1,134				—			1,482
Total Revenues	$	81,369	100.0	%	$	26,188	100.0	%	$	—		$	107,557		100.0	%
Provision for Loan Losses	12,565		15.4	%	13,910		53.1	%	—			26,475			24.6	%
Other Operating Expenses	38,738		47.6	%	4,225		16.1	%	—			42,963			40.0	%
Operating Gross Profit	30,066		37.0	%	8,053		30.8	%	—			38,119			35.4	%
Interest Expense, net	7,314		9.0	%	4,149		15.8	%	—			11,463			10.7	%
Depreciation and Amortization	967		1.2	%	242		0.9	%	—			1,209			1.1	%
Loss on Sale of Subsidiary	1,569		1.9	%	—		—		—			1,569			1.5	%
Gain on Debt Extinguishment (a)	—		—		—		—		(62,852		)	(62,852		)	(58.4	)%
Other Corporate Expenses (a)	—		—		—		—		21,585			21,585			20.1	%
Income from Operations, before tax	20,216		24.8	%	3,662		14.0	%	41,267			65,145			60.6	%

(a) Represents income and expenses not associated directly with operations that are not allocated between reportable segments. Therefore, the Company has elected to disclose the gain on debt extinguishment and all other corporate expenses as unallocated.

There were no intersegment revenues for the three months ended March 31, 2016.

	As of and for the three months ended March 31, 2015
	Retail		% of		Internet		% of		Unallocated					% of
	Financial Services		Revenue		Financial Services		Revenue		(Income) Expenses			Consolidated		Revenue
Total Assets	$	534,326			$	76,491			$	—		$	610,817
Goodwill	222,233				—				—			222,233
Other Intangible Assets	1,408				1,680				—			3,088
Total Revenues	$	103,382	100.0	%	$	33,052	100.0	%	$	—		$	136,434	100.0	%
Provision for Loan Losses	21,484		20.8	%	18,426		55.7	%	—			39,910		29.2	%
Other Operating Expenses	44,057		42.6	%	5,320		16.1	%	—			49,377		36.2	%
Operating Gross Profit	37,841		36.6	%	9,306		28.2	%	—			47,147		34.6	%
Interest Expense, net	9,292		9.0	%	4,916		14.9	%	—			14,208		10.4	%
Depreciation and Amortization	1,131		1.1	%	284		0.9	%	—			1,415		1.0	%
Other Corporate Expenses (a)	—		—		—		—		20,809			20,809		15.3	%
Income (loss) from Operations, before tax	27,418		26.5	%	4,106		12.4	%	(20,809		)	10,715		7.9	%

(a) Represents expenses not associated directly with operations that are not allocated between reportable segments. Therefore, the Company has elected to disclose all other corporate expenses as unallocated.

Intersegment revenues of $570 for the three months ended March 31, 2015, have been eliminated.

Note 13. Income Taxes

The Company files a consolidated federal income tax return. The Company files consolidated or separate state income tax returns as permitted by the individual states in which it operates. The effective rate change is related to permanent differences between book and tax. The Company had no liability recorded for unrecognized tax benefits at March 31, 2016 or December 31, 2015.

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At March 31, 2016, the Company had gross deferred tax assets of $29,609 and a net deferred tax liability of $848. At December 31, 2015, the Company had gross deferred tax assets of $46,441 and a net deferred tax asset of $1,565. A valuation allowance of $29,609 and $41,276 was recognized at March 31, 2016 and December 31, 2015, respectively, to reduce the deferred tax assets to the amount that was more likely than not expected to be realized. In evaluating whether a valuation allowance was needed for the deferred tax assets, the Company considered the ability to carry net operating losses back to prior periods, reversing taxable temporary differences, and estimates of future taxable income. There have been no credits or net operating losses that have expired. In addition, the Company’s projections of future taxable income are expected to result in the realization of the remaining deferred tax assets. The projections were evaluated in light of past operating results and considered the risks associated with future taxable income related to macroeconomic conditions in the markets in which the Company operates, regulatory developments and cost containment. The Company will continue to evaluate the need for a valuation allowance against deferred tax assets in future periods and will adjust the allowance as necessary if it determines that it is not more likely than not that some or all of the deferred tax assets are expected to be realized.

The Internal Revenue Service is currently examining the Company’s 2013 and 2014 federal income tax returns.

Note 14. Transactions with Variable Interest Entities

The Company has limited agency agreements with unaffiliated third-party lenders. The agreements govern the terms by which the Company refers customers to that lender, on a non-exclusive basis, for a possible extension of credit, processes loan applications and commits to reimburse the lender for any loans or related fees that were not collected from such customers. As of March 31, 2016, and December 31, 2015, the outstanding amount of active consumer loans, which was the Company’s maximum exposure, was $31,233 and $40,552, respectively, which were guaranteed by the Company. This obligation is recorded as a current liability on the Company’s consolidated balance sheet. The accrual for third party lender losses related to these obligations totaled $2,216 and $2,610 as of March 31, 2016 and December 31, 2015, respectively. The Company has determined that the lenders are VIEs but that the Company is not the primary beneficiary of the VIEs. Therefore, the Company has not consolidated either lender.

The Company provided a $6,000 temporary line of credit to the Buyer of Florida II as part of the consideration. The line of credit is a form of subordinated financial support that represents a variable interest in Florida II. The Company does not have the power to direct of the activities that most significantly impact the performance of Florida II, therefore, the Company has determined that it is not the primary beneficiary of Florida II and will not consolidated Florida II.

Note 15. Supplemental Guarantor Information

The 2019 notes and the 2020 notes contain various covenants that, subject to certain exceptions defined in the indentures governing the notes (the “Indentures”), limit the Company’s ability to, among other things, engage in certain transactions with affiliates, pay dividends or distributions, redeem or repurchase capital stock, incur or assume liens or additional debt, and consolidate or merge with or into another entity or sell substantially all of its assets. The Company has optional redemption features on the 2019 notes and the 2020 notes prior to their maturity which, depending on the date of the redemption, would require premiums to be paid in addition to all principal and interest due.

The 2019 notes and 2020 notes are guaranteed by all of the Company’s guarantor subsidiaries existing as of April 29, 2011 (the date the Company issued the 2019 notes) and any subsequent guarantor subsidiaries that guarantee the Company’s indebtedness or the indebtedness of any other subsidiary guarantor (the “Subsidiary Guarantors”), in accordance with the Indentures. The Company is a holding company and has no independent assets or operations of its own. The guarantees under the 2019 notes and 2020 notes are full, unconditional, and joint and several. There are no restrictions on the ability of the Company or any of the Subsidiary Guarantors to obtain funds from its restricted subsidiaries by dividend or loan, except for net worth requirements of certain states in which the Company operates and certain requirements relating to the Company’s Alabama subsidiary, Insight Capital, LLC, as a result of its separate revolving credit facility (the “Alabama Revolving Credit Agreement”). Certain Subsidiary Guarantors are required to maintain net worth ranging from $5 to $1,000. The total net worth requirements of these Subsidiary Guarantors is $7.4 million. The Indentures contain certain affirmative and negative covenants applicable to the Company and its Subsidiary Guarantors, including restrictions on their ability to incur additional indebtedness, consummate certain asset sales, make investments in certain entities that create liens on their assets, enter into certain affiliate transactions and make certain restricted payments, including restrictions on the Company’s ability to pay dividends on, or repurchase, its common stock.

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Community Choice Financial Inc. and Subsidiaries

Condensed Consolidating Balance Sheet (unaudited)

March 31, 2016

	Community		Guarantor		Non-Guarantor
	Choice Financial		Subsidiaries		Subsidiaries			Eliminations			Consolidated
Assets
Current Assets
Cash and cash equivalents	$	—	$	78,929	$	29,730		$	—		$	108,659
Restricted cash	—		3,460		—			—			3,460
Finance receivables, net	—		71,511		23,306			—			94,817
Short-term investments, certificates of deposit	—		400		—			—			400
Card related pre-funding and receivables	—		2,067		—			—			2,067
Other current assets	—		25,953		2,380			(10,012		)	18,321
Total current assets	—		182,320		55,416			(10,012		)	227,724
Noncurrent Assets
Investment in Subsidiaries	353,808		—		—			(353,808		)	—
Finance receivables, net	—		7,301		—			—			7,301
Leasehold improvements and equipment, net	—		41,390		—			—			41,390
Goodwill	—		146,877		—			—			146,877
Other intangible assets	—		1,482		—			—			1,482
Security deposits	—		2,564		—			—			2,564
Total assets	$	353,808	$	381,934	$	55,416		$	(363,820	)	$	427,338
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable and accrued liabilities	$	—	$	29,536	$	(67	)	$	(2,320	)	$	27,149
Money orders payable	—		8,338		—			—			8,338
Accrued interest	11,500		37		2,015			(1,839		)	11,713
Current portion of capital lease obligation	—		1,421		—			—			1,421
Current portion of lines of credit	31,242		—		—						31,242
Current portion of subsidiary note payable	—		212		41,965			—			42,177
CCFI funding notes	—		—		5,853			(5,853		)	—
Deferred revenue	—		4,608		—			—			4,608
Total current liabilities	42,742		44,152		49,766			(10,012		)	126,648
Noncurrent Liabilities
Accrued liabilities	—		—		—			—			—
Lease termination payable	—		1,023		—			—			1,023
Capital lease obligation	—		1,191		—			—			1,191
Stock repurchase obligation	—		—		—			—			—
Lines of credit	—		5,468		—			—			5,468
Subsidiary note payable	—		917		—			—			917
Senior secured notes	250,601		—		—			—			250,601
Deferred Revenue	—		8,800		—			—			8,800
Deferred tax liability, net	—		848		—			—			848
Total liabilities	293,343		62,399		49,766			(10,012		)	395,496
Stockholders’ Equity	60,465		319,535		5,650			(353,808		)	31,842
Total liabilities and stockholders’ equity	$	353,808	$	381,934	$	55,416		$	(363,820	)	$	427,338

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Community Choice Financial Inc. and Subsidiaries

Condensed Consolidating Balance Sheet

December 31, 2015

	Community		Guarantor		Non-Guarantor
	Choice Financial		Subsidiaries		Subsidiaries		Eliminations			Consolidated
Assets
Current Assets
Cash and cash equivalents	$	—	$	69,986	$	28,955	$	—		$	98,941
Restricted cash	—		3,460		—		—			3,460
Finance receivables, net	—		96,088		23,616		—			119,704
Short-term investments, certificates of deposit	—		1,115		—		—			1,115
Card related pre-funding and receivables	—		1,674		—		—			1,674
Other current assets	—		33,292		2,661		(18,929		)	17,024
Total current assets	—		205,615		55,232		(18,929		)	241,918
Noncurrent Assets
Investment in Subsidiaries	378,548		17,156		—		(395,704		)	—
Finance receivables, net	—		8,797		—		—			8,797
Leasehold improvements and equipment, net	—		43,300		2,785		—			46,085
Goodwill	—		121,533		31,035		—			152,568
Other intangible assets	—		1,748		165		—			1,913
Security deposits	—		2,943		155		—			3,098
Deferred tax asset, net	—		5,165		—		—			5,165
Total assets	$	378,548	$	406,257	$	89,372	$	(414,633	)	$	459,544
Liabilities and Stockholders’ Equity

Ohio (State or other jurisdiction of incorporation or organization)		45-1536453 (IRS Employer Identification No.)

6785 Bobcat Way, Suite 200, Dublin, Ohio (Address of principal executive offices)		43016 (Zip Code)

Large accelerated filer o		Accelerated filer o

Non-accelerated filer x (Do not check if a smaller reporting company)		Smaller reporting company o

		Page
	Financial Information

Item 1.	Financial Statements

	Consolidated Balance Sheets as of March 31, 2016 (unaudited) and December 31, 2015	3

	Consolidated Statements of Income for the three months ended March 31, 2016 (unaudited) and March 31, 2015 (unaudited)	4

	Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2016 (unaudited)	5

	Consolidated Statements of Cash Flows for the three months ended March 31, 2016 (unaudited) and March 31, 2015 (unaudited)	6

	Notes to unaudited Consolidated Financial Statements	7 - 24

Item 2.	Management’s Discussion and Analysis of Financial Condition and Result of Operations	25 - 37

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	38

Item 4.	Controls and Procedures	38

Part II	Other Information

Item 1.	Legal Proceedings	39

Item 1A.	Risk Factors	39

Item 6.	Exhibits	39

	Signatures	40